☒ |
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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☐ |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM
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Delaware
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95-4523882
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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3611 Valley Centre Drive, Suite 150
San Diego, CA
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92130
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(Address of principal executive offices)
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(Zip Code)
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Title of each class
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Trading
Symbol(s)
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Name of each exchange
on which registered
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Common Stock, par value $0.0001 per share
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AIRG
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The Nasdaq Capital Market
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Large accelerated filer
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☐
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Accelerated filer
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☐
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Non-accelerated
filer
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☒
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Smaller reporting company
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☒ |
Emerging growth company
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☒ |
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• |
Consumer.
Wi-Fi
Mesh systems and extenders, smart TVs, smart home devices, and
set-top
boxes. In these applications, our antennas support an array of technologies including WLAN,
Wi-Fi,
LTE, 5G and LPWAN. These devices facilitate a variety of consumer-oriented applications and services including high-speed wireless internet and wireless video streaming, home automation, smart appliances, home security systems, and smart TV entertainment systems. We estimate that the total addressable market for our antennas in the service provider segment of the consumer market will grow at a compound annual growth rate, or CAGR, of 6%, while the IoT segment will grow at a CAGR of 11% between 2021 and 2024, based on ABI research and our internal estimates of average selling price, or ASP. Furthermore, according to ABI Research, the market for residential gateways, routers and mesh devices shipped worldwide is expected to increase from 229 million device shipments in 2021 to 257 million in 2023. Within the consumer market, the connected home market has seen an explosion of automation services and broadband-connected devices, making the demand for increased bandwidth, high throughput and reliable connectivity more critical than ever before. Between 2021 and 2024, residential Wi-Fi Mesh systems are anticipated to experience some of the highest growth rates within the consumer market, with a CAGR of 16% according to ABI Research.
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• |
Enterprise.
Wi-Fi
systems providers, whereby we often work under a joint development manufacturing (JDM) or ODM model, developing complete external antenna systems, including outdoor enclosure and mounting hardware, to meet demanding technical specifications, often resulting in higher ASP’s when compared to our more traditional embedded antenna business. We estimate that the total addressable market for our antennas in the enterprise market will grow at a CAGR of 13% from 2021 to 2024, based on ABI Research device shipment numbers and our internal estimates of ASP.
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• |
Automotive
Wi-Fi,
3G, LTE, 5G, and satellite connectivity. The fleet and aftermarket segment of the automotive market consists of applications whereby rugged vehicular wireless routers are paired with external antenna systems to provide connectivity to fixed and mobile assets and includes first responder and public safety vehicle fleets, the targets for our AirgainConnect AC-HPUE antenna-modem. Within the fleet and aftermarket market segment, there has been a rise in the number of antennas per vehicle. This is largely driven by the increasing needs of connectivity across different access technologies that include
Wi-Fi,
3G, LTE, 5G, and satellite. We estimate the total addressable market for our antennas (excludes antenna-modems) in the automotive fleet antenna market in North America, will grow at a CAGR of 11% from 2021 and 2024, based on ABI Research device shipment numbers and our internal ASP estimates.
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• |
Engineering Review
on-board
noise and radio interference, as well as identification and housing constraints. We plan to expand awareness of our brand and our offerings throughout the OEM and carrier technical community through participation in industry technical working groups, forums and trade events.
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• |
Antenna Selection and Placement
|
• |
Simulation and Initial Testing
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• |
Over-the-Air
802.11-based
WLAN devices such as routers, gateways, and
set-top
boxes. Our benchmark testing provides an accurate assessment of the performance characteristics for devices to enable manufacturers to make informed decisions in selecting the best antenna solution for their needs. This iteration also considers firmware stability, system noise, and interference, as well as antenna performance, to provide a throughput optimized solution.
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• |
Final Integration
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Validation and Reporting
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• |
AirgainConnect.
™
AC-HPUE, the first antenna-modem from our break-through AirgainConnect platform. AirgainConnect AC-HPUE includes an integrated FirstNet Ready
™
high-power LTE modem supporting the 3GPP Band 14 High Power UE output power functionality. Band 14 spectrum is the nationwide, high-quality spectrum set aside by the U.S. government specifically for FirstNet. This rugged vehicle antenna-modem solution tightly couples essential LTE radio components to meet the most demanding needs of public safety and fleet vehicles. By integrating an HPUE modem within an antenna assembly, AC-HPUE ensures transmission of the maximum allowable radiated power directly to the LTE antenna elements. Our patented technology supporting the AirgainConnect platform eliminates the signal loss over coax cables that run from mobile routers mounted in vehicle compartments to roof-mounted antennas, which combined with HPUE capability provides up to ten times the transmit power at the antenna when compared to the router’s conventional modem and antenna. The result is a dramatic increase in the coverage area and higher data rates.
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• |
Custom Embedded Antenna Solutions.
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• |
MaxBeam
TM
Embedded Antennas
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• |
Profile Embedded Antennas
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• |
Profile Contour Embedded Antennas
two-dimensional
shapes making them ideal for integration within curved enclosures and wearable devices.
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• |
Ultra Embedded Antennas
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• |
SmartMax
TM
Embedded Antennas.
Wi-Fi
systems.
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• |
MaxBeam Carrier Class Antennas
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• |
Antenna Plus Antennas.
Wi-Fi
6, Bluetooth, Intelligent Transport Systems, or ITS, and GPS/GNSS. Designed for all environments, our broad range of highly integrated and multi-band products support a variety of applications from kiosk and ATM connectivity to government and public safety vehicular applications. We have over 26 years of experience designing mission critical automotive fleet and mobile antenna applications. As the original inventor of the
low-profile
cellular antenna, we are known for our market leading performance, quality, and long product life. Our antennas build on the
best-in-class
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• |
Transition to systems solutions.
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• |
Innovate into new products and markets.
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• |
Expand our customer base within our core markets.
end-customers.
Although the customers that pay for our products are often ODMs and distributors, it is primarily the OEMs, carriers, and retail-focused
end-customers
that drive the selection of our solutions.
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• |
Increase our sales to existing customers.
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• |
Focus on system performance and products with long lifecycles
re-certification
of products. This is especially valuable in the service provider market, where product generations generally ship for two to three years before displacement by next-generation devices.
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Acquire complementary technologies, assets and companies.
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• |
OEM.
Wi-Fi
access points and repeaters,
set-top
boxes, video gateways, and other wireless equipment found in homes, schools, businesses, and networks. Typically, these customers work with us to help overcome a specific performance issue, or to improve product performance against internal or external benchmarks. OEMs are also often mandated or encouraged by service providers to select us.
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• |
ODM.
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• |
Chipset Vendors.
time-to-market
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• |
Service Providers.
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• |
Value Added Reseller (VARs) and Distributors.
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• |
Direct Competitors.
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• |
In-house
Antenna Design and Engineering Teams.
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• |
Third-Party Custom Design and Engineering Companies.
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• |
Automotive Modem Companies.
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• |
Price and total cost of ownership as a result of reliability and performance issues;
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• |
Brand awareness and reputation;
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• |
Antenna and antenna-modem performance, such as reliability, range, throughput;
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• |
Ability to integrate with other technology infrastructures;
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• |
Offerings across breadth of
in-home
wireless products;
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• |
Antenna design and testing capabilities;
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• |
Lead-time, and flexibility to rapidly customize solutions to individual customer requirements;
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• |
Relationships with semiconductor/chipset vendors; and
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• |
Intellectual property portfolio.
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• |
Methods of determining which antenna pattern to use;
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• |
Antenna pattern selection with multiple stations connected to access point;
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• |
Dynamically selected antennas for MIMO systems; and
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• |
Hardware implementations of switched directional antennas;
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• |
Large assortment of antenna designs;
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• |
Antenna assemblies and systems for vehicles; and
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• |
Compact embedded wireless modems and environmental monitoring assemblies.
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• |
The market for our antenna products is developing and may not develop as we expect;
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• |
Our operating results may fluctuate significantly, which makes our future operating results difficult to predict and could cause our operating results to fall below expectations or our guidance;
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• |
Our products are subject to intense competition, including competition from the customers to whom we sell, and competitive pressures from existing and new companies may harm our business, sales, growth rates and market share;
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• |
Our future success depends on our ability to develop and successfully introduce new and enhanced products for the wireless market that meet the needs of our customers;
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• |
Our business is characterized by short product development windows and short product lifecycles;
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• |
Any delays in our sales cycles could result in customers canceling purchases of our products;
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We have a history of losses, including an accumulated deficit of $47.3 million at December 31, 2020, and we may not be profitable in the future;
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• |
We sell to customers who are extremely price conscious, and a few customers represent a significant portion of our sales. If we lose any of these customers, our sales could decrease significantly;
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We rely on a few contract manufacturers to produce and ship all of our products, a single or limited number of suppliers for some components of our products and channel partners to sell and support our products, and the failure to manage our relationships with these parties successfully could adversely affect our ability to market and sell our products;
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If we cannot protect our intellectual property rights, our competitive position could be harmed or we could incur significant expenses to enforce our rights; and
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Our international sales and operations subject us to additional risks that can adversely affect our operating results and financial condition.
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• |
fluctuations in demand for our products and services;
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• |
the inherent complexity, length and associated unpredictability of product development windows and product lifecycles;
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• |
the timing and extent of investment in our targeted growth markets and the timing and amount of sales in such markets;
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• |
changes in customers’ budgets for technology purchases and delays in their purchasing cycles;
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• |
seasonal fluctuations around local holidays in China affecting how customers make purchasing decisions;
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• |
delays or difficulties in the integration of the NimbeLink acquisition;
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changing market conditions;
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any significant changes in the competitive dynamics of our markets, including new entrants, or further consolidation; the timing of product releases or upgrades by us or by our competitors;
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• |
our ability to develop, introduce and ship in a timely manner new products and product enhancements and anticipate future market demands that meet our customers’ requirements;
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• |
public health crises such as the COVID-19 pandemic; and
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• |
increasing uncertainty of international relations and tariffs.
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• |
our OEM customers and carriers usually complete a lengthy technical evaluation of our products, over which we have no control, before placing a purchase order;
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• |
the commercial introduction of our products by OEM customers and carriers is typically limited during the initial release to evaluate product performance;
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• |
the development and commercial introduction of products incorporating new technologies frequently are delayed; and
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• |
certain customers of advanced antenna systems and integrated wireless solutions require successful field trials before committing to purchase our solutions, which could delay the customer decision making process.
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• |
qualify appropriate component suppliers;
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• |
manage capacity during periods of high demand;
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• |
meet delivery schedules;
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• |
assure the quality of our products;
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• |
ensure adequate supplies of materials;
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• |
protect our intellectual property; and
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• |
deliver finished products at agreed-upon prices.
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• |
labor strikes or shortages;
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• |
financial problems of either contract manufacturers or component suppliers;
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• |
reservation of manufacturing capacity at our contract manufactures by other companies, inside or outside of our industry;
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• |
changes or uncertainty in tariffs, economic sanctions, and other trade barriers or political unrest in regions where manufacturers are located, such as recent developments in Myanmar; and
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• |
industry consolidation occurring within one or more component supplier markets, such as the semiconductor market.
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• |
price and volume fluctuations in the overall stock market from time to time;
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• |
volatility in the market prices and trading volumes of technology stocks;
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• |
changes in operating performance and stock market valuations of other technology companies generally, or those in our industry in particular;
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• |
sales of shares of our common stock by us or our stockholders;
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• |
failure of financial analysts to maintain coverage of us, changes in financial estimates by any analysts who follow our company, or our failure to meet these estimates or the expectations of investors;
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• |
the financial projections we may provide to the public, any changes in those projections or our failure to meet those projections;
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• |
announcements by us or our competitors of new products or new or terminated significant contracts, commercial relationships or capital commitments;
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• |
the development and sustainability of an active trading market for our common stock;
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• |
the public’s reaction to our press releases, other public announcements and filings with the SEC;
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• |
rumors and market speculation involving us or other companies in our industry;
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• |
actual or anticipated changes in our operating results or fluctuations in our operating results;
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• |
actual or anticipated developments in our business or our competitors’ businesses or the competitive landscape generally;
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• |
litigation involving us, our industry or both or investigations by regulators into our operations or those of our competitors;
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• |
developments or disputes concerning our intellectual property or other proprietary rights;
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• |
announced or completed acquisitions of businesses or technologies by us or our competitors;
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• |
new laws or regulations or new interpretations of existing laws or regulations applicable to our business;
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• |
changes in accounting standards, policies, guidelines, interpretations or principles;
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• |
any major change in our management;
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• |
general economic conditions and slow or negative growth of our markets; and
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• |
other events or factors, including those resulting from war, incidents of terrorism or responses to these events.
|
• |
authorize our board of directors to issue, without further action by the stockholders, up to 10,000,000 shares of undesignated preferred stock and up to 200,000,000 shares of authorized common stock;
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• |
require that any action to be taken by our stockholders be effected at a duly called annual or special meeting and not by written consent;
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• |
specify that special meetings of our stockholders can be called only by our board of directors, the Chairman, the Chief Executive Officer or the President;
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• |
establish an advance notice procedure for stockholder approvals to be brought before an annual meeting of our stockholders, including proposed nominations of persons for election to our board of directors;
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• |
establish that our board of directors is divided into three classes, Class I, Class II and Class III, with each class serving staggered terms;
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• |
provide that our directors may be removed only for cause; and
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• |
provide that vacancies on our board of directors may, except as otherwise required by law, be filled only by a majority of directors then in office, even if less than a quorum.
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• |
exemption from the auditor attestation requirements under Section 404 of the Sarbanes-Oxley Act;
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• |
reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements;
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• |
exemption from the requirements of holding
non-binding
stockholder votes on executive compensation arrangements; and
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• |
exemption from any rules requiring mandatory audit firm rotation and auditor discussion and analysis and, unless the SEC otherwise determines, any future audit rules that may be adopted by the Public Company Accounting Oversight Board.
|
• |
Sales decreased by 13% in 2020 compared to 2019. The decrease in sales was primarily driven by the impacts from
COVID-19
and a product cycle transition for several large volume embedded antenna products.
|
• |
Gross profit as a percentage of sales increased to 46.6% in 2020 compared to 45.4% in 2019. The increase in gross profit as a percentage of sales was largely due to product cost reductions for the year ended December 31, 2020.
|
• |
Income from operations decreased by $3.6 million in 2020 compared to 2019. This decrease was primarily due to an increase of $0.8 million in operating expenses along with a $2.7 million decrease in gross profit due to lower sales volumes.
|
• |
Our effective tax rate was (9.0)% in 2020 compared to 15.0% in 2019.
|
• |
We ended 2020 with cash, cash equivalents totaling $38.2 million.
|
For the year ended December 31,
|
||||||||
2020
|
2019
|
|||||||
(calculated as a percentage of associated sales)
|
||||||||
Statement of Operations Data:
|
||||||||
Sales
|
100.0 | % | 100.0 | % | ||||
Cost of goods sold
|
53.4 | 54.6 | ||||||
|
|
|
|
|||||
Gross profit
|
46.6 | 45.4 | ||||||
Operating expenses:
|
||||||||
Research and development
|
18.9 | 16.1 | ||||||
Sales and marketing
|
12.3 | 12.6 | ||||||
General and administrative
|
21.9 | 16.0 | ||||||
|
|
|
|
|||||
Total operating expenses
|
53.1 | 44.7 | ||||||
|
|
|
|
|||||
Income (loss) from operations
|
(6.5 | ) | 0.7 | |||||
Other income
|
(0.4 | ) | (1.3 | ) | ||||
|
|
|
|
|||||
Income (loss) before income taxes
|
(6.1 | ) | 2.0 | |||||
Provision for income taxes
|
0.6 | 0.3 | ||||||
|
|
|
|
|||||
Net income (loss)
|
(6.7 | )% | 1.7 | % | ||||
|
|
|
|
For the year ended December 31,
|
||||||||||||||||
2020
|
2019
|
Increase /
(Decrease) |
% Change
|
|||||||||||||
Sales
|
$ | 48,502 | $ | 55,739 | $ | (7,237 | ) | (13.0 | )% |
For the year ended December 31,
|
||||||||||||||||
2020
|
2019
|
Increase /
(Decrease) |
% Change
|
|||||||||||||
Cost of goods sold
|
$ | 25,917 | $ | 30,415 | $ | (4,498 | ) | (14.8 | )% |
For the year ended December 31,
|
||||||||||||||||
2020
|
2019
|
Increase /
(Decrease) |
% Change
|
|||||||||||||
Gross profit
|
$ | 22,585 | $ | 25,324 | $ | (2,739 | ) | (10.8 | )% | |||||||
Gross profit (percentage of sales)
|
46.6 | % | 45.4 | % | 1.2 | % |
For the year ended December 31,
|
||||||||||||||||
2020
|
2019
|
Increase /
(Decrease) |
% Change
|
|||||||||||||
Operating Expenses
|
||||||||||||||||
Research and development
|
$ | 9,157 | $ | 8,989 | $ | 168 | 1.9 | % | ||||||||
Sales and marketing
|
5,976 | 7,036 | (1,060 | ) | (15.1 | )% | ||||||||||
General and administrative
|
10,636 | 8,919 | 1,717 | 19.3 | % | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total
|
$ | 25,769 | $ | 24,944 | $ | 825 | 3.3 | % | ||||||||
|
|
|
|
|
|
|
|
For the year ended December 31,
|
||||||||||||||||
2020
|
2019
|
(Increase) /
Decrease |
% Change
|
|||||||||||||
Other expense (income):
|
||||||||||||||||
Interest income, net
|
$ | (197 | ) | $ | (709 | ) | $ | 512 | (72.2 | )% | ||||||
Other expense
|
19 | — | 19 | — | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total
|
$ | (178 | ) | $ | (709 | ) | $ | 531 | (74.9 | )% | ||||||
|
|
|
|
|
|
|
|
For the year ended December 31
|
||||||||
2020
|
2019
|
|||||||
Net cash provided by operating activities
|
$ | 3,704 | $ | 2,368 | ||||
Net cash provided by (used in) investing activities
|
20,886 | (2,400 | ) | |||||
Net cash used in financing activities
|
561 | (392 | ) | |||||
|
|
|
|
|||||
Net increase (decrease) in cash, cash equivalents, and restricted cash
|
$ | 25,151 | $ | (424 | ) | |||
|
|
|
|
Payments due by period
|
||||||||||||||||||||
Total
|
Less than
1 year |
1-3
years |
3-5
years |
More than
5 years |
||||||||||||||||
Office operating leases
|
$ | 3,722 | $ | 992 | $ | 2,115 | $ | 615 | $ | — |
• |
Fair value of our common stock.
|
• |
Expected term.
|
• |
Expected volatility.
|
• |
Risk-free interest rate.
|
• |
Expected dividend.
|
1.
|
Financial Statements.
|
2.
|
Financial Statement Schedules.
|
3.
|
Exhibits
|
Page | ||||
F-2 | ||||
F-3 | ||||
F-4 | ||||
F-5 | ||||
F-6 | ||||
F-7 | ||||
F-8 |
December 31,
|
||||||||
2020
|
2019
|
|||||||
Assets
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$ | 38,173 | $ | 13,197 | ||||
Short-term investments
|
— | 21,686 | ||||||
Trade accounts receivable
|
4,782 | 7,656 | ||||||
Inventory
|
1,016 | 1,193 | ||||||
Prepaid expenses and other current assets
|
1,462 | 1,361 | ||||||
|
|
|
|
|||||
Total current assets
|
45,433 | 45,093 | ||||||
Property and equipment, net
|
2,377 | 2,126 | ||||||
Goodwill
|
3,700 | 3,700 | ||||||
Customer relationships, net
|
2,627 | 3,110 | ||||||
Intangible assets, net
|
541 | 687 | ||||||
Other assets
|
249 | 10 | ||||||
|
|
|
|
|||||
Total assets
|
$ | 54,927 | $ | 54,726 | ||||
|
|
|
|
|||||
Liabilities and stockholders’ equity
|
||||||||
Current liabilities:
|
||||||||
Accounts payable
|
$ | 2,975 | $ | 3,838 | ||||
Accrued compensation
|
2,655 | 2,492 | ||||||
Accrued liabilities and other
|
1,187 | 344 | ||||||
Current portion of deferred rent obligation under operating lease
|
39 | 85 | ||||||
|
|
|
|
|||||
Total current liabilities
|
6,856 | 6,759 | ||||||
Deferred tax liability
|
58 | 52 | ||||||
Deferred rent obligation under operating lease
|
271 | 11 | ||||||
|
|
|
|
|||||
Total liabilities
|
7,185 | 6,822 | ||||||
|
|
|
|
|||||
Commitments and contingencies (note
11
)
|
||||||||
Stockholders’ equity:
|
||||||||
Common stock and additional
paid-in
capital, par value $0.0001, 200,000 shares authorized; 10,318 shares issued and 9,784 shares outstanding at December 31, 2020; and 10,146 shares issued and 9,681 shares outstanding at December 31, 2019
|
100,356 | 96,623 | ||||||
Treasury stock, at cost; 534 shares and 465 shares at December 31, 2020 and 2019, respectively
|
(5,267 | ) | (4,659 | ) | ||||
Accumulated other comprehensive income
|
— | 8 | ||||||
Accumulated deficit
|
(47,347 | ) | (44,068 | ) | ||||
|
|
|
|
|||||
Total stockholders’ equity
|
47,742 | 47,904 | ||||||
|
|
|
|
|||||
Total liabilities and stockholders’ equity
|
$ | 54,927 | $ | 54,726 | ||||
|
|
|
|
For the year ended December 31,
|
||||||||
2020
|
2019
|
|||||||
Sales
|
$ | 48,502 | $ | 55,739 | ||||
Cost of goods sold
|
25,917 | 30,415 | ||||||
|
|
|
|
|||||
Gross profit
|
22,585 | 25,324 | ||||||
|
|
|
|
|||||
Operating expenses:
|
||||||||
Research and development
|
9,157 | 8,989 | ||||||
Sales and marketing
|
5,976 | 7,036 | ||||||
General and administrative
|
10,636 | 8,919 | ||||||
|
|
|
|
|||||
Total operating expenses
|
25,769 | 24,944 | ||||||
|
|
|
|
|||||
Income (loss) from operations
|
(3,184 | ) | 380 | |||||
|
|
|
|
|||||
Other (income) expense:
|
||||||||
Interest income net
|
(197 | ) | (709 | ) | ||||
Other expense
|
19 | — | ||||||
|
|
|
|
|||||
Total other income
|
(178 | ) | (709 | ) | ||||
|
|
|
|
|||||
Income (loss) before income taxes
|
(3,006 | ) | 1,089 | |||||
Provision for income taxes
|
273 | 163 | ||||||
|
|
|
|
|||||
Net income (loss)
|
$ | (3,279 | ) | $ | 926 | |||
|
|
|
|
|||||
Net income (loss) per share:
|
||||||||
Basic
|
$ | (0.34 | ) | $ | 0.10 | |||
Diluted
|
$ | (0.34 | ) | $ | 0.09 | |||
Weighted average shares used in calculating income (loss) per share
|
||||||||
Basic
|
9,714 | 9,684 | ||||||
Diluted
|
9,714 | 10,097 |
For the year ended December 31,
|
||||||||
2020
|
2019
|
|||||||
Net income (loss)
|
$ | (3,279 | ) | $ | 926 | |||
Unrealized gain (loss) on
available-for-sale
|
(8 | ) | 19 | |||||
|
|
|
|
|||||
Total comprehensive income (loss)
|
$ | (3,287 | ) | $ | 945 | |||
|
|
|
|
For the year ended December 31,
|
||||||||
2020
|
2019
|
|||||||
Total stockholders’ equity, beginning balance
|
$ | 47,904 | $ | 45,147 | ||||
|
|
|
|
|||||
Common stock and additional
paid-in
capital:
|
||||||||
Balance at beginning of period
|
96,623 | 93,584 | ||||||
Stock-based compensation
|
2,564 | 2,204 | ||||||
Issuance of shares for stock purchase plans
|
1,169 | 835 | ||||||
|
|
|
|
|||||
Balance at end of period
|
100,356 | 96,623 | ||||||
|
|
|
|
|||||
Treasury stock:
|
||||||||
Balance at beginning of period
|
(4,659 | ) | (3,432 | ) | ||||
Repurchases of common stock
|
(608 | ) | (1,227 | ) | ||||
|
|
|
|
|||||
Balance at end of period
|
(5,267 | ) | (4,659 | ) | ||||
|
|
|
|
|||||
Accumulated other comprehensive income (loss):
|
||||||||
Balance at beginning of period
|
8 | (11 | ) | |||||
Unrealized gain (loss) on
available-for-sale
|
(8 | ) | 19 | |||||
|
|
|
|
|||||
Balance at end of period
|
— | 8 | ||||||
|
|
|
|
|||||
Accumulated deficit:
|
||||||||
Balance at beginning of period
|
(44,068 | ) | (44,994 | ) | ||||
Net income (loss)
|
(3,279 | ) | 926 | |||||
|
|
|
|
|||||
Balance at end of period
|
(47,347 | ) | (44,068 | ) | ||||
|
|
|
|
|||||
Total stockholders’ equity, ending balance
|
$ | 47,742 | $ | 47,904 | ||||
|
|
|
|
For the year ended December 31,
|
||||||||
2020
|
2019
|
|||||||
Cash flows from operating activities:
|
||||||||
Net income (loss)
|
$ | (3,279 | ) | $ | 926 | |||
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
|
||||||||
Depreciation
|
463 | 493 | ||||||
Loss on disposal of property and equipment
|
11 | — | ||||||
Amortization of intangibles
|
629 | 655 | ||||||
Amortization of (discounts) premium on investments, net
|
64 | (312 | ) | |||||
Stock-based compensation
|
2,564 | 2,204 | ||||||
Deferred tax liability
|
6 | 14 | ||||||
Changes in operating assets and liabilities:
|
||||||||
Trade accounts receivable
|
2,874 | (643 | ) | |||||
Inventory
|
177 | 158 | ||||||
Prepaid expenses and other assets
|
(164 | ) | (171 | ) | ||||
Accounts payable
|
(862 | ) | (303 | ) | ||||
Accrued compensation
|
163 | (625 | ) | |||||
Accrued liabilities and other
|
843 | 168 | ||||||
Deferred obligation under operating lease
|
215 | (196 | ) | |||||
|
|
|
|
|||||
Net cash provided by operating activities
|
3,704 | 2,368 | ||||||
|
|
|
|
|||||
Cash flows from investing activities:
|
||||||||
Purchases of
available-for-sale
|
(753 | ) | (36,456 | ) | ||||
Maturities of
available-for-sale
|
22,366 | 35,270 | ||||||
Purchases of property and equipment
|
(727 | ) | (1,214 | ) | ||||
|
|
|
|
|||||
Net cash provided by (used in) investing activities
|
20,886 | (2,400 | ) | |||||
|
|
|
|
|||||
Cash flows from financing activities:
|
||||||||
Repurchase of common stock
|
(608 | ) | (1,227 | ) | ||||
Proceeds from issuance of common stock
|
1,169 | 835 | ||||||
|
|
|
|
|||||
Net cash provided by (used in) financing activities
|
561 | (392 | ) | |||||
|
|
|
|
|||||
Net increase (decrease) in cash, cash equivalents, and restricted cash
|
25,151 | (424 | ) | |||||
Cash, cash equivalents, and restricted cash; beginning of period
|
13,197 | 13,621 | ||||||
|
|
|
|
|||||
Cash, cash equivalents, and restricted cash; end of period
|
$ | 38,348 | $ | 13,197 | ||||
|
|
|
|
|||||
Supplemental disclosure of cash flow information
|
||||||||
Interest paid
|
$ | — | $ | 1 | ||||
Taxes paid
|
$ | 164 | $ | 71 | ||||
Supplemental disclosure of
non-cash
investing and financing activities:
|
||||||||
Accrual of property and equipment
|
$ | 2 | $ | 4 | ||||
Cash and cash equivalents
|
$ | 38,173 | $ | 13,197 | ||||
Restricted cash included in other assets
|
175 | — | ||||||
|
|
|
|
|||||
Total cash, cash equivalents, and restricted cash
|
$ | 38,348 | $ | 13,197 | ||||
|
|
|
|
(1)
|
Significant Accounting Policies
|
|
•
|
|
Fair value of our common stock
|
|
•
|
|
Expected term
|
|
•
|
|
Expected volatility
|
|
•
|
|
Risk-free interest rate
|
|
•
|
|
Expected dividend
|
• |
Level 1: Quoted prices in active markets for identical assets or liabilities.
|
• |
Level 2: Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs are observable in active markets.
|
• |
Level 3: Valuations derived from valuation techniques in which one or more significant inputs are unobservable in active markets.
|
For the year ended December 31,
|
||||||||
2020
|
2019
|
|||||||
Numerator:
|
||||||||
Net income (loss)
|
$ | (3,279 | ) | $ | 926 | |||
|
|
|
|
|||||
Denominator:
|
||||||||
Weighted average common shares outstanding
|
||||||||
Basic
|
9,714 | 9,684 | ||||||
Diluted
|
9,714 | 10,097 | ||||||
Net income (loss) per share:
|
||||||||
Basic
|
$ | (0.34 | ) | $ | 0.10 | |||
Diluted
|
$ | (0.34 | ) | $ | 0.09 |
For the year ended December 31,
|
||||||||
2020
|
2019
|
|||||||
Stock options and restricted stock units
|
1,548 | 402 | ||||||
Warrants outstanding
|
51 | — | ||||||
Total
|
$ | 1,599 | $ | 402 |
(2)
|
Cash, Cash Equivalents and Short-Term Investments
|
2020
|
||||||||||||||||||||||||
Amortized
Cost |
Gross
Unrealized Gains |
Gross
Unrealized Losses |
Estimated
Fair Value |
Cash and
Cash Equivalents |
Short-Term
Investments |
|||||||||||||||||||
Cash
|
$ | 2,779 | $ | — | $ | — | $ | 2,779 | $ | 2,779 | $ | — | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Level 1
(1)
:
|
||||||||||||||||||||||||
Money market funds
|
35,394 | — | — | 35,394 | 35,394 | — | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total
|
$ | 38,173 | $ | — | $ | — | $ | 38,173 | $ | 38,173 | $ | — | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
2019
|
||||||||||||||||||||||||
Amortized
Cost |
Gross
Unrealized Gains |
Gross
Unrealized Losses |
Estimated
Fair Value |
Cash and
Cash Equivalents |
Short-Term
Investments |
|||||||||||||||||||
Cash
|
$ | 3,950 | $ | — | $ | — | $ | 3,950 | $ | 3,950 | $ | — | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Level 1
(1)
:
|
||||||||||||||||||||||||
Money market funds
|
5,500 | — | — | 5,500 | 5,500 | — | ||||||||||||||||||
U.S. treasury securities
|
3,078 | 2 | (1 | ) | 3,079 | — | 3,079 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Subtotal
|
8,578 | 2 | (1 | ) | 8,579 | 5,500 | 3,079 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Level 2
(2)
:
|
||||||||||||||||||||||||
Commercial paper
|
8,920 | — | — | 8,920 | 747 | 8,173 | ||||||||||||||||||
Corporate debt obligations
|
5,922 | 5 | (1 | ) | 5,926 | — | 5,926 | |||||||||||||||||
Repurchase agreements
|
3,000 | — | — | 3,000 | 3,000 | — | ||||||||||||||||||
Asset-backed securities
|
4,505 | 3 | — | 4,508 | — | 4,508 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Subtotal
|
22,347 | 8 | (1 | ) | 22,354 | 3,747 | 18,607 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total
|
$ | 34,875 | $ | 10 | $ | (2 | ) | $ | 34,883 | $ | 13,197 | $ | 21,686 | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
Level 1 fair value estimates are based on quoted prices in active markets for identical assets or liabilities.
|
(2) |
Level 2 fair value estimates are based on observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
|
Description of securities
|
Estimated fair value
|
Unrealized losses
|
||||||
U.S. treasury securities
|
$ | 1,218 | $ | (1 | ) | |||
Corporate debt obligations
|
1,428 | (1 | ) | |||||
Asset-backed securities
|
753 | — | ||||||
|
|
|
|
|||||
Total
|
$ | 3,399 | $ | (2 | ) | |||
|
|
|
|
(3)
|
Property and Equipment
|
2020
|
2019
|
|||||||
Computers and software
|
$ | 596 | $ | 572 | ||||
Furniture, fixtures, and equipment
|
400 | 299 | ||||||
Manufacturing and testing equipment
|
3,874 | 3,444 | ||||||
Construction in process
|
120 | 18 | ||||||
Leasehold improvements
|
932 | 911 | ||||||
|
|
|
|
|||||
5,922 | 5,244 | |||||||
Less accumulated depreciation
|
(3,545 | ) | (3,118 | ) | ||||
|
|
|
|
|||||
$ | 2,377 | $ | 2,126 | |||||
|
|
|
|
(4)
|
Goodwill and Intangible Assets
|
2020
|
Weighted average
amortization period (years) |
Gross
carrying amount |
Accumulated
amortization |
Intangibles,
net |
||||||||||||
Customer relationships
|
10 | $ | 4,830 | $ | 2,203 | $ | 2,627 | |||||||||
Developed technologies
|
9 | 1,080 | $ | 539 | 541 | |||||||||||
Tradename
|
3 | 120 | $ | 120 | — | |||||||||||
|
|
|
|
|
|
|||||||||||
Total
|
$ | 6,030 | $ | 2,862 | $ | 3,168 | ||||||||||
|
|
|
|
|
|
|||||||||||
2019
|
||||||||||||||||
Customer relationships
|
10 | $ | 4,830 | $ | 1,720 | $ | 3,110 | |||||||||
Developed technologies
|
9 | 1,080 | 406 | 674 | ||||||||||||
Tradename
|
3 | 120 | 107 | 13 | ||||||||||||
|
|
|
|
|
|
|||||||||||
Total
|
$ | 6,030 | $ | 2,233 | $ | 3,797 | ||||||||||
|
|
|
|
|
|
Estimated future
amortization |
||||
2021
|
$ | 598 | ||
2022
|
563 | |||
2023
|
563 | |||
2024
|
563 | |||
2025
|
551 | |||
Thereafter
|
330 | |||
|
|
|||
Total
|
$ | 3,168 | ||
|
|
(6)
|
Long-term Note Payable and Line of Credit
|
(
7
)
|
Treasury Stock
|
(
8
)
|
Income Taxes
|
(a)
|
Income Taxes
|
2020
|
2019
|
|||||||
Current:
|
||||||||
U.S. federal
|
$ | — | $ | 1 | ||||
State and local
|
(2 | ) | 3 | |||||
|
|
|
|
|||||
Foreign
|
|
|
269
|
|
|
|
144
|
|
Total current provision
|
267 | 148 | ||||||
|
|
|
|
|||||
Deferred:
|
||||||||
U.S. federal
|
10 | 10 | ||||||
State and local
|
(4 | ) | 5 | |||||
|
|
|
|
|||||
Total deferred provision
|
6 | 15 | ||||||
|
|
|
|
|||||
Total tax provision
|
$ | 273 | $ | 163 | ||||
|
|
|
|
(b)
|
Tax Rate Reconciliation
|
2020
|
2019
|
|||||||
Income taxes at statutory rates
|
$ | (631 | ) | $ | 229 | |||
State income tax, net of federal benefit
|
(6 | ) | 8 | |||||
Permanent items
|
(20 | ) | (11 | ) | ||||
Meals and entertainment
|
29 | 50 | ||||||
Equity based compensation
|
81 | (8 | ) | |||||
Research and development credit
|
(168 | ) | (94 | ) | ||||
Federal return to provision
|
(136 | ) | 101 | |||||
Foreign taxes
|
|
|
269
|
|
|
|
144
|
|
Other
|
— | 1 | ||||||
Change in federal valuation allowance
|
855 | (257 | ) | |||||
|
|
|
|
|||||
$ | 273 | $ | 163 | |||||
|
|
|
|
(c)
|
Significant Components of Current and Deferred Taxes
|
2020
|
2019
|
|||||||
Deferred tax assets:
|
||||||||
Net operating loss carryforward
s
|
$ | 4,741 | $ | 4,564 | ||||
Research and AMT credits
|
2,664 | 2,208 | ||||||
Stock based compensation
|
733 | 387 | ||||||
Accrued and other
|
928 | 748 | ||||||
|
|
|
|
|||||
9,066 | 7,907 | |||||||
Less valuation allowance
|
(8,520 | ) | (7,455 | ) | ||||
|
|
|
|
|||||
Deferred tax assets, net of allowance
|
546 | 452 | ||||||
|
|
|
|
|||||
Deferred tax liabilities:
|
||||||||
Fixed assets
|
(344 | ) | (288 | ) | ||||
Goodwill
|
(260 | ) | (216 | ) | ||||
|
|
|
|
|||||
Deferred tax liabilities
|
(604 | ) | (504 | ) | ||||
|
|
|
|
|||||
Total deferred tax liabilities
|
$ | (58 | ) | $ | (52 | ) | ||
|
|
|
|
2020
|
2019
|
|||||||
Beginning unrecognized tax benefits
|
$ | 765 | $ | 732 | ||||
Decreases related to prior year tax positions
|
36 | (7 | ) | |||||
Increases related to current year tax positions
|
78 | 40 | ||||||
|
|
|
|
|||||
Ending unrecognized tax benefits
|
$ | 879 | $ | 765 | ||||
|
|
|
|
(
9
)
|
Stockholders’ Equity
|
2020
|
2019
|
|||||||
Warrants issued and outstanding
|
51 | 51 | ||||||
Stock option awards issued and outstanding
|
1,760 | 1,600 | ||||||
Authorized for grants under the 2016 Equity Incentive Plan
|
357 |
(2)
|
401 | |||||
Authorized for grants under the 2016 Employee Stock Purchase Plan
|
256 |
(3)
|
186 | |||||
|
|
|
|
|||||
2,424 | 2,238 | |||||||
|
|
|
|
(1)
|
Treasury stock in the amount of 534,000 and 465,000 as of December 31, 2020 and 2019, respectively, are excluded from the table above.
|
(2)
|
On January 1, 2020, the number of authorized shares in the 2016 Equity Incentive Plan increased by 387,000 shares pursuant to the evergreen provisions of the 2016 Equity Incentive Plan.
|
(3)
|
On January 1, 2020, the number of authorized shares in the 2016 Employee Stock Purchase Plan increased by 97,000 shares pursuant to the evergreen provisions of the 2016 Employee Stock Purchase Plan.
|
(10)
|
Stock Based Compensation
|
As of December 31,
|
||||||||
2020
|
2019
|
|||||||
Valuation assumptions:
|
||||||||
Expected dividend yield
|
0 | % | 0 | % | ||||
Expected volatility
|
44.1 | % | 40.8 | % | ||||
Expected term (years)
|
5.8 | 6.0 | ||||||
Risk-free interest rate
|
1.5 | % | 2.1 | % |
Number
of shares |
Weighted
average exercise price |
Weighted average
remaining contractual term (years) |
||||||||||
Balance at December 31, 2019
|
1,600 | $ | 9.98 | |||||||||
Granted
|
402 | 10.05 | ||||||||||
Exercised
|
(120 | ) | 8.49 | |||||||||
Expired/Forfeited
|
(122 | ) | 10.38 | |||||||||
|
|
|||||||||||
Balance at December 31, 2020
|
1,760 | 10.07 | 7.6 | |||||||||
|
|
|||||||||||
Vested and exercisable at December 31, 2020
|
984 | $ | 9.40 | 6.7 | ||||||||
Vested and expected to vest at December 31, 2020
|
1,760 | $ | 10.07 | 7.6 |
Restricted stock
units |
Weighted average
grant date fair value |
|||||||
Balance at December 31, 2019
|
80 | $ | 11.43 | |||||
Grants
|
151 | 10.17 | ||||||
Vested
|
(29 | ) | 11.28 | |||||
|
|
|||||||
Balance at December 31, 2020
|
202 | 10.51 | ||||||
|
|
(c)
|
Employee Stock Purchase Plan (ESPP)
|
(d)
|
Stock-based compensation expense
|
|
|
For the year ended December 31,
|
|
|||||
|
|
2020
|
|
|
2019
|
|
||
Cost of goods sold
|
|
$
|
2
|
|
|
$
|
—
|
|
Research and development
|
|
|
548
|
|
|
|
474
|
|
Sales and marketing
|
|
|
390
|
|
|
|
174
|
|
General and administrative
|
|
|
1,624
|
|
|
|
1,556
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
2,564
|
|
|
|
2,204
|
|
|
|
|
|
|
|
|
|
(11)
|
Commitments and Contingencies
|
(a)
|
Operating Leases
|
Year ending: | ||||
2021
|
$ | 992 | ||
2022
|
721 | |||
2023
|
705 | |||
2024
|
689 | |||
2025
|
615 | |||
|
|
|||
$ | 3,722 | |||
|
|
(b)
|
Indemnification
|
(c)
|
Supply Agreement
|
|
(d)
|
Employment Agreements
|
(1
2
)
|
Customer and Geographic Information
|
(a)
|
Concentration of Sales and Accounts Receivable
|
For the year ended December 31,
|
||||||||
2020
|
2019
|
|||||||
Percentage of net revenue
|
||||||||
Customer A
|
34 | % | 36 | % | ||||
Customer B
|
12 | % | 14 | % | ||||
As of December, 31
|
||||||||
2020
|
2019
|
|||||||
Percentage of gross trade accounts receivable
|
||||||||
Customer A
|
23 | % | 33 | % | ||||
Customer B
|
17 | % | 7 |
%
|
||||
Customer C
|
13 | % | 9 | % | ||||
Customer D
|
— | 14 | % |
(b)
|
Concentration of Purchases
|
(c)
|
Concentration of Property and Equipment
|
As of December, 31
|
||||||||
2020
|
2019
|
|||||||
North America
|
$ | 1,936 | $ | 1,663 | ||||
China
|
249 | 190 | ||||||
United Kingdom
|
192 | 273 | ||||||
Total
|
|
$
|
2,377
|
|
|
$
|
2,126
|
|
(1
3
)
|
Disaggregated Revenues
|
By Sales Channel
|
For year ended December 31,
|
|||||||
2020
|
2019
|
|||||||
Fulfillment distributors
|
$ | 27,356 | $ | 32,273 | ||||
OEM/ODM/CM
|
16,020 | 17,075 | ||||||
Other
|
5,126 | 6,391 | ||||||
|
|
|
|
|||||
Total
|
$ | 48,502 | $ | 55,739 | ||||
|
|
|
|
By Market Group
|
For year ended December 31,
|
|||||||
|
|
2020
|
|
|
2019
|
|
||
Consumer
|
|
$
|
37,129
|
|
|
$
|
43,000
|
|
Automotive
|
|
|
7,463
|
|
|
|
8,873
|
|
Enterprise
|
|
|
3,910
|
|
|
|
3,866
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
48,502
|
|
|
$
|
55,739
|
|
|
|
|
|
|
|
|
|
By Geography
|
For year ended December 31,
|
|||||||
2020
|
2019
|
|||||||
China
|
$ | 35,173 | $ | 40,810 | ||||
North America
|
10,044 | 11,611 | ||||||
Other
|
3,285 | 3,318 | ||||||
|
|
|
|
|||||
Total
|
$ | 48,502 | $ | 55,739 | ||||
|
|
|
|
(14)
|
Employee Benefit Plan
|
(1
5
)
|
Subsequent Events
|
(1) |
Incorporated by reference to the Registrant’s Current Report on Form
8-K,
filed with the SEC on August 17, 2016.
|
(2) |
Incorporated by reference to Amendment No. 1 to the Registrant’s Registration Statement on Form
S-1
(Registration
No. 333-212542),
filed with the SEC on July 29, 2016.
|
(3) |
Incorporated by reference to the Registrant’s Annual Report on Form 10-K filed with the SEC on February 28, 2020
|
(4) |
Incorporated by reference to the Registrant’s Registration Statement on Form S-1 (Registration No. 333-212542), filed with the SEC on July 15, 2016.
|
(5) |
Incorporated by reference to the Registrant’s Annual Report on Form
10-K,
filed with the SEC on March 15, 2019
|
(6) |
Incorporated by reference to the Registrant’s Quarterly Report on Form
10-Q,
filed with the SEC on May 12, 2017.
|
(7) |
Incorporated by reference to the Registrant’s Quarterly Report on Form
10-Q,
filed with the SEC on November 7, 2019.
|
(8) |
Incorporated by reference to the Registrant’s Quarterly Report on Form
10-Q,
filed with the SEC on May 7, 2020.
|
(9) |
Incorporated by reference to the Registrant’s Current Report on Form 8-K, filed with the SEC on January 7, 2021.
|
# |
Indicates management contract or compensatory plan.
|
* |
These certifications are being furnished solely to accompany this annual report pursuant to 18 U.S.C. Section 1350, and are not being filed for purposes of Section 18 of the Securities Exchange Act of 1934 and are not to be incorporated by reference into any filing of the Registrant, whether made before or after the date hereof, regardless of any general incorporation language in such filing.
|
AIRGAIN, INC.
|
/s/ Jacob Suen |
Jacob Suen
Chief Executive Officer
|
Signature
|
Title
|
Date
|
||
/s/ Jacob Suen
Jacob Suen
|
Chief Executive Officer, President and Director
(Principal Executive Officer)
|
February 19, 2021 | ||
/s/ David B. Lyle
David B. Lyle
|
Chief Financial Officer
(Principal Financial and Accounting Officer)
|
February 19, 2021 | ||
/s/ James K. Sims
James K. Sims
|
Chairman | February 19, 2021 | ||
/s/
Tzau-Jin
Chung
Tzau-Jin
Chung
|
Director | February 19, 2021 | ||
/s/ Joan H. Gillman
Joan H. Gillman
|
Director | February 19, 2021 | ||
/s/ Thomas A. Munro
Thomas A. Munro
|
Director | February 19, 2021 | ||
/s/ Arthur M. Toscanini
Arthur M. Toscanini
|
Director | February 19, 2021 |
Exhibit 10.11
SECOND AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This SECOND AMENDED AND RESTATED EMPLOYMENT AGREEMENT (Agreement), effective as of April 27, 2020 (the Effective Date), is made by and between AIRGAIN, INC. (the Company), and KEVIN THILL (Employee).
WHEREAS, Employee is employed by the Company as its Senior Vice-President, Engineering;
WHEREAS, Employee and the Company are parties to that certain Amended and Restated Employment Agreement effective as of January 16, 2019 (the Prior Agreement);
WHEREAS, the Board of Directors of the Company (the Board) has determined that it is in the best interests of the Company and its shareholders to continue to employ Employee as the Companys Senior Vice-President, Engineering under the following revised terms and conditions; and
WHEREAS, Employee desires to continue to be employed by the Company as the Companys Senior Vice-President, Engineering and to accept such revised terms and conditions of employment as are contained in this Agreement.
NOW, THEREFORE, in consideration of the promises and mutual covenants contained herein and for other good and valuable consideration, the receipt of which is mutually acknowledged, the Company and Employee (individually a Party and together the Parties) agree as follows:
AGREEMENT
1. Effective Date.
Employees employment under the terms of this Agreement shall commence on the Effective Date.
2. At-will Employment.
Employees employment relationship with the Company under this Agreement (Employment) is at-will, terminable at any time and for any reason by either the Company or Employee. While certain sections of this Agreement describe events that could occur at a particular time in the future, nothing in this Agreement shall be construed as a guarantee of employment of any length.
3. Employment Duties.
a. Title/Responsibilities. Employee shall be the Senior Vice-President, Engineering of the Company, reporting to the Chief Executive Officer (the Supervising Officer) of the Company. Employee shall perform all of the duties and responsibilities of such offices set forth in the Bylaws of the Company and those commonly associated with such offices and such further duties and responsibilities as may from time to time be assigned to him by the Board or the Supervising Officer.
b. Full-Time Attention. Employee shall devote his full time, attention, energy and skills to the Company during the period he is employed under this Agreement.
1
c. Policy Compliance. Employee shall comply with all of the Companys policies, practices and procedures, as well as, all applicable laws. Employee has previously executed and delivered to the Company the Confidentiality and Inventions Assignment Agreement (the Confidentiality and Inventions Assignment Agreement) attached hereto as Exhibit 1.
4. Compensation.
a. Base Salary. Effective January 1, 2019, the Company shall pay Employee a base salary of $275,000 per year, or such higher amount as the Board may determine from time to time, less applicable federal and state withholding taxes, in accordance with the Companys regular payroll practices (the Base Salary).
b. Annual Bonus Compensation. In addition to the Base Salary, Employee will be eligible to receive an incentive bonus (the Bonus) at an initial target of sixty percent (60%) of his Base Salary (the Target Bonus).
c. Effective Date Equity Awards.
i. |
On the effective date of the Prior Agreement, the Company granted to Employee (i) stock options to purchase an aggregate of 25,000 shares of the Companys common stock (the Stock Option), and (ii) 10,163 restricted stock units (the RSUs). The Stock Option shall vest as follows: 25% of the original number of shares subject to the Stock Option shall vest on January 1, 2020, and 1/48th of the original number of shares subject to the Stock Option shall vest following each one-month period thereafter, subject to Employees continued service to the Company through each such vesting date, so that all of the shares subject to the Stock Option shall be vested on January 1, 2023. The RSUs shall vest as follows: 25% of the original number of shares subject to the RSUs shall vest on each of March 1, 2020, 2021, 2022 and 2023, subject to Employees continued service to the Company through each such vesting date. The Stock Option and the RSUs were granted pursuant to the Companys 2016 Incentive Award Plan (the Plan). The Stock Option will have an exercise price per share equal to the then-current fair market value per share of the common stock of the Company (as determined pursuant to the Plan) on the date of grant. The Stock Option shall be an incentive stock option to the extent permitted under Section 422 of the Internal Revenue Code of 1986, as amended (the Code). The Stock Option shall have a ten-year term. The Stock Option and the RSUs shall be subject to the terms and conditions of the Plan and the award agreements pursuant to which such awards are granted. |
ii. |
Notwithstanding the foregoing, the Stock Option and the RSUs (and all Equity Awards held by Employee (as defined below)) shall become fully vested and exercisable, in the event of Employees termination of employment by the Company without Cause (as defined below), or Employees Resignation for Good Reason (as defined below), in each case following a Change in Control (as defined below). In addition, with respect to Equity |
2
Awards granted on or after the Effective Date, all such Equity Awards held by Employee shall become fully vested in the event of Employees termination of employment by the Company without Cause, or Employees Resignation for Good Reason, in each case within sixty (60) days prior to a Change in Control or at any time following a Change in Control. For the avoidance of doubt, any acceleration in the event of Employees termination of employment by the Company without Cause or Employees Resignation for Good Reason within sixty (60) days prior to a Change in Control will be effective on the date of the Change in Control occurring within such sixty (60) day period following such termination. For purposes of this Agreement, Equity Awards means all stock options, restricted stock, restricted stock units and such other awards granted pursuant to the Companys stock option and equity incentive award plans or agreements and any shares of stock issued upon exercise thereof, including the Stock Option and the RSUs. |
d. Additional Equity Awards. Employee shall be entitled to participate in any equity or other employee benefit plan that is generally available to senior executive officers, as distinguished from general management, of the Company. Except as otherwise provided in this Agreement, Employees participation in and benefits under any such plan shall be on the terms and subject to the conditions specified in the governing document of the particular plan.
e. Employee Benefits. Employee shall be entitled to participate in all employee benefit plans, programs and arrangements maintained by the Company and made available to employees generally, including, without limitation, bonus, retirement, profit sharing and savings plans and medical, disability, dental, life and accidental death and dismemberment insurance plans.
f. Reimbursement of Expenses. During his Employment with the Company, Employee shall be entitled to reimbursement for all reasonable and necessary business expenses incurred on behalf of the Company, including without limitation, travel and entertainment expenses, business supplies and communication expenses, in accordance with the Companys policies and procedures.
5. Voluntary Resignation or Termination for Cause.
a. Payment upon Voluntary Resignation other than for Good Reason or Termination for Cause. If Employee voluntarily resigns his Employment other than for Good Reason or if Employee is terminated for Cause, the Company shall pay Employee the following: (i) all accrued and unpaid Base Salary, if any is due, through the date of termination and any vacation which is accrued but unused as of such date; (ii) Employees business expenses that are reimbursable pursuant to this Agreement and Company policies, but which have not been reimbursed by the Company as of the date of termination; and (iii) the Employees Bonus compensation for the calendar year immediately preceding the year in which the date of termination occurs if such Bonus has been determined but not paid as of the date of termination (payable at the time such Bonus would otherwise have been paid to Employee, but in no event later than March 15 of the year in which the date of termination occurs) (collectively, the Accrued Obligations). Employee shall not be eligible for severance payments under Sections 6, 7 or 8 below, or any continuation of benefits (other than as required by law), or any other compensation pursuant to this Agreement or otherwise.
3
b. Definition of Cause. As set forth above, the employment relationship between the Parties is at-will, terminable at any time by either Party for any reason or no reason. The termination may nonetheless be for Cause. For purposes of this Agreement, Cause is defined as the Companys good faith determination of: (i) Employees material breach of this Agreement or the Confidentiality and Inventions Assignment Agreement or the definitive agreements relating to the Equity Awards referenced in Section 4(c) above; (ii) Employees continued substantial and material failure or refusal to perform according to, or to comply with, the policies, procedures or practices established by the Company; (iii) the appropriation (or attempted appropriation) of a material business opportunity of the Company, including attempting to secure or securing any personal profit in connection with any transaction entered into on behalf of the Company; (iv) the misappropriation (or attempted appropriation) of any of the Companys funds or property of any kind; (v) willful gross misconduct; or (vi) Employees conviction of a felony involving moral turpitude that is likely to inflict or has inflicted material injury on the business of the Company; provided, however, that except for Cause being the result of item (vi) above, the Company shall provide written notice to Employee, which notice specifically identifies the nature of the alleged Cause claimed by the Company with enough specificity for Employee to be able to cure, and Employee shall thereafter have fifteen (15) days to cure the purported ground(s) for Cause.
c. Definition of Good Reason. For purposes of this Agreement, Good Reason and Resignation for Good Reason are defined as:
i. |
a material reduction in Employees authority, duties or responsibilities relative to Employees authority, duties or responsibilities in effect immediately prior to such reduction; |
ii. |
a material reduction by the Company in Employees Base Salary relative to Employees Base Salary in effect immediately prior to such reduction (and the Parties agree that a reduction of ten percent (10%) or more will be considered material for purposes of this clause (ii)), other than a general reduction in the base salaries of similarly situated employees of the Company; |
iii. |
a material change in the geographic location at which Employee must perform his duties (and the Company and Employee agree that any requirement that Employee be based at any place outside a 25-mile radius of his or her place of employment as of the Effective Date, except for reasonably required travel on the Companys or any successors or affiliates business that is not materially greater than such travel requirements prior to the Effective Date, shall be considered a material change); or |
iv. |
the Companys material breach of this Agreement; |
provided, however, that Employee must provide written notice to the Board of the condition that could constitute a Good Reason event within ninety (90) days of the initial existence of such condition and such condition must not have been remedied by the Company within thirty (30) days (the Cure Period) of such written notice. Employees Resignation for Good Reason must occur within six (6) months following the initial existence of such condition.
4
6. Termination Without Cause or Resignation for Good Reason. In the event Employee is terminated without Cause or resigns for Good Reason, Employee shall be entitled to:
a. the Accrued Obligations; plus
b. subject to Employees execution and non-revocation of a full and final Release (as defined in Section 9 below) and Employees continued compliance with the Confidentiality and Inventions Assignment Agreement, severance pay in an amount equal to the sum of (i) twelve (12) months Base Salary as in effect immediately prior to the date of termination, plus (ii) an amount equal to Employees Target Bonus for the calendar year during which the date of termination occurs, prorated for such portion of the calendar year during which such termination occurs that has elapsed through the date of termination, payable in a lump sum on the date that is thirty (30) days following the date of termination; plus
c. subject to Employees execution and non-revocation of a full and final Release and Employees continued compliance with the Confidentiality and Inventions Assignment Agreement, for the period beginning on the date of Employees termination of employment and ending on the date which is twelve (12) full months following the date of Employees termination of employment (or, if earlier, the date on which the applicable continuation period under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (COBRA) expires) (the COBRA Coverage Period), the Company shall arrange to provide Employee and his eligible dependents who were covered under the Companys health insurance plans as of the date of Employees termination of employment with health (including medical and dental) insurance benefits substantially similar to those provided to Employee and his dependents immediately prior to the date of such termination. If the Company is not reasonably able to continue health insurance benefits coverage under the Companys insurance plans, the Company shall provide substantially equivalent coverage under other third-party insurance sources. If any of the Companys health benefits are self-funded as of the date of Employees termination of employment, or if the Company cannot provide the foregoing benefits in a manner that is exempt from or otherwise compliant with applicable law (including, without limitation, Section 409A of the Code and Section 2716 of the Public Health Service Act), instead of providing continued health insurance benefits as set forth above, the Company shall instead pay to Employee an amount equal to the monthly premium payment for Employee and his eligible dependents who were covered under the Companys health plans as of the date of Employees termination of employment (calculated by reference to the premium as of the date of termination) as currently taxable compensation in substantially equal monthly installments over the COBRA Coverage Period (or the remaining portion thereof).
7. Employees Disability or Death. Employees employment shall terminate automatically in the event of Employees death or termination of employment by reason of his Disability. In the event of Employees death or termination of employment as a result of Employees Disability, Employee or his heirs shall be entitled to (a) the Accrued Obligations, plus (b) payment of an amount equal to Employees earned Bonus for the calendar year during which Employees date of termination occurs calculated as of the date of termination (wherein earned means that Employee has met the applicable bonus metrics as of date of such termination, as determined by the Board), prorated for such portion of the calendar year during which such termination occurs that has elapsed through the date of termination, payable in a lump sum on the date that is thirty (30) days following the date of termination. For purposes of this Agreement, Disability shall mean the Employees failure to perform his duties hereunder, for a period of not less than one hundred twenty (120) consecutive days because of Employees incapacitation due to physical or mental injury, disability, or illness.
5
8. Change in Control Termination.
a. Payment Upon Change in Control Termination. In the event of a Change in Control Termination, as defined below, Employee shall be entitled to:
i. |
the Accrued Obligations; plus |
ii. |
subject to Employees execution and non-revocation of a full and final Release and Employees continued compliance with the Confidentiality and Inventions Assignment Agreement, severance pay in an amount equal to the sum of (a) twelve (12) months Base Salary as in effect immediately prior to the date of termination, plus (b) Employees Target Bonus for the calendar year during which such date of termination occurs, payable in a lump sum on the date that is thirty (30) days following the date of termination; plus |
iii. |
subject to Employees execution and non-revocation of a full and final Release and Employees continued compliance with the Confidentiality and Inventions Assignment Agreement, for the period beginning on the date of Employees termination of employment and ending on the date which is eighteen (18) full months following the date of Employees termination of employment (or, if earlier, the date on which the applicable continuation period under COBRA expires) (the CIC COBRA Coverage Period), the Company shall arrange to provide Employee and his eligible dependents who were covered under the Companys health insurance plans as of the date of Employees termination of employment with health (including medical and dental) insurance benefits substantially similar to those provided to Employee and his dependents immediately prior to the date of such termination. If the Company is not reasonably able to continue health insurance benefits coverage under the Companys insurance plans, the Company shall provide substantially equivalent coverage under other third-party insurance sources. If any of the Companys health benefits are self-funded as of the date of Employees termination of employment, or if the Company cannot provide the foregoing benefits in a manner that is exempt from or otherwise compliant with applicable law (including, without limitation, Section 409A of the Code and Section 2716 of the Public Health Service Act), instead of providing continued health insurance benefits as set forth above, the Company shall instead pay to Employee an amount equal to the monthly premium payment for Employee and his eligible dependents who were covered under the Companys health plans as of the date of Employees termination of employment (calculated by reference to the premium as of the date of termination) as currently taxable compensation in substantially equal monthly installments over the CIC COBRA Coverage Period (or the remaining portion thereof). |
6
b. Definition of Change in Control Termination. A Change in Control Termination occurs if Employee (i) is terminated without Cause, or (ii) terminates his employment pursuant to a Resignation for Good Reason, in each case within twelve (12) months following a Change in Control (as defined below). For purposes of this Agreement, a Change in Control means and includes each of the following:
i. A transaction or series of transactions (other than an offering of the Companys common stock to the general public through a registration statement filed with the Securities and Exchange Commission or a transaction or series of transactions that meets the requirements of clauses (x) and (y) of subsection (iii) below) whereby any person or related group of persons (as such terms are used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended (the Exchange Act) (other than the Company, any of its subsidiaries, an employee benefit plan maintained by the Company or any of its subsidiaries or a person that, prior to such transaction, directly or indirectly controls, is controlled by, or is under common control with, the Company) directly or indirectly acquires beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act) of securities of the Company possessing more than fifty percent (50%) of the total combined voting power of the Companys securities outstanding immediately after such acquisition; or
ii. During any period of two consecutive years, individuals who, at the beginning of such period, constitute the Board together with any new director(s) (other than a director designated by a person who shall have entered into an agreement with the Company to effect a transaction described in subsections (i) or (iii)) whose election by the Board or nomination for election by the Companys stockholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the two (2)-year period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority thereof; or
iii. The consummation by the Company (whether directly involving the Company or indirectly involving the Company through one or more intermediaries) of (A) a merger, consolidation, reorganization, or business combination or (B) a sale or other disposition of all or substantially all of the Companys assets in any single transaction or series of related transactions or (C) the acquisition of assets or stock of another entity, in each case other than a transaction:
x. which results in the Companys voting securities outstanding immediately before the transaction continuing to represent (either by remaining outstanding or by being converted into voting securities of the Company or the person that, as a result of the transaction, controls, directly or indirectly, the Company or owns, directly or indirectly, all or substantially all of the Companys assets or otherwise succeeds to the business of the Company (the Company or such person, the Successor Entity)) directly or indirectly, at least a majority of the combined voting power of the Successor Entitys outstanding voting securities immediately after the transaction, and
7
y. after which no person or group beneficially owns voting securities representing fifty percent (50%) or more of the combined voting power of the Successor Entity; provided, however, that no person or group shall be treated for purposes of this clause (y) as beneficially owning fifty percent (50%) or more of the combined voting power of the Successor Entity solely as a result of the voting power held in the Company prior to the consummation of the transaction.
In addition, if a Change in Control constitutes a payment event with respect to any payment under this Agreement which provides for the deferral of compensation and is subject to Section 409A of the Code, the transaction or event described in clause (i), (ii) or (iii) with respect to such payment must also constitute a change in control event, as defined in Treasury Regulation Section 1.409A-3(i)(5) to the extent required by Section 409A of the Code.
9. Release. Notwithstanding any provision to the contrary in this Agreement, no amount shall be paid or benefit provided pursuant to Section 6 or Section 8 (other than the Accrued Obligations) and no accelerated vesting of the Equity Awards shall occur as a result of Employees termination of employment pursuant to Section 4(c) unless, on or prior to the thirtieth (30th) day following the date of Employees termination of employment, an effective general release of claims agreement (the Release) in substantially the form attached hereto as Exhibit 2 has been executed by Employee and remains effective on such date and any applicable revocation period thereunder has expired.
10. Notices. Any reports, notices or other communications required or permitted to be given by either Party hereto, shall be given in writing by personal delivery, overnight courier service, or by registered or certified mail, postage prepaid, return receipt requested, addressed to the Company at its principal executive offices and to Employee at his most recent address on the Companys payroll records.
11. Notice of Termination. Any purported termination of Employment by the Company or the Employee shall be communicated by written Notice of Termination to the other Party. For purposes of this Agreement, a Notice of Termination shall mean a notice which indicates, if applicable, the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Employees employment under the provision so indicated. For purposes of this Agreement, no such purported termination of employment shall be effective without delivery of such a Notice of Termination.
12. General Provisions.
a. Governing Law; Venue. This Agreement shall be governed by and construed in accordance with the laws of the State of Arizona without regard to the conflicts of laws principles thereof. Employee and the Company agree that any litigation regarding this Agreement shall be conducted in Scottsdale, Arizona. Employee and the Company hereby consent to the jurisdiction of the courts of the State of Arizona and the United States District Court for the District of Arizona.
b. Assignment; Assumption by Successor. The rights of the Company under this Agreement may, without the consent of Employee, be assigned by the Company, in its sole and unfettered discretion, to any person, firm, corporation or other business entity which at any time, whether by purchase, merger or otherwise, directly or indirectly, acquires all or substantially all of the assets or business of the Company. The Company will require any successor (whether direct or indirect, by purchase, merger or otherwise) to all or substantially
8
all of the business or assets of the Company expressly to assume and to agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place; provided, however, that no such assumption shall relieve the Company of its obligations hereunder. As used in this Agreement, the Company shall mean the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid which assumes and agrees to perform this Agreement by operation of law or otherwise.
c. No Waiver of Breach. The failure to enforce any provision of this Agreement shall not be construed as a waiver of any such provision, nor prevent a Party thereafter from enforcing the provision or any other provision of this Agreement. The rights granted the Parties are cumulative, and the election of one shall not constitute a waiver of such Partys right to assert all other legal and equitable remedies available under the circumstances.
d. Severability. The provisions of this Agreement are severable, and if any provision shall be held to be invalid or otherwise unenforceable, in whole or in part, the remainder of the provisions, or enforceable parts of this Agreement, shall not be affected.
e. Entire Agreement. This Agreement, the Confidentiality and Inventions Assignment Agreement and that certain Noncompete Agreement, effective April 28, 2017, between Employee and the Company, constitute the entire agreement of the Parties with respect to the subject matter of this Agreement and supersede all prior and contemporaneous negotiations, agreements and understandings between the Parties, whether oral or written, including, without limitation, any offer letter between the parties and the Prior Agreement.
f. Modifications and Waivers. No modification or waiver of this Agreement shall be valid unless in writing, signed by the Party against whom such modification or waiver is sought to be enforced.
g. Amendment. This Agreement may be amended or supplemented only by a writing signed by both of the Parties hereto.
h. Duplicate Counterparts; Facsimile. This Agreement may be executed in duplicate counterparts, each of which shall be deemed an original; provided, however, such counterparts shall together constitute only one agreement. Facsimile signatures or signatures sent via electronic mail shall be as effective as original signatures.
i. Interpretation. The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.
j. Non-transferability of Interest. None of the rights of Employee to receive any form of compensation payable pursuant to this Agreement shall be assignable or transferable except through a testamentary disposition or by the laws of descent and distribution upon the death of Employee. Any attempted assignment, transfer, conveyance, or other disposition (other than as aforesaid) of any interest in the rights of Employee to receive any form of compensation to be made by the Company pursuant to this Agreement shall be void.
k. Construction. The language in all parts of this Agreement shall in all cases be construed simply, according to its fair meaning, and not strictly for or against any of the parties hereto. Without limitation, there shall be no presumption against any party on the ground that such party was responsible for drafting this Agreement or any part thereof.
9
l. Section 409A.
i. Notwithstanding anything to the contrary in this Agreement, no payment or benefit to be paid or provided to Employee upon his termination of employment, if any, pursuant to this Agreement that, when considered together with any other payments or benefits, are considered deferred compensation under Section 409A (together, the Deferred Payments) will be paid or otherwise provided until Employee has a separation from service within the meaning of Section 409A. Similarly, no amounts payable to Employee, if any, pursuant to this Agreement that otherwise would be exempt from Section 409A pursuant to Treasury Regulation Section 1.409A-1(b)(9) will be payable until Employee has a separation from service within the meaning of Section 409A.
ii. Notwithstanding anything to the contrary in this Agreement, if Employee is a specified employee within the meaning of Section 409A at the time of Employees termination of employment (other than due to death), then the Deferred Payments that are payable within the first six (6) months following Employees separation from service, will become payable on the first payroll date that occurs on or after the date six (6) months and one (1) day following the date of Employees separation from service. All subsequent Deferred Payments, if any, will be payable in accordance with the payment schedule applicable to each payment or benefit. Notwithstanding anything herein to the contrary, if Employee dies following Employees separation from service, but prior to the six (6) month anniversary of the separation from service, then any payments delayed in accordance with this paragraph will be payable in a lump sum as soon as administratively practicable after the date of Employees death and all other Deferred Payments will be payable in accordance with the payment schedule applicable to each payment or benefit. Each payment and benefit payable under this Agreement is intended to constitute a separate payment for purposes of Section 1.409A-2(b)(2) of the Treasury Regulations.
iii. Any amount paid under this Agreement that satisfies the requirements of the short-term deferral rule set forth in Section 1.409A-1(b)(4) of the Treasury Regulations will not constitute a Deferred Payment for purposes of clauses (i) and (ii) above.
iv. Any amount paid under this Agreement that qualifies as a payment made as a result of an involuntary separation from service pursuant to Section 1.409A-1(b)(9)(iii) of the Treasury Regulations that does not exceed the limits set forth therein will not constitute a Deferred Payment for purposes of clauses (i) and (ii) above.
v. This Agreement is intended to be written, administered, interpreted and construed in a manner such that no payment or benefits provided under the Agreement become subject to (A) the gross income inclusion set forth within Code Section 409A(a)(1)(A) or (B) the interest and additional tax set forth within Code Section 409A(a)(1)(B) (together, referred to herein as the Section 409A Penalties), including, where appropriate, the construction of defined terms to have meanings that would not cause the imposition of Section 409A Penalties. In no event shall the Company be required to provide a tax gross-up payment to Employee or otherwise reimburse Employee with respect to Section 409A Penalties. The Company and Employee agree to work together in good faith to consider amendments to this Agreement and to take such reasonable actions which are necessary, appropriate or desirable to avoid imposition of any Section 409A Penalties on Employee.
10
vi. Any reimbursement of expenses or in-kind benefits payable under this Agreement shall be made in accordance with Treasury Regulation Section 1.409A-3(i)(1)(iv) and shall be paid on or before the last day of Employees taxable year following the taxable year in which Employee incurred the expenses. The amount of expenses reimbursed or in-kind benefits payable in one year shall not affect the amount eligible for reimbursement or in-kind benefits payable in any other taxable year of Employees, and Employees right to reimbursement for such amounts shall not be subject to liquidation or exchange for any other benefit.
m. Whistleblower Provision. Nothing herein shall be construed to prohibit Employee from communicating directly with, cooperating with, or providing information to, any government regulator, including, but not limited to, the U.S. Securities and Exchange Commission, the U.S. Commodity Futures Trading Commission, or the U.S. Department of Justice. Employee acknowledges that the Company has provided Employee with the following notice of immunity rights in compliance with the requirements of the Defend Trade Secrets Act: (i) Employee shall not be held criminally or civilly liable under any Federal or State trade secret law for the disclosure of proprietary information of the Company that is made in confidence to a Federal, State, or local government official or to an attorney solely for the purpose of reporting or investigating a suspected violation of law, (ii) Employee shall not be held criminally or civilly liable under any Federal or State trade secret law for the disclosure of proprietary information of the Company that is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal and (iii) if Employee files a lawsuit for retaliation by the Company for reporting a suspected violation of law, Employee may disclose the proprietary information to my attorney and use the proprietary information in the court proceeding, if Employee files any document containing the proprietary information under seal, and does not disclose the proprietary information, except pursuant to court order.
(Signature Page Follows)
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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date(s) set forth below.
AIRGAIN, INC.
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Dated: 6/11/2020 |
By: /s/ Jacob Suen |
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Name: Jacob Suen |
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Title: CEO
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EMPLOYEE
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Dated: 6/9/2020 |
/s/ Kevin Thill |
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KEVIN THILL |
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EXHIBIT 1
CONFIDENTIALITY AND INVENTIONS ASSIGNMENT AGREEMENT
[Attached]
EXHIBIT 2
GENERAL RELEASE OF CLAIMS
[The language in this Release may change based on legal developments and evolving best
practices; this form is provided as an example of what will be included in the final Release document.]
This General Release of Claims (Release) is entered into as of this _____ day of ________, ______, between KEVIN THILL (Employee), and AIRGAIN, INC., a Delaware corporation (the Company) (collectively referred to herein as the Parties).
WHEREAS, Employee and the Company are parties to that certain Second Amended and Restated Employment Agreement effective as of April [__], 2020 (the Agreement);
WHEREAS, the Parties agree that Employee is entitled to certain severance benefits under the Agreement, subject to Employees execution of this Release; and
WHEREAS, the Company and Employee now wish to fully and finally to resolve all matters between them.
NOW, THEREFORE, in consideration of, and subject to, the severance benefits payable to Employee pursuant to the Agreement, the adequacy of which is hereby acknowledged by Employee, and which Employee acknowledges that he would not otherwise be entitled to receive, Employee and the Company hereby agree as follows:
1. General Release of Claims by Employee.
(a) Employee, on behalf of himself and his executors, heirs, administrators, representatives and assigns, hereby agrees to release and forever discharge the Company and all predecessors, successors and their respective parent corporations, affiliates, related, and/or subsidiary entities, and all of their past and present investors, directors, shareholders, officers, general or limited partners, employees, attorneys, agents and representatives, and the employee benefit plans in which Employee is or has been a participant by virtue of his employment with or service to the Company (collectively, the Company Releasees), from any and all claims, debts, demands, accounts, judgments, rights, causes of action, equitable relief, damages, costs, charges, complaints, obligations, promises, agreements, controversies, suits, expenses, compensation, responsibility and liability of every kind and character whatsoever (including attorneys fees and costs), whether in law or equity, known or unknown, asserted or unasserted, suspected or unsuspected (collectively, Claims), which Employee has or may have had against such entities based on any events or circumstances arising or occurring on or prior to the date hereof or on or prior to the date hereof, arising directly or indirectly out of, relating to, or in any other way involving in any manner whatsoever Employees employment by or service to the Company or the termination thereof, including any and all claims arising under federal, state, or local laws relating to employment, including without limitation claims of wrongful discharge, breach of express or implied contract, fraud, misrepresentation, defamation, or liability in tort, and claims of any kind that may be brought in any court or administrative agency including, without
limitation, claims under Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. Section 2000, et seq.; the Americans with Disabilities Act, as amended, 42 U.S.C. § 12101 et seq.; the Rehabilitation Act of 1973, as amended, 29 U.S.C. § 701 et seq.; the Civil Rights Act of 1866, and the Civil Rights Act of 1991; 42 U.S.C. Section 1981, et seq.; the Age Discrimination in Employment Act, as amended, 29 U.S.C. Section 621, et seq. (the ADEA); the Equal Pay Act, as amended, 29 U.S.C. Section 206(d); regulations of the Office of Federal Contract Compliance, 41 C.F.R. Section 60, et seq.; the Family and Medical Leave Act, as amended, 29 U.S.C. § 2601 et seq.; the Fair Labor Standards Act of 1938, as amended, 29 U.S.C. § 201 et seq.; the Employee Retirement Income Security Act, as amended, 29 U.S.C. § 1001 et seq.; and the California Fair Employment and Housing Act, California Government Code Section 12940, et seq.
Notwithstanding the generality of the foregoing, Employee does not release the following claims:
(i) Claims for unemployment compensation or any state disability insurance benefits pursuant to the terms of applicable state law;
(ii) Claims for workers compensation insurance benefits under the terms of any workers compensation insurance policy or fund of the Company;
(iii) Claims pursuant to the terms and conditions of the federal law known as COBRA;
(iv) Claims for indemnity under the bylaws of the Company, as provided for by California or Delaware law or under any applicable indemnification agreement or insurance policy with respect to Employees liability as an employee, director or officer of the Company;
(v) Employees right to bring to the attention of the Equal Employment Opportunity Commission or the California Department of Fair Employment and Housing or any other federal, state or local government agency claims of discrimination, or from participating in an investigation or proceeding conducted by the Equal Employment Opportunity Commission or any other federal, state or local government agency; provided, however, that Employee does release his right to secure any damages for alleged discriminatory treatment;
(vi) Claims based on any right Employee may have to enforce the Companys executory obligations under the Agreement;
(vii) Claims Employee may have to vested or earned compensation and benefits; and
(viii) Employees right to communicate or cooperate with any government agency.
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(b) EMPLOYEE ACKNOWLEDGES THAT HE HAS BEEN ADVISED OF AND IS FAMILIAR WITH THE PROVISIONS OF CALIFORNIA CIVIL CODE SECTION 1542, WHICH PROVIDES AS FOLLOWS:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR OR RELEASING PARTY DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH, IF KNOWN BY HIM OR HER, WOULD HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR OR RELEASED PARTY.
BEING AWARE OF SAID CODE SECTION, EMPLOYEE HEREBY EXPRESSLY WAIVES ANY RIGHTS HE MAY HAVE THEREUNDER, AS WELL AS UNDER ANY OTHER STATUTES OR COMMON LAW PRINCIPLES OF SIMILAR EFFECT.
[Note: Clauses (c), (d) and (e) apply only if Employee is age 40 or older at time of termination]
(c) Employee acknowledges that this Release was presented to him on the date indicated above and that Employee is entitled to have twenty-one (21) days time in which to consider it. Employee further acknowledges that the Company has advised him that he is waiving his rights under the ADEA, and that Employee should consult with an attorney of his choice before signing this Release, and Employee has had sufficient time to consider the terms of this Release. Employee represents and acknowledges that if Employee executes this Release before twenty-one (21) days have elapsed, Employee does so knowingly, voluntarily, and upon the advice and with the approval of Employees legal counsel (if any), and that Employee voluntarily waives any remaining consideration period.
(d) Employee understands that after executing this Release, Employee has the right to revoke it within seven (7) days after his execution of it. Employee understands that this Release will not become effective and enforceable unless the seven (7) day revocation period passes and Employee does not revoke the Release in writing. Employee understands that this Release may not be revoked after the seven (7) day revocation period has passed. Employee also understands that any revocation of this Release must be made in writing and delivered to the Company at its principal place of business within the seven (7) day period.
(e) Employee understands that this Release shall become effective, irrevocable, and binding upon Employee on the eighth (8th) day after his execution of it, so long as Employee has not revoked it within the time period and in the manner specified in clause (d) above.
(f) Employee further understands that Employee will not be given any severance benefits under the Agreement unless this Release is effective on or before the date that is thirty (30) days following the date of Employees termination of employment.
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2. No Assignment. Employee represents and warrants to the Company Releasees that there has been no assignment or other transfer of any interest in any Claim that Employee may have against the Company Releasees. Employee agrees to indemnify and hold harmless the Company Releasees from any liability, claims, demands, damages, costs, expenses and attorneys fees incurred as a result of any such assignment or transfer from Employee.
3. Whistleblower Provision. Nothing herein shall be construed to prohibit Employee from communicating directly with, cooperating with, or providing information to, any government regulator, including, but not limited to, the U.S. Securities and Exchange Commission, the U.S. Commodity Futures Trading Commission, or the U.S. Department of Justice. Employee acknowledges that the Company has provided Employee with the following notice of immunity rights in compliance with the requirements of the Defend Trade Secrets Act: (i) Employee shall not be held criminally or civilly liable under any Federal or State trade secret law for the disclosure of proprietary information of the Company that is made in confidence to a Federal, State, or local government official or to an attorney solely for the purpose of reporting or investigating a suspected violation of law, (ii) Employee shall not be held criminally or civilly liable under any Federal or State trade secret law for the disclosure of proprietary information of the Company that is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal and (iii) if Employee files a lawsuit for retaliation by the Company for reporting a suspected violation of law, Employee may disclose the proprietary information to my attorney and use the proprietary information in the court proceeding, if Employee files any document containing the proprietary information under seal, and does not disclose the proprietary information, except pursuant to court order.
4. Severability. In the event any provision of this Release is found to be unenforceable by an arbitrator or court of competent jurisdiction, such provision shall be deemed modified to the extent necessary to allow enforceability of the provision as so limited, it being intended that the parties shall receive the benefit contemplated herein to the fullest extent permitted by law. If a deemed modification is not satisfactory in the judgment of such arbitrator or court, the unenforceable provision shall be deemed deleted, and the validity and enforceability of the remaining provisions shall not be affected thereby.
5. Interpretation; Construction. The headings set forth in this Release are for convenience only and shall not be used in interpreting this Agreement. This Release has been drafted by legal counsel representing the Company, but Employee has participated in the negotiation of its terms. Furthermore, Employee acknowledges that Employee has had an opportunity to review and revise the Release and have it reviewed by legal counsel, if desired, and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Release. Either partys failure to enforce any provision of this Release shall not in any way be construed as a waiver of any such provision, or prevent that party thereafter from enforcing each and every other provision of this Release.
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6. Governing Law; Venue. This Release shall be governed by and construed in accordance with the laws of the State of California without regard to the conflicts of laws principles thereof. Employee and the Company agree that any litigation regarding this Release shall be conducted in San Diego, California. Employee and the Company hereby consent to the jurisdiction of the courts of the State of California and the United States District Court for the Southern District of California.
7. Entire Agreement. This Release and the Agreement constitute the entire agreement of the Parties in respect of the subject matter contained herein and therein and supersede all prior or simultaneous representations, discussions, negotiations and agreements, whether written or oral. This Release may be amended or modified only with the written consent of Employee and an authorized representative of the Company. No oral waiver, amendment or modification will be effective under any circumstances whatsoever.
8. Counterparts. This Release may be executed in multiple counterparts, each of which shall be deemed to be an original but all of which together shall constitute one and the same instrument.
(Signature Page Follows)
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Exhibit 10.12
SECOND AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This SECOND AMENDED AND RESTATED EMPLOYMENT AGREEMENT (Agreement), effective as of April 27, 2020 (the Effective Date), is made by and between AIRGAIN, INC. (the Company), and JACOB SUEN (Employee).
WHEREAS, Employee is employed by the Company as its President and Chief Executive Officer;
WHEREAS, Employee and the Company are parties to that certain Amended and Restated Employment Agreement effective as of January 16, 2019, as amended by that certain Amendment to Amended and Restated Employment Agreement effective August 8, 2019 (together, the Prior Agreement);
WHEREAS, the Board of Directors of the Company (the Board) has determined that it is in the best interests of the Company and its shareholders to continue to employ Employee as the Companys President and Chief Executive Officer under the following revised terms and conditions; and
WHEREAS, Employee desires to continue to be employed by the Company as the Companys President and Chief Executive Officer and to accept such revised terms and conditions of employment as are contained in this Agreement.
NOW, THEREFORE, in consideration of the promises and mutual covenants contained herein and for other good and valuable consideration, the receipt of which is mutually acknowledged, the Company and Employee (individually a Party and together the Parties) agree as follows:
AGREEMENT
1. Effective Date.
Employees employment under the terms of this Agreement shall commence on the Effective Date.
2. At-will Employment.
Employees employment relationship with the Company under this Agreement (Employment) is at-will, terminable at any time and for any reason by either the Company or Employee. While certain sections of this Agreement describe events that could occur at a particular time in the future, nothing in this Agreement shall be construed as a guarantee of employment of any length.
3. Employment Duties.
a. Title/Responsibilities. Employee shall be the President and Chief Executive Officer of the Company, reporting to the Board. Employee shall perform all of the duties and responsibilities of such offices set forth in the Bylaws of the Company and those commonly associated with such offices and such further duties and responsibilities as may from time to time be assigned to him by the Board.
b. Full-Time Attention. Employee shall devote his full time, attention, energy and skills to the Company during the period he is employed under this Agreement.
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c. Policy Compliance. Employee shall comply with all of the Companys policies, practices and procedures, as well as, all applicable laws. Employee has previously executed and delivered to the Company the Confidentiality and Inventions Assignment Agreement (the Confidentiality and Inventions Assignment Agreement) attached hereto as Exhibit 1.
4. Compensation.
a. Base Salary. The Company shall pay Employee a base salary of $400,000 per year, or such higher amount as the Board may determine from time to time, less applicable federal and state withholding taxes, in accordance with the Companys regular payroll practices (the Base Salary).
b. Annual Bonus Compensation. In addition to the Base Salary, Employee will be eligible to receive an incentive bonus (the Bonus) at an initial target of ninety percent (90%) of his Base Salary (the Target Bonus).
c. Effective Date Equity Awards.
i. |
On the effective date of the Prior Agreement, the Company granted to Employee (i) stock options to purchase an aggregate of 87,500 shares of the Companys common stock (the Stock Option), and (ii) 35,570 restricted stock units (the RSUs). The Stock Option shall vest as follows: 25% of the original number of shares subject to the Stock Option shall vest on January 1, 2020, and 1/48th of the original number of shares subject to the Stock Option shall vest following each one-month period thereafter, subject to Employees continued service to the Company through each such vesting date, so that all of the shares subject to the Stock Option shall be vested on January 1, 2023. The RSUs shall vest as follows: 25% of the original number of shares subject to the RSUs shall vest on each of March 1, 2020, 2021, 2022 and 2023, subject to Employees continued service to the Company through each such vesting date. The Stock Option and the RSUs were granted pursuant to the Companys 2016 Incentive Award Plan (the Plan). The Stock Option will have an exercise price per share equal to the then-current fair market value per share of the common stock of the Company (as determined pursuant to the Plan) on the date of grant. The Stock Option shall be an incentive stock option to the extent permitted under Section 422 of the Internal Revenue Code of 1986, as amended (the Code). The Stock Option shall have a ten-year term. The Stock Option and the RSUs shall be subject to the terms and conditions of the Plan and the award agreements pursuant to which such awards are granted. |
ii. |
Notwithstanding the foregoing, the Stock Option and the RSUs (and all Equity Awards held by Employee (as defined below)) shall become fully vested and exercisable, in the event of Employees termination of employment by the Company without Cause (as defined below), or Employees Resignation for Good Reason (as defined below), in each case following a Change in Control (as defined below). In addition, with respect to Equity |
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Awards granted on or after the Effective Date, all such Equity Awards held by Employee shall become fully vested in the event of Employees termination of employment by the Company without Cause, or Employees Resignation for Good Reason, in each case within sixty (60) days prior to a Change in Control or at any time following a Change in Control. For the avoidance of doubt, any acceleration in the event of Employees termination of employment by the Company without Cause or Employees Resignation for Good Reason within sixty (60) days prior to a Change in Control will be effective on the date of the Change in Control occurring within such sixty (60) day period following such termination. For purposes of this Agreement, Equity Awards means all stock options, restricted stock, restricted stock units and such other awards granted pursuant to the Companys stock option and equity incentive award plans or agreements and any shares of stock issued upon exercise thereof, including the Stock Option and the RSUs. |
d. Additional Equity Awards. Employee shall be entitled to participate in any equity or other employee benefit plan that is generally available to senior executive officers, as distinguished from general management, of the Company. Except as otherwise provided in this Agreement, Employees participation in and benefits under any such plan shall be on the terms and subject to the conditions specified in the governing document of the particular plan.
e. Employee Benefits. Employee shall be entitled to participate in all employee benefit plans, programs and arrangements maintained by the Company and made available to employees generally, including, without limitation, bonus, retirement, profit sharing and savings plans and medical, disability, dental, life and accidental death and dismemberment insurance plans.
f. Reimbursement of Expenses. During his Employment with the Company, Employee shall be entitled to reimbursement for all reasonable and necessary business expenses incurred on behalf of the Company, including without limitation, travel and entertainment expenses, business supplies and communication expenses, in accordance with the Companys policies and procedures.
5. Voluntary Resignation or Termination for Cause.
a. Payment upon Voluntary Resignation other than for Good Reason or Termination for Cause. If Employee voluntarily resigns his Employment other than for Good Reason or if Employee is terminated for Cause, the Company shall pay Employee the following: (i) all accrued and unpaid Base Salary, if any is due, through the date of termination and any vacation which is accrued but unused as of such date; (ii) Employees business expenses that are reimbursable pursuant to this Agreement and Company policies, but which have not been reimbursed by the Company as of the date of termination; and (iii) the Employees Bonus compensation for the calendar year immediately preceding the year in which the date of termination occurs if such Bonus has been determined but not paid as of the date of termination (payable at the time such Bonus would otherwise have been paid to Employee, but in no event later than March 15 of the year in which the date of termination occurs) (collectively, the Accrued Obligations). Employee shall not be eligible for severance payments under Sections 6, 7 or 8 below, or any continuation of benefits (other than as required by law), or any other compensation pursuant to this Agreement or otherwise.
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b. Definition of Cause. As set forth above, the employment relationship between the Parties is at-will, terminable at any time by either Party for any reason or no reason. The termination may nonetheless be for Cause. For purposes of this Agreement, Cause is defined as the Companys good faith determination of: (i) Employees material breach of this Agreement or the Confidentiality and Inventions Assignment Agreement or the definitive agreements relating to the Equity Awards referenced in Section 4(c) above; (ii) Employees continued substantial and material failure or refusal to perform according to, or to comply with, the policies, procedures or practices established by the Company; (iii) the appropriation (or attempted appropriation) of a material business opportunity of the Company, including attempting to secure or securing any personal profit in connection with any transaction entered into on behalf of the Company; (iv) the misappropriation (or attempted appropriation) of any of the Companys funds or property of any kind; (v) willful gross misconduct; or (vi) Employees conviction of a felony involving moral turpitude that is likely to inflict or has inflicted material injury on the business of the Company; provided, however, that except for Cause being the result of item (vi) above, the Company shall provide written notice to Employee, which notice specifically identifies the nature of the alleged Cause claimed by the Company with enough specificity for Employee to be able to cure, and Employee shall thereafter have fifteen (15) days to cure the purported ground(s) for Cause.
c. Definition of Good Reason. For purposes of this Agreement, Good Reason and Resignation for Good Reason are defined as:
i. |
a material reduction in Employees authority, duties or responsibilities relative to Employees authority, duties or responsibilities in effect immediately prior to such reduction; |
ii. |
a material reduction by the Company in Employees Base Salary relative to Employees Base Salary in effect immediately prior to such reduction (and the Parties agree that a reduction of ten percent (10%) or more will be considered material for purposes of this clause (ii)), other than a general reduction in the base salaries of similarly-situated employees of the Company; |
iii. |
a material change in the geographic location at which Employee must perform his duties (and the Company and Employee agree that any requirement that Employee be based at any place outside a 25-mile radius of his or her place of employment as of the Effective Date, except for reasonably required travel on the Companys or any successors or affiliates business that is not materially greater than such travel requirements prior to the Effective Date, shall be considered a material change); or |
iv. |
the Companys material breach of this Agreement; |
provided, however, that Employee must provide written notice to the Board of the condition that could constitute a Good Reason event within ninety (90) days of the initial existence of such condition and such condition must not have been remedied by the Company within thirty (30) days (the Cure Period) of such written notice. Employees Resignation for Good Reason must occur within six (6) months following the initial existence of such condition.
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6. Termination Without Cause or Resignation for Good Reason. In the event Employee is terminated without Cause or resigns for Good Reason, Employee shall be entitled to:
a. the Accrued Obligations; plus
b. subject to Employees execution and non-revocation of a full and final Release (as defined in Section 9 below) and Employees continued compliance with the Confidentiality and Inventions Assignment Agreement, severance pay in an amount equal to the sum of (i) twelve (12) months Base Salary as in effect immediately prior to the date of termination, plus (ii) an amount equal to Employees Target Bonus for the calendar year during which the date of termination occurs, prorated for such portion of the calendar year during which such termination occurs that has elapsed through the date of termination, payable in a lump sum on the date that is thirty (30) days following the date of termination; plus
c. subject to Employees execution and non-revocation of a full and final Release and Employees continued compliance with the Confidentiality and Inventions Assignment Agreement, for the period beginning on the date of Employees termination of employment and ending on the date which is twelve (12) full months following the date of Employees termination of employment (or, if earlier, the date on which the applicable continuation period under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (COBRA) expires) (the COBRA Coverage Period), the Company shall arrange to provide Employee and his eligible dependents who were covered under the Companys health insurance plans as of the date of Employees termination of employment with health (including medical and dental) insurance benefits substantially similar to those provided to Employee and his dependents immediately prior to the date of such termination. If the Company is not reasonably able to continue health insurance benefits coverage under the Companys insurance plans, the Company shall provide substantially equivalent coverage under other third-party insurance sources. If any of the Companys health benefits are self-funded as of the date of Employees termination of employment, or if the Company cannot provide the foregoing benefits in a manner that is exempt from or otherwise compliant with applicable law (including, without limitation, Section 409A of the Code and Section 2716 of the Public Health Service Act), instead of providing continued health insurance benefits as set forth above, the Company shall instead pay to Employee an amount equal to the monthly premium payment for Employee and his eligible dependents who were covered under the Companys health plans as of the date of Employees termination of employment (calculated by reference to the premium as of the date of termination) as currently taxable compensation in substantially equal monthly installments over the COBRA Coverage Period (or the remaining portion thereof).
7. Employees Disability or Death. Employees employment shall terminate automatically in the event of Employees death or termination of employment by reason of his Disability. In the event of Employees death or termination of employment as a result of Employees Disability, Employee or his heirs shall be entitled to (a) the Accrued Obligations, plus (b) payment of an amount equal to Employees earned Bonus for the calendar year during which Employees date of termination occurs calculated as of the date of termination (wherein earned means that Employee has met the applicable bonus metrics as of date of such termination, as determined by the Board), prorated for such portion of the calendar year during which such termination occurs that has elapsed through the date of termination, payable in a lump sum on the date that is thirty (30) days following the date of termination. For purposes of this Agreement, Disability shall mean the Employees failure to perform his duties hereunder, for a period of not less than one hundred twenty (120) consecutive days because of Employees incapacitation due to physical or mental injury, disability, or illness.
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8. Change in Control Termination.
a. Payment Upon Change in Control Termination. In the event of a Change in Control Termination, as defined below, Employee shall be entitled to:
i. |
the Accrued Obligations; plus |
ii. |
subject to Employees execution and non-revocation of a full and final Release and Employees continued compliance with the Confidentiality and Inventions Assignment Agreement, severance pay in an amount equal to the sum of (a) twelve (12) months Base Salary as in effect immediately prior to the date of termination, plus (b) Employees Target Bonus for the calendar year during which such date of termination occurs, payable in a lump sum on the date that is thirty (30) days following the date of termination; plus |
iii. |
subject to Employees execution and non-revocation of a full and final Release and Employees continued compliance with the Confidentiality and Inventions Assignment Agreement, for the period beginning on the date of Employees termination of employment and ending on the date which is eighteen (18) full months following the date of Employees termination of employment (or, if earlier, the date on which the applicable continuation period under COBRA expires) (the CIC COBRA Coverage Period), the Company shall arrange to provide Employee and his eligible dependents who were covered under the Companys health insurance plans as of the date of Employees termination of employment with health (including medical and dental) insurance benefits substantially similar to those provided to Employee and his dependents immediately prior to the date of such termination. If the Company is not reasonably able to continue health insurance benefits coverage under the Companys insurance plans, the Company shall provide substantially equivalent coverage under other third-party insurance sources. If any of the Companys health benefits are self-funded as of the date of Employees termination of employment, or if the Company cannot provide the foregoing benefits in a manner that is exempt from or otherwise compliant with applicable law (including, without limitation, Section 409A of the Code and Section 2716 of the Public Health Service Act), instead of providing continued health insurance benefits as set forth above, the Company shall instead pay to Employee an amount equal to the monthly premium payment for Employee and his eligible dependents who were covered under the Companys health plans as of the date of Employees termination of employment (calculated by reference to the premium as of the date of termination) as currently taxable compensation in substantially equal monthly installments over the CIC COBRA Coverage Period (or the remaining portion thereof). |
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b. Definition of Change in Control Termination. A Change in Control Termination occurs if Employee (i) is terminated without Cause, or (ii) terminates his employment pursuant to a Resignation for Good Reason, in each case within twelve (12) months following a Change in Control (as defined below). For purposes of this Agreement, a Change in Control means and includes each of the following:
i. A transaction or series of transactions (other than an offering of the Companys common stock to the general public through a registration statement filed with the Securities and Exchange Commission or a transaction or series of transactions that meets the requirements of clauses (x) and (y) of subsection (iii) below) whereby any person or related group of persons (as such terms are used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended (the Exchange Act) (other than the Company, any of its subsidiaries, an employee benefit plan maintained by the Company or any of its subsidiaries or a person that, prior to such transaction, directly or indirectly controls, is controlled by, or is under common control with, the Company) directly or indirectly acquires beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act) of securities of the Company possessing more than fifty percent (50%) of the total combined voting power of the Companys securities outstanding immediately after such acquisition; or
ii. During any period of two consecutive years, individuals who, at the beginning of such period, constitute the Board together with any new director(s) (other than a director designated by a person who shall have entered into an agreement with the Company to effect a transaction described in subsections (i) or (iii)) whose election by the Board or nomination for election by the Companys stockholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the two (2)-year period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority thereof; or
iii. The consummation by the Company (whether directly involving the Company or indirectly involving the Company through one or more intermediaries) of (A) a merger, consolidation, reorganization, or business combination or (B) a sale or other disposition of all or substantially all of the Companys assets in any single transaction or series of related transactions or (C) the acquisition of assets or stock of another entity, in each case other than a transaction:
x. which results in the Companys voting securities outstanding immediately before the transaction continuing to represent (either by remaining outstanding or by being converted into voting securities of the Company or the person that, as a result of the transaction, controls, directly or indirectly, the Company or owns, directly or indirectly, all or substantially all of the Companys assets or otherwise succeeds to the business of the Company (the Company or such person, the Successor Entity)) directly or indirectly, at least a majority of the combined voting power of the Successor Entitys outstanding voting securities immediately after the transaction, and
y. after which no person or group beneficially owns voting securities representing fifty percent (50%) or more of the combined voting power of the Successor Entity; provided, however, that no person or group shall be treated for
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purposes of this clause (y) as beneficially owning fifty percent (50%) or more of the combined voting power of the Successor Entity solely as a result of the voting power held in the Company prior to the consummation of the transaction.
In addition, if a Change in Control constitutes a payment event with respect to any payment under this Agreement which provides for the deferral of compensation and is subject to Section 409A of the Code, the transaction or event described in clause (i), (ii), or (iii) with respect to such payment must also constitute a change in control event, as defined in Treasury Regulation Section 1.409A-3(i)(5) to the extent required by Section 409A of the Code.
9. Release. Notwithstanding any provision to the contrary in this Agreement, no amount shall be paid or benefit provided pursuant to Section 6 or Section 8 (other than the Accrued Obligations) and no accelerated vesting of the Equity Awards shall occur as a result of Employees termination of employment pursuant to Section 4(c) unless, on or prior to the thirtieth (30th) day following the date of Employees termination of employment, an effective general release of claims agreement (the Release) in substantially the form attached hereto as Exhibit 2 has been executed by Employee and remains effective on such date and any applicable revocation period thereunder has expired.
10. Notices. Any reports, notices or other communications required or permitted to be given by either Party hereto, shall be given in writing by personal delivery, overnight courier service, or by registered or certified mail, postage prepaid, return receipt requested, addressed to the Company at its principal executive offices and to Employee at his most recent address on the Companys payroll records.
11. Notice of Termination. Any purported termination of Employment by the Company or the Employee shall be communicated by written Notice of Termination to the other Party. For purposes of this Agreement, a Notice of Termination shall mean a notice which indicates, if applicable, the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Employees employment under the provision so indicated. For purposes of this Agreement, no such purported termination of employment shall be effective without delivery of such a Notice of Termination.
12. General Provisions.
a. Governing Law; Venue. This Agreement shall be governed by and construed in accordance with the laws of the State of California without regard to the conflicts of laws principles thereof. Employee and the Company agree that any litigation regarding this Agreement shall be conducted in San Diego, California. Employee and the Company hereby consent to the jurisdiction of the courts of the State of California and the United States District Court for the Southern District of California.
b. Assignment; Assumption by Successor. The rights of the Company under this Agreement may, without the consent of Employee, be assigned by the Company, in its sole and unfettered discretion, to any person, firm, corporation or other business entity which at any time, whether by purchase, merger or otherwise, directly or indirectly, acquires all or substantially all of the assets or business of the Company. The Company will require any successor (whether direct or indirect, by purchase, merger or otherwise) to all or substantially
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all of the business or assets of the Company expressly to assume and to agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place; provided, however, that no such assumption shall relieve the Company of its obligations hereunder. As used in this Agreement, the Company shall mean the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid which assumes and agrees to perform this Agreement by operation of law or otherwise.
c. No Waiver of Breach. The failure to enforce any provision of this Agreement shall not be construed as a waiver of any such provision, nor prevent a Party thereafter from enforcing the provision or any other provision of this Agreement. The rights granted the Parties are cumulative, and the election of one shall not constitute a waiver of such Partys right to assert all other legal and equitable remedies available under the circumstances.
d. Severability. The provisions of this Agreement are severable, and if any provision shall be held to be invalid or otherwise unenforceable, in whole or in part, the remainder of the provisions, or enforceable parts of this Agreement, shall not be affected.
e. Entire Agreement. This Agreement and the Confidentiality and Inventions Assignment Agreement constitute the entire agreement of the Parties with respect to the subject matter of this Agreement and supersede all prior and contemporaneous negotiations, agreements and understandings between the Parties, whether oral or written, including, without limitation, any offer letter between the parties and the Prior Agreement.
f. Modifications and Waivers. No modification or waiver of this Agreement shall be valid unless in writing, signed by the Party against whom such modification or waiver is sought to be enforced.
g. Amendment. This Agreement may be amended or supplemented only by a writing signed by both of the Parties hereto.
h. Duplicate Counterparts; Facsimile. This Agreement may be executed in duplicate counterparts, each of which shall be deemed an original; provided, however, such counterparts shall together constitute only one agreement. Facsimile signatures or signatures sent via electronic mail shall be as effective as original signatures.
i. Interpretation. The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.
j. Non-transferability of Interest. None of the rights of Employee to receive any form of compensation payable pursuant to this Agreement shall be assignable or transferable except through a testamentary disposition or by the laws of descent and distribution upon the death of Employee. Any attempted assignment, transfer, conveyance, or other disposition (other than as aforesaid) of any interest in the rights of Employee to receive any form of compensation to be made by the Company pursuant to this Agreement shall be void.
k. Construction. The language in all parts of this Agreement shall in all cases be construed simply, according to its fair meaning, and not strictly for or against any of the parties hereto. Without limitation, there shall be no presumption against any party on the ground that such party was responsible for drafting this Agreement or any part thereof.
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l. Section 409A.
i. Notwithstanding anything to the contrary in this Agreement, no payment or benefit to be paid or provided to Employee upon his termination of employment, if any, pursuant to this Agreement that, when considered together with any other payments or benefits, are considered deferred compensation under Section 409A (together, the Deferred Payments) will be paid or otherwise provided until Employee has a separation from service within the meaning of Section 409A. Similarly, no amounts payable to Employee, if any, pursuant to this Agreement that otherwise would be exempt from Section 409A pursuant to Treasury Regulation Section 1.409A-1(b)(9) will be payable until Employee has a separation from service within the meaning of Section 409A.
ii. Notwithstanding anything to the contrary in this Agreement, if Employee is a specified employee within the meaning of Section 409A at the time of Employees termination of employment (other than due to death), then the Deferred Payments that are payable within the first six (6) months following Employees separation from service, will become payable on the first payroll date that occurs on or after the date six (6) months and one (1) day following the date of Employees separation from service. All subsequent Deferred Payments, if any, will be payable in accordance with the payment schedule applicable to each payment or benefit. Notwithstanding anything herein to the contrary, if Employee dies following Employees separation from service, but prior to the six (6) month anniversary of the separation from service, then any payments delayed in accordance with this paragraph will be payable in a lump sum as soon as administratively practicable after the date of Employees death and all other Deferred Payments will be payable in accordance with the payment schedule applicable to each payment or benefit. Each payment and benefit payable under this Agreement is intended to constitute a separate payment for purposes of Section 1.409A-2(b)(2) of the Treasury Regulations.
iii. Any amount paid under this Agreement that satisfies the requirements of the short-term deferral rule set forth in Section 1.409A-1(b)(4) of the Treasury Regulations will not constitute a Deferred Payment for purposes of clauses (i) and (ii) above.
iv. Any amount paid under this Agreement that qualifies as a payment made as a result of an involuntary separation from service pursuant to Section 1.409A-1(b)(9)(iii) of the Treasury Regulations that does not exceed the limits set forth therein will not constitute a Deferred Payment for purposes of clauses (i) and (ii) above.
v. This Agreement is intended to be written, administered, interpreted and construed in a manner such that no payment or benefits provided under the Agreement become subject to (A) the gross income inclusion set forth within Code Section 409A(a)(1)(A) or (B) the interest and additional tax set forth within Code Section 409A(a)(1)(B) (together, referred to herein as the Section 409A Penalties), including, where appropriate, the construction of defined terms to have meanings that would not cause the imposition of Section 409A Penalties. In no event shall the Company be required to provide a tax gross-up payment to Employee or otherwise reimburse Employee with respect to Section 409A Penalties. The Company and Employee agree to work together in good faith to consider amendments to this Agreement and to take such reasonable actions which are necessary, appropriate or desirable to avoid imposition of any Section 409A Penalties on Employee.
vi. Any reimbursement of expenses or in-kind benefits payable under this Agreement shall be made in accordance with Treasury Regulation Section 1.409A-3(i)(1)(iv) and shall be paid on or before the last day of Employees taxable year following the taxable year in which Employee incurred the expenses. The amount of expenses reimbursed or
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in-kind benefits payable in one year shall not affect the amount eligible for reimbursement or in-kind benefits payable in any other taxable year of Employees, and Employees right to reimbursement for such amounts shall not be subject to liquidation or exchange for any other benefit.
m. Whistleblower Provision. Nothing herein shall be construed to prohibit Employee from communicating directly with, cooperating with, or providing information to, any government regulator, including, but not limited to, the U.S. Securities and Exchange Commission, the U.S. Commodity Futures Trading Commission, or the U.S. Department of Justice. Employee acknowledges that the Company has provided Employee with the following notice of immunity rights in compliance with the requirements of the Defend Trade Secrets Act: (i) Employee shall not be held criminally or civilly liable under any Federal or State trade secret law for the disclosure of proprietary information of the Company that is made in confidence to a Federal, State, or local government official or to an attorney solely for the purpose of reporting or investigating a suspected violation of law, (ii) Employee shall not be held criminally or civilly liable under any Federal or State trade secret law for the disclosure of proprietary information of the Company that is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal and (iii) if Employee files a lawsuit for retaliation by the Company for reporting a suspected violation of law, Employee may disclose the proprietary information to my attorney and use the proprietary information in the court proceeding, if Employee files any document containing the proprietary information under seal, and does not disclose the proprietary information, except pursuant to court order.
(Signature Page Follows)
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EXHIBIT 1
CONFIDENTIALITY AND INVENTIONS ASSIGNMENT AGREEMENT
[Attached]
EXHIBIT 2
GENERAL RELEASE OF CLAIMS
[The language in this Release may change based on legal developments and evolving best practices; this form is provided as an example of what will be included in the final Release document.]
This General Release of Claims (Release) is entered into as of this _____ day of ________, ____, between JACOB SUEN (Employee), and AIRGAIN, INC., a Delaware corporation (the Company) (collectively referred to herein as the Parties).
WHEREAS, Employee and the Company are parties to that certain Second Amended and Restated Employment Agreement effective as of April [__], 2020 (the Agreement);
WHEREAS, the Parties agree that Employee is entitled to certain severance benefits under the Agreement, subject to Employees execution of this Release; and
WHEREAS, the Company and Employee now wish to fully and finally to resolve all matters between them.
NOW, THEREFORE, in consideration of, and subject to, the severance benefits payable to Employee pursuant to the Agreement, the adequacy of which is hereby acknowledged by Employee, and which Employee acknowledges that he would not otherwise be entitled to receive, Employee and the Company hereby agree as follows:
1. General Release of Claims by Employee.
(a) Employee, on behalf of himself and his executors, heirs, administrators, representatives and assigns, hereby agrees to release and forever discharge the Company and all predecessors, successors and their respective parent corporations, affiliates, related, and/or subsidiary entities, and all of their past and present investors, directors, shareholders, officers, general or limited partners, employees, attorneys, agents and representatives, and the employee benefit plans in which Employee is or has been a participant by virtue of his employment with or service to the Company (collectively, the Company Releasees), from any and all claims, debts, demands, accounts, judgments, rights, causes of action, equitable relief, damages, costs, charges, complaints, obligations, promises, agreements, controversies, suits, expenses, compensation, responsibility and liability of every kind and character whatsoever (including attorneys fees and costs), whether in law or equity, known or unknown, asserted or unasserted, suspected or unsuspected (collectively, Claims), which Employee has or may have had against such entities based on any events or circumstances arising or occurring on or prior to the date hereof or on or prior to the date hereof, arising directly or indirectly out of, relating to, or in any other way involving in any manner whatsoever Employees employment by or service to the Company or the termination thereof, including any and all claims arising under federal, state, or local laws relating to employment, including without limitation claims of wrongful discharge, breach of express or implied contract, fraud, misrepresentation, defamation, or liability in tort, and claims of any kind that may be brought in any court or administrative agency including, without
limitation, claims under Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. Section 2000, et seq.; the Americans with Disabilities Act, as amended, 42 U.S.C. § 12101 et seq.; the Rehabilitation Act of 1973, as amended, 29 U.S.C. § 701 et seq.; the Civil Rights Act of 1866, and the Civil Rights Act of 1991; 42 U.S.C. Section 1981, et seq.; the Age Discrimination in Employment Act, as amended, 29 U.S.C. Section 621, et seq. (the ADEA); the Equal Pay Act, as amended, 29 U.S.C. Section 206(d); regulations of the Office of Federal Contract Compliance, 41 C.F.R. Section 60, et seq.; the Family and Medical Leave Act, as amended, 29 U.S.C. § 2601 et seq.; the Fair Labor Standards Act of 1938, as amended, 29 U.S.C. § 201 et seq.; the Employee Retirement Income Security Act, as amended, 29 U.S.C. § 1001 et seq.; and the California Fair Employment and Housing Act, California Government Code Section 12940, et seq.
Notwithstanding the generality of the foregoing, Employee does not release the following claims:
(i) Claims for unemployment compensation or any state disability insurance benefits pursuant to the terms of applicable state law;
(ii) Claims for workers compensation insurance benefits under the terms of any workers compensation insurance policy or fund of the Company;
(iii) Claims pursuant to the terms and conditions of the federal law known as COBRA;
(iv) Claims for indemnity under the bylaws of the Company, as provided for by California or Delaware law or under any applicable indemnification agreement or insurance policy with respect to Employees liability as an employee, director or officer of the Company;
(v) Employees right to bring to the attention of the Equal Employment Opportunity Commission or the California Department of Fair Employment and Housing or any other federal, state or local government agency claims of discrimination, or from participating in an investigation or proceeding conducted by the Equal Employment Opportunity Commission or any other federal, state or local government agency; provided, however, that Employee does release his right to secure any damages for alleged discriminatory treatment;
(vi) Claims based on any right Employee may have to enforce the Companys executory obligations under the Agreement;
(vii) Claims Employee may have to vested or earned compensation and benefits; and
(viii) Employees right to communicate or cooperate with any government agency.
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(b) EMPLOYEE ACKNOWLEDGES THAT HE HAS BEEN ADVISED OF AND IS FAMILIAR WITH THE PROVISIONS OF CALIFORNIA CIVIL CODE SECTION 1542, WHICH PROVIDES AS FOLLOWS:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR OR RELEASING PARTY DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH, IF KNOWN BY HIM OR HER, WOULD HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR OR RELEASED PARTY.
BEING AWARE OF SAID CODE SECTION, EMPLOYEE HEREBY EXPRESSLY WAIVES ANY RIGHTS HE MAY HAVE THEREUNDER, AS WELL AS UNDER ANY OTHER STATUTES OR COMMON LAW PRINCIPLES OF SIMILAR EFFECT.
[Note: Clauses (c), (d) and (e) apply only if Employee is age 40 or older at time of termination]
(c) Employee acknowledges that this Release was presented to him on the date indicated above and that Employee is entitled to have twenty-one (21) days time in which to consider it. Employee further acknowledges that the Company has advised him that he is waiving his rights under the ADEA, and that Employee should consult with an attorney of his choice before signing this Release, and Employee has had sufficient time to consider the terms of this Release. Employee represents and acknowledges that if Employee executes this Release before twenty-one (21) days have elapsed, Employee does so knowingly, voluntarily, and upon the advice and with the approval of Employees legal counsel (if any), and that Employee voluntarily waives any remaining consideration period.
(d) Employee understands that after executing this Release, Employee has the right to revoke it within seven (7) days after his execution of it. Employee understands that this Release will not become effective and enforceable unless the seven (7) day revocation period passes and Employee does not revoke the Release in writing. Employee understands that this Release may not be revoked after the seven (7) day revocation period has passed. Employee also understands that any revocation of this Release must be made in writing and delivered to the Company at its principal place of business within the seven (7) day period.
(e) Employee understands that this Release shall become effective, irrevocable, and binding upon Employee on the eighth (8th) day after his execution of it, so long as Employee has not revoked it within the time period and in the manner specified in clause (d) above.
(f) Employee further understands that Employee will not be given any severance benefits under the Agreement unless this Release is effective on or before the date that is thirty (30) days following the date of Employees termination of employment.
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2. No Assignment. Employee represents and warrants to the Company Releasees that there has been no assignment or other transfer of any interest in any Claim that Employee may have against the Company Releasees. Employee agrees to indemnify and hold harmless the Company Releasees from any liability, claims, demands, damages, costs, expenses and attorneys fees incurred as a result of any such assignment or transfer from Employee.
3. Whistleblower Provision. Nothing herein shall be construed to prohibit Employee from communicating directly with, cooperating with, or providing information to, any government regulator, including, but not limited to, the U.S. Securities and Exchange Commission, the U.S. Commodity Futures Trading Commission, or the U.S. Department of Justice. Employee acknowledges that the Company has provided Employee with the following notice of immunity rights in compliance with the requirements of the Defend Trade Secrets Act: (i) Employee shall not be held criminally or civilly liable under any Federal or State trade secret law for the disclosure of proprietary information of the Company that is made in confidence to a Federal, State, or local government official or to an attorney solely for the purpose of reporting or investigating a suspected violation of law, (ii) Employee shall not be held criminally or civilly liable under any Federal or State trade secret law for the disclosure of proprietary information of the Company that is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal and (iii) if Employee files a lawsuit for retaliation by the Company for reporting a suspected violation of law, Employee may disclose the proprietary information to my attorney and use the proprietary information in the court proceeding, if Employee files any document containing the proprietary information under seal, and does not disclose the proprietary information, except pursuant to court order.
4. Severability. In the event any provision of this Release is found to be unenforceable by an arbitrator or court of competent jurisdiction, such provision shall be deemed modified to the extent necessary to allow enforceability of the provision as so limited, it being intended that the parties shall receive the benefit contemplated herein to the fullest extent permitted by law. If a deemed modification is not satisfactory in the judgment of such arbitrator or court, the unenforceable provision shall be deemed deleted, and the validity and enforceability of the remaining provisions shall not be affected thereby.
5. Interpretation; Construction. The headings set forth in this Release are for convenience only and shall not be used in interpreting this Agreement. This Release has been drafted by legal counsel representing the Company, but Employee has participated in the negotiation of its terms. Furthermore, Employee acknowledges that Employee has had an opportunity to review and revise the Release and have it reviewed by legal counsel, if desired, and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Release. Either partys failure to enforce any provision of this Release shall not in any way be construed as a waiver of any such provision, or prevent that party thereafter from enforcing each and every other provision of this Release.
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6. Governing Law; Venue. This Release shall be governed by and construed in accordance with the laws of the State of California without regard to the conflicts of laws principles thereof. Employee and the Company agree that any litigation regarding this Release shall be conducted in San Diego, California. Employee and the Company hereby consent to the jurisdiction of the courts of the State of California and the United States District Court for the Southern District of California.
7. Entire Agreement. This Release and the Agreement constitute the entire agreement of the Parties in respect of the subject matter contained herein and therein and supersede all prior or simultaneous representations, discussions, negotiations and agreements, whether written or oral. This Release may be amended or modified only with the written consent of Employee and an authorized representative of the Company. No oral waiver, amendment or modification will be effective under any circumstances whatsoever.
8. Counterparts. This Release may be executed in multiple counterparts, each of which shall be deemed to be an original but all of which together shall constitute one and the same instrument.
(Signature Page Follows)
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Exhibit 10.17
AIRGAIN, INC.
NON-EMPLOYEE DIRECTOR COMPENSATION PROGRAM AND STOCK OWNERSHIP GUIDELINES
(As Amended and Restated Effective November 19, 2020)
The board of directors (the Board) of Airgain, Inc. (the Company) has adopted this Non-Employee Director Compensation Program and Stock Ownership Guidelines (this Program). The cash and equity compensation described in this Program shall be paid or be made, as applicable, automatically and without further action of the Board, to each member of the Board who is not an employee of the Company or any parent or subsidiary of the Company (each, a Non-Employee Director) who is entitled to receive such cash or equity compensation, unless such Non-Employee Director declines the receipt of such cash or equity compensation by written notice to the Company. This Program shall remain in effect until it is revised or rescinded by further action of the Board. This Program may be amended, modified or terminated by the Board at any time in its sole discretion. The terms and conditions of this Program shall supersede any prior cash and/or equity compensation arrangements for service as a member of the Board between the Company and any of its Non-Employee Directors. No Non-Employee Director shall have any rights hereunder, except with respect to Initial Awards or Subsequent Awards (each as defined below) granted pursuant to the Program.
I. |
NON-EMPLOYEE DIRECTOR COMPENSATION |
1. Cash Compensation.
(a) Annual Retainers. Each Non-Employee Director shall receive an annual retainer of $32,000 for service on the Board.
(b) Additional Annual Retainers. In addition, each Non-Employee Director shall receive the following additional annual retainers, as applicable:
(i) Chairperson of the Board.
(A) For the period commencing February 9, 2020 and ending December 31, 2020, a Non-Employee Director serving as Chairperson of the Board shall receive an annual retainer of $240,000 for such service in lieu of the annual retainer set forth in clause (a) above.
(B) For the period commencing January 1, 2021 and ending December 31, 2021, a Non-Employee Director serving as Chairperson of the Board shall receive an annual retainer of $175,000 for such service in lieu of the annual retainer set forth in clause (a) above.
(C) From and after January 1, 2022, a Non-Employee Director serving as Chairperson of the Board shall receive an additional annual retainer of $26,500 for such service.
(ii) Audit Committee. A Non-Employee Director serving as Chairperson of the Audit Committee shall receive an additional annual retainer of $16,000 for such service. A Non-Employee Director serving as a member of the Audit Committee (other than the Chairperson) shall receive an additional annual retainer of $8,000 for such service.
(iii) Compensation Committee. A Non-Employee Director serving as Chairperson of the Compensation Committee shall receive an additional annual retainer of $10,600 for such service. A Non-Employee Director serving as a member of the Compensation Committee (other than the Chairperson) shall receive an additional annual retainer of $5,300 for such service.
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(iv) Nominating and Corporate Governance Committee. A Non-Employee Director serving as Chairperson of the Nominating and Corporate Governance Committee shall receive an additional annual retainer of $8,000 for such service. A Non-Employee Director serving as a member of the Nominating and Corporate Governance Committee (other than the Chairperson) shall receive an additional annual retainer of $4,000 for such service.
(c) Payment of Retainers. The annual retainers described in Sections 1(a) and 1(b) shall be earned on a quarterly basis based on a calendar quarter and shall be paid by the Company in arrears not later than the fifteenth day following the end of each calendar quarter. In the event a Non-Employee Director does not serve as a Non-Employee Director, or in the applicable positions described in Section 1(b), for an entire calendar quarter, the retainer paid to such Non-Employee Director shall be prorated for the portion of such calendar quarter actually served as a Non-Employee Director, or in such position, as applicable.
2. Equity Compensation. Non-Employee Directors shall be granted the equity awards described below. The awards described below shall be granted under and shall be subject to the terms and provisions of the Companys 2016 Incentive Award Plan or any other applicable Company equity incentive plan then-maintained by the Company (the Equity Plan) and shall be granted subject to the execution and delivery of award agreements, including attached exhibits, in substantially the forms previously approved by the Board. All applicable terms of the Equity Plan apply to this Program as if fully set forth herein, and all grants of stock awards hereby are subject in all respects to the terms of the Equity Plan and the applicable award agreement. For the avoidance of doubt, the share numbers in this Section 2 shall be subject to adjustment as provided in the Equity Plan.
(a) Initial Awards. Each Non-Employee Director who is initially elected or appointed to the Board shall be automatically granted, on the date of such initial election or appointment, (i) an option to purchase such number of shares of the Companys common stock having a value of $50,000, calculated as of the date of grant in accordance with the Black-Scholes option pricing model (utilizing the same assumptions that the Company utilizes in preparation of its financial statements and the thirty-day trailing average trading price of the Companys common stock preceding the date of grant (the Thirty-Day Trailing Average), plus (ii) such number of restricted stock units as is determined by dividing (A) $50,000 by (B) the Thirty-Day Trailing Average. The awards described in this Section 2(a) shall be referred to as Initial Awards. No Non-Employee Director shall be granted more than one Initial Award.
(b) Subsequent Awards. On the first trading day in February of each calendar year, (i) each Non-Employee Director (other than the Chairperson of the Board) shall be automatically granted (A) an option to purchase such number of shares of the Companys common stock having a value of $30,000, calculated as of the date of grant in accordance with the Black-Scholes option pricing model (utilizing the same assumptions that the Company utilizes in preparation of its financial statements and the Thirty-Day Trailing Average), plus (B) such number of restricted stock units as is determined by dividing (1) $30,000 by (2) the Thirty-Day Trailing Average, and (ii) a Non-Employee Director serving as Chairperson of the Board on such date shall be automatically granted (A) an option to purchase such number of shares of the Companys common stock having a value of $45,000, calculated as of the date of grant in accordance with the Black-Scholes option pricing model (utilizing the same assumptions that the Company utilizes in preparation of its financial statements and the Thirty-Day Trailing Average), plus (B) such number of restricted stock units as is determined by dividing (1) $45,000 by (2) the Thirty-Day Trailing Average. The awards described in this Section 2(b) shall be referred to as Subsequent Awards. In the event a Non-Employee Director has not been serving as a member of the Board for twelve months as of the date of any Subsequent Award, the Board may determine to prorate the Subsequent Award to such Non-Employee Director to reflect the number of months served since such initial election through the date of the Subsequent Award.
(c) Termination of Employment of Employee Directors. Members of the Board who are employees of the Company or any parent or subsidiary of the Company who subsequently terminate their employment with the Company and any parent or subsidiary of the Company and remain on the Board will not receive Initial Awards pursuant to Section 2(a) above, but to the extent that they are otherwise entitled, will receive, after termination from employment with the Company and any parent or subsidiary of the Company, Subsequent Awards as described in Section 2(b) above.
(d) Terms of Awards Granted to Non-Employee Directors
(i) Purchase Price. The per share exercise price of each option granted to a Non-Employee Director shall equal the Fair Market Value (as defined in the Equity Plan) of a share of common stock on the date the option is granted.
(ii) Vesting. Each Initial Award shall vest and become exercisable in substantially equal installments on each of the first three anniversaries of the date of grant, subject to the Non-Employee Director continuing in service on the Board through each such vesting date. Each Subsequent Award shall vest and/or become exercisable on the first anniversary of the date of grant, subject to the Non-Employee Director continuing in service on the Board through such vesting date. Unless the Board otherwise determines, no portion of an Initial Award or Subsequent Award which is unvested and/or exercisable at the time of a Non-Employee Directors termination of service on the Board shall become vested and/or exercisable thereafter. All of a Non-Employee Directors Initial Awards and Subsequent Awards shall vest in full immediately prior to the occurrence of a Change in Control (as defined in the Equity Plan), to the extent outstanding at such time.
(iii) Term. The term of each stock option granted to a Non-Employee Director shall be ten years from the date the option is granted.
3. Compensation Limits. Notwithstanding anything to the contrary in this Program, all compensation payable under this Program will be subject to any limits on the maximum amount of Non-Employee Director compensation set forth in the Equity Plan, as in effect from time to time.
II. |
NON-EMPLOYEE DIRECTOR STOCK OWNERSHIP GUIDELINES |
1. Purpose. In an effort to align the interests of the Non-Employee Directors with the stockholders of the Company, the Board has adopted the following Stock Ownership Guidelines (the Guidelines).
2. Ownership Threshold. Non-Employee Directors are expected to own and hold shares of the Companys common stock with a value equal to three times the annual cash retainer for service as a Non-Employee Director (without regard to any retainers paid for committee service or service as chairman of the Board).
3. Grace Period. The stock ownership level should be achieved by each Non-Employee Director on or before September 30, 2021, or, if later, within three years after the Non-Employee Directors first appointment to the Board.
4. Ownership Defined. Stock that counts toward satisfaction of these Guidelines include: shares of common stock owned outright by the Non-Employee Director and his or her immediate family members who share the same household, whether held individually or jointly; restricted stock where the restrictions have lapsed; shares acquired upon stock option exercise; shares purchased in the open market; and shares held in trust for the benefit of the Non-Employee Director or his or her family. Restricted stock units, which represent the right to receive shares, do not count towards satisfaction of these guidelines. Due to the complexities of trust accounts, requests to include shares held in trust should be submitted to the Chief Financial Officer of the Company and the Chairman of the Board will make the final decision as to whether to include those shares.
5. Application of Guidelines.
(a) Market Value. A Non-Employee Director will be deemed to be in compliance with these guidelines if the Fair Market Value (as defined in the Equity Plan) of the shares of the Companys common stock held by such Non-Employee Director on any date prior to the deadline for his or her compliance equals or exceeds the required multiple of his or her annual cash retainer.
(b) Subsequent Changes in Fair Market Value or Annual Cash Retainer. After meeting the requirements set forth in these Guidelines, any subsequent decreases in the fair market value of the common stock shall not be considered, so long as the Non-Employee Director does not have an increase in annual cash retainer and continues to hold at least the same number of shares of common stock as he or she did when these Guidelines were first met or exceeded by such Non-Employee Director. A Non-Employee Director will be expected to reach any increased requirements set forth in these Guidelines as a result of an increase in annual cash retainer within five years from the effective date of such increase.
6. Undue Hardship. Nothing in these Guidelines shall serve to prevent the sale of share holdings by an Non-Employee Director to cover his or her tax liability with respect to equity awards granted by the Company. There may be instances in which these Guidelines would place a severe hardship on a Non-Employee Director (including, but not limited to, preventing the Non-Employee Director from complying with a court order, such as a divorce settlement, or other legal requirement). In these instances, the Non-Employee Director may submit a request in writing to the Board that summarizes the circumstances and describes the extent to which an exemption is being requested. The Board will make the final decision as to whether an exemption will be granted. If such a request is granted in whole or part, the Board will work with the Non-Employee Director to develop an alternative stock ownership plan that reflects both the intention of these Guidelines and the individuals circumstances
* * * * *
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Exhibit 10.18
AIRGAIN, INC.
2021 INCENTIVE AWARD PLAN
ARTICLE I.
PURPOSE
The Plans purpose is to enhance the Companys ability to attract, retain and motivate Eligible Persons who are expected to make important contributions to the Company by providing these individuals with equity ownership opportunities. Capitalized terms used in the Plan are defined in Article XI.
ARTICLE II.
ELIGIBILITY
Eligible Persons are eligible to be granted Awards under the Plan, subject to the limitations described herein.
ARTICLE III.
ADMINISTRATION AND DELEGATION
3.1 Administration. The Plan is administered by the Committee. The Administrator shall have the sole and exclusive authority to administer the Plan. The Administrator has authority to determine which Eligible Persons receive Awards, grant Awards and set Award terms and conditions, subject to the conditions and limitations in the Plan. The Administrator also has the authority to take all actions and make all determinations under the Plan, to interpret the Plan and Award Agreements and to adopt, amend and repeal Plan administrative rules, guidelines and practices as it deems advisable. The Administrator may correct defects and ambiguities, supply omissions and reconcile inconsistencies in the Plan or any Award as it deems necessary or appropriate to administer the Plan and any Awards. The Administrators determinations under the Plan are in its sole discretion and will be final and binding on all persons having or claiming any interest in the Plan or any Award. The Board may abolish the Committee or re-vest in itself any previously delegated authority at any time; provided, however, that any action taken by the Board in connection with the administration of the Plan shall not be deemed approved by the Board unless such actions are approved by a majority of the Independent Directors. Awards under the Plan will be approved by (a) the Companys Compensation Committee comprised entirely of Independent Directors or (b) a majority of the Companys Independent Directors.
3.2 Actions Required Upon Grant of Award. Following the issuance of any Award under the Plan, the Company shall, in accordance with the listing requirements of the applicable securities exchange, (a) promptly issue a press release disclosing the material terms of the grant, including the recipient(s) of the grant and the number of shares involved (and if the disclosure relates to an award to only one person, or to executive officers, or the award was individually negotiated, then the disclosure must include the identity of the recipient), and (b) notify the applicable securities exchange of such grant no later than the earlier to occur of (i) five calendar days after entering into the agreement to issue the Award or (ii) the date of the public announcement of the Award.
ARTICLE IV.
SHARES AVAILABLE FOR AWARDS
4.1 Number of Shares. Subject to adjustment under Article VIII and the terms of this Article IV, Awards may be made under the Plan covering up to the Overall Share Limit. Shares issued under the Plan may consist of authorized but unissued Shares, Shares purchased on the open market or treasury Shares.
4.2 Share Recycling. If all or any part of an Award expires, lapses or is terminated, exchanged for cash, surrendered, repurchased, canceled without having been fully exercised or forfeited, in any case, in a manner that results in the Company acquiring Shares covered by the Award at a price not greater than the price (as adjusted to reflect any Equity Restructuring) paid by the Participant for such Shares or not issuing any Shares covered by the Award, the unused Shares covered by the Award will, as applicable, become or again be available for Award grants under the Plan. Further, Shares delivered (either by actual delivery or attestation) to the Company by a Participant to satisfy the applicable exercise or purchase price of an Award and/or to satisfy any applicable tax withholding obligation (including Shares retained by the Company from the Award being exercised or purchased and/or creating the tax obligation) will, as applicable, become or again be available for Award grants under the Plan. The payment of Dividend Equivalents in cash in conjunction with any outstanding Awards shall not count against the Overall Share Limit.
ARTICLE V.
STOCK OPTIONS AND STOCK APPRECIATION RIGHTS
5.1 General. The Administrator may grant Options or Stock Appreciation Rights to Eligible Persons subject to the limitations in the Plan. The Administrator will determine the number of Shares covered by each Option and Stock Appreciation Right, the exercise price of each Option and Stock Appreciation Right and the conditions and limitations applicable to the exercise of each Option and Stock Appreciation Right. A Stock Appreciation Right will entitle the Participant (or other person entitled to exercise the Stock Appreciation Right) to receive from the Company upon exercise of the exercisable portion of the Stock Appreciation Right an amount determined by multiplying the excess, if any, of the Fair Market Value of one Share on the date of exercise over the exercise price per Share of the Stock Appreciation Right by the number of Shares with respect to which the Stock Appreciation Right is exercised, subject to any limitations of the Plan or that the Administrator may impose and payable in cash, Shares valued at Fair Market Value or a combination of the two as the Administrator may determine or provide in the Award Agreement. All Options granted under the Plan shall be Non-Qualified Stock Options.
5.2 Exercise Price. The Administrator will establish each Options and Stock Appreciation Rights exercise price and specify the exercise price in the Award Agreement. The exercise price will not be less than 100% of the Fair Market Value on the grant date of the Option or Stock Appreciation Right.
5.3 Duration of Options and Stock Appreciation Rights. Each Option or Stock Appreciation Right will be exercisable at such times and as specified in the Award Agreement, provided that the term of an Option or Stock Appreciation Right will not exceed ten years. Notwithstanding the foregoing and unless determined otherwise by the Company, in the event that on the last business day of the term of an Option or Stock Appreciation Right (i) the exercise of the Option or Stock Appreciation Right is prohibited by Applicable Law, as determined by the Company, or (ii) Shares may not be purchased or sold by the applicable Participant due to any Company insider trading policy (including blackout periods) or a lock-up agreement undertaken in connection with an issuance of securities by the Company, the term of the Option or Stock Appreciation Right shall be extended until the date that is thirty (30) days after the end of the legal prohibition, black-out period or lock-up agreement, as determined by the Company; provided, however, in no event shall the extension last beyond the ten year term of the applicable Option or Stock Appreciation Right. Notwithstanding the foregoing, if the Participant, prior to the end of the term of an Option or Stock Appreciation Right, violates the non-competition, non-solicitation, confidentiality or other similar restrictive covenant provisions of any employment contract, confidentiality and nondisclosure
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agreement or other agreement between the Participant and the Company or any of its Subsidiaries, the right of the Participant and the Participants transferees to exercise any Option or Stock Appreciation Right issued to the Participant shall terminate immediately upon such violation, unless the Company otherwise determines. In addition, if, prior to the end of the term of an Option or Stock Appreciation Right, the Participant is given notice by the Company or any of its Subsidiaries of the Participants Termination of Service by the Company or any of its Subsidiaries for Cause, and the effective date of such Termination of Service is subsequent to the date of the delivery of such notice, the right of the Participant and the Participants transferees to exercise any Option or Stock Appreciation Right issued to the Participant shall be suspended from the time of the delivery of such notice until the earlier of (i) such time as it is determined or otherwise agreed that the Participants service as a Service Provider will not be terminated for Cause as provided in such notice or (ii) the effective date of the Participants Termination of Service by the Company or any of its Subsidiaries for Cause (in which case the right of the Participant and the Participants transferees to exercise any Option or Stock Appreciation Right issued to the Participant will terminate immediately upon the effective date of such Termination of Service).
5.4 Exercise. Options and Stock Appreciation Rights may be exercised by delivering to the Company a written notice of exercise, in a form the Administrator approves (which may be electronic), signed by the person authorized to exercise the Option or Stock Appreciation Right, together with, as applicable, payment in full (i) as specified in Section 5.5 for the number of Shares for which the Award is exercised and (ii) as specified in Section 9.5 for any applicable taxes. Unless the Administrator otherwise determines, an Option or Stock Appreciation Right may not be exercised for a fraction of a Share.
5.5 Payment Upon Exercise. Subject to Section 10.10, any Company insider trading policy (including blackout periods) and Applicable Laws, the exercise price of an Option must be paid by:
(a) cash, wire transfer of immediately available funds or by check payable to the order of the Company; provided, that, the Company may limit the use of one of the foregoing payment forms if one or more of the payment forms below is permitted;
(b) if there is a public market for Shares at the time of exercise, unless the Company otherwise determines, (A) delivery (including electronically or telephonically to the extent permitted by the Company) of an irrevocable and unconditional undertaking by a broker acceptable to the Company to deliver promptly to the Company sufficient funds to pay the exercise price, or (B) the Participants delivery to the Company of a copy of irrevocable and unconditional instructions to a broker acceptable to the Company to deliver promptly to the Company cash or a check sufficient to pay the exercise price; provided that such amount is paid to the Company at such time as may be required by the Administrator;
(c) to the extent permitted by the Administrator, delivery (either by actual delivery or attestation) of Shares owned by the Participant valued at their Fair Market Value;
(d) to the extent permitted by the Administrator, surrendering Shares then issuable upon the Options exercise valued at their Fair Market Value on the exercise date;
(e) to the extent permitted by the Administrator, delivery of a promissory note or any other property that the Administrator determines is good and valuable consideration; or
(f) to the extent permitted by the Company, any combination of the above payment forms approved by the Administrator.
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ARTICLE VI.
RESTRICTED STOCK; RESTRICTED STOCK UNITS
6.1 General. The Administrator may grant Restricted Stock, or the right to purchase Restricted Stock, to any Eligible Person, subject to the Companys right to repurchase all or part of such Shares at their issue price or other stated or formula price from the Participant (or to require forfeiture of such Shares) if conditions the Administrator specifies in the Award Agreement are not satisfied before the end of the applicable restriction period or periods that the Administrator establishes for such Award. In addition, the Administrator may grant to Eligible Persons Restricted Stock Units, which may be subject to vesting and forfeiture conditions during the applicable restriction period or periods, as set forth in an Award Agreement. The Administrator will determine and set forth in the Award Agreement the terms and conditions for each Restricted Stock and Restricted Stock Unit Award, subject to the conditions and limitations contained in the Plan.
6.2 Restricted Stock.
(a) Dividends. Participants holding Shares of Restricted Stock will be entitled to all ordinary cash dividends paid with respect to such Shares, unless the Administrator provides otherwise in the Award Agreement. In addition, unless the Administrator provides otherwise, if any dividends or distributions are paid in Shares, or consist of a dividend or distribution to holders of Common Stock of property other than an ordinary cash dividend, the Shares or other property will be subject to the same restrictions on transferability and forfeitability as the Shares of Restricted Stock with respect to which they were paid.
(b) Stock Certificates. The Company may require that the Participant deposit in escrow with the Company (or its designee) any stock certificates issued in respect of Shares of Restricted Stock, together with a stock power endorsed in blank.
6.3 Restricted Stock Units.
(a) Settlement. The Administrator may provide that settlement of Restricted Stock Units will occur upon or as soon as reasonably practicable after the Restricted Stock Units vest or will instead be deferred, on a mandatory basis or at the Participants election, in a manner intended to comply with Section 409A.
(b) Stockholder Rights. A Participant will have no rights of a stockholder with respect to Shares subject to any Restricted Stock Unit unless and until the Shares are delivered in settlement of the Restricted Stock Unit.
(c) Dividend Equivalents. If the Administrator provides, a grant of Restricted Stock Units may provide a Participant with the right to receive Dividend Equivalents. Dividend Equivalents may be paid currently or credited to an account for the Participant, settled in cash or Shares and subject to the same restrictions on transferability and forfeitability as the Restricted Stock Units with respect to which the Dividend Equivalents are granted and subject to other terms and conditions as set forth in the Award Agreement.
ARTICLE VII.
OTHER STOCK OR CASH BASED AWARDS
Other Stock or Cash Based Awards may be granted to Participants, including Awards entitling Participants to receive Shares to be delivered in the future and including annual or other periodic or long-term cash bonus awards, in each case subject to any conditions and limitations in the Plan. Such Other Stock or Cash Based Awards will also be available as a payment form in the settlement of other Awards, as standalone payments and as payment in lieu of compensation to which a Participant is otherwise entitled.
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Other Stock or Cash Based Awards may be paid in Shares, cash or other property, as the Administrator determines. Subject to the provisions of the Plan, the Administrator will determine the terms and conditions of each Other Stock or Cash Based Award, including any purchase price, performance goal, transfer restrictions, and vesting conditions, which will be set forth in the applicable Award Agreement.
ARTICLE VIII.
ADJUSTMENTS FOR CHANGES IN COMMON STOCK
AND CERTAIN OTHER EVENTS
8.1 Equity Restructuring(a) . In connection with any Equity Restructuring, notwithstanding anything to the contrary in this Article VIII, the Administrator will equitably adjust each outstanding Award as it deems appropriate to reflect the Equity Restructuring, which may include adjusting the number and type of securities subject to each outstanding Award and/or the Awards exercise price or grant price (if applicable), granting new Awards to Participants, and making a cash payment to Participants. The adjustments provided under this Section 8.1 will be nondiscretionary and final and binding on the affected Participant and the Company; provided that the Administrator will determine whether an adjustment is equitable.
8.2 Corporate Transactions. In the event of any dividend or other distribution (whether in the form of cash, Common Stock, other securities, or other property), reorganization, merger, consolidation, combination, amalgamation, repurchase, recapitalization, liquidation, dissolution, or sale, transfer, exchange or other disposition of all or substantially all of the assets of the Company, or sale or exchange of Common Stock or other securities of the Company, Change in Control, issuance of warrants or other rights to purchase Common Stock or other securities of the Company, other similar corporate transaction or event, other unusual or nonrecurring transaction or event affecting the Company or its financial statements or any change in any Applicable Laws or accounting principles, the Administrator, on such terms and conditions as it deems appropriate, either by the terms of the Award or by action taken prior to the occurrence of such transaction or event (except that action to give effect to a change in Applicable Law or accounting principles may be made within a reasonable period of time after such change) and either automatically or upon the Participants request, is hereby authorized to take any one or more of the following actions whenever the Administrator determines that such action is appropriate in order to (x) prevent dilution or enlargement of the benefits or potential benefits intended by the Company to be made available under the Plan or with respect to any Award granted or issued under the Plan, (y) to facilitate such transaction or event or (z) give effect to such changes in Applicable Laws or accounting principles:
(a) To provide for the cancellation of any such Award in exchange for either an amount of cash or other property with a value equal to the amount that could have been obtained upon the exercise or settlement of the vested portion of such Award or realization of the Participants rights under the vested portion of such Award, as applicable; provided that, if the amount that could have been obtained upon the exercise or settlement of the vested portion of such Award or realization of the Participants rights, in any case, is equal to or less than zero, then the Award may be terminated without payment;
(b) To provide that such Award shall vest and, to the extent applicable, be exercisable as to all Shares covered thereby, notwithstanding anything to the contrary in the Plan or the provisions of such Award;
(c) To provide that such Award be assumed by the successor or survivor corporation, or a parent or subsidiary thereof, or shall be substituted for by awards covering the stock of the successor or survivor corporation, or a parent or subsidiary thereof, with appropriate adjustments as to the number and kind of Shares and/or applicable exercise or purchase price, in all cases, as determined by the Administrator;
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(d) To make adjustments in the number and type of Shares (or other securities or property) subject to outstanding Awards and/or with respect to which Awards may be granted under the Plan (including, but not limited to, adjustments of the limitations in Article IV hereof on the maximum number and kind of Shares which may be issued) and/or in the terms and conditions of (including the grant or exercise price), and the criteria included in, outstanding Awards;
(e) To replace such Award with other rights or property selected by the Administrator; and/or
(f) To provide that the Award will terminate and cannot vest, be exercised or become payable after the applicable event.
8.3 Effect of Non-Assumption in a Change in Control. Notwithstanding the provisions of Section 8.2 above, if a Change in Control occurs and a Participants Awards are not continued, converted, assumed, or replaced with a substantially similar award by (a) the Company, or (b) a successor entity or its parent or subsidiary (an Assumption), and provided that the Participant has not had a Termination of Service, then the Administrator shall provide that, immediately prior to the Change in Control, such Awards shall become fully vested, exercisable and/or payable, as applicable, and all forfeiture, repurchase and other restrictions on such Awards shall lapse, in which case, such Awards shall be canceled upon the consummation of the Change in Control in exchange for the right to receive the Change in Control consideration payable to other holders of Common Stock (i) which may be on such terms and conditions as apply generally to holders of Common Stock under the Change in Control documents (including, without limitation, any escrow, earn-out or other deferred consideration provisions) or such other terms and conditions as the Administrator may provide, and (ii) determined by reference to the number of Shares subject to such Awards and net of any applicable exercise price; provided that to the extent that any Awards constitute nonqualified deferred compensation that may not be paid upon the Change in Control under Section 409A without the imposition of taxes thereon under Section 409A, the timing of such payments shall be governed by the applicable Award Agreement (subject to any deferred consideration provisions applicable under the Change in Control documents); and provided, further, that if the amount to which a Participant would be entitled upon the settlement or exercise of such Award at the time of the Change in Control is equal to or less than zero, then such Award may be terminated without payment. The Administrator shall determine whether an Assumption of an Award has occurred in connection with a Change in Control.
8.4 Administrative Stand Still. In the event of any pending stock dividend, stock split, combination or exchange of Shares, merger, consolidation or other distribution (other than normal cash dividends) of Company assets to stockholders, or any other extraordinary transaction or change affecting the Shares or the share price of Common Stock, including any Equity Restructuring or any securities offering or other similar transaction, for administrative convenience, the Administrator may refuse to permit the exercise of any Award for up to sixty days before or after such transaction.
8.5 General. Except as expressly provided in the Plan or the Administrators action under the Plan, no Participant will have any rights due to any subdivision or consolidation of Shares of any class, dividend payment, increase or decrease in the number of Shares of any class or dissolution, liquidation, merger, or consolidation of the Company or other corporation. Except as expressly provided with respect to an Equity Restructuring under Section 8.1 above or the Administrators action under the Plan, no issuance by the Company of Shares of any class, or securities convertible into Shares of any class, will affect, and no adjustment will be made regarding, the number of Shares subject to an Award or the Awards grant or exercise price. The existence of the Plan, any Award Agreements and the Awards granted hereunder will not affect or restrict in any way the Companys right or power to make or authorize (i) any adjustment, recapitalization, reorganization or other change in the Companys capital structure or its business, (ii) any merger, consolidation dissolution or liquidation of the Company or sale of Company assets or (iii) any sale or issuance of securities, including securities with rights superior to those of the Shares or securities convertible into or exchangeable for Shares. The Administrator may treat Participants and Awards (or portions thereof) differently under this Article VIII.
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ARTICLE IX.
GENERAL PROVISIONS APPLICABLE TO AWARDS
9.1 Transferability. Except as the Administrator may determine or provide in an Award Agreement or otherwise, Awards may not be sold, assigned, transferred, pledged or otherwise encumbered, either voluntarily or by operation of law, except by will or the laws of descent and distribution, or, subject to the Administrators consent, pursuant to a domestic relations order, and, during the life of the Participant, will be exercisable only by the Participant. References to a Participant, to the extent relevant in the context, will include references to a Participants authorized transferee that the Administrator specifically approves.
9.2 Documentation. Each Award will be evidenced in an Award Agreement, which may be written or electronic, as the Administrator determines. Each Award may contain terms and conditions in addition to those set forth in the Plan.
9.3 Discretion. Except as the Plan otherwise provides, each Award may be made alone or in addition or in relation to any other Award. The terms of each Award to a Participant need not be identical, and the Administrator need not treat Participants or Awards (or portions thereof) uniformly.
9.4 Termination of Status. The Administrator will determine how the disability, death, retirement, authorized leave of absence or any other change or purported change in a Participants Service Provider status affects an Award and the extent to which, and the period during which, the Participant, the Participants legal representative, conservator, guardian or Designated Beneficiary may exercise rights under the Award, if applicable.
9.5 Withholding. Each Participant must pay the Company, or make provision satisfactory to the Administrator for payment of, any taxes required by law to be withheld in connection with such Participants Awards by the date of the event creating the tax liability. The Company may deduct an amount sufficient to satisfy such tax obligations based on the minimum statutory withholding rates (or such other rate as may be determined by the Company after considering any accounting consequences or costs) from any payment of any kind otherwise due to a Participant. Subject to Section 10.10 and any Company insider trading policy (including blackout periods), Participants may satisfy such tax obligations (i) in cash, by wire transfer of immediately available funds, by check made payable to the order of the Company; provided, that, the Company may limit the use of the foregoing payment forms if one or more of the payment forms below is permitted, (ii) to the extent permitted by the Administrator, in whole or in part by delivery of Shares, including Shares retained from the Award creating the tax obligation, valued at their Fair Market Value, (iii) if there is a public market for Shares at the time the tax obligations are satisfied, unless the Company otherwise determines, (A) delivery (including telephonically to the extent permitted by the Company) of an irrevocable and unconditional undertaking by a broker acceptable to the Company to deliver promptly to the Company sufficient funds to satisfy the tax obligations, or (B) delivery by the Participant to the Company of a copy of irrevocable and unconditional instructions to a broker acceptable to the Company to deliver promptly to the Company cash or a check sufficient to satisfy the tax withholding; provided that such amount is paid to the Company at such time as may be required by the Administrator, or (iv) to the extent permitted by the Company, any combination of the foregoing payment forms approved by the Administrator. If any tax withholding obligation will be satisfied under clause (ii) of the immediately preceding sentence by the Companys retention of Shares from the Award creating the tax obligation and there is a public market for Shares at the time the tax obligation is satisfied, the Company may elect to
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instruct any brokerage firm determined acceptable to the Company for such purpose to sell on the applicable Participants behalf some or all of the Shares retained and to remit the proceeds of the sale to the Company or its designee, and each Participants acceptance of an Award under the Plan will constitute the Participants authorization to the Company and instruction and authorization to such brokerage firm to complete the transactions described in this sentence.
9.6 Amendment of Award; Repricing. The Administrator may amend, modify or terminate any outstanding Award, including by substituting another Award of the same or a different type, and changing the exercise or settlement date. The Participants consent to such action will be required unless (i) the action, taking into account any related action, does not materially and adversely affect the Participants rights under the Award, or (ii) the change is permitted under Article VIII or pursuant to Section 10.6. Notwithstanding the foregoing or anything in the Plan to the contrary, the Administrator may, without the approval of the stockholders of the Company, reduce the exercise price per share of outstanding Options or Stock Appreciation Rights or cancel outstanding Options or Stock Appreciation Rights in exchange for cash, other Awards or Options or Stock Appreciation Rights with an exercise price per share that is less than the exercise price per share of the original Options or Stock Appreciation Rights.
9.7 Conditions on Delivery of Shares. The Company will not be obligated to deliver any Shares under the Plan or remove restrictions from Shares previously delivered under the Plan until (i) all Award conditions have been met or removed to the Companys satisfaction, (ii) as determined by the Company, all other legal matters regarding the issuance and delivery of such Shares have been satisfied, including any applicable securities laws and stock exchange or stock market rules and regulations, and (iii) the Participant has executed and delivered to the Company such representations or agreements as the Administrator deems necessary or appropriate to satisfy any Applicable Laws. The Companys inability to obtain authority from any regulatory body having jurisdiction, which the Administrator determines is necessary to the lawful issuance and sale of any securities, will relieve the Company of any liability for failing to issue or sell such Shares as to which such requisite authority has not been obtained.
9.8 Acceleration. The Administrator may at any time provide that any Award will become immediately vested and fully or partially exercisable, free of some or all restrictions or conditions, or otherwise fully or partially realizable.
ARTICLE X.
MISCELLANEOUS
10.1 No Right to Employment or Other Status. No person will have any claim or right to be granted an Award, and the grant of an Award will not be construed as giving a Participant the right to continued employment or any other relationship with the Company. The Company expressly reserves the right at any time to dismiss or otherwise terminate its relationship with a Participant free from any liability or claim under the Plan or any Award, except as expressly provided in an Award Agreement.
10.2 No Rights as Stockholder; Certificates. Subject to the Award Agreement, no Participant or Designated Beneficiary will have any rights as a stockholder with respect to any Shares to be distributed under an Award until becoming the record holder of such Shares. Notwithstanding any other provision of the Plan, unless the Administrator otherwise determines or Applicable Laws require, the Company will not be required to deliver to any Participant certificates evidencing Shares issued in connection with any Award and instead such Shares may be recorded in the books of the Company (or, as applicable, its transfer agent or stock plan administrator). The Company may place legends on stock certificates issued under the Plan that the Administrator deems necessary or appropriate to comply with Applicable Laws.
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10.3 Effective Date10.4 and Term of Plan. The Plan shall be effective on the date approved by the Board. The Plan shall remain in effect until terminated by the Administrator, but Awards previously granted may extend beyond that date in accordance with the Plan.
10.5 Stockholder Approval. It is expressly intended that approval of the Companys stockholders not be required as a condition of the effectiveness of the Plan, and the Plans provisions shall be interpreted in a manner consistent with such intent for all purposes. Specifically, Nasdaq Stock Market Rule 5635(c) generally requires stockholder approval for stock option plans or other equity compensation arrangements adopted by companies whose securities are listed on the Nasdaq Stock Market pursuant to which stock awards or stock may be acquired by officers, directors, employees or consultants of such companies. Nasdaq Stock Market Rule 5635(c)(4) provides an exemption in certain circumstances for employment inducement awards (within the meaning of Nasdaq Stock Market Rule 5635(c)(4)). Notwithstanding anything to the contrary herein, if the Companys securities are traded on the Nasdaq Stock Market, then Awards under the Plan may only be made to Employees who have not previously been an Employee or director of the Company or any Subsidiary, or following a bona fide period of non-employment by the Company or any Subsidiary, in each case as an inducement material to the Employees entering into employment with the Company or any Subsidiary. Awards under the Plan will be approved by (a) the Companys Compensation Committee comprised entirely of Independent Directors or (b) a majority of the Companys Independent Directors. Accordingly, pursuant to Nasdaq Stock Market Rule 5635(c)(4), the issuance of Awards and the shares issuable upon exercise or vesting of such Awards pursuant to the Plan are not subject to the approval of the Companys stockholders.
10.6 Amendment of Plan. The Administrator may amend, suspend or terminate the Plan at any time; provided that no amendment, other than an increase to the Overall Share Limit, may materially and adversely affect any Award outstanding at the time of such amendment without the affected Participants consent. No Awards may be granted under the Plan during any suspension period or after the Plans termination. Awards outstanding at the time of any Plan suspension or termination will continue to be governed by the Plan and the Award Agreement, as in effect before such suspension or termination. The Board will obtain stockholder approval of any Plan amendment to the extent necessary to comply with Applicable Laws.
10.7 Provisions for Foreign Participants. The Administrator may modify Awards granted to Participants who are foreign nationals or employed outside the United States or establish subplans or procedures under the Plan to address differences in laws, rules, regulations or customs of such foreign jurisdictions with respect to tax, securities, currency, employee benefit or other matters.
10.8 Section 409A.
(a) General. The Company intends that all Awards be structured to comply with, or be exempt from, Section 409A, such that no adverse tax consequences, interest, or penalties under Section 409A apply. Notwithstanding anything in the Plan or any Award Agreement to the contrary, the Administrator may, without a Participants consent, amend this Plan or Awards, adopt policies and procedures, or take any other actions (including amendments, policies, procedures and retroactive actions) as are necessary or appropriate to preserve the intended tax treatment of Awards, including any such actions intended to (A) exempt this Plan or any Award from Section 409A, or (B) comply with Section 409A, including regulations, guidance, compliance programs and other interpretative authority that may be issued after an Awards grant date. The Company makes no representations or warranties as to an Awards tax treatment under Section 409A or otherwise. The Company will have no obligation under this Section 10.8 or otherwise to avoid the taxes, penalties or interest under Section 409A with respect to any Award and will have no liability to any Participant or any other person if any Award, compensation or other benefits under the Plan are determined to constitute noncompliant nonqualified deferred compensation subject to taxes, penalties or interest under Section 409A.
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(b) Separation from Service. If an Award constitutes nonqualified deferred compensation under Section 409A, any payment or settlement of such Award upon a termination of a Participants Service Provider relationship will, to the extent necessary to avoid taxes under Section 409A, be made only upon the Participants separation from service (within the meaning of Section 409A), whether such separation from service occurs upon or after the termination of the Participants Service Provider relationship. For purposes of this Plan or any Award Agreement relating to any such payments or benefits, references to a termination, termination of employment or like terms means a separation from service.
(c) Payments to Specified Employees. Notwithstanding any contrary provision in the Plan or any Award Agreement, any payment(s) of nonqualified deferred compensation required to be made under an Award to a specified employee (as defined under Section 409A and as the Administrator determines) due to his or her separation from service will, to the extent necessary to avoid taxes under Section 409A(a)(2)(B)(i) of the Code, be delayed for the six-month period immediately following such separation from service (or, if earlier, until the specified employees death) and will instead be paid (as set forth in the Award Agreement) on the day immediately following such six-month period or as soon as administratively practicable thereafter (without interest). Any payments of nonqualified deferred compensation under such Award payable more than six months following the Participants separation from service will be paid at the time or times the payments are otherwise scheduled to be made.
10.9 Limitations on Liability. Notwithstanding any other provisions of the Plan, no individual acting as a director, officer, other employee or agent of the Company or any Subsidiary will be liable to any Participant, former Participant, spouse, beneficiary, or any other person for any claim, loss, liability, or expense incurred in connection with the Plan or any Award, and such individual will not be personally liable with respect to the Plan because of any contract or other instrument executed in his or her capacity as an Administrator, director, officer, other employee or agent of the Company or any Subsidiary. The Company will indemnify and hold harmless each director, officer, other employee and agent of the Company or any Subsidiary that has been or will be granted or delegated any duty or power relating to the Plans administration or interpretation, against any cost or expense (including attorneys fees) or liability (including any sum paid in settlement of a claim with the Administrators approval) arising from any act or omission concerning this Plan unless arising from such persons own fraud or bad faith.
10.10 Lock-Up Period. The Company may, at the request of any underwriter representative or otherwise, in connection with registering the offering of any Company securities under the Securities Act, prohibit Participants from, directly or indirectly, selling or otherwise transferring any Shares or other Company securities during a period of up to one hundred eighty days following the effective date of a Company registration statement filed under the Securities Act, or such longer period as determined by the underwriter.
10.11 Data Privacy. As a condition for receiving any Award, each Participant explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of personal data as described in this section by and among the Company and its Subsidiaries and affiliates exclusively for implementing, administering and managing the Participants participation in the Plan. The Company and its Subsidiaries and affiliates may hold certain personal information about a Participant, including the Participants name, address and telephone number; birthdate; social security, insurance number or other identification number; salary; nationality; job title(s); any Shares held in the Company or its Subsidiaries and affiliates; and Award details, to implement, manage and administer the Plan and Awards (the Data). The Company and its Subsidiaries and affiliates may transfer the Data amongst themselves as necessary to
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implement, administer and manage a Participants participation in the Plan, and the Company and its Subsidiaries and affiliates may transfer the Data to third parties assisting the Company with Plan implementation, administration and management. These recipients may be located in the Participants country, or elsewhere, and the Participants country may have different data privacy laws and protections than the recipients country. By accepting an Award, each Participant authorizes such recipients to receive, possess, use, retain and transfer the Data, in electronic or other form, to implement, administer and manage the Participants participation in the Plan, including any required Data transfer to a broker or other third party with whom the Company or the Participant may elect to deposit any Shares. The Data related to a Participant will be held only as long as necessary to implement, administer, and manage the Participants participation in the Plan. A Participant may, at any time, view the Data that the Company holds regarding such Participant, request additional information about the storage and processing of the Data regarding such Participant, recommend any necessary corrections to the Data regarding the Participant or refuse or withdraw the consents in this Section 10.11 in writing, without cost, by contacting the local human resources representative. The Company may cancel Participants ability to participate in the Plan and, in the Administrators discretion, the Participant may forfeit any outstanding Awards if the Participant refuses or withdraws the consents in this Section 10.11. For more information on the consequences of refusing or withdrawing consent, Participants may contact their local human resources representative.
10.12 Severability. If any portion of the Plan or any action taken under it is held illegal or invalid for any reason, the illegality or invalidity will not affect the remaining parts of the Plan, and the Plan will be construed and enforced as if the illegal or invalid provisions had been excluded, and the illegal or invalid action will be null and void.
10.13 Governing Documents. If any contradiction occurs between the Plan and any Award Agreement or other written agreement between a Participant and the Company (or any Subsidiary) that the Administrator has approved, the Plan will govern, unless it is expressly specified in such Award Agreement or other written document that a specific provision of the Plan will not apply.
10.14 Governing Law. The Plan and all Awards will be governed by and interpreted in accordance with the laws of the State of Delaware, disregarding any states choice-of-law principles requiring the application of a jurisdictions laws other than the State of Delaware.
10.15 Claw-back Provisions. All Awards (including, without limitation, any proceeds, gains or other economic benefit actually or constructively received by Participant upon any receipt or exercise of any Award or upon the receipt or resale of any Shares of Common Stock underlying the Award) shall be subject to the provisions of any claw-back policy implemented by the Company, including, without limitation, any claw-back policy adopted to comply with Applicable Laws (including the Dodd-Frank Wall Street Reform and Consumer Protection Act and any rules or regulations promulgated thereunder) as and to the extent set forth in such claw-back policy or the Award Agreement.
10.16 Titles and Headings. The titles and headings in the Plan are for convenience of reference only and, if any conflict, the Plans text, rather than such titles or headings, will control.
10.17 Conformity to Securities Laws. Participant acknowledges that the Plan is intended to conform to the extent necessary with Applicable Laws. Notwithstanding anything herein to the contrary, the Plan and all Awards will be administered only in conformance with Applicable Laws. To the extent Applicable Laws permit, the Plan and all Award Agreements will be deemed amended as necessary to conform to Applicable Laws.
10.18 Relationship to Other Benefits. No payment under the Plan will be taken into account in determining any benefits under any pension, retirement, savings, profit sharing, group insurance, welfare or other benefit plan of the Company or any Subsidiary except as expressly provided in writing in such other plan or an agreement thereunder.
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10.19 Broker-Assisted Sales. In the event of a broker-assisted sale of Shares in connection with the payment of amounts owed by a Participant under or with respect to the Plan or Awards, including amounts to be paid under the final sentence of Section 9.5: (a) any Shares to be sold through the broker-assisted sale will be sold on the day the payment first becomes due, or as soon thereafter as practicable; (b) such Shares may be sold as part of a block trade with other Participants in the Plan in which all participants receive an average price; (c) the applicable Participant will be responsible for all brokers fees and other costs of sale, and by accepting an Award, each Participant agrees to indemnify and hold the Company harmless from any losses, costs, damages, or expenses relating to any such sale; (d) to the extent the Company or its designee receives proceeds of such sale that exceed the amount owed, the Company will pay such excess in cash to the applicable Participant as soon as reasonably practicable; (e) the Company and its designees are under no obligation to arrange for such sale at any particular price; and (f) in the event the proceeds of such sale are insufficient to satisfy the Participants applicable obligation, the Participant may be required to pay immediately upon demand to the Company or its designee an amount in cash sufficient to satisfy any remaining portion of the Participants obligation.
ARTICLE XI.
DEFINITIONS
As used in the Plan, the following words and phrases will have the following meanings:
11.1 Administrator means the Committee.
11.2 Applicable Laws means the requirements relating to the administration of equity incentive plans under U.S. federal and state securities, tax and other applicable laws, rules and regulations, the applicable rules of any stock exchange or quotation system on which the Common Stock is listed or quoted and the applicable laws and rules of any foreign country or other jurisdiction where Awards are granted.
11.3 Award means, individually or collectively, a grant under the Plan of Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units or Other Stock or Cash Based Awards.
11.4 Award Agreement means a written agreement evidencing an Award, which may be electronic, that contains such terms and conditions as the Administrator determines, consistent with and subject to the terms and conditions of the Plan.
11.5 Board means the Board of Directors of the Company.
11.6 Cause shall mean (a) the Administrators determination that the Participant failed to substantially perform the Participants duties (other than any such failure resulting from the Participants Disability); (b) the Administrators determination that the Participant failed to carry out, or comply with any lawful and reasonable directive of the Board or the Participants immediate supervisor; (c) the Participants conviction, plea of no contest, plea of nolo contendere, or imposition of unadjudicated probation for any felony, indictable offense or crime involving moral turpitude; (d) the Participants unlawful use (including being under the influence) or possession of illegal drugs on the premises of the Company or any of its Subsidiaries or while performing the Participants duties and responsibilities; or (e) the Participants commission of an act of fraud, embezzlement, misappropriation, misconduct, or breach of fiduciary duty against the Company of any of its Subsidiaries. Notwithstanding the foregoing, if the Participant is a party to a written employment or consulting agreement with the Company (or its Subsidiary) in which the term cause is defined, then Cause shall be as such term is defined in the applicable written employment or consulting agreement.
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11.7 Change in Control means and includes each of the following:
(a) A transaction or series of transactions (other than an offering of Common Stock to the general public through a registration statement filed with the Securities and Exchange Commission or a transaction or series of transactions that meets the requirements of clauses (i) and (ii) of subsection (c) below) whereby any person or related group of persons (as such terms are used in Sections 13(d) and 14(d)(2) of the Exchange Act) (other than the Company, any of its Subsidiaries, an employee benefit plan maintained by the Company or any of its Subsidiaries or a person that, prior to such transaction, directly or indirectly controls, is controlled by, or is under common control with, the Company) directly or indirectly acquires beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act) of securities of the Company possessing more than 50% of the total combined voting power of the Companys securities outstanding immediately after such acquisition; or
(b) During any period of two consecutive years, individuals who, at the beginning of such period, constitute the Board together with any new Director(s) (other than a Director designated by a person who shall have entered into an agreement with the Company to effect a transaction described in subsections (a) or (c)) whose election by the Board or nomination for election by the Companys stockholders was approved by a vote of at least two-thirds of the Directors then still in office who either were Directors at the beginning of the two-year period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority thereof; or
(c) The consummation by the Company (whether directly involving the Company or indirectly involving the Company through one or more intermediaries) of (x) a merger, consolidation, reorganization, or business combination or (y) a sale or other disposition of all or substantially all of the Companys assets in any single transaction or series of related transactions or (z) the acquisition of assets or stock of another entity, in each case other than a transaction:
(i) which results in the Companys voting securities outstanding immediately before the transaction continuing to represent (either by remaining outstanding or by being converted into voting securities of the Company or the person that, as a result of the transaction, controls, directly or indirectly, the Company or owns, directly or indirectly, all or substantially all of the Companys assets or otherwise succeeds to the business of the Company (the Company or such person, the Successor Entity)) directly or indirectly, at least a majority of the combined voting power of the Successor Entitys outstanding voting securities immediately after the transaction, and
(ii) after which no person or group beneficially owns voting securities representing 50% or more of the combined voting power of the Successor Entity; provided, however, that no person or group shall be treated for purposes of this clause (ii) as beneficially owning 50% or more of the combined voting power of the Successor Entity solely as a result of the voting power held in the Company prior to the consummation of the transaction.
Notwithstanding the foregoing, if a Change in Control constitutes a payment event with respect to any Award (or portion of any Award) that provides for the deferral of compensation that is subject to Section 409A, to the extent required to avoid the imposition of additional taxes under Section 409A, the transaction or event described in subsection (a), (b) or (c) with respect to such Award (or portion thereof) shall only constitute a Change in Control for purposes of the payment timing of such Award if such transaction also constitutes a change in control event, as defined in Treasury Regulation Section 1.409A-3(i)(5).
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The Administrator shall have full and final authority, which shall be exercised in its discretion, to determine conclusively whether a Change in Control has occurred pursuant to the above definition, the date of the occurrence of such Change in Control and any incidental matters relating thereto; provided that any exercise of authority in conjunction with a determination of whether a Change in Control is a change in control event as defined in Treasury Regulation Section 1.409A-3(i)(5) shall be consistent with such regulation.
11.8 Code means the Internal Revenue Code of 1986, as amended, and the regulations issued thereunder.
11.9 Committee means the Compensation Committee of the Board comprised of two or more Directors, each of whom is intended to qualify as a Non-Employee Director and an Independent Director.
11.10 Common Stock means the common stock of the Company.
11.11 Company means Airgain, Inc., a Delaware corporation, or any successor.
11.12 Consultant means any person, including any adviser, engaged by the Company or its parent or Subsidiary to render services to such entity if the consultant or adviser: (a) renders bona fide services to the Company; (b) renders services not in connection with the offer or sale of securities in a capital-raising transaction and does not directly or indirectly promote or maintain a market for the Companys securities; and (c) is a natural person.
11.13 Designated Beneficiary means the beneficiary or beneficiaries the Participant designates, in a manner the Administrator determines, to receive amounts due or exercise the Participants rights if the Participant dies or becomes incapacitated. Without a Participants effective designation, Designated Beneficiary will mean the Participants estate.
11.14 Director means a Board member.
11.15 Disability means a permanent and total disability under Section 22(e)(3) of the Code, as amended.
11.16 Dividend Equivalents means a right granted to a Participant under the Plan to receive the equivalent value (in cash or Shares) of dividends paid on Shares.
11.17 Eligible Person means any prospective Employee who has not previously been an Employee or Director of the Company or any Subsidiary, or who is commencing employment with the Company or any Subsidiary following a bona fide period of non-employment by the Company or any Subsidiary, if he or she is granted an Award in connection with his or her commencement of employment with the Company or any Subsidiary and such grant is an inducement material to his or her entering into employment with the Company or any Subsidiary (within the meaning of Nasdaq Stock Market Rule IM-5636-1 or any successor rule, if the Companys securities are traded on the Nasdaq Stock Market, and/or the applicable requirements of any other established stock exchange on which the Companys securities are traded, as applicable, as such rules and requirements may be amended from time to time). The Administrator may in its discretion adopt procedures from time to time to ensure that a prospective Employee is eligible to participate in the Plan prior to the granting of any Awards to such individual under the Plan (including without limitation a requirement that each such prospective Employee certify to the Company prior to the receipt of an Award under the Plan that he or she has not been previously employed by the Company or any Subsidiary, or if previously employed, has had a bona fide period of non-employment, and that the grant of Awards under the Plan is an inducement material to his or her agreement to enter into employment with the Company or any Subsidiary).
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11.18 Employee means any employee of the Company or its Subsidiaries.
11.19 Equity Restructuring means a nonreciprocal transaction between the Company and its stockholders, such as a stock dividend, stock split, spin-off or recapitalization through a large, nonrecurring cash dividend, that affects the number or kind of Shares (or other Company securities) or the share price of Common Stock (or other Company securities) and causes a change in the per share value of the Common Stock underlying outstanding Awards.
11.20 Exchange Act means the Securities Exchange Act of 1934, as amended.
11.21 Fair Market Value means, as of any date, the value of a Share of Common Stock determined as follows: (a) if the Common Stock is listed on any established stock exchange, its Fair Market Value will be the closing sales price for such Common Stock as quoted on such exchange for such date, or if no sale occurred on such date, the last day preceding such date during which a sale occurred, as reported in The Wall Street Journal or another source the Administrator deems reliable; (b) if the Common Stock is not traded on a stock exchange but is quoted on a national market or other quotation system, the closing sales price on such date, or if no sales occurred on such date, then on the last date preceding such date during which a sale occurred, as reported in The Wall Street Journal or another source the Administrator deems reliable; or (c) without an established market for the Common Stock, the Administrator will determine the Fair Market Value in its discretion.
11.22 Good Reason shall mean (a) a change in the Participants position with the Company (or its Subsidiary employing the Participant) that materially reduces the Participants authority, duties or responsibilities or the level of management to which he or she reports, (b) a material diminution in the Participants level of compensation (including base salary, fringe benefits and target bonuses under any corporate performance-based incentive programs), or (c) a relocation of the Participants place of employment by more than 50 miles, provided that such change, reduction or relocation is effected by the Company (or its Subsidiary employing the Participant) without the Participants consent. Notwithstanding the foregoing, if the Participant is a party to a written employment or consulting agreement with the Company (or its Subsidiary) in which the term good reason is defined, then Good Reason shall be as such term is defined in the applicable written employment or consulting agreement
11.23 Independent Director means a Director of the Company who is not an Employee of the Company or any Subsidiary and who qualifies as independent within the meaning of Nasdaq Stock Market Rule 5605(a)(2), or any successor rule, if the Companys securities are traded on the Nasdaq Stock Market, and/or the applicable requirements of any other established stock exchange on which the Companys securities are traded, as applicable, as such rules and requirements may be amended from time to time.
11.24 Non-Employee Director means a non-employee director within the meaning of Rule 16b-3.
11.25 Non-Qualified Stock Option means an Option not intended or not qualifying as an incentive stock option as defined in Section 422 of the Code.
11.26 Option means an option to purchase Shares.
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11.27 Other Stock or Cash Based Awards means cash awards, awards of Shares, and other awards valued wholly or partially by referring to, or are otherwise based on, Shares or other property.
11.28 Overall Share Limit means 300,000 Shares.
11.29 Participant means an Eligible Person who has been granted an Award.
11.30 Plan means this Airgain, Inc. 2021 Employment Inducement Incentive Award Plan.
11.31 Restricted Stock means Shares awarded to a Participant under Article VI subject to certain vesting conditions and other restrictions.
11.32 Restricted Stock Unit means an unfunded, unsecured right to receive, on the applicable settlement date, one Share or an amount in cash or other consideration determined by the Administrator to be of equal value as of such settlement date, subject to certain vesting conditions and other restrictions.
11.33 Rule 16b-3 means Rule 16b-3 promulgated under the Exchange Act.
11.34 Section 409A means Section 409A of the Code and all regulations, guidance, compliance programs and other interpretative authority thereunder.
11.35 Securities Act means the Securities Act of 1933, as amended.
11.36 Service Provider means an Employee, Consultant or Director.
11.37 Shares means shares of Common Stock.
11.38 Stock Appreciation Right means a stock appreciation right granted under Article V.
11.39 Subsidiary means any entity (other than the Company), whether domestic or foreign, in an unbroken chain of entities beginning with the Company if each of the entities other than the last entity in the unbroken chain beneficially owns, at the time of the determination, securities or interests representing at least 50% of the total combined voting power of all classes of securities or interests in one of the other entities in such chain.
11.40 Termination of Service means the date the Participant ceases to be a Service Provider.
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Exhibit 10.19
AIRGAIN, INC.
2021 EMPLOYMENT INDUCEMENT INCENTIVE AWARD PLAN
STOCK OPTION GRANT NOTICE
Capitalized terms not specifically defined in this Stock Option Grant Notice (the Grant Notice) have the meanings given to them in the 2021 Employment Inducement Incentive Award Plan (as amended from time to time, the Plan) of Airgain, Inc. (the Company).
The Company hereby grants to the participant listed below (Participant) the stock option described in this Grant Notice (the Option), subject to the terms and conditions of the Plan and the Stock Option Agreement attached hereto as Exhibit A (the Agreement), both of which are incorporated into this Grant Notice by reference.
Participant: | %%FIRST_NAME%-% %%LAST_NAME%-% | |||
Grant Date: | %%OPTION_DATE,MM/DD/YYYY%-% | |||
Exercise Price per Share: | %%OPTION_PRICE,$999,999,999.99%-% | |||
Shares Subject to the Option: | %%TOTAL_SHARES_GRANTED,999,999,999%-% | |||
Final Expiration Date: | %%EXPIRE_DATE_PERIOD1,MM/DD/YYYY%-% | |||
Vesting Commencement Date: | %%VEST_BASE_DATE,MM/DD/YYYY%-% | |||
Vesting Schedule: | ||||
Vest Date | Vest Type | Shares Vesting | ||
%%VEST_DATE_PERIOD1,MM/DD/YYYY%-% | %%VEST_TYPE_PERIOD1%-% | %%SHARES_PERIOD1,999,999,999%-% | ||
%%VEST_DATE_PERIOD2,MM/DD/YYYY%-% | %%VEST_TYPE_PERIOD2%-% | %%SHARES_PERIOD2,999,999,999%-% | ||
Type of Option | Non-Qualified Stock Option |
By electronically accepting this document, Participant agrees to be bound by the terms of this Grant Notice, the Plan and the Agreement. Participant has reviewed the Plan, this Grant Notice and the Agreement in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Grant Notice and fully understands all provisions of the Plan, this Grant Notice and the Agreement. Participant has been provided with a copy or electronic access to a copy of the prospectus for the Plan. Participant hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Administrator upon any questions arising under the Plan, this Grant Notice or the Agreement.
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STOCK OPTION AGREEMENT
Capitalized terms not specifically defined in this Agreement have the meanings specified in the Grant Notice or, if not defined in the Grant Notice, in the Plan.
ARTICLE XII.
GENERAL
1.1 Grant of Option; Employment Inducement Award. Pursuant to the Grant Notice to which this Agreement is attached, the Company has granted to Participant the Option effective as of the grant date set forth in the Grant Notice (the Grant Date). The Option is a Non-Qualified Stock Option. The Option is intended to constitute an employment inducement award under Nasdaq Stock Market (Nasdaq) Rule 5635(c)(4), and consequently is intended to be exempt from the Nasdaq rules regarding stockholder approval of stock option plans or other equity compensation arrangements. This Agreement and the terms and conditions of the Option shall be interpreted in accordance and consistent with such exemption.
1.2 Incorporation of Terms of Plan. The Option is subject to the terms and conditions set forth in this Agreement and the Plan, which is incorporated herein by reference. In the event of any inconsistency between the Plan and this Agreement, the terms of the Plan will control.
ARTICLE XIII.
PERIOD OF EXERCISABILITY
2.1 Commencement of Exercisability. The Option will vest and become exercisable according to the vesting schedule in the Grant Notice (the Vesting Schedule) except that any fraction of a Share as to which the Option would be vested or exercisable will be accumulated and will vest and become exercisable only when a whole Share has accumulated. Notwithstanding anything in the Grant Notice, the Plan or this Agreement to the contrary, unless the Administrator otherwise determines, the Option will immediately expire and be forfeited as to any portion that is not vested and exercisable as of Participants Termination of Service for any reason.
2.2 Duration of Exercisability. The Vesting Schedule is cumulative. Any portion of the Option which vests and becomes exercisable will remain vested and exercisable until the Option expires. The Option will be forfeited immediately upon its expiration.
2.3 Expiration of Option. Subject to Section 5.3 of the Plan, the Option may not be exercised to any extent by anyone after, and will expire on, the first of the following to occur:
(a) The final expiration date in the Grant Notice;
(b) Except as the Administrator may otherwise approve, the expiration of three (3) months from the date of Participants Termination of Service, unless Participants Termination of Service is for Cause or by reason of Participants death or Disability;
(c) Except as the Administrator may otherwise approve, the expiration of one (1) year from the date of Participants Termination of Service by reason of Participants death or Disability; and
(d) Except as the Administrator may otherwise approve, Participants Termination of Service for Cause.
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ARTICLE XIV.
EXERCISE OF OPTION
3.1 Person Eligible to Exercise. During Participants lifetime, only Participant may exercise the Option. After Participants death, any exercisable portion of the Option may, prior to the time the Option expires, be exercised by Participants Designated Beneficiary as provided in the Plan.
3.2 Partial Exercise. Any exercisable portion of the Option or the entire Option, if then wholly exercisable, may be exercised, in whole or in part, according to the procedures in the Plan at any time prior to the time the Option or portion thereof expires, except that the Option may only be exercised for whole Shares.
3.3 Tax Withholding.
(a) The Company has the right and option, but not the obligation, to treat Participants failure to provide timely payment in accordance with the Plan of any withholding tax arising in connection with the Option as Participants election to satisfy all or any portion of the withholding tax by requesting the Company retain Shares otherwise issuable under the Option.
(b) Participant acknowledges that Participant is ultimately liable and responsible for all taxes owed in connection with the Option, regardless of any action the Company or any Subsidiary takes with respect to any tax withholding obligations that arise in connection with the Option. Neither the Company nor any Subsidiary makes any representation or undertaking regarding the treatment of any tax withholding in connection with the awarding, vesting or exercise of the Option or the subsequent sale of Shares. The Company and the Subsidiaries do not commit and are under no obligation to structure the Option to reduce or eliminate Participants tax liability.
ARTICLE XV.
OTHER PROVISIONS
4.1 Adjustments. Participant acknowledges that the Option is subject to adjustment, modification and termination in certain events as provided in this Agreement and the Plan.
4.2 Notices. Any notice to be given under the terms of this Agreement to the Company must be in writing and addressed to the Company in care of the Companys Secretary at the Companys principal office or the Secretarys then-current email address or facsimile number. Any notice to be given under the terms of this Agreement to Participant must be in writing and addressed to Participant (or, if Participant is then deceased, to the person entitled to exercise the Option) at Participants last known mailing address, email address or facsimile number in the Companys personnel files. By a notice given pursuant to this Section, either party may designate a different address for notices to be given to that party. Any notice will be deemed duly given when actually received, when sent by email, when sent by certified mail (return receipt requested) and deposited with postage prepaid in a post office or branch post office regularly maintained by the United States Postal Service, when delivered by a nationally recognized express shipping company or upon receipt of a facsimile transmission confirmation.
4.3 Titles. Titles are provided herein for convenience only and are not to serve as a basis for interpretation or construction of this Agreement.
4.4 Conformity to Securities Laws. Participant acknowledges that the Plan, the Grant Notice and this Agreement are intended to conform to the extent necessary with all Applicable Laws and, to the extent Applicable Laws permit, will be deemed amended as necessary to conform to Applicable Laws.
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4.5 Successors and Assigns. The Company may assign any of its rights under this Agreement to single or multiple assignees, and this Agreement will inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer set forth in the Plan, this Agreement will be binding upon and inure to the benefit of the heirs, legatees, legal representatives, successors and assigns of the parties hereto.
4.6 Limitations Applicable to Section 16 Persons. Notwithstanding any other provision of the Plan or this Agreement, if Participant is subject to Section 16 of the Exchange Act, the Plan, the Grant Notice, this Agreement and the Option will be subject to any additional limitations set forth in any applicable exemptive rule under Section 16 of the Exchange Act (including any amendment to Rule 16b-3) that are requirements for the application of such exemptive rule. To the extent Applicable Laws permit, this Agreement will be deemed amended as necessary to conform to such applicable exemptive rule.
4.7 Entire Agreement. The Plan, the Grant Notice and this Agreement (including any exhibit hereto) constitute the entire agreement of the parties and supersede in their entirety all prior undertakings and agreements of the Company and Participant with respect to the subject matter hereof.
4.8 Agreement Severable. In the event that any provision of the Grant Notice or this Agreement is held illegal or invalid, the provision will be severable from, and the illegality or invalidity of the provision will not be construed to have any effect on, the remaining provisions of the Grant Notice or this Agreement.
4.9 Limitation on Participants Rights. Participation in the Plan confers no rights or interests other than as herein provided. This Agreement creates only a contractual obligation on the part of the Company as to amounts payable and may not be construed as creating a trust. Neither the Plan nor any underlying program, in and of itself, has any assets. Participant will have only the rights of a general unsecured creditor of the Company with respect to amounts credited and benefits payable, if any, with respect to the Option, and rights no greater than the right to receive the Shares as a general unsecured creditor with respect to the Option, as and when exercised pursuant to the terms hereof.
4.10 Not a Contract of Employment. Nothing in the Plan, the Grant Notice or this Agreement confers upon Participant any right to continue in the employ or service of the Company or any Subsidiary or interferes with or restricts in any way the rights of the Company and its Subsidiaries, which rights are hereby expressly reserved, to discharge or terminate the services of Participant at any time for any reason whatsoever, with or without Cause, except to the extent expressly provided otherwise in a written agreement between the Company or a Subsidiary and Participant.
4.11 Counterparts. The Grant Notice may be executed in one or more counterparts, including by way of any electronic signature, subject to Applicable Law, each of which will be deemed an original and all of which together will constitute one instrument.
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Exhibit 23.1
Consent of Independent Registered Public Accounting Firm
The Board of Directors
Airgain, Inc.:
We consent to the incorporation by reference in the registration statement No. 333-229680 on Form S-3 and No. 333-213770 on Form S-8 of Airgain, Inc. of our report dated February 19, 2021, with respect to the balance sheets of Airgain, Inc. as of December 31, 2020 and 2019, the related statements of operations, comprehensive income (loss), stockholders equity, and cash flows for each of the years in the two-year period ended December 31, 2020, and the related notes, which report appears in the December 31, 2020 annual report on Form 10-K of Airgain, Inc.
/s/ KPMG, LLP
San Diego, California
February 19, 2021
Exhibit 31.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Jacob Suen, certify that:
1. I have reviewed this annual report on Form 10-K of Airgain, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a. designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b. designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c. evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d. disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and
5. The registrants other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions):
a. all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and
b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting.
Date: February 19, 2021 |
/s/ Jacob Suen |
|||
Jacob Suen | ||||
President and Chief Executive Officer (principal executive officer) |
Exhibit 31.2
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, David B. Lyle, certify that:
1. I have reviewed this annual report on Form 10-K of Airgain, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a. designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b. designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c. evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d. disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and
5. The registrants other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions):
a. all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and
b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting.
Date: February 19, 2021 |
/s/ David B. Lyle |
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David B. Lyle | ||||
Chief Financial Officer and Secretary (principal financial and accounting officer) |
Exhibit 32.1
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the annual report of Airgain, Inc. (the Company) on Form 10-K for the year ended December 31, 2020, as filed with the Securities and Exchange Commission on the date hereof (the Report), I, Jacob Suen, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: February 19, 2021 |
/s/ Jacob Suen |
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Jacob Suen | ||||
President and Chief Executive Officer (principal executive officer) |
The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350 and is not being filed as part of the Report or as a separate disclosure document.
Exhibit 32.2
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the annual report of Airgain, Inc. (the Company) on Form 10-K for the year ended December 31, 2020, as filed with the Securities and Exchange Commission on the date hereof (the Report), I, David B. Lyle, Chief Financial Officer and Secretary of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: February 19, 2021 |
/s/ David B. Lyle |
|||
David B. Lyle | ||||
Chief Financial Officer and Secretary (principal financial and accounting officer) |
The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350 and is not being filed as part of the Report or as a separate disclosure document.