UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. 1)2)
Filed by the Registrant x | |||
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Filed by a Party other than the Registrant o | |||
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Check the appropriate box: | |||
x | Preliminary Proxy Statement | ||
o | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | ||
o | Definitive Proxy Statement | ||
o | Definitive Additional Materials | ||
o | Soliciting Material under §240.14a-12 |
CURE PHARMACEUTICAL HOLDING CORP. | |||
(Name of Registrant as Specified in Its Charter) | |||
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant) |
Payment of Filing Fee (Check the appropriate box): | |||
x | No fee required. | ||
o | Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. | ||
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| (2) | Aggregate number of securities to which transaction applies: | |
| (3) | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): | |
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o | Fee paid previously with preliminary materials. | ||
o | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. | ||
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CURE PHARMACEUTICAL HOLDING CORP.
1620 Beacon Place, Oxnard, California 93033
NOTICE OF 2019 ANNUAL MEETING OF SHAREHOLDERS
To Be Held July 15, 2019
To the Shareholders of Cure Pharmaceutical Holding Corp.:
Notice is hereby given that the 2019 Annual Meeting of shareholders (the “Annual Meeting”) of Cure Pharmaceutical Holding Corp. (the “Company”) will be held at 11:00 a.m. (Pacific Time), on July 15, 2019 at 1620 Beacon Place, Oxnard, California 93033 to consider and voting on the following matters:
(1) | To elect the seven director nominees named in the accompanying proxy statement to serve until the 2019 annual meeting of stockholders and until successors are duly elected or until the earliest of their removal or resignation (“Proposal 1”); |
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(2) | To approve a proposal to reincorporate the Company from the State of Nevada to the State of Delaware (“Proposal 2”); |
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(3) | To approve a proposal to amend the Company’s Articles of Incorporation to increase the number of authorized shares of the Company’s common stock by 75,000,000 shares to 150,000,000 (“Proposal 3”); |
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(4) | To approve an amendment to the Company’s 2017 Equity Incentive Plan to increase the number of shares of the Company’s common stock available for awards thereunder by an additional 5,000,000 shares to a total of 10,000,000 shares (“Proposal 4”); |
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(5) | To approve an amendment to the Company’s 2017 Equity Incentive Plan to revise Section 5.5 of the 2017 Equity Incentive Plan relating to Nonemployee Director Award Limits (“Proposal 5”). |
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(6) | To ratify a proposal for the selection of RBSM LLP as the Company’s independent registered public accounting firm for 2019 (“Proposal 6”) |
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(7) | To transact any other business which may properly come before the Annual Meeting or any adjournment thereof. |
Only those stockholders of record as of the close of business on June 21, 2019, the record date for the Annual Meeting, will be entitled to vote at the Annual Meeting and any adjournments or postponements thereof.
To make it easier for you to vote, Internet, fax, e-mail, and mail voting, as well as in-person voting, are available. The instructions in the proxy materials, the proxy card describe how to use these convenient services.
You are cordially invited to attend the meeting in person. Whether or not you expect to attend the meeting, please vote your shares. You may submit your proxy card or voting instruction card by completing, signing, dating and mailing your proxy card or voting instruction card in the envelope provided or vote by facsimile, email or over the Internet as instructed in the proxy statement. Any stockholder attending the meeting may vote in person, even if you already returned a proxy card or voting instruction card and intend to change your original vote. Please note, however, that if your shares are held of record by a broker, bank or other nominee and you wish to vote at the meeting, you must obtain a legal proxy issued in your name from that record holder.
| By Order of the Board of Directors, |
| Rob Davidson |
| Chief Executive Officer |
June [*], 2019
Important notice regarding the availability of proxy materials for the Annual Meeting to be held on July 15, 2019: The Company’s proxy statement is available electronically at www.curepharmaceutical.com and www.proxyvote.com. |
PRELIMINARY COPY — SUBJECT TO COMPLETION
CURE PHARMACEUTICAL HOLDING CORP.
1620 Beacon Place, Oxnard, California 93033
PROXY STATEMENT
2019 ANNUAL MEETING OF SHAREHOLDERS
July 15, 2019
This proxy statement is being furnished to shareholders by the Board of Directors (the “Board”) of Cure Pharmaceutical Corp. (the “Company”) in connection with the solicitation of proxies by the Board for use at the 2019 Annual Meeting of shareholders of the Company to be held at 1620 Beacon Place, Oxnard, California 93033 on July 15, 2019 at 11:00 a.m. Pacific Time, and all adjournments or postponements thereof (the “Annual Meeting”) for the purposes set forth in the attached Notice of 2019 Annual Meeting of Shareholders.
A proxy, in the enclosed form, which is properly executed, duly returned to the Company and not revoked, will be voted in accordance with the instructions contained therein. The shares represented by executed but unmarked proxies will be voted as follows:
(1) FOR the election of the seven director nominees named in the accompanying proxy statement to serve until the 2019 annual meeting of stockholders and until successors are duly elected or until the earliest of their removal or resignation (“Proposal 1”);
(2) FOR the approval of a proposal to reincorporate the Company from the State of Nevada to the State of Delaware (“Proposal 2”);
(3) FOR the approval of a proposal to amend the Company’s Articles of Incorporation to increase the number of authorized shares of the Company’s common stock by 75,000,000 shares to 150,000,000 shares (“Proposal 3”);
(4) FOR the approval of an amendment to the Company’s 2017 Equity Incentive Plan to increase the number of shares of the Company’s common stock available for awards thereunder by an additional 5,000,000 shares to a total of 10,000,000 shares (“Proposal 5”);
(5) FOR the approval of an amendment to the Company’s 2017 Equity Incentive Plan to revise Section 5.5 of the 2017 Equity Incentive Plan relating to Nonemployee Director Award Limits (“Proposal 5”);
(6) FOR the ratification of a proposal to select RBSM LLP as the Company’s independent registered public accounting firm for 2019 (“Proposal 6”);
With respect to such other business which may properly come before the Annual Meeting or any adjournment thereof, votes will be cast in the discretion of the appointed proxies.
The information in this Proxy Statement relates to the Proposals to be voted on at the Annual Meeting. Included with this Proxy Statement is a copy of the Company’s Annual Report on Form 10-K for the year ended December 31, 2018.
All shareholders will have access the proxy materials via www.curepharmaceutical.com and www.proxyvote.com. Instructions on how to access the proxy materials over the Internet or to request a printed copy may be found in the Notice. In addition, shareholders may request to receive proxy materials in printed form by mail or electronically by email on an ongoing basis.
It is important that your shares are represented at the Annual Meeting. Whether or not you plan to attend the Annual Meeting, please sign and date the enclosed proxy card and return it to us. If you own your shares through a broker, bank or other nominee, please return your voting instruction form to your broker, bank or nominee, or use the electronic voting means described below to vote your shares.
Our Board is soliciting proxies for the 2019 fiscal year annual meeting of stockholders and at any adjournments or postponements of the meeting. This Proxy Statement contains important information for you to consider when deciding how to vote on the matters brought before the meeting. Please read it carefully.
The Company will pay the costs of soliciting proxies from stockholders. Our directors, officers and regular employees may solicit proxies on behalf of the Company, without additional compensation, personally or by telephone.
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Who is entitled to vote?
Only our stockholders of record at the close of business on the record date for the meeting, June 21, 2019, are entitled to vote at the Annual Meeting. On the record date, we had 43,384,671 shares of common stock issued and outstanding.
Can I access the proxy materials electronically?
Yes. This Proxy Statement is available online at www.curepharmaceutical.com and on the SEC website.
How can I attend the Annual Meeting?
Stockholders may attend the Annual Meeting in-person at the Company’s corporate offices, located at 1620 Beacon Place, Oxnard, CA 93033. While all stockholders will be permitted to attend the Annual Meeting, only stockholders of record and beneficial owners as of the close of business on the record date, June 21, 2019, may vote and ask questions during the Annual Meeting. Stockholders must return a proxy by one of the methods described on the proxy card or attend the Annual Meeting in person in order to vote on the proposals.
What is the difference between a stockholder of record and a beneficial owner of shares held in street name?
Stockholder of Record. If your shares are registered directly in your name with our transfer agent, VStock Transfer, you are considered the stockholder of record with respect to those shares, and we sent a Notice of Annual Meeting and a printed set of the proxy materials, together with a proxy card, directly to you.
Beneficial Owner of Shares Held in Street Name. If your shares are held in an account at a broker, bank or other nominee, then you are the beneficial owner of those shares held in “street name,” and a Notice of Annual Meeting and a printed set of the proxy materials, together with a voting instruction form, were forwarded to you by your broker, bank or other nominee who is considered the stockholder of record with respect to those shares. As a beneficial owner, you have the right to instruct your broker, bank or other nominee on how to vote the shares held in your account by following the instructions in the Notice of Annual Meeting and the voting instruction form you received.
How can I vote my shares?
The process for voting your shares depends on how your shares are held. Generally, as discussed above, you may hold shares as a “record holder” (that is, in your own name) or in “street name” (that is, through a nominee, such as a broker or bank). As explained above, if you hold shares in “street name,” you are considered to be the “beneficial owner” of those shares.
Voting by Record Holders. If you are a record holder, you may vote by proxy prior to the Annual Meeting or you may vote during the Annual Meeting in person. If you are a record holder and would like to vote your shares by proxy prior to the Annual Meeting, you have four ways to vote:
| · | Online by visiting http://www.vstocktransfer.com/proxy; |
| · | By mailing your proxy card with the return envelope that will be addressed to 18 Lafayette Place, Woodmere, NY 11598; |
| · | By fax to (646) 536-3179; and |
| · | By e-mail to vote@vstocktransfer.com. |
Please note that Internet, fax and e-mail proxy voting will close at 8:59 p.m. (Pacific Standard time) on July 14, 2019. If you received a proxy card in the mail and wish to vote by completing and returning the proxy card via mail, please note that your completed proxy card must be received before the polls close for voting at the Annual Meeting.
Voting by beneficial owners of shares held in “street name”. If your shares are held in the name of a broker, bank, or other nominee (that is, your shares are held in “street name”), you should receive separate instructions from the record holder of your shares describing how to vote.
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How are proxies voted?
All shares represented by valid proxies received prior to the Annual Meeting will be voted, and where a stockholder specifies by means of the proxy a choice with respect to any matter to be acted upon, the shares will be voted in accordance with the stockholder’s instructions.
What happens if I do not give specific voting instructions?
Stockholders of Record. If you are a stockholder of record and you sign and return a proxy card without giving specific voting instructions or you indicate when voting in person, on the Internet, by fax or by e-mail that you wish to vote as recommended by the Board, then the proxy holders will vote your shares in the manner recommended by the Board on all matters presented in this Proxy Statement and as the proxy holders may determine in their discretion with respect to any other matters properly presented for a vote at the Annual Meeting.
Beneficial Owners of Shares Held in Street Name. If you are a beneficial owner of shares held in street name and do not join and vote at the Annual Meeting or provide the broker, bank or other nominee that holds your shares with specific voting instructions, then the broker, bank or other nominee that holds your shares may generally vote on routine matters but cannot vote on non-routine matters. If the broker, bank or other nominee that holds your shares does not receive instructions from you on how to vote your shares on a non-routine matter, the broker, bank or other nominee that holds your shares will inform the inspector of election that it does not have the authority to vote on this matter with respect to your shares. This is generally referred to as a “broker non-vote.”
Which ballot measures are considered ‘‘routine’’ or ‘‘non-routine’’?
The ratification of the appointment of RBSM, LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2019 (Proposal No. 6) is considered a “routine” matter. Your broker, therefore, may vote your shares in its discretion if you do not provide instructions on how to vote on this routine matter, and no broker non-votes are expected in connection with this proposal. The (1) election of the seven director nominees named in the accompanying proxy statement (“Proposal 1”); (2) the approval of a proposal to reincorporate the Company from the State of Nevada to the State of Delaware (“Proposal 2”); (3) the approval of a proposal to amend the Company’s Articles of Incorporation to increase the number of authorized shares of the Company’s common stock by 75,000,000 shares to 150,000,000 shares (“Proposal 3”); (4) the approval of an amendment to the Company’s 2017 Equity Incentive Plan to increase the number of shares of the Company’s common stock available for awards thereunder by an additional 5,000,000 shares to a total of 10,000,000 shares (“Proposal 4”); and (5) the approval of an amendment to the Company’s 2017 Equity Incentive Plan to revise Section 5.5 of the 2017 Equity Incentive Plan relating to Nonemployee Director Award Limits (“Proposal 5”) are non-routine. Accordingly, a broker may not vote on these proposals without instructions from its customer and broker non-votes may occur with respect to these proposals.
Can I change my vote or revoke my proxy after I return my proxy card or vote online?
Any proxy may be revoked at any time before it is exercised by filing an instrument revoking it with the Company’s Secretary or by submitting a duly executed proxy bearing a later date prior to the time of the Annual Meeting. Stockholders who have voted by proxy over the Internet, by fax or by e-mail or have executed and returned a proxy and who then attend the Annual Meeting and desire to vote in person are requested to notify the Secretary in writing prior to the time of the Annual Meeting. We request that all such written notices of revocation to the Company be addressed to the Secretary of the Company prior to the Annual Meeting at 1620 Beacon Place, Oxnard, CA 93033. Stockholders may also revoke their proxy by entering a new vote over the Internet, by fax, or by e-mail.
What constitutes a quorum?
The presence at the Annual Meeting, in person or by proxy, of the holders of a majority of the outstanding shares of stock entitled to vote at the Annual Meeting will constitute a quorum at the Annual Meeting for the transaction of any business. If a quorum is established, each stockholder entitled to vote at the Annual Meeting will be entitled to one vote, virtually or by proxy, for each share of stock entitled to vote held by such stockholder on the record date June 21, 2019. Proxies received but marked as abstentions and broker non-votes will be included in the calculation of the number of votes considered to be present at the Annual Meeting and will be counted for quorum purposes. If a quorum is not present, the Annual Meeting may be adjourned until a quorum is obtained.
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What are the Board of Directors’ recommendations?
The recommendations of the Board of Directors are set forth under the description of each proposal in this Proxy Statement. In summary, the Board of Directors recommends that you vote:
(1) FOR the election of the seven director nominees named in the accompanying proxy statement to serve until the 2019 annual meeting of stockholders and until successors are duly elected or until the earliest of their removal or resignation (“Proposal 1”);
(2) FOR the approval of a proposal to reincorporate the Company from the State of Nevada to the State of Delaware (“Proposal 2”);
(3) FOR the approval of a proposal to amend the Company’s Articles of Incorporation to increase the number of authorized shares of the Company’s common stock by 75,000,000 shares to 150,000,000 shares (“Proposal 3”);
(4) FOR the approval of an amendment to the Company’s 2017 Equity Incentive Plan to increase the number of shares of the Company’s common stock available for awards thereunder by an additional 5,000,000 shares to a total of 10,000,000 shares (“Proposal 5”);
(5) FOR the approval of an amendment to the Company’s 2017 Equity Incentive Plan to revise Section 5.5 of the 2017 Equity Incentive Plan relating to Nonemployee Director Award Limits (“Proposal 5”);
(6) FOR the ratification of a proposal to select RBSM LLP as the Company’s independent registered public accounting firm for 2019 (“Proposal 6”);
What vote is required to approve each Proposal?
All proposals require the affirmative vote of a majority of votes cast. You may vote for, against or abstain from voting for these proposals.
Will abstentions and broker non-votes have an impact on the proposals contained in this Proxy Statement?
Abstentions and broker non-votes will be counted to determine whether there is a quorum present at the Annual Meeting, but will not be considered votes cast for voting purposes and thus will have no effect on any of the proposals to be presented at the Annual Meeting.
Where can I find the voting results of the Annual Meeting?
We intend to announce preliminary voting results at the Annual Meeting and disclose final results in a Current Report on Form 8-K filed with the U.S. Securities and Exchange Commission (the “SEC”) within four business days after the Annual Meeting.
Who pays the cost for soliciting proxies by the Board of Directors?
We will bear the cost of soliciting proxies, including the cost of preparing, printing and mailing the materials in connection with the solicitation of proxies. We will reimburse brokerage firms and other custodians, nominees and fiduciaries for reasonable expenses incurred by them in sending the proxy materials to the beneficial owners of our common stock. In addition to solicitations by mail, our officers and regular employees may, without being additionally compensated, solicit proxies personally and by mail, telephone, facsimile or electronic communication.
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PROPOSAL 1-RATIFICATION OF DIRECTOR NOMINATIONS FOR 2019
Our Bylaws provide that the Board of Directors shall be not less than one nor more than thirteen. Each Director shall hold office until the next annual meeting of shareholders and until his/her successor shall have been elected and qualified. Our Board of Directors currently consists of six directors, five of which have been nominated for election at the Annual Meeting with two new nominees nominated by the Board of Directors. Each nominee has confirmed that he or she will be able and willing to serve as a director if elected. If any of the nominees becomes unable or unwilling to serve, your proxy will be voted for the election of a substitute nominee recommended by the current Board of Directors.
Our Board of Directors has recommended and nominated for election as directors at our Annual Meeting the following individuals: Robert Davidson, William Yuan, Gene Salkind, M.D., Ruben King-Shaw Jr., Joshua Held, Lauren Chung Ph.D. and Anya Goldin. Each nominee, if elected at the Annual Meeting, will hold office for a one-year term until our next annual meeting of stockholders or until their successor is duly elected, unless prior thereto the director resigns or the director’s office becomes vacant by reason of death or other cause.
Director Nominees
The following sections set forth certain information regarding the nominees for election as directors of the Company. There are no familial relationships among any of our directors and/or executive officers.
Name |
| Age |
| Title |
| Director Since |
| Age |
| Title |
| Director Since |
Robert Davidson |
| 51 |
| Director and Chief Executive Officer |
| 2011 |
| 51 |
| Director and Chief Executive Officer |
| 2011 |
William Yuan |
| 58 |
| Chairman of the Board and Director |
| 2016 |
| 58 |
| Chairman of the Board and Director |
| 2016 |
Gene Salkind, M.D. |
| 64 |
| Director |
| 2018 |
| 64 |
| Director |
| 2018 |
Ruben King-Shaw Jr. |
| 57 |
| Director |
| 2019 |
| 57 |
| Director |
| 2019 |
Joshua Held |
| 33 |
| Director |
| 2019 |
| 34 |
| Director |
| 2019 |
Lauren Chung Ph.D. |
| 46 |
| New Nominee |
| 46 |
| New Nominee | ||||
Anya Goldin | 56 |
| New Nominee | 56 |
| New Nominee |
Robert Davidson – Chairman of the Board and Chief Executive Officer
Robert Davidson has served as the Chairman of the Board and Chief Executive Officer of CURE Pharmaceutical since July 2011. Prior to his role at CURE Pharmaceutical, Mr. Davidson served as President and Chief Executive Officer of InnoZen Inc., Chief Executive Officer of Gel Tech LLC, Chief Executive Officer of Bio delivery Technologies Inc., and Director of HealthSport Inc. Mr. Davidson was responsible for the development of several drug delivery technologies and commercial brand extensions. He has worked with brands such as Chloraseptic™, Suppress™, as well as Pediastrip™, a private label electrolyte oral thin film sold in major drug store chains. Mr. Davidson is also considered an industry expert leader in ODF technology. Mr. Davidson received his B.S. degree with a concentration in Biological Life Sciences from the University of the State of New York, Excelsior College. He has a Masters Certificate in Applied Project Management from Villanova University, Masters of Public Health from American Military University, Virginia and a Masters in Health and Wellness from Liberty University, Virginia. Mr. Davidson is also a Certified Performance Enhancement Specialist and Fitness Nutrition Specialist through the National Academy of Sports Medicine and attended Post-Graduate Studies at the University of Cambridge. Mr. Davidson’s experience as our Chief Executive Officer and Chairman, and his extensive knowledge of ODF and drug delivery technologies qualifies him to serve on our Board.
William Yuan – Director
William Yuan has served as a director of the Company since November 7, 2016. Mr. Yuan was most recently Chairman and CEO of Fortress Hill Holdings, an Asian-based investment banking firm. With 23 years in global finance experience, he has served as a key strategist and advisor to international institutions. U.S. companies advised by Mr. Yuan include Amgen Corp., Biogen, GE Capital, Warner Brothers Studios, and Fox News. He has also guided such leading Asian institutions as Sina.com, Shanghai Petrochemicals, Jinlia Pharmaceutical and Tsingtao Beer Corp. In 1995, Mr. Yuan led Merrill Lynch Asset Management Asia, and managed one of the largest pension/retirement funds in the world, with a $488 billion portfolio under his leadership. Simultaneously, he was chairman and portfolio manager of the $1.2 billion AmerAsia Hedge Fund. In 1993, he was the founder and managing director of the Corporate Institutional Services Group at Merrill Lynch Asset Management. Prior to that, Mr. Yuan served as a senior-vice president and co-manager at Morgan Stanley Smith Barney’s Portfolio Management Corporation with dual functions as co-head of the Capital Markets Derivative team, and Chairman of the Technology Investment Management and Executive Policy Committee. He began his finance career at Goldman Sachs in 1983 as an investment banker in Mergers & Acquisitions. Mr. Yuan is a member of the International Who’s Who of Finance, Technology, Media and Telecom. Mr. Yuan holds a Bachelor of Science degree in Economics from Cornell University and attended Harvard University’s John F. Kennedy School as a Mason Fellow. Mr. Yuan’s extensive finance, investment banking and corporate strategy background as well as his experience advising large pharmaceutical companies such as Amgen, Biogen and Jinlia Pharmaceutical qualifies him to serve on our Board.
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Gene Salkind M.D. – Director
Dr. Gene Salkind is board certified in neurological surgery by the American Board of Neurological Surgery and completed various residencies, fellowships and postgraduate training at Abington Memorial hospital, The Graduate Hospital, Veteran’s Administration Hospital, Pennsylvania Hospital, Children’s Hospital of Philadelphia, and the Hospital of the University of Pennsylvania. He received his Medical Degree from Temple University School of Medicine and his Bachelor of Arts from the University of Pennsylvania. He has had numerous faculty, hospital and administrative appointments at virtually every major hospital in the northeastern Philadelphia and surrounding areas. As a prolific pharmaceutical investor, some of Dr. Salkind’s previous successful investments include Intuitive Surgical, Pharmacyclics, which grew from less than $1 per share to subsequently being acquired by Abbvie for $250/share, and Centocor, one of the nation’s largest biotechnology companies, which was acquired by Johnson & Johnson for $4.9 billion in stock. Dr. Salkind currently sits on the board of DermTech, a private company based in San Diego that has become the global leader in non-invasive dermatological molecular diagnostics. Dr. Salkind’s medical background and experience as well as his extensive finance and investing experience qualifies him to serve on our Board.
Ruben King-Shaw, Jr. – Director
Mr. King-Shaw is currently the President of Steward Health Care Network (SHCN) since June 2018 where he leads the business unit focused on managing integrated, coordinated and community-based health care services delivery in 9 states. He is also the President, since April 2004, of Mansa Equity Partners, Inc. (Mansa), the King-Shaw family’s personal holding company and investment vehicle. In addition to SHCN and Mansa, Mr. King-Shaw has three decades of executive leadership experience in the healthcare technology and private equity sectors and held c-suite positions with leading private companies including Neighborhood Health Partnership, Inc. and JMH Health Plan. He recently served on the board of Atlanta-based Cotiviti Holdings, Inc. and currently serves on the board of privately-held Intelligent Retinal Imaging Systems of Pensacola, FL. Past board service consists of Lead Director of Athenahealth; Independent Living Systems, of Miami, FL; and WellCare Health Plans, Inc. of Tampa, FL. He served on the Obama Administration's Medicare Program Advisory and Oversight Committee, and he was COO and deputy administrator of the Centers for Medicare and Medicaid Services (CMS) during the administration of President George W. Bush, administering a federal budget of $600 billion. Over the past year, Mr. King-Shaw has provided advice on areas of healthcare policy to the Trump Administration, including CMS and the National Economic Council. Mr. King-Shaw completed his undergraduate studies at Cornell University, earning a Bachelor of Science degree in Industrial and Labor Relations, and earned both a Master of Health Service Administration and a Master of International Business degree from Florida International University. He also completed advanced studies in Corporate Governance at the Harvard Business School. Mr. King-Shaw’s executive experience and administrative expertise in the healthcare field qualifies him to serve on our Board.
Joshua Held – Director
Mr. Joshua Held is currently the President of Form Factory Inc. a wholly owned subsidiary of Acreage Holdings (ARCG.CN) the largest multi-State cannabis operator licensed in 20 States. Since August of 2018, he has led the manufacturing and strategy divisions of Form Factory Inc. Mr. Held is the founder and CEO of Chemistry Holdings, Inc. a formulation technology company that creates innovative, sustainable delivery systems for a variety of industries. Chemistry Holdings was recently acquired by Cure Pharmaceutical. Mr. Held previously founderfounded and was the CEO of Made by Science, rebranded as Form Factory Inc. a private company acquired by Acreage Holdings for $160 Million in December of 2018. Form Factory is at the forefront of the creation of next-generation delivery systems that raise the bar for cannabis product manufacturers and sellers by eliminating common problems in efficacy, formulation, onset, dosage, and labeling. In his prior role as a Vice President of Investments for JP Morgan, Mr. Held managed more than $100 million in investment dollars for high-net-worth individuals and families. He received his Bachelor of Arts from the California State University, Long Beach. He's a licensed real estate broker in California and formally held his Series 7 & 66 licenses. Mr. Held’s accomplishments as the founder of several medical technology companies, including the Company’s acquisition of Chemistry Holdings, qualifies him to serve on our Board.
Lauren Chung, Ph.D.
Dr. Lauren Chung has 20 years of healthcare investment management and advisory experience. Dr. Chung founded in 2012 MINLEIGH LLC identifying, evaluating and partnering with companies for investments and various strategic, operational, and commercial planning, as well as providing growth capital. Dr. Chung was a Managing Director in Healthcare Research at WestPark Capital, where she joined in 2017. Prior to that she was a Senior Healthcare Equity Analyst at Maxim Group. Previously, Dr. Chung was a Co Founder of Tokum Capital , a global healthcare fund, which merged with Perella Weinberg Partners. Prior to that, Dr. Chung managed healthcare investment portfolios at RBR Capital, Kingdon Capital, and Pequot Capital. Earlier in her career, Dr. Chung was a recognized research scientist conducting cutting edge research in the field of Alzheimer’s disease and Angelman Syndrome at Massachusetts General Hospital/Harvard Medical School and Boston Children’s Hospital, respectively. Dr. Chung has published many highly regarded peer reviewed scientific journals. Dr. Chung serves as a board member in private healthcare companies. Dr. Chung holds a PhD in Neuropathology from Columbia University-College of Physicians & Surgeons, and a BA with honors in Biochemistry and Economics from Wellesley College. Dr. Chung’s experience in healthcare investments and her academic accomplishments in scientific fields qualifies her to serve on our Board.
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Anya Goldin
Mrs. Anya Goldin is an accomplished executive with 28 years of experience and demonstrated success across the law, private equity, venture capital, healthcare and telecommunications industries. Since 2014, she has worked as a consultant advising companies on strategic and business issues, complex and cross-border transactions, as well as corporate restructurings and multi-jurisdictional disputes. Anya is also practicing at Nolan Heimann law firm and is teaching a course on International Business Negotiations at the USC’s Gould School of Law. She has co-founded a technology start-up Provenance Laboratories, and engages in entrepreneurial, investment and philanthropic activities. Throughout her executive career, Anya has held leadership positions as a managing partner at Latham & Watkins (17 years), as well as the General Counsel, Vice President and Chair of the Risk Management Committee of a $20-billion London Stock Exchange-listed conglomerate that controlled four other public companies listed on the New York and London Stock Exchanges, as well as a variety of private international assets. Her responsibilities included managing all aspects of the legal and compliance functions of the group.Anya has served on the boards of eight public and private companies in Europe, Russia, India and the UK, and for seven years oversaw international operations of a global regulated private equity fund in her capacity as the Vice Chair of the Board of Directors. Anya is currently on the Advisory Board of a California private equity fund, Lumia Capital, on the Board of Trustees of Westmark School, and on the Board of Berkeley Law Alumni’s L.A. Chapter. Anya is a member of the State Bar of California. She holds a BA in Mass Communications from University of California Berkeley, as well as a JD from University of California Berkeley School of Law (Boalt Hall), graduating in the top ten percent of her class with both degrees. Ms. Goldin’s experience in both business and law, specifically her experience related to start-up and technology companies, qualifies her to serve on our Board.
Director Independence
The Board of Directors utilizes NASDAQ’s standards for determining the independence of its members. In applying these standards, the Board considers commercial, industrial, banking, consulting, legal, accounting, charitable and familial relationships, among others, in assessing the independence of directors, and must disclose any basis for determining that a relationship is not material.
The Board has concluded that, of the seven nominees, William Yuan, Gene Salkind, M.D., Ruben King-Shaw Jr., Joshua Held, Lauren Chung Ph.D. and Anya Goldin are “independent” based on the listing standards of the Nasdaq Stock Market, having concluded that any relationship between such director and our company, in its opinion, does not interfere with the exercise of independent judgment in carrying out the responsibilities of a director.
There are no family relationships among our directors or executive officers. To our knowledge, there is no arrangement or understanding between any of our officers and any other person, including directors, pursuant to which the officer was selected to serve as an officer.
Board Functions and Board Committees
Management has been delegated the responsibility for meeting defined corporate objectives, implementing approved strategic and operating plans, carrying on our business in the ordinary course, managing cash flow, evaluating new business opportunities, recruiting staff and complying with applicable regulatory requirements. The Board of Directors exercises its supervision over management by reviewing and approving long-term strategic, business and capital plans, material contracts and business transactions, and all debt and equity financing transactions and stock issuances.
The Board of Directors held four (4) meetings during 2018. During 2018, all directors, with the exception of Alan Einstein, attended 100% of the aggregate number of meetings of the Board of Directors that were held during the time that they served as members of the Board of Directors. Mr. Einstein did not attend any meetings during 2018. We do not have a formal policy regarding attendance by members of the Board of Directors at the annual meeting of stockholders, but we strongly encourage all members of the Board of Directors to attend our annual meetings and expect such attendance except in the event of extraordinary circumstances. We did not have an annual meeting of stockholders for the 2018 fiscal year.
Committees of the Board of Directors
The Board of Directors has established and currently maintains the following three standing committees: the Audit Committee, the Compensation Committee, and the Nominating and Corporate Governance Committee (the “N&GC”). The Board of Directors has adopted written charters for each of these committees, which we make available free of charge on or through our Internet website, along with other items related to corporate governance matters, including our Code of Business Conduct and Ethics applicable to all employees, officers and directors. We maintain our Internet website at http://www.curepharmaceutical.com. You can access our committee charters and code of conduct on our website by first clicking “Investors” and then “Corporate Governance.”
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Currently, the Audit Committee consists of Mr. Yuan (Chair), Messrs. Berman and Einstein, the Compensation Committee consists of Mr. Berman (Chair), Mr. Yuan, and the N&GC consists of Mr. Berman (Chair), Mr. Yuan. During the 2018 fiscal year, the Audit Committee, Compensation Committee and the N&GC did not hold any meetings. After the Annual Meeting, the Board will appoint independent directors to the committees and the committees will have regular meetings.
Audit Committee
Among other functions, the Audit Committee reviews and approves the engagement of our independent auditors to perform audit and any permissible non-audit services, evaluates the performance, independence and qualifications of our independent auditors and determining whether to retain our existing independent auditors or to engage new independent auditors, reviews our annual and quarterly financial statements and reports, including the disclosures contained in the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and discussing the statements and reports with our independent auditors and management, reviews with our independent auditors and management significant issues that arise regarding accounting principles and financial statement presentation and matters concerning scope, adequacy and effectiveness of our financial controls, reviews our major financial risk exposures, including the guidelines and policies to govern the process by which risk assessment and risk management is implemented, and reviews and evaluates on an annual basis the performance of the audit committee, including compliance of the audit committee with its charter. The Board of Directors has determined that each of the current members of the Audit Committee is an independent director within the meaning of the NASDAQ independence standards and Rule 10A-3 promulgated by the SEC under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). In addition, the Board of Directors has determined that Mr. Yuan qualifies as an Audit Committee Financial Expert under applicable SEC Rules and satisfies the NASDAQ standards of financial literacy and financial or accounting expertise or experience.
Compensation Committee
The Compensation Committee’s functions include reviewing, modifying and approving (or if it deems appropriate, making recommendations to the full Board of Directors regarding) our overall compensation strategy and policies, reviewing and approving compensation, the performance goals and objectives relevant to the compensation, and other terms of employment of our Chief Executive Officers and our other executive officers, reviewing and approving (or if it deems appropriate, making recommendations to the full Board of Directors regarding) the equity incentive plans, compensation plans and similar programs advisable for us, as well as modifying, amending or terminating existing plans and programs, reviewing and approving the terms of employment agreements, severance arrangements, change in control protections and any other compensatory arrangements for our executive officers, reviewing with management and approving our disclosures under the caption “Compensation Discussion and Analysis” in our periodic reports or proxy statements to be filed with the SEC, and preparing the report that the SEC requires in our annual proxy statement. Neither the Compensation Committee nor the Board of Directors retained any consultants to assist in the review and approval of the compensation and benefits for the executive officers of our company during 2018. The Board of Directors has determined that each current member of the Compensation Committee is an independent director within the meaning of the NASDAQ independence standards.
Nominating and Corporate Governance Committee
The functions include identifying, reviewing and evaluating candidates to serve on our Board of Directors consistent with criteria approved by our Board of Directors, evaluating director performance on our Board of Directors and applicable committees of our Board of Directors and determining whether continued service on our board of directors is appropriate, evaluating, nominating and recommending individuals for membership on our Board of Directors, and evaluating nominations by stockholders for election to our Board of Directors. The Board of Directors has determined that each current member of the committee is an independent director within the meaning of the NASDAQ independence standards. See “Directors, Executive Officers and Corporate Governance – Directors” above for descriptions of the relevant education and experience of each member of the above stated committees.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the “Exchange Act, requires officers and directors of the Company and persons who beneficially own more than ten percent (10%) of the Common Stock outstanding to file initial statements of beneficial ownership of Common Stock (Form 3) and statements of changes in beneficial ownership of Common Stock (Forms 4 or 5) with the SEC. Officers, directors and greater than 10% stockholders are required by SEC regulation to furnish us with copies of all such forms they file. Our records reflect that all reports which were required to be filed pursuant to Section 16(a) of the Securities Exchange Act of 1934, as amended, were filed on a timely basis.
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Corporate Code of Conduct and Ethics
Our Board of Directors has adopted a written code of business conduct and ethics 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. Copies of our corporate code of conduct and ethics are available, without charge, upon request in writing to Cure Pharmaceutical Holding Corp., 1620 Beacon Place, Oxnard, California 93033, and are posted on the investor relations section of our website, which is located at www.curepharmaceutical.com. The inclusion of our website address in this Annual Report on Form 10-K does not include or incorporate by reference the information on our website into this Annual Report on Form 10-K. We also intend to disclose any amendments to the Corporate Code of Conduct and Ethics, or any waivers of its requirements, on our website.
Selection of Board Candidates
In selecting candidates for the Board of Directors, the Board begins by determining whether the incumbent directors whose terms expire at the annual meeting of stockholders desire and are qualified to continue their service on the Board of Directors. If there are positions on the Board of Directors for which the Board will not be renominating an incumbent director, or if there is a vacancy on the Board of Directors, the Board will solicit recommendations for nominees from persons whom the Board believes are likely to be familiar with qualified candidates, including members of our Board of Directors and our senior management. The Board may also engage a search firm to assist in the identification of qualified candidates. The Board will review and evaluate those candidates whom it believes merit serious consideration, taking into account all available information concerning the candidate, the existing composition and mix of talent and expertise on the Board of Directors and other factors that it deems relevant. In conducting its review and evaluation, the committees may solicit the views of management and other members of the Board of Directors and may conduct interviews of proposed candidates.
The Board generally requires that all candidates for the Board of Directors be of the highest personal and professional integrity and have demonstrated exceptional ability and judgement. The Board will consider whether such candidate will be effective, in conjunction with the other members of the Board of Directors, in collectively serving the long-term interests of our stockholders. In addition, the Board requires that all candidates have no interests that materially conflict with our interest and those of our stockholders, have meaningful management, advisory or policy making experience, have general appreciation of the major business issues facing us and have adequate time to devote to service on the Board of Directors.
The Board will consider stockholder recommendations for nominees to fill director positions, provided that the Board will not entertain stockholder nominations from stockholders who do not meet the eligibility criteria for submission of stockholder proposals under Rule 14a-8 of Regulation 14A under the Exchange Act. Stockholders may submit written recommendations for nominees to the Board of Directors, together with appropriate biographical information and qualification of such nominees as required by our Bylaws, to our Cooperate Secretary following the same procedures as described in “Stockholder Communications” in our Proxy Statement. In order for a nominee for directorship submitted by a stockholder to be considered, such recommendation must be received by the Corporate Secretary by the time period set forth in our most recent proxy statement for the submission of stockholder proposals under Rule 14a-8 of Regulation 14A under the Exchange Act. The Corporate Secretary shall then deliver any such communications to the Chairman of the Board or the N&GC, as applicable. The Board will evaluate stockholder recommendations for candidates for the Board of Directors using the same criteria as for other candidates, except that the Board may consider, as one of the factors in its evaluation of stockholder recommended candidates, the size and duration of the interest of the recommending stockholder or stockholder group in our equity.
Board Leadership Structure and Role in Risk Oversight
Our Board of Directors is currently chaired by William Yuan, who was appointed to serve in such capacity effective January 9, 2019. Our amended and restated bylaws provide our Board of Directors with flexibility to combine or separate the positions of Chairman of the Board and Chief Executive Officer in accordance with its determination that utilizing one or the other structure is in the best interests of our company. As Chairman of the Board, Mr. Yuan facilitates communications between members of our Board of Directors and works with management in the preparation of the agenda for each board meeting. All of our directors are encouraged to make suggestions for board agenda items or pre-meeting materials. Mr. Davidson presides over the executive sessions of the Board of Directors in which Mr. Yuan does not participate.
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Involvement in Certain Legal Proceedings
To our knowledge, none of our current directors or executive officers has, during the past ten years:
| · | been convicted in a criminal proceeding or been subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); |
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| · | had any bankruptcy petition filed by or against the business or property of the person, or of any partnership, corporation or business association of which he or she was a general partner or executive officer, either at the time of the bankruptcy filing or within two years prior to that time; |
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| · | been subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction or federal or state authority, permanently or temporarily enjoining, barring, suspending or otherwise limiting, his or her involvement in any type of business, securities, futures, commodities, investment, banking, savings and loan, or insurance activities, or to be associated with persons engaged in any such activity; |
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| · | been found by a court of competent jurisdiction in a civil action or by the SEC or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated; |
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| · | been the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated (not including any settlement of a civil proceeding among private litigants), relating to an alleged violation of any federal or state securities or commodities law or regulation, any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order, or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or |
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| · | been the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member. |
Director Compensation
The following Director Compensation Table sets forth information concerning compensation for services rendered to our independent directors for fiscal year 2018:
Name |
| Fees Earned Or Paid in Cash ($) |
|
| Stock Awards ($) |
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| Option Awards ($)(1) |
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| All Other Compensation ($) |
|
| Total ($) |
| |||||
William Yuan |
|
| - |
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| - |
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| 89,258 |
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| - |
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| 89,258 |
|
Charles Berman |
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| - |
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| - |
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| 59,505 |
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| - |
|
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| 59,505 |
|
Alan Einstein |
|
| - |
|
|
| - |
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| 59,505 |
|
|
| - |
|
|
| 59,505 |
|
_______
(1) | In accordance with SEC rules, the amounts in this column reflect the fair value on the grant date of the option awards granted to the named executive, calculated in accordance with ASC Topic 718. Stock options were valued using the Black-Scholes model. The grant-date fair value does not necessarily reflect the value of shares which may be received in the future with respect to these awards. The grant-date fair value of the stock options in this column is a non-cash expense for the Company that reflects the fair value of the stock options on the grant date and therefore does not affect our cash balance. The fair value of the stock options will likely vary from the actual value the holder receives because the actual value depends on the number of options exercised and the market price of our common stock on the date of exercise. For a discussion of the assumptions made in the valuation of the stock options, see Note 12 (Stock Based Compensation) to our financial statements, which are included in the Annual Report on Form 10-K. |
The Company does not have a formal policy regarding compensation for non-employee directors. Directors are not paid for meetings attended. However, for the year ended December 31, 2018, the Company, as part of its Equity Incentive Plan, granted stock options to Messrs. Yuan and Berman and Dr. Einstein, see table above.
Required Vote and Recommendation
The election of directors requires the affirmative vote of a plurality of the voting shares present or represented by proxy and entitled to vote at the Annual Meeting. The seven nominees receiving the highest number of affirmative votes will be elected. Unless otherwise instructed or unless authority to vote is withheld, shares represented by executed proxies will be voted “FOR” the election of the nominees.
THE BOARD RECOMMENDS A VOTE “FOR”
THE RATIFICATION OF DIRECTOR NOMINATIONS
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We are asking you to approve the reincorporation of CURE Pharmaceutical Holding Corp. from the state of Nevada to the state of Delaware (the “Reincorporation”). For the reasons discussed below, our Board of Directors has unanimously adopted, subject to stockholder approval, the reincorporation pursuant to a plan of conversion.
Summary
The principal effects of the Reincorporation, if approved by our stockholders and effected, will be that:
· | The affairs of the Company will cease to be governed by the corporate laws of the state of Nevada and will become subject to the corporate laws of the state of Delaware. | |
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· | Following the Reincorporation, the resulting entity (“CURE-Delaware”) will be the same entity as currently incorporated in the state of Nevada (“CURE-Nevada”) and will continue with all of the rights, privileges and powers of CURE-Nevada, will possess all of the properties of CURE-Nevada, will continue with all of the debts, liabilities and obligations of CURE-Nevada and will continue with the same officers and directors of CURE-Nevada, as further described below. | |
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· | If and when the Reincorporation becomes effective, all of the issued and outstanding shares of Common Stock of CURE-Nevada will be automatically converted into issued and outstanding shares of common stock of CURE-Delaware, without any action on the part of our stockholders. We will continue to file periodic reports and other documents with the SEC. The Reincorporation will not change the respective positions of the Company or stockholders under federal securities laws. Shares of our common stock that are freely tradable prior to the Reincorporation will continue to be freely tradable after the Reincorporation, and shares of our common stock that are subject to restrictions prior to the Reincorporation will continue to be subject to the same restrictions after the Reincorporation. For purposes of computing compliance with the holding period requirement of Rule 144 under the Securities Act of 1933, as amended (the “Securities Act”), stockholders will be deemed to have acquired the CURE-Delaware common stock on the date they acquired their shares of CURE-Nevada common stock. | |
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· | The common stock of CURE-Delaware will continue to be quoted on the Nasdaq Capital Market with the same trading symbol (“CURR”). | |
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· | Following the Reincorporation, all of our employee benefit and incentive plans will become CURE-Delaware plans, and each option, equity award or other right issued under such plans will automatically be converted into an option, equity award or right to purchase or receive the same number of shares of CURE-Delaware common stock, at the same price per share, upon the same terms and subject to the same conditions as before the Reincorporation. |
Plan of Conversion
To accomplish the reincorporation, the Board of Directors has adopted a plan of conversion (the “Plan of Conversion”), substantially in the form attached hereto as Appendix A. The Plan of Conversion provides that we will convert into a Delaware corporation and thereafter will be subject to the General Corporation Law of the State of Delaware (the “DGCL”).
Assuming the holders of a majority of our outstanding shares of common stock vote in favor of this Proposal 2, we will cause the Reincorporation to be effected at such time as we determine by filing with (1) the Secretary of State of the State of Nevada articles of conversion, substantially in the form attached hereto as Appendix B (the “Articles of Conversion”) and (2) the Secretary of State of the State of Delaware (i) the certificate of conversion, substantially in the form attached hereto as Appendix C (the “Certificate of Conversion) and (ii) the Certificate of Incorporation, substantially in the form attached hereto as Appendix D (the “Delaware Certificate”). In addition, if and when the Board of Directors effects the Reincorporation, the Board of Directors will adopt the Bylaws of CURE-Delaware (the “Delaware Bylaws”), substantially in the form attached hereto as Appendix E. Approval of this Proposal 2 by our stockholders will constitute approval of the Plan of Conversion, the Articles of Conversion, the Certificate of Conversion, the Delaware Certificate, and the Delaware Bylaws.
Notwithstanding the foregoing, the Reincorporation may be delayed by the Board of Directors or the Plan of Conversion may be terminated and abandoned by action of the Board of Directors at any time prior to the effective time of the Reincorporation, whether before or after approval by the Company’s stockholders, if the Board of Directors determines for any reason that such delay or termination would be in the best interests of our Company and its stockholders. If the Reincorporation is approved by our stockholders, the Reorganization would become effective upon the filing (and acceptance thereof by the Secretary of State of the State of Nevada) of the articles of conversion and the filing (and acceptance thereof by the Secretary of State of the State of Delaware) of the certificate of conversion and the Delaware Certificate.
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Reasons for Voting for Approval of the Reincorporation from the State of Nevada to the State of Delaware
The Board of Directors has approved the reincorporation because the corporate laws of the State of Delaware are more comprehensive, widely used and extensively interpreted than the corporate laws of other states, including Nevada. The state of Delaware is recognized for adopting comprehensive, modern and flexible corporate laws, which are amended periodically to respond to the changing legal and business needs of corporations. As a result of the flexibility and responsiveness of the Delaware corporate laws to the legal and business needs of corporations, many major corporations are incorporated in Delaware or have changed their corporate domiciles to Delaware. Delaware, unlike Nevada, has established a specialized court, the Court of Chancery, that has exclusive jurisdiction over matters relating to the DGCL. The Delaware judiciary has become particularly familiar with corporate laws and corporate matters, and a substantial body of court decisions has developed construing the DGCL, thus providing greater clarity and predictability with respect to our corporate legal and governance affairs. We believe this will assist our Board of Directors and management in making corporate decisions and taking corporate actions with greater assurance as to the validity and consequences of those decisions and actions. For these and other reasons, we believe that the Reincorporation will directly benefit our stockholders.
The Board of Directors is not proposing the reincorporation to prevent a change in control of our company and is not aware of any present attempt by any person to acquire control of our company or to obtain representation on the Board of Directors.
Why You Should Vote for Reincorporation
Delaware is a nationally recognized leader in adopting and implementing comprehensive, modern and flexible corporate laws. The DGCL is frequently revised and updated to accommodate changing legal and business needs and is more comprehensive, widely used and interpreted than other state corporate laws, including the Nevada Revised Statutes (the “NRS”).
Further, Delaware courts (including the Court of Chancery and the Delaware Supreme Court) are highly regarded for their considerable expertise in dealing with corporate legal issues and for producing a substantial body of case law construing Delaware legal precedents. Because the judicial system is based largely on legal precedents, the abundance of Delaware case law enhances the relative clarity and predictability of many areas of corporate law, which in turn may offer added advantages to us by allowing the Board of Directors and management to make corporate decisions and take actions with a greater assurance as to the validity and consequences of those decisions and actions.
The Reincorporation may also make it easier to attract future candidates willing to serve on the Board of Directors because many such candidates are familiar with Delaware law, including provisions of the DGCL relating to fiduciary duties and director indemnification, from their past business experience.
Additionally, in the opinion of the Board of Directors, underwriters and other members of the financial services industry may be more willing and better able to assist in capital-raising programs for corporations having the greater flexibility afforded by the DGCL. Certain investment funds, sophisticated investors, and brokerage firms may be more comfortable and more willing to invest in a Delaware corporation than in a corporation incorporated in another U.S. jurisdiction whose corporate laws may be less understood or perceived to be unresponsive to stockholder rights.
Effects of Reincorporation
Apart from being governed by the Delaware Certificate, the Delaware Bylaws and the DGCL, CURE-Delaware will effectively be the same entity as CURE-Nevada. By virtue of the Reincorporation, all rights, privileges, and powers of CURE-Nevada, all property owned by CURE-Nevada, all debts owed to CURE-Nevada, and all other causes of action belonging to CURE-Nevada immediately prior to the Reincorporation will remain vested in CURE-Delaware following the Reincorporation. In addition, by virtue of the Reincorporation, all debts, liabilities and duties of CURE-Nevada immediately prior to the Reincorporation will remain attached to the CURE-Delaware following the Reincorporation.
Upon effectiveness of the Reincorporation, all shares of common stock of CURE-Nevada will automatically be converted into shares of common stock of CURE-Delaware, without any further action on the part of the stockholders. The Reincorporation will have no effect on the transferability of the shares or the trading of the shares of common stock on Nasdaq under the same trading symbol “CURR.” We will continue to file periodic reports and other documents as and to the extent required by the rules and regulations of the SEC. Shares of our common stock that are freely tradeable prior to the Reincorporation will continue to be freely tradeable as shares of CURE-Delaware common stock, and shares of the Company’s common stock that are subject to restrictions prior to the Reincorporation will continue to be subject to the same restrictions as shares of CURE-Delaware common stock. The Reincorporation will not change the respective positions of CURE Pharmaceutical Holding Corp. or our stockholders under federal securities laws.
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Upon effectiveness of the Reincorporation, (i) our directors and officers will become all of the directors and officers of CURE-Delaware, (ii) all of our employee benefit and incentive plans will become CURE-Delaware plans, and each option, equity award or other right issued under such plans will automatically be converted into an option, equity award or right to purchase or receive the same number of shares of CURE-Delaware common stock, at the same price per share, upon the same terms and subject to the same conditions as before the Reincorporation.
We believe that the Reincorporation will not affect any of our material contracts with any third parties, and that our rights and obligations under such material contractual arrangements will continue as our rights and obligations after the Reincorporation.
Effect of Vote for Reincorporation
A vote in favor of the reincorporation is a vote in favor of the Plan of Conversion, the Articles of Conversion, the Certificate of Conversion, the Delaware Certificate and the Delaware Bylaws. Stockholders should also note that approval of the reincorporation also will constitute approval of our equity and other employee benefit and incentive plans continuing as plans of our company after the reincorporation.
Effect of Not Obtaining Required Vote for Approval
If we fail to obtain the requisite vote of our stockholders for approval of the reincorporation, the reincorporation will not be consummated and we will continue to be incorporated under the laws of the state of Nevada, the Nevada Article of Incorporation and the current bylaws of CURE-Nevada.
Amendments, Termination, Abandonment of the Plan of Conversion
The Plan of Conversion may be amended or modified by the Board of Directors prior to effecting the reincorporation, provided that the board determines that such amendment would be in the best interests of CURE-Nevada and our stockholders, and provided further that, if stockholder approval has been obtained, the amendment does not (1) alter or change the manner or bases of exchanging an owner’s interest to be acquired for owner’s interests, rights to purchase owner’s interests, or other securities of any entity, or for cash or other property in whole or in part, or (2) alter or change any of the terms and conditions of the Plan Conversion in a manner that adversely affects our stockholders.
The reincorporation may be delayed by the Board of Directors, or the Plan of Conversion may be terminated and abandoned by action of the Board of Directors, at any time prior to the effective time of the reincorporation, whether before or after approval by our stockholders, if the Board of Directors determines for any reason that such delay or termination would be in the best interests of CURE-Nevada and our stockholders.
Material U.S. Federal Income Tax Consequences of the Reincorporation to U.S. Holders
The discussion of U.S. federal income tax consequences set forth below is for general information only and does not purport to be a complete discussion or analysis of all potential tax consequences that may apply to a stockholder. Stockholders are urged to consult their tax advisors to determine the particular tax consequences of the Reincorporation, including the applicability and effect of federal, state, local, foreign and other tax laws.
The Reincorporation provided for in the Plan of Conversion is intended to be a tax-free reorganization under Section 368(a) of the Code. Assuming the Reincorporation qualifies as a reorganization, no gain or loss will be recognized to the holders of our capital stock as a result of consummation of the Reincorporation, and no gain or loss will be recognized by us. You will have the same basis in the CURE-Delaware common stock received by you pursuant to the Reincorporation as you have in the shares of CURE-Nevada common stock held by you as of immediately prior to the time the Reincorporation is consummated. Your holding period with respect to CURE-Delaware common stock will include the period during which you held the corresponding shares of CURE-Nevada common stock, provided the latter was held by you as a capital asset at the time of consummation of the Reincorporation.
Dissenters’ Rights
Under the NRS, stockholders are entitled to dissenters’ rights in connection with a reincorporation. A stockholder who is entitled to dissent and obtain payment pursuant to NRS 92A.300 to 92A.500, inclusive, may not challenge the corporate action creating the entitlement unless the action is unlawful or fraudulent with respect to the stockholder or the domestic corporation. From and after the effective date of the corporate action, the basis of which invokes dissenters’ rights, any stockholder who has exercised their right to dissent is not entitled to vote on any action for any purpose or receive any dividends accrued and payable after such effective date.
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Accounting Treatment
We expect that the Reincorporation will have no effect from an accounting perspective because there is no different entity as a result of the Reincorporation. As such, our financial statements previously filed with the SEC will remain our financial statements following the Reincorporation.
Regulatory Approvals
The Reincorporation will not be consummated until after stockholder approval is obtained. We will obtain all required consent of government authorities, including the filing of the Articles of Conversion, the Certificate of Conversion and the Delaware Certificate.
Comparison of Stockholder Rights Before and After the Reincorporation
Although the Delaware Certificate of Incorporation and the Delaware Bylaws contain many similar provisions to the current Articles of Incorporation and Bylaws of CURE-Nevada, they also include certain provisions that are different from the provisions contained in CURE current Articles of Incorporation and Bylaws. The following discussion briefly summarizes some of the changes resulting from the Reincorporation and the significant differences between the NRS, the current Articles of Incorporation and Bylaws of CURE-Nevada and the DGCL, the Delaware Certificate of Incorporation and the Delaware Bylaws. The foregoing summary does not purport to be a complete statement of the respective rights of holders of our common stock and CURE-Delaware common stock, and is qualified in its entirety by reference to the NRS and DGCL, respectively, and to the current Articles of Incorporation and Bylaws of CURE-Nevada and the Delaware Certificate of Incorporation and the Delaware Bylaws, respectively. A matrix that compares many of the most important differences between Nevada and Delaware laws can be found below.
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Provision |
| NRS and Nevada Articles and Nevada Bylaws |
| DGCL and Delaware Certificate of Incorporation and Delaware Bylaws |
Amendment of Charter Documents |
| Nevada law requires the adoption of a resolution by the corporation’s board of directors followed by the affirmative vote of the majority of the voting power of the corporation.
If any proposed amendment would adversely alter or change any preference or any relative or other right given to any class or series of outstanding shares, then the amendment must be approved by the vote, in addition to the affirmative vote otherwise required, of the holders of shares representing a majority of the voting power of each class or series adversely affected by the amendment. NRS 78.390.
The Nevada Articles of Incorporation are consistent with the NRS. |
| Delaware law requires the adoption of a resolution by the corporation’s board of directors followed by the affirmative vote of the majority of shares present in person or represented by proxy and entitled to vote to approve any amendment to the certificate of incorporation, unless a greater percentage vote is required by the certificate of incorporation. Where a separate vote by class or series is required, the affirmative vote of a majority of the shares of such class or series is required unless the certificate of incorporation requires a greater percentage vote. Further, Delaware law states that if an amendment would (i) increase or decrease the aggregate number of authorized shares of a class, (ii) increase or decrease the par value of shares of a class, or (iii) alter or change the powers, preferences or special rights of a particular class or series of stock so as to affect them adversely, the class or series so affected shall be given the power to vote as a class notwithstanding the absence of any specifically enumerated power in the certificate of incorporation. DGCL Section 242. |
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| The Delaware Certificate of Incorporation is consistent with the DGCL. | |
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Amendment of Bylaws |
| Nevada law provides that, unless otherwise prohibited by any bylaw adopted by the stockholders, the directors may adopt, amend or repeal any bylaw, including any bylaw adopted by the stockholders. The articles of incorporation may grant the authority to adopt, amend or repeal bylaws exclusively to the directors. NRS 78.120. |
| The power to adopt, amend, or repeal the bylaws of a corporation shall be vested in the stockholders entitled to vote, provided that the corporation in its certificate of incorporation may confer such power on the board of directors, although the power vested in the stockholders is not divested or limited where the board of directors also has such power. DGCL Section 109. |
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| The Nevada Articles of Incorporation and Nevada Bylaws are consistent with the NRS. In addition, the Nevada Bylaws state that (a) these Bylaws may be amended, altered, or repealed by the shareholders at any regular or Annual Meeting of the shareholders if notice of the proposed alteration or amendment is contained in the notice of the meeting; and (b) these Bylaws may be amended, altered, or repealed by the affirmative vote of a majority of the entire Board of Directors at any regular or Annual Meeting of the Board. |
| The Delaware Certificate of Incorporation expressly authorizes the Board of Directors to adopt, amend or repeal the Delaware Bylaws. The Delaware Bylaws also state that the Board of Directors is expressly empowered to adopt, amend or repeal the bylaws. |
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Number of Directors |
| A corporation must have at least one director and may provide in its articles of incorporation or in its bylaws for a fixed number of directors or a variable number of directors, and for the manner in which the number of directors may be increased or decreased. Unless otherwise provided in the articles of incorporation, directors need not be stockholders. NRS 78.115. |
| The board of directors of a corporation shall consist of 1 or more members, each of whom shall be a natural person. The number of directors shall be fixed by, or in the manner provided in, the bylaws, unless the certificate of incorporation fixes the number of directors, in which case a change in the number of directors shall be made only by amendment of the certificate. DGCL Section 141. |
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| The Nevada Bylaws do not change this statutory rule. |
| The Delaware Certificate of Incorporation (which does not fix the number of directors) and Delaware Bylaws do not change this statutory rule. | |
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Filling Vacancies on the Board of Directors |
| All vacancies, including those caused by an increase in the number of directors, may be filled by a majority of the remaining directors, though less than a quorum, unless it is otherwise provided in the articles of incorporation. Unless otherwise provided in the articles of incorporation, pursuant to a resignation by a director, the board may fill the vacancy or vacancies with each director so appointed to hold office during the remainder of the term of office of the resigning director or directors. NRS 78.335.
The Nevada Bylaws are consistent with the NRS. |
| All vacancies on the board of directors of a Delaware corporation may be filled by a majority of the remaining directors, though less than a quorum, unless the certificate of incorporation provides otherwise. Unless otherwise provided in the certificate of incorporation, the board may fill the vacancies for the remainder of the term of office of resigning director or directors. Further, if, at the time of filling any vacancy, the directors then in office shall constitute less than a majority of the whole board, the Delaware Court of Chancery may, upon application of any stockholder or stockholders holding at least 10% of the total number of the shares at the time outstanding having the right to vote for such directors, summarily order an election to be held to fill any such vacancies or newly created directorships, or to replace the directors chosen by the directors then in office. DGCL Section 223. |
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| The Delaware Bylaws are consistent with the DGCL and are substantially similar to the Nevada Bylaws. However, as noted, the DGCL provides greater protection to the Company’s stockholders by permitting stockholders representing at least 10% of the issued and outstanding shares to apply to the Delaware Court of Chancery to have an election of directors in the situation where the directors in office constitute less than a majority of the whole board of directors. | ||
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Removal of Directors |
| Any one or all of the directors of a corporation may be removed by the holders of not less than two-thirds of the voting power of a corporation’s issued and outstanding stock. Nevada law does not distinguish between removal of directors with or without cause. NRS 78.335.
The Nevada Bylaws are consistent with the NRS. In addition, the Nevada Bylaws state that the directors may be removed from office with or without cause by a vote of shareholders holding a majority of the shares entitled to vote at an election of directors. |
| Any director or the entire board of directors may be removed, with or without cause, by the holders of a majority of the shares then entitled to vote at an election of directors, except as follows: (a) unless the certificate of incorporation otherwise provides, in the case of a corporation whose board is classified stockholders may effect such removal only for cause; or (b) in the case of a corporation having cumulative voting, if less than the entire board is to be removed, no director may be removed without cause if the votes cast against such director’s removal would be sufficient to elect such director if then cumulatively voted at an election of the entire board of directors, or, if there be classes of directors, at an election of the class of directors of which such director is a part. DGCL Section 141. |
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| The Delaware Bylaws are consistent with the DGCL. |
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Board Action by Written Consent |
| Nevada law provides that, unless the articles of incorporation or bylaws provide otherwise, any action required or permitted to be taken at a meeting of the board of directors or of a committee thereof may be taken without a meeting if, before or after the action, a written consent thereto is signed by all the members of the board or committee. NRS 78.315. |
| Delaware law provides that, unless the certificate of incorporation or bylaws provide otherwise, any action required or permitted to be taken at a meeting of the board of directors or of any committee thereof may be taken without a meeting if all members of the board or committee consent thereto in writing or by electronic transmission and the writing or writings or electronic transmission or transmissions are filed with the minutes of proceedings of the board or committee. DGCL Section 141. |
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| The Nevada Bylaws are consistent with the NRS. |
| The Delaware Bylaws are consistent with the DGCL and are substantially similar in regard to board and committee action by written consent. | |
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Interested Party Transaction |
| Nevada law provides that no contract or transaction between a corporation and one or more of its directors or officers, or between a corporation and any other entity of which one or more of its directors or officers are directors or officers, or in which one or more of its directors or officers have a financial interest, is void or voidable if one of the following circumstances exists: (a) the director’s or officer’s interest in the contract or transaction is known to the Board, and the transaction is approved or ratified by the Board in good faith by a vote sufficient for the purpose (without counting the vote of the interested director or officer); (b) the director’s or officer’s interest in the contract or transaction is known to the stockholders, and the transaction is approved or ratified by a majority of the stockholders holding a majority of voting power; (c) the fact of the common interest is not known to the director or officer at the time the transaction is brought before the Board; or (d) the contract or transaction is fair to the corporation at the time it is authorized or approved. NRS 78.140.
Nevada and Delaware law are substantially similar, with Delaware law providing additional provisions for the approval of related party transactions by stockholders. |
| Delaware law provides that no contract or transaction between a corporation and one or more of its directors or officers, or between a corporation and any other entity of which one or more of its directors or officers are directors or officers, or in which one or more of its directors or officers have a financial interest, is void or voidable if (a) the material facts as to the director’s or officer’s relationship or interest and as to the contract or transaction are disclosed or known to the board of directors or a committee thereof, which authorizes the contract or transaction in good faith by the affirmative vote of a majority of the disinterested directors, even though the disinterested directors are less than a quorum, (b) the material facts as to the director’s or officer’s relationship or interest and as to the contract or transaction are disclosed or known to the stockholders entitled to vote thereon and the contract or transaction is specifically approved in good faith by the stockholders, or (c) the contract or transaction is fair to the corporation as of the time it is authorized, approved or ratified by the board of directors, a committee thereof or the stockholders. DGCL Section 144. |
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Stockholder Voting - Quorum |
| Unless the articles of incorporation or bylaws otherwise provide, a majority of the voting power, present in person or by proxy at a meeting of stockholders (regardless of whether the proxy has authority to vote on all matters), constitutes a quorum for the transaction of business. NRS 78.320.
The Nevada Bylaws are consistent with the NRS. In addition, the Nevada Bylaws state that a majority of the shares represented at a meeting, even if less than a quorum, may adjourn the meeting from time to time without further notice. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally notified. The shareholders present at a duly organized meeting may continue to transact business until adjournment, notwithstanding the withdrawal of enough shareholders to leave less than a quorum. |
| The certificate of incorporation or bylaws may specify the number of shares and/or the amount of other securities having voting power the holders of which shall be present or represented by proxy at any meeting in order to constitute a quorum for, and the votes that shall be necessary for, the transaction of any business, but in no event shall a quorum consist of less than 1/3 of the shares entitled to vote at the meeting, except that, where a separate vote by a class or series or classes or series is required, a quorum shall consist of no less than 1/3 of the shares of such class or series or classes or series. In the absence of such specification in the certificate of incorporation or bylaws: (a) a majority of the shares entitled to vote, present in person or represented by proxy, shall constitute a quorum at a meeting of stockholders; (b) in all matters other than the election of directors, the affirmative vote of the majority of shares present in person or represented by proxy at the meeting and entitled to vote on the subject matter shall be the act of the stockholders; (c) directors shall be elected by a plurality of the votes of the shares present in person or represented by proxy at the meeting and entitled to vote on the election of directors; and (d) where a separate vote by a class or series or classes or series is required, a majority of the outstanding shares of such class or series or classes or series, present in person or represented by proxy, shall constitute a quorum entitled to take action with respect to that vote on that matter and, in all matters other than the election of directors, the affirmative vote of the majority of shares of such class or series or classes or series present in person or represented by proxy at the meeting shall be the act of such class or series or classes or series. A bylaw amendment adopted by stockholders which specifies the votes that shall be necessary for the election of directors shall not be further amended or repealed by the board of directors. DGCL Section 216. |
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| Consistent with the DGCL, the Delaware Bylaws state that the holders of a majority in voting power of the capital stock issued and outstanding and entitled to vote, present in person or represented by proxy, shall constitute a quorum for the transaction of business. The Delaware Bylaws and Nevada Bylaws are substantially similar with respect to quorum requirements. |
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Annual Meetings of Stockholders |
| Unless otherwise provided in the articles of incorporation or bylaws, the entire Board, any two directors, or the president may call annual and Annual Meetings of the stockholders and directors. NRS 78.310. |
| Annual Meetings of the stockholders may be called by the board of directors or by such person or persons as may be authorized by the certificate of incorporation or by the bylaws. DGCL Section 211. |
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| The Nevada Bylaws are consistent with the NRS, but also provide that Annual Meetings of the shareholders of this Corporation may be called at any time by the holders of twenty-five percent (25%) of the voting shares of the Corporation, or by the President, or by the Chief Executive Officer, or by the Board of Directors or a majority thereof. No business shall be transacted at any Annual Meeting of shareholders except as is specified in the notice calling for said meeting. |
| The Delaware Certificate of Incorporation and Delaware Bylaws state the Annual Meetings of the stockholders may be called at any time by the Board of Directors, and officer or at the request in writing of stockholders owning at least 25% of the capital stock of the Corporation issued and outstanding and entitled to vote.
Neither the Delaware Articles of Incorporation nor the Delaware Bylaws change this statutory rule. Nevada and Delaware law are substantially similar in regard to stockholder approval of mergers and other corporate reorganizations. | |
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Stockholder Action by Written Consent |
| Nevada law provides that, unless the articles of incorporation or bylaws otherwise provide, any action required or permitted to be taken at a meeting of the stockholders may be taken without a meeting if the holders of outstanding stock having at least the minimum number of votes that would be necessary to authorize or take such action at a meeting consent to the action in writing. NRS 78.320.
The Nevada Bylaws state that unless otherwise restricted by the Corporation’s Articles of Incorporation or these Bylaws, any action required or permitted to be taken at a meeting of the shareholders may be taken without a meeting if, before or after the action, a written consent thereto is signed by shareholders holding at least a majority of the voting power, except that if a different proportion of voting power is required for such an action at a meeting, then that proportion of written consents shall be required. Whenever such action is taken by written consent, a meeting of shareholders need not be called or notice given. The shareholders’ written consent may be signed in counterparts, including, without limitation, facsimile counterparts, and shall be filed with the minutes of the proceedings of the shareholders. |
| Delaware law provides that, unless the certificate of incorporation provides otherwise, any action required or permitted to be taken at a meeting of the stockholders may be taken without a meeting if the holders of outstanding stock having at least the minimum number of votes that would be necessary to authorize or take such action at a meeting consents to the action in writing. In addition, Delaware law requires the corporation to give prompt notice of the taking of corporate action without a meeting by less than unanimous written consent to those stockholders who did not consent in writing. DGCL Section 228.
The Delaware Certificate of Incorporation and Delaware Bylaws allow stockholders to act by written consent, and therefore do not differ from the Nevada Bylaws. |
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Advance Notice Provisions |
| Nevada law permits a corporation to include in its bylaws provisions requiring advance notice of shareholder proposals. |
| Delaware law permits a corporation to include in its bylaws provisions requiring advance notice of shareholder proposals. |
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| The Nevada Bylaws do not change this statutory rule. |
| The Delaware Bylaws will provide that advance notice of a stockholder’s proposal or director nominee must be delivered to the Secretary at the Company’s principal executive offices not less than forty-five (45) days nor more than seventy-five (75) days prior to the one-year anniversary of the preceding year’s annual meeting; provided, however, that if the date of the annual meeting is more than thirty (30) days before or more than sixty (60) days after such anniversary date, notice by the stockholder to be timely must be so delivered, or mailed and received, not earlier than the one hundred twentieth (120th) day prior to such annual meeting and not later than the later of (i) the ninetieth (90th) day prior to such annual meeting, or (ii) the tenth (10th) day following the day on which public disclosure of the date of such annual meeting was first made. |
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Effect of Failure to Hold an Annual Meeting of Stockholders |
| If a corporation fails to hold an annual stockholders’ meeting to elect directors within 18 months after the last election of directors, a Nevada district court will have jurisdiction in equity and may order an election upon petition of one or more stockholders holding at least 15% of the voting power. NRS 78.345. The Nevada Bylaws do not change this statutory rule. |
| If an annual meeting for election of directors is not held on the date designated or an action by written consent to elect directors in lieu of an annual meeting has not been taken within 30 days after the date designated for the annual meeting, or if no date has been designated, for a period of 13 months after the latest to occur of the organization of the corporation, its last annual meeting or the last action by written consent to elect directors in lieu of an annual meeting, the Court of Chancery may summarily order a meeting to be held upon the application of any stockholder or director. DGCL Section 211. |
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| The Delaware Bylaws do not change this statutory rule. As between Nevada law and Delaware law, Delaware law provides for a shorter interval than Nevada law (13 months versus 18 months) before a stockholder can apply to a court to order a meeting for the election of directors. Also, Nevada law requires that application be made by a stockholder holding at least 15% of the voting power; whereas, Delaware law permits any stockholder or director to make the application. |
Limitation on Director Liability |
| Under Nevada law, unless the articles of incorporation or an amendment thereto (filed on or after October 1, 2003) provides for greater individual liability, a director or officer is not individually liable to the corporation or its stockholders or creditors for any damages as a result of any act or failure to act in his or her capacity as a director or officer unless it is proven that: (a) the director’s or officer’s act or failure to act constituted a breach of his or her fiduciary duties as a director or officer; and (b) the breach of those duties involved intentional misconduct, fraud, or a knowing violation of law. NRS 78.138. |
| Under Delaware law, if a corporation’s certificate of incorporation so provides, the personal liability of a director for breach of fiduciary duty as a director may be eliminated or limited. A corporation’s certificate of incorporation, however, may not limit or eliminate a director’s personal liability (a) for any breach of the director’s duty of loyalty to the corporation or its stockholders, (b) for acts or omissions not in good faith or involving intentional misconduct or a knowing violation of law, (c) for the payment of unlawful dividends, stock repurchases or redemptions, or (d) for any transaction in which the director received an improper personal benefit. DGCL Section 102. |
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| Consistent with this statutory rule, the Nevada Articles of Incorporation provide that the personal liability of the directors of the corporation is eliminated to the fullest extent permitted by the NRS. The Nevada Bylaws do not change this statutory rule. |
| Consistent with this statutory rule, the Delaware Certificate of Incorporation and the Delaware Bylaws limit the personal liability of a director for breach of fiduciary duty as permitted under the DGCL. Delaware law is more extensive in the enumeration of actions under which we may not eliminate a director’s personal liability. | |
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Indemnification |
| A corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending, or completed action, suit, or proceeding, whether civil, criminal, administrative, or investigative, except an action by or in the right of the corporation, by reason of the fact that the person is or was a director, officer, employee, or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee, or agent of another corporation, partnership, joint venture, trust, or other enterprise, against expenses, including attorneys’ fees, judgments, fines, and amounts paid in settlement actually and reasonably incurred by the person in connection with the action, suit or proceeding if the person: (a) is not liable pursuant to NRS 78.138; or (b) acted in good faith and in a manner which he or she reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe the conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction or upon a plea of nolo contendere or its equivalent, does not, of itself, create a presumption that the person is liable pursuant to NRS 78.138 or did not act in good faith and in a manner which he or she reasonably believed to be in or not opposed to the best interests of the corporation, or that, with respect to any criminal action or proceeding, he or she had reasonable cause to believe that the conduct was unlawful. However, indemnification may not be made for any claim, issue, or matter as to which such a person has been adjudged to be liable to the corporation or for amounts paid in settlement, unless and only to the extent that the court determines the person is fairly and reasonably entitled to indemnity for such expenses as the court deems proper. NRS 78.7502. |
| A corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending, or completed action, suit, or proceeding, whether civil, criminal, administrative, or investigative (other than an action by or in the right of the corporation) by reason of the fact that the person is or was a director, officer, employee, or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee, or agent of another corporation, partnership, joint venture, trust, or other enterprise, against expenses (including attorneys’ fees), judgments, fines, and amounts paid in settlement actually and reasonably incurred by the person in connection with such action, suit or proceeding if: (a) the person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the corporation; and (b) with respect to any criminal action or proceeding, had no reasonable cause to believe the person’s conduct was unlawful. With respect to actions by or in the right of the corporation, no indemnification shall be made with respect to any claim, issue, or matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that the Court of Chancery or the court in which such action or suit is brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnification for such expenses which such court shall deem proper. A director or officer who is successful, on the merits or otherwise in defending any proceeding subject to the Delaware corporate statutes’ indemnification provisions shall be indemnified against expenses (including attorneys’ fees) actually and reasonably incurred by such person in connection therewith. DGCL Section 145. |
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| The Nevada Articles of Incorporation and the Nevada Bylaws are consistent with the NRS. |
| The Delaware Certificate of Incorporation and the Delaware Bylaws are consistent with the DGCL. The indemnification provisions of the NRS and DGCL are substantially similar. |
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Declaration and Payment of Dividends |
| Except as otherwise provided in the articles of incorporation, a board of directors may authorize and the corporation may make distributions to its stockholders, including distributions on shares that are partially paid. However, no distribution may be made if, after giving effect to such distribution: (a) the corporation would not be able to pay its debts as they become due in the usual course of business; or (b) except as otherwise specifically allowed by the articles of incorporation, the corporation’s total assets would be less than the sum of its total liabilities plus the amount that would be needed, if the corporation were to be dissolved at the time of distribution, to satisfy the preferential rights upon dissolution of stockholders whose preferential rights are superior to those receiving the distribution. NRS 78.288.
The Nevada Articles of Incorporation and the Nevada Bylaws do not change this statutory rule. |
| Subject to any restriction contained in a corporation’s certificate of incorporation, the board of directors may declare, and the corporation may pay, dividends or other distributions upon the shares of its capital stock either (a) out of “surplus”; or (b) in the event that there is no surplus, out of the net profits for the fiscal year in which the dividend is declared and/or the preceding fiscal year. Dividends may not be paid if the capital of the corporation is less than the total amount of capital represented by the outstanding stock of all classes having a preference upon the distribution of assets. “Surplus” is defined as the excess of the net assets of the corporation over the amount determined to be the capital of the corporation by the board of directors (which amount cannot be less than the aggregate par value of all issued shares of capital stock). DGCL Sections 154, 170.
The Delaware Certificate of Incorporation and the Delaware Bylaws are consistent with the DGCL. |
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Business Combinations |
| Nevada law prohibits certain business combinations between a Nevada corporation and an interested stockholder for three years after such person becomes an interested stockholder. Generally, an interested stockholder is a holder who is the beneficial owner of 10% or more of the voting power of a corporation’s outstanding stock and at any time within three years immediately before the date in question was the beneficial owner of 10% or more of the then outstanding stock of the corporation. After the three-year period, business combinations remain prohibited unless they are (a) approved by the board of directors prior to the date that the person first became an interested stockholder or by a majority of the outstanding voting power not beneficially owned by the interested party, or (b) the interested stockholder satisfies certain fair-value requirements. An interested stockholder is (i) a person that beneficially owns, directly or indirectly, 10% or more of the voting power of the outstanding voting shares of a corporation, or (ii) an affiliate or associate of the corporation who, at any time within the past three years, was an interested stockholder of the corporation. NRS 78.411-.444.
The Nevada Articles of Incorporation and the Nevada Bylaws do not change this statutory rule. |
| Delaware law prohibits, in certain circumstances, a “business combination” between the corporation and an “interested stockholder” within three years of the stockholder becoming an “interested stockholder.” Generally, an “interested stockholder” is a holder who, directly or indirectly, controls 15% or more of the outstanding voting stock or is an affiliate of the corporation and was the owner of 15% or more of the outstanding voting stock at any time within the three-year period prior to the date upon which the status of an “interested stockholder” is being determined. A “business combination” includes a merger or consolidation, a sale or other disposition of assets having an aggregate market value equal to 10% or more of the consolidated assets of the corporation or the aggregate market value of the outstanding stock of the corporation and certain transactions that would increase the interested stockholder’s proportionate share ownership in the corporation. This provision does not apply where, among other things, (i) the transaction which resulted in the individual becoming an interested stockholder is approved by the corporation’s board of directors prior to the date the interested stockholder acquired such 15% interest, (ii) upon consummation of the transaction which resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the outstanding voting stock of the corporation at the time the transaction commenced, or (iii) at or after the date the person becomes an interested stockholder, the business combination is approved by a majority of the board of directors of the corporation and an affirmative vote of at least 66 2/3% of the outstanding voting stock at an annual or Annual Meeting and not by written consent, excluding stock owned by the interested stockholder. This provision also does not apply if a stockholder acquires a 15% interest inadvertently and divests itself of such ownership and would not have been a 15% stockholder in the preceding three years but for the inadvertent acquisition of ownership. DGCL Section 203. |
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| The Delaware Certificate of Incorporation and the Delaware Bylaws do not change this statutory rule. Nevada law and Delaware law provide for different thresholds in determining whether or not a person is an “interested stockholder.” Under Delaware law, since the threshold is higher, we will be able to engage in certain transactions with stockholders that would otherwise be prohibited under Nevada law. | ||
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Selection of Forum |
| The Nevada Articles of Incorporation and the Nevada Bylaws do not contain any provisions governing selection of forum for litigating corporate claims. |
| The Delaware Certificate of Incorporation contains a provision regarding selection of forum, which provides that unless the Corporation consents in writing to the selection of an alternative forum, the Delaware Court of Chancery shall, to the fullest extent permitted by law, be the sole and exclusive forum for (a) any derivative action or proceeding brought on behalf of the Corporation, (b) any action asserting a claim of breach of fiduciary duty owed by, or other wrongdoing by any director, officer, employee or agent of the Corporation to the Corporation or the Corporation’s stockholders, (c) any action asserting a claim arising pursuant to any provision of the DGCL or the Delaware Certificate of Incorporation or the Delaware Bylaws, (d) any action to interpret, apply, enforce or determine the validity of the Delaware Certificate of Incorporation or the Bylaws, or (e) any action asserting a claim governed by the internal affairs doctrine, in each case subject to the Court of Chancery having personal jurisdiction over the indispensable parties named as defendants therein; provided that, if and only if the Court of Chancery dismisses any such action for lack of subject matter jurisdiction, such action may be brought in another state or federal court sitting in Delaware. This provision is not intended to apply to claims arising under the Securities Act and the Exchange Act. To the extent the provision could be construed to apply to such claims, there is uncertainty as to whether a court would enforce the provision in such respect, and our stockholders will not be deemed to have waived our compliance with federal securities laws and the rules and regulations thereunder.
Any person or entity purchasing or otherwise acquiring any interest in any of our securities shall be deemed to have notice of and consented to this provision. These exclusive-forum provisions may limit a stockholder’s ability to bring a claim in a judicial forum of its choosing for disputes with us or our directors, officers, or other employees, which may discourage lawsuits against us and our directors, officers, and other employees. If a court were to find either exclusive-forum provision in our amended and restated bylaws to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving the dispute in other jurisdictions, which could harm our results of operations. |
Vote Required
Approval of the reincorporation from the state of Nevada to the state of Delaware requires the affirmative vote of a majority of the voting power of the incorporation.
THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE
“FOR”
THE APPROVAL OF THE REINCORPORATION FROM THE STATE OF NEVADA TO THE STATE OF DELAWARE
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Background
On May 31, 2019, the Board approved, and recommended that shareholders approve an amendment to the Company’s articles of incorporation, to increase its authorized common stock from 75,000,000 shares to 150,000,000 shares.
To increase the number of shares of authorized common stock, the Board proposes to amend Paragraph 1 of Article III of the Company’s Articles of Incorporation (the “Articles”) to read in its entirety as follows:
“The total authorized shares:
1. Common Shares: 150,000,000”
The Board believes that the current level of authorized common stock constrains the Company’s ability to conduct business in a manner intended to support growth and to enhance shareholder value. The Board considers the proposed increase in the number of authorized shares of common stock desirable because it would give the Company the necessary flexibility to issue common stock for capital raising purposes, and to issue common stock upon the exercise of warrants outstanding and upon the exercise of warrants that may be granted in the future in connection with capital raising transactions or otherwise. Furthermore, an increase in the number of shares of authorized common stock gives the Company the ability to acquire other businesses in exchange for shares of common stock. If approved, and as contemplated under the merger agreement with Chemistry Holdings, Inc. dated March 31, 2019 (“Merger Agreement”), the Company has plans to issue a warrant to purchase 4,143,706 of the newly-authorized shares to MACI Molecule SPV LLC, an Oregon limited liability company, in consideration for consulting and advisory services to be provided.
The proposed amendment to the Company’s Articles will ensure that the Company will continue to have an adequate number of authorized and unissued shares of common stock available for future use. As of June 21, 2019, there were 43,384,671 shares of the common stock outstanding and 31,569,489 shares of common stock reserved for issuance upon the exercise of outstanding options and warrants and upon achievement of certain milestones pursuant to the Merger Agreement, as well as for future issuance under our shareholder-approved equity incentive plan.
As is the case with the shares of common stock which are currently authorized but unissued, if this proposal to amend the Company’s Articles to increase the authorized number of shares of common stock is approved by the shareholders, the Board will have authority to issue additional shares of common stock from time to time without further action on the part of shareholders, except as may be required by applicable law or by the rules of any stock exchange or market on which the Company’s securities may then be listed or authorized for quotation.
Our Articles do not include any preemptive or other rights of shareholders to subscribe for any shares of common stock which may in the future be issued by the Company, which means that current shareholders do not have a prior right to purchase any new issue of common stock in order to maintain their proportionate ownership of common stock.
Other than issuing the aforementioned shares to MACI Molecule SPV LLC we do not have any specific plans, arrangements or understandings for the newly authorized but unissued shares of common stock that would be available following the increase in authorized shares, we view the issuance of common stock and warrants to purchase common stock as our principal source of operating capital until such time as we may begin to generate positive cash flow from operations.
The additional shares of common stock that we are seeking authorization for may be used for such corporate purposes as the Board may determine from time to time to be necessary or desirable. These purposes may include, without limitation: issuing shares under our incentive plans, raising capital through the sale of common stock and/or warrants to purchase common stock and acquiring other businesses in exchange for shares of common stock.
The authorization of the additional shares of common stock by this proposal would not have any immediate dilutive effect on the proportionate voting power or other rights of existing shareholders, but, to the extent that the additional authorized shares are issued in the future, it will decrease the existing shareholders’ percentage equity ownership and, depending on the price at which they are issued, could be dilutive to existing shareholders and have a negative effect on the trading price of our common stock.
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Implementation
If the amendment is approved by our shareholders, we must file an amendment with the Nevada Secretary of State in order for the amendment to become effective. If we obtain shareholder approval of the amendment, we intend to file the amendment as soon as practicable.
If shareholders approve this Proposal 3 together with Proposal 2 (to reincorporate the Company from the State of Nevada to the State of Delaware), the Company will implement this Proposal 3 first and amend, prior to implementation of Proposal 2, Section 4.1 of the Delaware Certificate (as defined in Proposal 2) to reflect the shareholder-approved increase in authorized shares.
Effect of Failure to Obtain Shareholder Approval
If we do not obtain shareholder approval for this proposal to amend our Articles to increase the authorized number of shares of our common stock from 75,000,000 to 150,000,000, we may not have the ability to raise sufficient capital to continue to operate our business or have sufficient shares authorized to effect strategic transactions in the future where the consideration would otherwise be capital stock.
No Appraisal Rights
Under Nevada law, our stockholders are not entitled to appraisal rights with respect to the increase to the number of authorized shares of common stock.
Vote Required
Approval of the proposal to amend the Articles to increase the number of authorized shares of the Company’s common stock requires an affirmative vote of a majority of the votes entitled to be cast on the matter. Abstentions and broker non-votes will have the same effect on the result of this vote as votes cast AGAINST this proposal.
If you do not hold your shares in street name and respond but do not indicate how you want to vote on the amendment, your proxy will be counted as a vote in favor of such proposal.
THE BOARD RECOMMENDS A VOTE “FOR”
AN AMENDMENT TO THE COMPANY’S ARTICLES OF INCORPORATION TO INCREASE THE NUMBER OF
AUTHORIZED SHARES OF THE COMPANY’S COMMON STOCK
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Background
On May 31, 2019, the Board approved, and recommended that shareholders approve an amendment to the Company’s 2017 Equity Incentive Plan to increase the number of shares of the Company’s common stock available for awards thereunder by an additional 5,000,000 shares to a total of 10,000,000 shares.
We are asking our stockholders to approve the Amendment (the “Amendment”) to the Company’s 2017 Equity Incentive Plan (as amended from time to time, the “2017 Plan”). As of June 21, 2019, 985,244 shares remained available for future grants under the 2017 Plan. Our Board believes that this share increase is necessary to ensure that the Company has a sufficient reserve of shares available to attract and retain the services of key individuals essential to the Company’s long-term growth and success. Other than the amendment contained in Proposal 5, no other changes to the 2017 Plan are proposed. A copy of the Amendment is attached to this Proxy Statement as Exhibit F, and the discussion in this proposal is qualified in its entirety by the full text of the Amendment.
Currently, the 2017 Plan provides that the maximum number of shares available for issuance pursuant to awards issued thereunder is 5,000,000 shares of our common stock. Because certain of our directors and executive officers may be eligible to receive awards under the 2017 Plan, such directors and executive officers may be considered to have an interest in this proposal.
Description of Principal Features of the 2017 Plan
Types of Awards. Grants under the 2017 Plan may be made in the form of stock options, stock appreciation rights (“SARs”), restricted stock, restricted stock units (“RSUs”), performance shares, performance units and other cash or stock-based awards.
Number of Authorized Shares. If approved by our stockholders, the 2017 Plan will authorize awards in respect of an aggregate of 5,000,000 shares of our common stock. Of the 5,000,000 shares authorized under the 2017 Plan, no more than 5,000,000 shares will be available for grants of “full-value” awards, meaning awards other than stock options, SARs or other awards for which the recipient pays the exercise price. If an award under the 2017 Plan is canceled, forfeited, terminates or is settled in cash, the shares related to that award will not be treated as having been delivered under the 2017 Plan. For purposes of determining the number of shares available for grant as incentive stock options, only shares that are subject to an award that expires or is cancelled, forfeited or settled in cash shall be treated as not having been issued under the 2017 Plan.
Maximum Grants under the 2017 Plan. For purposes of Section 162(m) of the Code, the maximum (i) number of our shares with respect to which stock options or SARs may be granted to any participant in any fiscal year is 500,000 shares, (ii) number of our shares of restricted stock that may be granted to any participant in any fiscal year is 500,000 shares, (iii) number of our shares with respect to which RSUs may be granted to any participant in any fiscal year is 500,000 shares, (iv) number of our shares with respect to which performance shares may be granted to any participant in any fiscal year is 500,000 shares, (v) amount of compensation that may be paid with respect to performance units or other cash or stock-based awards awarded to any participant in any fiscal year is $1,000,000 or a number of shares having a fair market value not in excess of that amount and (vi) dividend or dividend equivalent that may be paid to any one participant in any one fiscal year is $1,000,000.
Administration. The 2017 Plan shall be administered by the Committee, as defined below. All questions of interpretation of the 2017 Plan, of any award agreement or of any other form of agreement or other document employed by the Company in the administration of the 2017 Plan or of any Award shall be determined by the Committee, and such determinations shall be final, binding and conclusive upon all persons having an interest in the Plan or such Award, unless fraudulent or made in bad faith. Any and all actions, decisions and determinations taken or made by the Committee in the exercise of its discretion pursuant to the Plan or Award Agreement or other agreement thereunder (other than determining questions of interpretation pursuant to the preceding sentence) shall be final, binding and conclusive upon all persons having an interest therein. All expenses incurred in connection with the administration of the Plan shall be paid by the Company. For purposes of the 2017 Plan, “Committee” shall mean the Compensation
Committee and such other committee or subcommittee of the Board, if any, duly appointed to administer the 2017 Plan and having such powers in each instance as shall be specified by the Board, and if, at any time, there is no committee of the Board then authorized or properly constituted to administer the 2017 Plan, the Board shall exercise all of the powers of the Committee granted herein, and, in any event, the Board may in its discretion exercise any or all of such powers.
Effective Date and Duration. The 2017 Plan will become effective if it is approved by our stockholders at the Special Meeting, and will authorize the granting of awards for up to ten years. The 2017 Plan will remain in effect with respect to outstanding awards until no awards remain outstanding.
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Amendment and Termination. The Committee may amend, suspend or terminate the 2017 Plan at any time. However, without the approval of the Company’s stockholders, there shall be (a) no increase in the maximum aggregate number of shares of common stock that may be issued under the 2017 Plan (except by operation of the provisions of Sections 4.2, 4.3 and 4.4 of the 2017 Plan), (b) no change in the class of persons eligible to receive Incentive Stock Options, and (c) no other amendment of the 2017 Plan that would require approval of the Company’s stockholders under any applicable law, regulation or rule, including the rules of any stock exchange or quotation system upon which the Stock may then be listed or quoted. No amendment, suspension or termination of the 2017 Plan shall affect any then outstanding Award unless expressly provided by the Committee. Except as provided by the next sentence, no amendment, suspension or termination of the 2017 Plan may have a materially adverse effect on any then outstanding Award without the consent of the Participant. Notwithstanding any other provision of the Plan or any Award Agreement to the contrary, the Committee may, in its sole and absolute discretion and without the consent of any Participant, amend the 2017 Plan or any Award Agreement, to take effect retroactively or otherwise, as it deems necessary or advisable for the purpose of conforming the 2017 Plan or such Award Agreement to any present or future law, regulation or rule applicable to the 2017 Plan, including, but not limited to, Section 409A of the Code.
Change in Capitalization. In the event of any equity restructuring, such as a stock dividend, stock split, spinoff, rights offering or recapitalization through a large, nonrecurring cash dividend, the Committee shall cause an equitable adjustment to be made (i) in the number and kind of shares of our common stock that may be delivered under the 2017 Plan, (ii) in the individual annual limitations on each type of award under the 2017 Plan and (iii) with respect to outstanding awards, in the number and kind of shares subject to outstanding awards, the exercise price, grant price or other price of shares subject to outstanding awards, any performance conditions relating to shares, the market price of shares, or per-share results and other terms and conditions of outstanding awards, in the case of (i), (ii) and (iii) to prevent dilution or enlargement of rights. In the event of any other change in corporate capitalization, such as a merger, consolidation or liquidation, the Committee may, in its sole discretion, cause an equitable adjustment as described in the foregoing sentence to be made, to prevent dilution or enlargement of rights.
Repricing. Without the affirmative vote of holders of a majority of the shares of common stock cast in person or by proxy at a meeting of the stockholders of the Company at which a quorum representing a majority of all outstanding shares of common stock is present or represented by proxy, the Committee shall not approve a program providing for either (a) the cancellation of outstanding Options or SARs having exercise prices per share greater than the then Fair Market Value of a share of Stock (“Underwater Awards”) and the grant in substitution therefor of new Options or SARs having a lower exercise price, Full Value Awards or payments in cash, or (b) the amendment of outstanding Underwater Awards to reduce the exercise price thereof.
Eligibility and Participation. Eligible participants include all employees, directors and consultants of the Company and our subsidiaries, as determined by the Committee. However, eligibility shall not entitle any person to be granted an Award, or, having been granted an Award, to be granted an additional Award.
Termination of Employment or Service. Each award agreement will set forth the participant’s rights with respect to the award following termination of employment with or service to the Company.
Change in Control. In the event of a Change in Control, outstanding Awards shall be subject to the definitive agreement entered into by the Company in connection with the Change in Control. Subject to the requirements and limitations of Section 409A of the Code, if applicable, the Committee may provide for any one or more of the following: a) accelerated vesting, b) the surviving’s corporation’s assumption or continue that Company’s rights and obligations under each or any Award, or c) cash out of outstanding stock based awards.
Transferability. Awards generally will be non-transferable except upon the death of a participant, although the Committee may permit a participant to transfer awards (for example, to family members or trusts for family members) subject to such conditions as the Committee may establish.
Deferrals. The Committee may permit the deferral of vesting or settlement of an award and may authorize crediting of dividends or interest or their equivalents in connection with any such deferral. Any such deferral and crediting will be subject to the terms and conditions established by the Committee and any terms and conditions of the plan or arrangement under which the deferral is made.
Types of Awards
The following is a general description of the types of awards that may be granted under the 2017 Plan. Terms and conditions of awards will be determined on a grant-by-grant basis by the Committee, subject to the limitations contained in the 2017 Plan.
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Stock Options. The Committee may grant incentive stock options (“ISOs”), nonqualified stock options (“NQSOs”) or a combination thereof under the 2017 Plan. The exercise price for each such award will be at least equal to 100% of the fair market value of a share of common stock on the date of grant (110% of fair market value in the case of an ISO granted to a person who owns more than 10% of the voting power of all classes of stock of the Company or any subsidiary). Options will expire at such times and will have such other terms and conditions as the Committee may determine at the time of grant; provided, however, that no option may be exercisable later than the tenth anniversary of its grant (fifth anniversary in the case of an ISO granted to a person who owns more than 10% of the voting power of all classes of stock of the Company or any subsidiary). The exercise price of options granted under the 2017 Plan may be paid in cash, by tendering previously acquired shares of common stock having a fair market value equal to the exercise price, through broker-assisted cashless exercise or any other means permitted by the Committee consistent with applicable law or by a combination of any of the permitted methods. The Committee may also award dividend equivalent payments in connection with a stock option.
Stock Appreciation Rights. SARs granted under the 2017 Plan may be in the form of freestanding SARs (SARs granted independently of any option), tandem SARs (SARS granted in connection with a related option) or a combination thereof. The grant price of a freestanding SAR will be equal to the fair market value of a share of common stock on the date of grant. The grant price of a tandem SAR will be equal to the exercise price of the related option. Freestanding SARs may be exercised upon such terms and conditions as are imposed by the Committee and set forth in the SAR award agreement. Tandem SARs may be exercised only with respect to the shares of common stock for which its related option is exercisable. Upon exercise of a SAR, a participant will receive the product of the excess of the fair market value of a share of common stock on the date of exercise over the grant price multiplied by the number of shares with respect to which the SAR is exercised. Payment upon SAR exercise may be in cash, in shares of common stock of equivalent value, or in some combination of cash and shares, as determined by the Committee. The Committee may also award dividend equivalent payments in connection with SARs.
Restricted Stock. The Committee will be authorized to award restricted stock under the 2017 Plan. Restricted Stock is an award that is non-transferable and subject to a substantial risk of forfeiture until vesting conditions, which can be related to continued service or other conditions established by the Committee, are satisfied. Prior to vesting, holders of restricted stock may receive dividends and voting rights. If the vesting conditions are not satisfied, the participant forfeits the shares. Restricted stock may be granted in the form of either Restricted Stock Bonus or a Restricted Stock Purchase Right.
Restricted Stock Units. The Committee will be authorized to award Restricted Stock Units (“RSUs”) under the 2017 Plan. RSUs represent a right to receive a share of common stock, an equivalent amount of cash, or a combination of shares and cash, as the Committee may determine, if vesting conditions are satisfied. No monetary payment (other than applicable tax withholding, if any) shall be required as a condition of receiving an RSU, the consideration for which shall be services actually rendered to a Participating Company or for its benefit. Notwithstanding the foregoing, if required by applicable state corporate law, the Participant shall furnish consideration in the form of cash or past services rendered to a Participating Company or for its benefit having a value not less than the par value of the shares of Stock issued upon settlement of the RSU. RSUs may contain vesting conditions based on continued service or other conditions established by the Committee. The Committee may also award dividend equivalent payments in connection with such awards.
Performance Awards. Performance Awards may be granted in the form of either Performance Shares or Performance Units. Unless otherwise provided by the Committee in granting a Performance Award, each Performance Share shall have an initial monetary value equal to the Fair Market Value of one (1) share of the Company’s common stock on the effective date of grant of the Performance Share, and each Performance Unit shall have an initial monetary value established by the Committee at the time of grant. Performance Units are awards that entitle a participant to receive shares of common stock, cash or a combination of shares and cash if certain performance conditions are satisfied. The amount received depends upon the value of the performance units and the number of performance units earned, each of which is determined by the Committee. The Committee may also award dividend equivalent payments in connection with such awards. Performance shares may contain vesting conditions based on attainment of performance goals established by the Committee in addition to service conditions.
Other Cash and Stock-Based Awards. Other cash and stock-based awards are awards other than those described above, the terms and conditions of which are determined by the Committee. These awards may include, without limitation, the grant of shares of our common stock based on attainment of performance goals established by the Committee, the payment of shares as a bonus or in lieu of cash based on attainment of performance goals established by the Committee, and the payment of shares in lieu of cash under an incentive or bonus program. Payment under or settlement of any such awards will be made in such manner and at such times as the Committee may determine.
Dividend Equivalents. Dividend equivalents granted to participants will represent a right to receive payments equivalent to dividends with respect to a specified number of shares.
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Performance Goals
The Committee will have the discretion to designate any award under the 2017 Plan as a performance compensation award (a “Performance Award”). While awards in the form of stock options and SARs are intended to qualify as “performance-based compensation” under Section 162(m) of the Code, the Committee may treat certain other awards under the 2017 Plan as “performance-based compensation” and thus preserve deductibility by the Company for federal income tax purposes of such awards which are made to individuals who are “covered employees” as defined in Section 162(m) of the Code.
Each Performance Award will be payable only upon achievement over a specified performance period of a pre-established objective performance goal established by the Committee for such period. The Committee may designate one or more performance criteria for purposes of establishing a performance goal with respect to Performance Compensation Awards made under the 2017 Plan. Performance goals will be chosen from among the following performance measures: revenues; sales; expenses; operating income; gross margin; operating margin, ear before any one or more of: stock-based compensation expense, interest, taxes, depreciation and amortization; pre-tax profit; net operating income; net income; economic value added; free cash flow; operating cash flow; balance of cash, cash equivalents and marketable securities; stock price; earnings per share; return on stockholder equity; return on capital; return on assets; return on investment; total stockholder return; employee satisfaction; employee retention; market share; customer satisfaction; product development; research and development expenses; completion of an identified special project; and completion of a joint venture or other corporate transaction. The targeted level or levels of performance with respect to such performance measures may be established at such levels and on such terms as the Committee may determine, in its discretion, including in absolute terms, as a goal relative to performance in prior periods or as a goal compared to the performance of one or more comparable companies or an index covering multiple companies.
The Committee may make adjustments in the terms and conditions of, and the criteria included in, awards in recognition of unusual or nonrecurring events, including, for example, events affecting us or our financial statements or changes in applicable laws, regulations, or accounting principles, whenever the Committee determines that such adjustments are appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the 2017 Plan. With respect to any awards intended to qualify as performance-based compensation under section 162(m) of the Code, any such adjustments shall be specified at such times and in such manner as will not cause such awards to fail to so qualify.
Certain U.S. Federal Income Tax Consequences
Set forth below is a discussion of certain United States federal income tax consequences with respect to certain awards that may be granted pursuant to the 2017 Plan. The following discussion is a brief summary only, and reference is made to the Code and the regulations and interpretations issued thereunder for a complete statement of all relevant federal tax consequences. This summary is not intended to be exhaustive and does not describe state, local or foreign tax consequences of participation in the 2017 Plan.
Incentive Stock Options. In general, no taxable income is realized by a participant upon the grant of an Incentive Stock Option ("ISO"). If shares of common stock are issued to a participant pursuant to the exercise of an ISO, then, generally (i) the participant will not realize ordinary income with respect to the exercise of the option, (ii) upon sale of the underlying shares acquired upon the exercise of an ISO, any amount realized in excess of the exercise price paid for the shares will be taxed to the participant as capital gain and (iii) the Company will not be entitled to a deduction. The amount by which the fair market value of the stock on the exercise date of an ISO exceeds the purchase price generally will, however, constitute an item which increases the participant’s income for purposes of the alternative minimum tax. However, if the participant disposes of the shares acquired on exercise before the later of the second anniversary of the date of grant or one year after the receipt of the shares by the participant (a “Disqualifying Disposition”), the participant generally would include in ordinary income in the year of the Disqualifying Disposition an amount equal to the excess of the fair market value of the shares at the time of exercise (or, if less, the amount realized on the disposition of the shares), over the exercise price paid for the shares. If ordinary income is recognized due to a disqualifying disposition, the Company would generally be entitled to a deduction in the same amount. Subject to certain exceptions, an ISO generally will not be treated as an ISO if it is exercised more than three months following termination of employment. If an ISO is exercised at a time when it no longer qualifies as an ISO, it will be treated for tax purposes as a nonqualified stock option (“NQSO”) as discussed below.
Nonqualified Stock Options. In general, no taxable income is realized by a participant upon the grant of an NQSO. Upon exercise of an NQSO, the participant generally would include in ordinary income at the time of exercise an amount equal to the excess, if any, of the fair market value of the shares at the time of exercise over the exercise price paid for the shares. At the time the participant recognizes ordinary income, the Company generally will be entitled to a deduction in the same amount. In the event of a subsequent sale of shares received upon the exercise of an NQSO, any appreciation after the date on which taxable income is realized by the participant in respect of the option exercise should be taxed as capital gain in an amount equal to the excess of the sales proceeds for the shares over the participant’s basis in such shares. The participant’s basis in the shares will generally equal the amount paid for the shares plus the amount included in ordinary income by the participant upon exercise of the NQSO.
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Stock Appreciation Rights. In general, the grant of a SAR will not result in income for the participant or in a tax deduction for the Company. Upon the settlement of a SAR, the participant will recognize ordinary income equal to the aggregate value of the payment received, and the Company generally will be entitled to a tax deduction at such time in the same amount.
Restricted Stock. In general, a participant will not recognize any income upon the grant of restricted stock, unless the participant elects under Section 83(b) of the Code, within thirty days after such grant, to recognize ordinary income in an amount equal to the fair market value of the restricted stock at the time of grant, less any amount paid for the shares. If the election is made, the participant will not be allowed a deduction for amounts subsequently required to be returned to the Company. If the election is not made, the participant will generally recognize ordinary income on the date that the restrictions to which the restricted stock lapse, in an amount equal to the fair market value of such shares on such date, less any amount paid for the shares. At the time the participant recognizes ordinary income, the Company generally will be entitled to a deduction in the same amount. Generally, upon a sale or other disposition of restricted stock with respect to which the participant has recognized ordinary income (i.e., where a Section 83(b) election was previously made or the restrictions were previously removed), the participant will recognize capital gain or loss in an amount equal to the difference between the amount realized on such sale or other disposition and the participant’s basis in such shares.
Restricted Stock Units and Other Awards. Restricted stock units and other awards granted under the 2017 Plan are generally not subject to tax at the time of the award but are subject to ordinary income tax at the time of payment, whether paid in cash or shares of our common stock. With respect to such awards, we generally will be allowed a tax deduction for the amount included in the taxable income of the participant in the taxable year of inclusion.
Number of Awards Granted to Employees, Consultants and Directors
The number of awards that an employee, director, or consultant may receive under the Amended and Restated Plan is in the discretion of the administrator and therefore cannot be determined in advance. The following table sets forth: (i) the aggregate number of shares of common stock subject to options granted under the Current Plan since inception to each of our named executive officers; 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 and (ii) the average per share exercise price of such options;
Name of Individual or Group |
| Number of Shares Subject to Options Granted |
|
| Average Per Share Exercise Price of Option Grants |
| ||
|
|
|
|
|
|
| ||
Robert Davidson, Chief Executive Officer and Chairman |
|
| 422,750 |
|
| $ | 0.68 |
|
Michael Redard(1), Chief Financial Officer |
|
| 250,000 |
|
| $ | 4.01 |
|
Jessica Rousset(2), Chief Operating Officer |
|
| 350,000 |
|
| $ | 0.68 |
|
Wayne Nasby(3), former Chief Operating Officer |
|
| - |
|
| $ | - |
|
Mark Udell(4), Chief Accounting Officer, Treasurer and Secretary |
|
| 150,000 |
|
| $ | 0.74 |
|
Edward Maliski(5), former President and Chief Scientific Officer |
|
| 50,000 |
|
| $ | 0.74 |
|
|
|
|
|
|
|
|
|
|
All executive officers, as a group |
|
| 972,750 |
|
| $ | 0.70 |
|
|
|
|
|
|
|
|
|
|
All directors who are not executive officers, as a group |
|
| 500,000 |
|
| $ | 1.84 |
|
|
|
|
|
|
|
|
|
|
All employees who are not executive officers, as a group |
|
| 465,300 |
|
| $ | 0.81 |
|
________
(1) | Michael Redard was appointed the Company’s Chief Financial Officer, replacing Mark Udell who remains with the Company as Chief Accounting Officer, Treasurer and Secretary. |
(2) | Jessica Rousset was appointed to Chief Operating Officer effective January 22, 2018. |
(3) | Wayne Nasby entered into a separation agreement that was effective January 21, 2018. |
(4) | Mark Udell resigned as the Company’s Chief Financial Officer effective November 15, 2018, with the appointment of Alex Katz as the Company’s Chief Financial Officer. Mr. Udell remains with the Company as Chief Accounting Officer, Treasurer and Secretary. |
(5) | Edward Maliski resigned as the Company President and Chief Scientific Officer effective June 30, 2018 and entered into a Confidential Severance and General Release Agreement. On July 1, 2018, Mr. Maliski entered into a Consulting Agreement with the Company. |
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Effect of Failure to Obtain Shareholder Approval
If the stockholders do not approve the Amendment, the Amendment will not become effective, the 2017 Equity Incentive Plan will continue in effect (without giving effect to the Amendment), and we will be subject to the current share limit set forth in the 2017 Equity Incentive Plan.
Vote Required
Amendment to the Company’s 2017 Equity Incentive Plan to increase the number of shares of the Company’s common stock available for awards thereunder by an additional 5,000,000 shares to a total of 10,000,000 shares requires an affirmative vote of a majority of the votes entitled to be cast on the matter to approve the proposal. Abstentions and broker non-votes will operate to prevent the approval of proposal to the same extent as a vote against such proposal
If you do not hold your shares in street name and respond but do not indicate how you want to vote on the amendment, your proxy will be counted as a vote in favor of such proposal.
THE BOARD RECOMMENDS A VOTE “FOR”
AMENDMENT TO THE COMPANY’S 2017 EQUITY INCENTIVE PLAN TO INCREASE THE NUMBER OF SHARES OF
THE COMPANY’S COMMON STOCK AVAILABLE FOR AWARDS THEREUNDER BY AN ADDITIONAL 5,000,000
SHARES TO A TOTAL OF 10,000,000 SHARES
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Background
On May 31, 2019, the Board approved, and recommended that shareholders approve an amendment of Section 5.5 of the Company’s 2017 Equity Incentive Plan to revise the nonemployee director award limit in any fiscal year from an aggregate of one hundred thousand (100,000) shares of the Company’s common stock, to an aggregate compensation of up to $300,000 (less any cash retainer made to the nonemployee directors) using (i) the market value for any non-derivative securities (e.g., common stock) granted under the 2017 Equity Incentive Plan and (ii) the Black-Scholes value of any derivative securities (e.g., options) granted under the 2017 Equity Incentive Plan.
The revised wording of Section 5.5 shall be:
“Nonemployee Director Award Limit. Notwithstanding any other provision of the Plan to the contrary, the aggregate grant date fair value (computed as of the date of grant in accordance with generally accepted accounting principles in the United States) of all Awards granted to any Nonemployee Director during any fiscal year of the Company, taken together with any cash compensation paid to such Nonemployee Director during such fiscal year, shall not exceed $300,000.”
We are asking our stockholders to approve this revision (the “Revision”) to the Company’s 2017 Equity Incentive Plan. Other than the amendment contained in Proposal 4, no other changes to the 2017 Equity Incentive Plan are proposed. A copy of the effect of the Amendment and Revision is attached to this Proxy Statement as Exhibit F, and the discussion in this proposal is qualified in its entirety by the full text of the Amendment.
The Revision was adopted by the Board May 31, 2019, subject to stockholder approval. The Revision allows the Board to be more creative in granting compensation to nonemployee directors under the 2017 Equity Incentive Plan. Currently, the Board may annually grant nonemployee directors up to 100,000 shares of the Company’s common stock, the Revision allows the Company to structure the compensation for nonemployee directors in a manner that is both favorable to the Company and the nonemployee director.
Description of Principal Features of the 2017 Plan and Certain U.S. Federal Income Tax Consequences
See the information included under Proposal 3 for a description of the principal features of the 2017 plan and certain U.S. Federal income tax consequences.
Effect of Failure to Obtain Shareholder Approval
If the stockholders do not approve the Revision, the Revision will not become effective, the 2017 Equity Incentive Plan will continue in effect (without giving effect to the Revision), and we will be subject to the current grant limit set forth in the 2017 Equity Incentive Plan which allows the Board to annually grant up 100,000 shares of the Company’s common stock to nonemployee directors.
Vote Required
The Revision to the Company’s 2017 Equity Incentive Plan to revise the nonemployee director award limit in any fiscal year from an aggregate of one hundred thousand (100,000) shares of the Company’s common stock, to an aggregate compensation of up to $300,000 (less any cash retainer made to the nonemployee directors) using (i) the market value for any non-derivative securities (e.g., common stock) granted under the 2017 Equity Incentive Plan and (ii) the Black-Scholes value of any derivative securities granted under the 2017 Equity Incentive Plan (e.g., options) requires an affirmative vote of a majority of the votes entitled to be cast on the matter to approve the proposal. Abstentions and broker non-votes will operate to prevent the approval of proposal to the same extent as a vote against such proposal
If you do not hold your shares in street name and respond but do not indicate how you want to vote on the amendment, your proxy will be counted as a vote in favor of such proposal.
THE BOARD RECOMMENDS A VOTE “FOR”
AMENDMENT TO THE COMPANY’S 2017 EQUITY INCENTIVE PLAN TO REVISE SECTION 5.5 OF THE 2017
EQUITY INCENTIVE PLAN RELATING TO NONEMPLOYEE DIRECTOR AWARD LIMITS
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PROPOSAL 6 RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2019
Proposal to Ratify Selection of Auditors for 2019
The Audit Committee of our Board has engaged RBSM LLP as our independent registered public accounting firm for the year ending December 31, 2018 and is seeking ratification of such selection by our shareholders at the Annual Meeting. RBSM LLP has served as the Company’s independent public accounting firm since 2015. Representatives of RBSM LLP are expected to be present at the Annual Meeting. They will have an opportunity to make a statement if they so desire and will be available to respond to appropriate questions.
Independent Accountants
The following table presents aggregate fees billed for each of the year ended December 31, 2018 and 2017 for professional services rendered by RBSM LLP in the categories listed below.
|
| 2017 |
|
| 2018 |
| ||
Audit Fees (1) |
| $ | 85,000 |
|
| $ | 85,811 |
|
Audit-Related Fees (2) |
|
| — |
|
| $ | 18,000 |
|
Tax Fees (3) |
| $ | 1500 |
|
| $ | 5,000 |
|
All Other Fees |
|
| — |
|
|
| — |
|
__________
(1) | Audit Fees – These consisted of the aggregate fees for professional services rendered in connection with (i) the audit of our annual financial statements and (ii) the review of the financial statements included in our Quarterly Reports on Form 10-Q for the quarters ended March 31, June 30 and September 30. |
|
|
(2) | Audit-related Fees–These consisted of professional services rendered in connection with our Form S-1, Form S-1/A and Form S-8. |
(3) | Tax Fees – These consisted of services performed in preparation of the Company’s corporate Federal and State tax returns. |
The Audit Committee of the Board does not consider the provision of the services described above by RBSM LLP to be incompatible with the maintenance of RBSM LLP’s independence.
Before RBSM LLP is engaged by us to render audit or non-audit services, the engagement is approved by our Audit Committee. All of the services performed by RBSM LLP for the Company during 2018 were pre-approved by the Audit Committee.
Vote Required
Approval of the proposal to ratify the selection of RBSM LLP as our independent registered public accounting firm requires the affirmative vote of a majority of the votes cast by the holders of common shares entitled to vote on the matter. We are not required to have shareholders ratify the selection of our independent registered public accounting firm. However, the Audit Committee is submitting its selection of RBSM LLP to our shareholders for ratification as a matter of good corporate practice and to help ensure that we will have the necessary quorum at our Annual Meeting. If our shareholders fail to ratify the selection, the Audit Committee will reconsider whether or not to retain RBSM LLP. Even if the selection is ratified, the Audit Committee in its discretion may direct the appointment of a different independent registered public accounting firm at any time during the year if they determine that such a change would be in the best interests of the Company and our shareholders.
THE BOARD RECOMMENDS A VOTE “FOR”
THE RATIFICAITON OF RBSM LLP AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2019
30 |
Table of Contents |
OFFICERS AND EXECUTIVE COMPENSATION
The following table sets forth certain information regarding our Directors and Executive Officers. The age of each Director and Executive Officer listed below is given as of December 31, 2018.
Name |
| Age |
| Position |
Robert Davidson |
| 51 |
| Chairman of the Board, Chief Executive Officer |
Michael Redard (1) |
| 60 |
| Chief Financial Officer |
Jessica Rousset (2) |
| 42 |
| Chief Operating Officer |
Mark Udell |
| 41 |
| Chief Accounting Officer, Treasurer and Secretary |
________
(1) | Michael Redard was appointed the Company’s Chief Financial Officer effective date May 15, 2019 replacing Mark Udell who remains with the Company as Chief Accounting Officer, Treasurer and Secretary. |
(2) | Jessica Rousset was appointed the Company’s Chief Operating Officer effective January 22, 2018, replacing Wayne Nasby. |
Executive Officers
Robert Davidson – Chairman of the Board and Chief Executive Officer
Robert Davidson has served as the Chairman of the Board and Chief Executive Officer of CURE Pharmaceutical since July 2011. Prior to his role at CURE Pharmaceutical, Mr. Davidson served as President and Chief Executive Officer of InnoZen Inc., Chief Executive Officer of Gel Tech LLC, Chief Executive Officer of Bio delivery Technologies Inc., and Director of HealthSport Inc. Mr. Davidson was responsible for the development of several drug delivery technologies and commercial brand extensions. He has worked with brands such as Chloraseptic™, Suppress™, as well as Pediastrip™, a private label electrolyte oral thin film sold in major drug store chains. Mr. Davidson is also considered an industry expert leader in ODF technology. Mr. Davidson received his B.S. degree with a concentration in Biological Life Sciences from the University of the State of New York, Excelsior College. He has a Masters Certificate in Applied Project Management from Villanova University, Masters of Public Health from American Military University, Virginia and a Masters in Health and Wellness from Liberty University, Virginia. Mr. Davidson is also a Certified Performance Enhancement Specialist and Fitness Nutrition Specialist through the National Academy of Sports Medicine and attended Post-Graduate Studies at the University of Cambridge. Mr. Davidson’s experience as our Chief Executive Officer and Chairman, and his extensive knowledge of ODF and drug delivery technologies qualifies him to serve on our Board.
Michael Redard – Chief Financial Officer
Jessica Rousset – Chief Operating Officer
Jessica Rousset has served as the Company’s Chief Operating Officer since January 22, 2018. She previously served since March 15, 2017 as the Company’s Chief Business Officer, oversees operations and drives corporate strategy and growth. Mrs. Rousset previously served as Head of Innovation at Children’s Hospital Los Angeles, where over a ten-year period from 2006 to November 2016, she helped launch both therapeutic and medical device companies and founded and operated a national pediatric technology accelerator. Prior to that, Mrs. Rousset held positions at The Scripps Research Institute and GlaxoSmithKline Biologicals in laboratory, clinical research and business development roles. She is a seasoned business development and commercialization leader, expert in bridging corporate, academic and governmental interests toward the common goal of improving patient’s lives. She brings more than fifteen years of experience fostering innovation in large organizations and advising start-ups to bring novel healthcare solutions to market and into clinical use. She trained as a biochemical engineer at the Institut National des Sciences Appliquées in Lyon, France.
31 |
Table of Contents |
Mark Udell – Chief Accounting Officer, Treasurer and Secretary
Mark Udell has served as the Chief Accounting Officer since November 2018 and as Treasurer and Secretary of CURE Pharmaceutical since July 2011. He is a Certified Public Accountant with over 17 years of experience in finance and accounting. Prior to joining the Company in 2011, Mr. Udell served as InnoZen, Inc.’s Chief Accounting Officer and Controller and was responsible for establishing, monitoring and enforcing policies and procedures for the company as well as conducting audits and working with external auditors. While working at CURE and InnoZen, Inc., Mr. Udell gained valuable knowledge in the drug delivery industry and is a key contributor in the development and commercialization of various drug delivery technologies. He has also held the position as Auditing Manager at Green Hasson & Janks, LLP in Los Angeles. Mr. Udell received his B.A. in Business Economics with a concentration in accounting from the University of California, Santa Barbara.
The following table sets forth information regarding compensation earned during 2018 and 2017 by our principal executive officer and our other most highly compensated executive officers as of the end of the 2018 fiscal year (“Named Executive Officers”).
Summary Compensation Table
Name and Principal Position |
| Year |
| Salary ($) |
|
| Bonus ($) |
|
| Stock Awards ($) |
|
| Option Awards ($) |
|
| All Other Compensation ($) |
|
| Total ($) |
| ||||||
Robert Davidson, Chief Executive Officer and Chairman |
| 2018 |
|
| 175,833 |
|
|
| - |
|
|
| 23,125 |
|
|
| 251,558 |
|
|
| 15,082 |
|
|
| 465,598 |
|
|
| 2017 |
|
| 155,000 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 155,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Alex Katz(4), former Chief Financial Officer |
| 2018 |
|
| 3,864 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 3,864 |
|
|
| 2017 |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jessica Rousset(2), Chief Operating Officer |
| 2018 |
|
| 180,000 |
|
|
| - |
|
|
| 29,600 |
|
|
| 208,268 |
|
|
| 19,284 |
|
|
| 437,152 |
|
|
| 2017 |
|
| 127,953 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 127,953 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wayne Nasby(1), former Chief Operating Officer |
| 2018 |
|
| 3,063 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 65,000 |
|
|
| 68,063 |
|
|
| 2017 |
|
| 129,783 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 127,783 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark Udell(3), Chief Accounting Officer, Treasurer and Secretary |
| 2018 |
|
| 115,000 |
|
|
| - |
|
|
| - |
|
|
| 89,258 |
|
|
| - |
|
|
| 204,258 |
|
|
| 2017 |
|
| 115,000 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 115,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Edward Maliski(5), former President and Chief Scientific Officer |
| 2018 |
|
| 32,924 |
|
|
| - |
|
|
| - |
|
|
| 29,753 |
|
|
| - |
|
|
| 62,677 |
|
|
| 2017 |
|
| 60,000 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 60,000 |
|
__________
(1) | Wayne Nasby entered into a separation agreement that was effective January 21, 2018. |
(2) | Jessica Rousset was appointed to Chief Operating Officer effective January 22, 2018. |
(3) | Mark Udell resigned as the Company’s Chief Financial Officer effective November 15, 2018, with the appointment of Alex Kats as the Company’s Chief Financial Officer. Mr. Udell remains with the Company as Chief Accounting Officer, Treasurer and Secretary. |
(4) | Alex Katz was appointed the Company’s Chief Financial Officer effective November 15, 2018, replacing Mark Udell who remains with the Company as Chief Accounting Officer, Treasurer and Secretary. |
(5) | Edward Maliski resigned as the Company President and Chief Scientific Officer effective June 30, 2018 and entered into a Confidential Severance and General Release Agreement. On July 1, 2018, Mr. Maliski entered into a Consulting Agreement with the Company. |
32 |
Table of Contents |
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The following table sets forth certain information regarding the ownership of our common stock as of May 30, 2019 (the “Determination Date”) by: (i) each current director of our company and each director nominee; (ii) each of our Named Executive Officers; (iii) all current executive officers and directors of our company as a group; and (iv) all those known by us to be beneficial owners of more than five percent (5%) of our common stock.
Beneficial ownership and percentage ownership are determined in accordance with the rules of the SEC. Under these rules, beneficial ownership generally includes any shares as to which the individual or entity has sole or shared voting power or investment power and includes any shares that an individual or entity has the right to acquire beneficial ownership of within 60 days of the Determination Date, through the exercise of any option, warrant or similar right (such instruments being deemed to be “presently exercisable”). In computing the number of shares beneficially owned by a person and the percentage ownership of that person, shares of our common stock that could be issued upon the exercise of presently exercisable options and warrants are considered to be outstanding. These shares, however, are not considered outstanding as of the Determination Date when computing the percentage ownership of each other person.
To our knowledge, except as indicated in the footnotes to the following table, and subject to state community property laws where applicable, all beneficial owners named in the following table have sole voting and investment power with respect to all shares shown as beneficially owned by them. Percentage of ownership is based on 43,145,089 shares of common stock outstanding as of the Determination Date. Unless otherwise indicated, the business address of each person in the table below is c/o Cure Pharmaceutical Holding Corp., 1620 Beacon Place, Oxnard, California 93033. No shares identified below are subject to a pledge.
Security Ownership of Directors and Executive Officers
Name and Address of Beneficial Owner |
| Amount and Nature of Beneficial Ownership (1) |
|
| Percent (1) |
| ||
Robert Davidson |
|
| 820,641 | (4) |
|
| 1.9 | % |
Jessica Rousset |
|
| 221,875 | (5) |
| * |
| |
Michael Redard |
|
| 50,000 | (6) |
| * |
| |
Mark Udell |
|
| 498,882 | (7) |
|
| 1.2 | % |
|
|
|
|
|
|
|
|
|
William Yuan |
|
| 93,750 | (8) |
| * |
| |
Joshua Held |
|
| 2,099,095 | (13) |
|
| 4.9 | % |
Ruben King-Shaw |
|
| 12,500 | (9) |
| * |
| |
Alan Einstein |
|
| 81,250 | (10) |
| * |
| |
Gene Salkind |
|
| 1,884,377 | (11) |
|
| 4.4 | % |
*Directors & Executive Officers as a Group (9 persons) |
|
| 5,762,370 |
|
|
| 13.4 | % |
|
|
|
|
|
|
|
|
|
Climate Change Investigation, Innovation and Investment Company, LLC(3) |
|
| 2,432,004 |
|
|
| 5.6 | % |
Hangar202, LLC(2) |
|
| 2,706,974 |
|
|
| 9.1 | % |
MACI Molecule SPV LLC(12) |
|
| 2,579,109 |
|
|
| 5.7 | % |
_________
* | Less than 1% |
|
|
(1) | Percentage of ownership is based on 43,145,089 shares of our common stock outstanding as of May 30, 2019. Except as otherwise indicated, we believe that the beneficial owners of the common stock listed above, based on information furnished by such owners, have sole investment and voting power with respect to such shares, subject to community property laws where applicable. Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. Shares of common stock subject to options or warrants currently exercisable or exercisable within 60 days, are deemed outstanding for purposes of computing the percentage ownership of the person holding such option or warrants but are not deemed outstanding for purposes of computing the percentage ownership of any other person. |
33 |
Table of Contents |
(2) | James Victor Branstetter is a control person of Hangar202, LLC. The address for this shareholder is 2711 North Sepulveda Blvd., Manhattan Beach, California 90266. |
| |
(3) | James Farrell is a control person of Climate Change Investigation, Innovation and Investment Company LLC. The address for this shareholder is 12 San Rafael Avenue, Belvedere, California 94920. |
| |
(4) | Consists of (i) 510,469 common stock shares, (ii) 354,000 ordinary shares issuable upon exercise of outstanding options at a price of $0.74 per share, (iii) 68,750 ordinary shares issuable upon exercise of outstanding options at a price of $0.61 per share, and (iv) 31,250 restricted shares at a price of $0.74 per share. A total of 278,922 outstanding options will have vested 60 days from the determination date. |
| |
(5) | Consists of (i) 290,000 ordinary shares issuable upon exercise of outstanding options at a price of $0.74 per share, (ii) 60,000 ordinary shares issuable upon exercise of outstanding options at a price of $0.61 per share and (iii) 40,000 restricted shares at a price of $0.74 per share. A total of 181,875 outstanding options will have vested 60 days from the determination date. |
| |
(6) | Consists of 250,000 ordinary shares issuable upon exercise of outstanding options at a price of $4.01 per share. A total of 50,000 outstanding options will have vested 60 days from the determination date. |
| |
(7) | Consists of (i) 442,632 common stock shares and (ii) 150,000 ordinary shares issuable upon exercise of outstanding options at a price of $0.74 per share. A total of 56,250 outstanding options will have vested 60 days from the determination date. |
| |
(8) | Consists of (i) 100,000 ordinary shares issuable upon exercise of outstanding options at a price of $0.74 per share and (ii) 100,000 ordinary shares issuable upon exercise of outstanding options at a price of $3.40 per share. A total of 93,750 outstanding options will have vested 60 days from the determination date. |
| |
(9) | Includes of 100,000 ordinary shares issuable upon exercise of outstanding options at a price of $3.40 per share. A total of 12,500 outstanding options will have vested 60 days from the determination date. |
| |
(10) | Consists of (i) 100,000 ordinary shares issuable upon exercise of outstanding options at a price of $0.74 per share and (ii) 100,000 ordinary shares issuable upon exercise of outstanding options at a price of $3.40 per share. A total of 81,250 outstanding options will have vested 60 days from the determination date. |
|
|
(11) | Consists of (i) 1,871,877 common stock shares and (ii) 100,000 ordinary shares issuable upon exercise of outstanding options at a price of $3.40 per share. A total of 12,500 outstanding options will have vested 60 days from the determination date. |
|
|
(12) | Andrew Sturner is a control person of MACI Molecule SPV, LLC. The address for this shareholder is 2890 NE 187th ST, Aventura, Florida 90049. |
(13) | Consists of (i) 2,086,595 common stock shares and (ii) 100,000 ordinary shares issuable upon exercise of outstanding options at a price of $4.01 per share. A total of 12,500 outstanding options will have vested 60 days from the determination date. The common stock shares are held in The Held Family Trust. The address for this shareholder is 2535 Veteran Avenue Los Angeles CA 90064. |
Securities Authorized for Issuance Under Existing Equity Compensation Plans
On October 11, 2018, the Company filed a Form S-8 amending the Company’s 2017 Equity incentive plan, described in detail in the Company’s definitive proxy statement for the Meeting filed with the Securities and Exchange Commission on December 13, 2017. The amendment authorized an additional 5,000,000 shares to be added to the 2017 Equity incentive plan pool. The Company does not have any individual compensation arrangements with respect to its common stock. The issuance of any of our common stock is within the discretion of our Board of Directors, which has the power to issue any or all of our authorized but unissued shares without stockholder approval.
The following table summarizes certain information regarding our equity compensation plans as of December 31, 2018:
Plan Category |
| Number of Securities to be Issued Upon Exercise of Outstanding Options |
|
| Weighted-Average Exercise Price of Outstanding Options |
|
| Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) |
| |||
|
| (a) |
|
| (b) |
|
| (c) |
| |||
Equity compensation plans approved by security holders (1) |
|
| 2,313,050 |
|
| $ | 0.79 |
|
|
| 2,065,700 |
|
Equity compensation plans not approved by security holders |
|
| - |
|
| $ | - |
|
|
| - |
|
Total |
|
| 2,313,050 |
|
| $ | 0.79 |
|
|
| 2,065,700 |
|
_______
(1) | Consists of the 2017 Equity Incentive Plan. For a short description of those plans, see Note 13 to our 2018 Consolidated Financial Statements included in this Annual Report on Form 10-K for the year ended December 31, 2018. |
34 |
Table of Contents |
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Approval for Related Party Transactions
It is our practice and policy to comply with all applicable laws, rules and regulations regarding related-person transactions. The Company requires that all employees, including officers and directors, disclose to the CEO the nature of any company business that is conducted with any related party of such employee, officer or director (including any immediate family member of such employee, officer or director, and any entity owned or controlled by such persons). If the transaction involves an officer or director of our company, the CEO must bring the transaction to the attention of the Audit Committee or, in the absence of an Audit Committee the full Board, which must review and approve the transaction in writing in advance. In considering such transactions, the Audit Committee (or the full Board, as applicable) takes into account the relevant available facts and circumstances.
There were no reportable related party transaction in 2018.
We are not aware of any matter other than those described in this Proxy Statement that will be acted upon at the annual meeting. In the event that any other matter properly comes before the meeting for a vote of stockholders, the persons named as proxies in the enclosed form of proxy will vote in accordance with their best judgment on such other matter.
We will pay the costs of proxy solicitation. Proxies are being solicited primarily by mail, but, in addition, our officers and employees may solicit proxies in person, by telephone or electronically.
STOCKHOLDER PROPOSALS FOR THE NEXT ANNUAL MEETING
Pursuant to Rule 14a‑8 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), if a stockholder wants to submit a proposal for inclusion in our proxy materials for the next annual meeting of stockholders, it must be received at our principal executive offices, 1620 Beacon Place, Oxnard, California 93033, Attention: Secretary, not later than [February 28], 2020. In order to avoid controversy, stockholders should submit proposals by such means, including electronic means, which permit them to prove the date of delivery.
If a stockholder intends to present a proposal for consideration at the next annual meeting outside of the processes of Rule 14a-8 under the Exchange Act, we must receive notice of such proposal at the address given above by [February 28], 2020, or such notice will be considered untimely under Rule 14a-4(c)(1) under the Exchange Act, and our proxies will have discretionary voting authority with respect to such proposal, if presented at the annual meeting, without including information regarding such proposal in our proxy materials.
The deadlines described above are calculated by reference to the mailing date of the proxy materials for this year’s annual meeting. If the Board changes the date of next year’s annual meeting by more than 30 days, the Board will, in a timely manner, inform stockholders of such change and the effect of such change on the deadlines given above by including a notice in our Annual Report on Form 10-K, our quarterly reports on Form 10-Q, a current report on Form 8-K or by any other means reasonably calculated to inform the stockholders.
Your cooperation in giving this matter your immediate attention and in returning your proxy promptly will be appreciated.
35 |
Table of Contents |
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and other information with the SEC. You may read and copy any document we file at the SEC public reference room located at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the public reference room. Our SEC filings are also available to the public at the SEC website at www.sec.gov. You also may obtain free copies of the documents we file with the SEC, including this Proxy Statement, by going to the Investors link of our corporate website at www.curepharmaceutical.com. Our website address is provided as an inactive textual reference only. The information provided on our website, other than copies of the documents listed below that have been filed with the SEC, is not part of this Proxy Statement, and therefore is not incorporated herein by reference.
Statements contained in this Proxy Statement, or in any document incorporated by reference in this Proxy Statement regarding the contents of any contract or other document, are not necessarily complete and each such statement is qualified in its entirety by reference to that contract or other document filed as an exhibit with the SEC. The SEC allows us to “incorporate by reference” into this Proxy Statement documents we file with the SEC. This means that we can disclose important information to you by referring you to those documents. The information incorporated by reference is considered to be a part of this Proxy Statement, and later information that we file with the SEC will update and supersede that information. We incorporate by reference the documents listed below and any documents filed by us pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this Proxy Statement and before the date of the Annual Meeting.
| ● | Annual Report on Form 10-K for the fiscal year ended December 31, 2018; |
| ● | Quarterly Reports on Form 10-Q for the quarterly period ended March 31, 2019; |
| ● | Current Reports on Form 8-K filed with the SEC on January 7, 2019, January 17, 2019, February 19, 2019, April 1, 2019, April 9, 2019, May 1, 2019, May 14, 2019, and May 20, 2019; and |
| ● | Our proxy statement on Schedule 14A for our 2017 Annual Meeting filed with the SEC on December 13, 2017 and the additional definitive proxy soliciting materials on Schedule 14A filed with the SEC on December 13, 2017. |
Notwithstanding the foregoing, information furnished under Items 2.02 and 7.01 of any Current Report on Form 8-K, including the related exhibits, is not incorporated by reference into this Proxy Statement.
THIS PROXY STATEMENT DOES NOT CONSTITUTE THE SOLICITATION OF A PROXY IN ANY JURISDICTION TO OR FROM ANY PERSON TO WHOM OR FROM WHOM IT IS UNLAWFUL TO MAKE SUCH PROXY SOLICITATION IN THAT JURISDICTION. YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROXY STATEMENT TO VOTE YOUR SHARES OF OUR COMMON STOCK AT THE ANNUAL MEETING. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION THAT IS DIFFERENT FROM WHAT IS CONTAINED IN THIS PROXY STATEMENT. THIS PROXY STATEMENT IS DATED OCTOBER 20, 2017. YOU SHOULD NOT ASSUME THAT THE INFORMATION CONTAINED IN THIS PROXY STATEMENT IS ACCURATE AS OF ANY DATE OTHER THAN THAT DATE, AND THE MAILING OF THIS PROXY STATEMENT TO STOCKHOLDERS DOES NOT CREATE ANY IMPLICATION TO THE CONTRARY.
| By Order of the Board of Directors |
| |
| ___________________________
___________________________ |
Dated: _________________, 2019
36 |
Table of Contents |
| VOTE ON INTERNET
Go to http://www.vstocktransfer.com/proxy and log-on using the below control number. Voting will be open until 11:59 pm (ET) on July 15, 2019.
CONTROL # |
* SPECIMEN * |
|
1 MAIN STREET ANYWHERE PA 99999-9999 | VOTE BY MAIL Mark, sign and date your consent and return it in the envelope we have provided to 18 Lafayette Place, Woodmere, NY 11598. |
|
|
| VOTE IN PERSON
If you would like to vote in person, please attend the Annual Meeting to be held on July 15, 2019 at 11:00 a.m. PST. |
Please Vote, Sign, Date and Return Promptly in the Enclosed Envelope.
Annual Meeting of Shareholders - Cure Pharmaceutical Holding Corp.
DETACH CARD HERE TO VOTE BY MAIL
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ALL DIRECTOR NOMINEES
AND "FOR" PROPOSALS 2, 3, 4, 5 AND 6.
(1) | Election of Directors: |
|
| ¨ FOR ALL NOMINEES LISTED BELOW (except as marked to the contrary below) | ¨ WITHHOLD AUTHORITY TO VOTE FOR ALL NOMINEES LISTED BELOW |
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ONE OR MORE INDIVIDUAL NOMINEES STRIKE A LINE THROUGH THE NOMINEES' NAMES BELOW:
| 01 Robert Davidson | 02 William Yuan | 03 Gene Salkind, M.D. | 04 Ruben King-Shaw Jr. |
|
|
|
|
|
| 05 Joshua Held | 06 Lauren Chung Ph.D. | 07 Anya Goldin |
|
(2) | To approve the reincorporation of the Company from the State of Nevada to the State of Delaware; | |||
| ¨ VOTE FOR | ¨ VOTE AGAINST | ¨ ABSTAIN |
|
(3) | To approve an amendment to the Company's Articles of Incorporation to increase the number of authorized shares of the Company's common stock by 75,000,000 shares to 150,000,000 shares; | |||
¨ VOTE FOR | ¨ VOTE AGAINST | ¨ ABSTAIN |
(4) | To approve an amendment to the Company's 2017 Equity Incentive Plan to increase the number of shares of the Company's common stock available for awards thereunder by an additional 5,000,000 shares to a total of 10,000,000 shares; | |||
¨ VOTE FOR | ¨ VOTE AGAINST | ¨ ABSTAIN |
(5) | To approve and amendment to the Company's 2017 Equity Incentive Plan to revise Section 5.5 of the 2017 Equity Incentive Plan relating to Nonemployee Director Award Limits; | |||
¨ VOTE FOR | ¨ VOTE AGAINST | ¨ ABSTAIN |
(6) | To approve the ratification of RBSM LLP as the Company's independent registered public accounting firm for 2019. | |||
¨ VOTE FOR | ¨ VOTE AGAINST | ¨ ABSTAIN |
Date |
| Signature |
| Signature, if held jointly |
|
|
|
|
|
|
|
To change the address on your account, please check the box at right and indicate your new address ¨ |
| |
|
|
|
* SPECIMEN * | AC:ACCT9999 | 90.00 |
37 |
CURE PHARMACEUTICAL HOLDING CORP.
Annual Meeting of Shareholders
July 15, 2019
Important Notice Regarding the Availability of Proxy Materials for the Special Meeting of Stockholders To Be Held on July 15, 2019
The Company’s proxy statement is available electronically at
www.curepharameutical.com and www.proxyvote.com.
CURE PHARMACEUTICAL HOLDING CORP.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, revoking all prior proxies, hereby appoints ___________ with full power of substitution, as proxy to represent and vote all shares of common stock, par value $0.001 per share, of CURE Pharmaceutical Holding Corp. (“CURE,” the “Company,” “we,” “our,” and “us”) beginning on July ____, 2019 in connection with the solicitation of proxies by the Board of Directors of the Company (the “Board of Directors” or the “Board”) to be used at the Annual Meeting of Stockholders (the “Annual Meeting”) to be held on July 15, 2019 at 12:00 P.M. (Pacific Standard Time) and at any postponement of adjournment thereof. The Annual Meeting will be held at the Company’s corporate officer, located at 1620 Beacon Place, Oxnard, CA 93033.
This proxy, when properly executed, will be voted as directed. If no direction is made, the proxy shall be voted FOR the approval of all director nominees, FOR the approval of the reincorporation of the Company from the State of Nevada to the State of Delaware, FOR the approval to amend the Company’s Articles of Incorporation to increase the number of authorized shares of the Company’s common stock 75,000,000 to 150,000,000, FOR the approval to amend the Company’s 2017 Equity Incentive Plan to increase the number of shares of the Company’s common stock available for awards thereunder by an additional 5,000,000 shares to a total of 10,000,000 shares, FOR the approval to amend the Company’s 2017 Equity Incentive Plan to revise Section 5.5 of the 2017 Equity Incentive Plan relating to Nonemployee Director Award Limits, FOR the ratification of the appointment of RBSM LLP as the Company’s independent registered public accounting firm for 2019 and, in the case of other matters that legally come before the meeting, as said proxy(s) may deem advisable.
Please check here if you plan to attend the Special Meeting of Stockholders on December 27, 2017 at 12:00 p.m. (PST).
PLEASE INDICATE YOUR VOTE ON THE REVERSE SIDE
(Continued and to be signed on Reverse Side)
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Appendix A
PLAN OF CONVERSION
OF
CURE PHARMACEUTICAL HOLDING, CORP.
THIS PLAN OF CONVERSION (this “Plan”) is entered into by Cure Pharmaceutical Holding Corp., Inc., a Nevada corporation (the “Converting Entity”), which intends to convert (the “Conversion”) into Cure Pharmaceutical Holding Corp., Inc., a Delaware corporation (the “Converted Entity”) as of the ___ day of ___, 2019.
WHEREAS, the Converting Entity is a corporation duly organized and existing under the laws of the State of Nevada;
WHEREAS, the Board of Directors of the Converting Entity has determined that it is advisable and in the best interests of the Converting Entity and its stockholder for the Converting Entity to convert from a Nevada corporation to a Delaware corporation;
WHEREAS, in accordance with Nevada Revised Statute (“NRS”) 92A and Section 265 of the Delaware General Corporation Law (the “DGCL”) the Converting Entity proposes to effect the Conversion into the Converted Entity;
WHEREAS, the form, terms and provisions of this Plan have been authorized, approved and adopted by the Board of Directors of the Converting Entity; and
WHEREAS, this Plan has been authorized, approved and adopted by the holders of a majority of the voting power of the stockholders of the Converting Entity.
NOW, THEREFORE, in consideration of the premises and mutual covenants, agreements, undertakings and obligations set forth herein, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows:
1. Conversion.
(a) The name of the Converting Entity is Cure Pharmaceutical Holding Corp., Inc., a Nevada corporation.
(b) The name of the Converted Entity shall be Cure Pharmaceutical Holding Corp., Inc., a Delaware corporation.
(c) Upon the Effective Time (as defined below), and in accordance with NRS 92A and Section 265 of the DGCL, the Converting Entity shall be converted from a Nevada corporation to a Delaware corporation and shall thereafter be subject to all of the provisions of the DGCL, except that notwithstanding Section 106 of the DGCL, the existence of the Converted Entity shall be deemed to have commenced on the date the Converting Entity commenced its existence in the State of Nevada.
(d) Upon the Effective Time (as defined below), by virtue of the Conversion and without any further action on the part of the Converting Entity or its stockholders, the Converted Entity shall for all purposes of the laws of the State of Delaware, be deemed to be the same entity as the Converting Entity existing immediately prior to the Effective Time. Upon the Effective Time (as defined below), by virtue of the Conversion and without any further action on the part of the Converting Entity or its stockholders, for all purposes of the laws of the State of Delaware, all of the rights, privileges and powers of the Converting Entity existing immediately prior to the Effective Time, and all property, real, personal and mixed, and all debts due to the Converting Entity existing immediately prior to the Effective Time, shall remain vested in the Converted Entity and shall be the property of the Converted Entity and the title to any real property vested by deed or otherwise in the Converting Entity existing immediately prior to the Effective Time shall not revert or be in any way impaired by reason of the Conversion; but all creditors and all liens upon any property of the Converting Entity existing immediately prior to the Effective Time shall be preserved unimpaired, and all debts, liabilities and duties of the Converting Entity existing immediately prior to the Effective Time shall remain attached to the Converted Entity upon the Effective Time, and may be enforced against the Converted Entity to the same extent as if said debts, liabilities and duties had originally been incurred or contracted by the Converted Entity in its capacity as a corporation of the State of Delaware. The rights, privileges, powers and interests in property of the Converting Entity existing immediately prior to the Effective Time, as well as the debts, liabilities and duties of the Converting Entity existing immediately prior to the Effective Time, shall not be deemed, as a consequence of the Conversion, to have been transferred to the Converted Entity upon the Effective Time for any purpose of the laws of the State of Delaware.
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(e) The Conversion shall not be deemed to affect any obligations or liabilities of the Converting Entity incurred prior to the Conversion or the personal liability of any person incurred prior to the Conversion.
2. Filings. As promptly as practicable following the adoption of this Plan by the Board of Directors and the stockholders of the Converting Entity, the Converting Entity shall cause the Conversion to be effective by:
(a) executing and filing (or causing the execution and filing of) Articles of Conversion pursuant to Section 92A.205 of the NRS, substantially in the form of Exhibit A hereto (the “Articles of Conversion”);
(b) executing and filing (or causing the execution and filing of) a Certificate of Conversion pursuant to Sections 103 and 265 of the DGCL, substantially in the form of Exhibit B hereto (the “Certificate of Conversion”); and
(c) executing and filing (or causing the execution and filing of) a Certificate of Incorporation of the Converted Entity, substantially in the form of Exhibit C hereto (the “Certificate of Incorporation”).
3. Effective Time. The Conversion shall become effective upon the later of (i) the effectiveness of the filing of the Articles of Conversion and (ii) the effectiveness of the filing of the Certificate of Conversion and of the Certificate of Incorporation (the “Effective Time”).
4. Effect of Conversion.
(a) Effect on Common Stock. Upon the Effective Time, by virtue of the Conversion and without any further action on the part of the Converting Entity or its stockholders, each share of Common Stock, $0.001 par value per share, of the Converting Entity (“Converting Entity Common Stock”) that is issued and outstanding immediately prior to the Effective Time shall convert into one validly issued, fully paid and nonassessable share of Common Stock, $0.001 par value per share, of the Converted Entity (“Converted Entity Common Stock”).
(b) Effect on Outstanding Warrants. Upon the Effective Time, by virtue of the Conversion and without any further action on the part of the Converting Entity or its stockholders, each warrant to purchase shares of Converting Entity Common Stock outstanding immediately prior to the Effective Time shall convert into an equivalent warrant to purchase shares of Converted Entity Common Stock.
(c) Effect on Outstanding Stock Options. Upon the Effective Time, by virtue of the Conversion and without any further action on the part of the Converting Entity or its stockholders, each option to purchase shares of Converting Entity Common Stock outstanding immediately prior to the Effective Time shall convert into an equivalent option to purchase shares of Converted Entity Common Stock.
(d) Effect on Stock Certificates. All of the outstanding certificates representing shares of Converting Entity Common Stock immediately prior to the Effective Time shall be deemed for all purposes to continue to evidence ownership of and to represent the same number of shares of Converted Entity Common Stock.
(e) Effect on Employee Benefit, Equity Incentive or Other Similar Plans. Upon the Effective Time, by virtue of the Conversion and without any further action on the part of the Converting Entity or its stockholders, each employee benefit plan, stock option plan or other similar plan to which the Converting Entity is a party shall continue to be a plan of the Converted Entity. To the extent that any such plan provides for the issuance of Converting Entity Common Stock, upon the Effective Time, such plan shall be deemed to provide for the issuance of Converted Entity Common Stock.
(f) Effect on Directors and Officers. Upon the Effective Time, by virtue of the Conversion and without any further action on the part of the Converting Entity or its stockholder, the members of the Board of Directors and the officers of the Converting Entity holding their respective offices in the Converting Entity existing immediately prior to the Effective Time shall continue in their respective offices as members of the Board of Directors and officers, respectively, of the Converted Entity.
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5. Tax Reporting. The Conversion is intended to be a “reorganization” for purposes of Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”), and this Plan of Conversion is hereby adopted as a “plan of reorganization” for purposes of the Section 368(a)(1)(F) of the Code.
6. Further Assurances. If, at any time after the Effective Time, the Converted Entity shall determine or be advised that any deeds, bills of sale, assignments, agreements, documents or assurances or any other acts or things are necessary, desirable or proper, consistent with the terms of this Plan, (a) to vest, perfect or confirm, of record or otherwise, in the Converted Entity its right, title or interest in, to or under any of the rights, privileges, immunities, powers, purposes, franchises, properties or assets of the Converting Entity existing immediately prior to the Effective Time, or (b) to otherwise carry out the purposes of this Plan, the Converted Entity and its officers and directors (or their designees), are hereby authorized to solicit in the name of the Converted Entity any third-party consents or other documents required to be delivered or proper to vest, perfect or confirm its right, title or interest in, to or under any of the rights, privileges, immunities, powers, purposes, franchises, properties or assets of the Converting Entity existing immediately prior to the Effective Time and otherwise to carry out the purposes of this Plan.
7. Delaware Bylaws. Upon the Effective Time, the bylaws of the Converted Entity shall be the Bylaws of Cure Pharmaceutical Holding Corp., substantially in the form of Exhibit D hereto.
8. Delaware Indemnification Agreements. As promptly as practicable following the Effective Time, the Converted Entity shall enter into an Indemnification Agreement substantially in the form of Exhibit E hereto with each member of the Board of Directors of the Converted Entity and each executive officer of the Converted Entity.
9. Miscellaneous.
(a) Copy of Plan of Conversion. Following the Conversion, a copy of this Plan will be kept on file at the offices of the Converted Entity, and any stockholder of the Converted Entity (or former stockholder of the Converting Entity) may request a copy of this Plan at no charge at any time.
(b) Termination. At any time prior to the Effective Time, this Plan may be terminated and the transactions contemplated hereby may be abandoned by action of the Board of Directors of the Converting Entity if, in the opinion of the Board of Directors of the Converting Entity, such action would be in the best interests of the Converting Entity and its stockholders. In the event of termination of this Plan, this Plan shall become void and of no further force or effect.
(c) Third Party Beneficiaries. This Plan shall not confer any rights or remedies upon any person other than as expressly provided herein. For the avoidance of doubt, following the Conversion the Converting Entity will hold all of the rights and obligations of the Converted Entity under this Plan.
(d) Severability. Whenever possible, each provision of this Plan will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Plan is held to be prohibited by or invalid under applicable law, such provision will be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of this Plan.
[signature page follows]
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IN WITNESS WHEREOF, the parties hereto have executed this Plan as of the day and year first above written.
CURE PHARMACEUTICAL HOLDING CORP.
Name: Robert Davidson
Title: Chief Executive Officer
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Appendix B
ARTICLES OF CONVERSION
BARBARA K. CEGAVSKE
Secretary of State
202 North Carson Street
Carson City, Nevada 89701-4201
(775) 684-5708
Website: www.nvsos.gov
Articles of Conversion
(PURSUANT TO NRS 92A.205)
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USE BLACK INK ONLY - DO NOT HIGHLIGHT |
| ABOVE SPACE IS FOR OFFICE USE ONLY |
PLEASE NOTE: The charter document for the resulting entity must be submitted/filed simultaneously with the articles of conversion.
Articles of Conversion
(Pursuant to NRS 92A.205)
1. Name and jurisdiction of organization of constituent entity and resulting entity:
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Cure Pharmaceutical Holding Corp. |
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Name of constituent entity |
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Nevada |
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Jurisdiction |
| Entity type * |
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and, |
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Cure Pharmaceutical Holding Corp. |
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Name of resulting entity |
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Delaware |
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2. A plan of conversion has been adopted by the constituent entity in compliance with the law of the jurisdiction governing the constituent entity.
3. Location of plan of conversion: (check one)
☐ | The entire plan of conversion is attached to these articles. |
☒ | The complete executed plan of conversion is on file at the registered office or principal place of business of the resulting entity. |
☐ | The complete executed plan of conversion for the resulting domestic limited partnership is on file at the records office required by NRS 88.330. |
* corporation, limited partnership, limited-liability limited partnership, limited-liability company or business trust.
This form must be accompanied by appropriate fees. |
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BARBARA K. CEGAVSKE
Secretary of State
202 North Carson Street
Carson City, Nevada 89701-4201
(775) 684-5708
Website: www.nvsos.gov
Articles of Conversion
(PURSUANT TO NRS 92A.205)
Page 2 |
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USE BLACK INK ONLY - DO NOT HIGHLIGHT |
| ABOVE SPACE IS FOR OFFICE USE ONLY |
4. Forwarding address where copies of process may be sent by the Secretary of State of Nevada (if a foreign entity is the resulting entity in the conversion):
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Attn: | Mark Udell |
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c/o: | 1620 Beacon Place, Oxnard, California 93033
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5. Effective date and time of filing: (optional) (must not be later than 90 days after the certificate is filed)
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6. Signatures - must be signed by:
1. If constituent entity is a Nevada entity: an officer of each Nevada corporation; all general partners of each Nevada limited partnership or limited-liability limited partnership; a manager of each Nevada limited-liability company with managers or one member if there are no managers; a trustee of each Nevada business trust; a managing partner of a Nevada limited-liability partnership (a.k.a. general partnership governed by NRS chapter 87).
2. If constituent entity is a foreign entity: must be signed by the constituent entity in the manner provided by the law governing it.
Cure Pharmaceutical Holding Corp.
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* Pursuant to NRS 92A.205(4) if the conversion takes effect on a later date specified in the articles of conversion pursuant to NRS 92A.240, the constituent document filed with the Secretary of State pursuant to paragraph (b) subsection 1 must state the name and the jurisdiction of the constituent entity and that the existence of the resulting entity does not begin until the later date.
This statement must be included within the resulting entity's articles.
FILING FEE: $350.00
IMPORTANT: Failure to include any of the above information and submit with the proper fees may cause this filing to be rejected.
This form must be accompanied by appropriate fees. | Nevada Secretary of State 92A Conversion Page 2 Revised: 1-5-15 |
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Appendix C
STATE OF DELAWARE
CERTIFICATE OF CONVERSION
of
CURE PHARMACEUTICAL HOLDING CORP.
(a Nevada Corporation)
to
CURE PHARMACEUTICAL HOLDING CORP.
(a Delaware Corporation)
THIS CERTIFICATE OF CONVERSION of Cure Pharmaceutical Holding Corp., a Nevada corporation (the “Nevada Corp.”) to Cure Pharmaceutical Holding Corp., a Delaware Corporation (the “Corporation”) is being executed
Mark Udell
41
Chief Accounting Officer, Treasurer and filed pursuant to Section 265 ofSecretary
________
(1) | Michael Redard was appointed the |
(2) | Jessica Rousset was appointed the Company’s Chief Operating Officer effective January 22, 2018, replacing Wayne Nasby. |
Executive Officers
Robert Davidson – Chairman of the Board and Chief Executive Officer
Robert Davidson has served as the Chairman of the Board and Chief Executive Officer of CURE Pharmaceutical since July 2011. Prior to his role at CURE Pharmaceutical, Mr. Davidson served as President and Chief Executive Officer of InnoZen Inc., Chief Executive Officer of Gel Tech LLC, Chief Executive Officer of Bio delivery Technologies Inc., and Director of HealthSport Inc. Mr. Davidson was responsible for the development of several drug delivery technologies and commercial brand extensions. He has worked with brands such as Chloraseptic™, Suppress™, as well as Pediastrip™, a private label electrolyte oral thin film sold in major drug store chains. Mr. Davidson is also considered an industry expert leader in ODF technology. Mr. Davidson received his B.S. degree with a concentration in Biological Life Sciences from the University of the State of New York, Excelsior College. He has a Masters Certificate in Applied Project Management from Villanova University, Masters of Public Health from American Military University, Virginia and a Masters in Health and Wellness from Liberty University, Virginia. Mr. Davidson is also a Certified Performance Enhancement Specialist and Fitness Nutrition Specialist through the National Academy of Sports Medicine and attended Post-Graduate Studies at the University of Cambridge. Mr. Davidson’s experience as our Chief Executive Officer and Chairman, and his extensive knowledge of ODF and drug delivery technologies qualifies him to serve on our Board.
Michael Redard – Chief Financial Officer
Jessica Rousset – Chief Operating Officer
Jessica Rousset has served as the Company’s Chief Operating Officer since January 22, 2018. She previously served since March 15, 2017 as the Company’s Chief Business Officer, oversees operations and drives corporate strategy and growth. Mrs. Rousset previously served as Head of Innovation at Children’s Hospital Los Angeles, where over a ten-year period from 2006 to November 2016, she helped launch both therapeutic and medical device companies and founded and operated a national pediatric technology accelerator. Prior to that, Mrs. Rousset held positions at The Scripps Research Institute and GlaxoSmithKline Biologicals in laboratory, clinical research and business development roles. She is a seasoned business development and commercialization leader, expert in bridging corporate, academic and governmental interests toward the common goal of improving patient’s lives. She brings more than fifteen years of experience fostering innovation in large organizations and advising start-ups to bring novel healthcare solutions to market and into clinical use. She trained as a biochemical engineer at the Institut National des Sciences Appliquées in Lyon, France.
1. The date on which and jurisdiction where the Nevada Corp. was first formed is May 15, 2014, in the State
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