SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
the Securities Exchange Act of 1934
(Amendment (Amendment No. )
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proposals. Such other business will be transacted as may properly come before the annual meeting. IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE SHAREHOLDER IMPORTANT INFORMATION ABOUT THE Who Can Vote? You do not need to attend the directors. May I Change or Revoke My Proxy? This practice, referred to as “householding,” benefits both you and us. It reduces the volume of duplicate information received at your household and helps to reduce our expenses. The rule applies to our Notices, annual reports, proxy statements and information statements. Once you receive notice from your broker or from us that communications to your address will be “householded,” the practice will continue until you are otherwise notified or until you revoke your consent to the practice. Stockholders who participate in householding will continue to have access to and utilize separate proxy voting instructions. DIRECTORS director. annual meeting is required to ratify the appointment of Friedman as our independent registered public accounting firm for the fiscal year ending December 31, 2020. Abstentions will be treated as votes against this proposal. Brokerage firms have authority to vote customers’ unvoted shares held by the firms in street name on this proposal. If a broker does not exercise this authority, such broker non-votes will have no effect on the results of this vote. We are not required to obtain the approval of our stockholders to select our independent registered public accounting firm. However, if our stockholders do not ratify the selection of Friedman as our independent registered public accounting firm for 2020, our Audit Committee of our Board of Directors will reconsider its selection. EQUITY INCENTIVE PLAN Vote Required and Board of Directors’ Recommendation The affirmative vote of the holders of a majority of the shares of our Common Stock present and 2020 Plan. ADVISORY VOTE ON APPROVAL OF EXECUTIVE COMPENSATION AS DISCLOSED IN THIS PROXY STATEMENT. hereby APPROVED.” named executive officers, as described in this proxy statement. Abstentions will be treated as votes against this proposal. Brokerage firms do not have authority to vote customers’ unvoted ADDITIONAL PROXIES IF THERE ARE NOT SUFFICIENT VOTES IN FAVOR OF PROPOSALS A “broker non-vote” or a failure to submit a proxy or vote at the annual meeting will have no effect on the outcome of the vote for this Proposal 5. For purposes of the vote on this Proposal 5, an abstention will have the same effect as a vote “AGAINST” such proposal. If any other business is properly brought before the annual meeting, proxies will be voted in accordance with the judgment of the persons named therein. ![[MISSING IMAGE: lg_xpresspagroup-bw.jpg]](https://files.docoh.com/DEF 14A/0001104659-20-106428/lg_xpresspagroup-bw.jpg){kind=small}
254 West 31st31st Street, 11th11th Floor
New York, New York 10001May 6,special2020 annual meeting of stockholders of XpresSpa Group, Inc. to be held at 11:00 A.M. EDTEST on Thursday, MayWednesday, October 28, 2020.special2020 annual meeting will be a virtual meeting via live webcast on the internet. You will be able to attend the special meeting, vote and submit your questions during the special meeting by visitinghttps://web.lumiagm.com/249967429www.virtualshareholdermeeting.com/XSPA2020, entering your control number and entering the meeting password included on the proxy card you receive. You will not be able to attend the special meeting in person.specialannual meeting, we will ask stockholders to consider the following proposals:1.To authorize, for purposes of complying with Nasdaq Listing Rule 5635(d), the issuance of shares of our Common Stock in connection with certain warrant exchange agreements entered into in March 2020;2.To authorize, for purposes of complying with Nasdaq Listing Rule 5635(d), the issuance of shares of our Common Stock pursuant to that certain Fourth Amended and Restated Convertible Promissory Note, dated March 6, 2020, by and between the Company and B3D, LLC;3.To approve a proposed amendment to the Certificate of Designation, Preferences, Rights and Limitations of our Series E Convertible Preferred Stock to provide for the voluntary adjustment of the conversion price by our Board of Directors in its discretion, and to authorize, for purposes of complying with Nasdaq Listing Rule 5635(d), the issuance of shares of our Common Stock upon the conversion of our Series E Convertible Preferred Stock;4.To approve a proposed amendment to the XpresSpa Group, Inc. Amended and Restated Certificate of Incorporation to effect a reverse stock split of our issued and outstanding shares of Common Stock, at a ratio of between 1-for-2 and 1-for-25;5.To approve an adjournment of our special meeting of stockholders, if necessary, to solicit additional proxies if there are not sufficient votes in favor of the proposals referred to in proposals (1) through (4).proposals.specialannual meeting. Whether you plan to attend the specialannual meeting or not, it is important that you cast your vote either at the special meetingin person or by proxy. You may vote over the Internet as well as by telephone or by mail. When you have finished reading the proxy statement, you are urged to vote in accordance with the instructions set forth in this proxy statement. We encourage you to vote by proxy so that your shares will be represented and voted at the meeting, whether or not you can attend.specialannual meeting.Sincerely,Douglas SatzmanChief Executive Officer![[MISSING IMAGE: lg_xpresspa.jpg]](https://files.docoh.com/DEF 14A/0001104659-20-057569/image_002.jpg)
Chief Executive Officer
254 West 31st31st Street, 11th11th Floor
New York, New York 10001May 6,SPECIALANNUAL MEETING OF STOCKHOLDERSTIME:11:00 A.M. EDTDATE:May 28, 2020ACCESS:The special meeting will be a virtual meeting via live webcast on the Internet. You will be able to attend the special meeting, vote and submit your questions during the meeting by visitinghttps://web.lumiagm.com/249967429, entering your control number and entering the meeting password included on the proxy card you receive.1.To authorize, for purposes of complying with Nasdaq Listing Rule 5635(d), the issuance of shares of our Common Stock in connection with certain warrant exchange agreements entered into in March 2020;2.To authorize, for purposes of complying with Nasdaq Listing Rule 5635(d), the issuance of shares of our Common Stock pursuant to that certain Fourth Amended and Restated Convertible Promissory Note, dated March 6, 2020, by and between the Company and B3D, LLC;3.To approve a proposed amendment to the Certificate of Designation, Preferences, Rights and Limitations of our Series E Convertible Preferred Stock to provide for the voluntary adjustment of the conversion price by our Board of Directors in its discretion, and to authorize, for purposes of complying with Nasdaq Listing Rule 5635(d), the issuance of shares of our Common Stock upon the conversion of our Series E Convertible Preferred Stock;4.To approve a proposed amendment to the XpresSpa Group, Inc. Amended and Restated Certificate of Incorporation to effect a reverse stock split of our issued and outstanding shares of Common Stock, at a ratio of between 1-for-2 and 1-for-25;5.To approve an adjournment of our special meeting of stockholders, if necessary, to solicit additional proxies if there are not sufficient votes in favor of the proposals referred to in proposals (1) through (4).or Series E Preferred Stock at the close of business on March 30,September 8, 2020. A list of stockholders of record will be available at the specialannual meeting and, during the 10 days prior to the specialannual meeting, athttps://web.lumiagm.com/249967429www.virtualshareholdermeeting.com/XSPA2020.specialannual meeting.Whether you plan to attend the specialannual meeting or not, we urge you to vote and submit your proxy by the Internet telephone or mail in order to ensure the presence of a quorum.quorum. You may change or revoke your proxy at any time before it is voted at the meeting.BY ORDER OF THE BOARD OF DIRECTORSSincerely,Douglas SatzmanChief Executive Officer
Chief Executive Officeri
254 West 31st31st Street, 11th11th Floor
New York, New York 10001SPECIAL
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAYOCTOBER 28, 2020specialannual meeting of stockholders, contains information about the specialannual meeting of stockholders of XpresSpa Group, Inc. including any adjournments or postponements of the specialannual meeting. We are holding the specialannual meeting at 11:00 A.M. EDT,a.m. local time, on Thursday, MayWednesday, October 28, 2020. As a result of the continuing public health and travel risks and concerns due to COVID-19, the special2020 annual meeting will be a virtual meeting via live webcast on the internet. You will be able to attend the special meeting, vote and submit your questions during the special meeting by visitinghttps://web.lumiagm.com/249967429www.virtualshareholdermeeting.com/XSPA2020, entering your control number and entering the meeting password included on the proxy card you receive. You will not be able to attend the special2020 annual meeting in person.specialannual meeting.May 7,September 18, 2020, we intend to beginbegan sending this proxy statement, the attached Notice of SpecialAnnual Meeting of Stockholders and the enclosed proxy card to all stockholders entitled to vote at the specialannual meeting.
Although not part of this proxy statement, we are also sending, along with this proxy statement, our 2019 annual report, as amended, which includes our financial statements for the fiscal year ended December 31, 2019.1
MEETING TO BE HELD ON MAYOCTOBER 28, 2020www.proxyvote.com.www.proxyvote.com. To view this material please have your control number(s) available that appears on your proxy card. On this website, you can also elect to receive future distributions of our proxy statements by electronic delivery.2SPECIALANNUAL MEETING AND VOTINGspecialannual meeting of stockholders to be held virtually via live webcast on the internetOctober 28, 2020, at 11:00 A.M. EDT, on Thursday, May 28, 2020a.m. local time and any adjournments of the meeting, which we refer to as the specialannual meeting. The proxy statement, along with the accompanying Notice of SpecialAnnual Meeting of Stockholders, summarizes the purposes of the meeting and the information you need to know to vote at the specialannual meeting.SpecialAnnual Meeting of Stockholders, and the proxy card and a copy of our Annual Report on Form 10-K for the fiscal year ended December 31, 2019, as amended, because you owned shares of our Common Stock, par value $0.01 per share (the “Common Stock”) on the record date. We intend to commence distribution of the proxy materials to stockholders on or about May 7,September 18, 2020.SpecialAnnual Meeting?specialannual meeting will be held in a virtual meeting format only. We have designed our virtual format to enhance, rather than constrain, stockholder access, participation and communication. Forspecialannual meeting so they can ask questions of our Board of Directors or management, as time permits.SpecialAnnual Meeting?specialannual meeting, voting at the specialannual meeting or submitting questions at the specialannual meeting. If you encounter any difficulties accessing the virtual special meeting during the check-in or meeting time, please call 1 (800) 937-5449.Why is the Company seeking approval for the issuance of shares of Common Stock in connection with the certain warrant exchange agreements entered into in March 2020?On March 19, 2020, we entered into separate Warrant Exchange Agreements (the “Exchange Agreements”) with the holders of certain existing warrants (the “Exchanged Warrants”) to purchase shares of Common Stock. The Exchanged Warrants were originally issued (i) pursuant to a securities purchase agreement, dated as of May 15, 2018, and in connection with a related consent and (ii) in connection with that certain Agreement and Plan of Merger by and among the Company (formerly known as FORM Holdings Corp.), FHXMS, LLC, XpresSpa Holdings, LLC and Mistral XH Representative, LLC, as representative of the unitholders, dated October 25, 2016, as subsequently amended. Pursuant to the Exchange Agreements, on the closing date and subject to (i) the receipt of approval of our stockholders as required by the applicable rules and regulations of the Nasdaq Stock Market and (ii) our having a sufficient number of shares of Common Stock authorized for issuance in connection with the warrant exchange, the holders of Exchanged Warrants will exchange each Exchanged Warrant for a number of shares of Common Stock (the “New Shares”) equal to the product of (i) the number of shares of Common Stock underlying such Exchanged Warrants (based on a formula related to the closing price of the Common Stock at the time of the closing of the exchange as further detailed in the Exchange Agreements) and (ii) 1.5.Nasdaq Listing Rule 5635(d) generally requires us to obtain stockholder approval prior to issuing more than 20% of our outstanding shares of Common Stock under a financing transaction. We are seeking the approval of our stockholders pursuant to Nasdaq Listing Rule 5635(d) with respect to issuances involving our Common Stock in connection with the Exchange Agreements.For more information, see “Proposal 1: Issuance of Shares of Common Stock in connection with Certain Exchange Agreements” contained elsewhere in this proxy statement.Why is the Company seeking approval for the issuance of shares of Common Stock pursuant to the Fourth Amended and Restated Convertible Promissory Note?On January 9, 2020, our wholly-owned subsidiary XpresSpa Holdings, LLC entered into a fifth amendment to its existing credit agreement with B3D, LLC (“B3D”) in order to, among other provisions, amend and restate its existing convertible promissory note (the “B3D Note”) in order to increase the principal amount owed to B3D from $7.0 million to $7.15 million, which additional $150,000 in principal and any interest accrued thereon will be convertible, at B3D’s option, into shares of our Common Stock subject to receipt of the approval of our stockholders in accordance with applicable law and the rules and regulations of the Nasdaq Stock Market. In addition, on March 6, 2020, XpresSpa Holdings, LLC entered into a sixth amendment to its existing credit agreement with B3D in order to, among other provisions, further amend and restate the B3D Note in order to increase the principal amount owed to B3D from $7.15 million to $7.9 million, which additional $750,000 in principal and any interest accrued thereon will be convertible, at B3D’s option, into shares of our Common Stock; provided, however, that the additional $750,000 in principal and any interest accrued thereon shall neither be convertible into Common Stock nor interest payable in Common Stock prior to receipt of the approval of our stockholders in accordance with applicable law and the rules and regulations of the Nasdaq Stock Market3Nasdaq Listing Rule 5635(d) generally requires us to obtain stockholder approval prior to issuing more than 20% of our outstanding shares of Common Stock under a financing transaction. We are seeking the approval of our stockholders pursuant to Nasdaq Listing Rule 5635(d) with respect to issuances involving our Common Stock pursuant to the B3D Note.For more information, see “Proposal 2: Issuance of Shares of Common Stock pursuant to that Certain Fourth Amended and Restated Convertible Promissory Note” contained elsewhere in this proxy statement.Why is the Company seeking approval for a proposed amendment to the Certificate of Designation, Preferences, Rights and Limitations of our Series E Convertible Preferred Stock to provide for the voluntary adjustment of the conversion price by our Board of Directors in its discretion, and to authorize, for purposes of complying with Nasdaq Listing Rule 5635(d), the issuance of shares of our Common Stock upon the conversion of our Series E Convertible Preferred Stock?On November 12, 2018, we filed with the Secretary of State of the State of Delaware a Certificate of Designation of Preferences, Rights and Limitations of Series E Convertible Preferred Stock (the “Series E Certificate of Designation”), which provided for the designation of 1,473,300 shares of Series E Convertible Preferred Stock (the “Series E Preferred Stock”). On July 8, 2019, we filed a certificate of amendment to the Series E Certificate of Designation to (i) increase the number of authorized shares of Series E Preferred Stock to 2,397,060 and (ii) reduce the conversion price to $2.00 upon receipt of shareholder approval, which approval was received on October 2, 2019. We are requesting the approval of our stockholders to further amend the Series E Certificate of Designation to provide for the voluntary adjustment of the conversion price by our Board of Directors in its discretion, in order to provide the Board of Directors with greater flexibility in connection with potential future financings. In addition, the Series E Preferred Stock will mature on the seven (7) year anniversary of the initial issuance date, or November 12, 2025, and, upon maturity, all outstanding shares of Series E Preferred Stock will become payable in cash. Approving the Series E COD Amendment will enable our Board of Directors to reduce the conversion price in its discretion to entice the holders of Series E Preferred Stock to convert their shares into Common Stock, reducing the likelihood that the Company will be required to make cash payments upon maturity.For more information, see “Proposal 3: Approval of a proposed amendment to the Certificate of Designation, Preferences, Rights and Limitations of our Series E Convertible Preferred Stock to provide for the voluntary adjustment of the conversion price by our Board of Directors in its discretion, and to authorize, for purposes of complying with Nasdaq Listing Rule 5635(d), the issuance of shares of our Common Stock upon the conversion of our Series E Convertible Preferred Stock” contained elsewhere in this proxy statement.Why is the Company seeking approval for the reverse stock split?On January 2, 2020, we received a notification letter from The Nasdaq Stock Market informing us that for the last 30 consecutive business days, the bid price of our Common Stock had closed below $1.00 per share, which is the minimum required closing bid price for continued listing on The Nasdaq Capital Market pursuant to Listing Rule 5550(a)(2). This notice had no immediate effect on our Nasdaq listing; we have 180 calendar days, or until June 30, 2020, to regain compliance. To regain compliance, the closing bid price of our Common Stock must be at least $1.00 per share for a minimum of ten consecutive business days. On April 17, 2020, we received notice from Nasdaq, which stated that, due to recent market conditions, effective as of April 16, 2020, Nasdaq has determined to toll the compliance period for the minimum bid price requirement through June 30, 2020. On July 1, 2020, we will receive the balance of the pending compliance period. As a result of this extension, we now have until September 14, 2020 to regain compliance with the minimum bid price requirement. If we do not regain compliance by September 14, 2020, we may be eligible for additional time to regain compliance or if we are otherwise not eligible, we may request a hearing before a Hearings Panel.Our Board of Directors has approved the reverse stock split as a means of increasing the share price of our Common Stock to regain compliance with Listing Rule 5550(a)(2). Our Board of Directors believes that maintaining our listing on The Nasdaq Capital Market may provide a broader market for our Common Stock and facilitate the use of our Common Stock in financing and other transactions. We expect the reverse stock split to facilitate the continuation of such listing. We cannot assure you, however, that the reverse stock split will result in an increase in the per share price of our Common Stock, or if it does, how long the increase would be sustained, if at all. Although the reverse stock split is designed to raise the stock price, there is no guarantee that the share price will rise proportionately to the reverse stock split, so the end result could be a loss of value.For more information, see “Proposal 4: Reverse Stock Split” contained elsewhere in this proxy statement.or Series E Preferred Stock at the close of business on March 30,September 8, 2020 are entitled to vote at the specialannual meeting. On this record date, there were 53,304,40168,793,193 shares of our Common Stock outstanding and entitled to vote and 987,988 shares of our Series E Preferred Stock outstanding and entitled to vote. On an as-converted basis, holders of our Series E Preferred Stock are entitled to an aggregate of 1,531,381 votes. Our Common Stock and our Series E Preferred Stock areis our only classesclass of voting stock.4specialannual meeting to vote your shares. Shares represented by valid proxies, received in time for the specialannual meeting and not revoked prior to the specialannual meeting, will be voted at the specialannual meeting. For instructions on how to change or revoke your proxy, see “May I Change or Revoke My Proxy?Proxy?” below.Each shareThere is no cumulative voting in the election of our Series E Preferred Stock that you own entitles you to the number of votes equal to the number of shares of Common Stock into which your shares of Series E Preferred Stock could have been converted on the record date. This number is obtained by dividing the stated value of your Series E Preferred Stock ($3.10) by the conversion price in effect on the record date ($2.00). With respect to proposals 1 through 5, our Common Stock and Series E Preferred Stock vote together as a single class.specialannual meeting or not, we urge you to vote by proxy. All shares represented by valid proxies that we receive through this solicitation, and that are not revoked, will be voted in accordance with your instructions on the proxy card or as instructed via the Internet or telephone.Internet. You may specify whether your shares should be voted FOR or WITHHELD for each nominee for director, and whether your shares should be voted FOR, AGAINST or ABSTAIN with respect to each of the other proposals. If you properly submit a proxy without giving specific voting instructions, your shares will be voted in accordance with the Board of Directors’ recommendations as noted below. Voting by proxy will not affect your right to attend the specialannual meeting. If your shares are registered directly in your name through our stock transfer agent, American Stock Transfer & Trust Company, LLC, or you have stock certificates registered in your name, you may vote:·By the Internet or by telephone. Follow the instructions included in the proxy card to vote by Internet or telephone.·By mail. If you received a proxy card by mail, you can vote by mail by completing, signing, dating and returning the proxy card as instructed on the card. If you sign the proxy card but do not specify how you want your shares voted, they will be voted in accordance with the Board of Directors’ recommendations as noted below.·At the meeting. If you attend the virtual special meeting, you may vote during the special meeting by visitinghttps://web.lumiagm.com/249967429, entering your control number and entering the meeting password included on the proxy card you receive.MayOctober 27, 2020.heldnot registered in streetyour own name and you plan to vote your shares in person at the specialannual meeting, you should contact your broker or agent to obtain a legal proxy or broker’s proxy card and bring it to the specialannual meeting in order to vote. To vote during the special meeting, visithttps://web.lumiagm.com/249967429, enter your control number and enter the meeting password included on the proxy card you receive.·“FOR” the approval, for purposes of complying with Nasdaq Listing Rule 5635(d), of the issuance of shares of our Common Stock in connection with certain exchange agreements;·“FOR” the approval, for purposes of complying with Nasdaq Listing Rule 5635(d), of the issuance of shares of our Common Stock pursuant to that certain Fourth Amended and Restated Convertible Promissory Note;·“FOR” the proposed amendment to the Certificate of Designation, Preferences, Rights and Limitations of our Series E Convertible Preferred Stock to provide for the voluntary adjustment of the conversion price by our Board of Directors in its discretion, and to authorize, for purposes of complying with Nasdaq Listing Rule 5635(d), the issuance of shares of our Common Stock upon the conversion of our Series E Convertible Preferred Stock;·“FOR” the approval of the amendment to the XpresSpa Group, Inc. Amended and Restated Certificate of Incorporation to effect a reverse stock split of our issued and outstanding shares of Common Stock, at a ratio of between 1-for-2 and 1-for-25; and��“FOR” adjournment of our special meeting of stockholders, if necessary, to solicit additional proxies if there are not sufficient votes in favor of the proposals referred to above.specialannual meeting, your proxy provides that your shares will be voted by the proxy holder listed in the proxy in accordance with his or her best judgment. At the time this proxy statement was first made available, we knew of no matters that needed to be acted on at the specialannual meeting, other than those discussed in this proxy statement.5specialannual meeting. You may change or revoke your proxy in any one of the following ways:·if you received a proxy card, by signing a new proxy card with a date later than your previously delivered proxy and submitting it as instructed above;·by re-voting by the Internet or telephone as instructed above;·by notifying the Corporate Secretary of XpresSpa Group, Inc. in writing before the special meeting that you have revoked your proxy; or·by attending the special meeting virtually. Attending the special meeting virtually will not in and of itself revoke a previously submitted proxy. You must specifically request at the special meeting that it be revoked.Vote?Vote?” for each account to ensure that all of your shares are voted.2 and 3.3, 4 or 5. Therefore, we encourage you to provide voting instructions to your bank, broker or other nominee. This ensures your shares will be voted at the specialannual meeting and in the manner you desire. A “broker non-vote” will occur if your broker cannot vote your shares on a particular matter because it has not received instructions from you and does not have discretionary voting authority on that matter or because your broker chooses not to vote on a matter for which it does have discretionary voting authority. Proposal 1: IssuanceElection of SharesDirectors The nominees for director who receive the most votes (also known as a “plurality” of Common Stockthe votes cast) will be elected. You may vote either FOR all of the nominees, WITHHOLD your vote from all of the nominees or WITHHOLD your vote from any one or more of the nominees. Votes that are withheld will not be included in connection with Certain Exchange Agreementsthe vote tally for the election of the directors. Brokerage firms do not have authority to vote customers’ unvoted shares held by the firms in street name for the election of the directors. As a result, any shares not voted by a customer will be treated as a broker non-vote. Such broker non-votes will have no effect on the results of this vote. Proposal 2: Ratify Selection of Independent Registered Public Accounting Firm The affirmative vote of the holders of a majority of the total votes cast atshares of Common Stock present and entitled to vote on the virtual special meetingmatter either virtually or by proxy at the specialannual meeting is required to ratify the appointment of Friedman LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2020. Abstentions will be treated as votes AGAINST this proposal. Brokerage firms have authority to vote customers’ unvoted shares held by the firms in street name on this proposal. If a broker does not exercise this authority, such broker non-votes will have no effect on the results of this vote. We are not required to obtain the approval of our stockholders to select our independent registered public accounting firm. However, if our stockholders do not ratify the selection of Friedman LLP as our independent registered public accounting firm for 2020, our Audit Committee of our Board of Directors will reconsider its selection. Proposal 3: Approval of the XpresSpa Group, Inc. 2020 Equity Incentive Plan The affirmative vote of the holders of a majority of the shares of Common Stock present and entitled to vote on the matter either virtually or by proxy at the annual meeting is required to approve in accordance with Nasdaq Listing Rule 5635(d), the issuance of shares of our Common Stock2020 Plan. Abstentions will be treated as described in Proposal 1. Abstentions have no effect onvotes AGAINST this proposal. Brokerage firms do not have authority to vote customers’ unvoted shares held by the firms in street name on this proposal. As a result, any shares not voted by a customer will be treated as a broker non-vote. Such broker non-votes will have no effect on the results of this vote. Proposal 2: Issuance4: Approve an Advisory Vote on the Compensation of Shares of Common Stock pursuant to that Certain Fourth Amended and Restated Convertible Promissory Noteour Named Executive Officers The affirmative vote of the holders of a majority of the total votes cast atshares of Common Stock present and entitled to vote on the virtual special meetingmatter either in person or by proxy at the specialannual meeting is required to approve, in accordance with Nasdaq Listing Rule 5635(d),on an advisory basis, the issuance of sharescompensation of our Common Stocknamed executive officers, as described in Proposal 2.this proxy statement. Abstentions have no effect onwill be treated as votes AGAINST this proposal. Brokerage firms do not have authority to vote customers’ unvoted shares held by the firms in street name on this proposal. As a result, any shares not voted by a customer will be treated as a broker non-vote. Such broker non-votes will have no effect on the results of this vote.Proposal 3: Amendment to Although the Certificate of Designation, Preferences, Rightsadvisory vote is non-binding, the Compensation Committee and Limitations of our Series E Convertible Preferred Stock to provide for the voluntary adjustment of the conversion price by our Board of Directors in its discretion,will review the voting results and to authorize, for purposes of complying with Nasdaq Listing Rule 5635(d), the issuance of shares of our Common Stock upon the conversion of our Series E Convertible Preferred Stocktake them into consideration when making future decisions regarding executive compensation.The affirmative vote of a majority of the holders of our Common Stock and Series E Preferred Stock voting on an as-converted basis having voting power outstanding on the Record Date is required to approve the amendment to the Certificate of Designation, Preferences, Rights and Limitations of our Series E Convertible Preferred Stock to provide for the voluntary adjustment of the conversion price by our Board of Directors in its discretion. Brokerage firms do not have authority to vote customers’ unvoted shares held by the firms in street name on this proposal. As a result, any shares not voted by a customer will be treated as a broker non-vote. Such broker non-votes will have no effect on the results of this vote.6Proposal 4: Reverse Stock SplitThe affirmative vote of the holders of a majority of the shares of our Common Stock and Series E Preferred Stock voting on an as-converted basis having voting power outstanding on the record date is required to approve the amendment to our Amended and Restated Certificate of Incorporation to effect a reverse stock split of our Common Stock. Abstentions will be treated as votes against this proposal. Brokerage firms have authority to vote customers’ unvoted shares held by the firms in street name on this proposal. If a broker does not exercise this authority, such broker non-votes will have the same effect as a vote against such proposal. Proposal 5: Approve an Adjournment of the SpecialAnnual Meeting, if Necessary, to Solicit Additional Proxies if there are not Sufficient Votes in Favor of Proposals 12 through 4. Approval of the adjournment of the specialannual meeting, if necessary, to solicit additional proxies if there are not sufficient votes in favor of Proposals 12 through 4 requires the affirmative vote of the holders of a majority of the shares of Common Stock and Series E Preferred Stock voting on an as-converted basis present and entitled to vote on the matter either in personvirtually or by proxy at the specialannual meeting. A “broker non-vote” or a failure to submit a proxy or vote at the specialannual meeting will have no effect on the outcomeresults of the vote for this Proposal 5. For purposes of the vote onvote. Abstentions will be treated as votes AGAINST this Proposal 5, an abstention will have the same effect as a vote “AGAINST” such proposal. InspectorInspectors of Election, Broadridge Financial Solutions, Inc., examine these documents. Management will not know how you voted on a specific proposal unless it is necessary to meet legal requirements. We will, however, forward to management any written comments you make, on the proxy card or otherwise provide.SpecialAnnual Meeting?specialannual meeting, and we will publish preliminary, or final results, if available, in a Current Report on Form 8-K within four business days of the specialannual meeting. If final results are unavailable at the time we file the Form 8-K, then we will file an amended report on Form 8-K to disclose the final voting results within four business days after the final voting results are known.LLC®,LLC to assist in the solicitation of proxies and provide related advice and informational support, for a services fee and the reimbursement of customary disbursements that are not expected to exceed $27,500 in the aggregate.SpecialAnnual Meeting?and Series E Preferred Stock entitled to vote at the special meeting is necessary to constitute a quorum at the specialannual meeting. Votes of stockholdersspecialannual meeting virtuallyin person or by proxy, abstentions, and broker non-votes are counted for purposes of determining whether a quorum exists.SpecialAnnual Meetingspecialannual meeting will be held at 11:00 A.M. EDT,a.m. on Thursday, MayWednesday, October 28, 2020. The specialannual meeting will be held in a virtual meeting format only. To attend the virtual specialannual meeting, go tohttps://web.lumiagm.com/249967429www.virtualshareholdermeeting.com/XSPA2020 and enter your control number and the meeting password included on the proxy card you receive shortly before the meeting time, and follow the instructions for downloading the Webcast. You need not attend the special meeting in order to vote.SpecialAnnual Disclosure Documentsspecialannual disclosure documents allow us or your broker to send a single Notice or, if applicable, a single set of our proxy materials to any household at which two or more of our stockholders reside, if we or your broker believe that the stockholders are members of the same family.7·If your household received a single Notice or, if applicable, a single set of proxy materials this year, but you would prefer to receive your own copy, please contact XpresSpa Group’s Corporate Secretary at XpresSpa Group, Inc., 254 West 31st Street, 11th Floor, New York, New York, 10001.·If you do not wish to participate in “householding” and would like to receive your own Notice or, if applicable, set of our proxy materials in future years, follow the instructions described below. Conversely, if you share an address with another of our stockholders and together both of you would like to receive only a single Notice or, if applicable, set of proxy materials, follow these instructions:·If your shares are registered in your own name, please contact American Stock Transfer & Trust Company, LLC and inform them of your request by calling them at 718-921-8200.·If a broker or other nominee holds your shares, please contact the broker or other nominee directly and inform them of your request. Be sure to include your name, the name of your brokerage firm and your account number.·following the instructions provided on your proxy card;·following the instructions provided when you vote over the Internet; or·going towww.proxyvote.com and following the instructions provided.8 Stock and Series E Preferred Stock as of April 24,September 8, 2020 for (a) each of our named executive officers, (b) each of our directors and director nominees, and (c) all of our current directors and executive officers as a group. There is no stockholder known by us to own beneficially more than 5% of our Common Stock or Series E Preferred Stock, (b) each of our named executive officers, (c) each of our directors and director nominees, and (d) all of our current directors and executive officers as a group.Stock. Beneficial ownership is determined in accordance with the rules of the SEC and includes voting or investment power with respect to the securities. We deem shares of Common Stock and Series E Preferred Stock that may be acquired by an individual or group within 60 days of April 24,September 8, 2020, pursuant to the conversion of preferred stock into Common Stock, the exercise of options or warrants or the vesting of restricted stock units as applicable, to be outstanding for the purpose of computing the percentage ownership of such individual or group, but are not deemed to be outstanding for the purpose of computing the percentage ownership of any other person shown in the table. Except as indicated in footnotes to this table, we believe that the stockholders named in this table have sole voting and investment power with respect to all shares of Common Stock and/or Series E Preferred Stock shown to be beneficially owned by them based on information provided to us by these stockholders. Percentage of ownership is based on (i) 108,018,06568,793,193 shares of Common Stock and (ii) 987,988 shares of Series E Preferred Stock convertible into 1,531,381 shares of Common Stockoutstanding as of April 24,September 8, 2020. All beneficial ownership information reflects the Company’s 1-for-201-for-3 reverse stock split effected on June 11, 2020.
Shares of
Common
Stock
Beneficially
Owned
Shares of
Common
Stock
Beneficially
Owned Directors and named executive officers: 100,000 * Edward Jankowski 5,425 * 56,486 * 49,291 * 46,250 * 37,500 * 289,527 * Name Age Position(s) with the Company Doug Satzman 47 Chief Executive Officer and Director 56 Chairman of the Board of Directors Robert Weinstein*(2) 60 Director 74 Director Michael Lebowitz* 48 Director Name and principal position Year
($)
Pay
($)
Awards
($)(1)
($) 2019 344,833 — 315,000 659,833 2019 375,000 — — 375,000 2018 250,000 — — 250,000 Options Awards Stock Awards Name
of securities
underlying
unexercised options
(#) exercisable
of securities
underlying
unexercised
options
(#) un-
exercisable
exercise
price ($)
expiration
date
of shares
of units
of
stock
that have
not
vested (#)
value
of shares
of units
of stock
that have
not
vested ($) — 25,000 12.60 February 11, 2023 12,500(2) 25,125(3) Edward Jankowski — — — — — — Name
Earned or
Paid in
Cash
($)
Awards
($)(1)
($) 45,000 35,700 80,700 45,000 33,600 78,600 50,000 35,700 85,700 45,000 31,500 76,500 Plan Category
to be issued upon
exercise of
outstanding
options,
warrants and
rights
average exercise
price of
outstanding
options, warrants
and rights ($)
Remaining
available for
future issuance
under equity
compensation
plans (excluding
securities
reflected in
the first column)
security holders(1)(2) 45,964 $ 827.37 762,052 February 22, 2019. Number of
Shares of
Common
Stock
Beneficially
Owned Percent of
Shares of
Common
Stock
Beneficially
Owned Number of
Shares of
Common
Stock
Underlying
Series E
Preferred
Beneficially
Owned Percent of
Shares of
Common Stock
Underlying
Series E
Preferred
Beneficially
Owned Five percent or more beneficial owners: B3D, LLC (2) 5,390,101 4.99 % 1,531,381 100 % Alpha Capital Anstalt (3) 5,390,101 4.99 % — — Directors and named executive officers: Douglas Satzman (4) 137,500 * — — Edward Jankowski 7,948 * — — Bruce T. Bernstein (5) 69,459 * — — Donald E. Stout (6) 60,375 * — — Robert Weinstein (7) 46,250 * — — Michael Lebowitz (8) 37,500 * — — All current directors and officers as a group (five individuals)(9): 351,084 * — — *Less than 1%(1)Unless otherwise indicated, the business address of the individuals is c/o XpresSpa Group, Inc., 254 West 31st Street,June 11,th Floor, New York, NY 10001.(2)Includes 10,000,000 shares of Common Stock issuable upon conversion of the B3D Note, 6,285,715 shares of Common Stock issuable pursuant to that certain 5.00% unsecured convertible note due 2022,4,127,383 shares of Common Stock issuable upon the exercise of warrants, and 1,531,381 shares of Common Stock underlying the Series E Preferred Stock, which are exercisable within 60 days of April 24, 2020. The shares included in the table report the number of shares that would be issuable after giving effect to the 4.99% beneficial ownership blocker included in the notes and warrants. The percentage included in the table also gives effect to the 4.99% beneficial ownership blocker included in the notes and warrants.(3)Includes 102,036 shares of Common Stock and 9,763,922 shares of Common Stock issuable upon exercise of warrants. The shares included in the table report the number of shares that would be issuable after giving effect to the 4.99% beneficial ownership blocker included in the warrants.(4)The number of shares of Common Stock beneficially owned includes options to purchase 137,500 shares of Common Stock, which are exercisable within 60 days of April 24, 2020.(5)The number of shares of Common Stock beneficially owned includes 3,709 shares of Common Stock and options to purchase 65,750 shares of Common Stock, which are exercisable within 60 of April 24, 2020.(6)The number of shares of Common Stock beneficially owned includes options to purchase 60,375 shares of Common Stock, which are exercisable within 60 days of April 24, 2020.(7)The number of shares of Common Stock beneficially owned includes options to purchase 46,250 shares of Common Stock, which are exercisable within 60 days of April 24, 2020.(8)The number of shares of Common Stock beneficially owned includes options to purchase 37,500 shares of Common Stock, which are exercisable within 60 days of April 24, 2020.(9)See footnotes (4) - (8).9
Robert Weinstein
Donald E. StoutTO AUTHORIZE, FOR PURPOSESELECTION OF COMPLYING WITH NASDAQ LISTING RULE 5635(d), THEISSUANCE OF SHARES OF OUR COMMON STOCK IN CONNECTION WITH CERTAIN WARRANT EXCHANGE AGREEMENTS.BackgroundDescription of ProposalOn March 19, 2020, we entered into separate Warrant Exchange Agreements (the “Exchange Agreements”) withMichael Lebowitz for election by the holders of certain existing warrants (the “Exchanged Warrants”) to purchase shares of Common Stock. The Exchanged Warrants were originally issued (i) pursuant to a securities purchase agreement, dated as of May 15, 2018, and in connection with a related consent and (ii) in connection with that certain Agreement and Plan of Merger by and among the Company (formerly known as FORM Holdings Corp.), FHXMS, LLC, XpresSpa Holdings, LLC and Mistral XH Representative, LLC, as representative of the unitholders, dated October 25, 2016, as subsequently amended. Pursuant to the Exchange Agreements, on the closing date and subject to (i) the receipt of approval of the Company’s stockholders as required by the applicable rules and regulations of the Nasdaq Stock Market and (ii) our having a sufficient number of shares of Common Stock authorized for issuance in connection with the warrant exchange, the holders of Exchanged Warrants will exchange each Exchanged Warrant for a number of shares of Common Stock (the “New Shares”) equal to the product of (i) the number of shares of Common Stock underlying such Exchanged Warrants (based on a formula related to the closing price of the Common Stock at the time of the closing of the exchange as further detailed in the Exchange Agreement) and (ii) 1.5. To the extent any holder of Exchanged Warrants would otherwise beneficially own in excess of any beneficial ownership limitation applicable to such holder after giving effect to the warrant exchange, that holder’s Exchanged Warrants shall be exchanged for a number of New Shares issuable to the holder without violating the applicable beneficial ownership limitation and the remainder of the holder’s Exchanged Warrants shall automatically convert into pre-funded warrants to purchase the number of shares of Common Stock equal to the number of shares of Common Stock in excess of the applicable beneficial ownership limitation.Nasdaq Listing Rule 5635(d) generally requires us to obtain stockholder approval prior to issuing more than 20% of our outstanding shares of Common Stock under a financing transaction. Weannual meeting. If they are seeking the approval of our stockholders pursuant to Nasdaq Listing Rule 5635(d) with respect to the issuance of our Common Stock in connection with the Exchange Agreements.Reasons for the Warrant ExchangeWe believe that the issuance of our Common Stock in connection with the Exchange Agreements is necessary to simplify the Company’s capital structure. In addition, the Exchanged Warrants contain full-ratchet anti-dilution price protection provisions, which, subject to limited exceptions, would reduce the exercise price of the Exchanged Warrants (and increase the number of shares issuable) in the event that we in the future issue Common Stock, or securities convertible into or exercisable to purchase Common Stock, at a price per share lower than the exercise price then in effect, to such lower price. By conducting the warrant exchange and reducing the number of outstanding warrants that feature full-ratchet anti-dilution price protection,elected, they will serve on our Board of Directors believesuntil the 2021 annual meeting of stockholders and until their respective successors have been elected and qualified.we mayany nominee becomes unable or unwilling to serve, the shares represented by the enclosed proxy will be better positioned to conduct potential future financings on more favorable terms,voted for the election of such other person as the Company would not have to consider the potential dilutive effects of triggering the anti-dilution price provisions in the Exchanged Warrants once they are exchanged for shares of Common Stock.Effect of Issuance of SecuritiesThe potential issuance of shares of Common Stock in connection with the Exchange Agreements that are the subject of this Proposal 1 would result in an increase in the number of shares of Common Stock outstanding, and our stockholders will incur dilution of their percentage ownership. Because the holders of Exchanged Warrants will exchange each Exchanged Warrant for a number of New Shares to be determined, in part, based on the closing price of the Common Stock at the time of the closing of the warrant exchange, the exact magnitude of the dilutive effective cannot be conclusively determined. However, the dilutive effect may be material to our current stockholders.Interests of Related PartiesCertain of our affiliates have interests in this proposal that may be different from, or in addition to, the interests of our shareholders generally. Mistral Spa Holdings, LLC, a Delaware limited liability company (“Mistral”), is party to an Exchange Agreement. Mistral is an investment entity indirectly controlled by our former director, Mr. Andrew Heyer, through Mistral Equity Partners, LP, Mistral Equity Partners QP, LP and MEP Co-Invest, LLC. Our Board of Directors was aware of these interests and considered them, among other matters,may recommend in approving the Exchange Agreements and the transactions contemplated thereby and in approving this proposal and declaring it advisable.Proposalthat nominee’s place. We have no reason to Approve Issuance of Common Stock in connection with Exchange AgreementsNasdaq Listing Rule 5635(d) generally requires usbelieve that any nominee will be unable or unwilling to obtain stockholder approval prior to issuing more than 20% of our outstanding shares of Common Stock in connection with a transaction other than a public offering involving (i) the sale, issuance or potential issuance by us of our Common Stock (or securities convertible into or exercisable for our Common Stock) at a price less than the lesser of (x) the closing price of our Common Stock immediately preceding execution of the binding agreements and (y) the average closing price of our Common Stock for the five trading days immediately preceding execution of the binding agreements, which equals 20% or more of Common Stock or 20% or more of the voting power outstanding before the issuance; or (ii) the sale, issuance or potential issuance by us of our Common Stock (or securities convertible into or exercisable for our Common Stock) equal to 20% or more of the Common Stock or 20% or more of the voting power outstanding before the issuance for less than the lesser of (x) the closing price of our Common Stock immediately preceding execution of the binding agreements and (y) the average closing price of our Common Stock for the five trading days immediately preceding execution of the binding agreements. We are seeking the approval of our stockholders pursuant to Nasdaq Listing Rule 5635(d) with respect to issuances involving our Common Stock in connection with the Exchange Agreements.10We cannot predict the market price of our Common Stock at any future date, and therefore cannot predict the number of New Shares to be issued in connection with the warrant exchange. Under certain circumstances, however, it is possible, that we may have to issue more than 20% of our outstanding shares of Common Stock to the holders of the Exchanged Warrants. Therefore, we are seeking stockholder approval under this proposal to issue more than 20% of our outstanding shares of Common Stock, if necessary, to such holders under the terms of the Exchange Agreements.Any transaction requiring approval by our stockholders under Nasdaq Listing Rule 5635(d) would likely result in a significant increase in the number of shares of our Common Stock outstanding, and,serve as a result, our current stockholders will own a smaller percentage of our outstanding shares of Common Stock.The issuance of securities in connection with the Exchange Agreements may cause a significant reduction in the percentage interests of our current stockholders in the voting power, any liquidation value, our book and market value, and in any future earnings. Further, the issuance or resale of Common Stock issued to holders in connection with the Exchange Agreements could cause the market price of our Common Stock to decline. In addition to the foregoing, the increase in the number of issued shares of Common Stock in connection with the Exchange Agreements may have an incidental anti-takeover effect in that additional shares could be used to dilute the stock ownership of parties seeking to obtain control of us. The increased number of issued shares could discourage the possibility of, or render more difficult, certain mergers, tender offers, proxy contests or other change of control or ownership transactions.Consequences of Not Approving this ProposalAfter careful consideration, our Board of Directors believes that the warrant exchange provides the best opportunity for us to simplify our capital structure and position ourselves to conduct potential future financings on more favorable terms. If our stockholders do not approve this proposal, we will not be able to exchange the Exchanged Warrants for the New Shares pursuant to the terms of the Exchange Agreements. In addition, if this Proposal 1 is not approved by our stockholders prior to June 17, 2020, we will prohibited from issuing, entering into any agreement to issue or announcing the issuance or proposed issuance of any shares of our Common Stock or Common Stock equivalents until we receive such stockholder approval.Pursuant to the terms of the Exchange Agreements, the closing of the warrant exchange is conditioned on the approval of this proposal and our having a sufficient number of shares of Common Stock authorized for issuance in connection therewith.Nasdaq Listing Rule 5635(d) generally require usobtain stockholder approval priorelect each nominee as a director. Votes that are withheld will not be included in the vote tally for the election of the directors. Brokerage firms do not have authority to issuing more than 20%vote customers’ unvoted shares held by the firms in street name for the election of the directors. As a result, any shares not voted by a customer will be treated as a broker non-vote. Such broker non-votes will have no effect on the results of this vote. 2019 2018 $ 382,750 $ 346,250 138,500 103,800 Total $ 521,250 $ 450,050 outstanding sharesfinancial statements, quarterly reviews of Common Stockour financial statements, and services that are normally provided by the independent registered public accounting firm in connection with statutory and regulatory filings or engagements.transactiondisclaimer of opinion, nor was it qualified or modified as to uncertainty, audit scope or accounting principles, other than, in each of the years ended December 31, 2019 and December 31, 2018, to include an explanatory paragraph regarding substantial doubt as to the Company’s ability to continue as a going concern.offering.Theaccounting firm for the fiscal year ending December 31, 2020, effective immediately. During the fiscal years ended December 31, 2019 and December 31, 2018 and through the subsequent interim period as of May 4, 2020, neither the Company, nor any party on behalf of the Company, consulted with Friedman regarding either (i) the application of accounting principles to a specified transaction, either completed or proposed, or the audit opinion that might be rendered regarding the Company’s consolidated financial statements, and no written report or oral advice was provided to the Company that Friedman concluded was an important factor considered by the Company in deciding on any accounting, auditing or financial reporting issue, or (ii) any matter subject to any “disagreement” (as such term is defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions) or a “reportable event” (as such term is defined in Item 304(a)(1)(v) of Regulation S-K).Proposal 1 requiresall audit and permissible non-audit services provided by our independent registered public accounting firm. Our Audit Committee pre-approves these services by category and service. Our Audit Committee has pre-approved all of the services provided by our independent registered public accounting firms in 2019 and 2018.total votes castshares of Common Stock present and entitled to vote on the matter either in person or by proxy at the special meeting.TO APPROVE THE ISSUANCE OF SHARES OF OUR COMMON STOCK IN CONNECTION WITH THE EXCHANGE AGREEMENTS, IN SATISFACTION“FOR” RATIFICATION OF THE NASDAQ LISTING RULES,APPOINTMENT OF FRIEDMAN LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM, AND PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE VOTED IN FAVOR OF THE PROPOSALSUCH RATIFICATION UNLESS A STOCKHOLDER INDICATES OTHERWISE ON THE PROXY.112: TO AUTHORIZE, FOR PURPOSES3: APPROVAL OF COMPLYING WITH NASDAQ LISTING RULE 5635(d), THEISSUANCE OF SHARES OF OUR COMMON STOCK PURSUANT TO THAT FOURTH AMENDED AND RESTATEDCONVERTIBLE PROMISSORY NOTE, DATED MARCH 6, XPRESSPA GROUP, INC. 2020 BY AND BETWEEN THE COMPANY AND B3D, LLC.2)Background3)Description of ProposalOn January 9, 2020, our wholly-owned subsidiary XpresSpa Holdings, LLC entered into a fifth amendment to its existing credit agreement with B3D, LLCnonqualified stock options, stock appreciation rights, restricted stock awards, restricted stock units (“B3D”RSUs”) in order to, among, performance share awards, cash awards and other provisions, (i) amend and restate its existing convertible promissory note (the “B3D Note”) in order to increase the principal amount owed to B3D from $7.0 million to $7.15 million, which additional $150,000 in principal and any interest accrued thereon will be convertible, at B3D’s option, into sharesequity-based awards. The purpose of the Company’s Common Stock subject2020 Plan is to receiptenable us to attract and retain the types of employees, consultants and directors who will contribute to our long range success; provide incentives that align the interests of our employees, consultants and directors with those of our shareholders; and promote the success of our business.approval of our stockholders in accordance with applicable law and the rules and regulations of the Nasdaq Stock Market and (ii) provide for the advance payment of 291,669 shares of Common Stock in satisfaction of the interest payable pursuant to the B3D Note for the months of October, November and December 2020 in shares of Common Stock. In addition, on March 6, 2020, XpresSpa Holdings, LLC entered into a sixth amendment to its existing credit agreement with B3D in order to, among other provisions, (i) further amend and restate the B3D Note in order to increase the principal amount owed to B3D from $7.15 million to $7.9 million, which additional $750,000 in principal and any interest accrued thereon will be convertible, at B3D’s option, into shares of our Common Stock; provided, however, that the additional $750,000 in principal and any interest accrued thereon shall neither be convertible into Common Stock nor interest payable in Common Stock prior to receipt of the approval of our stockholders in accordance with applicable law and the rules and regulations of the Nasdaq Stock Market and (ii) decrease the conversion rate under the B3D Note from $2.00 per share to $0.56 per share, pursuant to the authority ofCompensation Committee, our Board of Directors unanimously approved the 2020 Plan on September 17, 2020 (the “Effective Date”), subject to voluntarily reduceshareholder approval. NASDAQ listing standards require that we submit the conversion rate in its discretion, which was previously approved by2020 Plan to our stockholders on October 2, 2019.shareholders for approval. In connection withaddition, the credit agreement amendment and B3D Note, B3D agreed to consent to the entry by certainInternal Revenue Code of our subsidiaries into an accounts receivable advance agreement with CC Funding, a division of Credit Cash, NJ LLC, providing for the advance of $1,000,000 to XpresSpa Holdings, LLC, and to provide us with $500,000 in additional funding and to submit conversion notices to convert (i) an aggregate of $375,000 in principal to Common Stock on March 6, 2020 and (ii) an additional aggregate of $375,000 in principal to Common Stock on or prior to March 27, 2020.On October 2, 2019,1986, as amended (the “Code”), requires that we obtained theobtain shareholder approval of our stockholders of the conversion of the initial $7.0 million2020 Plan in principal pursuantorder to B3D Note into Common Stock and the payment by us of principal, interest and/or other amounts payable thereon in shares of Common Stock, as well as the inclusion of anti-dilution price protection and the provision allowing for voluntary reduction of the conversion price by our Board of Directors at any time in its discretion. In connection with the January 2020 and March 2020 amendmentsbe able to the B3D Note, we agreed to seek approval of our stockholders of the conversion of the aggregate $0.9 million in increased principal pursuant to the B3D Note into Common Stock and the payment by us of principal, interest and/or other amounts payable thereon in shares of Common Stock. Our Board of Directors recommends that such proposal be approved.Reasons for the FinancingNeed for Additional FundsAs of December 31, 2019,we had cash, cash equivalents and marketable securities of approximately $2.2 million. In each of January 2020 and March 2020,our Board of Directors determined that it was necessary to raise additional funds to support our continuing operations and to provide working capital for general corporate purposes. Our Board of Directors agreed that approaching our existing investor B3D and increasing the principal amount pursuant to the B3D Note was in the best interest of us and our stockholders.Fourth Amended and Restated B3D NoteFollowing receipt of shareholder approval, all amounts dueissue incentive stock options under the B3D Note, including2020 Plan. If our shareholders do not approve the additional aggregate $0.9 million in principal resulting from2020 Plan, then the January 2020 Plan will not become effective, and Marchany grants made under the 2020 amendments to the B3D Note, will be convertible at any time, in whole or in part, at the option of B3D into shares of our Common Stock at a conversion price which is subject to adjustment as described below. If B3D elects to convert all or any portion of the B3D NotePlan prior to the maturity date all accrued and unpaid interest onof the principal amount being converted will also be converted at the conversion price. Subject to approval by our stockholders, the B3D NoteAnnual Meeting will be convertible into sharesvoid. If our shareholders approve the 2020 Plan, then our 2012 Employee, Director and Consultant Equity Incentive Plan, as amended (the “2012 Plan”) will terminate as of Common Stockthe date of the Annual Meeting, and no awards will be granted under the 2012 Plan on or after the date of the Annual Meeting.conversion price currently equal to $0.175 per share of Common Stock. The conversion price is subject to adjustment for stock splits, combinations or similar events.The conversion of the principal, interest and any other amounts payable pursuant to the B3D Note will result in the issuance of additional shares of Common Stock. In addition, the B3D Note is subject to (i) anti-dilution protection in the eventsevere competitive disadvantage if we issue additional Common Stock, options or Common Stock equivalents atcould not use equity-based awards covering a price per share less than the conversion price in effect, except in the case of issuances of certain excluded securities and (ii) voluntary reduction of the conversion price by the Board of Directors at any time in its discretion. If we issue Common Stock, options or Common Stock equivalents at a price less than the conversion price of the B3D Note, subject to certain customary exceptions, or if our Board of Directors elects to reduce the conversion price in its discretion, the conversion price of the B3D Note will be reduced to that lower price. Therefore, the anti-dilution provision and voluntary adjustment provision in the B3D Note may result in the downward adjustment of the conversion price of the B3D Note and result in a greatermeaningful number of shares being issued pursuant to the B3D Note. This conversionrecruit and retain key talent in this competitive market for human capital.aggregate $0.9 million in principal resulting from the Januaryshares. The 2020 Plan does not contain an annual “evergreen” provision that provides for automatic increases of shares on an ongoing basis. The 2020 Plan instead authorizes a fixed number of shares, and March 2020 amendments to the B3D Note into shares of Common Stock will not be effective until stockholdershareholder approval is obtained. If we obtain stockholder approval of this Proposal 2, we may make payments of principal, interest andrequired for any other amounts payable pursuant to the B3D Note with respect to the additional aggregate $0.9 million in principal resulting from the January 2020 and March 2020 amendments to the B3D Note in shares of Common Stock.12Effect of Issuance of SecuritiesThe potential issuance of an additional 5,142,857 shares of Common Stock issuable in connection with the aggregate $0.9 million principal increase pursuant to B3D Note, plus the potential issuance of additional shares of Common Stock that may be issued as payment of interest on approximately $81,000 of interest paid shares issued at the prevailing VWAP at the interest payment dates, thereon that is the subject of this Proposal 2, would result in an increase in the number of shares.Common Stockstock options, and shares tendered or withheld to satisfy tax withholding obligations with respect to an award, do not again become available for grant.and our stockholdersequity awards upon a change in control.incur dilution of their percentage ownershipbe subject to forfeiture, cancellation, reimbursement or recoupment to the extent that B3D convertsprovided in any applicable clawback policy adopted by the B3D Note into sharesCompany or otherwise required pursuant to applicable law.Common Stock, or additional sharesutilizing equity as a means of Common Stock are issued as payment of principal or interestcompensation on the B3D Note. This assumesour shareholders, we considered both our “overhang” and our “burn rate”.conversion price equal to $0.175 per share, but becausemeasure of potential adjustments todilution which we define as the sum of (i) the total number of shares underlying all outstanding equity awards and (ii) the total number of shares available for future award grants, divided by the number of shares of Common Stockcommon stock outstanding. As of September 8, 2020, there were 725,452shares underlying all equity awards outstanding and 37,520 shares available for future awards, and the basic weighted average common shares outstanding for the period ended September 8, 2020 was 32,473,294. Accordingly, our overhang at September 8, 2020 was 2.4%. For purposes of this calculation, we counted the shares subject to our performance-based awards using the target number of shares of common stock issuable in connection withunder such awards. If the B3D Note due5,000,000 shares proposed to anti-dilution price protection, these numbers could increasebe authorized for grant under the 2020 Plan are included in the event that we completecalculation, our overhang on September 8, 2020 would have been 17.7%.dilutive financing.Proposal to Approve B3D TransactionNasdaq Listing Rule 5635(d) generally requires us to obtain stockholder approvalweighted-average exercise price of $5.44 and a weighted-average remaining term of 9.43 years as of September 8, 2020, and (2) 37,425 shares of common stock issuable for vested outstanding RSUs. As of September 8, 2020, all equity awards outstanding were made under our 2012 Plan and no awards were outstanding under any prior to issuing more than 20%plans. As of ourSeptember 8 2020, there were 68,793,193 outstanding shares of Common Stock in connection withcommon stock.transaction other than a public offering involving (i)measure of the sale, issuance or potential issuance by usdilutive impact of our Common Stock (or securities convertible into or exercisableequity award program which we calculate by dividing the number of shares subject to equity awards granted during the fiscal year by the basic weighted average number of shares outstanding. Set forth below is a table that reflects our gross burn rate for the 2020, 2019 and 2018 fiscal years.Fiscal Year Awards Granted
Number of Common
Shares Outstanding(A) For the period ended September 8, 2020 724,531 32,473,294 2.2% 2019 35,833 1,634,444 2.2% 2018 557 484,545 0.1% Three-Year Average 1.5% Common Stock) at a price less thanperformance criteria based on the lessertarget number of (x)shares of common stock issuable under such awards.closing pricenumber of shares to request for approval under the 2020 Plan, the Compensation Committee directed its compensation consultant to review current market practices in the use of equityCommon Stock immediately preceding executionrecent share usage, anticipated hiring needs in the next three fiscal years, the potential dilution of the binding agreements and (y)2020 Plan (as noted in the average closingfigures above), our current stock price, of our Common Stock for the five trading days immediately preceding execution of the binding agreements, which equals 20% or more of Common Stock or 20% or more of the voting power outstanding before the issuance; or (ii) the sale, issuance or potential issuance by us of our Common Stock (or securities convertible into or exercisable for our Common Stock) equal to 20% or more of the Common Stock or 20% or more of the voting power outstanding before the issuance for less than the lesser of (x) the closing price of our Common Stock immediately preceding execution of the binding agreements and (y) the average closing price of our Common Stock for the five trading days immediately preceding execution of the binding agreements. We are seeking the approval of our stockholders pursuant to Nasdaq Listing Rule 5635(d)recent experiences with respect to issuancesthe value of equity awards expected by new hire candidates, and general guidance from the major proxy advisory firms (such as ISS) that our Common Stock pursuantshareholders might consider in evaluating the 2020 Plan. After reviewing this information, the Compensation Committee decided to request that certain Fourth Amendedour shareholders approve an initial share reserve of 5,000,000 shares for issuance under the 2020 Plan. We currently anticipate that the 2020 Plan share reserve will provide for grants in the ordinary course of business for up to three years. However, the proposed share reserve could last for a shorter or longer period of time, such as might be the case if we experience unexpected opportunities to grow the business beyond our current annual operating plan, if equity compensation practices within our compensation peer group change and Restated Convertible Promissory Note.While we may electrequire us to pay interest onalter our current grant practices to remain competitive, or if our stock price changes materially.B3D Note2020 PlanCommon Stock at our discretion, we generally have no control over whether B3D elects to convert the B3D Note. For this reason, we are unable to accurately forecast or predict with any certainty the total amount of sharescommon stock that may be issued pursuant to awards granted under the B3D Note. Under certain circumstances, however, it2020 Plan will not exceed 5,000,000 shares, plus the number shares of subject to outstanding awards under the 2012 Plan or any predecessor plans as of the effective date of the 2020 Plan which are thereafter forfeited, settled in cash or canceled or expire or are reacquired by the Company. The number of shares of common stock that may be issued pursuant to incentive stock options under the 2020 Plan is possible, that wealso limited to 5,000,000 shares. Shares of common stock available for distribution under the 2020 Plan may have to issue more than 20%consist, in whole or in part, of authorized and unissued shares, treasury shares or shares reacquired by the Company in any manner. The closing price of our outstandingcommon stock on NASDAQ on September 17, 2020 was $1.87.Common Stockcommon stock subject to B3D pursuantan award that expires or is canceled, forfeited, or terminated without issuance of the full number of shares of common stock to which the award related will again be added back. Shares of common stock subject to an award will not again be made available for issuance or delivery under the 2020 Plan if such shares are (a) shares that are tendered or withheld to satisfy tax withholding obligations with respect to an award or to pay the exercise price of an option or (b) shares subject to a stock appreciation right that are not issued in connection with the stock settlement of the stock appreciation right on exercise thereof options.B3D Note. Therefore, we are seeking stockholder approval under this proposal to issue more than 20% of our outstanding shares of Common Stock, if necessary, to B3D pursuantCompensation Committee. Subject to the terms of the B3D Note.Any transaction requiring2020 Plan, the Compensation Committee, as plan administrator, has full authority to determine participants and the type, terms and conditions and number of shares subject to awards and to construe and interpret the 2020 Plan and awards. The Compensation Committee may delegate administration of the 2020 Plan to a committee or committees of one or more members of the Board,our stockholdersan award agreement and will be subject to such conditions not inconsistent with the 2020 Plan as may be reflected in the award agreement.Nasdaq Listing Rule 5635(d) would likely resultthe 2020 Plan. The maximum term of any stock appreciation right is ten years. The plan administrator may provide that stock appreciation rights are exercisable at the discretion of the holder or that they will be paid at a time or times certain or upon the occurrence or non-occurrence of certain events.significant increasedeferral feature (“deferred stock units”), whereby settlement is deferred beyond the vesting date until the occurrence of a future payment date or event set forth in an award agreement. At the discretion of the plan administrator, each RSU or deferred stock unit (representing one share of common stock) may be credited with dividend equivalents in an amount equal to the cash and stock dividends paid by the Company in respect of one share of common stock. Dividend equivalents will be withheld by the Company and credited to the participant’s account, and interest may be credited on the amount of cash dividend equivalents credited to the participant’s account at a rate and subject to such terms as determined by the plan administrator. Dividend equivalents credited to a participant’s account and attributable to any particular RSU or deferred stock unit (and earnings thereon, if applicable) will be distributed in cash or, at the discretion of the plan administrator, in shares of common stock having a fair market value (as determined under the 2020 Plan) equal to the amount of such dividend equivalents and earnings, if applicable, to the participant upon settlement of such RSU or deferred stock unit and, if such RSU or deferred stock unit is forfeited, the participant will have no right to such dividend equivalents.our Common Stock outstanding,common stock or stock-denominated units subject to a performance share award granted to any participant; (ii) the performance period applicable to any award; (iii) the conditions that must be satisfied for a participant to earn an award; and (iv) the other terms, conditions and restrictions of the award. The number of performance shares earned by a participant will depend on the extent to which the performance goals established by the plan administrator are attained within the applicable performance period, as a result, our current stockholdersdetermined by the plan administrator.own a smaller percentage of our outstandingdetermine and will be payable in cash or shares of Common Stock.Future issuancescommon stock, as the plan administrator may determine.securitiesconsideration upon exercise of an award, satisfaction of performance criteria, or other event that absent the election would entitle the participant to payment or receipt of shares of common stock or other consideration under an award. The plan administrator may establish the election procedures, the timing of such elections, the mechanisms for payments of, and accrual of interest or other earnings, if any, on amounts, shares or other consideration so deferred, and such other terms, conditions, rules and procedures that the plan administrator deems advisable for the administration of any such deferral program.B3D Note, if any, may cause a significant reductiongrant or settlement of awards or to which an award is subject, and the exercise price of each option and stock appreciation right are subject to, adjustment in the percentage interestsevent of any recapitalization of the Company or similar event effected without receipt of consideration by the Company.current stockholdersaffiliates, any income recognized will be subject to employment and withholding taxes.voting power, any liquidation value, our book andexcess of the fair market value of the common stock on the date the option is exercised over the price paid for the common stock. Depending upon the period shares of common stockin any future earnings. Further, the issuancefair market value of such shares when the non-qualified option was exercised.resale of Common Stock issued to B3Dshe exercises the option or a portion thereof. Instead, he or she will be taxed at the time he or she sells the common stock purchased pursuant to the B3D Note could causeoption. The participant will be taxed on the difference between the price he or she paid for the stock and the amount for which he or she sells the stock. If the participant does not sell the stock prior to two years from the date of grant of the option and one year from the date the stock is transferred to him or her, the participant will be entitled to capital gain or loss treatment based upon the difference between the amount realized on the disposition and the aggregate exercise price and the Company will not get a corresponding deduction. If the participant sells the stock at a gain prior to that time, the difference between the amount the participant paid for the stock and the lesser of the fair market pricevalue on the date of our Common Stock to decline. In additionexercise or the amount for which the stock is sold, will be taxed as ordinary income; if the stock is sold for an amount in excess of the fair market value on the date of exercise, the excess amount is taxed as capital gain. If the participant sells the stock for less than the amount he or she paid for the stock prior to the foregoing,one or two year periods indicated, no amount will be taxed as ordinary income and the loss will be taxed as a capital loss. Exercise of an incentive option may subject a participant to, or increase a participant’s liability for, the alternative minimum tax.number of issuedCode. However, when the shares of Commoncommon stock that are subject to the stock award are transferable by the participant or are no longer subject to a substantial risk of forfeiture, the participant will recognize compensation taxable as ordinary income in an amount equal to the fair market value of the stock subject to the stock award, less any amount paid for such stock, and the Company will then be entitled to a corresponding deduction. However, if a participant so elects at the time of receipt of a stock award in accordance with Section 83(b) of the Code, he or she may include the fair market value of the stock subject to the stock award, less any amount paid for such stock, in income at that time.the B3D Note may have an incidental anti-takeover effect in that additional shares could be used to dilute the stock ownership of parties seeking to obtain control of us. The increased number of issued shares could discourage the possibility of, or render more difficult, certain mergers, tender offers, proxy contests or othera change of control or ownership transactions.Consequences of Not Approving this ProposalAfter extensive efforts to raise capital on more favorable terms, we believeda company, and that the aggregate increasecompany (or a successor) may forfeit a deduction on the amounts subject to this additional tax.$0.9the Code imposes additional income taxes for certain types of deferred compensation that do not comply with Section 409A. The Company attempts in good faith to structure awards under the 2020 Plan so that such awards either conform with the requirements of, or qualify for an exemption under, Section 409A. However, neither the Company nor the plan administrator has any obligation to take any action to prevent the assessment of any additional tax or penalty on any participant under Section 409A of the Code and neither the Company nor the plan administrator will have any liability to any participant for such tax or penalty.in principalper year on the amount of deductible compensation paid to certain “covered employees,” which includes our namedB3D Note wasexemption for performance-based compensation.only viable financing alternative available2020 Planusapprove the following awards under the 2020 Plan, subject to shareholder approval of the 2020 Plan at the time. Annual Meeting:Name and Position Dollar Value Number of Shares Executive Group — — Non-Executive Director Group — — Non-Executive Officer Employee Group $ 421,877 96,319 our stockholdersshareholders do not approve this proposal, wethe 2020 Plan at the Annual Meeting, the awards approved by the Committee under the 2020 Plan prior to the Annual Meeting, including the awards listed above, will not be ablevoid. If shareholders approve the 2020 Plan at the Annual Meeting, the awards approved by the Committee under the 2020 Plan prior to issue more than 20%the Annual Meeting, including the awards listed above, will be deemed granted as of the date of the shareholder approval.outstanding sharescommon stock at the time of Common Stockgrant, as well as Company, divisional, and individual performance. Accordingly, it is not possible to B3D in connection withdetermine the B3D Note, or permit the conversion of such $0.9 million in principal into shares of Common Stock (or make interest payments thereon in shares of Common Stock). As a result, we maybenefits that would be unable to make some of the payments duereceived under the B3D Note in shares of our Common Stock or issue sufficient shares upon conversion of the B3D Note which will, in lieu of those shares, require that we pay substantial cash amounts to B3D. We do not anticipate having sufficient funds to make any substantial cash payments to B3D.
2020 Plan.13The Third Amended and Restated Convertible Promissory Note and Fifth Amendment to Credit Agreement were filed with the Securities and Exchange Commission (“SEC”) in connection with our Current Report on Form 8-K filed on January 14, 2020. The Fourth Amended and Restated Convertible Promissory Note and Sixth Amendment to Credit Agreement were filed with the SEC in connection with our Current Report on Form 8-K filed on March 6, 2020.Nasdaq Listing Rule 5635(d) generally requires us to obtain stockholder approval prior to issuing more than 20% of our outstanding shares of Common Stock in connection with a transaction other than a public offering.The approval of Proposal 2 requires the affirmative vote of the holders of a majority of the total votes cast in person or by proxy at the special meeting.THE BOARD OF DIRECTORS RECOMMENDS A VOTE TO APPROVE THE ISSUANCE OF SHARES OF OUR COMMON STOCK PURSUANT TO THE FOURTH AMENDED AND RESTATED CONVERTIBLE PROMISSORY NOTE IN SATISFACTION OF THE NASDAQ LISTING RULES, AND PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE VOTED IN FAVOR OF THE PROPOSAL UNLESS A STOCKHOLDER INDICATES OTHERWISE ON THE PROXY.14PROPOSAL 3:To approve a proposed amendment to the Certificate of Designation,Preferences, Rights and Limitations of our Series E Convertible Preferred Stock toprovide for the voluntary adjustment of the conversion price by our Board of Directorsin its discretion, and to authorize, for purposes of complying with Nasdaq Listing Rule 5635(d), theissuance of shares of our Common Stock upon the conversion of our Series E Convertible Preferred Stock(Notice Item 3)Background and Description of ProposalOn November 12, 2018, we filed with the Secretary of State of the State of Delaware a Certificate of Designation of Preferences, Rights and Limitations of Series E Convertible Preferred Stock (the “Series E Certificate of Designation”), which provided for the designation of 1,473,300 shares of Series E Convertible Preferred Stock (the “Series E Preferred Stock”). On July 8, 2019, we filed a certificate of amendment to the Series E Certificate of Designation to (i) increase the number of authorized shares of Series E Preferred Stock to 2,397,060 and (ii) reduce the conversion price to $2.00 upon receipt of shareholder approval, which approval was received on October 2, 2019. We are requesting the approval of our stockholders to further amend the Series E Certificate of Designation to provide for the voluntary adjustment of the conversion price by our Board of Directors in its discretion, in order to provide the Board of Directors with greater flexibility in connection with potential future financings. The full text of the proposed amendment to the Series E Certificate of Designation (the “Series E COD Amendment”) is attached to this proxy statement as Appendix B.Reasons for the Series E COD AmendmentNeed for Additional FundsAs of December 31, 2019,we had cash and cash equivalents of approximately $2.2 million. OurBoard of Directors has determined that it may be necessary to raise additional funds to support our continuing operations and to provide working capital for general corporate purposes. Approving the Series E COD Amendment to provide for the voluntary adjustment of the conversion price by our Board of Directors in its discretion may provide the Board of Directors with greater flexibility in connection with potential future financings. In addition, the Series E Preferred Stock will mature on the seven (7) year anniversary ofthe initial issuance date, or November 12, 2025, and, upon maturity, all outstanding shares of Series E Preferred Stock will become payable in cash. Approving the Series E COD Amendment will enable our Board of Directors to reduce the conversion price in its discretion to entice the holders of Series E Preferred Stock to convert their shares into Common Stock, reducing the likelihood that the Company will be required to make cash payments upon maturity.Effect of Issuance of SecuritiesThe potential issuance of additional shares of Common Stock underlying the Series E Preferred Stock at a conversion price below $2.00 per share pursuant to the Series E COD Amendment would result in an increase in the number of shares of Common Stock outstanding, and our stockholders will incur dilution of their percentage ownership upon the voluntary adjustment by our Board of Directors of the conversion price and subsequent conversion of the Series E Preferred Stock into Common Stock. Because the Board of Directors may adjust the conversion price to an amount to be determined at a future date, the exact magnitude of the dilutive effect cannot be conclusively determined at this time. However, the dilutive effect may be material to our current stockholders.Proposal to Approve Issuance of Common Stock in connection with the Series E COD AmendmentNasdaq Listing Rule 5635(d) generally requires us to obtain the approval of our stockholders prior to issuing more than 20% of our outstanding shares of Common Stock in connection with a transaction other than a public offering involving (i) the sale, issuance or potential issuance by us of our Common Stock (or securities convertible into or exercisable for our Common Stock) at a price less than the lesser of (x) the closing price of our Common Stock immediately preceding execution of the binding agreements and (y) the average closing price of our Common Stock for the five trading days immediately preceding execution of the binding agreements, which equals 20% or more of Common Stock or 20% or more of the voting power outstanding before the issuance; or (ii) the sale, issuance or potential issuance by us of our Common Stock (or securities convertible into or exercisable for our Common Stock) equal to 20% or more of the Common Stock or 20% or more of the voting power outstanding before the issuance for less than the lesser of (x) the closing price of our Common Stock immediately preceding execution of the binding agreements and (y) the average closing price of our Common Stock for the five trading days immediately preceding execution of the binding agreements. We are seeking the approval from our stockholders pursuant to Nasdaq Listing Rule 5635(d) with respect to issuances of the Common Stock underlying the Series E Preferred Stock in connection with the proposed voluntary adjustment provision.15We cannot predict the amount to which the Board may adjust the conversion price of the Series E Preferred Stock pursuant to this proposal, and therefore cannot predict the number of shares of Common Stock that may be issued in connection with this proposal. Under certain circumstances, however, it is possible, that we may have to issue more than 20% of our outstanding shares of Common Stock. Therefore, we are seeking stockholder approval under this proposal to issue more than 20% of our outstanding shares of Common Stock, if necessary, to holders of our Series E Preferred Stock in connection with a voluntary adjustment of the conversion price by the Board of Directors.Any transaction requiring approval by our stockholders under Nasdaq Listing Rule 5635(d) would likely result in a significant increase in the number of shares of our Common Stock outstanding, and, as a result, our current stockholders will own a smaller percentage of our outstanding shares of Common Stock.The issuance of securities in connection with the Series E COD Amendment may cause a significant reduction in the percentage interests of our current stockholders in the voting power, any liquidation value, our book and market value, and in any future earnings. Further, the issuance or resale of Common Stock issued to holders in connection with the Series E COD Amendment could cause the market price of our Common Stock to decline. In addition to the foregoing, the increase in the number of issued shares of Common Stock in connection with the Series E COD Amendment may have an incidental anti-takeover effect in that additional shares could be used to dilute the stock ownership of parties seeking to obtain control of us. The increased number of issued shares could discourage the possibility of, or render more difficult, certain mergers, tender offers, proxy contests or other change of control or ownership transactions.Consequences of Not Approving this ProposalAfter careful consideration, our Board of Directors believes that the Series E COD Amendment provides the best opportunity for us to position ourselves to conduct potential future financings on more favorable terms and reduce the likelihood that the Company will be required to make cash payments upon maturity. If our stockholders do not approve this proposal, the Board of Directors will not be permitted to adjust the conversion price of the Series E Preferred Stock in its discretion.Vote Required and Board of Directors’ RecommendationSeries E Preferred Stock voting on an as-converted basis having voting power outstandingentitled to vote on the Record Datematter either in person or by proxy at the annual meeting is required to approve the proposed amendment to the Certificate of Designation, Preferences, Rights and Limitations of our Series E Convertible Preferred Stock to provide for the voluntary adjustmentadoption of the conversion price by our Board of Directors in its discretion, and to authorize, for purposes of complying with Nasdaq Listing Rule 5635(d), the issuance of shares of our Common Stock upon the conversion of our Series E Convertible Preferred Stock.TO APPROVE“FOR” APPROVAL OF THE PROPOSED AMENDMENT TO THE CERTIFICATEof Designation, Preferences, Rights and Limitations of our Series E Convertible Preferred Stock to provide for the voluntary adjustment of the conversion price by our Board of Directors in its discretion,XPRESSPA GROUP, INC. 2020 EQUITY INCENTIVE PLAN, AND PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE VOTED IN FAVOR OF THE PROPOSALSUCH RATIFICATION UNLESS A STOCKHOLDER INDICATES OTHERWISE ON THE PROXY.16REVERSE STOCK SPLITGeneralAtspecial meetingSecurities Exchange Act of stockholders, our stockholders are being asked to approve the proposal that our Amended and Restated Certificate of Incorporation,1934, as amended, (the “Charter”) be amended to effect a reverse stock spliton the approval of the issued and outstanding shares of Common Stock (such split to combine a number of outstanding sharescompensation of our Common Stock between 1-for-2named executive officers as described in the Compensation Discussion and 1-for-25, such number consisting of only whole shares, into one (1) share of Common Stock). The full text ofAnalysis, the proposed amendment to our Charter is attached tocompensation tables and related material contained in this proxy statement as Appendix C. If approved by the stockholders, the reverse stock split would become effective at a time, and at a ratio, tostatement. Because your vote is advisory, it will not be designated by thebinding on our Compensation Committee or our Board of Directors. The Board of Directors may effect only one reverse stock split as a result of this authorization. The Board of Directors’ decision as to whether and when to effectHowever, the reverse stock split will be based on a number of factors, including market conditions, existing and expected trading prices for our Common Stock and the continued listing requirements of The Nasdaq Capital Market. Even if the stockholders approve the reverse stock split, we reserve the right not to effect the reverse stock split if the Board of Directors does not deem it to be in the best interests of us and our stockholders to effect the reverse stock split. The reverse stock split, if authorized pursuant to this resolution and if deemed by the Board of Directors to be in the best interests of us and our stockholders, will be effected, if at all, at a time that is not later than October 27, 2021.The proposed amendment to our Charter to effect the reverse stock split, as more fully described below, will effect the reverse stock split but will not change the number of authorized shares of Common Stock or preferred stock, or the par value of Common Stock or preferred stock. As of the date of this proxy statement, we do not have any current arrangements or understandings relating to the issuance of any additional shares of Common Stock following the reverse stock split.PurposeThe Board of Directors approved the proposal authorizing the reverse stock split for the following reasons:·the Board of Directors believes that effecting the reverse stock split may be an effective means of maintaining compliance with the bid price requirement for continued listing of our Common Stock on The Nasdaq Capital Market; and·the Board of Directors believes that a higher stock price may help generate investor interest in us, including interest among institutional investors.If the reverse stock split successfully increases the per share price of our Common Stock and facilitates the continued listing of our Common Stock on The Nasdaq Capital Market, as to which no assurance can be given, the Board of Directors believes this increase may facilitate future financings, enhance our ability to transact with our securities and increase the appetite of third parties with whom we may be negotiating for purposes of evaluating potential strategic alternatives.Nasdaq Requirements for Continued ListingOur Common Stock is listed on The Nasdaq Capital Market under the symbol “XSPA.” One of the requirements for continued listing on The Nasdaq Capital Market is maintenance of a minimum closing bid price of $1.00. On April 24, 2020, the closing market price per share of our Common Stock was $0.52, as reported by the Nasdaq Capital Market.On January 2, 2020, we received a letter from Nasdaq indicating that for the last 30 consecutive business days, the bid price of our Common Stock closed below the minimum $1.00 per share requirement pursuant to Nasdaq Listing Rule 5550(a)(2) for continued listing on The Nasdaq Capital Market. In accordance with Nasdaq Listing Rule 5810(c)(3)(A), we have a grace period of 180 calendar days, or until June 30, 2020, to regain compliance with the minimum bid price requirement. To regain compliance, the closing bid price of our Common Stock must be at least $1.00 per share for a minimum of ten consecutive business days. On April 17, 2020, we received notice from Nasdaq, which stated that, due to recent market conditions, effective as of April 16, 2020, Nasdaq has determined to toll the compliance period for the minimum bid price requirement through June 30, 2020. On July 1, 2020, we will receive the balance of the pending compliance period. As a result of this extension, we now have until September 14, 2020 to regain compliance with the minimum bid price requirement. If we do not regain compliance by September 14, 2020, we may be eligible for additional time to regain compliance or if we are otherwise not eligible, we may request a hearing before a Hearings Panel.Our plan to regain compliance with the Nasdaq Listing Rules includes effecting the reverse stock split for which we are seeking stockholder approval in this Proposal 4. We cannot assure you that our share price will comply with the requirements for continued listing of our common shares on the Nasdaq Capital Market in the future or that we will comply with the other continued listing requirements. If our Common Stock loses its status on the Nasdaq Capital Market, our Common Stock would likely trade in the over-the-counter market.If our shares were to trade on the over-the-counter market, selling our Common Stock could be more difficult because smaller quantities of shares would likely be bought and sold, and transactions could be delayed. In addition, in the event our Common Stock is delisted, broker-dealers have certain regulatory burdens imposed upon them, which may discourage broker-dealers from effecting transactions in our Common Stock, further limiting the liquidity of our Common Stock. These factors could result in lower prices and larger spreads in the bid and ask prices for our Common Stock.17Such delisting from The Nasdaq Capital Market and continued or further declines in our share price could also greatly impair our ability to raise additional necessary capital through equity or debt financing, and could significantly increase the ownership dilution to stockholders caused by our issuing equity in financing or other transactions.In light of the factors mentioned above, our Board of Directors approved the reverse stock split as a potential means of increasing the share price of our Common Stock to above $1.00 per share and of maintaining the share price of our common stock above $1.00 per share in compliance with Nasdaq requirements.Potential Increased Investor InterestIn approving the proposal authorizing the reverse stock split, the Board of Directors considered that our Common Stock may not appeal to brokerage firms that are reluctant to recommend lower priced securities to their clients. Investors may also be dissuaded from purchasing lower priced stocks because the brokerage commissions, as a percentage of the total transaction, tend to be higher for such stocks. Moreover, the analysts at many brokerage firms do not monitor the trading activity or otherwise provide coverage of lower priced stocks.There are risks associated with the reverse stock split, including that the reverse stock split may not result in a sustained increase in the per share price of our Common Stock.We cannot predict whether the reverse stock split will increase the market price for our Common Stock on a sustained basis. The history of similar stock split combinations for companies in like circumstances is varied. There is no assurance that:·the market price per share of our Common Stock after the reverse stock split will rise in proportion to the reduction in the number of shares of our Common Stock outstanding before the reverse stock split;·the reverse stock split will result in a per share price that will attract brokers and investors who do not trade in lower priced stocks;·our ability to conduct future financings will be enhanced; and·the market price per share will either exceed or remain in excess of the $1.00 minimum bid price as required by Nasdaq, or that we will otherwise meet the requirements of Nasdaq for continued inclusion for trading on the Nasdaq Capital Market.The market price of our Common Stock will also be based on our performance and other factors, some of which are unrelated to the number of shares outstanding. If the reverse stock split is effected and the market price of our Common Stock declines, the percentage decline as an absolute number and as a percentage of our overall market capitalization may be greater than would occur in the absence of a reverse stock split. Furthermore, the liquidity of our Common Stock could be adversely affected by the reduced number of shares that would be outstanding after the reverse stock split.Principal Effects of the Reverse Stock SplitIf the stockholders approve the proposal to authorize the Board of Directors to implement the reverse stock splitCompensation Committee and the Board of Directors implementswill review the reverse stock split, we will amendvoting results and take them into consideration when making future decisions regarding executive compensation. We have determined to hold an advisory vote to approve the existing provision of Article Fourthcompensation of our Amended and Restated Certificate of Incorporation by adding the following paragraphs:“(3) Upon effectiveness of this Certificate of Amendment to the Amended and Restated Certificate of Incorporation of the Corporation (the “Effective Time”), the shares of Common Stock issued and outstanding immediately prior to the Effective Timenamed executive officers annually and the sharesnext such advisory vote will occur at the 2021 annual meeting of Common Stock issuedstockholders.held inincentives needed to motivate and reward fairly those individuals who perform over time at or above the treasurylevels that we expect and to attract, as needed, and retain individuals with the skills necessary to achieve our objectives and who are crucial to our long-term success. Our compensation program is also designed to reinforce a sense of the Corporation immediately priorownership and to the Effective Time are reclassified into a smaller number of shares such that each [ ] shares of issued Common Stock immediately priorlink compensation to the Effective Time is reclassified into one (1) share of Common Stock. Notwithstanding the immediately preceding sentence, no fractional shares shall be issuedour performance as a result of the reverse stock split. Instead, any stockholder who would otherwise be entitled to a fractional share of our Common Stock as a result of the reclassification shall be entitled to receive a cash payment equal to the product of such resulting fractional interest in one share of our Common Stock multiplied by the closing trading price of our Common Stock on the trading day immediately following the effective date of the reverse stock split. Notwithstanding the foregoing, the Corporation shall not be obliged to issue certificates evidencing the shares of Common Stock outstanding as a result of the reverse stock split or cash in lieu of fractional shares, if any, unless and until the certificates evidencing the shares held by a holder prior to the reverse stock split are either delivered to the Corporation or its transfer agent, or the holder notifies the Corporation or its transfer agent that such certificates have been lost, stolen or destroyed and executes an agreement satisfactory to the Corporation to indemnify the Corporation from any loss incurred by it in connection with such certificates.18(4) Each stock certificate that, immediately prior to the Effective Time, represented shares of Common Stock that were issued and outstanding immediately prior to the Effective Time shall, from and after the Effective Time, automatically and without the necessity of presenting the same for exchange, represent that the number of whole shares of Common Stock after the Effective Time into which the shares of Common Stock formerly represented by such certificate shall have been reclassified (as well as the rightperformance of each of our named executive officers.receiveexecute our business plan and strategy. Thus, our compensation program is structured in a cash paymentmanner similar to companies in lieuthese industries in order to attract and retain talented employees who may have other opportunities in these industry areas.fractional sharebase salary, to retain and provide a base level of Common Stock), provided, however, thatcompensation to our named executive officers; andperson of record holding a certificate that represented shares of Common Stock that were issued and outstanding immediately priorour named executive officers, the Compensation Committee subjectively considers the overall value to the Effective Time shall receive, upon surrenderCompany of such certificate, a new certificate evidencing and representing the numbereach named executive officer in light of whole shares of Common Stock after the Effective Time into which the shares of Common Stock formerly represented by such certificate shall have been reclassified (including the right to receive a cash payment in lieu of a fractional share of Common Stock).”The reverse stock split will be effected simultaneously for all issued and outstanding shares of Common Stock and the exchange ratio will be the same for all issued and outstanding shares of Common Stock. The reverse stock split will affect all of our stockholders uniformly and will not affect any stockholder’s percentage ownership interests in the Company, except to the extent that cash payments are made in lieu of fractional shares. Common Stock issued pursuant to the reverse stock split will remain fully paid and nonassessable. The reverse stock split will not affect the Company continuing to be subject to the periodic reporting requirements of the Exchange Act. Following the reverse stock split, our Common Stock will continue to be listed on the Nasdaq Capital Market, under the symbol “XSPA,” although it would receive a new CUSIP number.By approving this amendment, stockholders will approve the combination of any whole number of shares of Common Stock between and including two (2) and twenty-five (25) and into one (1) share. The certificate of amendment to be filed with the Secretary of State of the State of Delaware will include only that number determined by the Board of Directors to be in the best interests of the Company and its stockholders. The Board of Directors will not implement any amendment providing for a different split ratio.Procedure for Effecting Reverse Stock Split and Exchange of Stock CertificatesIf the certificate of amendment is approved by our stockholders, and if at such time the Board of Directors still believes that a reverse stock split is in the best interests of the Company and its stockholders, the Board of Directors will determine the ratio of the reverse stock split to be implemented. We will file the certificate of amendment with the Secretary of State of the State of Delaware at such time as the Board of Directors has determined the appropriate effective time for the reverse stock split. The Board of Directors may delay effecting the reverse stock split, if at all, until a time that is not later than April 24, 2021, without re-soliciting stockholder approval. The reverse stock split will become effective on the date of filing of the certificate of amendment with the Secretary of State of the State of Delaware. Beginning on the effective date of the split, each certificate representing pre-split shares will be deemed for all corporate purposes to evidence ownership of post-split shares.Book-Entry SharesIf the reverse stock split is effected, stockholders who hold uncertificated shares (i.e., shares held in book-entry form and not represented by a physical stock certificate), either as direct or beneficial owners, will have their holdings electronically adjusted automatically by our transfer agent (and, for beneficial owners, by their brokers or banks that hold in “street name” for their benefit, as the case may be) to give effect to the reverse stock split. Stockholders who hold uncertificated shares as direct owners will be sent a statement of holding from our transfer agent that indicates the number of post-reverse stock split shares of our Common Stock owned in book-entry form.Certificated SharesAs soon as practicable after the effective date of the split, stockholders will be notified that the reverse stock split has been effected. We expect that our transfer agent will act as exchange agent for purposes of implementing the exchange of stock certificates. Holders of pre-split shares will be asked to surrender to the exchange agent certificates representing pre-split shares in exchange for certificates representing post-split shares in accordance with the procedures to be set forth in a letter of transmittal to be sent by us or our exchange agent. No new certificates will be issued to a stockholder until such stockholder has surrendered such stockholder’s outstanding certificate(s) together with the properly completed and executed letter of transmittal to the exchange agent. Any pre-split shares submitted for transfer, whether pursuant to a sale or other disposition, or otherwise, will automatically be exchanged for post-split shares. STOCKHOLDERS SHOULD NOT DESTROY ANY STOCK CERTIFICATE(S) AND SHOULD NOT SUBMIT ANY CERTIFICATE(S) UNTIL REQUESTED TO DO SO.Fractional SharesNo fractional shares will be issued in connection with the reverse stock split. Stockholders of record on the effective date of the split who otherwise would be entitled to receive fractional shares because they hold a number of pre-split shares not evenly divisible by the number of pre-split shares for which each post-split share is to be exchanged, will in lieu of a fractional share, be entitled upon surrender to the exchange agent of certificates representing such pre-split shares, if any, to receive payment in cash in lieu of any such resulting fractional shares of Common Stock as the post-reverse split amounts of Common Stock will be rounded down to the nearest full share. Such cash payment in lieu of a fractional share of Common Stock will be calculated by multiplying such fractional interest in one share of Common Stock by the closing trading price of our Common Stock on the trading day immediately preceding the effective date of the reverse stock split, and rounded to the nearest cent. No fractional shares will be issued in connection with the reverse stock split.19Accounting MattersThe reverse stock split will not affect the Common Stock capital account on our balance sheet. However, because the par value of our Common Stock will remain unchanged on the effective date of the split, the components that make up the Common Stock capital account will change by offsetting amounts. Based on the number of shares of Common Stock outstanding on April 24, 2020 and depending on the size of the reverse stock split the Board of Directors decides to implement, the stated capital component will be reduced to an amount between $43,207.23 and $540,090.33, and the additional paid-in capital component will be increased with the amount by which the stated capital is reduced. The per share net income or loss and net book value of our Common Stock will be increased because there will be fewer shares of Common Stock outstanding. Prior periods’ per share amounts will be restated to reflect the reverse stock split. Effect on Par ValueThe proposed amendment to our Charter will not affect the par value of our Common Stock, which will remain at $0.01 per share.No Going Private TransactionNotwithstanding the decrease in the number of outstanding shares following the proposed reverse stock split, our Board of Directors does not intend for this transaction to be the first step in a “going private transaction” within the meaning of Rule 13e-3 of the Exchange Act.Potential Anti-Takeover EffectAlthough the increased proportion of unissued authorized shares to issued shares could, under certain circumstances, have an anti-takeover effect (for example, by permitting issuances that would dilute the stock ownership of a person seeking to effect a change in the composition of the Board of Directors or contemplating a tender offer or other transaction for the combination of the Company with another company), the reverse stock split proposal is not being proposed in response to any effort of which we are aware to accumulate shares of our Common Stock or obtain control of the Company, nor is it part of a plan by management to recommend a series of similar amendments to the Board of Directors and stockholders. Other than the reverse stock split proposal, the Board of Directors does not currently contemplate recommending the adoption of any other actions that could be construed to affect the ability of third parties to take over or change control of the Company.No Dissenters’ RightsUnder the Delaware General Corporation Law, our stockholders are not entitled to dissenters’ rights with respect to the reverse stock split, and we will not independently provide stockholders with any such right.Material United States Federal Income Tax Consequences of the Reverse Stock SplitThe following is not intended as tax or legal advice. Each holder should seek advice based on his, her or its particular circumstances from an independent tax advisor.The following discussion describes the anticipated material United States federal income tax consequences to “U.S. holders” (as defined below) of our capital stock relating to the reverse stock split. This discussion is based upon the Internal Revenue Code of 1986, as amended (the “Code”), Treasury Regulations promulgated thereunder, judicial authorities, published positions of the Internal Revenue Service (“IRS”), and other applicable authorities, all as currently in effect and all of which are subject to change or differing interpretations (possibly with retroactive effect). We have not obtained a ruling from the IRS or an opinion of legal or tax counsel with respect to the tax consequences of the reverse stock split and there can be no assurance the IRS will not challenge the statements set forth below or that a court would not sustain any such challenge. The following discussion is for information purposes only and is not intended as tax or legal advice.For purposes of this discussion, the term “U.S. holder” means a beneficial owner of our capital stock that is for United States federal income tax purposes:(i) an individual citizen or resident of the United States;(ii) a corporation (or other entity treated as a corporation for U.S. federal income tax purposes) organized under the laws of the United States, any state or the District of Columbia;(iii) an estate with income subject to United States federal income tax regardless of its source; or(iv) a trust that (a) is subject to primary supervision by a United States court and for which United States persons control all substantial decisions or (b) has a valid election in effect under applicable Treasury Regulations to be treated as a United States person.20This discussion assumes that a U.S. holder holds our capital stock as a capital asset within the meaning of Code Section 1221. This discussion does not address all of the tax consequences that may be relevant to a particular stockholder or to stockholders that are subject to special treatment under United States federal income tax lawsnumerous factors, including, but not limited to, the following:institutions, tax-exempt organizations, insurance companies, regulated investment companies, persons that are broker-dealers, traders in securities who electperformance and the mark-to-market methodcontribution of accounting for their securities, or stockholders holding their shareseach individual to our financial performance;capital stock as part of a “straddle,” “hedge,” “conversion transaction” or other integrated transaction. business plan and strategy; andaddition, this discussion does not address other United States federal taxes (such as gift or estate taxes or alternative minimum taxes),accordance with the tax consequencesrules of the reverse stock split under state, local or foreign tax laws or certain tax reporting requirementsSEC, the following resolution, commonly known as a “say-on-pay” vote, is being submitted for a stockholder vote at the 2020 annual meeting:may be applicable with respectthe compensation paid to the reverse stock split.If a partnership (or other entity treatednamed executive officers of XpresSpa Group, Inc., as a partnership for United States federal income tax purposes) is a stockholder, the tax treatment of a partner in the partnership or any equity owner of such other entity will generally depend upon the status of the person and the activities of the partnership or other entity treated as a partnership for United States federal income tax purposes.Tax Consequences of the Reverse Stock Split GenerallyWe believe that the reverse stock split should qualify as a “recapitalization” under Section 368(a)(1)(E) of the Code. Accordingly: ·A U.S. holder’s aggregate tax basis in his, her or its post-reverse stock split shares will be equal to the aggregate tax basis in the pre-reverse stock split shares exchanged therefor.·A U.S. holder’s holding period for the post-reverse stock split shares will include the period during which such stockholder held the pre-reverse stock split shares surrendered in the reverse stock split.Treasury Regulations promulgated under the Code provide detailed rules for allocating the tax basis and holding period of the shares of our Common Stock surrendered to the shares of our Common Stock receiveddisclosed pursuant to the reverse stock split. Holders of shares of our Common Stock who acquired their shares on different dates and at different prices should consult their tax advisors regarding the allocationcompensation disclosure rules of the tax basisSecurities and holding period of such shares among their post-reverse stock split shares.Interests of DirectorsExchange Commission, the compensation tables and Executive OfficersOur directors and executive officers have no substantial interests, directly or indirectly,the related material disclosed in the matters set forth in this proposal except to the extent of their ownership of shares of our Common Stock.Reservation of Right to Abandon Reverse Stock SplitWe reserve the right to not file the Certificate of Amendment and to abandon any reverse stock split without further action by our stockholders at any time before the effectiveness of the filing with the Secretary of the State of Delaware of the Certificate of Amendment, even if the authority to effect these amendmentsproxy statement, is approved by our stockholders at the special meeting. By voting in favor of a reverse stock split, you are expressly also authorizing the Board of Directors to delay, not proceed with, and abandon, these proposed amendments if it should so decide, in its sole discretion, that such action is in the best interests of our stockholders.our Common Stock present and Series E Preferred Stock voting on an as-converted basis having voting power outstandingentitled to vote on the Record Datematter either in person or by proxy at the annual meeting is required to approve, on an advisory basis, the amendment to our Charter to effect a reverse stock splitcompensation of our Common Stock.TO AUTHORIZE THE BOARD OF DIRECTORS IN ITS DISCRETION TO AMEND THE AMENDED AND RESTATED CERTIFICATE OF INCORPORATION, AS AMENDED, TO EFFECT A REVERSE STOCK SPLIT“FOR” APPROVAL OF THE ISSUED AND OUTSTANDING SHARESCOMPENSATION OF OUR COMMON STOCK (SUCH SPLIT TO COMBINE A NUMBER OF OUTSTANDING SHARES OF OUR COMMON STOCK BETWEEN 1-FOR-2 AND 1-FOR-25, SUCH NUMBER CONSISTING OF ONLY WHOLE SHARES, INTO ONE (1) SHARE OF OUR COMMON STOCK),NAMED EXECUTIVE OFFICERS, AND PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE VOTED IN FAVOR OF THE AMENDMENTSUCH APPROVAL UNLESS A STOCKHOLDER INDICATES OTHERWISE ON THE PROXY.21SPECIALANNUAL MEETING, IF NECESSARY, TO SOLICIT12 THROUGH 4specialannual meeting, if necessary, to solicit additional proxies if there are not sufficient votes in favor of Proposals 12 through 4.specialannual meeting, if necessary, to solicit additional proxies if there are not sufficient votes in favor of the Proposals 12 through 4 requires the affirmative vote of the holders of a majority of the shares of Common Stock and Series E Preferred Stock voting on an as-converted basis present and entitled to vote on the matter either in person or by proxy at the specialannual meeting.SPECIALANNUAL MEETING, IF NECESSARY, TO SOLICIT ADDITIONAL PROXIES IF THERE ARE NOT SUFFICIENT VOTES IN FAVOR OF PROPOSALS 12 THROUGH 4.
4, AND PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE VOTED IN FAVOR OF SUCH APPROVAL UNLESS A STOCKHOLDER INDICATES OTHERWISE ON THE PROXY.22 conduct and ethics that applies to all of our employees, including our CEO and chief financial and accounting officers.employees. The text of the code of conduct and ethics is posted on the “Investors — Corporate Governance” section of our website atwww.xpresspagroup.comwww.xpresspagroup.com/corp_governance, and will be made available to stockholders without charge, upon request, in writing to the Corporate Secretary at 254 West 31st Street 11th11th Floor, New York, New York 10001. Disclosure regarding any amendments to, or waivers from, provisions of the code of conduct and ethics that apply to our directors, and/or principal executive and financial officers will be included in a Current Report on Form 8-K within four business days following the date of the amendment or waiver, unless website posting or the issuance of a press release of such amendments or waivers is then permitted by the rules of Nasdaq Stock Market.specialannual meeting.20202021 annual meeting of stockholders, we must have receivedreceive stockholder proposals (other than for director nominations) no later than April 11, 2020,May 21, 2021, which is 120 days prior to the date that is one year from thethis year’s mailing date of the proxy statement in connection with the 2019 annual stockholder meeting.date. To be considered for presentation at the 2020 annual meeting, although not included in the proxy statement, proposals (including director nominations that are not requested to be included in our proxy statement) must be received no earlier than May 26, 2020,July 5, 2021, which is 75 days prior to the date that is one year from thethis year’s mailing date of the proxy statement in connection with the 2019 annual stockholder meeting and no later than June 25, 2020,August 4, 2021, which is 45 days prior to the date that is one year from thethis year’s mailing date of the proxy statement in connection with the 2019 annual stockholder meeting.date. Proposals that are not received in a timely manner will not be voted on at the 20202021 annual meeting. If a proposal is received on time, the proxies that management solicits for the meeting may still exercise discretionary voting authority on the proposal under circumstances consistent with the proxy rules of the SEC. All stockholder proposals should be marked for the attention of Corporate Secretary at 254 West 31st Street, 11th Floor, Vote Processing, c/o Broadridge Financial Solutions Inc., 51 Mercedes Way, Edgewood, New York 11717. 10001.New York, New YorkMay 6,
September 18, 202023
Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: KEEP THIS PORTION FOR YOUR RECORDS THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. DETACH AND RETURN THIS PORTION ONLY D17196-Z77164
2020 EQUITY INCENTIVE PLANTo authorize, for purposesPurpose; Eligibility.complying with Nasdaq Listing Rule 5635(d), the issuance of shares of our Common Stock in connection with certain warrant exchange agreements entered into in March 2020. 4. To approve a proposed amendment tothis plan is the XpresSpa Group, Inc. Amended and Restated Certificate of Incorporation to effect a reverse stock split of our issued and outstanding shares of Common Stock, at a ratio of between 1-for-2 and 1-for-25. 2. To authorize, for2020 Equity Incentive Plan. The purposes of complying with Nasdaq Listing Rule 5635(d), the issuance of shares of our Common Stock pursuantPlan are to that certain Fourth Amended and Restated Convertible Promissory Note, dated March 6, 2020, by and between the Company and B3D, LLC. 3. To approve a proposed amendment to the Certificate of Designations, Preferences, Rights and Limitations of our Series E Convertible Preferred Stock to provide for the voluntary adjustment of the conversion price by our Board of Directors in its discretion, and to authorize, for purposes of complying with Nasdaq Listing Rule 5635(d), the issuance of shares of our Common Stock upon the conversion of our Series E Convertible Preferred Stock. 5. To approve an adjournment of our Special Meeting of Stockholders, if necessary, to solicit additional proxies if there are not sufficient votes in favor of For Against Abstain ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! The Board of Directors recommends you vote FOR the following proposals: XPRESSPA GROUP, INC. 254 WEST 31ST STREET 11TH FLOOR NEW YORK, NY 10001 VOTE BY INTERNET - www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 p.m. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years. VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 p.m. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. XPRESSPA GROUP, INC. NOTE: The proxies are authorized to vote on all such matters as may properly come before the meeting or any adjournment thereof. Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer. the proposals referred to in proposals (1) through (4). A-1
D17197-Z77164 Important Notice Regarding the Availability of Proxy Materials for the Special Meeting: The Proxy Statement is available at www.proxyvote.com. XPRESSPA GROUP, INC. Special Meeting of Stockholders May 28, 2020, 11:00 AM, EDT THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF XPRESSPA GROUP, INC. The undersigned stockholder of(a) enable XpresSpa Group, Inc., a Delaware corporation, (the "Company"), hereby appoints Douglas Satzman and Bruce T. Bernstein,any Affiliate to attract and eachretain the types of them,Employees, Consultants and Directors who will contribute to the Company’s long range success; (b) provide incentives that align the interests of Employees, Consultants and Directors with power to act without the other and with power of substitution, as proxies and attorneys-in-fact and hereby authorizes them to represent and vote, allthose of the shares of common stockstockholders of the Company whichCompany; and (c) promote the undersigned is entitled to vote, on all matters that may properly come before the Special Meeting of Stockholders of the Company to be held on May 28, 2020, at 11:00 AM, EDT, and at any adjournment or postponement thereof. As a result of the public health and travel risks and concerns due to COVID-19, the Special Meeting of Stockholders will be a virtual meeting via live webcast on the internet. You will be able to attend the Special Meeting, vote and submit your questions during the Special Meeting by visiting https://web.lumiagm.com/249967429 and entering your control number and the meeting password: xpresspa2020. The undersigned stockholder hereby revokes any proxy or proxies heretofore given by the undersigned for the Special Meeting. THIS PROXY CARD, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED. IF NO DIRECTION IS MADE BUT THE CARD IS SIGNED, THIS PROXY CARD WILL BE VOTED "FOR" PROPOSALS 1, 2, 3, 4, AND 5. Continued and to be signed on reverse sideA-2FORM OF CERTIFICATE OF AMENDMENT TO CERTIFICATE OF DESIGNATION OF PREFERENCES, RIGHTSAND LIMITATIONS OF SERIES E CONVERTIBLE PREFERRED STOCKThis Amendment to the Certificate of Designation of Preferences, Rights and Limitations of Series E Convertible Preferred Stock (this “Amendment”) is dated as of [ ].WHEREAS, the board of directors (“Board of Directors”) of XpresSpa Group, Inc., a Delaware corporation (the “Company”), pursuant to authority granted to it by the certificate of incorporation of the Company, has previously fixed the rights, preferences, restrictions and other matters relating to a seriessuccess of the Company’s preferred stock, consisting of 2,397,060 authorized shares of preferred stock, classified as Series E Convertible Preferred Stock (the “Series E Preferred Stock”)business.the Certificate of Designation of Preferences, Rights and Limitations of Series E Convertible Preferred Stock (the “Certificate of Designation”) was filed with the Secretary of State of the State of Delaware on November 13, 2018 (and subsequently amended on July 8, 2019) evidencing such terms;WHEREAS, the Board of Directors has duly adopted resolutions proposing to adopt this Amendment and declaring this Amendment to be advisable and in the best interest of the Company and its stockholders;Affiliates andWHEREAS, such other individuals designated by the requisite stockholdersCommittee who are reasonably expected to become Employees, Consultants and Directors after the receipt of Awards.have duly approved this Amendment in accordance with Section 242be transmitted electronically to any Participant. Each Award Agreement shall be subject to the terms and conditions of the General Corporation LawPlan.State of Delaware (the Company, as constituted at any time.DGCL”).NOW, THEREFORE, this Amendment has been duly adoptedCash Award”accordance with cash that is granted under Section 2427.4 of the DGCL and has been executedPlan.duly authorized officerParticipant of any provision of any employment, consulting, advisory, nondisclosure, non-competition or similar agreement between the Participant and the Company or any Affiliate, and (e) conduct substantially prejudicial to the business of the Company or any Affiliate; provided, however, that any provision in an agreement between a Participant and the Company or an Affiliate, which contains a conflicting definition of Cause for termination and which is in effect at the time of such first set forth above to amend the terms of the CertificatePlan, which for this purpose shall be the date of Designation as follows:1.Capitalized Terms. Unless otherwise specifiedits approval by the stockholders of the Company, or (B) are elected, or nominated for election, to the Board of Directors with the affirmative votes of at least a majority of the Incumbent Directors at the time of such election or nomination (but shall not include an individual whose election or nomination is in this Amendment, all terms herein shallconnection with an actual or threatened proxy contest relating to the election of directors to the Company).the same meanings ascribed to themoccurred if such transaction is not also a “change in the Certificateownership or effective control of” the Company or “a change in the ownership of Designation.2.Amendment to Section 8. Section 8a substantial portion of the Certificate of Designation is hereby amendedassets of” the Company as determined under Treasury Regulation Section 1.409A-3(i)(5) (without regard to add a new Section 8.1.3 as follows:8.1.3. Voluntary Adjustment.any alternative definition thereunder). The Board of Directors may, in its sole discretion reduceand without a Participant’s consent, amend the then current Conversion Pricedefinition of “Change in Control” to conform to the definition of “Change in Control” under Section 409A of the Code, and the regulations thereunder.amount and for any periodregulations promulgated thereunder.time deemed appropriateone or more members of the Board appointed by the Board of Directors. Notwithstanding anything herein to administer the contrary, this Plan in accordance with Section 8.1.3 shall not apply until receipt3.3 and Section 3.4, or any Officers of the approvalCompany to whom it has delegated authority as permitted under Section 3.3.stockholderscommon stock, $0.01 par value per share, or such other securities of the Company as may be designated by the Committee from time to time in substitution thereof.Nasdaq Listing Rule 5635(d)a registration statement on Form S-8 under the Securities Act or any successor form thereto.Nasdaq Listing Rule 5635(d).This CertificateSection 16 of Amendmentthe Exchange Act. Nothing herein shall create an inference that an Award is not validly granted under the Plan in the event Awards are granted under the Plan by a compensation committee of the Board that does not at all times consist solely of two or more Non-Employee Directors.effective on [ ] at [ ], Eastern Time.IN WITNESS WHEREOF,indemnified by the CorporationCompany against the reasonable expenses, including attorney’s fees, actually incurred in connection with any action, suit or proceeding or in connection with any appeal therein, to which the Committee may be party by reason of any action taken or failure to act under or in connection with the Plan or any Award granted under the Plan, and against all amounts paid by the Committee in settlement thereof (caused this Certificate been approved by the Company, which approval shall not be unreasonably withheld) or paid by the Committee in satisfactionAmendmenta judgment in any such action, suit or proceeding, except in relation to matters as to which it shall be adjudged in such action, suit or proceeding that such Committee did not act in good faith and in a manner which such person reasonably believed to be signed by its Chief Executive Officer on this [ ] day of [ ].XPRESSPA GROUP, INC.By:Name:Douglas SatzmanTitle:Chief Executive OfficerB-1FORM OF CERTIFICATE OF AMENDMENT TO EFFECT REVERSE STOCK SPLITPursuant to Section 242in the best interests of the General Corporation LawCompany, or in the case of a criminal proceeding, had no reason to believe that the Stateconduct complained of Delaware, XpresSpa Group, Inc.was unlawful; a corporation organizedthat within 60 days after the institution of any such action, suit or proceeding, such Committee shall, in writing, offer the Company the opportunity at its own expense to handle and existing under the laws of the State of Delaware (the “Corporation”), does hereby certify as follows:1. The name of the Corporation is XpresSpa Group, Inc. The date of filing of its original Certificate of Incorporation with the Secretary of State of the State of Delaware was January 9, 2006, under the name of Vringo, Inc. The name of the Corporation was changed to FORM Holdings Corp. by filing a Certificate of Amendmentdefend such action, suit or proceeding.Certificate of Incorporation with the Secretary of State of the State of Delaware on May 6, 2016. The name of the Corporation was changedPlan.XpresSpa Group, Inc. by filing a Certificate of Amendment to the Certificate of Incorporation with the Secretary of State of the State of Delaware on January 5, 2018.2. The Board of Directors of the Corporation has duly adopted a resolution pursuant to Section 242 of the General Corporation Law of the State of Delaware setting forth a proposed amendment to the Amended and Restated Certificate of Incorporation of the Corporation and declaring said amendment to be advisable. The requisite stockholders of the Corporation have duly approved said proposed amendmentadjustment in accordance with Section 24211, the maximum aggregate number of shares of Common Stock available for issuance under the Plan is 5,000,000 shares plus the number of shares of Common Stock subject to outstanding awards under the Prior Plan or any predecessor plans as of the General Corporation LawEffective Date which thereafter are forfeited, settled in cash or cancelled or expire or are reacquired by the Company (the “StateAwards, the Company shall keep available at all times the number of Delaware. The amendment amendsshares of Common Stock required to satisfy such Awards. Upon the Amendedapproval of this Plan by Company stockholders, no additional awards will be granted under the Prior Plan or any predecessor plan; provided that all outstanding awards previously granted under the Prior Plan or predecessor plans as of such approval date shall remain outstanding and Restated Certificate of Incorporationshall be administered and settled in accordance with the provisions of the Corporation as follows:Sections (3)Prior Plan and (4)such other predecessor plans.Article Fourth are hereby amendedauthorized and restatedunissued shares, treasury shares or shares reacquired by the Company in their entirety as follows:“(3) Upon effectivenessany manner.this Certificate of AmendmentCommon Stock may be issued in the aggregate pursuant to the Amended and Restated Certificateexercise of IncorporationIncentive Stock Options (the “ISO Limit”).Corporation (the “Effective Time”full number of shares of Common Stock to which the Award related will again be available for issuance under the Plan. Notwithstanding anything to the contrary contained herein: shares subject to an Award under the Plan shall not again be made available for issuance or delivery under the Plan if such shares are (a) shares tendered in payment of an Option, (b) shares delivered or withheld by the Company to satisfy any tax withholding obligation, or (c) shares covered by a stock-settled Stock Appreciation Right or other Awards that were not issued upon the settlement of the Award.issued and outstanding immediately priorare listed on any established stock exchange or a national market system, through theEffective Time andCompany an amount equal to the exercise price (i.e., by means of a “cashless” exercise procedure); (iii) by reduction in the number of shares of Common Stock issued and held in the treasuryotherwise deliverable upon exercise of the Corporation immediately prior to the Effective Time are reclassified intosuch Option with a smaller number of shares such that each [ ] shares of issued Common Stock immediately prior to the Effective Time is reclassified into one (1) share of Common Stock. Notwithstanding the immediately preceding sentence, no fractional shares shall be issued as a result of the reverse stock split. Instead, any stockholder who would otherwise be entitled to a fractional share of our Common Stock as a result of the reclassification shall be entitled to receive a cash paymentFair Market Value equal to the productaggregate Option Exercise Price at the time of such resulting fractional interestexercise (i.e., by means of a “net exercise”); (iv) by any combination of the foregoing methods; or (v) in one shareany other form of ourlegal consideration that may be acceptable to the Committee. Unless otherwise specifically provided in the Option, the exercise price of Common Stock multipliedacquired pursuant to an Option that is paid by delivery (or attestation) to the closing trading priceCompany of our Common Stock on the trading day immediately following the effective date of the reverse stock split. Notwithstanding the foregoing, the Corporation shall not be obliged to issue certificates evidencing theother shares of Common Stock outstanding as a result ofacquired, directly or indirectly from the reverse stock split or cash in lieu of fractional shares, if any, unless and until the certificates evidencing the shares heldCompany, shall be paid only by a holder prior to the reverse stock split are either delivered to the Corporation or its transfer agent, or the holder notifies the Corporation or its transfer agent that such certificates have been lost, stolen or destroyed and executes an agreement satisfactory to the Corporation to indemnify the Corporation from any loss incurred by it in connection with such certificates.(4) Each stock certificate that, immediately prior to the Effective Time, represented shares of Common Stock of the Company that were issued and outstanding immediately priorhave been held for more than six months (or such longer or shorter period of time required to avoid a charge to earnings for financial accounting purposes). Notwithstanding the Effective Time shall, from and after the Effective Time, automatically and without the necessity of presenting the sameforegoing, during any period for exchange, represent that the number of whole shares of Common Stock after the Effective Time into which the shares of Common Stock formerly representedare publicly traded (i.e., the Common Stock is listed on any established stock exchange or a national market system) an exercise by a Director or Officer that involves or may involve a direct or indirect extension of credit or arrangement of an extension of credit by the Company, directly or indirectly, in violation of Section 402(a) of the Sarbanes-Oxley Act of 2002 shall be prohibited with respect to any Award under this Plan. Notwithstanding the foregoing, the Committee shall accept only such payment on exercise of an Incentive Stock Option as is permitted by Section 422 of the Code.certificateagreement. If a Participant fails to execute an agreement evidencing an Award of Restricted Stock and, if applicable, an escrow agreement and stock power, the Award shall be null and void. Subject to the restrictions set forth in the Award, the Participant generally shall have been reclassified (as wellthe rights and privileges of a stockholder as to such Restricted Stock, including the right to vote such Restricted Stock and the right to receive dividends; provided that, any cash dividends and stock dividends with respect to the Restricted Stock shall be withheld by the Company for the Participant’s account, and interest may be credited on the amount of the cash dividends withheld at a rate and subject to such terms as determined by the Committee. The cash paymentdividends or stock dividends so withheld by the Committee and attributable to any particular share of Restricted Stock (and earnings thereon, if applicable) shall be distributed to the Participant in lieucash or, at the discretion of the Committee, in Common Stock having a Fair Market Value equal to the amount of such dividends, if applicable, upon the release of restrictions on such stock and, if such stock is forfeited, the Participant shall have no right to such dividends.fractionalgrant of Restricted Stock Units shall be reflected in an Award Agreement. No Common Stock shall be issued at the time a Restricted Stock Unit is granted, and the Company will not be required to set aside funds for the payment of any such Award. A Participant shall have no voting rights with respect to any Restricted Stock Units granted hereunder. The Committee may also grant Restricted Stock Units with a deferral feature, whereby settlement is deferred beyond the vesting date until the occurrence of a future payment date or event set forth in an Award Agreement (“Deferred Stock Units”). At the discretion of the Committee, each Restricted Stock Unit or Deferred Stock Unit (representing one share of Common Stock), may be credited with an amount equal to the cash and stock dividends paid by the Company in respect of one share of Common Stock (“Dividend Equivalents”). Dividend Equivalents shall be withheld by the Company and credited to the Participant’s account, and interest may be credited on the amount of cash Dividend Equivalents credited to the Participant’s account at a rate and subject to such terms as determined by the Committee. Dividend Equivalents credited to a Participant’s account and attributable to any particular Restricted Stock Unit or Deferred Stock Unit (and earnings thereon, if applicable)personVested Unit.record holding a certificate that representedPerformance Stock Awards. Each Performance Stock Award granted under the Plan shall be evidenced by an Award Agreement. Each Performance Stock Award so granted shallweremust be satisfied for a Participant to earn an Award; and (iv) the other terms, conditions and restrictions of the Award.outstanding immediatelysale of Common Stock under the Plan, the Company shall be relieved from any liability for failure to issue and sell Common Stock upon exercise of such Awards unless and until such authority is obtained.Effective Timedate such Common Stock certificate is issued, except as provided in Section 11 hereof.receive,confer upon surrenderany Participant any right to continue to serve the Company or an Affiliate in the capacity in effect at the time the Award was granted or shall affect the right of the Company or an Affiliate to terminate (a) the employment of an Employee with or without notice and with or without Cause or (b) the service of a Director pursuant to the Bylaws of thecertificate,means: (a) tendering a new certificate evidencingcash payment; (b) authorizing the Company to withhold Common Stock from the Common Stock otherwise issuable to the Participant as a result of the exercise or acquisition of Common Stock under the Award, provided, however, that no Common Stock is withheld for such purpose with a value exceeding the maximum amount of tax required to be withheld by law; (c) delivering to the Company previously owned and representingunencumbered Common Stock of the Company; or (d) if the Common Stock is listed on any established stock exchange or a national market system, through the delivery of irrevocable instructions to a broker to deliver promptly to the Company an amount equal to the tax required to be withheld by law (i.e., by means of a “cashless” exercise procedure). whole shares of Common Stock aftersubject to all Awards stated in Section 4 will be equitably adjusted or substituted, as to the Effective Time into which the sharesnumber, price or kind of Common Stock formerly representedor other consideration subject to such Awards to the extent necessary to preserve the economic intent of such Award. In the case of adjustments made pursuant to this Section, unless the Committee specifically determines that such adjustment is in the best interests of the Company or its Affiliates, the Committee shall, in the case of Incentive Stock Options, ensure that any adjustments under this Section will not constitute a modification, extension or renewal of the Incentive Stock Options within the meaning of Section 424(h)(3) of the Code and in the case of Non-Qualified Stock Options, ensure that any adjustments under this Section will not constitute a modification of such Non-Qualified Stock Options within the meaning of Section 409A of the Code. Any adjustments made under this Section shall be made in a manner which does not adversely affect the exemption provided pursuant to Rule 16b-3 under the Exchange Act. The Company shall give each Participant notice of an adjustment hereunder and, upon notice, such adjustment shall be conclusive and binding for all purposes.certificateperformance goals shall be deemed satisfied as if target performance was achieved.been reclassified (includingfor purposes of this Plan, 30 days shall be considered a reasonable period of time.right to receive aPlan. The Committee shall determine whether cash, paymentadditional Awards or other securities or property shall be issued or paid in lieu of fractional Common Stock or whether any fractional shares should be rounded, forfeited or otherwise eliminated.fractional share“disposition” (as defined in Section 424 of the Code) of all or any portion of Common Stock).”This CertificateStock acquired upon exercise of Amendmentan Incentive Stock Option within two years from the Grant Date of such Incentive Stock Option or within one year after the issuance of the Common Stock acquired upon exercise of such Incentive Stock Option (a “on [ ] at [ ], Eastern Time.IN WITNESS WHEREOF,only when filed by the Corporation has caused this CertificateParticipant in writing with the Company during the Participant’s lifetime.Amendmentadministering the Plan shall be paid by the Company.signedinvalid, illegal or unenforceable, whether in whole or in part, such provision shall be deemed modified to the extent, but only to the extent, of such invalidity, illegality or unenforceability and the remaining provisions shall not be affected thereby.its Chief Executive Officerit selectively among persons who are eligible to receive, or actually receive, Awards. Without limiting the generality of the foregoing, the Committee shall be entitled to make non-uniform and selective determinations, amendments and adjustments, and to enter into non-uniform and selective Award Agreements.[ ] dayPlan, without regard to such state’s conflict of [ ].
law rules.XPRESSPA GROUP, INC.By:Name:Douglas SatzmanTitle:Chief Executive OfficerC-1
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