UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Amendment No. )
Filed by the Registrant ☒
Filed by a Party other than the Registrant ☐
Check the appropriate box:
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| Preliminary Proxy Statement |
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| Confidential, for Use of the Commission Only (as permitted by Rule 14a‑6(e)(2)) |
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| Definitive Proxy Statement |
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| Definitive Additional Materials |
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| Soliciting Material under §240.14a‑12 |
Ra Medical Systems, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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☐ | Fee paid previously with preliminary materials. |
☐ | Fee computed on table |
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2070 Las Palmas Drive
Carlsbad, California 92011
(760) 804-1648
To our Stockholders:
We are pleased to invite you to attend the annualspecial meeting of stockholders (including any adjournment or postponement thereof, the “Special Meeting”) of Ra Medical Systems, Inc., (the “Company”) to be held on Friday, June 4, 2021Tuesday, September 20, 2022 at 9:8:00 a.m. Pacific Time,time.
At the Special Meeting, you will be asked:
To approve, in accordance with NYSE American Company Guide Section 713(a), the issuance of more than 19.99% of our outstanding common stock, par value $0.0001 per share (“Common Stock”) upon the exercise of our Series C Common Stock Purchase Warrants, with the right for such potential exercise to occur immediately following the date upon which our stockholders approve this proposal (the “Warrant Exercise Proposal” or “Proposal No. 1”);
To approve the amendment to our Amended and Restated Certificate of Incorporation (the “Restated Certificate”) to effect a reverse stock split of our Common Stock that is issued and outstanding or held in treasury at a stock split ratio of between 1-for-20 and 1-for-50, inclusive, which ratio will be selected at the sole discretion of our Board of Directors or a duly authorized committee thereof at any whole number in the above range (the “Reverse Stock Split”), with cash paid for any fractional shares that would otherwise be issued as a result of the Reverse Stock Split; provided, that the Board may abandon the Reverse Stock Split in its sole discretion (the “Reverse Stock Split Proposal” or “Proposal No. 2”); and
To approve the adjournment of postponement thereof. the Special Meeting, if necessary, to continue to solicit votes for Proposal Nos. 1 and 2 (the “Adjournment Proposal” or “Proposal No. 3”).
The annual meetingSpecial Meeting will be a virtual meeting of stockholders. You are invited to attend and vote your shares at the annual meetingSpecial Meeting live via internet webcast so long as you register to attend the annual meetingSpecial Meeting at www.proxydocs.com/RMEDwww.viewproxy.com/RMED/2022 by 5:008:59 p.m. Pacific Timetime on June 1, 2021Monday, September 19, 2022 (the “Registration Deadline”). Questions will need to be submitted prior to the AnnualSpecial Meeting. To submit questions, please visit www.proxydocs.com/RMEDwww.viewproxy.com/RMED/2022. After registering, you will receive an e-mail containing a unique link and password that will enable you to attend the meeting and vote. You will not be able to attend the annual meetingSpecial Meeting in person.
At this year’s annual meeting, our stockholders will be asked to:
elect as Class III directors the two nominees named in the accompanying proxy statement to serve until our 2024 annual meeting of stockholders or until their respective successors are duly elected and qualified.
approve an amendment to our 2018 Equity Incentive Plan (the “2018 Equity Incentive Plan”) to (i) increase the number of shares of common stock reserved for issuance thereunder by 270,000 shares, and (ii) modify the “evergreen” provision by removing the cap on the number of shares that may be reserved for issuance, so that on January 1st of each year, commencing on January 1, 2022, the number of shares reserved for issuance under such plan will increase by 5% of the number of outstanding shares of common stock on such date or such lesser amount as the Board may determine;
ratify the appointment of Haskell & White LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2021; and
transact such other business that may properly come before the annual meeting.
Details regarding how to attend the annual meeting and theperson. The business to be conducted at the annual meeting areSpecial Meeting is more fully described in the accompanying notice of annual meetingSpecial Meeting of stockholders and proxy statement.
Your vote is important. Regardless of whether you plan to attend the annual meeting,Special Meeting, it is important that your shares be represented and voted at the annual meeting,Special Meeting, and we hope you will vote as soon as possible. You may vote by proxy via the Internet, by telephone, or by mail, according to the instructions on the enclosed proxy card or voting instruction card. Voting over the Internet or by telephone, by written proxy or voting instruction card will ensure your representation at the annual meetingSpecial Meeting regardless of whether you attend the annual meeting.Special Meeting.
Thank you for your ongoing support of, and continued interest in, Ra Medical Systems, Inc.
Sincerely,
Jonathan Will McGuire |
Chief Executive Officer |
Carlsbad, California |
August 29, 2022 |
Jonathan Will McGuireChief Executive Officer,Carlsbad, California
April 23, 2021
The date of this proxy statement is April 23, 2021, and is being mailed to stockholders on or about April 30, 2021.
Important Notice Regarding the Availability of Proxy Materials for the AnnualSpecial Meeting to Be Held on June 4, 2021.Tuesday, September 20, 2022. Our Proxy Statement and Annual ReportThis proxy statement is being mailed on or about August 29, 2022 to Stockholders areall stockholders entitled to vote at the Special Meeting. A copy of this proxy statement is available at www.proxydocs.com/www.viewproxy.com/RMED/2022 and from the SEC on its website at www.sec.gov.
RA MEDICAL SYSTEMS, INC.
2070 Las Palmas Drive
Carlsbad, California 92011
(760) 804-1648
NOTICE OF ANNUALSPECIAL MEETING OF STOCKHOLDERS
Time and Date |
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Meeting Location | The Special Meeting will be held in virtual only format. In order to attend the meeting you must first register at |
Items of Business | (1) To (2) To approve (3) To
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Record Date |
Only stockholders of record of our |
Meeting Admission | You are invited to attend the |
Voting | Your vote is very important. You may vote by proxy via the Internet, by telephone, or by mail, according to the instructions on the enclosed proxy card or voting instruction card. For specific instructions on how to vote your shares, please refer to the section entitled Questions and Answers beginning on page 1 of the accompanying proxy statement. |
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Important Notice Regarding the Availability of Proxy Materials for the AnnualSpecial Meeting to be Held on June 4, 2021Tuesday, September 20, 2022. TheThis proxy statement the accompanying materials and our 2020 annual report areis being mailed on or about April 30, 2021August 29, 2022 to all stockholders entitled to vote at the annual meeting. Special Meeting. A copy of ourthis proxy statement is available at www.viewproxy.com/RMED/2022 and our 2020 annual report are also posted on www.proxydocs.com/RMED and are available from the SEC on its website at www.sec.gov.www.sec.gov.
By order of the Board of Directors |
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Carlsbad, California |
August 29, 2022 |
April 23, 2021
Table of Contents
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RA MEDICAL SYSTEMS, INC.
2070 Las Palmas Drive
Carlsbad, California 92011
PROXY STATEMENT
For the 2021 AnnualSpecial Meeting of Stockholders
to be held on June 4, 2021Tuesday, September 20, 2022
The information provided in the “Questions and Answers” format below is for your convenience only and is merely a summary of the information contained in this proxy statement. You should read the entire proxy statement carefully.
QUESTIONS AND ANSWERS ABOUT THE PROXY MATERIALS AND ANNUALSPECIAL MEETING
Why am I receiving these materials?
This proxy statement and the enclosed form of proxy are furnished in connection with the solicitation of proxies by our board of directors for use at the 2021 annual meeting of stockholders of Ra Medical Systems, Inc., a Delaware corporation, and any postponements, adjournments, or continuations thereof, or the annual meeting. The annual meeting will be held on Friday, June 4, 2021 at 9:00 a.m. Pacific Time, via live internet webcast.
Stockholders are invited to attend the annual meeting and are requested to vote on the items of business described in this proxy statement. This proxy statement, the accompanying materials and our 2020 annual report are being mailed on or about April 30, 2021, to all stockholders entitled to vote at the annual meeting. A copy of our proxy statement and our 2020 annual report are posted on www.proxydocs.com/RMED, and are also available from the SEC on its website at www.sec.gov.
What is a proxy?
A proxy is your legal designation of another person to vote the stock you own. The person you designate is your “proxy,” and you give the proxy authority to vote your shares by submitting the enclosed proxy card, or if available, voting by telephone or over the Internet. We have designated Jonathan Will McGuire, Andrew Jacksonour Chief Executive Officer, and Daniel HorwoodBrian Conn, our interim Chief Financial Officer, to serve as proxies for the annual meeting.Special Meeting.
What am I voting on?
You are being asked to vote on twothree proposals:
To approve, in accordance with NYSE American Company Guide Section 713(a), the electionissuance of two (2) Class III directors frommore than 19.99% of our outstanding common stock, par value $0.0001 per share (“Common Stock”) upon the nominees named inexercise of Series C Common Stock Purchase Warrants, with the right for such potential exercise to occur immediately following the date upon which our stockholders approve this proxy statement to hold office until our 2024 annual meeting of stockholdersproposal (the “Warrant Exercise Proposal” or until their respective successors are duly elected and qualified;“Proposal No. 1”).
To approve the approval of an amendment to our 2018 Equity Incentive PlanRestated Certificate to (i) increaseeffect a reverse stock split of our Common Stock that is issued and outstanding or held in treasury at a stock split ratio of between 1-for-20 and 1-for-50, inclusive, which ratio will be selected at the sole discretion of our Board of Directors or a duly authorized committee thereof at any whole number of shares of common stock reservedin the above range (the “Reverse Stock Split”), with cash paid for issuance thereunder by 270,000 shares, and (ii) modify the “evergreen” provision by removing the cap on the number ofany fractional shares that maywould otherwise be reserved for issuance, so that on January 1st of each year, commencing on January 1, 2022, the number of shares reserved for issuance under such plan will increase by 5%issued as a result of the number of outstanding shares of common stock on such date or such lesser amount asReverse Stock Split; provided, that the Board may determine;abandon the Reverse Stock Split in its sole discretion (the “Reverse Stock Split Proposal” or “Proposal No. 2”).
To approve the ratificationadjournment of the appointment of Haskell & White LLP as our independent registered public accounting firmSpecial Meeting, if necessary, to continue to solicit votes for our fiscal year ending December 31, 2021;Proposal Nos. 1 and 2 (the “Adjournment Proposal” or “Proposal No. 3”).
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We will also transact any other business that properly comes before the annual meeting.
What if otherThe foregoing matters are properly brought before the annual meeting?
Asonly items of the date of this proxy statement, we are not aware of any other mattersbusiness that will be presented for considerationconducted at the annual meeting. If any other matters are properly brought before the annual meeting, the persons named as proxies will be authorized to vote or otherwise act on those matters in accordance with their judgment. If for any reason a director nominee is not available as a candidate for director, the persons named as proxy holders will vote your proxy for such other candidate as may be nominated by our board of directors.Special Meeting.
How does the board of directors recommend that I vote?
Our board of directors recommends that you vote your shares:
“FOR” the election of the directors nominated by our board of directors and named in this proxy statement as Class III directors;Warrant Exercise Proposal;
“FOR” the amendment to our 2018 Equity Incentive Plan to (i) increase the number of shares of common stock reserved for issuance thereunder by 270,000 shares, and (ii) modify the “evergreen” provision by removing the cap on the number of shares that may be reserved for issuance, so that on January 1st of each year, commencing on January 1, 2022, the number of shares reserved for issuance under such plan will increase by 5% of the number of outstanding shares of common stock on such date or such lesser amount as the Board may determine;Reverse Stock Split Proposal; and
“FOR” the ratification of the appointment of Haskell & White LLP as our independent registered public accounting firm for our fiscal year ending December 31, 2021.Adjournment Proposal.
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Who may vote at the annual meeting?Special Meeting?
Only stockholders of record as of the close of business on April 9, 2021,July 22, 2022, the record date for the annual meeting,Special Meeting, or the record date, are entitled to vote at the annual meeting.Special Meeting. As of the record date, there were 3,255,98052,909,195 shares of our common stockCommon Stock issued and outstanding, held by 6865 holders of record. We do not have cumulative voting rights for the election of directors.
You are invited to attend and vote your shares at the annual meeting live via webcast so long as you register to attend the annual meeting at www.proxydocs.com/RMED by 5:00 p.m. Pacific Time on June 1, 2021 (the “Registration Deadline”). You will be asked to provide the control number located inside the shaded gray box on your proxy card (the “Control Number”) as described in the proxy card. After completion of your registration by the Registration Deadline, further instructions, including a unique link to access the annual meeting, will be emailed to you.
Stockholder of Record: Shares Registered in Your Name. If, at the close of business on the record date for the annual meeting,Special Meeting, your shares were registered directly in your name with our transfer agent, American Stock Transfer & Trust Company, LLC, then you are a stockholder of record. As a stockholder of record, you have the right to grant your voting proxy directly to the individuals listed on the proxy card or to vote live via the internet at the annual meeting.Special Meeting. You may also vote on the internet, by mail, or by telephone as described below under the heading “How can I vote my shares?” and on your proxy card.
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Beneficial Owner: Shares Registered in the Name of a Broker, Bank, or Other Nominee. If, at the close of business on the record date for the annual meeting,Special Meeting, your shares were held, not in your name, but rather in an account at a brokerage firm, bank, or other nominee, then you are the beneficial owner of shares held in “street name” and these proxy materials are being forwarded to you by that organization. The organization holding your account is considered the stockholder of record for purposes of voting at the annual meeting.Special Meeting. As a beneficial owner, you have the right to direct your broker, bank or other nominee regarding how to vote the shares in your account by following the voting instructions your broker, bank or other nominee provides. You are also invited to attend the annual meetingSpecial Meeting live via webcast, and you must pre-register at www.proxydocs.com/RMEDwww.viewproxy.com/RMED/2022. However, since you are not the stockholder of record, you may not vote your shares in person at the annual meetingSpecial Meeting unless you obtain a valid proxy from your broker, bank or other nominee.
You are also invited to attend and vote your shares at the Special Meeting live via webcast so long as you register to attend the Special Meeting at www.viewproxy.com/RMED/2022 by 8:59 p.m. Pacific time on Monday, September 19, 2022 (the “Registration Deadline”). If you are a stockholder of record, you will be asked to provide the control number from your proxy card (the “Control Number”) If you are a beneficial owner, then you must first obtain a valid proxy from your bank, broker or other nominee and submit it when you register. After registering, you will receive an e-mail containing a unique link and password that will enable you to attend the meeting and vote.
How can I vote my shares?
Stockholder of Record: Shares Registered in Your Name
If you are a stockholder of record, you may vote in one of the following ways:
You may vote during the annual meetingSpecial Meeting live via the internet. If you plan to attend the annual meetingSpecial Meeting live via webcast, you may vote by following the instructions posted at www.proxydocs.com/RMEDwww.viewproxy.com/RMED/2022. To be admitted to the annual meetingSpecial Meeting and vote your shares, you must register byin advance following the Registration Deadline and provide the Control Number as described in the proxy card. After completion of your registration by the Registration Deadline, further instructions including a unique link to access the annual meeting, will be emailed to you.above.
You may vote by mail. Complete, sign and date the proxy card that accompanies this proxy statement and return it promptly in the postage-prepaid envelope provided (if you received printed proxy materials). Your completed, signed and dated proxy card must be received prior to the annual meeting.Special Meeting.
You may vote by telephone. To vote over the telephone, dial toll-free (855) 673-06471-866-402-3905 and follow the recorded instructions. You will be asked to provide the company number and control number from your proxy card. Telephone voting is available 24 hours a day, 7 days a week, until 8:59 a.m.p.m. Pacific Time,time, on June 3, 2021.September 19, 2022.
You may vote via the Internet. To vote via the Internet, go to www.proxypush.com/www.FCRvote.com/RMED to complete an electronic proxy card (have your proxy card in hand when you visit the website). You will be asked to provide the company number and control number from your proxy card. Internet voting is available 24 hours a day, 7 days a week, until 8:59 a.m.p.m. Pacific Time,time, on June 3, 2021.September 19, 2022.
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Beneficial Owners: Shares Registered in the Name of a Broker, Bank or Other Nominee
If you are a beneficial owner of shares held of record by a broker, bank or other nominee, you will receive voting instructions from your broker, bank or other nominee. You must follow the voting instructions provided by your broker, bank or other nominee in order to instruct your broker, bank or other nominee on how to vote your shares. Beneficial owners of shares should generally be able to vote by returning the voting instruction card, or by telephone or via the Internet. However, the availability of telephone or Internet voting will depend on the voting process of your broker, bank, or other nominee. As discussed above, if you are a beneficial owner, you may not vote your shares in live via the internet at the annual meetingSpecial Meeting unless you obtain a legal proxy from your broker, bank or other nominee that holds your shares, giving you the right to vote the shares at the meeting.Special Meeting, and submit it when you register.
Can I change my vote or revoke my proxy?
Stockholder of Record: Shares Registered in Your Name. If you are a stockholder of record, you can change your vote or revoke your proxy at any time before the annual meetingSpecial Meeting by:
entering a new vote by Internet or telephone (until the applicable deadline for each method as set forth above);
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returning a later-dated proxy card (which automatically revokes the earlier proxy);
providing a written notice of revocation to our corporate secretary at Ra Medical Systems, Inc., 2070 Las Palmas Drive, Carlsbad, California 92011, Attention: Corporate Secretary; or
attending the annual meetingSpecial Meeting and voting live via the internet. Attendance at the annual meetingSpecial Meeting live via the internet will not cause your previously granted proxy to be revoked unless you specifically so request.
Beneficial Owner: Shares Registered in the Name of a Broker, Bank or Other Nominee. If you are the beneficial owner of your shares, you must contact the broker, bank or other nominee holding your shares and follow their instructions to change your vote or revoke your proxy.
What is the effect of giving a proxy?
Proxies are solicited by and on behalf of our board of directors. The persons named in the proxy, Jonathan Will McGuire, our Chief Executive Officer, Andrew Jackson,and Brian Conn, our interim Chief Financial Officer, with full power of substitution and Daniel Horwood, our General Counsel and Corporate Secretary,re-substitution, have been designated as proxies for the annual meetingSpecial Meeting by our board of directors. When proxies are properly dated, executed and returned, the shares represented by such proxies will be voted at the annual meetingSpecial Meeting in accordance with the instruction of the stockholder. If no specific instructions are given, however, the shares will be voted in accordance with the recommendations of our board of directors as described above and, if any other matters are properly brought before the annual meeting,Special Meeting, the shares will be voted in accordance with the proxies’ judgment.
What shares can I vote?
Each share of our common stockCommon Stock issued and outstanding as of the close of business on April 9, 2021,July 22, 2022, the record date for the 2021 annual meeting of stockholders,Special Meeting, is entitled to vote on all items being considered at the 2021 annual meeting.Special Meeting. You may vote all shares owned by you as of the record date, including (i) shares held directly in your name as the stockholder of record and (ii) shares held for you as the beneficial owner in street name through a broker, bank, trustee, or other nominee. On the record date, we had 3,255,98052,909,195 shares of common stockCommon Stock issued and outstanding.
How many votes do I have?
On each matter to be voted upon at the annual meeting,Special Meeting, each stockholder will be entitled to one vote for each share of our common stockCommon Stock held by them on the record date.
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What is the quorum requirement for the annual meeting?Special Meeting?
A quorum is the minimum number of shares required to be present or represented at the annual meetingSpecial Meeting for the meeting to be properly held under our bylaws and Delaware law. Holders of a majorityone-third of the voting power of our issued and outstanding common stockCommon Stock and entitled to vote at the annual meetingSpecial Meeting must be present in person or represented by proxy to hold and transact business at the annual meeting.Special Meeting. On the record date, there were 3,255,98052,909,195 shares outstanding and entitled to vote. Thus, the holders of at least 1,627,99117,636,398 shares must be present in person or represented by proxy at the annual meetingSpecial Meeting to have a quorum.
Abstentions “WITHHOLD” votes, and “broker non-votes” are counted as present and entitled to vote for purposes of determining a quorum. If there is no quorum, the chairman of the meeting or the holders of a majority of the voting power present in person or represented by proxy at the annual meetingSpecial Meeting and entitled to vote at the annual meetingcasting votes affirmatively or negatively may adjourn the meeting to another date.
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What are broker non-votes?
Broker non-votes occur when a beneficial owner of shares held in “street name” does not give instructions to the broker holding the shares as to how to vote on matters deemed “non-routine” and there is at least one “routine” matter to be voted upon at the meeting. Generally, if shares are held in street name, the beneficial owner of the shares is entitled to give voting instructions to the broker holding the shares. If the beneficial owner does not provide voting instructions, the broker can still vote the shares with respect to matters that are considered to be “routine,” but not with respect to “non-routine” matters. In the event that a broker votes shares on the “routine” matters, but does not vote shares on the “non-routine” matters, those shares will be treated as broker non-votes with respect to the “non-routine” proposals. Accordingly, if you own shares through a nominee, such as a broker or bank, please be sure to instruct your nominee how to vote to ensure that your vote is counted on each of the proposals.
What matters are considered “routine” and “non-routine”?
The ratification ofReverse Stock Split Proposal (Proposal No. 2) and the appointment of Haskell & White LLP as our independent registered public accounting firm for our fiscal year ending December 31, 2021Adjournment Proposal (Proposal No. 3) isare considered a “routine” matter.matters. The election of directorsWarrant Exercise Proposal (Proposal No. 1) and the approval of the amendment to our 2018 Equity Incentive Plan (Proposal No. 2) areis considered “non-routine.”
What are the effects of abstentions and broker non-votes?
An abstention represents a stockholder’s affirmative choice to decline to vote on a proposal. If a stockholder indicates on its proxy card that it wishes to abstain from voting its shares, or if a broker, bank or other nominee holding its customers’ shares of record causes abstentions to be recorded for shares, these shares will be considered present and entitled to vote at the annual meeting.Special Meeting. As a result, abstentions will be counted for purposes of determining the presence or absence of a quorum andbut will also countnot be counted as votes against a proposal in cases where approval of the proposal requires the affirmative vote of a majority of the shares present in person or represented by proxy and entitled to vote atcasting votes affirmatively or negatively on the annual meetingsubject matter (e.g., Proposal No. 21 and Proposal No. 3)3). However, becauseTherefore, abstentions will make a quorum more readily attainable but will not otherwise affect the outcome of Proposal No. 1 (election of directors)the vote on those proposals. An abstention will be determined by a plurality vote, abstentions will have no impact on the outcome of such proposal as longcount as a quorum exists.vote against a proposal in cases where approval of the proposal requires the affirmative vote of a majority of the issued and outstanding shares of the Company (e.g., Proposal No. 2) because an abstention is not an affirmative vote.
Broker non-votes will be counted for purposes of calculating whether a quorum is present at the annual meetingSpecial Meeting but will not be counted for purposesas votes against a proposal in cases where approval of determining the numberproposal requires the affirmative vote of a majority of the shares present in person or represented by proxy and casting votes cast.affirmatively or negatively on the subject matter (e.g., Proposal No. 3). Therefore, a broker non-vote will make a quorum more readily attainable but will not otherwise affect the outcome of the vote on any proposal.those proposals. A broker non-vote will count as a vote against a proposal in cases where approval of the proposal requires the affirmative vote of a majority of the issued and outstanding shares of the Company (e.g., Proposal No. 2) because a broker non-vote is not an affirmative vote.
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What is the voting requirement to approve each of the proposals?
Proposal No. 1: Election of two nominees for Class III director named in this proxy statement to hold office until our 2024 annual meeting of stockholders or until their successors are duly elected and qualified. The Warrant Exercise Proposal.
The election of directors requires a plurality of the voting power of shares present in person or represented by proxy at the annual meeting and entitled to vote on the election of directors. This means that the two (2) nominees for Class III director receiving the highest number of “FOR” votes will be elected as Class III directors. You may vote (i) “FOR” each nominee, or (ii) “WITHHOLD” your vote as to each nominee. Any shares not voted “FOR” a particular nominee (whether as a result of voting withheld or a broker non-vote) will not be counted in such nominees’ favor and will have no effect on the outcome of the election. Because the outcome of this proposal will be determined by a plurality vote, shares voted “WITHHOLD” will have no impact on the outcome of this proposal, but will count towards the quorum requirement for the annual meeting.
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Proposal No. 2: Approval of an amendment to our 2018 Equity Incentive Plan to (i) increase the number of shares of common stock reserved for issuance thereunder by 270,000 shares, and (ii) modify the “evergreen” provision by removing the cap on the number of shares that may be reserved for issuance, so that on January 1st of each year, commencing on January 1, 2022, the number of shares reserved for issuance under such plan will increase by 5% of the number of outstanding shares of common stock on such date or such lesser amount as the Board may determine.
The approval of an amendment to our 2018 Equity Plan requires the affirmative vote of a majority of the shares of our common stockCommon Stock present in person or represented by proxy at the annual meetingSpecial Meeting and entitled to votecasting votes affirmatively or negatively thereon to be approved.is required for approval of the Warrant Exercise Proposal. You may vote “FOR,” “AGAINST,” or “ABSTAIN” on this proposal. Abstentions are deemed to be votes cast and have the same effect as a vote against the proposal. Brokerbroker non-votes are not deemed to be votes cast, are not included in the tabulation of voting results on this proposal, and will not affect the outcome of voting on this proposal.
Proposal No. 3: Ratification of Appointment of Haskell & White LLP. 2: The Reverse Stock Split Proposal
The ratification of the appointment of Haskell & White LLP requires the affirmative vote of a majority of the shares of our common stockCommon Stock issued and outstanding as of the Record Date is required for approval of the Reverse Stock Split Proposal. You may vote “FOR,” “AGAINST,” or “ABSTAIN” on this proposal. Broker non-votes and abstentions have the same effect as a vote against the proposal.
Proposal No. 3: The Adjournment Proposal
The affirmative vote of a majority of the shares of our Common Stock present in person or represented by proxy at the annual meetingSpecial Meeting and entitled to votecasting votes affirmatively or negatively thereon to be approved.is required for approval of the Adjournment Proposal. You may vote “FOR,” “AGAINST,” or “ABSTAIN” on this proposal. Abstentions will count towards the quorum requirement for the annual meeting and will have the same effect as a vote against the proposal. Brokerbroker non-votes are not included in the tabulation of voting results on this proposal, and will not affect the outcome of voting on this proposal. Notwithstanding
What equity stake will the appointmentCompany's existing common stockholders and the holders of Haskell & White LLPthe Series C Common Stock Purchase Warrants (solely in respect of the shares issuable upon exercise of such warrants) hold if Proposal No. 1 is approved?
If Proposal No. 1 (the Warrant Exercise Proposal) is approved at the Special Meeting, then based on 54,514,828 shares of Common Stock outstanding as of August 5, 2022 and evenassuming the exercise in full of all the Series C Common Stock Purchase Warrants for 22,202,503 shares of Common Stock, the Company anticipates that:
• | the existing holders of the Company’s Common Stock will, in the aggregate, hold approximately 54,514,828 shares, or 71%, of our Common Stock; and |
the holders of the Series C Common Stock Purchase Warrants (solely in respect of the shares issuable upon exercise of such warrants) will, in the aggregate, hold approximately 22,202,503 shares, or 29%, of our Common Stock, assuming the exercise in full of all the Series C Common Stock Purchase Warrants.
The number of shares of our Common Stock listed above have not been adjusted to give effect to the Reverse Stock Split and assumes that we have sufficient authorized shares under our Restated Certificate. See "Possible Effects of the Proposal" under Proposal No. 1 below for additional discussion of the effect on our existing common stockholders of the approval of the Warrant Exercise Proposal.
What will happen if stockholders fail to approve Proposal No. 1 (the Warrant Exercise Proposal) at the Special Meeting?
If our stockholders ratifyfail to approve Proposal No. 1 (the Warrant Exercise Proposal) at the appointment,Special Meeting, then the Series C Common Stock Purchase Warrants will remain outstanding in accordance with their terms and will have no impact on the Inducement Offer (as defined below), which closed effective as of July 22, 2022, that the Series C Common Stock Purchase Warrants were issued in connection with.
See "Possible Effects of the Proposal" under Proposal No. 1 below for additional discussion of the effect on our auditexisting common stockholders of the failure to approve the Warrant Exercise Proposal.
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What is the Reverse Stock Split and why is it necessary?
If Proposal No. 2 (the Reverse Stock Split Proposal) is approved, the outstanding shares of Common Stock will be combined into a lesser number of shares to be determined by the Board of Directors and publicly announced by the Company. The Board of Directors believes that a reverse stock split may be desirable for a number of reasons. The Company’s Common Stock is currently listed on the NYSE American, and we intend to utilize our best efforts to maintain that listing. According to the applicable NYSE American Listed Company Guide rules, in order for the Company’s Common Stock to continue to be listed on the NYSE American, the Company must satisfy certain requirements established by the NYSE American. In addition, we are required to meet the initial listing standards of the NYSE American upon the consummation of certain potential strategic transactions, including an acquisition, reverse merger or change of control, which include a certain minimum price requirement. The Board of Directors expects that a reverse stock split of Common Stock will increase the market price of Common Stock so that the Company will be able to satisfy the listing requirements for the foreseeable future, although the Company cannot assure that it will be able to do so. A reverse stock split of Common Stock will also provide for sufficient authorized shares under our Restated Certificate in order to permit the issuance of shares of Common Stock upon the exercise of the Series C Common Stock Purchase Warrants and/or in any future offerings or potential strategic transactions. The Board of Directors intends to effect a reverse stock split, or Reverse Stock Split, of the shares of Common Stock at a ratio of between 1-for-20 and 1-for-50, inclusive, which ratio will be selected at the sole discretion of our Board of Directors or a duly authorized committee in its discretion, may appoint another independent registered public accounting firmthereof at any time during our fiscal year if our audit committee believes that such a change would bewhole number in the best interestsabove range. See "Reasons for the Reverse Stock Split" under Proposal No. 2 below for addition information.
What happens if Proposal No. 1 (the Warrant Exercise Proposal) is approved but Proposal No. 2 (the Reverse Stock Split Proposal) is not approved?
If the Warrant Exercise Proposal is approved but the Reverse Stock Split Proposal is not approved, there may not be a sufficient number of authorized but unissued shares of our company andCommon Stock available to be issued upon the exercise of all the outstanding Series C Common Stock Purchase Warrants or for future issuance in connection with potential offerings of our stockholders.securities or potential strategic transactions. The Company may also not meet certain listing criteria of the NYSE American upon the consummation of potential strategic transactions.
Who will count the votes?
A representative of Mediant Communications, Inc.Alliance Advisors, LLC will tabulate the votes and act as inspector of elections.
What if I do not specify how my shares are to be voted or fail to provide timely directions to my broker, bank or other nominee?
Stockholder of Record: Shares Registered in Your Name. If you are a stockholder of record and you submit a proxy but you do not provide voting instructions, your shares will be voted:
“FOR” the election of the directors nominated by our board of directors and named in this proxy statement as Class III directors;Warrant Exercise Proposal;
“FOR” the amendment to our 2018 Equity Incentive Plan to (i) increase the number of shares of common stock reserved for issuance thereunder by 270,000 shares, and (ii) modify the “evergreen” provision by removing the cap on the number of shares that may be reserved for issuance, so that on January 1st of each year, commencing on January 1, 2022, the number of shares reserved for issuance under such plan will increase by 5% of the number of outstanding shares of common stock on such date or such lesser amount as the Board may determine;Reverse Stock Split Proposal; and
“FOR” the ratification of the appointment of Haskell & White LLP as our independent registered public accounting firm for our fiscal year ending December 31, 2021.
In addition, if any other matters are properly brought before the annual meeting, the persons named as proxies will be authorized to vote or otherwise act on those matters in accordance with their judgment.Adjournment Proposal.
Beneficial Owner: Shares Registered in the Name of a Broker, Bank or Other Nominee. Brokers, banks and other nominees holding shares of common stock in street name for customers are generally required to vote such shares in the manner directed by their customers. In the absence of timely directions, your broker, bank or other nominee will have discretion to vote your shares on our “routine” mattermatters – the Reverse Stock Split Proposal (Proposal No. 3 to ratify2) and the appointment of Haskell & White LLP.Adjournment Proposal (Proposal No. 3). Absent direction from you, however, your broker, bank or other nominee will not have the discretion to vote on the Warrant Exercise Proposal (Proposal No. 1 relating to the election of directors and Proposal No. 2 relating to the amendment to our 2018 Equity Incentive Plan.1).
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How can I contact Ra Medical Systems’the Company’s transfer agent?
You may contact our transfer agent by writing American Stock Transfer & Trust Company, LLC, 6201 15th Avenue, Brooklyn, New York 11219. You may also contact our transfer agent via email at help@astfinancial.com or by telephone at (800) 937-5449.
How can I attend the annual meeting?Special Meeting?
We will host the annual meetingSpecial Meeting live via internet webcast. You will not be able to attend the annual meeting in person. Prior registration to attend the annual meeting at www.proxydocs.com/RMED is required by 5:00 p.m. Pacific Time on June 1, 2021. A summary of the information you need in order to attend the annual meetingSpecial Meeting online is provided below:
Any stockholder may listenIn order to attend and vote your shares at the annual meeting and participateSpecial Meeting live via the internet at www.proxydocs.com/RMED. To be admitted to the annual meeting’s live internet webcast, you must register at www.proxydocs.com/RMEDwww.viewproxy.com/RMED/2022 by 8:59 byp.m. Pacific time on Monday, September 19, 2022 (the “Registration Deadline”). If you are a stockholder of record, you will be asked to provide the Registration Deadline as described inControl Number. If you are a beneficial owner then you must first obtain a legal proxy from your bank, broker or other nominee and submit it when you register. After registering you will receive an e-mail containing a unique link and password that will enable you to attend the proxy card. The live internet webcast will begin on June 4, 2021 at 9:00 a.m., Pacific Time.meeting and vote.
If a stockholder wishes to ask a question to directors and/or members of management in attendance at the annual meeting,Special Meeting, please note that such questions must be submitted in advance of the annual meeting. To submit a question, markSpecial Meeting. Questions should be submitted during the box on the proxy card when registering to attend the meeting and submit your written question or submit a question at www.proxydocs.com/RMED after logging in with your Control Number.registration process.
Stockholders may vote during the annual meetingSpecial Meeting live via the internet.
A stockholder must register to attend the annual meeting prior to the Registration Deadline, and after doing so, you will be sent a link in an email to join the meeting.
Instructions regarding how to connect and participate live via the internet, including how to demonstrate proof of stock ownership, are posted at www.proxydocs.com/RMEDwww.viewproxy.com/RMED/2022.
Stockholder of Record: Shares Registered in Your Name. If you were a stockholder of record at the close of business on the record date, follow the instructions regarding how to demonstrate proof of stock ownership posted at www.proxydocs.com/RMED.
Beneficial Owners: Shares Registered in the Name of a Broker, Bank or Other Nominee. If you wereare a beneficial owner, at the close of business on the record date, you may not vote your shares live via the internet at the annual meetingSpecial Meeting unless you obtain a “legal proxy” from your broker, bank or other nominee who is the stockholder of record with respect to your shares.and submit it when you register. You may still attend the annual meetingSpecial Meeting even if you do not have a legal proxy.proxy, if you demonstrate proof of stock ownership. Instructions regarding how to demonstrate proof of stock ownership are posted at www.proxydocs.com/RMEDwww.viewproxy.com/RMED/2022.
How are proxies solicited for the annual meetingSpecial Meeting and who is paying for such solicitation?
Our board of directors is soliciting proxies for use at the annual meetingSpecial Meeting by means of the proxy materials. We will bear the entire cost of proxy solicitation, including the preparation, assembly, printing, mailing and distribution of the proxy materials. Copies of solicitation materials will also be made available upon request to brokers, banks and other nominees to forward to the beneficial owners of the shares held of record by such brokers, banks or other nominees. The original solicitation of proxies may be supplemented by solicitation by telephone, electronic communication, or other means by our directors, officers or employees. NoIn addition, we have engaged Alliance Advisors, LLC to assist in the solicitation of proxies and provide related advice and information support, for a services fee and the reimbursement of customary disbursements, which are not expected to exceed $130,000 in total. Other than with respect to Alliance Advisors, LLC, no additional compensation will be paid to these individuals for any such services, although we may reimburse such individuals for their reasonable out-of-pocket expenses in connection with such solicitation. We do not plan to retain a proxy solicitor to assist in the solicitation of proxies.
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If you choose to access the proxy materials and/or vote over the Internet, you are responsible for Internet access charges you may incur. If you choose to vote by telephone, you are responsible for telephone charges you may incur.
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Where can I find the voting results of the annual meeting?Special Meeting?
We will announce preliminary voting results at the annual meeting.Special Meeting. We will also disclose voting results on a Current Report on Form 8-K filed with the SEC within four (4) business days after the annual meeting.Special Meeting. If final voting results are not available to us in time to file a Current Report on Form 8-K within four (4) business days after the annual meeting,Special Meeting, we will file a Current Report on Form 8-K to publish preliminary results and, within four (4) business days after final results are known, file an additional Current Report on Form 8-K to publish the final results.
What does it mean if I receive more than one set of printed materials?
If you receive more than one set of printed materials, your shares may be registered in more than one name and/or are registered in different accounts. Please follow the voting instructions on each set of printed materials, as applicable, to ensure that all of your shares are voted.
I share an address with another stockholder, and we received only one printed copy of the proxy materials. How may I obtain an additional copy of the proxy materials?
We have adopted an SEC-approved procedure called “householding,” under which we can deliver a single copy of the proxy materials and annual report to multiple stockholders who share the same address unless we receive contrary instructions from one or more of the stockholders. This procedure reduces our printing and mailing costs. Stockholders who participate in householding will continue to be able to access and receive separate proxy cards. Upon written or oral request, we will undertake to deliver promptly a separate copy of the proxy materials and annual report to any stockholder at a shared address to which we delivered a single copy of any of these documents. To receive a separate copy, or, if you are receiving multiple copies, to request that we only send a single copy of next year’sfuture proxy materials, and annual report, you may contact us as follows:
Ra Medical Systems, Inc.
Attention: Corporate Secretary
2070 Las Palmas Drive
Carlsbad, California 92011
(760) 804-1648
Stockholders who hold shares in street name may contact their brokerage firm, bank, broker-dealer or other nominee to request information about householding.
Is there a list of stockholders entitled to vote at the annual meeting?Special Meeting?
The names of stockholders of record entitled to vote at the annual meetingSpecial Meeting will be available at the annual meetingSpecial Meeting and from our corporate secretary for ten days prior to the meeting for any purpose germane to the meeting, between the hours of 9:8:00 a.m. and 4:305:00 p.m., Pacific Time,time, at our corporate headquarters located at 2070 Las Palmas Drive, Carlsbad, California 92011.
-8-Who can provide me with additional information and help answer my questions?
If you would like additional copies, without charge, of this proxy statement or if you have questions about the proposals being considered at the Special Meeting, including the procedures for voting your shares, you should contact Alliance Advisors, LLC, the Company’s proxy solicitor, by telephone at 833-945-2699.
THIS QUESTION AND ANSWER SECTION IS ONLY MEANT TO GIVE AN OVERVIEW OF THE PROXY STATEMENT. FOR MORE INFORMATION, PLEASE REFER TO THE MATERIAL CONTAINED IN THE SUBSEQUENT PAGES.
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When are stockholder proposals due for next year’s annual meeting?
Please seeCAUTIONARY INFORMATION REGARDING FORWARD-LOOKING STATEMENTS
This proxy statement, and the section entitled “Proposals of Stockholders for 2022 Annual Meeting” indocuments incorporated by reference into this proxy statement, for more informationcontains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including, but not limited to, statements regarding: future capital-raising offerings or transactions and expected use of proceeds therefrom; our estimates regarding expenses, future revenues, capital requirements; future performance, business prospects, events and product development plans; and stockholder approval of the Warrant Exercise Proposal and the Reverse Stock Split Proposal. The use of words such as, but not limited to, “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will,” or “would” and similar words expressions are intended to identify forward-looking statements. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based on our current beliefs, expectations and assumptions regarding the deadlines for the submission of stockholder proposals for our 2022 annual meeting.
What are the implications of being an “emerging growth company”?
We are an “emerging growth company” under applicable federal securities laws and therefore permitted to take advantage of certain reduced public company reporting requirements. As an emerging growth company, we provide in this proxy statement the scaled disclosure permitted under the Jumpstart Our Business Startups Act of 2012, or the JOBS Act, including certain executive compensation disclosures required of a “smaller reporting company,” as that term is defined in Rule 12b-2 promulgated under the Securities Exchange Act of 1934, as amended, or the Exchange Act. In addition, as an emerging growth company, we are not required to conduct votes seeking approval, on an advisory basis, of the compensationfuture of our named executive officers or the frequency with which such votes must be conducted. We will remain an emerging growth company until the earliest to occur of: (a) January 1, 2024; (b) the last day of the fiscal year in which we have more than $1.07 billion in annual revenue; (c) the end of the fiscal year in which the market value ofbusiness, future plans and strategies, our common stock that is held by non-affiliates exceeds $700.0 million as of the end of the second quarter of that fiscal year; or (d) the issuance, in any three-year period, by us of more than $1.0 billion in non-convertible debt securities.
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BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
Our businessclinical results and affairs are managed under the direction of our Board, which currently consists of seven members, six of which are “independent” under NYSE American listing standards. The Board is nominating two nominees for election. Our bylaws provide that the number of directors will be fixedother future conditions. New risks and uncertainties may emerge from time to time, by resolutionand it is not possible to predict all risks and uncertainties. No representations or warranties (expressed or implied) are made about the accuracy of any such forward-looking statements. We may not actually achieve the forecasts disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Such forward-looking statements are subject to a number of material risks and uncertainties including but not limited to those set forth under the caption “Risk Factors” in this Proxy Statement, our Annual Report on Form 10-K for the year ended December 31, 2021, and the amendment thereto, filed with the SEC and our Quarterly Reports on Form 10-Q filed with the SEC subsequent to the filing of the Board. All directors hold office until their successors have been electedmost recent Annual Report on Form 10-K, as well as discussions of potential risks, uncertainties, and qualified or until their earlier death, resignation, disqualification or removal. We have dividedother important factors in our subsequent filings with the terms of officeSEC. Any forward-looking statement speaks only as of the directors into three classes with staggered three year terms: Class I, whose term expires at the 2022 Annual Meetingdate on which it was made. Neither we, nor our affiliates, advisors or representatives, undertake any obligation to publicly update or revise any forward-looking statement, whether as result of Stockholders; Class II, whose term expires at the 2023 annual meeting of Stockholders; and Class III, whose term expires at the 2021 Annual Meeting of Stockholders. If elected, Messrs. Enquist and Mejia will continuenew information, future events or otherwise, except as directors and their terms will expire at the 2024 Annual Meeting of Stockholders.
Information about the Board of Directors
The following table sets forth the names, agesrequired by law. These forward-looking statements should not be relied upon as representing our views as of April 9, 2021, and certain other information regarding each member of the Board, including the nominees for electionany date subsequent to the Board as Class III directors at the Annual Meeting, are set forth below. The following information has been furnished to us by the directors.date hereof.
Name |
| Class |
| Age |
|
| Position |
| Director Since |
| Current Term Expires |
| Expiration of Term For Which Nominated |
| ||
Nominees for Director |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William R. Enquist, Jr. (1)(3) |
| III |
|
| 64 |
|
| Director |
| 2018 |
| 2021 |
| 2024 |
| |
Richard Mejia, Jr. (2) |
| III |
|
| 73 |
|
| Director |
| 2018 |
| 2021 |
| 2024 |
| |
Continuing Directors |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Martin Colombatto (3) |
| II |
|
| 62 |
|
| Chairman of the Board of Directors |
| 2017 |
| 2023 |
|
| — |
|
Jonathan Will McGuire |
| I |
|
| 58 |
|
| Chief Executive Officer, Director |
| 2020 |
| 2022 |
|
| — |
|
Susanne Meline (3) |
| II |
|
| 53 |
|
| Director |
| 2021 |
| 2023 |
|
| — |
|
Mark E. Saad (1)(2) |
| I |
|
| 51 |
|
| Director |
| 2018 |
| 2022 |
|
| — |
|
Joan Stafslien (1)(2) |
| II |
|
| 56 |
|
| Director |
| 2020 |
| 2023 |
|
| — |
|
|
|
|
|
|
|
Nominees for Election at the Annual Meeting
William R. Enquist, Jr. has served as a director of Ra Medical since July 2018. Mr. Enquist held various roles at Stryker Corporation, a medical device company, from 1986 to 2014, including Advisor from 2013 to 2014 and President, Global Endoscopy from 1998 to 2013. From 2015 to 2016, Mr. Enquist served as the chairman of the board of directors of EndoChoice Holdings, Inc., a publicly traded medical device company, until its acquisition by Boston Scientific in 2016. From 2017 to 2020, Mr. Enquist served as Chairman of the Board for Clinical Innovations, a private equity owned company which was purchased by Laborie in 2020. Mr. Enquist currently is board director for Firefly Medical. Mr. Enquist earned a BBA from the University of San Diego and completed Harvard University’s Program for Management Development. We believe that Mr. Enquist is qualified to serve as a member of our board of directors because of his extensive experience as a senior executive officer of other healthcare companies.
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Richard Mejia, Jr. has served as a director of Ra Medical since July 2018. Mr. Mejia previously served as a partner in the San Diego office of Ernst & Young LLP, a public accounting firm, from 1988 up until his retirement in 2008, including that from 2001 through 2008 he led the Life Sciences practice. From 2014 to 2018, he served on the Board of Stemedica Cell Technologies, Inc., a life science company and from 2008 to 2015, Mr. Mejia served on the board of directors of Dot Hill Systems Corp., a public company which manufacturers software and hardware storage systems. From 2010 to 2012, he served on the board of directors of Sharp Health, a healthcare delivery system. Mr. Mejia holds a B.S. in Accounting from the University of Southern California. We believe that Mr. Mejia is qualified to serve as a director because of his extensive experience in public accounting, financial matters, industry knowledge and serving on boards of directors.
Martin Colombatto has served as a director of Ra Medical since January 2017. Mr. Colombatto has served as a Venture and Industry Partner of Seven Peaks Ventures LLP, a venture capital fund based in Bend, OR, since January 2016. From December 2013 to August 2014, Mr. Colombatto served as a director of PLX Technology, Inc., a technology company. Mr. Colombatto has also served as the Chief Executive Officer and President of Staccato Communications, Inc., an Ultra Wideband semiconductor company, from January 2006 to March 2009 and as Executive Chairman of Staccato Communications, Inc., from January 2006 to September 2010. Prior to joining Staccato, Mr. Colombatto served as Vice President and General Manager of the Networking Business unit of Broadcom Corp., a broadband communication semiconductor company, from July 1996 to July 2002. Mr. Colombatto was also previously employed by LSI Logic, an application specific semiconductor company, from August 1987 to July 1996. Mr. Colombatto also previously held engineering positions at Reliance Electric, a production automation and control company, from August 1985 to June 1987 and Texas Instruments, an electronics company, from June 1982 to April 1985. Mr. Colombatto holds a Bachelor’s of Science Degree in Electronic Engineering Technology from California State Polytechnic University, Pomona. We believe that Mr. Colombatto is qualified to serve as a member of our board of directors due to his extensive management experience and familiarity with our business and strategy.
Jonathan Will McGuire has served as the Chief Executive Officer and a director of Ra Medical since March 2020. From August 2015 through March 2020, Mr. McGuire served as President and CEO of Second Sight Medical Products (Nasdaq: EYES), a developer, manufacturer and marketer of implantable visual prosthetics to treat blindness where he remains on the board as a director. Prior to Second Sight Medical Products he held leadership positions at Volcano Corporation including President of Americas Commercial and Senior Vice President and General Manager of Coronary Imaging, Systems and Program Management. Prior to that, Mr. McGuire served as Vice President and General Manager of Patient Monitoring at Covidien, and President and Chief Executive Officer at AtheroMed, Inc., a venture capital-backed peripheral atherectomy company. For approximately five years, Mr. McGuire served as Chief Operating Officer for Spectranetics Corporation, a publicly traded medical device company with laser-based atherectomy products for treating peripheral and coronary arterial disease. Earlier in his career, he held senior management positions at Guidant Corporation including General Manager of Latin America, Director of U.S. and Global Marketing for Vascular Intervention, and Production Manager for Coronary Stents. Mr. McGuire also held positions in Finance and Production at IVAC Medical Systems. Mr. McGuire received an engineering degree from the Georgia Institute of Technology, and his MBA from the Kenan-Flagler Business School at the University of North Carolina at Chapel Hill. We believe that Mr. McGuire is qualified to serve as a director because of his extensive knowledge of our industry and his prior and current experience as a senior officer of medical device companies.
Susanne Meline has served as a director of Ra Medical since January 2021. Ms. Meline co-founded Francis Capital Management (“FCM”), a value-based investment advisor, where she serves as the firm’s special situations advisor. She previously worked as an investment banker with Houlihan Lokey, a global investment bank serving corporations, institutions, and governments worldwide and also practiced law in the corporate group of Jones Day, an international law firm that provides legal advisory services across multiple disciplines and jurisdictions. Ms. Meline is a Certified Director through the UCLA Anderson School of Management, a Board Leadership Fellow for the National Association of Corporate Directors (the “NACD”) and holds a CERT Certificate in CyberSecurity Oversight from the NACD and Carnegie Mellon University Software Engineering Institute. Ms. Meline received a B.A from UCLA, and a J.D. from the UC Hastings College of the Law. She currently serves on the board of directors of ClearSign Technologies Corporation (NASDAQ:CLIR) where she is the Lead Independent Director and Audit Chair and has also served on the board of directors of Finomial Corporation and AquaMetals Corporation. We believe that Ms. Meline is qualified to serve as a director because of her extensive knowledge of the capital markets, her experience in identifying business and financial opportunities, and her experience as a board member at other public companies.
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PROPOSALS
PROPOSAL NO. 1
APPROVAL OF THE WARRANT EXERCISE PROPOSAL
Overview
At the Special Meeting, holders of our Common Stock will be asked to approve the issuance of more than 19.99% of our outstanding Common Stock Mark E. Saadupon the exercise of our Series C Common Stock Purchase Warrants has served(the “Series C Warrants”), with the right for such potential exercise to occur immediately following the date upon which our stockholders approve this proposal, for purposes of compliance with NYSE American Company Guide Section 713(a) and as required by the Inducement Letters (as defined below) entered into with holders of our Series A Warrants (as defined below) and Series B Warrants (as defined below) on July 22, 2022.
As a director of Ra Medical since July 2018. Mr. Saad currently serves as Partner and Chief Operating Officer of Alethea Capital Management, LLC, an asset management firm based in Seattle. From August 2014 to February 2017, Mr. Saad served as the Chief Financial Officer of Bird Rock Bio, Inc., a clinical stage biopharmaceutical company focused on developing innovative immuno-inflammatory regulators. Previously, Mr. Saad served as Chief Financial Officer of Cytori Therapeutics, a medical device developer and manufacturer, from 2004 to 2014, where he was responsible for finance and accounting, business development, and other operating functions. Prior to Cytori, he served as Executive Director of UBS Investment Bank, a multinational investment bank and financial services company, where he was the Chief Operating Officermaterial condition of the Global Healthcare Group. PriorInducement Offer (as defined below), the Company agreed to UBS, Mr. Saad was partsubmit and recommend this proposal to our stockholders. The Board believes that the Inducement Offer and this proposal are in the best interests of the Health Care Investment Banking Group at Salomon Smith Barney, an investment bank. Mr. Saad has beenCompany and its stockholders in order to fulfill and meet its contractual commitments made pursuant to the Inducement Letters. Under the Inducement Letters, we agreed to use our commercially reasonable efforts to hold a memberspecial meeting of stockholders on or before September 20, 2022 to obtain stockholder approval for the exercise of our Series C Warrants, with the recommendation of the boardBoard that such proposal be approved. We agreed that we would solicit proxies from our stockholders in connection with such proposal in the same manner as all other management proposals in the proxy statement and that all management-appointed proxyholders would vote their proxies in favor of directorssuch proposal. If we do not obtain stockholder approval of Axsome Therapeutics, Inc.this Proposal No. 1 at this Special Meeting, we have agreed to call a meeting of stockholders every 90 days thereafter to seek stockholder approval until stockholder approval is obtained or the Series C Warrants are no longer outstanding, which could be as long as five years.
Description of the Inducement Offer
On February 4, 2022, the Company entered into a firm commitment underwritten public offering under which the Company sold (i) 9,535,000 units, priced at a public offering price of $0.50 per unit, with each unit consisting of one share of Common Stock, one warrant to purchase one share of Common Stock at an exercise price of $0.50 per share that expires on the first anniversary of the date of issuance (a “Series A Warrant”) and one warrant to purchase one share of Common Stock at an exercise price of $0.50 per share that expires on the seventh anniversary of the date of issuance (a “Series B Warrant” and together with the Series A Warrants, the “Existing Warrants”) and (ii) 14,467,893 pre-funded units, priced at a public offering price of $0.4999 per unit, with each pre-funded unit consisting of one pre-funded warrant to purchase one share of Common Stock at an exercise price of $0.0001 per share that expires on the twentieth anniversary of the date of issuance, one Series A Warrant and one Series B Warrant. Each Series A Warrant was exercisable at a price per share of Common Stock of $0.50, each Series B Warrant was exercisable at a price per share of Common Stock of $0.50 and each pre-funded warrant was exercisable at a price per share of Common Stock of $0.0001. Each Existing Warrant and pre-funded warrant was immediately exercisable.
On July 22, 2022, the Company reduced the exercise price of all Existing Warrants from $0.50 per share to $0.28 (the “Warrant Repricing”). Following the Warrant Repricing, the Company entered into warrant inducement offer letters (the “Inducement Letters”) with certain investors pursuant to which such investors immediately exercised Series A Warrants for 22,202,503 shares of Common Stock (the “Inducement Offer”). In consideration for exercising the Existing Warrants, pursuant to the terms of the Inducement Letters, the Company issued to the investors a new Series C Common Stock Purchase Warrant (the “Series C Warrant”) if the investor exercised a Series A Warrant or a new Series D Common Stock Purchase Warrant (the “Series D Warrant” and together with the Series C Warrants, collectively, the “New Warrants”) if the investor exercised a Series B Warrant, in each case, to purchase up to a number of shares of Common Stock equal to 100% of the number of shares of Common Stock issued pursuant to the immediate exercise of the corresponding Series A Warrants and Series B Warrants, as applicable. The Series C Warrants have an exercise price of $0.28 and a term of five years, and the Series D Warrants have an exercise price of $0.28 and a term of seven years. The Company ultimately received aggregate gross proceeds of approximately $6.2 million from the exercise of the Series A Warrants which resulted in the issuance of 22,202,503 shares of Common Stock, together with the
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corresponding issuance of Series C Warrants exercisable for 22,202,503 shares of Common Stock. The Company received $0 in aggregate gross proceeds from the exercise of the Series B Warrants as none were exercised pursuant to the Inducement Offer. The New Warrants and the shares underlying the New Warrants (the “New Warrant Shares”) were issued in a private placement pursuant to Section 4(a)(2) of the Securities Act and were unregistered at the time of issuance.
Because the aggregate number of New Warrant Shares, or 22,202,503 shares of Common Stock, exceeded 19.99% of the outstanding shares of Common Stock of the Company (determined as of the date of, and without regard for, the issuance of the New Warrants), the New Warrants are initially exercisable with respect to only 19.99% of the outstanding shares of Common Stock of the Company (determined as of the date of, and without regard for, the issuance of the New Warrants), with the remainder of the New Warrants being exercisable on the date upon which the stockholders of the Company approve the Warrant Issuance Proposal. In addition, within 45 days of the date of issuance of the New Warrants, the Company is obligated to file a clinical-stage biopharmaceutical company, since December 2014. Mr. Saad holds a Bachelorregistration statement on the appropriate form providing for the resale of Arts from Villanova University. We believe that Mr. Saadthe New Warrant Shares and shall use commercially reasonable efforts to cause such registration statement to become effective within 90 days following the date of issuance of the New Warrants.
The terms of the Warrant Repricing, the Inducement Offer and the New Warrants are complex and are only briefly summarized above. For further information regarding these agreements and the financing, please refer to our Current Report on Form 8-K filed with the SEC on July 22, 2022. The discussion herein is qualified in its entirety by reference to serve assuch filed transaction documents.
Background and Reasons for the Inducement Offer
In approving the Inducement Offer, the Board of Directors considered the pros and cons of the Inducement Offer versus other alternatives for raising capital, the non-binding letter of intent to merge the Company with Catheter Precision, Inc. (“Catheter”) executed on June 18, 2022 (the “potential Merger”) and the uncertainty of consummating the potential Merger, the Company’s financial condition at the time of the Inducement Offer, and the opportunities and risks presented with the Inducement Offer. In particular, the Board of Directors took into account the following events, facts and circumstances in approving the Inducement Offer:
At the time of the Inducement Offer, the Company had not entered into a member of our board of directors due to his financial expertisebinding agreement with Catheter and leadership experience.
Joan Stafslien has served as a director of Ra Medical since April 2020. Prior to that, she served as Executive Vice President, General Counsel and Corporate Secretary of Nuvasive, Inc. from October 2016 through June 2018, and then as an Executive Consultant from June 2018 through October 2019. Previously, Ms. Stafslien served as General Counsel, Corporate Secretary and Chief Compliance Officer of CareFusion Corporation, where she led the legal team through the spin-off from Cardinal Health, Inc. in 2009 until its acquisition by Becton, Dickinson and Company in March 2015. Prior to that, Ms. Stafslien was the segment general counsel of Cardinal Health’s Clinical Technologies and Services from 2004 to 2009, joining Cardinal Health through the acquisition of Alaris Medical Systems in 2004, where she served as deputy general counsel and assistant secretary. Prior to joining Alaris, she was in private practicethe process of completing its due diligence review of Catheter and negotiating the terms of a definitive merger agreement. The consummation of the proposed Merger was subject to specified conditions precedent that must be satisfied or waived, including conditions precedent that were subject to the approval or consent of third parties, and a “Net Cash” condition.
The Company’s cash position was approximately $10.3 million at the time of the Inducement Offer. The Company’s Board of Directors and management discussed and considered with Brobeck, PhlegerLadenburg Thalmann & Harrison. We believeCo. Inc., its financial advisor with respect to the Inducement Offer and the proposed Merger with Catheter, the following factors, among other factors, in evaluating and approving the Inducement Offer: the financial condition of the Company; the greater economic climate in which the Company would be attempting to raise capital; the anticipated cash requirements of the Company that Ms. Stafslien is qualifiedwould be necessary in order to serve aspotentially consummate the Merger with Catheter; the potential winddown scenarios of the Company should the Merger not be consummated for any reason; the potential return to the stockholders of the Company under various scenarios, including consummation of a director becausepotential Merger with Catheter or a winddown of her leadership experiencethe Company; the Company’s potential liabilities and obligations to its creditors; and the potential aggregate proceeds that could be raised in the medical device industry and extensive knowledge of legal and regulatory issues.Inducement Offer.
Director IndependenceReasons for Stockholder Approval
Our common stockCommon Stock is listed on the NYSE American. UnderAmerican under the rules ofsymbol "RMED," and we are subject to the NYSE American independent directors must compriselisting standards. NYSE American Company Guide Section 713(a) requires stockholder approval prior to the sale, issuance or potential issuance of common stock (or securities convertible into common stock) in a majoritytransaction other than a public offering at a price less than the greater of a listed company’s board of directors within a specified periodbook or market value of the completion of such company’s initial public offering. In addition, the rules of the NYSE American require that, subject to specified exceptions, each member of a listed company’s audit, compensation, and nominating and corporate governance committees be independent. Under the rules of the NYSE American, a director will only qualify as an “independent director” if, in the opinion of that company’s board of directors, that person does not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.
To be considered independent for purposes of Rule 10A-3 and under the rules of NYSE American, a member of an audit committee of a listed company may not, other than in hisstock which either alone or her capacity as a member of the audit committee, board of directors, or any other board committee: (1) accept, directly or indirectly, any consulting, advisory, or other compensatory fee from the listed company or any of its subsidiaries; or (2) be an affiliated person of the listed company or any of its subsidiaries.
Our board of directors undertook a review of the independence of our directors and considered whether any director has a material relationship with us that could compromise his or her ability to exercise independent judgment in carrying out his or her responsibilities. Based upon information requested from and provided by each director concerning his background, employment and affiliations, including family relationships, our board of directors has determined that each of Martin Colombatto, Richard Mejia, Jr., Susanne Meline, Mark E. Saad, William R. Enquist, Jr. and Joan Stafslien, representing six of our seven directors, is “independent” as that term is defined under the rules of NYSE American.
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Our board of directors also determined that Richard Mejia, Jr. (Chairperson), Mark E. Saad, and Joan Stafslien, who currently comprise our audit committee, and Martin Colombatto (Chairperson), William R. Enquist, and Susanne Meline, who currently comprise our compensation committee, and Mark E. Saad (Chairperson), William R. Enquist, Jr., and Joan Stafslien, who currently comprise our nominating and corporate governance committee, satisfy the independence standards for those committees established by applicable Securities and Exchange Commission, or SEC, rules and the listing standards of the NYSE American.
In making these determinations, our board of directors considered the relationships that each non-employee director has with us and all other facts and circumstances our board of directors deemed relevant in determining their independence, including consulting relationships, family relationships and the beneficial ownership of our capital stock by each non-employee director.
There are currently no family relationships among any of our directors or executive officers. For a description of the prior family relationships among our directors or executive officers, see the section entitled “Certain Relationships and Related Party Transactions: Certain Family Relationships.”
As described below, Mr. Colombatto, an independent director with substantial executive leadership experience, currently serves as our Chairman of the board of directors and Mr. McGuire currently serves as our Chief Executive Officer.
Chairman of the Board
Our corporate governance principles provide that the board will fill the chairman position based upon the board’s view of what is in our best interests at any point in time. Our board of directors believes that Mr. Colombatto’s service as chairman is in the best interests of Ra Medical Systems and its stockholders. As Mr. Colombatto currently serves as our chairman and is an independent director, the board does not currently have a lead independent director. The Board has determined that this leadership structure, specifically the separation of the Chief Executive Officer and Chairman of the board of directors positions, is appropriate for our company because, in the judgment of the board of directors, an independent chairman of the board of directors (or lead independent director, if the chair of the board of directors is not an independent director) is best positioned to express to management the views of the board of directors (and, particularly, the independent directors) and to provide constructive feedback to the Chief Executive Officer regarding management’s performance.
Given his tenure with and status within Ra Medical Systems, our board of directors believes Mr. Colombatto possesses detailed and in-depth knowledge of the issues, opportunities, and challenges facing Ra Medical Systems, and we believe he is best positioned, in consultation with Mr. McGuire, to develop agendas that ensure that the board’s time and attention are focused on the most critical matters. In addition, we believe the working relationship between Mr. Colombatto and Mr. McGuire, on the one hand, and between Mr. Colombatto and the other independent directors, on the other, enhances and facilitates the flow of information between management and our board as well as the ability of our independent directors to evaluate and oversee management and its decision-making. Mr. Colombatto and Mr. McGuire speak regularly on strategic, operational, and management matters facing Ra Medical Systems. In addition, as discussed below, our board of directors typically holds executive sessions consisting only of non-employee directors in conjunction with each regular quarterly meeting of the board, and Mr. Colombatto and Mr. McGuire discuss board feedback to management following these executive sessions.
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Role of Board in Risk Oversight Process
Onetogether with sales by officers, directors or principal stockholders of the key functionscompany equals 20% or more of the of presently outstanding stock.
Prior to closing of the Inducement Offer, we had 32,318,914 shares of Common Stock outstanding. Following the Warrant Repricing, Series A Warrants were exercised for an aggregate of 22,202,503 shares of Common Stock, resulting in 54,521,417 shares of Common Stock outstanding. Therefore, the issuance of 22,202,503 shares of Common Stock upon exercise of the Series C Warrants would have constituted approximately 69% of the shares of our boardCommon Stock outstanding prior to giving effect to the Inducement Offer and excluding the 22,202,503 shares of directors is informed oversightCommon Stock that were issued as a result of the Series A Warrants that were exercised in connection with the Inducement Offer. Since the aggregate number of shares of our risk management process. Our board of directors does not have a standing risk management committee, but rather administers this oversight function directly through the board of directors as a whole, as well as through its standing committees that address risks inherent in their respective areas of oversight. In particular, our board of directors is responsible for monitoring and assessing strategic risk exposure. Our audit committee is responsible for reviewing and discussing our major financial risk exposures and the steps our management has taken to monitor and control these exposures, including guidelines and policies with respect to risk assessment and risk management. Our audit committee also monitors compliance with legal and regulatory requirements and reviews related party transactions, in addition to oversightCommon Stock issuable upon exercise of the performanceSeries C Warrants exceeds 19.99% of our external audit function. Our nominating and corporate governance committee assistsoutstanding Common Stock, the issuance of shares of our boardCommon Stock upon exercise of directors in fulfilling its oversight responsibilities with respectthe Series C Warrants requires stockholder approval under NYSE American Company Guide Section 713(a).
Possible Effects of the Proposal
If the stockholders do not approve this Proposal No. 1, then the Series C Warrants will only be exercisable to the management of risk associated with board organization, membership and structure, and corporate governance. Our compensation committee assesses and monitors whether any of our compensation policies and programs has the potential to encourage excessive risk-taking. The board believes its leadership structure is consistent with and supports the administration of its risk oversight function.
During our fiscal year ended December 31, 2020, our board of directors held ten (10) meetings (including regularly scheduled and special meetings), and each director attended at least 75% of the aggregate of (i)extent that the total number of meetingsshares issued upon exercise of the Series C Warrants do not exceed 19.99% of the shares of our board of directors held during the period for which he or she has been a director and (ii) the total number of meetings held by all committees of our board of directors on which he or she served during the periods that he or she served.
It is the policy of our BoardCommon Stock outstanding prior to regularly have separate meeting times for independent directors without management. Although we do not have a formal policy regarding attendance by members of our board of directors at annual meetings of stockholders, we encourage, but do not require, our directors to attend.
Our board of directors has an audit committee, a compensation committee and a nominating and corporate governance committee, each of which has the composition and the responsibilities described below. We believe that the composition of these committees meets the criteria for independence under, and the functioning of these committees comply with the requirements of, the Sarbanes-Oxley Act of 2002, the rules of the NYSE American, and SEC rules and regulations.
Audit Committee
The members of our audit committee are Richard Mejia, Jr., Mark E. Saad, and Joan Stafslien. Mr. Mejia serves as the chairperson of our audit committee. Our board of directors has determined that each of the members of our audit committee is an independent director under the NYSE American listing rules, satisfies the additional independence criteria for audit committee members and satisfies the requirements for financial literacy under the NYSE American listing rules and Rule 10A-3 of the Exchange Act, as applicable. Our board has also determined that Mr. Mejia qualifies as an audit committee financial expert within the meaning of the applicable rules and regulations of the SEC and satisfies the financial sophistication requirements of the NYSE American listing rules.
Our audit committee oversees our corporate accounting and financial reporting process and assists our board of directors in monitoring our financial systems and our legal and regulatory compliance. Our audit committee responsibilities also include, among other things:
selecting and hiring the independent registered public accounting firm to audit our financial statements;
overseeing the performance of the independent registered public accounting firm and taking those actions as it deems necessary to satisfy itself that the accountants are independent of management;
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reviewing financial statements and discussing with management and the independent registered public accounting firm our annual audited and quarterly financial statements, the results of the independent audit and the quarterly reviews, and the reports and certifications regarding internal control over financial reporting and disclosure controls;
preparing the audit committee report that the SEC requires to be included in our annual proxy statement;
reviewing the adequacy and effectiveness of our internal controls and disclosure controls and procedures;
overseeing our policies on risk assessment and risk management;
reviewing related party transactions; and
approving or, as required, pre-approving, all audit and all permissible non-audit services and fees to be performed by the independent registered public accounting firm.
Our audit committee operates under a written charter approved by our board of directors and that satisfies the applicable rules and regulations of the SEC and the listing requirements of NYSE American. The charter is available on our website, www.ramed.com, under the Investor Relations tab under Governance. Our audit committee held four (4) meetings during 2020.
Compensation Committee
The members of our compensation committee are Martin Colombatto, William R. Enquist, Jr. and Susanne Meline. Mr. Colombatto serves as the chairperson of our compensation committee. Our board of directors has determined that each member of our compensation committee is an independent director under the current rules of NYSE American, satisfies the additional independence criteria for compensation committee members under Rule 10C-1 and the NYSE American listing rules and is a “non-employee director” within the meaning of Rule 16b-3 under the Exchange Act.
Our compensation committee oversees our corporate compensation programs. The compensation committee responsibilities also include, among other things:
reviewing and approving or recommendinggiving effect to the board forInducement Offer. Failure to obtain such approval compensationmay discourage future investors from engaging in future financings with us. If these consequences occur, we may have difficulty finding alternative sources of capital to fund our executive officers;
reviewing and recommending to the board for approval compensation of directors;
overseeing our overall compensation philosophy and compensation policies, plans and benefit programs for service providers, including our executive officers;
reviewing, approving and making recommendations to our board of directors regarding incentive compensation and equity plans; and
administering our equity compensation plans.
Our compensation committee operates under a written charter approved by our board of directors and that satisfies the applicable rules and regulations of the SEC and the listing requirements of NYSE American. The charter is available on our website, www.ramed.com, under the Investor Relations tab under Governance. Our compensation committee held six (6) meetings during 2020.
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Nominating and Corporate Governance Committee
The current members of our nominating and corporate governance committee are Mark E. Saad, William R. Enquist, Jr. and Joan Stafslien. Mr. Saad serves as the chairperson of our nominating and corporate governance committee. All current members of our nominating and corporate governance committee meet the requirements for independence under current NYSE American listing standards and SEC rules and regulations. The nominating and corporate governance committee oversees our nominations for directors and corporate governance matters. The nominating and corporate governance committee responsibilities also include, among other things:
identifying, evaluating and selecting, or making recommendations to our board of directors regarding, nominees for election to our board of directors and its committees;
evaluating the performance of our board of directors and of individual directors;
considering and making recommendations to our board of directors regarding the composition of our board of directors and its committees; and
developing and making recommendations to our board of directors regarding corporate governance guidelines and matters.
Our nominating and corporate governance committee operates under a written charter approved by our board of directors and that satisfies the applicable rules and regulations of the SEC and the listing requirements of NYSE American. The charter is available on our website, www.ramed.com, under the Investor Relations tab under Governance. Our nominating and corporate governance committee held two (2) meetings during 2020.
Compensation Committee Interlocks and Insider Participation
None of our executive officers currently serves, oroperations in the past year has served, as a member of the compensation committee,future on terms favorable to us or other board committee performing equivalent functions (orat all. We can provide no assurance that we would be successful in the absence of anyraising funds pursuant to additional equity or debt financings or that such committee, the entire board of directors) or director of any entityfunds could be raised at prices that has one or more executive officers serving onwould not create substantial dilution for our compensation committee or our board of directors. None of the members of our compensation committee during the last fiscal year, which included Martin Colombatto, William R. Enquist, Jr. and Richard Mejia, Jr. is or has been an officer or employee of the Company.
Considerations in Evaluating Director Nominees
existing stockholders. The nominating and corporate governance committee uses the following procedures to identify and evaluate any individual recommended or offered for nomination to the Board:
The nominating and corporate governance committeeCompany will consider candidates recommended by stockholders in the same manner as candidates recommended to the nominating and corporate governance committee from other sources.
In its evaluation of director candidates, including the members of the Board eligible for re-election, the nominating and corporate governance committee will consider the following:
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The nominating and corporate governance committee evaluates all incumbent, replacement or additional nominees for election as directors, taking into account (i) all factors the committee considers appropriate, which may include career specialization, relevant technical skills or financial acumen, diversity of viewpoint and industry knowledge, and (ii) the following minimum qualifications:
the highest personal and professional ethics and integrity;
proven achievement and competence in the nominee’s field and the ability to exercise sound business judgment;
skills that are complementary to those of the existing board;
the ability to assist and support management and make significant contributions to the Company’s success; and
an understanding of the fiduciary responsibilities required of a member of the board and the commitment of time and energy necessary to diligently carry out those responsibilities.
The nominating and corporate governance committee also focuses on issues of diversity, such as diversity of gender, race, and national origin, education, professional experience and differences in viewpoints and skills. The nominating and corporate governance committee believes that it is essential that members of our board of directors represent diverse viewpoints.
If our nominating and corporate governance committee determines that an additional or replacement director is required, the nominating and corporate governance committee may take such measures as it considers appropriate in connection with its evaluation of a director candidate, including candidate interviews, inquiry of the person or persons making the recommendation or nomination, engagement of an outside search firm to gather additional information, or reliance on the knowledge of the members of the nominating and corporate governance committee, board, or management.
The nominating and corporate governance committee may propose to the Board a candidate recommended or offered for nomination by a stockholder as a nominee for election to the Board.
Our nominating and corporate governance committee has discretion to decide which individuals to recommend for nomination as directors and our board of directors has the final authority in determining the selection of director candidates for nomination to our board. After completing its review and evaluation of director candidates, our board of directors recommends Messrs. Enquist and Mejia, the director nominees, for election as Class III directors to serve until our 2024 annual meeting of stockholders or until their respective successors are duly elected and qualified.
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Stockholder Recommendations for Nominations to Our Board of Directors
It is the policy of our nominating and corporate governance committee to consider recommendations for candidates to our board of directors from our stockholders holding no less than one percent (1%) of the outstanding shares of the Company’s common stock continuously for at least twelve (12) months prior to the date of the submission of the recommendation or nomination. A stockholder that wishes to recommend a candidate for consideration by the committee as a potential candidate for director must direct the recommendation in writing to Ra Medical Systems, Inc., 2070 Las Palmas Drive, Carlsbad, California 92011, Attention: Corporate Secretary, and must include the candidate’s name, home and business contact information, detailed biographical data, relevant qualifications, a signed letter from the candidate confirming willingness to serve, information regarding any relationships between us and the candidate and evidence of the recommending stockholder’s ownership of our stock. Such recommendation must also include a statement from the recommending stockholder in support of the candidate, particularly within the context of the criteria for board membership, including issues of character, integrity, judgment, and diversity of experience, independence, area of expertise, corporate experience, length of service, potential conflicts of interest, other commitments and the like and personal references. Our board of directors will consider the recommendation but will not be obligated to take any further action with respectincur additional management resources and expenses to the recommendation.
Acall and hold a meeting every 90 days thereafter to seek such stockholder that instead desires to nominate a person directly for election to the Board at an annual meeting of the stockholders must meet the deadlines and other requirements set forth in Section 2.4 of the Company’s Bylaws and the rules and regulations of the Securities and Exchange Commission. Section 2.4 of the Company’s Bylaws requires that a stockholder who seeks to nominate a candidate for director must provide a written notice to the Secretary of the Company not later than the 45th day nor earlier than the 75th day before the one-year anniversary of the date on which the corporation first mailed its proxy materials or a notice of availability of proxy materials (whichever is earlier) for the preceding year’s annual meeting; provided, however, that in the event that no annual meeting was held in the previous year or if the date of the annual meeting is advanced by more than 30 days prior to or delayed by more than 60 days after the one-year anniversary of the date of the previous year’s annual meeting, then notice by the stockholder to be timely must be so received by the Secretary of the Company not earlier than the close of business on the 120th day prior to such annual meeting and not later than the close of business on the later of (i) the 90th day prior to such annual meeting and (ii) the 10th day following the day on which Public Announcement (as defined below) of the date of such annual meeting is first made. That notice must state the information required by Section 2.4 of the Company’s Bylaws, and otherwise must comply with applicable federal and state law. The Secretary of the Company will provide a copy of the Bylaws upon request in writing from a stockholder. “Public Announcement” shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press or a comparable national news service or in a document publicly filed by the corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Securities Exchange Act of 1934, as amended, or any successor thereto.
Communications with the Board of Directors
The Board believes that management speaks for the Company. Individual Board members may, from time to time, communicate with various constituencies that are involved with the Company, but it is expected that Board members would do this with knowledge of management and, in most instances, only at the request of management.
In cases where stockholders or other interested parties wish to communicate directly with our non-management directors, messages can be sent to Ra Medical Systems, Inc., 2070 Las Palmas Drive, Carlsbad, California 92011, Attention: Corporate Secretary. Our corporate secretary monitors these communications and will provide a summary of all received messages to the board at each regularly scheduled meeting. Our board typically meets on a quarterly basis. Where the nature of a communication warrants, our Secretary may determine, in his or her judgment, to obtain the more immediate attention of the appropriate committee of the board or non-management director, of independent advisors or of our management, as our Secretary considers appropriate.
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Our Secretary may decide in the exercise of his or her judgment whether a response to any stockholder or interested party communication is necessary.
This procedure for stockholder and other interested party communications with the non-management directors is administered by our nominating and corporate governance committee. This procedure does not apply to (a) communications to non-management directors from our officers or directors who are stockholders, (b) stockholder proposals submitted pursuant to Rule 14a-8 under the Exchange Act, or (c) communications to the audit committee pursuant to our procedures for complaints regarding accounting and auditing matters.
Corporate Governance Principles and Code of Ethics and Conduct
Our board of directors has adopted corporate governance principles. These principles address items such as the qualifications and responsibilities of our directors and director candidates and corporate governance policies and standards applicable to us in general. In addition, our board of directors has adopted a written code of ethics and conduct that applies to our directors, officers and employees, including our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. A copy of our corporate governance principles and code of ethics and conduct are available on our website, www.ramed.com, under the Investor Relations tab under Governance, then Governance Documents. If we make any substantive amendments to, or grant any waivers from, the code of ethics and conduct for any officer or director, we will disclose the nature of such amendment or waiver on our website.
In connection with our initial public offering, our board of directors retained Compensia, a national compensation consultant, to provide our board of directors with an analysis of market data compiled from certain comparable public companies and assistance in determining compensation of directors. Our board of directors adopted our Outside Director Compensation Policy which currently provides that each non-employee director is entitled to receive the following cash compensation for their services:
$40,000 retainer per year for each non-employee director;
$40,000 retainer per year for service as non-employee chairman of the board of directors;
$30,000 retainer per year for service as lead non-employee director;
$20,000 retainer per year for the chairman of the audit committee or $10,000 retainer per year for each other member of the audit committee;
$15,000 retainer per year for the chairman of the compensation committee or $7,000 retainer per year for each other member of the compensation committee; and
$8,500 retainer per year for the chairman of the nominating and corporate governance committee or $4,500 retainer per year for each other member of the nominating and corporate governance committee.
Each non-employee director may also elect to receive all or part of his or her cash retainer payments in the form of restricted stock granted under our 2018 Equity Incentive Plan, referred to as “retainer stock.” Elections to convert a cash retainer payment into retainer stock, referred to as “retainer stock elections,” must generally be made on or prior to December 31 of the year prior to the year in which the cash retainer payment is scheduled to be paid, or such earlier deadline as established by our board of directors or compensation committee, and is subject to a maximum of 4,000 shares per director, with the remainder of his or her cash payments made in cash. Each individual who first becomes a non-employee director is permitted to elect to convert cash retainer payments payable in the same calendar year into retainer stock, referred to as an “initial retainer election,” provided that the retainer stock election is made prior to the date the individual becomes a non-employee director. The number of shares subject to a retainer election will be equal to the quotient of (i) the dollar value of the aggregate retainer cash payments that the non-employee director elects to forego over the course of a specified period covered by a retainer option election in favor of receiving a retainer option divided by (ii) the grant date value (calculated in accordance with the Black-Scholes option valuation methodology, or such other methodology as our board of directors or the compensation committee may determine) of retainer stock, provided that
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the number of shares covered by such retainer election shall be rounded down to the nearest whole share. Retainer stock generally vests over one year at the rate of 25% each calendar quarter, subject to the non-employee director’s continued service as a director through each vesting date, provided that retainer stock granted pursuant to an initial retainer election will vest at the rate of 25%, 33%, 50% or 100% each calendar quarter depending on whether the date of the applicable non-employee director’s election or appointment to our board of directors occurs during the first, second, third or fourth quarter of the applicable calendar year. For the calendar year 2020, all current outside directors who were eligible to make such election chose to take the maximum annual amount of their annual retainer payments in stock.
In addition to the cash compensation structure described above, our Outside Director Compensation Policy provides the following equity incentive compensation program for non-employee directors. Each non-employee director who first joins us (other than a director who becomes a non-employee director as a result of terminating employment with us) is eligible to be granted on the first trading date on or after his or her start date as a non-employee director a one-time, initial restricted stock unit award with a value of $140,000. Ms. Stafslien was awarded 1,000 restricted stock units upon joining the Board in April 2020 and Ms. Meline was awarded 4,000 restricted stock units upon joining the Board in 2021 in lieu of the $140,000 value award. Further, on the date of each of our annual stockholder meetings, each non-employee director who is continuing as a director following our annual stockholder meeting automatically will be granted an annual restricted stock unit award with a value of $100,000. For 2020, each outside director was awarded 4,000 shares of restricted stock in lieu of the $100,000 value award. Unless otherwise determined by our board of directors or our compensation committee, the number of restricted stock units subject to such awards will be determined based on the per share fair market value of our common stock on the applicable grant date. Each initial restricted stock unit award vests as to 1/3rd of the award on each of the first three anniversaries of the date the director’s service as a non-employee director started, subject to continued service through each relevant vesting date. Each annual restricted stock unit award will vest as to 100% of the underlying shares onapproval until the earlier of the one-year anniversary of the award’s grant date stockholder approval is obtained or the day beforedate that the date of our annual stockholder meeting next following the award’s grant date, subject to continued service through such date. In the event of a change in control of our company, all equity awards granted to a non-employee director (including those granted pursuant to our Outside Director Compensation Policy) will fully vest and become immediately exercisable, subject to continued service through such date.
For compensation awarded following our initial public offering, in any fiscal year, a non-employee director maySeries C Warrants are no longer outstanding, which could be paid, issued or granted cash compensation and equity awards with a total value of no greater than $500,000 (with the value of an equity award based on its grant date fair value for purposes of this limit), or the annual director limit. Equity awards or cash compensation granted to a non-employee director while he or she was an employee or consultant (other than a non-employee director) will not count toward the annual director limit.
Our Outside Director Compensation Policy also provides for the reimbursement of our non-employee directors for reasonable, customary and documented travel expenses to attend meetings of our board of directors and committees of our board of directors.
Compensation for our non-employee directors is not limited to the equity awards and payments set forth in our Outside Director Compensation Policy. Our non-employee directors remain eligible to receive equity awards and cash or other compensation outside of the Outside Director Compensation Policy, as may be provided from time to time at the discretion of our board of directors.
2020 Director Compensation Table
The following table sets forth information regarding compensation earned or paid to our directors during the year ended December 31, 2020.
Name |
| Fees Earned or Paid in Cash ($) |
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| Stock Awards ($) (1) |
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| Total ($) |
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Martin Colombatto (2) |
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| 43,813 |
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| 58,990 |
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| 102,803 |
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Maurice Buchbinder (3) |
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| 34,773 |
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| — |
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| 34,773 |
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William R. Enquist, Jr. (4) |
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| — |
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| 54,956 |
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| 54,956 |
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Richard Mejia, Jr. (5) |
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| 7,999 |
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| 58,990 |
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| 66,989 |
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Mark E. Saad (6) |
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| — |
|
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| 58,721 |
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| 58,721 |
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Joan Stafslien (7) |
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| 30,642 |
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| 56,135 |
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| 86,777 |
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See “Executive Compensation” for information about the compensation of directors who are also executive officers.
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long as five years.
PROPOSAL NUMBERIf the stockholders approve this Proposal No. 1,
ELECTION OF CLASS III DIRECTORS
Our board of directors is currently composed of seven (7) directors, of which six (6) directors are “independent” under NYSE American listing standards. In accordance with our certificate of incorporation, our Board is divided into three classes with staggered three-year terms. Any increase or decrease in the number of directorsSeries C Warrants will be distributed amongexercisable at any time following receipt of such approval, which could result in substantial dilution to our stockholders. Additionally, the three classes so that, as nearly as possible, each class will consistissuance of one-thirdCommon Stock upon the exercise of our directors. This classificationSeries C Warrants could result in a transfer of our Board may havevoting power to Warrant Holders from existing stockholders.
See "Questions and Answers about the Proxy Materials and Special Meeting" for additional discussion of the effect of delaying or preventing changes in control ofon our company.
At the annual meeting, two (2) Class III directors will be elected to our board of directors by the holders of ourexisting common stock to serve for three-year terms expiring at the 2024 annual meeting of stockholders. Each director’s term continues until the election and qualification of his or her successor, or such director’s earlier death, resignation or removal.
Our board of directors has nominated, William R. Enquist, Jr. and Richard Mejia, Jr., each a current director, as nominees for reelection to our board of directors at the annual meeting as Class III directors. If elected, eachstockholders of the aforementioned nominees will serve as a Class III director until the 2024 annual meetingapproval or until his or her respective successor is duly elected and qualified. For more information concerning the nominees, please see the section entitled “Boardfailure to approve of Directors and Corporate Governancethis Proposal No. 1..”
Messrs. Enquist and Mejia have each agreed to serve, if elected, and management has no reason to believe that they will be unavailable to serve. In the event a nominee is unable or declines to serve as a director at the time of the annual meeting, proxies will be voted for any nominee who may be proposed by the nominating and corporate governance committee and designated by the present board of directors to fill the vacancy.
The Class III directors elected to the boardaffirmative vote of directors will be elected by a pluralitymajority of the voting powershares of sharesour Common Stock present in person or represented by proxy at the Special Meeting and entitled to vote on the election of directors. In other words, the two nominees receiving the highest number of “FOR”casting votes will be elected as Class III directors. Shares represented by executed proxies will be voted, if authority to do soaffirmatively or negatively thereon is not expressly withheld,required for the election of William R. Enquist, Jr. and Richard Mejia, Jr. Broker non-votes will have no effect on this proposal.
Our board of directors recommends a vote “FOR” the election of eachapproval of the two (2) nominees to the board of directors as Class III directors to serve for three year terms.
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APPROVAL OF AMENDMENT TO THE COMPANY’S 2018 EQUITY INCENTIVE PLAN
The Company’s stockholders are being asked to approve an amendment to the Company’s 2018 Equity Incentive Plan, or the 2018 Equity Incentive Plan, which (i) would increase the number of shares of common stock reserved for issuance under the 2018 Equity Incentive Plan by 270,000 shares, and (ii) modify the “evergreen” provision by removing the cap on the number of shares that may be reserved for issuance, so that on January 1st of each year, commencing on January 1, 2022, the number of shares reserved for issuance under such plan will increase by 5% of the number of outstanding shares of common stock on such date or such lesser amount as the Board may determine. A copy of the 2018 Equity Incentive Plan, as amended by this proposal, is set forth in this proxy statement as Appendix A.
We believe that long-term incentive compensation programs align the interests of management, employees and stockholders to create long-term stockholder value. We believe that the Plan increases the Company’s ability to achieve this objective by allowing for several different forms of long-term incentive awards, which we believe will help us recruit, reward, motivate and retain talented personnel. All of our outstanding stock options currently have exercise prices significantly higher than our market price, and therefore may not serve as an adequate retention tool for our existing employees. In addition, in order to achieve our business objectives, we are dependent on attracting and retaining talented executives and employees. We believe that granting equity awards serve as an important recruiting and retention tool. Also, given our limited cash resources, we believe that granting equity allows us to use our existing cash for vital business purposes.
If our stockholders approve the amendment, the total number of shares of our common stock that will be reserved for issuance under the 2018 Equity Incentive Plan will be 421,688 (representing approximately 13% of our outstanding common stock as of April 9, 2021) plus any additional shares added pursuant to expiration, termination or forfeiture of outstanding awards under the Stock Compensation Plan (the “Compensation Plan”), pursuant to the 2018 Equity Incentive Plan’s terms following April 9, 2021. Our compensation committee and our board of directors considered the following when determining the number of shares to reserve for issuance under the 2018 Equity Incentive Plan:
Number of Shares Remaining under the 2018 Equity Incentive Plan. As of April 9, 2021, the number of shares that remained available for issuance under the 2018 Equity Incentive Plan was 151,688 shares plus any shares subject to outstanding equity awards granted under our 2018 Equity Incentive Plan or the Compensation Plan that return or are added to the 2018 Equity Incentive Plan due to expiration, termination or forfeiture thereof pursuant to the 2018 Equity Incentive Plan’s terms. Any shares made subject to new awards granted under the 2018 Equity Incentive Plan between April 9, 2021, and the date the amendment to the 2018 Equity Incentive Plan is approved by our stockholders will reduce the shares available for issuance under the 2018 Equity Incentive Plan. As of April 9, 2021, options to purchase an aggregate of 57,978 shares of the Company’s common stock were outstanding under the 2018 Equity Incentive Plan, with a weighted average exercise price of $30.54 per share and a weighted average remaining contractual life of 8.32 years, and options to purchase an aggregate of 59,423 shares of the Company’s common stock were outstanding under the Compensation Plan, with a weighted average exercise price of $723.50 per share and a weighted average remaining contractual life of 4.56 years. In addition, as of April 9, 2021, a total of 32,711 restricted stock units were outstanding under the 2018 Equity Incentive Plan with a weighted average remaining vesting period of 1.55 years, and a total of zero restricted stock units were outstanding under the Compensation Plan.
Overhang. As of April 9, 2021, 90,689 shares of common stock were subject to equity awards under our 2018 Equity Incentive Plan, 59,423 shares of common stock were subject to equity awards under our Compensation Plan, and 151,688 shares of common stock were available for future grant under the 2018 Equity Incentive Plan (excluding the 270,000 shares discussed in this proposal and subject to approval at the Annual Meeting).
Historical Grant Practices. Our compensation committee and our board of directors considered the number of equity awards that we granted since our initial public offering. Since our initial public offering, which was completed in September 2018, we granted equity awards representing a total of 451,347 shares under the 2018 Equity Incentive Plan.
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External Factors. In determining the number of shares to request for approval under the 2018 Equity Incentive Plan amendment, our compensation committee and our board of directors also considered various other factors, including our current stock price, prior grants made to our employees, and guidance from our compensation committee’s independent compensation consultant.
After consideration of these factors, our compensation committee approved adding a 270,000 share reserve and removing of the cap on the evergreen increase would be appropriate to allow us to continue to grant equity-based compensation at levels we deem appropriate for the next two years. If stockholders do not approve the proposed 270,000 share increase and removal of the cap on the evergreen increase, in order to remain competitive in hiring and retaining high quality employees, it may become necessary to replace components of compensation previously awarded in equity with cash. Increasing cash compensation to make up for any shortfall in equity compensation is potentially impractical or inadvisable because we believe that a combination of equity awards and cash compensation provide a more effective compensation strategy than cash alone for attracting, retaining and motivating our employees long-term and aligning employees’ and stockholders’ interests. In addition, any significant increase in cash compensation in lieu of equity awards could substantially increase operating expenses and increase the negative cash flow from both operations, which could adversely affect both business results and the business strategy, including the research and development of innovative new products.
Summary of the 2018 Equity Incentive Plan
Our board of directors adopted the 2018 Equity Incentive Plan in connection with the Company’s 2018 initial public offering (“Initial Public Offering”). Our 2018 Equity Incentive Plan provides for the grant of incentive stock options, within the meaning of Section 422 of the Internal Revenue Code, or Code, to our employees and any of our parent and subsidiary corporations’ employees, and for the grant of nonstatutory stock options, restricted stock, restricted stock units, stock appreciation rights, performance units and performance shares to our employees, directors and consultants and our parent and subsidiary corporations’ employees and consultants. As of April 9, 2021, we had 6 non-employee directors and 84 employees, including our employee director.
Authorized Shares. Subject to the adjustment provisions contained in the 2018 Equity Incentive Plan and the automatic increase section set forth in Section 3(b) of the Plan, a total of 151,688 shares of our common stock are currently reserved for issuance pursuant to our 2018 Equity Incentive Plan, which includes 26,971 shares added to the 2018 Equity Incentive Plan from our Compensation Plan as of April 9, 2021, plus any shares subject to stock options or similar awards granted under the Compensation Plan that expire or otherwise terminate without having been exercised in full and shares issued pursuant to awards granted under the Compensation Plan that are forfeited to or repurchased by the Company (provided that the maximum number of shares that may be added to the 2018 Equity Incentive Plan pursuant to shares originally reserved under the Compensation Plan is 132,000 shares). If this amendment is approved by our stockholders, a total of 421,688 shares of our common stock will be reserved for issuance pursuant to the 2018 Equity Incentive Plan, plus any additional shares added pursuant to outstanding awards under the Compensation Plan and the 2018 Equity Incentive Plan’s terms following April 9, 2021.
The number of shares available for issuance under our 2018 Equity Incentive Plan also includes an annual increase on the first day of each fiscal year, equal to the least of:
65,285 shares;
five percent (5%) of the outstanding shares of our common stock as of the last day of the immediately preceding fiscal year; or
such other amount as our board of directors may determine.
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If an award expires or becomes unexercisable without having been exercised in full, is surrendered pursuant to an exchange program, or, with respect to restricted stock, restricted stock units, performance units or performance shares, is forfeited to or repurchased by us due to failure to vest, the unpurchased shares (or for awards other than stock options or stock appreciation rights, the forfeited or repurchased shares) will become available for future grant or sale under the 2018 Equity Incentive Plan (unless the 2018 Equity Incentive Plan has terminated). With respect to stock appreciation rights, only the net shares actually issued will cease to be available under the 2018 Equity Incentive Plan and all remaining shares under stock appreciation rights will remain available for future grant or sale under the 2018 Equity Incentive Plan (unless the 2018 Equity Incentive Plan has terminated). Shares that have actually been issued under the 2018 Equity Incentive Plan will not be returned to the 2018 Equity Incentive Plan, except if shares issued pursuant to awards of restricted stock, restricted stock units, performance shares or performance units are repurchased by or forfeited to us, such shares will become available for future grant under the 2018 Equity Incentive Plan. Shares used to pay the exercise price of an award or satisfy the tax withholding obligations related to an award will become available for future grant or sale under the 2018 Equity Incentive Plan. To the extent an award is paid out in cash rather than shares, such cash payment will not result in a reduction in the number of shares available for issuance under the 2018 Equity Incentive Plan.
Plan Administration. Our board of directors or one or more committees appointed by our board of directors administers our 2018 Equity Incentive Plan. The compensation committee of our board of directors administers our 2018 Equity Incentive Plan. In addition, if we determine it is desirable to qualify transactions under our 2018 Equity Incentive Plan as exempt under Rule 16b-3 of the Exchange Act, such transactions will be structured to satisfy the requirements for exemption under Rule 16b-3. Subject to the provisions of our 2018 Equity Incentive Plan, the administrator has the power to administer our 2018 Equity Incentive Plan and make all determinations deemed necessary or advisable for administering the 2018 Equity Incentive Plan, including but not limited to, the power to determine the fair market value of our common stock, select the service providers to whom awards may be granted, determine the number of shares covered by each award, approve forms of award agreements for use under the 2018 Equity Incentive Plan, determine the terms and conditions of awards (including, but not limited to, the exercise price, the time or times at which awards may be exercised, any vesting acceleration or waiver or forfeiture restrictions, and any restriction or limitation regarding any award or the shares relating thereto), construe and interpret the terms of our 2018 Equity Incentive Plan and awards granted under it, prescribe, amend and rescind rules relating to our 2018 Equity Incentive Plan, including creating sub-plans, modify or amend each award, including but not limited to the discretionary authority to extend the post-termination exercisability period of awards, and allow a participant to defer the receipt of payment of cash or the delivery of shares that would otherwise be due to such participant under an award. The administrator also has the authority to allow participants the opportunity to transfer outstanding awards to a financial institution or other person or entity selected by the administrator and to institute an exchange program by which outstanding awards may be surrendered or cancelled in exchange for awards of the same type, which may have a higher or lower exercise price and/or different terms, awards of a different type and/or cash, or by which the exercise price of an outstanding award is increased or reduced. The administrator’s decisions, interpretations and other actions are final and binding on all participants.
Stock Options. Stock options may be granted under our 2018 Equity Incentive Plan. The exercise price of options granted under our 2018 Equity Incentive Plan must at least be equal to the fair market value of our common stock on the date of grant. The term of an option may not exceed ten years. With respect to any participant who owns more than 10% of the voting power of all classes of our (or any parent or subsidiary of ours) outstanding stock, the term of an incentive stock option granted to such participant must not exceed five years and the exercise price must equal at least 110% of the fair market value on the grant date. The administrator will determine the methods of payment of the exercise price of an option, which may include cash, shares or other property acceptable to the administrator, as well as other types of consideration permitted by applicable law. After the termination of service of an employee, director or consultant, he or she may exercise his or her option for the period of time stated in his or her option agreement. In the absence of a specified time in an award agreement, if termination is due to death or disability, the option will remain exercisable for 12 months following the termination of service. In all other cases, in the absence of a specified time in an award agreement, the option will remain exercisable for three months following the termination of service. An option, however, may not be exercised later than the expiration of its term. Subject to the provisions of our 2018 Equity Incentive Plan, the administrator determines the other terms of options.
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Stock Appreciation Rights. Stock appreciation rights may be granted under our 2018 Equity Incentive Plan. Stock appreciation rights allow the recipient to receive the appreciation in the fair market value of our common stock between the exercise date and the date of grant. Stock appreciation rights may not have a term exceeding ten years. After the termination of service of an employee, director or consultant, he or she may exercise his or her stock appreciation right for the period of time stated in his or her stock appreciation rights agreement. In the absence of a specified time in an award agreement, if termination is due to death or disability, the stock appreciation rights will remain exercisable for 12 months following the termination of service. In all other cases, in the absence of a specified time in an award agreement, the stock appreciation rights will remain exercisable for three months following the termination of service. However, in no event may a stock appreciation right be exercised later than the expiration of its term. Subject to the provisions of our 2018 Equity Incentive Plan, the administrator determines the other terms of stock appreciation rights, including when such rights become exercisable and whether to pay any increased appreciation in cash or with shares of our common stock, or a combination thereof, except that the per share exercise price for the shares to be issued pursuant to the exercise of a stock appreciation right will be no less than 100% of the fair market value per share on the date of grant.
Restricted Stock. Restricted stock may be granted under our 2018 Equity Incentive Plan. Restricted stock awards are grants of shares of our common stock that vest in accordance with terms and conditions established by the administrator. The administrator will determine the number of shares of restricted stock granted to any employee, director or consultant and, subject to the provisions of our 2018 Equity Incentive Plan, will determine the terms and conditions of such awards. The administrator may impose whatever vesting conditions it determines to be appropriate (for example, the administrator may set restrictions based on the achievement of specific performance goals or continued service to us), except the administrator, in its sole discretion, may accelerate the time at which any restrictions will lapse or be removed. Recipients of shares of restricted stock will have voting and dividend rights with respect to such shares upon grant without regard to vesting, unless the administrator provides otherwise. Shares of restricted stock that do not vest are subject to our right of repurchase or forfeiture.
Restricted Stock Units. Restricted stock units may be granted under our 2018 Equity Incentive Plan. Restricted stock units are bookkeeping entries representing an amount equal to the fair market value of one share of our common stock. Subject to the provisions of our 2018 Equity Incentive Plan, the administrator determines the terms and conditions of restricted stock units, including the vesting criteria and the form and timing of payment. The administrator may set vesting criteria based upon the achievement of company-wide, divisional, business unit or individual goals (including, but not limited to, continued employment or service), applicable federal or state securities laws or any other basis determined by the administrator in its discretion. The administrator, in its sole discretion, may pay earned restricted stock units in the form of cash, in shares or in some combination thereof. In addition, the administrator, in its sole discretion, may accelerate the time at which any restrictions will lapse or be removed.
Performance Units and Performance Shares. Performance units and performance shares may be granted under our 2018 Equity Incentive Plan. Performance units and performance shares are awards that will result in a payment to a participant only if performance objectives established by the administrator are achieved or the awards otherwise vest. The administrator will establish performance objectives or other vesting criteria in its discretion, which, depending on the extent to which they are met, will determine the number or the value of performance units and performance shares to be paid out to participants. The administrator may set performance objectives based on the achievement of company-wide, divisional, business unit or individual goals (including, but not limited to, continued employment or service), applicable federal or state securities laws or any other basis determined by the administrator in its discretion. After the grant of a performance unit or performance share, the administrator, in its sole discretion, may reduce or waive any performance objectives or other vesting provisions for such performance units or performance shares. Performance units will have an initial value established by the administrator on or prior to the grant date. Performance shares will have an initial value equal to the fair market value of our common stock on the grant date. The administrator, in its sole discretion, may payout earned performance units or performance shares in cash, shares or in some combination thereof.
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Outside Directors. All outside (non-employee) directors will be eligible to receive all types of awards (except for incentive stock options) under our 2018 Equity Incentive Plan. Our 2018 Equity Incentive Plan provides that in any given fiscal year, an outside director will not be granted cash compensation and equity awards with an aggregate value greater than $500,000 (with the value of each equity award based on its grant date fair value as determined according to U.S. GAAP). Any cash compensation paid or awards granted to an individual for his or her services as an employee or consultant (other than as an outside director) will not count toward this limit.
Non-Transferability of Awards. Unless the administrator provides otherwise, our 2018 Equity Incentive Plan generally does not allow for the transfer of awards and only the recipient of an award may exercise an award during his or her lifetime. If the administrator makes an award transferrable, such award will contain such additional terms and conditions as the administrator deems appropriate.
Certain Adjustments. In the event of any dividend or other distribution, recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or exchange of our shares or other securities, or other change in our corporate structure affecting our shares, to prevent diminution or enlargement of the benefits or potential benefits available under our 2018 Equity Incentive Plan, the administrator will adjust the number and class of shares that may be delivered under our 2018 Equity Incentive Plan and/or the number, class and price of shares covered by each outstanding award and the numerical share limits set forth in our 2018 Equity Incentive Plan.
Dissolution or Liquidation. In the event of our proposed liquidation or dissolution, the administrator will notify participants as soon as practicable and, to the extent not exercised, all awards will terminate immediately prior to the consummation of such proposed transaction.
Merger or Change in Control. Our 2018 Equity Incentive Plan provides that in the event of a merger or change in control, as defined under our 2018 Equity Incentive Plan, each outstanding award will be treated as the administrator determines, without a participant’s consent. The administrator is not required to treat all awards, all awards held by a participant or all awards of the same type similarly.
If a successor corporation does not assume or substitute for any outstanding award, then the participant will fully vest in and have the right to exercise all of his or her outstanding options and stock appreciation rights, all restrictions on restricted stock and restricted stock units will lapse, and for awards with performance-based vesting, unless specifically provided for otherwise under the applicable award agreement or other agreement or policy applicable to the participant, all performance goals or other vesting criteria will be deemed achieved at 100% of target levels and all other terms and conditions met. If an option or stock appreciation right is not assumed or substituted in the event of a change in control, the administrator will notify the participant in writing or electronically that such option or stock appreciation right will be exercisable for a period of time determined by the administrator in its sole discretion and the option or stock appreciation right will terminate upon the expiration of such period.
For awards granted to an outside director, in the event of a change in control, the outside director will fully vest in and have the right to exercise all of his or her outstanding options and stock appreciation rights, all restrictions on restricted stock and restricted stock units will lapse and, for awards with performance-based vesting, unless specifically provided for otherwise under the applicable award agreement or other agreement or policy applicable to the participant, all performance goals or other vesting criteria will be deemed achieved at 100% of target levels and all other terms and conditions met.
Clawback. Awards will be subject to any clawback policy of ours, and the administrator also may specify in an award agreement that the participant’s rights, payments, and/or benefits with respect to an award will be subject to reduction, cancellation, forfeiture, and/or recoupment upon the occurrence of certain specified events. Our board of directors may require a participant to forfeit, return, or reimburse us all or a portion of the award and/or shares issued under the award, any amounts paid under the award, and any payments or proceeds paid or provided upon disposition of the shares issued under the award in order to comply with such clawback policy or applicable laws.
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Amendment; Termination. The administrator has the authority to amend, alter, suspend or terminate our 2018 Equity Incentive Plan, provided such action does not materially impair the rights of any participant. Our 2018 Equity Incentive Plan automatically will terminate in 2028, unless we terminate it sooner.
Summary of U.S. Federal Income Tax Consequences
The following summary is intended only as a general guide to the U.S. federal income tax consequences of participation in the 2018 Equity Incentive Plan. The summary is based on existing U.S. laws and regulations as of July 1, 2020 and there can be no assurance that those laws and regulations will not change in the future. The summary does not purport to be complete and does not discuss the tax consequences upon a participant’s death, or the provisions of the income tax laws of any municipality, state or foreign country in which the participant may reside. As a result, tax consequences for any particular participant may vary based on individual circumstances.
Incentive Stock Options.
A participant recognizes no taxable income for regular income tax purposes as a result of the grant or exercise of an option that qualifies as incentive stock option under Section 422 of the Code. If a participant exercises the option and then later sells or otherwise disposes of the shares acquired through the exercise of the option after both the two-year anniversary of the date the option was granted and the one-year anniversary of the exercise, the participant will recognize a capital gain or loss equal to the difference between the sale price of the shares and the exercise price, and we will not be entitled to any deduction for federal income tax purposes.
However, if the participant disposes of such shares either on or before the two-year anniversary of the date of grant or on or before the one-year anniversary of the date of exercise (a “disqualifying disposition”), any gain up to the excess of the fair market value of the shares on the date of exercise over the exercise price generally will be taxed as ordinary income, unless the shares are disposed of in a transaction in which the participant would not recognize a gain (such as a gift). Any gain in excess of that amount will be a capital gain. If a loss is recognized, there will be no ordinary income, and such loss will be a capital loss. Any ordinary income recognized by the participant upon the disqualifying disposition of the shares generally should be deductible by us for federal income tax purposes, except to the extent such deduction is limited by applicable provisions of the Internal Revenue Code.
For purposes of the alternative minimum tax, the difference between the option exercise price and the fair market value of the shares on the exercise date is treated as an adjustment item in computing the participant’s alternative minimum taxable income in the year of exercise. In addition, special alternative minimum tax rules may apply to certain subsequent disqualifying dispositions of the shares or provide certain basis adjustments or tax credits for purposes of the alternative minimum tax rules.
Nonstatutory Stock Options.
A participant generally recognizes no taxable income as a result of the grant of such an option. However, upon exercising the option, the participant normally recognizes ordinary income equal to the amount that the fair market value of the shares on such date exceeds the exercise price. If the participant is an employee, such ordinary income generally is subject to withholding of income and employment taxes. Upon the sale of the shares acquired by the exercise of a nonstatutory stock option, any gain or loss (based on the difference between the sale price and the fair market value on the exercise date) will be taxed as capital gain or loss. No tax deduction is available to us with respect to the grant of a nonstatutory stock option or the sale of the shares acquired through the exercise of the nonstatutory stock option.
Stock Appreciation Rights.
In general, no taxable income is reportable when a stock appreciation right is granted to a participant. Upon exercise, the participant generally will recognize ordinary income in an amount equal to the fair market value of any shares received. Any additional gain or loss recognized upon any later disposition of the shares will be taxed as capital gain or loss.
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Restricted Stock Awards.
A participant acquiring shares of restricted stock generally will recognize ordinary income equal to the fair market value of the shares on the vesting date. If the participant is an employee, such ordinary income generally is subject to withholding of income and employment taxes. The participant may elect, pursuant to Section 83(b) of the Internal Revenue Code to accelerate the ordinary income tax event to the date of acquisition by filing an election with the Internal Revenue Service no later than thirty (30) days after the date the shares are acquired. Upon the sale of shares acquired pursuant to a restricted stock award, any gain or loss, based on the difference between the sale price and the fair market value on the date the ordinary income tax event occurs, will be taxed as capital gain or loss.
Restricted Stock Unit Awards.
There are no immediate tax consequences of receiving an award of restricted stock units. A participant who is awarded restricted stock units generally will be required to recognize ordinary income in an amount equal to the fair market value of shares issued to such participant at the end of the applicable vesting period or, if later, the settlement date elected by the administrator or a participant. Any additional gain or loss recognized upon any later disposition of any shares received will be taxed as capital gain or loss.
Performance Shares and Performance Unit Awards.
A participant generally will recognize no income upon the grant of a performance share or a performance unit award. Upon the settlement of such awards, participants normally will recognize ordinary income in the year of receipt in an amount equal to the cash received and the fair market value of any cash or unrestricted shares received. If the participant is an employee, such ordinary income generally is subject to withholding of income and employment taxes. Upon the sale of any shares received, any gain or loss, based on the difference between the sale price and the fair market value on the date the ordinary income tax event occurs, will be taxed as capital gain or loss.
Section 409A.
Section 409A of the Code provides certain requirements for non-qualified deferred compensation arrangements with respect to an individual’s deferral and distribution elections and permissible distribution events. Awards granted under the 2018 Equity Incentive Plan with a deferral feature will be subject to the requirements of Section 409A. If an award is subject to and fails to satisfy the requirements of Section 409A, the recipient of that award may recognize ordinary income on the amounts deferred under the award, to the extent vested, which may be prior to when the compensation is actually or constructively received. Also, if an award that is subject to Section 409A fails to comply with Section 409A’s provisions, Section 409A imposes an additional 20% federal income tax on compensation recognized as ordinary income, as well as interest on such deferred compensation.
Tax Effect for the Company.
We generally will be entitled to a tax deduction in connection with an award under the 2018 Equity Incentive Plan in an amount equal to the ordinary income realized by a participant and at the time the participant recognizes such income (for example, the exercise of a nonstatutory stock option) except to the extent such deduction is limited by applicable provisions of the Internal Revenue Code. Special rules limit the deductibility of compensation paid to our chief executive officer and other “covered employees” as determined under Section 162(m) and applicable guidance. Under Section 162(m), the annual compensation paid to any of these specified executives will be deductible only to the extent that it does not exceed $1,000,000.
THE FOREGOING IS ONLY A SUMMARY OF THE EFFECT OF U.S. FEDERAL INCOME TAXATION UPON PARTICIPANTS AND RA MEDICAL SYSTEMS, INC. WITH RESPECT TO AWARDS UNDER THE 2018 EQUITY INCENTIVE PLAN. IT DOES NOT PURPORT TO BE COMPLETE AND DOES NOT DISCUSS THE IMPACT OF EMPLOYMENT OR OTHER TAX REQUIREMENTS, THE TAX CONSEQUENCES OF A PARTICIPANT’S DEATH, OR THE PROVISIONS OF THE INCOME TAX LAWS OF ANY MUNICIPALITY, STATE, OR FOREIGN COUNTRY IN WHICH THE PARTICIPANT MAY RESIDE.
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Number of Awards Granted to Employees, Consultants and Directors
The number of awards that an employee, director, or consultant may receive under the 2018 Equity Incentive Plan is in the discretion of the administrator and therefore cannot be determined in advance. As of April 9, 2021, the fair market value of the Company’s common stock was $4.73 per share. The following table sets forth the aggregate number of awards granted under our 2018 Plan during the year ended December 31, 2020 to each of our named executive officers, our executive officers, as a group; directors who are not executive officers, as a group; and all employees who are not executive officers, as a group.
Name of Individual or Group |
| Number of Shares Subject to Options Granted |
|
| Average Per Share Exercise Price of Options Granted |
|
| Number of Shares Subject to Stock Awards Granted |
|
| Dollar Value of Shares Subject to Stock Awards Granted(1) |
| ||||
Jonathan Will McGuire, Chief Executive Officer |
|
| — |
|
|
| — |
|
|
| 104,254 |
|
| $ | 481,653 |
|
Andrew Jackson, Chief Financial Officer (and previously Interim Chief Executive Officer) |
|
| — |
|
|
| — |
|
|
| 35,276 |
|
| $ | 162,975 |
|
Daniel Horwood, General Counsel and Secretary |
|
| — |
|
|
| — |
|
|
| 19,591 |
|
| $ | 90,510 |
|
All executive officers, as a group |
|
| — |
|
|
| — |
|
|
| 159,121 |
|
| $ | 735,138 |
|
All directors who are not executive officers, as a group |
|
| 7,729 |
|
| $ | 29.95 |
|
|
| 21,000 |
|
| $ | 165,175 |
|
All employees who are not executive officers, as a group |
|
| 4,000 |
|
| $ | 33.00 |
|
|
| 138,059 |
|
| $ | 812,166 |
|
|
|
Approval of the amendment of the Company’s 2018 Equity Incentive Plan requires the affirmative “FOR” vote of a majority of the shares present live via the internet or represented by proxy at the annual meeting and entitled to vote on the proposal.Warrant Exercise Proposal. You may vote “FOR,” “AGAINST,” or “ABSTAIN” on this proposal. Abstentions have the same effect as a vote against the proposal. Brokerand broker non-votes will not affect the outcome of voting on this proposal.
Board Recommendation
Our board of directors recommends a vote “FOR” the approval of the Warrant Exercise Proposal.
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PROPOSAL NO. 2
APPROVAL OF THE REVERSE STOCK SPLIT PROPOSAL
On July 13, 2022, the Company’s Board of Directors unanimously approved and adopted resolutions setting the record date for the Special Meeting at which stockholders would be asked to approve a reverse stock split. On August 16, 2022, the Board of Directors further unanimously approved and adopted resolutions (1) declaring that submitting an amendment to the Company’s Amended and Restated Certificate of Incorporation (“Restated Certificate”) to effect a reverse stock split of our Common Stock issued and outstanding or held in treasury (the “Reverse Stock Split”), was advisable and (2) directing that a proposal (the “Reverse Stock Split Proposal”) to approve the Reverse Stock Split be submitted to the holders of our Common Stock for their approval.
If approved by our stockholders, the Reverse Stock Split Proposal would permit, but would not require, the Board to effect a Reverse Stock Split of our Common Stock issued and outstanding or held in treasury by a ratio of not less than 1-for-20 and not more than 1-for-50, with the exact ratio to be set at a whole number within this range as determined by the Board (or a duly authorized committee thereof) in its sole discretion. The Reverse Stock Split, if effected, would affect all of our holders of Common Stock uniformly. The following description of the proposed amendment is a summary and is subject to the full text of the proposed Certificate of Amendment to our Restated Certificate, which is attached to this Proxy Statement as Annex A (the “Reverse Split Certificate of Amendment”).
If stockholders approve this proposal, the Board in its discretion could determine to cause the Reverse Split Certificate of Amendment to be filed with the Delaware Secretary of State and effect the Reverse Stock Split. The Board also may determine in its discretion not to effect the Reverse Stock Split and not to file the Reverse Split Certificate of Amendment. We could decide not to proceed with the Reverse Stock Split even if the Reverse Stock Split Proposal is approved by the stockholders. No further action on the part of stockholders will be required to either implement or abandon the Reverse Stock Split.
Reasons for the Reverse Stock Split
Meet certain continued listing requirements of the NYSE American.
To continue our listing on the NYSE American, we must comply with NYSE American rules. NYSE American Company Guide Section 1003(f)(v) provides that the NYSE American may delist a security when it sells for a substantial period of time at a low price per share. Our Common Stock has traded below $1.00 since February 2, 2022, and on August 17, 2022, the closing price was $0.17. Our Board of Directors has considered the potential harm to us and our stockholders should NYSE American delist our Common Stock from NYSE American. Delisting could adversely affect the liquidity of our Common Stock since alternatives, such as the OTC Bulletin Board and the pink sheets, are generally considered to be less efficient markets. An investor likely would find it less convenient to sell, or to obtain accurate quotations in seeking to buy, our Common Stock on an over-the-counter market. Many investors likely would not buy or sell our Common Stock due to difficulty in accessing over-the-counter markets, policies preventing them from trading in securities not listed on a national exchange or for other reasons. The Board of Directors believes that a Reverse Stock Split is a potentially effective means for us to increase the per share market price of our Common Stock and to avoid, or at least mitigate, the likely adverse consequences of our Common Stock being delisted from the NYSE American by producing the immediate effect of increasing the bid price of our Common Stock.
Meet certain standards for initial listing upon consummation of a reverse merger
In order to consummate a reverse merger, NYSE American Company Guide Section 341 requires that the post-transaction combined entity will be eligible for continued listing only if it meets the standards for initial listing, which includes a minimum price requirement. Our Board of Directors has considered the potential harm to us and our stockholders should we be unable to consummate a potential strategic transaction, such as a reverse merger, as a result of failing to meeting closing conditions relating to being a listed entity as a result of the post-transaction entity not meeting the initial listing standards. An inability to meet the standards for initial listing upon a strategic transaction could also
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have a negative impact on finding or negotiating with potential strategic partners or, as mentioned, on our ability to consummate potential transactions, which could adversely impact us and our stockholders. Our stockholders would also have potential harm if a potential strategic transaction were actually consummated but the post-transaction entity did not meet the standards of initial listing and was consequently delisted from the NYSE American. Delisting could adversely affect the liquidity of our Common Stock since alternatives, such as the OTC Bulletin Board and the pink sheets, are generally considered to be less efficient markets. An investor likely would find it less convenient to sell, or to obtain accurate quotations in seeking to buy, our Common Stock on an over-the-counter market. Many investors likely would not buy or sell our Common Stock due to difficulty in accessing over-the-counter markets, policies preventing them from trading in securities not listed on a national exchange or for other reasons. The Board of Directors believes that a Reverse Stock Split is a potentially effective means for us to increase the per share market price of our Common Stock and to avoid, or at least mitigate, the likely adverse consequences of us failing to meet the minimum price requirement which is a component of the initial listing standards that we may be required to meet upon the consummation of a potential strategic transaction.
Authorize sufficient shares of Common Stock for issuance upon exercise of the Series C Common Stock Purchase Warrants or in any future offerings and transactions.
Our authorized capital stock currently consists of 300,000,000 shares of Common Stock, par value $0.0001 per share, and 10,000,000 shares of preferred stock, par value $0.0001 per share. Although the Reverse Stock Split will not affect the rights of stockholders or any stockholder’s proportionate ownership interest in the Company (except as a result of rounding in lieu of fractional shares), the number of authorized shares of our Common Stock, non-voting common stock and preferred stock will not be reduced. If the Reverse Stock Split is implemented, the number of authorized shares of Common Stock would remain at 300,000,000 shares, thereby effectively increasing the number of shares of Common Stock authorized under the Restated Certificate for the purpose of permitting the issuance of additional shares of Common Stock upon the exercise in full of the Series C Common Stock Purchase Warrants and in any future offerings or strategic transactions.
To potentially improve the marketability and liquidity of our Common Stock.
Our Board of Directors believes that the increased market price of our Common Stock expected as a result of implementing a Reverse Stock Split could improve the marketability and liquidity of our Common Stock and encourage interest and trading in our Common Stock.
Appeal to a Broader Range of Investors to Generate Greater Investor Interest in the Company.
We believe that the Reverse Stock Split and an increase in our stock price may make our Common Stock more attractive to a broader range of institutional and other investors. Many brokerage firms and institutional investors have internal policies and practices that either prohibit them from investing in low-priced stocks or tend to discourage individual brokers from recommending low-priced stocks to their customers, which reduces the number of potential purchasers of our Common Stock. In addition, some of those policies and practices may function to make the processing of trades in low-priced stocks economically less attractive to brokers. 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, we believe the analysts at many brokerage firms do not monitor the trading activity or otherwise provide coverage of lower-priced stocks. Further, lower-priced stocks have a perception in the investment community as being more risky and speculative, which may negatively impact not only the price of our Common Stock, but also our market liquidity.
Certain Risks Associated with a Reverse Stock Split
There are certain risks associated with a reverse stock split, and we cannot accurately predict or assure that the Reverse Stock Split will produce or maintain the desired results. However, our Board believes that the benefits to the Company and our stockholders outweigh the risks and recommends that you vote in favor of the reverse stock split proposal.
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We cannot assure you that the proposed Reverse Stock Split, if effected, will increase our stock price. There can be no assurance that the total market capitalization of our Common Stock (the aggregate value of all of our outstanding Common Stock at the then market price) after the Reverse Stock Split will be equal to or greater than the total market capitalization before the Reverse Stock Split, or that the per share market price of our Common Stock following the Reverse Stock Split will either equal or exceed the current per share market price.
On August 17, 2022, the closing sale price of our Common Stock on the NYSE American was $0.17 per share. We expect that the Reverse Stock Split, if effected, will increase the per share trading price of our Common Stock. However, we cannot assure you that the market price per share of our Common Stock after the Reverse Stock Split will rise or remain constant in proportion to the reduction in the number of shares of Common Stock outstanding before the Reverse Stock Split. The effect of the Reverse Stock Split on the per share trading price of our Common Stock cannot be predicted with any certainty, and the history of reverse stock splits for other companies is varied, particularly since some investors may view a reverse stock split negatively. In many cases, the market price of a company’s shares declines after a reverse stock split, or the market price of a company’s shares immediately after a reverse stock split does not reflect a proportionate or mathematical adjustment to the market price based on the ratio of the reverse stock split. Accordingly, the total market capitalization of our Common Stock and the Company after a Reverse Stock Split may be lower than the total market capitalization before the Reverse Stock Split, and it is possible that a Reverse Stock Split may not result in a per share trading price that would attract investors who do not trade in lower priced stocks.
Reducing the number of outstanding shares of our Common Stock through the Reverse Stock Split, if we decide to proceed with the Reverse Stock Split, is intended, absent other factors, to increase the per share trading price of our Common Stock. However, even if we implement the Reverse Stock Split, the per share trading price of our Common Stock may decrease due to factors unrelated to the Reverse Stock Split. Other factors, such as our financial results, market conditions and the market perception of our business, may adversely affect the per share trading price of our Common Stock. As a result, there can be no assurance that the Reverse Stock Split, if completed, will result in the benefits that we anticipate, that the per share trading price of our Common Stock will increase following the Reverse Stock Split or that the per share trading price of our Common Stock will not decrease in the future. Although no assurances are possible concerning the trading price of our Common Stock if the Reverse Stock Split is effected or concerning future fluctuations in the market prices of our Common Stock after the Reverse Stock Split, based on such price, the Company’s intention in determining the reverse stock split ratio to be reflected in the Reverse Stock Split is that such ratio will result in an increase in the per share market price of our Common Stock immediately after the Reverse Stock Split, although whether the price of our Common Stock is sufficient or is maintained for a sufficient period of time depends in part on the ratio of the Reverse Stock Split and future fluctuations in the price of our Common Stock.
The proposed Reverse Stock Split may decrease the liquidity of our Common Stock and result in higher transaction costs.
The liquidity of our Common Stock may be negatively impacted by the Reverse Stock Split, given the reduced number of shares that would be outstanding after the Reverse Stock Split, particularly if the per share trading price does not increase proportionately as a result of the Reverse Stock Split. In addition, if the Reverse Stock Split is implemented, it will likely increase the number of our stockholders who own “odd lots” of fewer than 100 shares of Common Stock. Brokerage commission and other costs of transactions in odd lots are generally higher than the costs of transactions of more than 100 shares of common stock. In addition, although we believe the Reverse Stock Split may enhance the marketability of our Common Stock to certain potential investors, we cannot assure you that, if implemented, our Common Stock will be more attractive to investors. While our Board believes that a higher stock price may help generate the interest of new investors, the Reverse Stock Split may not result in a per-share price that will attract certain types of investors, such as institutional investors or investment funds, and such share price may not satisfy the investing guidelines of institutional investors or investment funds. As a result, the trading liquidity of our Common Stock may not improve as a result of a Reverse Stock Split and could be adversely affect by a higher per share price. Accordingly, the Reverse Stock Split may not achieve the desired results of increasing marketability of our Common Stock as described above.
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The proposed Reverse Stock Split will result in a significant increase in our authorized common stock and may result in future dilution to our stockholders.
The Reverse Stock Split will reduce the number of outstanding shares of our Common Stock without a proportionate reduction in the number of shares of authorized but unissued Common Stock in our Restated Certificate, which will give the Company a significantly larger number of authorized shares, as a percentage of total outstanding shares, available to be issued in the future without further stockholder action, except as may be required by applicable laws or the rules of any stock exchange on which our Common Stock is listed. The issuance of additional shares of our Common Stock may have a dilutive effect on the ownership of existing stockholders.
Potential Anti-Takeover Effect
As noted above, the Reverse Stock Split would result in an increased proportion of unissued authorized shares to issued shares, which could have possible anti-takeover effects and could be used by us to oppose a hostile takeover attempt or to delay or prevent changes in our control or management (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 us with another company). These authorized but unissued shares could (within the limits imposed by applicable law) be issued in one or more transactions that could make a change of control of the Company more difficult, and therefore more unlikely, or used to resist or frustrate a third-party transaction that is favored by a majority of the independent stockholders. For example, without further stockholder approval, our board of directors could (within the limits imposed by applicable law) strategically sell shares of Common Stock in a private transaction to purchasers who would oppose a takeover or favor our then current board of directors, or the shares could be available for potential issuance pursuant to a shareholder rights plan. The additional authorized shares could be used to discourage persons from attempting to gain control of the Company by diluting the voting power of shares then outstanding or increasing the voting power of persons that would support the board of directors in a potential takeover situation, including by preventing or delaying a proposed business combination that is opposed by the Board although perceived to be desirable by some stockholders. The issuance of additional shares to certain persons allied with our management could have the effect of making it more difficult to remove our current management by diluting the stock ownership or voting rights of persons seeking to cause such removal. Despite these possible anti-takeover effects, this reverse stock split proposal has been prompted by business and financial considerations and not by the threat of any hostile takeover attempt or any effort of which we are aware to accumulate our stock or to obtain control of our company by means of a merger, tender offer, solicitation in opposition to management or otherwise (nor is our board of directors currently aware of any such attempts directed at us). Nevertheless, stockholders should be aware that approval of this proposal could facilitate future efforts by us to deter or prevent changes in our control, including transactions in which the stockholders might otherwise receive a premium for their shares over then current market prices.
Procedure for Implementing the Reverse Stock Split
The effective time of the Reverse Stock Split (the “Effective Time”), if approved by stockholders and implemented by the Company, will be the date and time set forth in the Reverse Split Certificate of Amendment that is filed with the Delaware Secretary of State. If the reverse stock split proposal is approved and the board of directors determines to proceed with the Reverse Stock Split, the exact timing of the filing of the Reverse Split Certificate of Amendment will be determined by our board of directors.
If, at any time prior to the filing of the Reverse Split Certificate of Amendment with the Delaware Secretary of State, notwithstanding stockholder approval, and without further action by the stockholders, the board of directors, in its sole discretion, determines that it is in the Company’s best interests and the best interests of the Company’s stockholders to delay the filing of the Certificate of Amendment or abandon the Reverse Stock Split, the Reverse Stock Split may be delayed or abandoned. The Company reserves the right to abandon a 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 Reverse Split Certificate of Amendment to our Restated Certificate, even if the authority to effect the Reverse Stock Split has been approved by our stockholders at the Special Meeting. By voting in favor of the Reverse Stock Split Proposal, you are expressly also authorizing the board of directors to delay, not to proceed with, and abandon, the Reverse Stock Split if it should so decide, in its sole discretion, that such action is in the best interests of the Company and its stockholders.
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If a Reverse Stock Split is effected, then after the Effective Time, our Common Stock will have a new Committee on Uniform Securities Identification Procedures (CUSIP) number, which is a number used to identify our equity securities, and stock certificates with the older CUSIP number will need to be exchanged for stock certificates with the new CUSIP number by following the procedures described below. After the Reverse Stock Split, we will continue to be subject to the periodic reporting and other requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). We currently expect that our Common Stock will continue to be listed on the NYSE American under the symbol “RMED” subject to any future change of listing of our securities, although it will be considered a new listing with a new CUSIP number. The Reverse Stock Split is not intended to be, and we do not believe that it will have the effect of, a “going private transaction” covered by Rule 13e-3 under the Exchange Act.
Impact of the Reverse Stock Split Amendment if Implemented
If approved and implemented, the Reverse Stock Split will be realized simultaneously and in the same ratio for all of our issued and outstanding shares of Common Stock. Any fractional shares that would otherwise be issuable as a result of the Reverse Stock Split will be paid out in cash. The Reverse Stock Split will affect all holders of our Common Stock uniformly and will not affect any stockholder’s percentage ownership interest in the Company (subject to the treatment of fractional shares). In addition, the Reverse Stock Split will not affect any stockholder’s proportionate voting power (subject to the treatment of fractional shares).
Our authorized capital stock currently consists of 300,000,000 shares of Common Stock, par value $0.0001 per share, and 10,000,000 shares of preferred stock, par value $0.0001 per share. Although the Reverse Stock Split will not affect the rights of stockholders or any stockholder’s proportionate ownership interest in the Company (except as a result of treatment of fractional shares), the number of authorized shares of our Common Stock and preferred stock will not be reduced. If the Reverse Stock Split is implemented, the number of authorized shares of Common Stock would remain at 300,000,000 shares, thereby effectively increasing the number of shares of Common Stock available for future issuance. The total number of authorized shares of preferred stock would remain at 10,000,000 shares.
The table below sets forth, as of August 5, 2022 and for illustrative purposes only, certain effects of potential Reverse Stock Split ratios of between 1-for-20 and 1-for-50, inclusive, including on our total outstanding Common Stock equivalents (without giving effect to the treatment of fractional shares).
| Common Stock and Equivalents Outstanding Prior to Reverse Stock Split |
|
| Common Stock Equivalents Outstanding Assuming Certain Reverse Stock Split Ratios |
| ||||||||||
|
|
|
|
| Percent of Total |
|
| 1-for-20 |
|
| 1-for-50 |
| |||
Voting Common Stock outstanding |
| 54,514,828 |
|
|
| 49.1 | % |
|
| 2,725,741 |
|
|
| 1,090,296 |
|
Common stock underlying options and warrants |
| 56,390,527 |
|
|
| 50.8 | % |
|
| 2,819,526 |
|
|
| 1,127,810 |
|
Common stock underlying restricted stock units |
| 3,769 |
|
|
| < 0.1 | % |
|
| 188 |
|
|
| 75 |
|
Common stock underlying our Preferred Stock |
| — |
|
|
| 0.0 | % |
|
| — |
|
|
| — |
|
Total Common Stock and equivalents |
| 110,909,124 |
|
|
| 100.0 | % |
|
| 5,545,455 |
|
|
| 2,218,181 |
|
Common stock available for future issuance |
| 189,090,876 |
|
|
|
|
|
|
| 294,454,545 |
|
|
| 297,781,819 |
|
As illustrated by the table above, the Reverse Stock Split would significantly increase the ability of our board of directors to issue authorized and unissued shares in the future without further stockholder action. The issuance in the future of such additional authorized shares may have the effect of diluting the earnings or loss per share and book value per share, as well as the ownership and voting rights of the holders of our then-outstanding shares of Common Stock. In addition, an increase in the number of authorized but unissued shares of our Common Stock may have a potential anti-takeover effect, as our ability to issue additional shares could be used to thwart persons, or otherwise dilute the stock ownership of stockholders, seeking to control us. The Reverse Stock Split is not being recommended by our board of directors as part of an anti-takeover strategy. We have no plans, proposals or arrangements, written or otherwise, at this time involving the issuance of additional shares of common stock.
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Effect on Beneficial Holders of Common Stock (i.e., stockholders who hold in “street name”)
Upon the Reverse Stock Split, we intend to treat shares held by stockholders in “street name,” through a bank, broker or other nominee, in the same manner as registered stockholders whose shares are registered in their names. Banks, brokers or other nominees will be instructed to effect the Reverse Stock Split for their beneficial holders holding our Common Stock in “street name.” However, these banks, brokers or other nominees may have different procedures than registered stockholders for processing the Reverse Stock Split. If a stockholder holds shares of our Common Stock with a bank, broker or other nominee and has any questions in this regard, stockholders are encouraged to contact their bank, broker or other nominee.
Effect on Registered “Book- Entry” Holders of Common Stock (i.e., stockholders who are registered on the transfer agent’s books and records but do not hold stock certificates)
Certain of our registered holders of Common Stock may hold some or all of their shares electronically in book-entry form with the transfer agent. These stockholders do not have stock certificates evidencing their ownership of the Common Stock. They are, however, provided with a statement reflecting the number of shares registered in their accounts.
If a stockholder holds registered shares in book-entry form with the transfer agent, no action needs to be taken to receive post-Reverse Stock Split shares. If a stockholder is entitled to post-Reverse Stock Split shares, a transaction statement will automatically be sent to the stockholder’s address of record indicating the number of shares of Common Stock held following the Reverse Stock Split.
Accounting Matters
The Reverse Stock Split will not affect the par value of a share of our Common Stock. As a result, as of the Effective Time of the Reverse Stock Split, the stated capital attributable to Common Stock on our balance sheet will be reduced proportionately based on the Reverse Stock Split ratio (including a retroactive adjustment of prior periods), and the additional paid-in capital account will be credited with the amount by which the stated capital is reduced. Reported per share net income or loss will be higher because there will be fewer shares of Common Stock outstanding.
No Appraisal Rights
Under the Delaware General Corporation Law, stockholders are not entitled to dissenter’s or appraisal rights with respect to the Reverse Stock Split, and we will not independently provide stockholders with any such rights.
Material United States Federal Income Tax Considerations of the Reverse Stock Split
The following discussion is a summary of material U.S. federal income tax consequences of the Reverse Stock Split to stockholders but does not purport to be a complete analysis of all potential tax effects that may be relevant to stockholders. The effects of other U.S. federal tax laws, such as estate and gift tax laws, and any applicable state, local, or foreign tax laws are not discussed. This discussion is based on the Code, U.S. Treasury Regulations promulgated thereunder, judicial decisions, and published rulings and administrative pronouncements of the Internal Revenue Service in effect as of the date of this proxy statement. These authorities may change or be subject to differing interpretations. Any such change may be applied retroactively in a manner that could adversely affect a holder of our Common Stock.
This summary is limited to stockholders who hold our Common Stock as a “capital asset” within the meaning of Section 1221 of the Code (generally, property held for investment). This discussion does not address all U.S. federal income tax consequences relevant to the particular circumstances of a stockholder. In addition, it does not address consequences relevant to stockholders that are subject to particular rules, including, without limitation:
persons subject to the alternative minimum tax or Medicare contribution tax on net investment income;
persons whose functional currency is not the U.S. dollar;
persons holding our Common Stock as part of a hedge, straddle, or other risk reduction strategy or as part of a conversion transaction or other integrated investment;
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persons who are not U.S. Holders;
banks, insurance companies, and other financial institutions;
mutual funds, real estate investment trusts or regulated investment companies;
brokers, dealers, or traders in securities;
partnerships, other entities or arrangements treated as partnerships for U.S. federal income tax purposes, and other pass-through entities (and investors therein);
tax-exempt organizations or governmental organizations;
persons deemed to sell our Common Stock under the constructive sale provisions of the Code;
persons who hold or receive our Common Stock pursuant to the exercise of any employee stock options or otherwise as compensation;
persons who hold our Common Stock as “qualified small business stock” pursuant to Section 1202 of the Code; and
tax-qualified retirement plans.
This discussion is limited to stockholders that are U.S. Holders. For purposes of this discussion, a “U.S. Holder” is a beneficial owner of our Common Stock that, for U.S. federal income tax purposes, is or is treated as:
an individual who is a citizen or resident of the United States;
a corporation (or other entity taxable as a corporation for U.S. Federal income tax purposes) created or organized under the laws of the United States, any state thereof, or the District of Columbia;
an estate, the income of which is subject to U.S. federal income tax regardless of its source; or
a trust if either a court within the United States is able to exercise primary supervision over the administration of such trust and one or more United States persons (within the meaning of Section 7701(a)(30) of the Code) have the authority to control all substantial decisions of such trust, or the trust has a valid election in effect under applicable Treasury Regulations to be treated as a United States person for U.S. federal income tax purposes.
If an entity treated as a partnership for U.S. federal income tax purposes holds our Common Stock, the tax treatment of a partner in the partnership will depend on the status of the partner, the activities of the partnership and certain determinations made at the partner level. Accordingly, partnerships holding our Common Stock and the partners in such partnerships should consult their tax advisors regarding the U.S. federal income tax consequences to them.
In addition, the following discussion does not address the tax consequences of the Reverse Stock Split under state, local and foreign tax laws. Furthermore, the following discussion does not address any tax consequences of transactions effectuated before, after or at the same time as the Reverse Stock Split, whether or not they are in connection with the Reverse Stock Split.
INVESTORS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE APPLICATION OF THE U.S. FEDERAL INCOME TAX LAWS TO THEIR PARTICULAR SITUATIONS AS WELL AS ANY TAX CONSEQUENCES OF THE REVERSE STOCK SPLIT ARISING UNDER THE U.S. FEDERAL ESTATE OR GIFT TAX LAWS OR UNDER THE LAWS OF ANY STATE, LOCAL OR NON-U.S. TAXING JURISDICTION OR UNDER ANY APPLICABLE INCOME TAX TREATY.
Tax Consequences of the Reverse Stock Split
The following is a summary of certain material U.S. federal income tax consequences of the Reverse Stock Split to “U.S. stockholders” (as defined below). This summary is not intended to be a complete discussion of all possible U.S. federal income tax consequences of the Reverse Stock Split and is included for general information purposes only. Further, it does not address the Medicare tax on net investment income or any state, local or non-U.S. income or other tax consequences. For example, state and local tax consequences of the Reverse Stock Split may vary significantly as to each U.S. stockholder, depending upon the state in which such stockholder resides or does business. Also, it does not address the tax consequences to holders that are subject to special tax rules, such as partnerships, S corporations or other pass-through entities (or persons who hold our shares through such pass-through entities), banks or other financial institutions, individual retirement and other tax-deferred accounts, holders who acquired common stock pursuant to the exercise of employee stock options or otherwise as compensation, traders in securities that elect to apply a mark-to-
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market method of accounting, insurance companies, regulated investment companies, real estate investment trusts, dealers or traders in securities or currencies, former citizens or residents of the United States subject to Section 877 of the Code, corporations that accumulate earnings to avoid United States federal income tax, taxpayers subject to the alternative minimum tax, persons subject to the base erosion and anti-abuse tax, holders who actually or constructively own more than 5% of the outstanding stock of the company, personal holding companies, foreign entities, nonresident alien individuals, broker-dealers, tax-exempt entities U.S. stockholders whose functional currency is not the U.S. dollar, and holders who hold common stock as part of a hedge, straddle, constructive sale, conversion or other integrated transaction.
For purposes of this discussion, the term “U.S. stockholder” means a means a beneficial owner of Common Stock, that is, for U.S. federal income tax purposes, (i) an individual citizen or resident of the United States, (ii) a corporation, or entity treated as a corporation for U.S. federal income tax purposes, organized under the laws of the United States any state thereof or the District of Columbia, (iii) a trust if (a) a court within the United States is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust or (b) such trust has made a valid election to be treated as a U.S. person for U.S. federal income tax purposes or (iv) an estate, the income of which is subject to U.S. federal income tax regardless of its source.
The discussion below is based on the provisions of the U.S. federal income tax law as of the date hereof, which are subject to change retroactively as well as prospectively. This summary also assumes that the shares held by a U.S. stockholder prior to the Reverse Stock Split (“Old Shares”) were, and the shares owned by such stockholder immediately after the Reverse Stock Split (“New Shares”) will be, held as “capital assets,” as defined in the Code, generally property held for investment. The tax treatment of a stockholder may vary depending upon the particular facts and circumstances of such stockholder. The discussion below regarding the U.S. federal income tax consequences of the Reverse Stock Split also is not binding on the Internal Revenue Service or the courts. Accordingly, each stockholder is urged to consult with his, her or its own tax advisor with respect to the tax consequences of the Reverse Stock Split.
U.S. Federal Income Tax Consequences of the Reverse Stock Split to U.S. Stockholders
In general, and except as described below with respect to cash in lieu of fractional shares, no gain or loss should be recognized by a U.S. stockholder upon such stockholder’s exchange, or deemed exchange, of Old Shares for New Shares pursuant to the Reverse Stock Split. Accordingly, the aggregate tax basis of the New Shares received in the Reverse Stock Split should be the same as such stockholder's aggregate tax basis in the Old Shares being exchanged (excluding the portion of the tax basis allocable to any fractional share), and holding period for the New Shares received should include the holding period for the Old Shares being exchanged. Special tax basis and holding period rules may apply to holders that acquired different blocks of stock at different prices or at different times. Holders should consult their own tax advisors as to the applicability of these special rules to their particular circumstances.
Cash in Lieu of Fractional Shares
A U.S. stockholder who receives cash in lieu of a fractional share of New Shares pursuant to the Reverse Stock Split should generally recognize capital gain or loss in an amount equal to the difference between the amount of cash received and the U.S. stockholder’s tax basis in the Old Shares being exchanged that is allocated to the fractional share of New Shares. The capital gain or loss should be long term capital gain or loss if the U.S. stockholder’s holding period for such Old Shares being exchanged that is allocated to the fractional share of New Shares exceeded one year at the effective time of the Reverse Stock Split. The deductibility of net capital losses by individuals and corporations is subject to limitations. U.S. stockholders are advised to consult their tax advisors regarding the tax treatment of their receipt of cash in lieu of a fractional share of Common Stock pursuant to the Reverse Stock Split.
Information Reporting and Backup Withholding
Information returns generally will be required to be filed with the Internal Revenue Service (“IRS”) with respect to the payment of cash in lieu of a fractional share of New Shares pursuant to the Reverse Stock Split, unless a U.S. stockholder is an exempt recipient. In addition, U.S. stockholders may be subject to a backup withholding tax (at the current applicable rate of 24%) on the payment of this cash if they do not provide their taxpayer identification numbers in the manner required or otherwise fail to comply with applicable backup withholding tax rules. Backup withholding is
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not an additional tax. Any amounts withheld under the backup withholding rules may be refunded or allowed as a credit against the U.S. stockholder’s federal income tax liability, if any, provided the required information is timely furnished to the IRS. U.S. stockholders should consult their own tax advisors regarding their qualification for an exemption from backup withholding and the procedures for obtaining such an exemption.
Required Vote
The affirmative vote of a majority of the shares of our Common Stock outstanding as of the Record Date is required for approval of the Reverse Stock Split Proposal. You may vote “FOR,” “AGAINST,” or “ABSTAIN” on this proposal. Broker non-votes and abstentions have the same effect as a vote against the proposal.
Our board of directors recommends a vote “FOR” the approval of the amendment of the Company’s 2018 Equity Incentive Plan.Reverse Stock Split Proposal.
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RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
At the Annual Meeting, stockholders are being asked to ratify the appointment of Haskell & White LLP, or Haskell & White, as our independent registered public accounting firm for our fiscal year ending December 31, 2021. Stockholder ratification of the appointment of Haskell & White is not required by our bylaws or other applicable legal requirements. However, our board is submitting the appointment of Haskell & White to our stockholders because we value our stockholders’ views on our independent registered public accounting firm and as a matter of good corporate governance. If the appointment is not ratified by our stockholders, our audit committee may reconsider whether it should appoint another independent registered public accounting firm. A representative of Haskell & White is expected to attend the annual meeting, where he or she will be available to respond to appropriate questions and, if he or she desires, to make a statement.
Change of Independent Registered Public Accounting Firm
On April 2, 2021, following an evaluation of audit fees and costs and at the direction of our audit committee, we chose not to renew the engagement of Deloitte & Touche LLP, or Deloitte & Touche, which was then serving as the Company’s independent registered public accounting firm. We notified Deloitte & Touche on April 2, 2021 that it would be dismissed as our independent registered public accounting firm, effective immediately. The decision to change independent registered public accounting firms was approved by the audit committee.
Deloitte & Touche’s reports on the Company’s financial statements as of and for the fiscal years ended December 31, 2020 and 2019 did not contain any adverse opinion or a disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope, or accounting principles.
During the fiscal years ended December 31, 2020 and 2019 and the subsequent interim period through April 2, 2021, there were no disagreements, within the meaning of Item 304(a)(1)(iv) of Regulation S-K promulgated under the Exchange Act, or Regulation S-K, and the related instructions thereto, with Deloitte & Touche on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of Deloitte & Touche, would have caused it to make reference to the subject matter of the disagreements in connection with its reports. Also during this same period, there were no reportable events within the meaning of Item 304(a)(1)(v) of Regulation S-K and the related instructions thereto, except for the going concern qualification contained in Deloitte & Touche’s audit reports for the years ended December 31, 2020 and December 31, 2019.
On April 2, 2021, the audit committee approved the appointment of Haskell & White as the Company’s new independent registered public accounting firm, effective upon dismissal of Deloitte and Touche on April 2, 2021. During the fiscal years ended December 31, 2020 and 2019 and the subsequent interim period through April 2, 2021, neither we nor anyone acting on our behalf consulted with Haskell & White regarding any of the matters described in Items 304(a)(2)(i) and (ii) of Regulation S-K.
-31-
APPROVAL OF THE ADJOURNMENT PROPOSAL
General
Fees PaidIf the Company fails to receive a sufficient number of votes to approve Proposal No. 1 or Proposal No. 2, the Independent Registered Public Accounting FirmCompany may propose to adjourn the Special Meeting. The Company currently does not intend to propose adjournment at the Special Meeting if there are sufficient votes to approve Proposal Nos. 1 and 2.
The following table represents aggregate fees for services provided to us in the fiscal years ended December 31, 2020 and 2019 by Deloitte & Touche, our independent registered public accounting firm. Following the creation of our audit committee in 2018, all fees paid to the independent registered public accounting firm were pre-approved by the audit committee:
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| Fiscal Year ended |
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| 2020 |
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| 2019 |
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Audit Fees(1) |
| $ | 746,127 |
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| $ | 925,105 |
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Audit-Related Fees |
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| — |
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| — |
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Tax Fees(2) |
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| — |
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| — |
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All Other Fees(3) |
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| — |
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| — |
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Total Fees |
| $ | 746,127 |
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| $ | 925,105 |
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In 2020, there were no other professional services provided by Deloitte & Touche that would have required our audit committee to consider their compatibility with maintaining the independence of Deloitte & Touche.
Our audit committee’s policy is to pre-approve all audit and permissible non-audit services provided by the independent accountants and the related estimated fees. These services may include audit services, audit-related services, tax services and other services. Our audit committee generally pre-approves particular services or categories of services on a case-by-case basis. The independent registered public accounting firm and management are required to periodically report to our audit committee regarding the extent of services provided by the independent registered public accounting firm in accordance with these pre-approvals, and the fees for the services performed to date. Following the creation of our audit committee in 2018, all of the services of Deloitte & Touche for 2019 and 2020 described above were pre-approved by our audit committee.
Ratification of the appointment of Haskell & White as our independent registered public accounting firm for the year ending December 31, 2021 requires theThe affirmative “FOR” vote of a majority of the shares of our Common Stock present in person or represented by proxy at the annual meetingSpecial Meeting and entitled to vote oncasting votes affirmatively or negatively thereon is required for approval of the proposal.Adjournment Proposal. You may vote “FOR,” “AGAINST,” or “ABSTAIN” on this proposal. Abstentions have the same effect as a vote against the proposal. Brokerand broker non-votes will not affect the outcome of voting on this proposal.
Recommendation of the Board Recommendationof Directors
Our board of directors recommends a vote “FOR” the ratificationapproval of the appointmentAdjournment Proposal.
-24-
OTHER INFORMATION
General
The following description summarizes certain terms of Haskell & Whiteour capital stock and certain provisions of our Amended and Restated Certificate of Incorporation (the “Restated Certificate”). We have adopted our Restated Certificate and amended and restated bylaws, and this description summarizes certain of the provisions that are included in those documents. This summary does not purport to be complete and is qualified in its entirety by the provisions of our Restated Certificate and amended and restated bylaws, copies of which are filed with the SEC as exhibits to our independent registered public accounting firmAnnual Report on Form 10-K for the year endingended December 31, 2021.2021, and to the applicable provisions of Delaware law.
***
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The audit committeeOur authorized capital stock consists of 310,000,000 shares of capital stock, of which 300,000,000 shares are designated as Common Stock, $0.0001 par value per share, and 10,000,000 shares are designated as preferred stock, $0.0001 par value per share. Our board of directors is a committee of the Board of Directors comprised solely of independent directorsauthorized, without stockholder approval, except as required by the listing standards of the NYSE American, to issue shares of our preferred stock. As of July 22, 2022, there were 52,909,195 shares of Common Stock issued and rulesoutstanding and regulationsthere were 65 holders of record of our Common Stock.
Common Stock
The holders of Common Stock are entitled to one vote per share on all matters submitted to a vote of our stockholders and do not have cumulative voting rights. Accordingly, holders of a majority of the SEC. The audit committee serves as the representativeshares of Common Stock entitled to vote in any election of directors may elect all of the Boarddirectors standing for election. Subject to preferences that may be applicable to any preferred stock outstanding at the time, the holders of outstanding shares of Common Stock are entitled to receive ratably any dividends declared by our board of directors out of assets legally available. Upon our liquidation, dissolution or winding up, holders of our Common Stock are entitled to share ratably in all assets remaining after payment of liabilities and the liquidation preference of any then outstanding shares of preferred stock. Holders of Common Stock have no preemptive or conversion rights or other subscription rights. There are no redemption or sinking fund provisions applicable to the Common Stock.
Preferred Stock
Pursuant to our Restated Certificate, our board of directors has the authority, without further action by the stockholders, to issue from time to time up to 10,000,000 shares of preferred stock in one or more series. Our board of directors may designate the rights, preferences, privileges and restrictions of the preferred stock, including dividend rights, conversion rights, voting rights, redemption rights, liquidation preference, sinking fund terms and the number of shares constituting any series or the designation of any series. The issuance of preferred stock could have the effect of restricting dividends on the Common Stock, diluting the voting power of the Common Stock, impairing the liquidation rights of the Common Stock or delaying, deterring or preventing a change in control. Such issuance could have the effect of decreasing the market price of the Common Stock.
Anti-Takeover Effects of Delaware law and our Certificate of Incorporation and Bylaws
The provisions of Delaware law, our Restated Certificate and our amended and restated bylaws contain provisions that could have the effect of delaying, deferring or discouraging another person from acquiring control of our company. These provisions and certain provisions of Delaware law, which are summarized below, may have the effect of discouraging takeover bids, coercive or otherwise. They are also designed, in part, to encourage persons seeking to acquire control of us to negotiate first with our board of directors. We believe that the benefits of increased protection of our potential ability to negotiate with an unfriendly or unsolicited acquirer outweigh the disadvantages of discouraging a proposal to acquire us because negotiation of these proposals could result in an improvement of their terms.
Issuance of Undesignated Preferred Stock. As discussed above under “Description of Capital Stock-Preferred Stock,” our board of directors has the ability to designate and issue preferred stock with voting or other rights or preferences that could deter hostile takeovers or delay changes in our control or management.
-25-
Limits on Ability of Stockholders to Act by Written Consent or Call a Special Meeting. Our Restated Certificate provides that our stockholders may not act by written consent. This limit on the ability of stockholders to act by written consent may lengthen the amount of time required to take stockholder actions. As a result, the holders of a majority of our capital stock would not be able to amend the amended and restated bylaws or remove directors without holding a meeting of stockholders called in accordance with the amended and restated bylaws. In addition, our amended and restated bylaws provide that special meetings of the stockholders may be called only by the chairperson of the board, our chief executive officer or president (in the absence of a chief executive officer) or a majority of our board of directors. A stockholder may not call a special meeting, which may delay the ability of our stockholders to force consideration of a proposal or for holders controlling a majority of our capital stock to take any action, including the removal of directors.
Advance Requirements for Advance Notification of Stockholder Nominations and Proposals. Our amended and restated bylaws establish advance notice procedures with respect to its oversight of:
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The audit committee also reviews the performance of our independent registered public accounting firm, Deloitte & Touche LLP, including the qualifications and performance of the lead partner, in the annual audit of our financial statements and in assignments unrelated to the audit, and reviews and preapproves the independent registered public accounting firm’s audit and non-audit fees.
The members of the audit committee are currently Richard Mejia, Jr. (chair), Mark E. Saad and Joan Stafslien. Each of the members of the Audit Committee is an “independent director” as currently defined in the applicable New York Stock Exchange and U.S. Securities and Exchange Commission (“SEC”) rules. The Board of Directors has also determined that Mr. Mejia is an “audit committee financial expert” as described in applicable rules and regulations of the SEC.
In fulfilling its oversight responsibilities, the audit committee meets at least quarterly and provides our Board such information and materials as it may deem necessary to make our Board aware of financial matters requiring the attention of our Board. The audit committee reviews our financial disclosures and meets privately, outside the presence of our management, with our independent registered public accounting firm. The audit committee also reviewed and discussed the audited financial statements in our 2020 Annual Report with management, including a discussion of the quality and substance of the accounting principles, the reasonableness of significant judgments made in connection with the audited financial statements, and the clarity of disclosures in the financial statements. The audit committee reports on these meetings to our Board.
The audit committee has reviewed and discussed the Company’s audited financial statements with management and Deloitte & Touche LLP, the Company’s independent registered public accounting firm. The audit committee has discussed with Deloitte the matters required to be discussed by Public Company Accounting Oversight Board Auditing Standard No. 1301 (Communications with Audit Committees).
The audit committee has received and reviewed the written disclosures and the letter from Deloitte required by the applicable requirements of the Public Company Accounting Oversight Board regarding Deloitte’s communications with the audit committee concerning independence, and has discussed with Deloitte its independence.
Based on the review and discussions referred to above, the audit committee recommended to the board of directors that the Company’s audited financial statements be included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020 for filing with the Securities and Exchange Commission.
Respectfully submitted by the members of the auditor a committee of the board of directors:
Richard Mejia, Jr. (Chair)
Mark E. Saad
Joan Stafslien
The information contained indirectors. These advance notice procedures may have the above Audit Committee Report shalleffect of precluding the conduct of certain business at a meeting if the proper procedures are not be deemedfollowed and may also discourage or deter a potential acquirer from conducting a solicitation of proxies to be soliciting materialelect its own slate of directors or otherwise attempt to be filed with the Securities and Exchange Commission, nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that Ra Medical Systems, Inc., or the Company, specifically incorporates it by reference in such filing.
-33-
The namesobtain control of our executive officers and key employees, their ages, their positions with the Company and other biographical information as of April 9, 2021 are set forth below. There are currently no family relationships among any of our directors or executive officers. For a description of the prior family relationships among our directors or executive officers, see the section entitled “Certain Relationships and Related Party Transactions: Certain Family Relationships.company.”
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Jonathan Will McGuireBoard Classification. Please see the biographical information above in the section entitled “Board of Directors and Corporate Governance – Nominees for Director.”
Andrew Jackson has served as our Chief Financial Officer since April 2018. From October 2016 to April 2018, he was Chief Financial Officer for AltheaDx, Inc, a molecular diagnostics company specializing in precision medicine. From March 2014 to March 2016, Mr. Jackson held senior financial positions, including Chief Financial Officer, at Celladon Corporation, a publicly-traded, clinical stage biotechnology company. From April 2013 to March 2014 he held senior financial positions at Sapphire Energy, an industrial biotechnology company. Mr. Jackson received a MSBA in Finance in December 2006 from San Diego State University and a BSB in Accounting in June 1992 from the University of Minnesota. Mr. Jackson is also a certified public accountant (inactive).
Daniel Horwood has served as our General Counsel since October 2018 and as our Secretary since December 2018. From April 2018 until October 2018, Mr. Horwood served as Corporate Counsel to Teradata Corporation, a data and analytics, cloud analytics and consulting company. Mr. Horwood was Counsel at Wilson Sonsini Goodrich & Rosati, P.C. from November 2014 through April 2018, advising life sciences and technology companies on public offerings, private financing, mergers and acquisitions, securities compliance, public company reporting and corporate governance. Mr. Horwood began his legal career at the United States Securities and Exchange Commission, where he served as Special Counsel in the Division of Corporation Finance. Mr. Horwood received a B.A. from Connecticut College and a J.D. from the University of Pennsylvania.
-34-
Processes and Procedures for Executive Compensation
Our compensation committee assists the board in discharging the board’s responsibilities relating to oversight of the compensation of our chief executive officer and our other executive officers, including reviewing and making recommendations to the board with respect to the compensation, plans, policies and programs for our chief executive officer and our other executive officers and administering our equity compensation plans for our executive officers and employees.
Our compensation committee annually reviews the compensation, plans, policies and programs for our chief executive officer and our other executive officers. In connection therewith, our compensation committee considers, among other things, each executive officer’s performance in light of established individual and corporate goals and objectives and the recommendations of our chief executive officer. In particular, our compensation committee considers the recommendations of our chief executive officer when reviewing base salary and incentive performance compensation levels of our executive officers and when setting specific individual and corporate performance targets under our annual incentive bonus plan for our executive officers. While our chief executive officerRestated Certificate provides input on his compensation, he does not participate in compensation committee or board deliberations regarding his own compensation. Our compensation committee may delegate its authority to a subcommittee, but it may not delegate any power or authority required by agreement, law, regulation or listing standard to be exercised by the compensation committee as a whole.
In April 2018, prior to the establishment of our compensation committee,that our board of directors engaged Compensia, Inc.,are divided into three classes, one class of which is elected each year by our stockholders. The directors in each class will serve for a three-year term. Our classified board of directors may tend to discourage a third party from making a tender offer or Compensia, an independent compensation consultant,otherwise attempting to provide information, recommendationsobtain control of us because it generally makes it more difficult for stockholders to replace a majority of the directors.
Election and other advice relating to directorRemoval of Directors. Our Restated Certificate and executive compensation on an ongoing basis. In January 2021, the compensation committee replaced Compensia with Radford AON to serve as its compensation consultant. Radford continues to serve at the discretionamended and restated bylaws contain provisions that establish specific procedures for appointing and removing members of our compensation committee. Radford AON was engagedboard of directors. Under our Restated Certificate and amended and restated bylaws, vacancies and newly created directorships on our board of directors may be filled only by a majority of the directors then serving on the board of directors.
Under our Restated Certificate and amended and restated bylaws, directors may be removed only for cause by the affirmative vote of the holders of a majority of the shares then entitled to assist in helping us determine the appropriate levelvote at an election of overall compensation for our directors and executive officers, as well as assess each separate element of compensation, with a goal of ensuringdirectors.
No Cumulative Voting. The Delaware General Corporation Law provides that the compensation we offer to our directors and executive officers is competitive and fair. Our compensation committee assessed the independence of Radford AON taking into account, among other things, the enhanced independence standards and factors set forth in Exchange Act Rule 10C-1 and the applicable NYSE American listing standards, and concluded that that there were no conflicts of interest with respectstockholders are not entitled to the work that Radford AON performedright to cumulate votes in the election of directors unless our Restated Certificate provides otherwise. Our Restated Certificate and amended and restated bylaws do not expressly provide for cumulative voting. Without cumulative voting, a minority stockholder may not be able to gain as many seats on our board of directors as the compensation committee.stockholder would be able to gain if cumulative voting were permitted. The absence of cumulative voting makes it more difficult for a minority stockholder to gain a seat on our board of directors to influence our board of directors’ decision regarding a takeover.
Our named executive officers for 2020, which consistAmendment of Charter Provision. Any amendment of the above provisions in our Restated Certificate would require approval by holders of at least 66 2/3% of our principal executive officer and our next two most highly compensated executive officers who were officersthen outstanding capital stock entitled to vote, voting together as a single class.
Delaware Anti-Takeover Statute. We are subject to the provisions of December 31, 2020, were as follows:Section 203 of the Delaware General Corporation Law regulating corporate takeovers. In general, Section 203 prohibits a publicly held Delaware corporation from engaging, under certain circumstances, in a business combination with an interested stockholder for a period of three years following the date the person became an interested stockholder unless:
Will McGuire, Chief Executive Officer;prior to the date of the transaction, our board of directors approved either the business combination or the transaction that resulted in the stockholder becoming an interested stockholder;
Andrew Jackson, Chief Financial Officer;upon completion of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding for purposes of determining the voting stock outstanding, but not the outstanding voting stock owned by the interested stockholder, (1) shares owned by persons who are directors and
Daniel Horwood, General Counsel also officers and Secretary.(2) shares owned by employee stock plans in which employee participants do not have the
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The following table provides information regarding the compensation of our chief executive officer, and each of the next two most highly compensated executive officers during 2020, together referred to as our “named executive officers,” for 2020 and 2019, as applicable.
Name and Principal Position |
| Year |
| Salary ($) |
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| Bonus ($)(1) |
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| Stock Awards($)(2) |
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| Option Awards($)(3) |
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| Non-Equity Incentive Plan Compensation |
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| All Other Compensation ($)(4) |
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| Total ($) |
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Jonathan Will McGuire(5) |
| 2020 |
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| 378,846 |
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| 50,000 |
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| 609,153 |
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| 248,355 |
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| 329,063 |
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| 41,568 |
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| 1,656,985 |
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Chief Executive Officer |
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Andrew Jackson(6) |
| 2020 |
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| 385,923 |
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| 134,415 |
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| 162,975 |
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| — |
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| 173,564 |
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| 17,754 |
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| 874,631 |
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Chief Financial Officer |
| 2019 |
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| 384,808 |
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| 194,805 |
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| — |
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| 91,385 |
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| — |
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| 16,575 |
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| 687,573 |
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Daniel Horwood |
| 2020 |
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| 328,004 |
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| 78,678 |
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| 90,510 |
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| — |
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| 153,542 |
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| 16,964 |
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| 667,698 |
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General Counsel and Secretary |
| 2019 |
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| 298,275 |
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| 104,226 |
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| — |
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| 91,385 |
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| — |
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| 13,753 |
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| 507,639 |
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at or subsequent to the |
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Executive Employment Agreements and Arrangements
We entered into an offer letter with Mr. McGuire dated March 9, 2020. The offer letter provides for at-will employment. The offer letter provided for an initial base salary $500,000 and eligibility annually for a target cash bonus of 50% of his annual base salary, based on achieving performance objectives establishedthe transaction, the business combination is approved by our board of directors and authorized at an annual or a committeespecial meeting of our board of directors. For 2020, his bonus will be prorated based on his length of servicestockholders, and he will be guaranteed a bonusnot by written consent, by the affirmative vote of at least 75% of his prorated annual base salary. Mr. McGuire also received a signing bonus of $100,000 payable in equal installments within ten business days of his start date and the one-year anniversary of his start date. However, if Mr. McGuire voluntary resigns from the Company for any reason before the two-year anniversary of his start date, Mr. McGuire will be required to repay a pro rata portion66 2/3% of the signing bonus based on his lengthoutstanding voting stock that is not owned by the interested stockholder.
Generally, a business combination includes a merger, asset or stock sale, or other transaction resulting in a financial benefit to the interested stockholder. An interested stockholder is a person who, together with affiliates and associates, owns or, within three years prior to the determination of service. Mr. McGuire is also eligible for severance benefits, asinterested stockholder status, did own 15% or more fully described in “Executive Change in Control and Severance Agreements.”
Andrew Jackson
of a corporation’s outstanding voting stock. We entered into a confirmatory employment letterexpect the existence of this provision to have an anti-takeover effect with Mr. Jackson dated September 12, 2018, and effective as of the closing of our initial public offering. The confirmatory employment letter has no specific term and provides for at-will employment. The confirmatory employment letter provided for an initial base salary, effective on the closing of our initial public offering, of $348,000 and eligibility annually for a target cash bonus of 50% of his annual base salary, based on achieving performance objectives established byrespect to transactions our board of directors ordoes not approve in advance. We also anticipate that Section 203 may discourage attempts that might result in a committeepremium over the market price for the shares of Common Stock held by stockholders.
The provisions of Delaware law and the provisions of our boardRestated Certificate and amended and restated bylaws could have the effect of directors. In connection with his appointmentdiscouraging others from attempting hostile takeovers and as Interim Chief Executive Officer, on August 11, 2019,a consequence, they might also inhibit temporary fluctuations in the compensation committeemarket price of our Common Stock that often result from actual or rumored hostile takeover attempts.
These provisions might also approved an Interim Chief Executive Officer offer letter that includes an additional $6,000 per month stipend amount, less applicable tax withholdings, to Mr. Jackson duringhave the periodeffect of preventing changes in which Mr. Jackson serves as Ra Medical’s Interim Chief Executive Officer. This stipend was discontinued in March 2020, when Mr. Jackson no longer served as Interim Chief Executive Officer. Mr. Jacksonour management. It is also eligible for severance benefits, aspossible that these provisions could make it more fully describeddifficult to accomplish transactions that stockholders might otherwise deem to be in “Executive Change in Control and Severance Agreements.”their best interests.
Daniel Horwood
We entered into an offer letter with Mr. Horwood dated October 24, 2018. The offer letter has no specific term andChoice of Forum. Our Restated Certificate provides for at-will employment. The confirmatory employment letter provided for an initial base salarythat the Court of $291,000 and eligibility annually for a target cash bonus of 35% of his annual base salary, based on achieving performance objectives established by our board of directors or a committee of our board of directors. Mr. Horwood is also eligible for severance benefits, as more fully described in “Executive Change in Control and Severance Agreements.”
Executive Change in Control and Severance Agreements
Our board of directors has approved a change in control and severance agreement for certain of our executive officers, including our named executive officers, which agreements provide for certain severance and change in control benefits as described below. Each change in control and severance agreement supersedes any prior agreement or arrangement the executive officer may have had with us that provides for severance and/or change in control payments or benefits.
Each change in control and severance agreement has an initial term of three years, starting on the effective dateChancery of the agreement. OnState of Delaware will be the third anniversaryexclusive forum for: (i) any derivative action or proceeding brought on our behalf; (ii) any action asserting a breach of the effective date of the agreement (the fifth anniversary in the case of Mr. McGuire), the agreement will renew automatically for additional one year terms unless either party provides the other party with written notice of nonrenewal at least one year prior to the date of automatic renewal. However, iffiduciary duty; (iii) any action asserting a change in control (as defined in the applicable agreement) occurs when there are fewer than 12 months remaining during the initial term or during an additional term, the term of the change in control and severance agreement will extend automatically through the date that is 12 months following the date of the change in control.
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If an executive officer’s employment is terminated outside the period beginning three months before a change in control and ending 12 months following a change in control, or the Change in Control Period either (1) by the Company (or any of its subsidiaries) without “cause” (excluding by reason of death or disability) or (2) by the executive officer for “good reason” (as such terms are defined in the executive officer’s change in control and severance agreement), the executive officer will receive the following benefits if he or she timely signs and does not revoke a release of claims in our favor:
a lump-sum payment equal to: (1) 18 months for Mr. McGuire, (2) 12 months for Mr. Jackson and (3) six months for Mr. Horwood, of the executive officer’s annual base salary as in effect immediately prior to such termination (or if such termination is due to a resignation for good reason based on a material reduction in base salary, then as in effect immediately prior to the reduction);
for Mr. McGuire, a lump sum payment equal to the pro-rata amount of the executive’s annual bonus for the fiscal year in which the executive terminates employment, based on actual achievement and pro-rated based on the number of days the executive was employed by the Company during such year; and
payment of premiums for coverageclaim against us arising under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, or COBRA, for the executive officer and the executive officer’s eligible dependents, if any, for up to: (1) 18 months for Mr. McGuire, (2) 12 months for Mr. Jackson and (3) six months for Mr. Horwood, , or taxable monthly payments for the equivalent period in the event payment of the COBRA premiums would violate or be subject to an excise tax under applicable law.
If, within the Change in Control Period, the executive officer’s employment is terminated either (1) by the Company (or any of its subsidiaries) without cause (excluding by reason of death or disability) or (2) by the executive officer for good reason, the executive officer will receive the following benefits if he or she timely signs and does not revoke a release of claims in our favor.
a lump-sum payment equal to: 1) 24 months for Mr. McGuire and 12 months for Messrs. Jackson and Horwood of the executive officer’s annual base salary as in effect immediately prior to such termination (or if such termination is due to a resignation for good reason based on a material reduction in base salary, then as in effect immediately prior to the reduction) or if greater, at the level in effect immediately prior to the change in control);
a lump-sum payment equal to: (1) 150% for Mr. McGuire and (2) 100% for Messrs. Jackson and Horwood of the executive officer’s target annual bonus as in effect for the fiscal year in which such termination occurs;
payment of premiums for coverage under COBRA for the executive officer and the named executive officer’s eligible dependents, if any, for up to; (1) 24 months for Mr. McGuire and 12 months for Messrs. Jackson and Horwood, or taxable monthly payments for the equivalent period in the event payment of the COBRA premiums would violate or be subject to an excise tax under applicable law; and
100% accelerated vesting and exercisability of all outstanding equity awards and, in the case of an equity award with performance-based vesting, all performance goals and other vesting criteria generally will be deemed achieved at target.
If any of the amounts provided for under these change in control and severance agreements or otherwise payable to our named executive officers would constitute “parachute payments” within the meaning of Section 280G of the Internal Revenue Code and could be subject to the related excise tax, the executive officer would be entitled to receive either full payment of benefits under his or her change in control or severance agreement or such lesser amount which would result in no portion of the benefits being subject to the excise tax, whichever results in the greater amount of after-tax benefits to the executive officer. The change in control and severance agreements do not require us to provide any tax gross-up payments.
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Outstanding Equity Awards at 2020 Fiscal Year-End
The following table sets forth certain information concerning outstanding equity awards for our named executive officers at December 31, 2020:
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| Option Awards |
| Stock Awards |
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Name and Position |
| Number of Securities Underlying Unexercised Options (#) Exercisable |
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| Number of Securities Underlying Unexercised Options (#) Unexercisable |
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| Option Exercise Price ($) |
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| Option Expiration Date |
| Number of Shares or Units of Stock That Have Not Vested (#) |
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| Market Value of Shares or Units of Stock That Have Not Vested($) (1) |
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Jonathan Will McGuire |
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| 3,375 |
| (2) |
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| 14,625 |
|
|
| $ | 25.50 |
|
| 3/30/2030 |
|
|
|
|
|
|
|
|
|
Chief Executive Officer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 4,375 |
| (3) |
| $ | 32,506 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 104,254 |
| (4) |
| $ | 774,607 |
|
Andrew Jackson |
|
| 9,667 |
| (5) |
|
| 1,933 |
|
|
| $ | 723.50 |
|
| 6/4/2028 |
|
|
|
|
|
|
|
|
|
Chief Financial Officer |
|
| 5,562 |
|
|
|
| — |
|
|
| $ | 30.50 |
|
| 12/3/2029 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 35,276 |
| (4) |
| $ | 262,101 |
|
Daniel Horwood |
|
| 5,562 |
|
|
|
| — |
|
|
| $ | 30.50 |
|
| 12/3/2029 |
|
|
|
|
|
|
|
|
|
General Counsel and Secretary |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 369 |
| (6) |
| $ | 2,742 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 19,591 |
| (4) |
| $ | 145,561 |
|
|
|
|
|
|
|
|
|
|
|
Perquisites, Health, Welfare and Retirement Benefits
Our named executive officers are eligible to participate in our employee benefit plans, including our medical, dental, vision, group life, disability and accidental death and dismemberment insurance plans, in each case on the same basis as all of our other employees. We provide a 401(k) savings plan to our employees, including our current named executive officers, as discussed in the section below entitled “401(k) Savings Plan.”
We generally do not provide perquisites or personal benefits to our named executive officers, except in limited circumstances and as noted in the Summary Compensation Table above. Our board of directors may elect to adopt qualified or non-qualified benefit plans in the future if it determines that doing so is in our best interests.
-39-
We maintain a tax-qualified retirement plan that provides eligible employees, including named executive officers, with an opportunity to save for retirement on a tax advantaged basis. All participants’ interests in their deferrals are 100% vested when contributed. Pre-tax and after-tax contributions are allocated to each participant’s individual account and are then invested in selected investment alternatives according to the participant’s directions. The Company, in its sole discretion, may make certain contributions to the plan. The 401(k) plan is intended to qualify under Sections 401(a) and 501(a) of the Internal Revenue Code. As a tax-qualified retirement plan, contributions to the 401(k) plan and earnings on those contributions are not taxable to the employees until distributed from the 401(k) plan, and all contributions, if any, are deductible by us when made. The Company began matching contributions to this plan for all eligible employees in 2019 when the 401(k) plan was implemented.
Equity Compensation Plan Information
The following table summarizes information about our equity compensation plans as of December 31, 2020 with respect to shares of our common stock that may be issued under our existing equity compensation plans.
Plan Category |
| Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights (a) |
|
| Weighted- average Exercise Price of Outstanding Options, Warrants and Rights (b)(1) |
|
| Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (excluding securities reflected in column (a)(c) |
| |||
Equity compensation plans approved by security holders(2)(3)(4): |
|
| 124,171 |
|
| $ | 363.31 |
|
|
| 110,329 |
|
Equity compensation plans not approved by security holders: |
|
| 18,000 |
|
| $ | 25.50 |
|
|
| 9,000 |
|
Total |
|
| 142,171 |
|
| $ | 320.54 |
|
|
| 119,329 |
|
|
|
|
|
|
|
|
|
-40-
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
The following is a summary of transactions since January 1, 2019 to which we have been a party in which the amount involved exceeded $120,000 and in which any of our executive officers, directors, promoters or beneficial holders of more than 5% of our capital stock had or will have a direct or indirect material interest, other than compensation arrangements which are described under the section of this proxy statement titled “Executive Compensation.”
Melissa Burstein, the wife of our former Chief Executive Officer, Dean Irwin, served as Executive Vice President until March 2019, our Vice President until November 2019, and was a member of our board of directors until March 2019. For the year ended December 31, 2019, Ms. Burstein received a salary of $237,561, a $1,500 car allowance, a $1,939 reimbursement for COBRA premiums, $8,882 for a health insurance plan paid for by us on behalf of Ms. Burstein, and a severance payment of $230,000.
Ray Hartman, the brother-in-law of Mark Saad, is a partner of Cooley LLP. For the year ended December 31, 2019, we paid Cooley LLP $403,827 for legal services rendered, in a matter for which Cooley LLP no longer represents us.
Indemnification of Officers and Directors
We have entered, and intend to continue to enter, into separate indemnification agreements with each of our directors and executive officers, in addition to the indemnification provided for inDelaware General Corporation Law, our amended and restated certificate of incorporation and amended and restated bylaws. The indemnification agreements andor our amended and restated certificatebylaws; (iv) any action to interpret, apply, enforce or determine the validity of incorporation andour Restated Certificate or our amended and restated bylaws requirebylaws; and (v) any action asserting a claim against us that is governed by the internal affairs doctrine. Our Restated Certificate further provides that the federal district courts of the United States will be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act.
Transfer Agent and Registrar
The transfer agent and registrar for our Common Stock is American Stock Transfer & Trust Company, LLC. The transfer agent’s address is 6201 15th Avenue, Brooklyn, New York 11219, and its telephone number is 718-921-8300. Our shares of Common Stock are issued in uncertificated form only, subject to indemnify our directors, executive officers and certain controlling persons to the fullest extent permitted by Delaware law.limited circumstances.
Policies and Procedures for Transactions with Related PersonsMarket Listing
Our audit committee hasCommon Stock is listed on the primary responsibility for reviewing and approving or disapproving “related party transactions,” which are transactions between us and related persons in which the aggregate amount involved exceeds or may be expected to exceed $120,000 and in which a related person has or will have a direct or indirect material interest. The charter of our audit committee provides that our audit committee shall review and approve or disapprove in advance any related party transaction.
Our board of directors and audit committee have adopted a formal written policy that our executive officers, directors, holders of more than 5% of any class of our voting securities, and any member of the immediate family of any of the foregoing persons, are not permitted to enter into any transaction with us for which disclosure would be required under Item 404 of Regulation S-K, referred to as a related person transaction, without the review and approval or ratification of our audit committee, or other independent members of our board of directors if it is inappropriate for our audit committee to review such transaction due to a conflict of interest. Any related person transaction must be presented to our audit committee for review, consideration and approval or ratification. In approving or rejecting any such related person transaction, our audit committee is to consider the relevant facts and circumstances available and deemed relevant to the audit committee, including, but not limited to, whether the transaction is on terms no less favorable than terms generally available to an unaffiliated third partyNYSE American under the same or similar circumstances and the extent of the related person’s interest in the transaction.symbol “RMED.”
-27-
-41-
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to the beneficial ownership of our common stock as of April 9, 2021August 5, 2022 by:
each person, or group of affiliated persons, who we know to beneficially own more than 5% of our common stock;
each of our named executive officers;
each of our directors; and
all of our executive officers and directors as a group.
The percentage ownership information shown in the table is based on an aggregate of 3,255,98054,514,828 shares of our common stock outstanding as of April 9, 2021.August 5, 2022.
We have determined beneficial ownership in accordance with the rules of the Securities and Exchange Commission. These rules generally attribute beneficial ownership of securities to persons who possess sole or shared voting power or investment power with respect to those securities. In addition, the rules include shares of common stock issuable pursuant to: (i) the exercise of stock options that are either immediately exercisable or exercisable on or before June 8, 2021,October 4, 2022, which is 60 days after April 9, 2021August 5, 2022 (ii) RSUs held by that person that will vest within 60 days of April 9, 2021August 5, 2022 and (iii) outstanding warrants to purchase common stock held by that person that is either immediately exercisable or exercisable on or before June 8, 2021,October 4, 2022, which is 60 days after April 9, 2021.August 5, 2022. These shares are deemed to be outstanding and beneficially owned by the person holding those options and warrants for the purpose of computing the percentage ownership of that person, but they are not treated as outstanding for the purpose of computing the percentage ownership of any other person.
Unless otherwise noted below, the address of each of the individuals and entities named in the table below is c/o Ra Medical Systems, Inc., 2070 Las Palmas Drive, Carlsbad, California 92011. Beneficial ownership representing less than 1% is denoted with an asterisk (*).
-42-
Unless otherwise indicated, the persons or entities identified in this table have sole voting and investment power with respect to all shares shown as beneficially owned by them, subject to applicable community property laws.
|
| Number of Shares of Common Stock Beneficially Owned |
|
| Percentage of Stock Beneficially Owned |
| ||
5% Stockholders: |
|
|
|
|
|
|
|
|
Royce & Associates, LP (1) |
|
| 302,583 |
|
|
| 9.3 | % |
Laurence W. Lytton (2) |
|
| 240,952 |
|
|
| 7.4 | % |
Directors and Named Executive Officers: |
|
|
|
|
|
|
|
|
Jonathan Will McGuire (3) |
|
| 115,488 |
|
|
| 3.5 | % |
Andrew Jackson (4) |
|
| 55,046 |
|
|
| 1.7 | % |
Daniel Horwood (5) |
|
| 27,490 |
|
| * |
| |
Martin Colombatto (6) |
|
| 30,510 |
|
| * |
| |
William R. Enquist, Jr. (7) |
|
| 21,666 |
|
| * |
| |
Richard Mejia, Jr. (8) |
|
| 19,837 |
|
| * |
| |
Susanne Meline (9) |
|
| 119,267 |
|
|
| 3.6 | % |
Mark E. Saad (10) |
|
| 15,624 |
|
| * |
| |
Joan Stafslien (11) |
|
| 8,410 |
|
| * |
| |
All directors and executive officers as a group (9 persons)(12) |
|
| 413,338 |
|
|
| 12.3 | % |
|
| Number of Shares of Common Stock Beneficially Owned |
|
| Percentage of Stock Beneficially Owned |
| ||
5% Stockholders: |
|
|
|
|
|
|
|
|
N/A |
|
|
|
|
|
|
|
|
Directors and Named Executive Officers: |
|
|
|
|
|
|
|
|
Jonathan Will McGuire (1) |
|
| 74,130 |
|
| * |
| |
Andrew Jackson (2)(8) |
|
| 10,261 |
|
| * |
| |
Martin Colombatto (3) |
|
| 34,619 |
|
| * |
| |
Richard Mejia, Jr. (4) |
|
| 23,946 |
|
| * |
| |
Susanne Meline (5) |
|
| 124,601 |
|
| * |
| |
Joan Stafslien (6) |
|
| 13,077 |
|
| * |
| |
All directors and executive officers as a group (6 persons)(7) |
|
| 280,634 |
|
|
| 0.5 | % |
(1) |
|
|
|
| Includes |
-28-
| Includes |
|
|
| Includes (i) 3,680 shares of common stock subject to options exercisable within 60 days of |
|
|
-43-
| Includes 2,000 shares of common stock subject to options exercisable within 60 days of |
| Includes (i) 77,459 shares of common stock subject to warrants exercisable within 60 days of |
|
|
| Includes 4,410 shares held of record by Thomas & Joan Stafslien Family B Trust dated 6/17/1997. Joan Stafslien, a member of our board of directors, serves as trustee of the Thomas & Joan Stafslien Family B Trust. |
| Includes |
(8) | Mr. Jackson resigned from the Company effective May 25, 2022. |
-44-
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires our executive officers and directors, and persons who own more than 10% of a registered class of our equity securities, to file reports of ownership and changes of ownership on Forms 3, 4 and 5 with the SEC. Such directors, executive officers and 10% stockholders are required by SEC regulations to furnish us with copies of all Section 16(a) forms they file.
Based solely on our review of the copies of such forms, and written representations that we have received from certain reporting persons that they filed all required reports, we believe that all of our officers, directors and greater than 10% stockholders complied with all Section 16(a) filing requirements applicable to them with respect to transactions during 2020.
Fiscal Year 2020 Annual Report
Our financial statements for our fiscal year ended December 31, 2020 are included in our 2020 Annual Report on Form 10-K filed with the Securities and Exchange Commission, or the SEC, on March 17, 2021, or our Annual Report, which we will make available to stockholders at the same time as this proxy statement. This proxy statement and our Annual Report are posted on our website, www.ramed.com, under the investors tab and at the website of the SEC, at www.sec.gov. You may also obtain a copy of our Annual Report without charge by sending a written request to Ra Medical Systems, Inc., 2070 Las Palmas Drive, Carlsbad, California 92011, Attention: Corporate Secretary.
We maintain a website at www.ramed.com. Information contained on, or that can be accessed through, our website is not intended to be incorporated by reference into this proxy statement, and references to our website address in this proxy statement are inactive textual references only.
A copy of our bylaws may be obtained by accessing Ra Medical Systems’ filings on the SEC’s website at www.sec.gov. You may also contact our corporate secretary at our principal executive offices for a copy of the relevant bylaw provisions regarding the requirements for making stockholder proposals and nominating director candidates.
-45--29-
PROPOSALS OF STOCKHOLDERS FOR 2022THE 2023 ANNUAL MEETING
Stockholders may present proper proposals for inclusion in our proxy statement and for consideration at the next2023 annual meeting of stockholders by submitting their proposals in writing to our corporate secretary so that they are received at our principal executive offices not later than the close of business (5:30 p.m. Pacific Time)time) on December 31, 2021.2022. In addition, stockholder proposals must comply with the requirements of Rule 14a-8 under the Exchange Act regarding the inclusion of stockholder proposals in company-sponsored proxy materials. Pursuant to the rules promulgated by the SEC, simply submitting a proposal does not guarantee that it will be included.
InFor any proposal that is not submitted for inclusion in next year’s proxy statement but is instead sought to be presented directly at the 2023 annual meeting of shareholders, in order to be properly brought before our 20222023 annual meeting of stockholders, the stockholder must have given timely notice of such proposal or nomination, in proper written form. To be timely for our 20222023 annual meeting of stockholders, a stockholder’s notice of a matter that the stockholder wishes to present, or the person or persons the stockholder wishes to nominate as a director, must be delivered to our corporate secretary at our principal executive offices not less than 45 days and not more than 75 days before the one-year anniversary of the date on which we first mailed our proxy materials or a notice of availability of proxy materials (whichever is earlier) for the preceding year’s annual meeting. As a result, any written notice given by a stockholder pursuant to these provisions of our bylaws must be received by our corporate secretary at our principal executive offices:
not earlier than February 14, 2022,5, 2023, and
not later than March 16, 2022.7, 2023.
In the event that we hold our 20222023 annual meeting of stockholders more than 30 days before or more than 60 days after the one-year anniversary date of the 2021our 2022 annual meeting of stockholders, or Friday, June 3, 2022, then such written notice must be received not earlier than the close of business on the 120th day prior to such annual meeting and not later than the close of business on the later of the following two dates:
the 90th day prior to such annual meeting, or
the 10th day following the day on which public announcement of the date of such meeting is first made.
To be in proper written form, a stockholder’s notice and/or proposals must include the specified information concerning the proposal or nominee as described in our bylaws. We reserve the right to reject, rule out of order, or take other appropriate action with respect to any proposal that does not comply with these and other applicable requirements. Notices and/or proposals should be addressed to:
Ra Medical Systems, Inc.
Attention: Corporate Secretary
2070 Las Palmas Drive
Carlsbad, California 92011
Tel: (760) 804-1648
In addition, for our 2023 annual meeting of stockholders, we will be required under new SEC Rule 14a-19 to include on our proxy card all nominees for director for whom we have received notice under the rule, which must be received no later than 60 calendar days prior to the anniversary of the previous year’s annual meeting. For informationany such director nominee to be included on howour proxy card for our 2023 annual meeting of stockholders, the Corporate Secretary must receive notice under SEC Rule 14a-19 no later than April 4, 2023. Please note that the notice requirement under SEC Rule 14a-19 is in addition to accessthe applicable notice requirements under the advance notice provisions of our Bylaws described above.
A copy of our bylaws please seemay be obtained by accessing Ra Medical Systems’ filings on the section entitled “AvailabilitySEC’s website at www.sec.gov. You may also contact our corporate secretary at our principal executive offices for a copy of Bylaws,”the relevant bylaw provisions regarding the requirements for making stockholder proposals and for additional information regarding stockholder recommendations fornominating director candidates, please see the section entitled “Board of Directors and Corporate Governance – Stockholder Recommendations for Nominations to our Board of Directors.”candidates.
*********
We know of no other matters to be submitted at the 2021 annual meeting. If any other matters properly come before the 2021 annual meeting, it is the intention of the persons named in the proxy to vote the shares they represent as the board of directors may recommend. Discretionary authority with respect to such other matters is granted by a properly submitted proxy.-30-
It is important that your shares be represented at the 2021 annual meeting,Special Meeting, regardless of the number of shares that you hold. You are, therefore, urged to vote as promptly as possible to ensure your vote is recorded.
THE BOARD OF DIRECTORS |
|
Carlsbad, California |
|
-31-
Annex A
RA MEDICAL SYSTEMS, INC.
CERTIFICATE OF AMENDMENT
TO AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
Ra Medical Systems, Inc., a corporation organized and existing under the laws of the State of Delaware (the “Corporation”), certifies that:
| 1.
|
|
| 2. | This Certificate of
|
3. |
|
“Authorized Capital Stock. The total number of shares of all classes of capital stock that the Corporation is authorized to issue is three hundred ten million shares, consisting of three hundred million shares of Common Stock, par value $0.0001 per share (the “Common Stock”), and ten million shares of Preferred Stock, par value $0.0001 per share (the “Preferred Stock”).
Effective immediately upon the filing and effectiveness of this Certificate of Amendment (the “Effective Time”), each twenty to fifty shares of Common Stock of the Company, par value $0.0001 per share, that are issued and outstanding or held in treasury on the Effective Time shall be reverse split and combined into one (1) validly issued, fully paid and non-assessable share of Common Stock of the Company, par value $0.0001 per share, with the exact ratio within the twenty to fiftyrange to be determined by the Board of Directors of the Corporation (or a duly authorized committee thereof) prior to the Effective Time and publicly announced by the Corporation, subject to the treatment of fractional share interests as described below (the “Reverse Stock Split”). The Reverse Stock Split shall occur automatically without any further action by the Corporation or by the holders of the shares affected thereby and whether or not the certificates representing such shares immediately prior to the Effective Time (the “Old Certificates”) are surrendered to the Corporation. The Reverse Stock Split shall also apply to any outstanding securities or rights convertible into, or exchangeable or exercisable for, Common Stock of the Corporation. No fractional shares shall be issued upon the exchange and subdivision. Stockholders who otherwise would be entitled to receive a fractional share of Common Stock shall be entitled to receive their pro rata portion of the net proceeds obtained from the aggregation and sale by the exchange agent of the fractional shares resulting from the Reverse Stock Split (reduced by any customary brokerage fees, commissions and other expenses). The disposition of fractional share interests shall be effected by the Corporation by having (x) the exchange agent of the Corporation aggregate such fractional interests, (y) the shares resulting from the aggregation sold and (z) the net proceeds received from the sale allocated and distributed among the holders of the fractional interests on the basis of the relative fractional interests held by stockholders as a result of the Reverse Stock Split. Following the Effective Time, each Old Certificate shall thereafter represent that number of shares of Common Stock into which the shares of Common Stock represented by the Old Certificate shall have been combined and exchanged, subject to the elimination of fractional share interests as described above, until such time as such Old Certificate has been surrendered to the Corporation.
-32-
4. |
|
| 5. |
|
[signature page follows]
-33-
IN WITNESS WHEREOF, Ra Medical Systems, Inc. has caused this Certificate of Amendment of Amended and Restated Certificate of Incorporation to be signed by Jonathan Will McGuire, a duly authorized officer of the Corporation, on [•], 202[•]. The Administrator may at any time amend, alter, suspend or terminate the Plan.
(b)Stockholder Approval. The Company will obtain stockholder approval of any Plan amendment to the extent necessary and desirable to comply with Applicable Laws.
(c)Effect of Amendment or Termination. No amendment, alteration, suspension or termination of the Plan will materially impair the rights of any Participant, unless mutually agreed otherwise between the Participant and the Administrator, which agreement must be in writing and signed by the Participant and the Company. Termination of the Plan will not affect the Administrator’s ability to exercise the powers granted to it hereunder with respect to Awards granted under the Plan prior to the date of such termination.
20.Conditions Upon Issuance of Shares.
(a)Legal Compliance. Shares will not be issued pursuant to an Award unless the exercise of such Award and the issuance and delivery of such Shares will comply with Applicable Laws and will be further subject to the approval of counsel for the Company with respect to such compliance.
(b)Investment Representations. As a condition to the exercise of an Award, the Company may require the person exercising such Award to represent and warrant at the time of any such exercise that the Shares are being purchased only for investment and without any present intention to sell or distribute such Shares if, in the opinion of counsel for the Company, such a representation is required.
21.Inability to Obtain Authority. The inability of the Company to obtain authority from any regulatory body having jurisdiction or to complete or comply with the requirements of any registration or other qualification of the Shares under any U.S. federal or state law, any non-U.S. law, or the rules and regulations of the Securities and Exchange Commission, the stock exchange on which Shares of the same class are then listed, or any other governmental or regulatory body, which authority, registration, qualification or rule compliance is deemed by the Company’s counsel to be necessary or advisable for the issuance and sale of any Shares hereunder, will relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority, registration, qualification or rule compliance will not have been obtained.
22.Clawback. The Administrator may specify in an Award Agreement that the Participant’s rights, payments, and/or benefits with respect to an Award will be subject to reduction, cancellation, forfeiture, and/or recoupment upon the occurrence of certain specified events, in addition to any applicable vesting, performance or other conditions and restrictions of an Award. Notwithstanding any provisions to the contrary under this Plan, an Award granted under the Plan shall be subject to the Company’s clawback policy (if any) as may be established and/or amended from time to time. The Board may require a Participant to forfeit or return to and/or reimburse the Company all or a portion of the Award and/or Shares issued under the Award, any amounts paid under the Award, and any payments or proceeds paid or provided upon disposition of the Shares issued under the Award, pursuant to the terms of such Company policy or as necessary or appropriate to comply with Applicable Laws.
23.Stockholder Approval. The Plan will be subject to approval by the stockholders of the Company within twelve (12) months after the date the Plan is adopted by the Board. Such stockholder approval will be obtained in the manner and to the degree required under Applicable Laws.
YOUR VOTE IS IMPORTANT! PLEASE VOTE BY: Ra Medical Systems, Inc. Annual Meeting of Stockholders For Stockholders as of record on April 09, 2021 TIME: Friday, June 04, 2021 09:00 AM, Local Time PLACE: The Annual Meeting will be held live via the Internet Please visit www.proxydocs.com/RMED for more details. This proxy is being solicited on behalf of the Board of Directors The undersigned hereby appoints Jonathan Will McGuire, Andrew Jackson and Daniel Horwood, and each or either of them, as the true and lawful attorneys of the undersigned, with full power of substitution and revocation, and authorizes them, and each of them, to vote all the shares of capital stock of Ra Medical Systems, Inc. which the undersigned is entitled to vote at said meeting and any adjournment thereof upon the matters specified and upon such other matters as may be properly brought before the meeting or any adjournment thereof, conferring authority upon such true and lawful attorneys to vote in their discretion on such other matters as may properly come before the meeting and revoking any proxy heretofore given. THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS GIVEN, SHARES WILL BE VOTED IDENTICAL TO THE BOARD OF DIRECTORS RECOMMENDATION. This proxy, when properly executed, will be voted in the manner directed herein. In their discretion, the Named Proxies are authorized to vote upon such other matters that may properly come before the meeting or any adjournment or postponement thereof. You are encouraged to specify your choice by marking the appropriate box (SEE REVERSE SIDE) but you need not mark any box if you wish to vote in accordance with the Board of Directors’ recommendation. The Named Proxies cannot vote your shares unless you sign (on the reverse side) and return this card. PLEASE BE SURE TO SIGN AND DATE THIS PROXY CARD AND MARK ON THE REVERSE SIDE P.O. BOX 8016, CARY, NC 27512-9903 INTERNET Go To: www.proxypush.com/rmed • Cast your vote online • Have your Proxy Card ready • Follow the simple instructions to record your vote PHONE Call 1-855-673-0647 • Use any touch-tone telephone • Have your Proxy Card ready • Follow the simple recorded instructions MAIL • Mark, sign and date your Proxy Card • Fold and return your Proxy Card in the postage-paid envelope provided
Ra Medical Systems, Inc. | |
By: | |
Name: | Jonathan Will McGuire |
Title | Chief Executive Officer |
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PROXY RA MEDICAL SYSTEMS, INC. Special Meeting of Stockholders September 20, 2022 at 8:00 a.m. Pacific time THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF RA MEDICAL SYSTEMS, INC. THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED The undersigned acknowledges receipt of the Notice of Special Meeting of Stockholders and the Proxy Statement and hereby appoints Will McGuire and Brian Conn or either of them acting alone, with full power of substitution, as proxies to represent and to vote, as designated on the reverse side of this proxy, all of the shares of common stock of Ra Medical Systems, Inc. that the undersigned is entitled to vote at the Special Meeting of Stockholders to be held on September 20, 2022 at 8:00 a.m. Pacific time, conferring authority upon such true and lawful attorneys to vote in their discretion on such other matters as may properly come before the meeting and revoking any proxy heretofore given. The Special Meeting will be held in virtual only format. In order to attend the meeting you must first register at www.viewproxy.com/RMED/2022 by 8:59 p.m. Pacific time on September 19, 2022. After registering you will receive an e-mail containing a unique link and password that will enable you to attend the meeting and vote at the meeting and at any adjournment or postponement thereof. THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN. IF NO SUCH DIRECTION IS MADE, THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE BOARD OF DIRECTORS’ RECOMMENDATIONS. (Continued and to be marked, dated and signed on other side) PLEASE DETACH ALONG PERFORATED LINE AND MAIL IN THE ENVELOPE PROVIDED. Important Notice Regarding the Availability of Proxy Materials for the Special Meeting to be held on September 20, 2022: The Proxy Statement is available at: http://viewproxy.com/RMED/2022
Please mark your votes like this The Board of Directors recommends a vote “FOR” the following: Proposal 1. To approve, in accordance with NYSE American Company Guide Section 713(a), the issuance of more than 19.99% of our outstanding common stock, par value $0.0001 per share (“Common Stock”) upon the exercise of our Series C Common Stock Purchase Warrants, with the right for such potential exercise to occur immediately following the date upon which our stockholders approve this proposal. FOR AGAINST ABSTAIN DO NOT PRINT IN THIS AREA (Stockholder Name & Address Data) Address Change/Comments: (If you noted any Address Changes and/or Comments above, please mark box.) Please indicate if you plan to attend this meeting CONTROL NUMBER The Board of Directors recommends a vote “FOR” the following: Proposal 2. To approve the amendment to our Amended and Restated Certificate of Incorporation, as amended, to effect a reverse stock split of our outstanding shares of Common Stock at a stock split ratio of between 1-for-20 and 1-for-50, inclusive, which ratio will be selected at the sole discretion of our Board of Directors (or a duly authorized committee thereof) at any whole number in the above range (the “Reverse Stock Split”), with cash paid for any fractional shares that would otherwise be issued as a result of the Reverse Stock Split; provided, that the Board may abandon the Reverse Stock Split in its sole discretion. FOR AGAINST ABSTAIN Proposal 3. To approve the adjournment of the Special Meeting, if necessary, to continue to solicit votes for Proposal Nos. 1 and 2. FOR AGAINST ABSTAIN Date Signature Signature (if held jointly) NOTE: This proxy should be marked, dated and signed by each stockholder exactly as such stockholder’s name appears hereon, and returned promptly in the enclosed envelope. When shares are held jointly, each holder should sign. When signing as an executor, administrator, attorney, trustee or guardian, please give full title as such. If the signatory is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If the signatory is a partnership, please sign in the partnership name by authorized person. PLEASE DETACH ALONG PERFORATED LINE AND MAIL IN THE ENVELOPE PROVIDED. CONTROL NUMBER PROXY VOTING INSTRUCTIONS Please have your 11 digit control number ready when voting by Internet or Telephone INTERNET Vote Your Proxy on the Internet: Go to www.FCRvote.com/RMED Have your proxy card available when you access the above website. Follow the prompts to vote your shares. TELEPHONE Vote Your Proxy by Phone: Call 1-866-402-3905 Use any touch-tone telephone to vote your proxy. Have your proxy card available when you call. Follow the voting instructions to vote your shares. MAIL Vote Your Proxy by Mail: Mark, sign, and date your proxy card, then detach it, and return it in the postage-paid envelope provided.