UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant ☒
Filed by a Party other than the Registrant ☐
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Preliminary Proxy Statement
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Confidential, for Use of the
Commission Only (as permitted by Rule 14a‑6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material under §240.14a‑12
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MOSYS, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
Payment of Filing Fee (Check the appropriate box):
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and 0‑11.
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Aggregate number of securities to which transaction applies:
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pursuant to Exchange Act Rule 0‑11 (set forth the amount on which
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Check box if any part of the fee is offset as provided by Exchange
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Persons who are to respond to the collection of information
contained in this form are not required to respond unless the form
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2309 Bering Drive
San Jose, CA 95131
Dear Stockholder:
You are cordially invited to attend the 2020 Annual Meeting of
Stockholders (the “Annual Meeting”) of MoSys, Inc. (the
“Company”) to be held June 25, 2020, at 8:00 a.m., local time,
at our corporate headquarters located at 2309 Bering Drive, San
Jose, California 95131.
The matters expected to be acted upon at the meeting are described
in detail in the following Notice of the 2020 Annual Meeting of
Stockholders and Proxy Statement.
It is important that your shares be represented and voted at the
Annual Meeting. Whether you plan to attend the Annual Meeting or
not, it is important that you promptly register your vote in
accordance with the instructions set forth on the enclosed proxy
card to ensure your proper representation. Returning the proxy does
not deprive you of your right to attend the Annual Meeting. If you
decide to attend the Annual Meeting and wish to change your proxy
vote, you may do so automatically by voting in person at the
meeting.
We look forward to seeing you at the Annual Meeting.
Sincerely,
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/s/ Daniel Lewis
Daniel Lewis
Chief Executive Officer and President
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First mailed to stockholders
on or about May 28, 2020
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YOUR VOTE IS IMPORTANT.
PLEASE REMEMBER TO PROMPTLY RETURN YOUR PROXY.
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MOSYS, INC.
NOTICE OF 2020 ANNUAL MEETING OF STOCKHOLDERS
To the Stockholders of MoSys, Inc.:
NOTICE IS HEREBY GIVEN that the 2020 Annual Meeting of Stockholders
(the “Annual Meeting”) of MoSys, Inc., a Delaware corporation
(the “Company”), will be held June 25, 2020, at 8:00 a.m.,
local time, at the Company’s corporate headquarters located at 2309
Bering Drive, San Jose, California 95131, for the following
purposes:
1.To elect four members of our board of directors to hold office
until the next annual meeting of stockholders or until their
respective successors have been elected and qualified. The nominees
are Daniel Lewis, Scott Lewis, Robert Y. Newell and Daniel J.
O’Neil;
2.To ratify the appointment of Weinberg & Company, P.A. as our
independent registered public accounting firm for the fiscal year
ending December 31, 2020;
3.To approve, on an advisory basis, the compensation of our named
executive officers as described in this Proxy Statement;
4.To approve an amendment of our Amended and Restated Certificate
of Incorporation to decrease the number of authorized shares of
capital stock; and
5.To transact such other business as may properly come before the
Annual Meeting or any adjournment of the Annual Meeting.
The foregoing items of business are more fully described in the
Proxy Statement accompanying this Notice. Only stockholders of
record at the close of business on May 12, 2020 are entitled to
notice of and to vote at the Annual Meeting, or at any adjournment
thereof. A list of such stockholders will be available for
inspection at our principal office.
You are cordially invited to attend the Annual Meeting. However, to
ensure that you are represented at the Annual Meeting, please vote
your shares by submitting instructions for proxy voting via the
Internet, by phone, or by signing, dating and returning the proxy
card in accordance with the instructions set forth on the enclosed
proxy card at your earliest convenience. If you wish to submit your
proxy by mail, a return addressed envelope is enclosed for your
convenience. If you attend the Annual Meeting, you may vote in
person even though you have submitted your proxy previously. Your
proxy is revocable in accordance with the procedures set forth in
the Proxy Statement.
We intend to hold our Annual Meeting in person. However, we are
actively monitoring the circumstances surrounding the coronavirus
(COVID-19) crisis and are sensitive to the public health and travel
concerns our stockholders may have and the protocols that federal,
state, and local governments may impose.
In the event it is not possible or advisable to hold our Annual
Meeting in-person, we will publicly announce a determination to
hold a Virtual Annual Meeting by filing Definitive Additional
Materials with the SEC along with notice of the change(s) to the
Annual Meeting, and in a press release available at
https://investor.mosys.com/MOSY/press_releases as soon as
practicable before the Annual Meeting. In the event the Annual
Meeting is conducted virtually, it will be held at the same time
and on the same date as indicated above, via a live audio webcast.
You or your proxyholder will be able to participate, vote and
examine our list of stockholders at a Virtual Annual Meeting in the
event that the Annual Meeting is not held in-person.
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BY ORDER OF THE BOARD OF DIRECTORS
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/s/ Daniel Lewis
Daniel Lewis
Chief Executive Officer and President
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San Jose, California
May 26, 2020
MOSYS, INC.
2309 Bering Drive
San Jose, California 95131
PROXY STATEMENT
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the
solicitation by the board of directors of MoSys, Inc., a
Delaware corporation, of proxies, in the accompanying form, to be
used at the 2020 Annual Meeting of Stockholders (the “Annual
Meeting”) to be held at our corporate headquarters located at 2309
Bering Drive, San Jose, California 95131 on June 25, 2020, at
8:00 a.m., and any adjournments of the Annual Meeting. Unless
the context otherwise requires, the “Company,” “MoSys,” “we,” “us”
and similar terms refer to MoSys, Inc.
If you need directions to the location of the Annual Meeting,
please contact us at (408) 418‑7500.
We intend to hold our Annual Meeting in person. However, we are
actively monitoring the circumstances surrounding the coronavirus
(COVID-19) crisis and are sensitive to the public health and travel
concerns our stockholders may have and the protocols that federal,
state, and local governments may impose.
In the event it is not possible or advisable to hold our Annual
Meeting in-person, we will publicly announce a determination to
hold a Virtual Annual Meeting by filing Definitive Additional
Materials with the SEC along with notice of the change(s) to the
Annual Meeting, and in a press release available at
https://investor.mosys.com/MOSY/press_releases as soon as
practicable before the Annual Meeting. In the event the Annual
Meeting is conducted virtually, it will be held at the same time
and on the same date as indicated above, via a live audio webcast.
You or your proxyholder will be able to participate, vote and
examine our list of stockholders at a Virtual Annual Meeting in the
event that the Annual Meeting is not held in-person.
This Proxy Statement and the accompanying proxy card are being
mailed on or about May 28, 2020 to all stockholders entitled to
notice of and to vote at the Annual Meeting.
SOLICITATION AND VOTING PROCEDURES
Shares represented by valid proxies in the accompanying form
received in time for use at the Annual Meeting and not revoked at
or prior to the Annual Meeting will be voted as discussed below.
The presence, in person or by proxy, of the holders of a majority
of the outstanding shares of our common stock is necessary to
constitute a quorum at the Annual Meeting. Holders of our common
stock are entitled to one vote per share on all matters. To vote in
person, a stockholder must attend the Annual Meeting, and then
complete and submit the ballot provided at the meeting. To vote by
proxy, a stockholder must mark, sign and date the enclosed proxy
card and mail it to our transfer agent or submit voting
instructions electronically by using the telephone or Internet and
following the instructions provided on the proxy card. An automated
system administered by our transfer agent tabulates stockholder
votes submitted by proxy, and an officer of ours will tabulate
votes cast in person at the Annual Meeting.
Stockholders of record who are present at the meeting in person or
by proxy and who abstain from voting on a proposal, including
brokers holding customers’ shares of record, will be included in
the number of stockholders present at the meeting for purposes of
determining whether a quorum is present.
1
The
voting requirements for the proposals that we will consider at the
Annual Meeting are:
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Proposal
1—Election of Directors. Directors are elected by a
plurality, and the four directors who receive the most votes will
be elected to our board of directors. Shares represented by
properly completed and timely submitted proxies will be voted “FOR”
the election of the nominees listed in the Notice of the Annual
Meeting, unless authority to do so is specifically withheld. If any
nominee declines to serve or becomes unavailable for any reason, or
if a vacancy occurs before the election (although we know of no
reason to anticipate that this will occur), the proxies may be
voted for such substitute nominees as the board of directors may
designate.
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Proposal
2—Ratification of Appointment of Weinberg & Company, P.A. as
Independent Registered Public Accounting
Firm. An affirmative vote of the holders
of a majority of the shares present or represented by proxy and
entitled to vote on such matter is necessary for approval of this
proposal.
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Proposal 3—
Approval, on an advisory basis, of our named executive officer
compensation, as described in this Proxy Statement.
An affirmative vote of
the holders of a majority of the shares present or represented by
proxy and entitled to vote on this matter will constitute approval
of this proposal.
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Proposal 4—To
approve an amendment to our Restated Certificate of Incorporation
to reduce the number of shares of our authorized capital
stock. An
affirmative vote of the holders of a majority of the shares
outstanding and entitled to vote at the Annual Meeting is necessary
for approval of this proposal.
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Abstentions and Broker Non‑Votes. Brokers holding shares in street
name for customers have discretionary authority to vote on some
matters when they have not received instructions from the
beneficial owners of shares. Under the Delaware General Corporation
Law, an abstaining vote and a broker “non‑vote” will be counted as
present and, therefore, included for purposes of determining
whether a quorum of shares is present at the Annual Meeting. A
broker “non‑vote” occurs when a broker or other nominee holding
shares for a beneficial owner signs and returns a proxy with
respect to shares of common stock held in a fiduciary capacity
(typically referred to as being held in “street name”), but does
not vote on a particular matter due to a lack of discretionary
voting power and instructions from the beneficial owner. Under
rules governing voting with respect to shares held in street name,
brokers have the discretion to vote such shares on routine matters
but not on non‑routine matters. At the Annual Meeting, we believe
that Proposal No. 2 (the ratification of appointment of
Weinberg & Company, P.A. as our independent registered public
accounting firm for the 2020 audit) is a routine matter under these
rules. As such, brokers that do not receive instructions from the
beneficial owners of the shares should be entitled to vote in their
discretion on Proposal No. 2.
Broker non‑votes are considered present but not entitled to vote on
any non-routine matters. Because broker non‑votes are excluded from
the tabulation of votes cast on each non-routine proposal they will
not affect the outcome of the vote on any of the proposals at the
Annual Meeting as to which the brokers lack voting discretion,
except for Proposal 4, which is discussed separately below.
Abstentions are counted as present and entitled to vote for
purposes of establishing a quorum. An abstention will have no
effect on the election of directors under Proposal No. 1.
However, an abstention will have the same effect as a vote
“against” the ratification of the appointment by the Audit
Committee of Weinberg & Company, P.A. as our independent
registered public accounting firm for the 2020 audit under Proposal
No. 2 and the approval of our executive compensation under
Proposal No. 3 because a vote in favor of these proposals from a
majority of the shares present in person or by proxy and entitled
to vote on such matter is needed for approval.
To be approved, Proposal No. 4 requires the approval of a majority
of our outstanding shares entitled to vote at the Annual Meeting
(as opposed to being entitled to vote only on a particular
proposal). Brokers will generally not have discretion to vote on
Proposal No. 4 as it is a non-routine matter. This means that both
broker non-votes and abstentions will have the effect of a vote
“against” the approval of Proposal No. 4 to effect a reduction in
our authorized shares of capital stock. As a result, your action to
return your vote or your proxy to your bank, broker or other
nominee is critically important to determining whether Proposal No.
4 will be approved.
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Special
Note Regarding Shares Held in Broker Accounts. If you hold your shares through a broker,
bank or other nominee, it is critical that you submit a legal proxy
or voting instructions if
you want your shares to be counted. If you hold your shares through
a bank, broker or other nominee, and you do not submit a proxy or
otherwise instruct your bank, broker or other nominee how to vote
in the election of directors, no votes will be cast on your behalf on Proposal
Nos. 1,
3 and 4. If you submit a signed proxy, but do not
provide voting instructions, your bank, broker or other nominee
will have discretion to vote uninstructed shares on the
ratification of our independent registered public accounting firm (Proposal
No. 2), and your shares may still be counted for purposes of
determining if a quorum is present.
All proxies will be voted as specified on the proxy cards submitted
by stockholders, if the proxy card is properly executed or
electronically submitted and is received by us prior to the close
of voting at the Annual Meeting or any adjournment or postponement
of the Annual Meeting. Our chief executive officer, Daniel Lewis,
and our chief financial officer, James Sullivan, have been
designated as proxy holders for the Annual Meeting. If no choice
has been specified, a timely returned and properly executed or
electronically submitted proxy card will be voted in accordance
with management’s recommendations on Proposals Nos. 1, 2, 3
and 4, which are described in detail elsewhere in this Proxy
Statement, except with respect to broker non‑votes. In addition,
all properly completed and timely returned or electronically
submitted proxy cards that have been voted FOR item 5, or which
reflect no vote regarding item 5 on the proxy card, will be voted
by the proxyholders in their discretion for any other matters
properly and timely submitted for a vote at the Annual Meeting.
Only holders of our common stock at the close of business on May
12, 2020, the record date, will be entitled to notice of and to
vote at the Annual Meeting. As of that date, we had 3,532,512
shares of common stock outstanding, each with one vote per
share.
The cost of soliciting proxies, including expenses incurred in
connection with preparing and mailing this Proxy Statement and the
proxy card and maintaining the Internet access for such materials
and the submission of proxies will be borne by us. Copies of
solicitation material will be furnished to brokerage houses,
fiduciaries and custodians holding shares in their names that are
beneficially owned by others so that they my forward this
solicitation material to such beneficial owners of our common
stock. We will reimburse brokerage firms and other persons
representing beneficial owners of common stock for their expenses
in forwarding proxy material to such beneficial owners.
Solicitation of proxies by mail may be supplemented by telephone,
electronic facsimile transmission and other electronic means, and
personal solicitation by our directors, officers or employees. No
additional compensation will be paid to directors, officers or
employees for such solicitation. We have retained Equiniti Trust
Company to assist in the distribution of proxies for a fee
estimated to be approximately $3,500 plus reasonable out‑of‑pocket
expenses. We may also decide to engage the services of a private
proxy solicitor and incur fees of up to approximately $25,000.
Copies of our 2019 Annual Report on Form 10‑K filed with the
SEC on March 17, 2020 are being mailed to stockholders with
this Proxy Statement and these documents can also be viewed on the
investors section of our website, www.mosys.com. Additional copies of our
2019 Annual Report on Form 10‑K, excluding exhibits, may be
obtained by any stockholder, without charge, by sending an e‑mail
to priv_ir@mosys.com or by
written request addressed to: MoSys, Inc., 2309 Bering Drive,
San Jose, California 95131, Attention: Investor Relations.
3
REVOCABILITY
OF PROXIES
You can revoke your proxy at any time before the voting at the
Annual Meeting by sending a properly signed written notice of your
revocation to our secretary, by submitting another proxy that is
properly signed and bearing a later date, by following the
specified procedures for submitting a proxy electronically and
changing your vote or by voting in person at the Annual Meeting.
Attendance at the Annual Meeting will not itself revoke an earlier
submitted proxy. You should direct any written notices of
revocation and related correspondence to MoSys, Inc., 2309
Bering Drive, San Jose, California 95131, Attention: Secretary.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS
FOR THE STOCKHOLDER MEETING TO BE HELD JUNE 25, 2020
This Proxy Statement, the proxy card and our 2019 Annual Report on
Form 10‑K are available at www.mosys.com/proxy/proxymaterials.
Voting
Stockholders who have their shares in “street name,” meaning the
name of a broker or other nominee who is the record holder, must
either direct the record holder of their shares to vote their
shares or obtain a proxy from the record holder to vote their
shares at the Annual Meeting. Stockholders who have their shares in
street name may also attend the Annual Meeting, however,
because such stockholders are not the stockholders of record, they
may not vote their shares at the Annual Meeting unless they request
and obtain a valid proxy (sometimes referred to as a “legal proxy”)
from their broker or other nominee who is the record holder.
Stockholders of record may vote their shares by:
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By attending the Annual Meeting and voting their shares of common
stock in person;
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By MAIL - Mark, sign and date your proxy card and return it in the
postage-paid envelope provided;
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By INTERNET - www.proxypush.com/mosy. Use the
Internet to transmit your voting instructions and for electronic
delivery of information up until 11:59 P.M. Eastern Time the day
before the cut-off date or meeting date. Have your proxy card in
hand when you access the web site and follow the instructions to
obtain your records and to create an electronic voting instruction
form.
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By PHONE - 1-866-883-3382. Use any touch-tone telephone to transmit
your voting instructions up until 11:59 P.M. Eastern Time the day
before the cut-off date or meeting date. Have your proxy card in
hand when you call and then follow the instructions.
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If you vote your shares by Internet or by phone, you do not need to
mail back your proxy card.
4
BOARD
OF DIRECTORS
Directors
Our bylaws provide that the number of directors is determined by
resolution of the board of directors and can be changed by approval
of the stockholders or a majority of the directors. Our board of
directors currently consists of four directors. Each director is
elected to serve until the next annual meeting of stockholders and
until the election and qualification of his or her successor or his
or her earlier resignation or removal.
The names of our directors, including four nominees to be elected
at the Annual Meeting and certain information about each of them,
are set forth below.
Name
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Age
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Position(s) with the Company
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Daniel Lewis
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71
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Chief Executive Officer, President and Director
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Scott Lewis(1)
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64
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Director
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Robert Y. Newell(1)(2)
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72
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Director
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Daniel J. O’Neil(1)(2)
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49
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Director
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(1)
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Member of Audit Committee
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(2)
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Member of Compensation Committee
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The principal occupations and positions for at least the past five
years of our directors and director nominees are described below.
There are no family relationships among any of our directors or
executive officers.
Daniel Lewis. Mr. Lewis
was appointed to the board of directors in September 2017, and has
served as our president and chief executive officer since August
2018. He has served as the managing member and an owner of GMS
Manufacturing Solution LLC, which provides engineering
services to manufacturing companies, since 2013. From 2001 to 2013,
Mr. Lewis served as chief executive officer of View Box
Group, LLC, which provides management consulting services to
small businesses. Prior to 2001, he previously served as vice
president of worldwide sales at both Xicor, Inc. and
Integrated Device Technology, Inc. Mr. Lewis has also
held various sales and technical positions with Accelerant
Networks, Inc. Intel Corporation, Zilog, Inc. and Digital
Equipment Corporation. Mr. Lewis holds a B.S. in Electrical
Engineering from the University of Michigan. We believe that
Mr. Lewis’s qualifications to serve on the board of directors
include his extensive business experience, having held senior
management positions at several companies in the semiconductor,
computer and networking industries. He brings strategic and
operational insight to the board of directors.
Scott Lewis. Mr. Lewis
was appointed to our board of directors in October 2018. He brings
more than 40 years of design, sales, and product and corporate
marketing experience with technology and semiconductor companies.
He is not related to our chief executive officer. Since February
2018, Mr. Lewis has been serving as executive marketing strategist
at United Silicon Carbide, Inc., a leader in the silicon carbide
power device market. Previously, he held multiple corporate and
product-line marketing leadership positions at Maxim Integrated
Products, Inc., Global Foundries, Ltd., Cadence Design Systems,
Inc., Intersil Corp., Xilinx, Inc. and Integrated Device
Technology, Inc. Mr. Lewis holds a B.S. in Electrical Engineering
Technology from DeVry Institute of Technology. We believe that Mr.
Lewis’s qualifications to serve on the board of directors include
his extensive business experience with over 40 years of design,
sales, product and corporate marketing experience in
high-technology industries, primarily in management positions at
several companies in the semiconductor industry. He also can
provide the board with valuable insight into sales and customer
management relevant to our business.
5
Robert
Y. Newell. Mr. Newell was
appointed to our board of
directors in October 2018. He is currently a consultant and advisor to emerging technology
and healthcare companies, having held financial management
positions with technology and
healthcare companies in Silicon Valley for over 25 years. From
2003 to 2018, Mr.
Newell was CFO of Dextera Surgical
Inc., a developer of advanced stapling devices and automated
medical systems. In
December 2017, after entering into an agreement to sell
substantially all of its assets, Dextera Surgical,
Inc. filed a
voluntary petition for
reorganization under Chapter 11 of Title 11 of the United States
Code in the United States
Bankruptcy Court for the District of Delaware. Mr. Newell served on
the board of directors of ARI Network Services, Inc., a leading supplier of
SaaS and data-as-a-service
solutions, from 2012 to 2017. Previously, Mr. Newell
served as CFO of Omnicell, Inc., a
hospital supply and medication management company, and held
executive positions with
the Beta Group, LLC and Cardiometrics, Inc. Prior to his
business career, he was a pilot in
the United States Air
Force. Mr. Newell holds a BA in mathematics from the College of
William & Mary and an MBA from Harvard Business School. We believe that Mr.
Newell’s qualifications to serve on the board of directors
include his substantial financial and public-company
experience, as he has served as chief financial officer at multiple
medical device and other
technology companies. He also has previous experience serving as a
director on public-company boards of directors.
Daniel O’Neil. Mr.
O’Neil was appointed to our board of directors in September 2017
and has served as a partner at Acme Strategy, LLC, a provider of
strategic consulting and advisory services, which he founded, since
2010. From 2008 to 2010, he served as an investment banker at
Signal Hill Capital Group LLC. Prior to 2008, Mr. O’Neil held
business development and investment banking positions at Energy
Services Group, Deutsche Bank AG and BT Alex. Brown. Mr. O’Neil
holds an AB from Harvard College and an MBA from the Stanford
University Graduate School of Business. We believe that Mr.
O’Neil’s qualifications to serve on the board of directors include
his extensive business experience and expertise in corporate
finance and strategy, including experience gained both as an
investment banker and corporate consultant, primarily focused on
the semiconductor and electronics industries. In the past, Mr.
O’Neil has provided financial advisory services to us. He also
brings to our board extensive knowledge of the semiconductor
industry, along with deep experience in transactional processes,
mergers and acquisitions, and deal financing for a wide range of
transactions.
6
CORPORATE
GOVERNANCE
Director Independence
Our board of directors has determined that each of the current
directors, with the exception of Daniel Lewis, is “independent,” as
defined by the listing rules of the NASDAQ Stock Market, or Nasdaq,
and the rules and regulations of the Securities and Exchange
Commission, or SEC. Our board of directors has standing Audit and
Compensation Committees, each of which is comprised solely of
independent directors in accordance with the Nasdaq listing rules.
No director qualifies as independent unless the board of directors
affirmatively determines that he has no direct or indirect
relationship with us that would impair his independence. We
independently review the relationship of the Company to any entity
employing a director or on whose board of directors he is serving
currently.
Audit Committee
Our board of directors established the Audit Committee for the
purpose of overseeing the accounting and financial reporting
processes and audits of our financial statements. The Audit
Committee also is charged with reviewing reports regarding
violations of our code of ethics and complaints with respect
thereto, and internal control violations under our whistleblower
policy are directed to the members of the Audit Committee. The
responsibilities of our Audit Committee are described in the Audit
Committee Charter adopted by our board of directors, a current copy
of which can be found on the investors section of our website,
www.mosys.com.
Scott Lewis, Robert Y. Newell and Daniel J. O’Neil are the
members of the Audit Committee. All are independent, as determined
in accordance with Rule 5605(a)(2) of the Nasdaq listing rules
and Rule 10A‑3 of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”). Mr. O’Neil serves as the
chairman and has been designated by the board of directors as the
“audit committee financial expert,” as defined by
Item 407(d)(5) of Regulation S‑K under the Securities Act
of 1933, as amended, and the Exchange Act. That status does not
impose duties, liabilities or obligations that are greater than the
duties, liabilities or obligations otherwise imposed on him as a
member of the Audit Committee and the board of directors, however.
The Audit Committee has delegated
authority to Mr. O’Neil for review and pre-approval of services
proposed to be provided by our independent registered public
accounting firm.
Compensation Committee
Robert Y. Newell and Daniel J. O’Neil are the members of the
Compensation Committee, with Mr. Newell serving as the chairman.
The Compensation Committee is responsible for reviewing,
recommending and approving our compensation policies and benefits,
including the compensation of all of our executive officers and
directors. Our Compensation Committee also has the principal
responsibility for the administration of our equity incentive and
stock purchase plans. The responsibilities of our Compensation
Committee are described in the Compensation Committee Charter
adopted by our board of directors, a current copy of which can be
found on the investors section of our website, www.mosys.com.
Nominations Process
We do not have a nominating committee, as we are a small company
and currently only have four directors. Instead of having such a
committee, our board of directors historically has appointed all of
the independent directors on our board to search for and evaluate
qualified individuals to become nominees for director and board
committee members. The independent directors recommend candidates
for nomination for election or reelection for each annual meeting
of stockholders and, as necessary, to fill vacancies and newly
created directorships, and evaluate candidates for appointment to
and removal from committees. The independent directors operate in
this capacity under authority granted by resolution of the board of
directors, rather than by charter.
7
All
of our director
nominees have expressed their willingness to continue to serve as
our directors. When new candidates for our board of directors are
sought, the independent directors evaluate each candidate for
nomination as a director within the context of the needs
and
the composition of the board of directors as a whole. The
independent directors conduct any appropriate and necessary
inquiries into the backgrounds and qualifications of candidates.
When evaluating director nominees, our board of directors generally
seeks
to identify individuals with diverse, yet complementary business
backgrounds. Although we have no formal policy regarding diversity,
our directors consider both the personal characteristics and
experience of director nominees, including each nominee’s
independence, diversity, age, skills, expertise, time availability
and industry background in the context of the needs of the board of
directors and the Company. The board of directors believes that
director nominees should exhibit proven leadership
capabilities
and experience at a high level of responsibility within their
chosen fields, and must have the experience and ability to analyze
the complex business issues facing us, and specifically, the issues
inherent in the semiconductor industry. In addition
to business expertise, the board of directors requires that
director nominees have the highest personal and professional
ethics, integrity and values and, above all, are committed to
representing the long‑term
interests of our stockholders and other stakeholders.
To date, we have not paid any fee to a third party to assist in the
process of identifying or evaluating director candidates.
Our independent directors will consider candidates for nomination
as director who are recommended by a stockholder and
will
not evaluate any candidate for nomination for director differently
because the candidate was recommended by a stockholder. To date, we
have not received or rejected any suggestions for a director
candidate recommended by any stockholder or group of
stockholders
owning more than 5% of our common stock. When submitting candidates
for nomination to be elected at our annual meeting of stockholders,
stockholders must also follow the notice procedures and provide the
information required by our bylaws. To consider
a candidate recommended by a stockholder for nomination at the
2021
Annual Meeting of Stockholders, the recommendation must be
delivered or mailed to and received by our secretary within the
time periods discussed elsewhere in this proxy statement
under
the heading “Stockholder Proposals for 2021
Annual Meeting.” The recommendation must include the information
specified in our bylaws for stockholder nominees to be considered
at an annual meeting, including the following:
|
•
|
The stockholder’s name
and address and the beneficial owner, if any, on whose behalf the
nomination is proposed;
|
|
•
|
The stockholder’s reason
for making the nomination at the annual meeting, and the signed
consent of the nominee to serve if elected;
|
|
•
|
The number of shares
owned by, and any material interest of, the record owner and the
beneficial owner, if any, on whose behalf the record owner is
proposing the nominee;
|
|
•
|
A description of any
arrangements or understandings between the stockholder, the nominee
and any other person regarding the nomination; and
|
|
•
|
Information regarding
the nominee that would be required to be included in our proxy
statement by the rules of the SEC, including the nominee’s age,
business experience for the past five years and any other
directorships held by the nominee.
|
The information listed above is not a complete list of the
information required by our bylaws. The secretary will forward any
timely recommendations containing the required information to our
independent directors for consideration.
Board Leadership Structure
Our bylaws provide the board of directors with flexibility to
combine or separate the positions of chairman of the board of
directors and chief executive officer in accordance with its
determination that utilizing one or the other structure is in the
best interests of our company. Currently, the board of directors
has not appointed a chairman or lead independent director. From
time to time, each of the independent directors works with our
chief executive officer to perform a variety of functions related
to our corporate governance, including coordinating board of
directors activities, setting the agenda for meetings (in
consultation with our chief executive officer, as necessary or
appropriate) and ensuring adequate communication between the board
of directors and management. Our Audit Committee oversees critical
matters such as our relationship with our auditors, our financial
reporting practices, system of disclosure controls and procedures
and internal controls over financial reporting. Our Compensation
Committee oversees our executive compensation program. Each of
these committees consists entirely of independent directors.
8
Risk
Oversight
The board of directors is actively involved in the oversight of
risks, including strategic, credit, liquidity, operational and
other risks, which could affect our business. The board of
directors does not have a standing risk management committee, but
administers this oversight function directly through the board of
directors as a whole and through its committees, which oversee
risks relevant to their respective functions. For example, in
addition to the oversight matters described in the preceding
paragraph, the Audit Committee also assists the board of directors
in its risk oversight function by reviewing and discussing with
management our compliance with accounting principles and the
treasury function, including management of our cash and
investments. The Compensation Committee assists the board of
directors in its risk oversight function by considering risks
relating to the design of our executive compensation programs and
arrangements and employee benefit plans. The full board of
directors considers strategic risks and opportunities and receives
reports from the committees regarding risk oversight in their areas
of responsibility as necessary. The board of directors and each
committee administers its respective risk oversight function by
evaluating management’s monitoring, assessment and management of
risks, including steps taken to limit our exposure to known risks,
through regular interaction with our senior management and in board
and committee deliberations that are closed to members of
management. The interaction with management occurs not only at
formal board and committee meetings but also periodically through
other written and oral communications.
Stockholder Communications with the Board
Stockholders who desire to communicate with the board of directors,
or a specific director, may do so by sending the communication
addressed to either the board of directors or any director,
c/o MoSys, Inc., 2309 Bering Drive, San Jose, California
95131. These communications will be delivered to the board of
directors, or any individual director, as specified.
Annual Meeting Attendance
We have a policy of encouraging each director to attend the annual
meeting of stockholders, but attendance is not required.
Mr. Lewis, our president and chief executive officer, attended
the 2019 Annual Meeting of Stockholders.
Meetings of the Board and Committees
During 2019, there were six meetings of the board of directors,
four meetings of the Audit Committee and five meetings of the
Compensation Committee. Each director attended 100% of the total
number of meetings of the board of directors, and the Audit
Committee and Compensation Committee members attended 100% of the
respective committee meetings. The board of directors also acted at
times by unanimous written consent, as authorized by our bylaws and
the Delaware General Corporation Law.
Compensation Committee Interlocks and Insider Participation
During 2019, none of our executive officers served as a member of
the board of directors or compensation committee of any entity that
had one or more of its executive officers serving as a member of
our board of directors or Compensation Committee.
Messrs. Newell and O’Neil, the Compensation Committee members,
were not officers or employees of ours during 2019 or at any other
time.
Delinquent Section 16(a) Reports
Section 16(a) of the Exchange Act requires our directors,
executive officers and persons who own more than 10% of a
registered class of our equity securities to file with the SEC
initial reports of ownership and reports of changes in ownership of
common stock and other equity securities of ours. Directors,
executive officers and greater than 10% holders are required by SEC
regulation to furnish us with copies of all
Section 16(a) reports they file. Based solely on our
review of Forms 3 and 4 filed during 2019 (and any written
representations to us by such persons), we believe that all
directors, executive officers and 10% stockholders complied with
all applicable Section 16(a) filing requirements during
2019, except that James Sullivan failed to timely file a Form 4 in
August 2019.
9
Change
in Registered Public
Accounting Firm
On May 13, 2020, we dismissed BPM, LLP (“BPM”) as our registered
public accounting firm and we engaged Weinberg & Company, P.A.
(“Weinberg”) as our new independent registered public accounting
firm. The reports of BPM on our consolidated financial statements
as of and for the years ended December 31, 2019 and 2018 did not
contain any adverse opinion or disclaimer of opinion, nor were they
qualified or modified as to uncertainty, audit scope or accounting
principles. The decision to change our independent registered
public accountant was authorized and approved by our Audit
Committee.
In connection with the audit of our financial statements as of and
for the fiscal years ended December 31, 2019 and 2018 and during
the interim period through May 13, 2020, the date of dismissal, we
had no disagreement with BPM on any matter of accounting
principles or practices, financial statement disclosure, or
auditing scope or procedure (within the meaning of Item
304(a)(1)(iv) of Regulation S-K under the Securities Act), which
disagreements, if not resolved to the satisfaction of BDO would
have caused it to make reference thereto in its report on the
financial statements for such years. In addition, there were no
reportable events as described in Item 304(a)(1)(v) of Regulation
S-K under the Securities Act.
During our two most recent fiscal years ended December 31, 2019 and
2018, and the subsequent interim period through May 13, 2020, the
date we engaged Weinberg, we did not consult with Weinberg
regarding the application of accounting principles to a specified
transaction or the type of audit opinion that might be rendered on
our financial statements, or as to any disagreement or reportable
event as described in Items 304(a)(1)(iv) and 304(a)(1)(v) of
Regulation S-K under the Securities Act.
Code of Ethics
We have adopted a code of ethics that applies to all of our
employees. The code of ethics is designed to deter wrongdoing and
to promote, among other things, honest and ethical conduct, full,
fair, accurate, timely, and understandable disclosures in reports
and documents submitted to the SEC and other public communications,
compliance with applicable governmental laws, rules and
regulations, the prompt internal reporting of violations of the
code to an appropriate person or persons identified in the code and
accountability for adherence to such code.
The code of ethics is available on our website, www.mosys.com. If
we make any substantive amendments to the code of ethics or grant
any waiver, including any implicit waiver, from a provision of the
code to our Chief Executive Officer or Chief Financial Officer, or
persons performing similar functions, where such amendment or
waiver is required to be disclosed under applicable SEC rules, we
intend to disclose the nature of such amendment or waiver on our
website.
10
DIRECTOR
COMPENSATION
The information presented below has been modified to reflect the
impact of a 1‑for‑20 reverse stock split effected in August
2019.
The following table summarizes the compensation we paid to our
non‑employee directors in 2019:
Name
|
|
Fee
Compensation
($)
|
|
|
Restricted Stock
Awards
($)(1)
|
|
|
Option
Awards
($)(1)(2)
|
|
|
All Other
Compensation
|
|
|
Total
($)
|
|
Scott Lewis
|
|
|
30,000
|
|
|
|
6,246
|
|
|
|
14,010
|
|
|
|
—
|
|
|
|
50,256
|
|
Robert Y. Newell
|
|
|
31,500
|
|
|
|
6,246
|
|
|
|
14,010
|
|
|
|
—
|
|
|
|
51,756
|
|
Daniel O'Neil
|
|
|
33,000
|
|
|
|
6,246
|
|
|
|
—
|
|
|
|
—
|
|
|
|
39,246
|
|
(1)
|
Award amounts reflect the aggregate grant date fair value with
respect to awards granted during the years indicated, as determined
pursuant to FASB ASC Topic 718. Restricted stock award amounts
consist of: awards granted to Messrs. Lewis, Newell and O’Neil
on each of February 6, 2019 and October 23, 2019 to purchase 1,000
shares each. The assumptions used to calculate the aggregate grant
date fair value of option and stock awards are set forth in the
notes to the audited consolidated financial statements included in
our 2019 Annual Report on Form 10‑K. These amounts do not
reflect actual compensation earned or to be earned by our
non-employee directors.
|
(2)
|
As of December 31, 2019, our non‑employee directors each held
outstanding options to purchase 5,000 of shares of our common
stock.
|
Director Fee Compensation
The challenges our business has faced have made it challenging for
us to attract new non-employee directors. Nasdaq and SEC
regulations require that a majority of the directors on our board
of directors and its committees be independent, non-employee
directors, as defined by each entity. We pay the following annual
cash retainer fees, payable in quarterly installments, to our
non-employee directors for their service on our board of directors
and, as applicable, for service as chairperson of a committee of
our board of directors:
|
•
|
$30,000
for service on the board of directors;
|
|
•
|
$3,000 for service as
chairperson of the Audit Committee; and
|
|
•
|
$1,500 for service as
chairperson of the Compensation Committee.
|
Director Equity Compensation
In August 2019, the Company’s stockholders approved the 2019 Stock
Incentive Plan (the “2019 Plan”). The 2019 Plan permits the board
of directors to establish by resolution the number of shares, up to
a maximum of 2,000 each year for each non-employee director, to be
covered by annual option grants or other awards for each year of
service on our board. The 2019 Plan further provides that each
non-employee director may be granted an award to acquire up to
6,000 shares upon his or her initial appointment or election to our
board. The shares covered by these awards vest over a three year
period at the rate of one third of the total number of shares each
year, subject to the non-employee director’s continuous service on
the board. The 2019 Plan also permits a disinterested majority of
the board of directors, in its discretion, to authorize additional
shares to be awarded or granted to committee chairs and other
non-employee directors for extraordinary service on the board.
The exercise price per share under each option grant is equal to
the fair market value of a share of our common stock on the date of
grant on the principal trading market for our common stock at the
time of grant, which is The Nasdaq Stock Market, or Nasdaq. In the
event of a merger, sale of substantially all of our assets or
similar transaction, vesting of all non-employee director options
would accelerate as to 100% of the unvested shares subject to the
award.
In
recent years, our basic annual service award to a non-employee
director has been a restricted stock unit award for 1,000 shares of
our common stock. In 2019, the board of directors once again
determined that this was an appropriate award size. The annual
service award is granted at the first meeting of the board of
directors following each annual meeting of stockholders for each
year in which the director serves on our board of
directors. In each of February 2019 and October 2019, we
awarded restricted stock unit awards of 1,000 shares to each of
Messrs., S.
11
Lewis, Newell and O’Neil.
The awards
granted in February 2019
vested
and became
non-forfeitable
in February 2020. The
awards
granted in October 2019
vest and become non-forfeitable on the date of the
Annual
Meeting.
EXECUTIVE COMPENSATION—COMPENSATION DISCUSSION AND ANALYSIS
The information presented below has been modified to reflect the
impact of a 1‑for‑20 reverse stock split effected in August
2019.
Overview of Compensation Program
The Compensation Committee of the board of directors has
responsibility for establishing, implementing and monitoring
adherence to our compensation philosophy. The board of directors
has delegated to the Compensation Committee the responsibility for
determining our compensation policies and procedures for senior
management, including the named executive officers, periodically
reviewing these policies and procedures, and making recommendations
concerning executive compensation to be considered by the full
board of directors, when such approval is required under any of our
plans or policies or by applicable laws.
The compensation received by our named executive officers in fiscal
year 2019 is set forth in the Summary Compensation Table, below.
For 2019, the named executive officers included Daniel Lewis,
President and Chief Executive Officer, and James Sullivan, Vice
President of Finance and Chief Financial Officer.
Compensation Philosophy
In general, our executive compensation policies are designed to
recruit, retain and motivate qualified executives by providing them
with a competitive total compensation package based in large part
on the executive’s contribution to our financial and operational
success, the executive’s personal performance and increases in
stockholder value, as measured by the price of our common stock. We
believe that the total compensation paid to our executives should
be fair, reasonable and competitive.
We seek to have a balanced approach to executive compensation with
each primary element of compensation (base salary, variable
compensation and equity incentives) designed to play a specific
role. Overall, we design our compensation programs to allow for the
recruitment, retention and motivation of the key executives and
high‑level talent required in order for us to:
|
•
|
supply
high‑value and high‑quality integrated circuit solutions to our
customer base;
|
|
•
|
achieve
or exceed our annual financial plan and be profitable;
|
|
•
|
make
continuous progression towards achieving our long‑term strategic
objectives to be a high‑growth company with growing profitability;
and
|
|
•
|
increase
our share price to provide greater value to our
stockholders.
|
Role of Executive Officers in Compensation Decisions
The chief executive officer (CEO) makes recommendations for equity
and non‑equity compensation for executives to be approved by the
Compensation Committee. The Compensation Committee reviews these
guidelines annually. The CEO annually reviews the performance of
our executives (other than himself) and presents his
recommendations for proposed salary adjustments, bonuses and equity
awards to the Compensation Committee once a year. In its
discretion, the Compensation Committee may accept, modify or reject
the CEO’s recommendations. The Compensation Committee evaluates the
compensation of the CEO on its own without the participation or
involvement of the CEO. Only the Compensation Committee and the
board of directors are authorized to approve the compensation for
any named executive officer. Compensation of new executives is
based on hiring negotiations between the individuals and our CEO
and/or Compensation Committee.
12
Elements
of Compensation
Consistent with our compensation philosophy and objectives, we
offer executive compensation packages consisting of the following
three components:
|
•
|
annual
incentive compensation; and
|
In each fiscal year, the Compensation Committee determines the
amount and relative weighting of each component for all executives,
including the named executive officers. Base salaries are paid in
fixed amounts and thus do not encourage risk taking. Our widespread
use of long‑term compensation consisting of stock options and
restricted stock units (RSUs) focuses recipients on the achievement
of our longer‑term goals and conserves cash for other operating
expenses. For example, the RSUs granted to our executives in 2019
vest in increments over three years, while stock options granted to
our executives in 2019 vest over 36 months from the date of grant.
The Compensation Committee does not believe that these awards
encourage unnecessary or excessive risk taking because the ultimate
value of the awards is tied to our stock price, and the use of
multi‑year vesting schedules helps to align our employees’
interests even more closely with those of our long‑term
investors.
Base Salary
Because our compensation philosophy stresses performance-based
awards, base salary is intended to be a smaller portion of total
executive compensation relative to long-term equity. The
Compensation Committee takes into account the executive’s scope of
responsibility and significance to the execution of our long-term
strategy, past accomplishments, experience and personal performance
and compares each executive’s base salary with those of the other
members of senior management. The Compensation Committee may give
different weighting to each of these factors for each executive, as
it deems appropriate. The Compensation Committee did not retain a
compensation consultant or determine a compensation peer group for
2019. In 2019, there were no changes to the base salaries paid to
our named executive officers.
Annual Incentive Compensation
The Compensation Committee did not authorize any incentive
compensation for the named executive officers in 2019.
Equity Awards
Although we do not have a mandated policy regarding the ownership
of shares of common stock by officers and directors, we believe
that granting equity awards to executives and other key employees
on an ongoing basis gives them a strong incentive to maximize
stockholder value and aligns their interests with those of our
other stockholders on a long-term basis. The 2019 Plan, which was
approved by our stockholders and became effective in August 2019,
enables us to grant equity awards, as well as other types of
stock-based compensation, to our executive officers and other
employees. The Compensation Committee reviews and approves all
equity awards granted under the 2019 Plan to the named executive
officers. We grant equity awards to achieve retention and
motivation:
|
•
|
upon the
hiring of key executives and other personnel;
|
|
•
|
annually,
when we review progress against corporate and personal goals;
and
|
|
•
|
when we
believe that competitive forces or economic conditions threaten to
cause our key executives to lose their motivation and/or where
retention of these key executives is in jeopardy.
|
With
the Compensation Committee’s approval, we grant options to purchase
shares of common stock when we initially hire executives and other
employees, as a long-term performance incentive. The Compensation
Committee has determined the size of the initial option grants to
newly hired executives with reference to option grants held by
existing executives, the percentage that such grant represents of
our total shares outstanding and hiring negotiations
13
with the individual. In addition, the Compensation
Committee would consider other relevant information regarding the
size and type of compensation package considered necessary to
enable us to recruit, retain and motivate the executive.
Typically, when we hire an executive, the options vest with respect
to one-fourth of the total number of shares subject to the grant on
the first anniversary of the grant date and with respect to
1/48th of the shares monthly thereafter. The options granted
to executives in connection with annual performance reviews
typically vest monthly over a three-to-four-year period, and RSUs
granted typically vest annually over a period of from one-to-three
years, as the Compensation Committee may decide. As matters of
policy and practice we grant stock options with an exercise price
equal to fair market value, although the 2019 Plan allows us to use
a different exercise price. In determining fair market value, we
use the closing price of the common stock on the Nasdaq, on the
grant date.
Historically, no employee has been eligible for an annual
performance grant until the employee has been employed for at least
six months. Annual performance reviews are generally conducted in
the first half of each fiscal year. Our CEO conducts the
performance review of all other executives, and makes his
recommendations to the Compensation Committee. The Compensation
Committee also reviews the CEO’s annual performance and determines
whether he should receive additional equity awards. Aside from
equity award grants in connection with annual performance reviews,
we do not have a policy of granting additional awards to executives
during the year. The board of directors and Compensation Committee
have not adopted a policy with respect to setting the dates of
award grants relative to the timing of the release of material
non-public information. Our policy with respect to prohibiting
insider trading restricts sales of shares during specified
black-out periods, including at all times that our insiders are
considered to possess material non-public information.
In determining the size of equity awards in connection with the
annual performance reviews of our executives, the Compensation
Committee takes into account the executive’s current position with
and responsibilities to us, and current and past equity awards to
the executive. During 2019, the Compensation Committee approved
awards of restricted stock units for 22,500 shares and options to
purchase 75,000 shares of our common stock to Dan Lewis. In
addition, the Compensation Committee approved awards of restricted
stock units for 8,250 shares and options to purchase 25,500 shares
of our common stock to Mr. Sullivan. Messrs. Lewis and Sullivan did
not receive any equity awards in 2018.
Going forward, we intend to continue to evaluate and consider
equity grants to our executives on an annual basis. We expect to
consider potential equity awards for executives at the same time as
we annually review our employees’ performance and determine whether
to award grants for all employees.
Accounting and Tax Considerations
Our Compensation Committee has reviewed the impact of tax and
accounting treatment on the various components of our executive
compensation program. Section 162(m) of the Internal Revenue Code
(the “Code”) generally disallows a tax deduction to publicly-held
companies for compensation paid to “covered” executive officers, to
the extent that compensation paid to such an officer exceeds $1
million during the taxable year. The Tax Cuts and Jobs Act repealed
the performance-based exception to the deduction limit for
remuneration that is deductible in tax years commencing after
December 31, 2017. However, certain remuneration is specifically
exempt from the deduction limit under a transition rule to the
extent that it is "performance-based," as defined in Section 162(m)
of the Code, and subject to a "written binding contract" in effect
as of November 2, 2017 that is not later modified in any material
respect. We endeavor to award compensation that will be deductible
for income tax purposes, though other factors will also be
considered. None of the compensation paid to our covered executive
officers for the year ended December 31, 2019 that would be taken
into account for purposes of Section 162(m) exceeded the $1 million
limitation for 2019. Because of ambiguities and uncertainties as to
the application and interpretation of Section 162(m) of the Code
and the regulations issued thereunder, including the uncertain
scope of the transition relief under the Tax Cuts and Jobs Act, no
assurance can be given that compensation intended to satisfy the
requirements for exemption from Section 162(m) of the Code in fact
will satisfy such requirements. Our Compensation Committee may
authorize compensation payments that do not comply with the
exemptions to Section 162(m) when we believe that such payments are
appropriate to attract and retain executive talent.
14
Say‑on‑Pay
In 2017, we gave our stockholders an opportunity to provide
feedback on our executive compensation through an advisory vote at
our annual stockholder meeting. Stockholders were asked to approve,
on an advisory basis, the compensation paid to our named executive
officers. A majority of stockholders indicated approval of the
compensation of the named executive officers, with approximately
90% of the shares that voted on such matter voting in favor of the
proposal. Additionally, stockholders were asked to approve, on an
advisory basis, in favor of having a stockholder vote to approve
the compensation of the Company's named executive officers every
three years. A majority of stockholders indicated approval of
having a stockholder vote to approve the compensation of the
Company's named executive officers every three years, with
approximately 60% of the shares that voted on such matter voting in
favor of the proposal. Based on these results and consistent with
the previous recommendation and determination of its board of
directors, the Company will hold non-binding advisory votes on
executive compensation every three years until the next vote on the
frequency of the stockholder advisory vote on executive
compensation.
In light of the results of the advisory vote, the Compensation
Committee has continued to apply principles that were substantially
similar to those applied historically in determining compensation
policies and decisions and did not make any significant changes to
executive compensation decisions and policies with respect to 2019
executive compensation. The Compensation Committee will consider
the results of the current advisory vote in its compensation policy
and decisions.
15
COMPENSATION
COMMITTEE REPORT
The Compensation Committee has reviewed and discussed with
management the Compensation Discussion and Analysis provisions to
be included in our Proxy Statement for the Annual Meeting. Based on
this review and discussion, the Compensation Committee has
recommended to the board of directors that the Compensation
Discussion and Analysis be included in our Proxy Statement for the
Annual Meeting.
The Compensation Committee of the Board of Directors:
|
|
|
Robert Y. Newell (Chairman)
Daniel J. O’Neil
|
16
SUMMARY
COMPENSATION TABLE
The following table sets forth compensation information for fiscal
years 2019 and 2018 for each of our named executive officers.
Name and principal position
|
|
Year
|
|
Salary
($)
|
|
|
Stock Option
Awards
($)(1)
|
|
|
|
Restricted Stock
Awards
($)(1)
|
|
|
|
Non-Equity
Incentive Plan
Compensation
($)
|
|
|
|
Total
($)
|
|
Daniel Lewis
|
|
2019
|
|
|
250,000
|
|
|
|
153,000
|
|
|
|
|
88,200
|
|
|
|
|
|
|
|
|
|
491,200
|
|
Chief Executive Officer &
President
|
|
2018
|
|
|
99,432
|
|
|
|
3,350
|
|
(2)
|
|
|
23,200
|
|
(2)
|
|
|
|
|
|
|
|
125,982
|
|
James Sullivan
|
|
2019
|
|
|
244,793
|
|
|
|
52,960
|
|
|
|
|
32,340
|
|
|
|
|
|
|
|
|
|
330,093
|
|
Chief Financial Officer &
Vice President of Finance
|
|
2018
|
|
|
248,496
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
56,175
|
|
(3)
|
|
|
304,671
|
|
(1)
|
Award amounts reflect the aggregate grant date fair value with
respect to awards granted during the years indicated, as determined
pursuant to FASB ASC Topic 718. The assumptions used to calculate
the aggregate grant date fair value of option and stock awards are
set forth in the notes to the audited consolidated financial
statements included in our 2019 Annual Report on Form 10‑K.
These amounts do not reflect actual compensation earned or to be
earned by our named executive officers.
|
(2)
|
Granted in his capacity
as a director, prior to his hire as our chief executive officer and
president in August 2018.
|
(3)
|
Earned as a bonus in 2018.
|
17
GRANTS
OF PLAN‑BASED
AWARDS
The following table provides information on plan-based awards
granted in 2019 to each of the named executive officers:
Name
|
|
Grant Date
|
|
All Other
Stock
Awards:
Number
of Shares
of Stock
or Units
(#)(1)
|
|
|
All Other
Option
Awards:
Number of
Securities
Underlying
Options (#)
|
|
|
Exercise or
Base Price
of Option
Awards
($/Share) (2)
|
|
|
Grant Date
Fair Value
of Stock
and Option
Awards
($)(3)
|
|
Daniel Lewis
|
|
2/6/2019
|
|
|
22,500
|
|
|
|
15,000
|
|
|
|
3.92
|
|
|
|
147,000
|
|
Daniel Lewis
|
|
11/20/2019
|
|
|
—
|
|
|
|
60,000
|
|
|
|
1.57
|
|
|
|
94,200
|
|
James Sullivan
|
|
2/6/2019
|
|
|
8,250
|
|
|
|
5,500
|
|
|
|
3.92
|
|
|
|
53,900
|
|
James Sullivan
|
|
11/20/2019
|
|
|
—
|
|
|
|
20,000
|
|
|
|
1.57
|
|
|
|
31,400
|
|
(1)
|
Represents
restricted stock units granted pursuant to the 2019
Plan.
|
(2)
|
Each option
was granted at an exercise price equal to the fair market value of
our common stock on the grant date which was equal to the closing
price of our common stock on Nasdaq on the date of
grant.
|
(3)
|
The assumptions used to calculate the aggregate grant date fair
value of option and stock awards are set forth in the notes to the
audited consolidated financial statements included in our 2019
Annual Report on Form 10‑K.
|
18
OUTSTANDING
EQUITY AWARDS AT FISCAL YEAR‑END
The following table sets forth information regarding the
outstanding equity awards held by our named executive officers as
of December 31, 2019.
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
Name
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
|
|
|
Equity
Incentive
Plan Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options (#)
|
|
|
Option
Exercise
Price($)
|
|
|
Option
Expiration
Date(1)
|
|
|
Number of
Units That
Have Not
Vested (#)
|
|
|
|
Market
Value of
Units That
Have Not
Vested ($)
|
|
|
Daniel Lewis
|
|
|
2,667
|
|
(2)
|
|
|
1,333
|
|
|
|
—
|
|
|
|
15.00
|
|
|
10/19/2023
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
|
667
|
|
(3)
|
|
|
333
|
|
|
|
—
|
|
|
|
25.60
|
|
|
1/4/2024
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
|
4,167
|
|
(4)
|
|
|
10,833
|
|
|
|
—
|
|
|
|
3.92
|
|
|
2/6/2029
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
|
1,667
|
|
(5)
|
|
|
58,333
|
|
|
|
—
|
|
|
|
1.57
|
|
|
11/20/2029
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
18,750
|
|
(6)
|
|
|
33,094
|
|
(7)
|
James Sullivan
|
|
|
300
|
|
(8)
|
|
|
—
|
|
|
|
—
|
|
|
|
410.00
|
|
|
3/30/2025
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
|
614
|
|
(9)
|
|
|
175
|
|
|
|
—
|
|
|
|
144.00
|
|
|
8/23/2026
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
|
1,528
|
|
(4)
|
|
|
3,972
|
|
|
|
—
|
|
|
|
3.92
|
|
|
2/6/2029
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
|
556
|
|
(5)
|
|
|
19,444
|
|
|
|
—
|
|
|
|
1.57
|
|
|
11/20/2029
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
6,875
|
|
(6)
|
|
|
12,134
|
|
(7)
|
(1)
|
The standard option term is generally ten years, but all of the
options expire automatically unless exercised within 90 days
after the cessation of service as an employee, director or
consultant.
|
(2)
|
The stock option was granted on October 19, 2017 for service as a
non-employee director, and the shares subject to this option vest
annually over three years beginning September 26, 2018 subject to
continued employment (or service as a director or consultant).
|
(3)
|
The stock option was granted on January 4, 2018 for service as a
non-employee director, and the shares subject to this option vest
annually over three years beginning September 26, 2018 subject to
continued service as an employee, director or consultant.
|
(4)
|
The stock option was granted on February 6, 2019, and the shares
subject to this option vest monthly over three years subject to
continued service as an employee, director or consultant.
|
(5)
|
The stock option was granted on November 20, 2019, and the shares
subject to this option vest monthly over three years subject to
continued service as an employee, director or consultant.
|
(6)
|
The shares subject to each restricted stock unit grant vest on each
semi-annual anniversary over a three-year period commencing on
February 6, 2019 subject to continued employment (or service as a
director or consultant).
|
(7)
|
The amount is calculated using the closing price of $1.765 per
share of our common stock on December 31, 2019.
|
(8)
|
The stock option was granted on March 30, 2015, and the shares
subject to this option vest monthly over 48 months subject to
continued employment (or service as a director or consultant).
|
(9)
|
In August 2016, Mr. Sullivan tendered his eligible options and
received new options at a rate of 1 replacement option share for
each 1.75 option shares tendered. The stock option was granted on
August 23, 2016, and the shares subject to this option vest monthly
over 48 months subject to continued employment (or service as a
director or consultant).
|
19
OPTION
EXERCISES AND STOCK VESTED
The following table sets forth the number of shares acquired and
aggregate dollar amount realized pursuant to the exercise of
options and vesting of stock awards by our named executive officers
during 2019.
|
|
Option Awards
|
|
|
Stock Awards
|
|
Name
|
|
Number of
Shares
Acquired on
Exercise(#)
|
|
|
Value
Realized on
Exercise($)
|
|
|
Number of
Shares
Acquired on
Vesting(#)
|
|
|
Value
Realized on
Vesting($)(1)
|
|
Daniel Lewis
|
|
|
—
|
|
|
|
—
|
|
|
|
4,750
|
|
|
|
15,173
|
|
James Sullivan
|
|
|
—
|
|
|
|
—
|
|
|
|
1,355
|
|
|
|
4,434
|
|
(1)
|
The aggregate dollar value realized upon vesting represents the
closing price of a share of common stock on Nasdaq at the date of
vesting, multiplied by the total number of shares vested.
|
EMPLOYMENT AND CHANGE‑IN‑CONTROL ARRANGEMENTS AND AGREEMENTS
Our Executive Change-in-Control and Severance Policy (the “Policy”)
provides benefits that are intended to encourage the continued
dedication of our executive officers and to mitigate potential
disincentives to the consideration of a transaction that would
result in a change in control, particularly where the services of
our named executive officers may not be required by a potential
acquirer. The Policy provides for benefits for our named executive
officers in the event of a “Change-in-Control,” which is generally
defined as:
|
•
|
an
acquisition of 45% or more of our common stock or voting securities
by any “person” as defined under the Exchange Act; or
|
|
•
|
consummation of a
complete liquidation or dissolution of the Company or a merger,
consolidation, reorganization or sale of all or substantially all
of our assets (collectively, a “Business Combination”) other than a
Business Combination in which (A) our stockholders receive 50%
or more of the stock of the corporation resulting from the Business
Combination and (B) at least a majority of the board of
directors of such resulting corporation were our incumbent
directors immediately prior to the consummation of the Business
Combination, and (C) after which no individual, entity or
group (excluding any corporation or other entity resulting from the
Business Combination or any employee benefit plan of such
corporation or of ours) who did not own 45% or more of the stock of
the resulting corporation or other entity immediately before the
Business Combination owns 45% or more of the stock of such
resulting corporation or other entity.
|
Under the Policy, the following compensation and benefits are to be
provided to our chief executive officer upon the occurrence of a
Change-in-Control, and in the case of our other named executive
officers, upon a Change-in-Control combined with a termination of
the named executive officer’s employment without cause, or due to
disability or resignation for good reason (as defined in the
Policy) in connection with the Change-in-Control or within 24
months after it:
|
•
|
any base
salary earned but not yet paid through the date of
termination;
|
|
•
|
any
annual or discretionary bonus earned but not yet paid to him for
any calendar year prior to the year in which his termination
occurs;
|
|
•
|
any
compensation under any deferred compensation plan of ours or
deferred compensation agreement with us then in effect;
|
|
•
|
a single
lump sum payment equal to the sum of (a) one year of his or
her then-current base salary plus (b) the average of his or
her annual bonus payments in the preceding three years or such
shorter time as he or she has been employed by us (with prorated
weighting assigned to any bonus earned for a partial year of
employment), which payment will be made within 60 days following
the Change-in-Control (in the case of the chief executive officer),
or 60 days following the date of employment termination (in the
case of all other named executive officers).
|
20
|
•
|
Vesting
in 100% of all outstanding equity awards as of the date of the
Change-in-Control for the
chief executive officer, or as of the date of termination of
employment for all other named executive officers;
|
|
•
|
reimbursement of any
business expenses incurred by him through the date of termination
but not yet paid;
|
|
•
|
reimbursement of the
cost of continuation of medical benefits for a period of 12 months;
and
|
|
•
|
outstanding equity
awards that are structured as stock options, stock appreciation
rights or similar awards shall be amended effective as of the date
of termination to provide that such awards will remain outstanding
and exercisable until the earlier of (a) 12 months following the
date of the Change-in-Control for the chief executive officer, or
the termination of employment for the other named executive
officers, and (b) the expiration of the award’s initial
term
|
Under the Policy, “cause” means the executive’s:
|
•
|
willful
failure to attend to the executive’s duties that is not cured by
the executive within 30 days of receiving written notice from the
CEO (or, in the case of the CEO, from the board of directors)
specifying such failure;
|
|
•
|
material
breach of the executive’s then-current employment agreement (if
any) that is not cured by the executive within 30 days of receiving
written notice from the CEO (or, in the case of the CEO, from the
board of directors) specifying such breach;
|
|
•
|
conviction of (or
plea of guilty or nolo
contendere to) any felony or any
misdemeanor involving theft or embezzlement; or
|
|
•
|
misconduct resulting
in material harm to our business or reputation, including fraud,
embezzlement, misappropriation of funds or a material violation of
the executive’s Employment, Confidential
Information, Invention Assignment and Arbitration
Agreement;
and
|
Under the Policy, “good reason” means the occurrence of any of the
following conditions without the executive’s consent, but only if
such condition is reported by the executive within 90 days of the
executive’s knowledge of such condition and remains uncured 30 days
after written notice from the executive to the board of directors
of said condition:
|
•
|
a
material reduction in the executive’s then-current base salary or
annual target bonus (expressed as a percentage of Executive’s
then-current base salary), except for a reduction proportionate to
reductions concurrently imposed on all other members of the
Company’s executive management;
|
|
•
|
a
material reduction in the executive’s then-current employee
benefits package, taken as a whole, except for a reduction
proportionate to reductions concurrently imposed on all other
members of executive management;
|
|
•
|
a
material reduction in the executive’s responsibilities with respect
to our overall operations, such that continuity of responsibilities
with respect to business operations existing prior to a corporate
transaction will serve as a material reduction in responsibilities
if such business operations represent only a subsidiary or business
unit of the larger enterprise after the corporate
transaction;
|
|
•
|
a
material reduction in the responsibilities of the executive’s
direct reports, including a requirement for the chief executive
officer to report to another officer as opposed to our board of
directors or a requirement for any other executive to report to any
officer other than our chief executive officer;
|
|
•
|
a
material breach by us of any material provision of the executive’s
then-current employment agreement (if any);
|
|
•
|
a
requirement that the executive relocate to a location more than 35
miles from the executive’s then-current office location, unless
such office relocation results in the distance between the new
office and Executive’s home being closer or equal to the distance
between the prior office and the executive’s home;
|
|
•
|
a failure
of a successor or transferee to assume our obligations under this
Policy; or
|
21
|
•
|
a
failure to nominate the executive for election as a
Board director, if, at
the proper time for nomination, the executive is a member of the
board of directors
|
The information below
describes the severance benefits payable to our named executive
officers under the Policy as if the Policy had been in effect and a
Change‑in‑Control occurred on December 31, 2019, and the
employment of each of our named executive officers was terminated
without cause immediately following the Change‑in‑Control:
Name
|
|
Base
Salary($)(1)
|
|
|
Incentive
Plans($)(2)
|
|
|
Continuation
of
Benefits($)(3)
|
|
|
Stock
Option
Vesting($)(4)
|
|
|
Stock
Award
Vesting($)(5)
|
|
|
Total($)
|
|
Daniel Lewis
|
|
|
250,000
|
|
|
|
—
|
|
|
|
22,355
|
|
|
|
11,375
|
|
|
|
33,094
|
|
|
|
316,824
|
|
James Sullivan
|
|
|
250,000
|
|
|
|
31,075
|
|
|
|
22,355
|
|
|
|
3,792
|
|
|
|
12,170
|
|
|
|
319,392
|
|
(1)
|
Represents cash severance payments based on the executive’s salary
at December 31, 2019, in an amount equal to one year of his
base salary.
|
(2)
|
Represents the average of executive’s annual performance incentive
payments in the preceding three years.
|
(3)
|
Represents the aggregate amount of all premiums payable for the
continuation of the executive’s health benefits for one year, based
on the amount of such premiums at December 31, 2019.
|
(4)
|
The value is calculated as the intrinsic value per share,
multiplied by the number of shares that would become fully vested
upon the Change‑in‑Control. The intrinsic value per share would be
calculated as the excess of the closing price of our common stock
on Nasdaq of $1.765 on December 31, 2019 over the exercise
price of the option. If the value is less than zero, it is deemed
to be zero for the purposes of these calculations.
|
(5)
|
The value is calculated as the intrinsic value per share,
multiplied by the number of shares that would become fully vested
upon the Change‑in‑Control. The intrinsic value per share is
considered as the closing price of our common stock on Nasdaq of
$1.765 on December 31, 2019.
|
If a Change‑in‑Control occurred on December 31, 2019, under
the Policy, the following numbers of option and award shares would
have vested immediately as a result of acceleration on
December 31, 2019:
Name
|
|
Number of
Accelerated
Option and
Award Shares
|
|
Daniel Lewis
|
|
|
89,582
|
|
James Sullivan
|
|
|
30,486
|
|
Employment Agreements
In addition to the agreements containing the Change‑in‑Control
provisions summarized above, we have entered into our standard form
of employment, confidential information, invention assignment and
arbitration agreement with each of the named executive
officers.
We also have entered into agreements to indemnify our current and
former directors and certain executive officers, in addition to the
indemnification provided for in our certificate of incorporation
and bylaws. These agreements, among other things, provide for
indemnification of our directors and certain executive officers for
many expenses, including attorneys’ fees, judgments, fines and
settlement amounts incurred by any such person in any action or
proceeding, including any action by or in the right of the Company,
arising out of such person’s services as a director or executive
officer of the Company, any subsidiary of the Company or any other
company or enterprise to which the person provided services at our
request.
22
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of May 1,
2020 concerning the ownership of our common stock by:
|
•
|
each stockholder known
by us to be the beneficial owner of more than 5% of the outstanding
shares of our common stock (currently our only class of voting
securities);
|
|
•
|
each of the named
executive officers; and
|
|
•
|
all directors and
executive officers as a group.
|
Beneficial ownership is determined in accordance with
Rule 13d‑3 of the Exchange Act, and includes all shares over
which the beneficial owner exercises voting or investment power.
Shares that are issuable upon the exercise of options, warrants and
other rights to acquire common stock that are presently exercisable
or exercisable within 60 days of May 1, 2020 are reflected in
a separate column in the table below. These shares are taken into
account in the calculation of the total number of shares
beneficially owned by a particular holder and the total number of
shares outstanding for the purpose of calculating percentage
ownership of the particular holder. We have relied on information
supplied by our officers, directors and certain stockholders and on
information contained in filings with the SEC. Except as otherwise
indicated, and subject to community property laws where applicable,
we believe, based on information provided by these persons, that
the persons named in the table have sole voting and investment
power with respect to all shares of common stock shown as
beneficially owned by them. The percentage of beneficial ownership
is based on 3,532,512 shares of common stock outstanding as of May
1, 2020.
23
Unless
otherwise stated, the business address of each of our directors and
named executive officers listed in the table is 2309 Bering Drive,
San Jose, California 95131.
|
|
Amount and Nature of Beneficial
Ownership
|
|
|
|
|
|
|
Name and principal position
|
|
Number of Shares
Beneficially Owned
(Excluding Outstanding
Options)(1)
|
|
|
|
Number of Shares
Issuable on Exercise
of Outstanding Options
or Convertible
Securities(2)
|
|
|
|
Percent of
Class
|
|
Hudson Bay Capital
Management LP
|
|
|
—
|
|
|
|
|
241,681
|
|
(3)
|
|
|
6.40
|
%
|
77 Third Avenue
New York, NY 10017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ingalls & Snyder LLC
|
|
|
314,423
|
|
(4)
|
|
|
—
|
|
|
|
|
8.90
|
%
|
1325 Avenue of the Americas
New York, NY 10019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ingalls & Snyder Value
Partners, L.P.
|
|
|
—
|
|
|
|
|
314,124
|
|
(5)
|
|
|
8.17
|
%
|
1325 Avenue of the Americas
New York, NY 10019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CVI Investments, Inc.
|
|
|
304,500
|
|
(6)
|
|
|
—
|
|
|
|
|
8.62
|
%
|
Ugland House South Church
Street George Town Grand
Cayman KY1-1104
Cayman Islands
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sabby Volatility Warrant
Master Fund, Ltd.
|
|
|
304,500
|
|
(7)
|
|
|
—
|
|
|
|
|
8.62
|
%
|
89 Nexus Way, Camana Bay
Grand Cayman KY1-9007
Cayman Islands
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Empery Asset Management, LP
|
|
|
304,500
|
|
(8)
|
|
|
7,375
|
|
(9)
|
|
|
8.81
|
%
|
1 Rockefeller Plaza New York,
NY 10020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Directors and Officers:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Daniel Lewis
|
|
|
11,000
|
|
|
|
|
21,667
|
|
|
|
*
|
|
Scott Lewis
|
|
|
1,000
|
|
|
|
|
1,667
|
|
|
|
*
|
|
Robert Y. Newell
|
|
|
4,000
|
|
|
|
|
1,667
|
|
|
|
*
|
|
Daniel J. O'Neil
|
|
|
2,000
|
|
|
|
|
3,333
|
|
|
|
*
|
|
James Sullivan
|
|
|
3,321
|
|
|
|
|
7,420
|
|
|
|
*
|
|
All current directors and
executive officers
as a group (5 persons)
|
|
|
21,321
|
|
|
|
|
35,753
|
|
|
|
|
2.62
|
%
|
*
|
Represents holdings of less than one percent.
|
(1)
|
Excludes shares subject to outstanding options, warrants,
convertible securities or other rights to acquire common stock that
are exercisable within 60 days of May 1, 2020.
|
(2)
|
Represents the number of shares subject to outstanding options,
warrants, convertible securities or other rights to acquire common
stock that are exercisable within 60 days of May 1, 2020.
|
24
(3)
|
Hudson
Bay Capital Management LP. (“Hudson”) filed a Form 13G/A
with
the SEC on February 6, 2020 on behalf of Hudson and Mr. Sander
Gerber. These shares are issuable upon exercise of outstanding
warrants to purchase shares of common stock. Pursuant to
the terms of the warrants, the reporting persons cannot exercise
such
warrants if the reporting persons would beneficially own, after
such exercise, more than 9.99% of the outstanding shares of our
common stock.
|
(4)
|
In a Form 13G/A filed with the SEC on February 7, 2020,
Ingalls & Snyder LLC (“Ingalls”) reported that it had
shared dispositive power over all shares. These shares include
securities owned by clients of Ingalls, a registered broker dealer
and a registered investment advisor, in accounts managed under
investment advisory contracts.
|
(5)
|
ISVP is an investment partnership managed under an investment
advisory contract by Ingalls, a registered broker dealer and a
registered investment advisor. Thomas Boucher, a managing director
of Ingalls, and Robert Gipson and Adam Janovic, senior directors of
Ingalls, are the general partners of ISVP. Share ownership assumes
the conversion of $1,786,344 par amount of our senior secured
convertible notes due August 15, 2023 and the exercise of
pre-funded warrants to purchase 115,539 shares of common stock
issued October 4, 2018.
|
(6)
|
CVI Investments Inc. (“CVI”) filed a Form 13G with the SEC on April
24, 2020 on behalf of CVI and Heights Capital
Management, Inc. (“Heights”). Heights is the investment manager to
CVI, and, as such, may exercise voting and dispositive power over
these shares and may be deemed to be the beneficial owner of
these shares. Each of CVI and Heights
disclaims any beneficial ownership of the shares of common stock,
except for their pecuniary interest therein.
|
(7)
|
Sabby Volatility Warrant Master Fund,
Ltd. (“Sabby”) filed a Form 13G with the SEC on April 17, 2020 on
behalf of Sabby, Sabby Management, LLC and Hal Mintz
(together with Sabby, the “Sabby Persons”). Sabby Management, LLC
and Hal Mintz do not directly own any shares of common stock, but
each indirectly owns 304,500 shares of common stock. Sabby
Management, LLC, a Delaware limited liability company, indirectly
owns 304,500 shares of common stock because it serves as the
investment manager of Sabby. Mr. Mintz indirectly owns 304,500
shares of common stock in his capacity as manager of Sabby
Management, LLC. Sabby Management, LLC and Mr. Mintz
each disclaim any beneficial ownership of these shares.
|
(8)
|
Empery Asset Management. LP (“Empery”) filed a Form 13G with the
SEC on April 22, 2020 on behalf of (i)
Empery, (ii) Ryan Lane and (iii) Martin Hoe (together with Empery,
the “Empery Persons”). Martin
Hoe and Ryan Lane, in their capacity as investment managers of
Empery, may also be deemed to have investment discretion and voting
power over the shares held by Empery. Mr. Hoe and
Mr. Lane each disclaim any beneficial ownership of these
shares.
|
(9)
|
The beneficial ownership of the Empery
Persons includes shares of our common stock issuable upon exercise
of warrants issued in July 2017. The Empery Persons cannot exercise
the warrants to the extent the Empery Persons would beneficially
own, after any such exercise, more than 4.99% of the outstanding
shares of our common stock
|
25
AUDIT
COMMITTEE REPORT
The Audit Committee reviews, acts on and reports to the board of
directors with respect to various auditing and accounting matters.
The Audit Committee also monitors the performance of our
independent registered public accounting firm, and reviews the
audit report on the consolidated financial statements following
completion of the audit and our accounting practices with respect
to internal accounting and financial controls. Management has
primary responsibility for our financial statements and the overall
reporting process, including our system of internal control over
financial reporting. Our independent registered public accounting
firm audits the financial statements prepared by management,
expresses an opinion as to whether those financial statements
fairly present our financial position, results of operations and
cash flows in conformity with accounting principles generally
accepted in the United States and discusses with the Audit
Committee any issues they believe should be raised with us. The
Audit Committee’s responsibilities under the Audit Committee
charter adopted by the board of directors effective August 15,
2000 and amended as of February 1, 2006 and February 8,
2008, include the selection or dismissal of our independent
registered public accounting firm, review of the scope of the
annual audits, and approval of fees to be paid to our independent
registered public accounting firm.
The Audit Committee charter, as amended to date, can be found
through the investors section of our website, www.mosys.com.
During the fiscal year ended December 31, 2019, Scott Lewis,
Daniel J. O’Neil and Robert Newell served on the Audit Committee
and are considered independent, as determined in accordance with
Rule 5605(a)(2) of the Nasdaq listing rules and
Rule 10A‑3 of the Exchange Act.
The Audit Committee reviewed and discussed our audited financial
statements for fiscal year 2019 with management and BPM LLP,
or BPM, our former independent registered public accounting firm.
The Audit Committee discussed with BPM matters required to be
discussed by Public Company Accounting Oversight Board Auditing
Standard No. 16, “Communications with Audit Committees,” as
currently in effect. BPM has provided to the Audit Committee the
written disclosures and letter required by applicable requirements
of the Public Company Accounting Oversight Board regarding the
independent accountant’s communications with the Audit Committee
regarding independence, and the Audit Committee has discussed BPM’s
independence with members of that firm. The Audit Committee has
determined that the rendering of audit and audit‑related services
by BPM was compatible with maintaining the auditors’
independence.
Based on the discussions with management and BPM concerning the
audit, the independence discussions and the financial statement
review, and such other matters deemed relevant and appropriate by
the Audit Committee, the Audit Committee recommended to the board
of directors that our financial statements for the year ended
December 31, 2019 be included in our Annual Report on
Form 10‑K filed with the SEC.
The Audit Committee of the Board of Directors:
|
|
|
Daniel J. O’Neil (Chairman)
Scott Lewis
Robert Y. Newell
|
26
PROPOSAL NO. 1:
ELECTION OF DIRECTORS
At the Annual Meeting, four directors are to be elected to serve
until the next annual meeting of stockholders and until a successor
for such director is elected and qualified, or until the death,
resignation or removal of such director.
NOMINEES
Set forth below, and above under “BOARD OF DIRECTORS—Directors,” is
information regarding the four nominees for election to our board
of directors:
Name
|
|
Position(s) with the Company
|
|
Year First Elected Director
|
Daniel Lewis
|
|
Chief Executive Officer, President and Director
|
|
2017
|
Scott Lewis
|
|
Director
|
|
2018
|
Robert Y. Newell
|
|
Director
|
|
2018
|
Daniel J. O’Neil
|
|
Director
|
|
2017
|
Each person nominated has agreed to serve if elected, and our board
of directors has no reason to believe that any nominee will be
unavailable or will decline to serve. In the event, however, that
any nominee is unable or declines to serve as a director at the
time of the Annual Meeting, the proxies will be voted for any
nominee who is designated by the current board of directors to fill
the vacancy.
Required Vote
The nominees for the four director seats who receive the largest
number of votes cast “FOR” of the shares that are present in person
or represented by proxy at the Annual Meeting and entitled to vote
will be elected to serve as directors.
Our Board of Directors recommends a Vote “FOR” the Election of All
of the Above Nominees.
27
PROPOSAL NO. 2:
RATIFICATION OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM FOR 2020
The Audit Committee appointed Weinberg & Company, P.A.
(“Weinberg”), an independent registered public accounting firm, on
May 13, 2020 to audit our consolidated financial statements for the
year ending December 31, 2020 and, as a matter of good corporate
governance, seeks ratification of such appointment.
The Audit Committee
meets with our independent registered public accounting firm at
least four times a year. At such times, the Audit Committee reviews
both audit and non‑audit services performed by the independent
registered public accounting firm, as well as the fees charged for
such services. The Audit Committee is responsible for pre‑approving
all auditing services and non‑auditing services (other than
non‑audit services falling within the de minimis exception set forth in
Section 10A(i)(1)(B) of the Exchange Act and non‑audit
services that independent auditors are prohibited from providing to
us) in accordance with the following guidelines:
(1) pre‑approval policies and procedures must be detailed as
to the particular services provided; (2) the Audit Committee
must be informed about each service; and (3) the Audit
Committee may delegate pre‑approval authority to one or more of its
members, who shall report to the full committee, but shall not
delegate its pre‑approval authority to management. Among other
things, the Audit Committee examines the effect that performance of
non‑audit services may have upon the independence of the auditors.
BPM, our previous independent registered public accounting firm,
billed us for the following professional services for 2019 and
2018:
|
|
2019
|
|
|
2018
|
|
Audit Fees(1)
|
|
$
|
239
|
|
|
$
|
248
|
|
Audit-Related Fees(2)
|
|
|
9
|
|
|
|
87
|
|
Total(3)
|
|
$
|
248
|
|
|
$
|
335
|
|
(1)
|
Audit fees consisted of fees for professional services rendered for
the audit of our annual consolidated financial statements, review
of our quarterly financial statements and services normally
provided in connection with statutory and regulatory filings.
|
(2)
|
Audit‑related fees consisted of fees related to the issuance of SEC
registration statements.
|
(3)
|
BPM did not provide any non‑audit or other services other than
those reported under “Audit Fees” and “Audit‑Related Fees.”
|
For fiscal 2019 and 2018, all audit and audit‑related services
provided to us by BPM were pre‑approved by the Audit Committee in
accordance with the guidelines described above.
No fees were incurred with Weinberg in 2018 and 2019.
In the event the stockholders fail to ratify and approve the
appointment of Weinberg, the Audit Committee will reconsider its
selection. Even if the appointment is ratified and approved, 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 the Audit Committee determines that such a
change would be in our and the stockholders’ best interests.
Representatives of Weinberg are expected to be present at the
Annual Meeting, will have the opportunity to make a statement if
they desire to do so and will be available to respond to
appropriate questions.
Required Vote
Ratification of the selection of Weinberg as our independent
registered public accounting firm for the year ending December 31,
2020 requires the affirmative vote of the holders of a majority of
the shares that are present in person or represented by proxy at
the Annual Meeting and entitled to vote on such matter (meaning
that of the shares represented at the Annual Meeting and entitled
to vote, a majority of them must be voted “FOR” Proposal No. 2 for
it to be approved).
Our Board of Directors recommends a vote “FOR” the proposal to
ratify the Audit Committee’s appointment of Weinberg & Company,
P.A. to serve as our independent registered public accounting firm
for the year ending December 31, 2020.
28
PROPOSAL NO. 3:
ADVISORY VOTE TO APPROVE NAMED EXECUTIVE
OFFICER COMPENSATION
We are providing stockholders with an advisory vote on named
executive officer compensation, as required by Section 14A of the
Exchange Act and SEC Rule 14a-21.
This vote is advisory, and, therefore, not binding on the Company,
the Compensation Committee, or our board of directors. However, our
board of directors and our Compensation Committee value the
opinions of our stockholders and to the extent there is any
significant vote against the compensation of our named executive
officers, as disclosed in this Proxy Statement, we will consider
our stockholders’ concerns and the Compensation Committee will
evaluate whether any actions are necessary to address those
concerns. Our stockholders supported a three-year frequency for
this advisory vote at our 2017 Annual Meeting of Stockholders. As
such, the board of directors has determined that the Company will
hold a non-binding advisory vote on the compensation of our named
executive officers once every three years.
As described in detail under the heading “Executive
Compensation—Compensation Discussion and Analysis,” our executive
compensation program is designed to attract, motivate, and retain
the named executive officers, who are critical to our success.
Please read the Compensation Discussion and Analysis and the
accompanying compensation tables in this Proxy Statement for
additional information about our executive compensation program,
including information about the compensation of the named executive
officers in 2019. The Compensation Committee reviews our executive
compensation program annually to ensure that it achieves the
desired goal of aligning our executive compensation structure with
the interests of our stockholders and current market practices.
We are asking our stockholders to indicate their support for the
compensation of the named executive officers as described in this
Proxy Statement. This proposal, commonly known as a “Say-on-Pay”
proposal, gives our stockholders the opportunity to express their
views on the compensation of the named executive officers. Please
note that this vote is not intended to address any specific item of
compensation, but rather the overall compensation of the named
executive officers and the philosophy, policies and practices
described in this Proxy Statement.
Required Vote
The advisory vote to approve executive compensation, as disclosed
in the Compensation Discussion and Analysis and Executive
Compensation sections of this Proxy Statement, requires the
affirmative vote of a majority of the shares present and voting at
the 2020 Annual Meeting in person or by proxy. If you own shares
through a bank, broker or other holder of record, you must instruct
your bank, broker or other holder of record how to vote in order
for them to vote your shares so that your vote can be counted on
this proposal. Unless marked to the contrary, proxies received from
stockholders of record will be voted “FOR” approval.
The board of directors recommends a vote FOR the approval of the
compensation of our named executive officers for the fiscal year
ended December 31, 2019, as described in the Compensation
Discussion and Analysis and Executive Compensation sections of this
Proxy Statement.
29
PROPOSAL NO. 4:
AMENDMENT OF THE AMENDED AND RESTATED CERTIFICATE OF
INCORPORATION
TO DECREASE THE AUTHORIZED SHARES OF
CAPITAL STOCK
Our board of directors has adopted, subject to stockholder
approval, an amendment to our Amended and Restated Certificate of
Incorporation to decrease the number of authorized shares of our
common stock from 120,000,000 shares to 20,000,000 shares and to
decrease the number of authorized shares of our preferred stock
from 20,000,000 to 5,000,000.
As a Delaware
corporation, we are required to pay Delaware franchise tax.
Delaware franchise tax is calculated based upon several variables,
including a company’s number of total outstanding shares as
compared to the company’s number of authorized shares of capital
stock. The greater the difference between the number of shares
outstanding and the number of shares authorized, the greater the
tax liability. Our Amended and Restated Certificate of
Incorporation currently authorizes the issuance of up to
120,000,000 shares of common stock and 20,000,000 shares of our
preferred stock. The currently
authorized 120,000,000 shares of the common stock and 20,000,000
shares of preferred stock greatly exceed the 3,532,512 shares of
common stock and no shares of preferred stock we have outstanding
as of May 12, 2020.
Our board of directors believes that it is prudent to decrease the
authorized number of shares of our common stock from 120,000,000
shares to 20,000,000 shares and of our preferred stock from
20,000,000 to 5,000,000 shares. Our board of directors also
believes that this will allow us to maintain an adequate reserve of
authorized but unissued shares for future events that would require
the issuance of additional shares of common stock, such as for
acquisitions or equity offerings. The authorized but unissued
shares of common stock and preferred stock will be available for
issuance from time to time for any proper purpose approved by our
board of directors, subject to any stockholder approval
requirements of the SEC or Nasdaq. We believe that this reduction
in our authorized shares of capital stock will result in savings in
excess of $100,000 of Delaware franchise tax on annual basis. This
estimated savings is based on our current number of shares of
common stock outstanding and total assets, as these amounts are
used in the calculation of Delaware franchise taxes, and the annual
tax amount of will vary based on changes in these amounts.
The text of the form of proposed amendment to our Amended and
Restated Certificate of Incorporation is attached to this Proxy
Statement as Appendix A, provided however, that the text of this
amendment is subject to modification to include changes as may be
required by the office of the Secretary of State of the State of
Delaware and as our board of directors may deem necessary or
advisable, under advice of legal counsel, to effect the decrease in
authorized shares of our capital stock.
Required
Vote
The affirmative vote of the holders of a majority of the
outstanding shares of our common stock will be required to approve
the decrease in authorized shares of our capital stock and the
certificate of amendment to the Company’s Amended and Restated
Certificate of Incorporation. As a result, abstentions and broker
non-votes will have the same effect as negative votes.
The Board of Directors Recommends a Vote ‘‘FOR’’ Approval of the
amendment to our Amended and Restated Certificate of Incorporation
to decrease our authorized shares of capital stock.
30
STOCKHOLDER
PROPOSALS FOR
2021
ANNUAL MEETING
Deadline for Stockholder Proposals to be Considered for Inclusion
in the Company’s Proxy Materials Pursuant to Rule 14a‑8.
To be considered for inclusion in
our proxy statement relating to the 2021 Annual Meeting of
Stockholders pursuant to Rule 14a‑8 of Regulation 14A
under the Exchange Act, stockholder proposals must be received a
reasonable time prior to the date of the 2021 Annual Meeting of
Stockholders following public announcement of the date thereof.
Such proposals should be delivered to MoSys, Inc., Attn:
Secretary, 2309 Bering Drive, San Jose, California
95131.
Requirements for Stockholder Nominations for Director and
Stockholder Proposals Outside of Rule 14a‑8 to be brought
before the Annual Meeting. To be
timely for the 2021 Annual Meeting of Stockholders, a stockholder’s
notice containing the information specified in our bylaws must be
delivered or mailed to and received by our secretary at our
principal executive offices not later than the close of business on
the tenth calendar day following the date on which public
announcement of the date of the 2021 Annual Meeting of Stockholders
is first made. In no event will the public announcement of an
adjournment of an annual meeting of stockholders commence a new
time period for the giving of a stockholder’s notice as provided
above. A stockholder’s notice to our secretary must set forth the
information required by our bylaws with respect to each matter the
stockholder proposes to bring before the annual meeting. A copy of
the full text of our bylaws, including the provisions dealing with
stockholder proposals and stockholder nominations, is available to
stockholders upon written request to MoSys, Inc., Attn:
Secretary, 2309 Bering Drive, San Jose, California
95131.
In addition, the proxy solicited by the board of directors for the
2021 Annual Meeting of Stockholders will confer discretionary
authority to vote on (1) any untimely proposal presented by a
stockholder at that meeting and (2) any proposal made in
accordance with the bylaw provisions, if the proxy statement
briefly describes the matter and how management’s proxy holders
intend to vote on it, and if the stockholder does not comply with
the requirements of Rule 14a‑4(c)(2) under the Exchange
Act.
31
OTHER
MATTERS
Our board of directors knows of no other matters to be presented
for stockholder action at the Annual Meeting. However, if other
matters do properly come before the Annual Meeting, or any
adjournments or postponements thereof, our board of directors
intends that the persons named in the proxies will vote upon such
matters in accordance with the best judgment of the proxy holders,
as indicated on the enclosed proxy.
Whether or not you intend to be present at the meeting, you are
urged to fill out, sign, date and return the enclosed proxy at your
earliest convenience.
BY ORDER OF THE BOARD OF DIRECTORS
|
|
|
/s/ Daniel Lewis
Daniel Lewis
Chief Executive Officer and President
|
San Jose, California
May 26, 2020
32
APPENDIX
A
CERTIFICATE OF AMENDMENT OF
RESTATED CERTIFICATE OF INCORPORATION
OF MOSYS, INC.
MoSys, Inc. (the "Corporation"), a corporation duly organized and
existing under the General Corporation Law of the State of
Delaware, does hereby certify that:
1. The Restated Certificate of Incorporation of the Corporation,
filed with the Secretary of State of the State of Delaware on
November 10, 2010, as amended by the Certificate of Amendment of
Restated Certificate of Incorporation, filed with the Secretary of
State of the State of Delaware on February 14, 2017 and the
Certificate of Amendment of Restated Certificate of Incorporation,
filed with the Secretary of State of the State of Delaware on
August 27, 2019 (collectively referred to as the “Amended Restated
Certificate”), is hereby amended by deleting paragraph (A) of
Article IV thereof in its entirety and substituting the following
in lieu thereof:
"The Corporation shall be authorized to issue 25,000,000 shares of
capital stock, of which 20,000,000 shares shall be shares of Common
Stock, $.001 par value ("Common Stock") and 5,000,000 shares shall
be shares of Preferred Stock, $0.01 par value ("Preferred Stock")
of which one hundred twenty thousand (120,000) shares, $0.01 par
value per share, are designated “Series AA Preferred Stock”
pursuant to the certificate of designations that created such
series as filed with the Secretary of State of the State of
Delaware.”
2. The foregoing amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the
State of Delaware.
IN WITNESS WHEREOF, MoSys, Inc. has caused this Certificate to be
executed by its duly authorized officer on this day
of ,
2020.
MOSYS, INC.
33

Shareowner Services P.O. Box 64945 St. Paul, MN 55164-0945 Address
Change? Mark box, sign, and indicate changes below: n TO VOTE BY
INTERNET OR TELEPHONE, SEE REVERSE SIDE OF THIS PROXY CARD. TO VOTE
BY MAIL AS THE BOARD OF DIRECTORS RECOMMENDS ON ALL ITEMS BELOW,
SIMPLY SIGN, DATE, AND RETURN THIS PROXY CARD. The Board of
Directors Recommends a Vote "FOR" Items 1, 2, 3, 4 and 5.
1.Election of01 Daniel Lewis03 Daniel J. O’NeilnVote FORnVote
WITHHELD directors:02 Scott Lewis04 Robert Y. Newellall
nomineesfrom all nominees (except as marked) (Instructions: To
withhold authority to vote for any indicated nominee, write the
number(s) of nominee(s) in the box provided to the right.) 2.The
ratification of the appointment of Weinberg & Company, P.A. as
independent registered public accounting firm for the fiscal year
ending December 31, 2020.nFornAgainstnAbstain 3.To approve, on an
advisory bsis, the executive compensation of our named executive
officers, as described in the Proxy Statement.nFornAgainstnAbstain
4.To approve an amendment of our Amended and Restated Ceertificate
of Incorporation to decrease the number of authorized shares of
capital stock.nFornAgainstnAbstain 5.To act upon all other business
that may properly come before the Annual Meeting of Stockholders,
including any adjournment of the Annual
Meeting.nFornAgainstnAbstain THIS PROXY WHEN PROPERLY EXECUTED WILL
BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED
STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR
EACH OF THE NOMINEES IN PROPOSAL ONE AND FOR PROPOSALS TWO, THREE,
FOUR AND FIVE. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO
TRANSACT ANY OTHER BUSINESS AND VOTE ON ANY OTHER MATTERS REFERRED
TO IN SEC RULE 14a-4 THAT MAY PROPERLY COME BEFORE THE MEETING.
Date_______________________________________ Signature(s) in Box
Please sign exactly in the name or names in which you hold your
shares of common stock. For joint accounts, each owner should sign.
When signing as executor, administrator, attorney, trustee,
guardian or other fiduciary, please give your full title. If
signing for a corporate or other entity, please sign in full
corporate or other entity name by a duly authorized officer or
other agent. Please fold here — Do not separate.

MoSys, Inc. 2020 ANNUAL MEETING OF STOCKHOLDERS Thursday, June 25,
2020 8:00 A.M. Corporate Headquarters 2309 Bering Drive San Jose,
CA 95131 MoSys, Inc. 2309 Bering Drive San Jose, CA 95131proxy This
Proxy is Solicited on Behalf of the Board of Directors of MoSys,
Inc. The undersigned, revoking any proxy previously given, hereby
appoints Messrs. Daniel Lewis and James Sullivan as proxies, with
the full power of substitution, to vote the shares of the
undersigned in favor of each proposal designated on this Proxy Card
and to vote the shares of the undersigned in their discretion with
respect to other matters that properly come before the 2020 Annual
Meeting of Stockholders of MoSys, Inc. on June 25, 2020, and any
adjournment of the Annual Meeting. You are encouraged to specify
your choice by marking the appropriate boxes, but you need not mark
any boxes if you wish to vote in accordance with the Board of
Directors recommendation. This proxy, when properly executed, will
be voted as directed. If no direction is given with respect to a
particular proposal, this proxy will be voted "FOR ALL NOMINEES"
for Proposal 1, and "FOR" Proposal 2, Proposal 3, Proposal 4 and
Proposal 5. The proxy cannot vote your shares unless you sign this
card on the REVERSE SIDE before returning it. PLEASE MARK, DATE,
SIGN AND RETURN THIS PROXY CARD PROMPTLY, USING THE ENCLOSED
ENVELOPE; OR UTILIZE THE TELEPHONE OR INTERNET VOTING PROCEDURE, AS
DESCRIBED ON THE REVERSE SIDE OF THIS FORM. NO POSTAGE IS REQUIRED
IF MAILED IN THE UNITED STATES. Vote by Internet, Telephone or Mail
24 Hours a Day, 7 Days a Week Your phone or Internet vote
authorizes the named proxies to vote your shares in the same manner
as if you marked, signed and returned your proxy card. :(*
INTERNET/MOBILEPHONEMAIL www.proxypush.com/mosy1-866-883-3382 Use
the Internet to vote your proxyUse a touch-tone telephone toMark,
sign and date your proxy until 11:59 p.m. (CT) onvote your proxy
until 11:59 p.m. (CT)card and return it in the June 24, 2020.on
June 24, 2020.postage-paid envelope provided. If you vote your
proxy by Internet or by Telephone, you do NOT need to mail back
your Proxy Card.
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