Item
10. Directors, Executive Officers and Corporate Governance
Directors and Executive Officers
The following table sets forth the name, age and
position of each of our directors and executive officers.
Name | |
Age | |
Position |
Gregory Poilasne | |
| 50 | |
Chairman and Chief Executive Officer |
Ted Smith | |
| 54 | |
President, Chief Operating Officer and Director |
David G. Robson | |
| 54 | |
Chief Financial Officer |
Richard A. Ashby | |
| 56 | |
Director |
Angela Strand | |
| 52 | |
Director |
Kenji Yodose | |
| 38 | |
Director |
H. David Sherman | |
| 72 | |
Director |
Jon M. Montgomery | |
| 71 | |
Director |
Rashida La Lande | |
| 48 | |
Director |
Executive Officers
Gregory Poilasne has served as our
Chairman and Chief Executive Officer since the closing of the Business Combination. He is a co-founder of Nuvve OpCo and has served as
its Chairman and Chief Executive Officer since its inception. He is directly responsible for managing and overseeing all different activities
related to the successful development, deployment and commercialization of Nuvve’s technologies, as well as developing and supporting
the overall strategy. Since February 2019, he also has served as a board member of Dreev, a business venture between EDF and Nuvve. Mr.
Poilasne has more than 20 years of experience in the start-up and technology space. He was Chief Executive Officer of DockOn AG, a Radio-Frequency
technology company from February 2011 to January 2016. He was also Vice-President of Business Development of Rayspan, another Radio-Frequency
technology company, from 2007 to 2010. Mr. Poilasne was Director of Engineering at Kyocera Wireless, a handset company from 2003 to 2006
and was a founding engineer and director of engineering at Ethertronics, a wireless antenna company, from 2000 to 2003. Mr. Poilasne holds
an MBA from the Wharton School of Business, University of Pennsylvania, a Ph.D. in Electrical Engineering from the University of Rennes
1, France and a Diplome d’ingenieur from the Ecole Superieur d’Electronique de l’Ouest (“ESEO”),
France. We believe Mr. Poilasne is well-qualified to serve as the Chairman of the Board due to his extensive experience with Nuvve, his
business leadership, his strategic perspective and his contacts in and knowledge of the energy industry and EV industry.
Ted Smith has served as our President
and Chief Operating Officer and a member of our board of directors since the consummation of the Business Combination. Mr. Smith was a
founding investor in Nuvve OpCo and has served as a member of its board of directors since 2010 and as its Chief Operating Officer since
April 2018. Mr. Smith is directly responsible for managing the successful development, deployment and commercialization of Nuvve’s
technologies, as well as supporting global regulatory compliance efforts. He previously served as Nuvve’s Chief Administrative Officer
from March 2017 until becoming Chief Operating Officer. He also previously served as a board member of Dreev, a business venture between
EDF and Nuvve, in 2019. Mr. Smith has more than 20 years of experience in the finance industry and previously served in various roles
at Wall Street Associates, a San Diego-based investment advisory firm, including Principal, Chief Operating Officer from 2007 to January
2017, Chief Compliance Officer from 2003 to January 2017, and Quantitative Analyst from 1999 to 2003. From 1996 to 1999, Mr. Smith also
served as Quantitative Analyst at Nicholas-Applegate Capital Management, a San Diego-based investment advisory firm. Mr. Smith also served
as an officer in the United States Navy from 1989 to 1996. Mr. Smith holds an MBA from the University of San Diego and a Bachelor of Science
in Marine Engineering/Technology from Maine Maritime Academy. He is also a Chartered Financial Analyst charter holder and held the Chartered
Investment Counselor certification. We believe Mr. Smith is well-qualified to serve as a member of the board due to his extensive experience
with Nuvve, his business leadership, his operational and compliance experience and his contacts in and knowledge of the energy industry.
David G. Robson has served as our
Chief Financial Officer since the consummation of the Business Combination. Mr. Robson has over twenty-five years of finance, accounting
and operational experience and has held senior positions with both public and private companies in a variety of industries. Mr. Robson
has served on the board of directors of Payference, a software business, since February 2020. Mr. Robson recently served as the Chief
Financial Officer and Chief Compliance Officer of Farmer Brothers Co., a national distributor of coffee, tea and culinary products from
February 2017 to November 2019. His responsibilities included overseeing finance, information technology, mergers and acquisitions and
investor relations. Mr. Robson served as the Chief Financial Officer of PIRCH, a curator and retailer of kitchen, bath and outdoor home
brands, from September 2014 to September 2016. He oversaw all aspects of accounting, financial planning and analysis, treasury, merchandise
planning and legal, with responsibility for developing strategies, processes and operating priorities to upscale a high growth retailer
while building strong finance and merchandising teams. From January 2012 to September 2014, Mr. Robson was the Chief Financial Officer
of U.S. AutoParts, an online provider of auto parts and accessories. Prior to that, he served as the Executive Vice President and Chief
Financial Officer of Mervyns LLC, a former discount department store chain, from 2007 to 2011. From 2001 to 2007, he served as the Senior
Vice President of Finance and Principal Accounting Officer for Guitar Center, Inc. Mr. Robson began his career with the accounting firm
Deloitte & Touche LLP. Mr. Robson graduated with a Bachelor of Science degree in Accounting from the University of Southern California
and is a certified public accountant (inactive) in the State of California.
Directors
Richard A. Ashby has served as a
member of our board of directors since the consummation of the Business Combination. Mr. Ashby has thirty years of experience as an investment
banker, corporate Chief Financial Officer, investor, strategist and project developer and has been involved in over US$ 40 billion of
transactions in the renewable energy, thermal power, electric transmission, gas pipeline, LNG, water supply and solid waste sectors. Mr.
Ashby is the founder and, since September 2020, has served as the Chief Executive Officer of SouthPoint & Co., a financial advisory
and investment banking firm focused on companies leading the clean energy transition. Between January 2015 and September 2020, Mr. Ashby
led the renewable investment banking platform of Whitehall & Company, a New York-based investment bank where he executed mandates
involving over $7 billion in enterprise value on behalf of clean energy companies. Prior to Whitehall, as the Managing Partner of Infrastructure
Finance Advisors from January 2011 until December 2014, Mr. Ashby provided financial advisory and project development services to renewable
project developers and asset owners as well as co-founding and leading a Canada-based renewable project developer. From 2007 to 2010,
Mr. Ashby was the Chief Financial Officer of Renewable Energy Systems Americas, a vertically integrated renewable energy company that
develops, constructs, owns and operates renewable projects across North America. Mr. Ashby and his team closed over $5 billion of M&A,
project debt and tax equity transactions involving over 2.2 GW of assets and he played a key leadership role in initiating and managing
the firm’s entry into the solar, energy storage and transmission sectors and the growth of the development portfolio to over 15
GW. Between 2005 and 2007, Mr. Ashby was the Chief Financial Officer of the North American power generation subsidiary of the Sumitomo
Corporation of Japan where he was responsible for expanding the firm’s ownership portfolio through greenfield development and M&A
activities. Prior to Sumitomo, Mr. Ashby was a Managing Director with energy consultant, Pace Global Energy Services (now Siemens) advising
companies active in the power generation, LNG and the gas pipeline and storage sectors. Mr. Ashby spent the first decade of his career
developing and advising on some of the earliest private-sector energy infrastructure projects to be financed in emerging markets. During
this period, Mr. Ashby was a member of the London-based, 1,300 MW Hub River Power Project development team, co-founded a private equity
firm focused on developing and owning power generation and energy infrastructure assets in Asia and advised project developers and public
sector clients. Mr. Ashby holds Series 7, 63 and 79 securities licenses and earned an MBA in Finance from SUNY-Buffalo and a B.Sc. in
Management from the Georgia Institute of Technology. We believe Mr. Ashby is well-qualified to serve as a member of the board due to his
business leadership, his operational, financial and transactional experience and his contacts in and knowledge of the energy industry.
Rashida La Lande has served as a
member of our board of directors since January 2022. Ms. La Lande currently serves as Executive Vice President, Global General Counsel
and Chief Sustainability and Government Affairs Officer for The Kraft Heinz Company (Nasdaq: KHC). In addition to her general counsel
duties, she leads all corporate environmental social responsibility and government affairs functions. Prior to joining Kraft Heinz, La
Lande was a partner at the law firm of Gibson, Dunn & Crutcher, where she focused on mergers and acquisitions, leveraged buyouts,
private equity deals, and joint ventures. Throughout her career, La Lande has advised companies and private equity sponsors in various
industries including consumer products, retail, financial services, and technology. We believe Ms. La Lande is well-qualified to serve
as a member of the board due to her extensive legal and corporate governance experience.
Jon M. Montgomery has served as
a member of our board of directors since the consummation of the Business Combination. Mr. Montgomery is managing director at Meredith
Financial Group Inc., a financial management and advisory firm located in New York City. From 2010 to 2014, he was managing partner at
project finance advisory firm AGlobal Partners LLC where he assisted in arranging long-term, limited-recourse financing for private investments
in renewable energy, telecommunications, mining & metals, PPPs, and other infrastructure projects in emerging and other international
markets. He also advised clients on foreign direct investments, including those utilizing development finance institutions, export credit
agencies, and political risk insurers. In addition, Mr. Montgomery has more than 25 years of marketing consulting and market research
experience, informing and guiding clients’ branding, communications, segmentation and innovation challenges across a range of industries,
particularly in the information technology, telecommunications, financial services, CPG, pharmaceutical, and retail sectors. He is experienced
in applying model-based quantitative analysis — particularly choice-based modeling — to solving competitive problems. Previously,
from 1996 to 2010, Mr. Montgomery co-founded Hudson Group Inc. in New York, a research-based marketing consultancy. He also held prior
positions as executive vice president at Marketing Strategy & Planning Inc./Synovate, and vice president at Hase Schannen Research
Associates Inc. Mr. Montgomery holds a MBA from Northeastern University and a B.A. from the University of California, Berkeley. Since
2000 he has been Adjunct Faculty in Marketing at the University of Georgia. We believe Mr. Montgomery is well-qualified to serve as a
member of the board due to his investment banking, structuring and strategic expertise, his contacts in emerging and other international
markets and his extensive experience in marketing and market research.
H. David Sherman MBA, DBA, CPA,
served as an Independent Director of Newborn Acquisition Corp. (“Newborn”), our predecessor, from September 2019 until
the consummation of the Business Combination, and has served as a member of our board of directors since the consummation of the Business
Combination. Professor Sherman has been a professor at Northeastern University since 1985, specializing in, among other areas, financial
and management accounting, global financial statement analysis and contemporary accounting issues. Professor Sherman has served as Trustee
and Chair of Finance Committee for American Academy of Dramatic Arts, the oldest English language acting school in the world, since January
2014, and as board member and Treasurer for D-Tree International, a non-profit organization that develops and supports electronic clinical
protocols to enable health care workers worldwide to deliver high quality care since July 2010. Professor Sherman served on the board
and as audit committee chair for Dunxin Financial Holdings Ltd. (AMEX: DXF) from January 2018 to August 2019, Kingold Jewelry Inc. (Nasdaq:
KGJI) from February 2011 to May 2016, China HGS Real Estate Inc. (Nasdaq: HGSH) from January 2010 to August 2012, Agfeed Corporation from
January 2012 to November 2014, and China Growth Alliance, Ltd., a business acquisition company formed to acquire an operating business
in China, from 2007 through 2008. Professor Sherman was previously on the faculty of the Sloan School of Management at Massachusetts Institute
of Technology (“MIT”) and also, among other academic appointments, held an adjunct professorship at Tufts Medical School
and was a visiting professor at Harvard Business School (2015). From 2004 to 2005, Professor Sherman was an Academic Fellow at the U.S.
Securities and Exchange Commission in the Division of Corporate Finance’s Office of Chief Accountant. Professor Sherman received
his A.B. in Economics from Brandeis University and both an MBA and doctoral degrees from Harvard Business School. He is a Certified Public
Accountant and previously practiced with Coopers & Lybrand. Professor Sherman’s research has been published in management and
academic journals including Harvard Business Review, Sloan Management Review, Accounting Review and European Journal of Operations Research.
We believe Mr. Sherman is well-qualified to serve as a member of the board due to his extensive expertise in global financial statement
analysis and contemporary accounting issues and his public company experience.
Angela Strand has served as a member
of our board of directors since the consummation of the Business Combination. Ms. Strand is the founder and Managing Director of Strand
Strategy, a consulting firm specializing in disruptive technology commercialization. She is presently a director, chairman of the compensation
committee and member of the nominating and governance committee for Lordstown Motors (Nasdaq: RIDE). Previously, from 2016 to 2020, she
served as Vice Chairman of Integrity Applications (OTCQB: IGAP), including chairman of the nominating and corporate governance and compensation
committees, and as a member of the audit committee. From April 2017 to December 2018, Ms. Strand served as Vice President of Workhorse
Group Inc; from July 2015 to December 2016, she was a co-founder and senior executive of Chanje, a joint venture between Smith Electric
Vehicles and FDG Electric Vehicles Ltd. (HK: 729HK); and from 2011 to 2015, she served as the Chief Marketing Officer and Head of Business
Development and Government Affairs for Smith Electric Vehicles. In 2018, she was a founder of In-Charge, an electric vehicle infrastructure
solutions provider. Ms. Strand has also served in various management and executive roles at medical device, biotech and digital health
firms. Ms. Strand is a named inventor with seven issued patents. Ms. Strand holds a B.Sc. in Communications and an MBA in Marketing from
the University of Tennessee. We believe Ms. Strand is well-qualified to serve as a member of the board due to her business leadership,
her contacts in and knowledge of the EV industry and her public company experience.
Kenji Yodose has been a member of
our board of directors since the consummation of the Business Combination. Mr. Yodose has been designated for appointment as a director
by Toyota Tsusho Corporation (“TTC”), a significant shareholder of Nuvve OpCo prior to the Business Combination and
of Nuvve HoldCo after the Business Combination, pursuant to an agreement between TTC and Nuvve. He has served as a member of Nuvve OpCo’s
board of directors since May 2019. Mr. Yodose also has served in various roles at TTC since October 2017, including as a Group Leader
in charge of V2G since April 2020, as a Project Manager in charge of V2G from April 2019 until March 2020, and as a Project Manager in
charge of investing in hydro and wind fields, from October 2017 until March 2019. In his current role, Mr. Yodose is directly responsible
for strategy, new business development and key V2G/electrification projects within TTC. Previously, from October 2015 to September 2017,
Mr. Yodose held the position of Senior Vice President at Eurus Energy Uruguay, where he was directly responsible for developing South
American strategy and the formation of the Uruguay country office operations. From 2012 to September 2015, Mr. Yodose also held a key
role within Eurus Energy Holdings Planning Department, where he supported business expansion and investment into numerous IPP projects
totaling over $1 billion. Mr. Yodose also served in Japan and Europe from 2006 to 2012 in key accounting management roles for TTC focused
on J-SOX Act control procedure implementation, hedging currency risks and tax management. Mr. Yodose holds a Bachelor’s Degree in
Business Administration from Ritsumeikan University in Singa, Japan. We believe Mr. Yodose is well-qualified to serve as a member of the
board due to his experience with Nuvve, his extensive experience in electrification projects and his operational, administrative and other
business acumen.
Family Relationships
There are no familial relationships among our
directors and executive officers.
Delinquent Section 16(a) Reports
Section 16(a) of the Exchange Act requires Nuvve’s
directors and certain officers and holders of more than 10% of Nuvve’s common stock to file with the SEC initial reports of ownership
of Nuvve’s common stock and other equity securities on Form 3 and reports of changes in such ownership on a Form 4 or Form 5. These
Section 16 reporting persons are required by SEC regulations to furnish Nuvve with copies of all Section 16(a) forms they file. To Nuvve’s
knowledge, during the fiscal year ended December 31, 2020, all reports required to be filed pursuant to Section 16(a) were filed on a
timely basis.
Code of Ethics
We adopted a code of ethics that applies to all
of our directors, officers and employees. A copy of the code of ethics is available free of charge on Nuvve’s website at www.nuvve.com/investors/corporate-governance.
We also intend to disclose future amendments to, or waivers of, its code of ethics, as and to the extent required by SEC regulations,
on our website.
Changes to the Procedures for Recommending
Director Nominees
The nominating committee will consider director
nominee recommendations from security holders. There have been no material changes to the procedures by which security holders may recommend
nominees to our board of directors.
Audit Committee
Our board of directors has established a standing
audit committee. The audit committee consists of Mr. Sherman, Mr. Ashby and Mr. Montgomery. The board has determined that each member
of the audit committee is an independent director as defined by the rules of Nasdaq applicable to members of an audit committee, including
that each member meets the criteria for independence set forth in Rule 10A-3(b)(1) under the Exchange Act. In addition, as required by
the rules of The Nasdaq Stock Exchange LLC (“Nasdaq”), each member of the audit committee is able to read and understand
fundamental financial statements, including a company’s balance sheet, income statement, and statement of cash flows.
Financial Experts on Audit Committee
Our board of directors determined that Mr. Sherman
qualifies as an audit committee financial expert within the meaning of the rules and regulations of the SEC. In making this determination,
the board considered Mr. Sherman’s formal education and previous experience in financial roles. In addition, as required by the
rules of Nasdaq, we have at least one member who has past employment experience in finance or accounting, requisite professional certification
in accounting, or other comparable experience or background that results in the individual’s financial sophistication. The board
determined Mr. Sherman qualifies as financially sophisticated under the rules of Nasdaq.
Item
11. Executive Compensation
Executive Officer Compensation
Summary Compensation Table
The following table sets forth information concerning
the compensation of the named executive officers for the years ended December 31, 2021 and 2020.
| |
Year | | |
Salary | | |
Stock
Awards(4) | | |
Option
Awards(4) | | |
Bonus(5) | | |
All Other
Compensation | | |
Total | |
Gregory Poilasne(1) | |
| 2021 | | |
$ | 451,000 | | |
$ | 155,186 | | |
$ | 894,841 | | |
$ | 50,000 | | |
$ | 1,628,747 | (6) | |
$ | 3,179,774 | |
Chairman of the Board and
Chief Executive Officer | |
| 2020 | | |
$ | 276,000 | | |
| — | | |
| — | | |
| — | | |
| — | | |
$ | 276,000 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Ted Smith(2) | |
| 2021 | | |
$ | 388,906 | | |
$ | 90,520 | | |
$ | 611,211 | | |
$ | 150,000 | | |
$ | 289,579 | (7) | |
$ | 1,530,216 | |
President and Chief Operating Officer | |
| 2020 | | |
$ | 248,490 | | |
| — | | |
$ | 636,938 | | |
$ | 100,000 | | |
| — | | |
$ | 985,428 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
David G. Robson(3) | |
| 2021 | | |
$ | 312,500 | | |
$ | 64,655 | | |
$ | 444,555 | | |
$ | 50,000 | | |
| — | | |
$ | 871,711 | |
Chief Financial Officer | |
| 2020 | | |
| — | | |
| — | | |
| — | | |
| | | |
| — | | |
| — | |
(1) | Mr. Poilasne has served as the Chairman and Chief Executive Officer of Nuvve HoldCo since the closing
of the Business Combination. Prior to the closing, he served as the Chairman and Chief Executive Officer of Nuvve OpCo. The compensation
set forth in this table includes compensation paid by Nuvve OpCo prior to the Business Combination. |
(2) | Mr. Smith has served as the President and Chief Operating Officer of Nuvve Holdco since the closing of
the Business Combination. Prior to the closing, he served as the Chief Operating Officer of Nuvve OpCo. The compensation set forth in
this table includes the compensation paid by Nuvve OpCo prior to the Business Combination. |
(3) | Mr. Robson has served as Chief Financial Officer of Nuvve HoldCo since the closing of the Business Combination. |
(4) | Represents the estimated grant date fair value of the stock options as determined under the provisions
of Financial Accounting Standards Board Accounting Standard Codification Topic 718. Such estimated fair value amounts do not necessarily
correspond to the potential actual value realized from the stock options. The assumptions made in computing the estimated fair value of
such stock options are discussed in note 13 of the consolidated financial statements. |
(5) | Represents the signing bonus paid to Mr. Poilasne and the discretionary bonus paid to Mr. Smith as described
more fully below. |
(6) | Deferred compensation ($1,617,347) for one of Nuvve OpCo co-founder earned during the first five years
of Nuvve's operations equal to 1% of the value of Nuvve as of the date the Merger transaction closed on March 16, 2021. $11,400 is auto
reimbursement. |
(7) | Deferred compensation ($260,000) for one of Nuvve OpCo co-founder earned during the first five years of
Nuvve's operations equal to 1% of the value of Nuvve as of the date the Merger transaction closed on March 16, 2021. $29,579 is auto reimbursement. |
Narrative Disclosure to Summary Compensation
Table
For 2021 and 2020, the compensation program for
Nuvve’s named executive officers consisted of base salary and incentive compensation delivered in the form of cash bonuses and equity
awards. Base salary was set at a level that was commensurate with the executive’s duties and authorities, contributions, prior experience
and sustained performance. Cash bonuses and equity awards were also set at a level that was commensurate with the executive’s duties
and authorities, contributions, prior experience and sustained performance, subject to any employment or similar agreement with the executive.
Nuvve provides benefits to its named executive
officers on the same basis as it provides them to all of its employees, including health, dental and vision insurance; life and disability
insurance; and a tax-qualified Section 401(k) plan for which no match by Nuvve is provided. In 2021 and 2020, Nuvve did not maintain any
executive-specific benefit or perquisite programs.
Nuvve maintains two equity plans. Upon consummation
of the Business Combination, Nuvve HoldCo established the Nuvve HoldCo 2020 Equity Incentive Plan (the “2020 Plan”).
In addition, in connection with the Business Combination, Nuvve HoldCo assumed the Nuvve OpCo 2010 Equity Incentive Plan (the “2010
Plan”) and the options granted under such plan. However, the 2010 Plan was amended so that no further awards may be granted
under such plan.
Employment Agreements
Gregory Poilasne
Until the Business Combination, Mr. Poilasne served
as Nuvve OpCo’s Chief Executive Officer pursuant to an offer letter with Nuvve OpCo dated July 1, 2017. Under the offer letter,
Mr. Poilasne earned base salary at a rate of $276,000 per year. In addition, Mr. Poilasne was eligible to receive an annual bonus based
on the achievement of criteria as approved by Nuvve OpCo’s board of directors with a target equal to 100% of his annual base salary.
In connection with the entry into the offer letter, Mr. Poilasne was granted an option to purchase 350,000 shares of Nuvve OpCo common
stock (which became 74,341 shares of Nuvve HoldCo common stock after assumption by Nuvve HoldCo of such option) at an exercise price of
$0.27 per share (which became an exercise price of $1.27 per share upon assumption by Nuvve HoldCo of such option). The option vests in
equal monthly installments over a five-year period.
Upon consummation of the Business Combination,
Mr. Poilasne entered into a new employment agreement with Nuvve HoldCo providing for him to serve as Nuvve HoldCo’s Chairman of
the Board and Chief Executive Officer.
Mr. Poilasne’s agreement has a term of three
years. Under the agreement, Mr. Poilasne (i) earns base salary at a rate of $500,000 per year, (ii) is eligible to receive an annual bonus
based on key performance indicators established by the compensation committee with a target equal to 100% of his base salary, (iii) is
eligible to receive a bonus of up to $100,000 per year at the discretion of the compensation committee, and (iv) received a signing bonus
of $50,000. In addition, upon the approval of the compensation committee, Mr. Poilasne received a grant under the 2020 Plan of options
to purchase 600,000 shares of Nuvve HoldCo common stock and a grant under the 2020 Plan of 43,796 shares of restricted stock (with a value
of $600,000 based on the closing market price on the date of grant). The options have an exercise price of $13.70 (the closing market
price on the date of grant), will vest as to one-quarter of the shares March 31, 2022 and will vest in 12 equal quarterly installments
during the following three years. The restricted stock will vest in three equal installments on the first, second and third anniversary
of the grant date. Nuvve will reimburse Mr. Poilasne for the costs of his automobile lease (up to a maximum of $20,000 for the down payment
and $1,500 per month) and his mobile phone. Furthermore, Mr. Poilasne received approximately $1,548,000 in compensation in respect of
his services to Nuvve OpCo in prior years, which became payable in connection with the successful completion of the Business Combination.
If Mr. Poilasne is terminated without “cause,”
he will continue to receive his then current base salary for the ensuing 18 months at the rate then in effect in accordance with Nuvve’s
standard payroll procedures and will continue to receive health insurance benefits during such period. If Mr. Poilasne is terminated without
“cause” or resigns for “good reason” within 12 months after Nuvve is subject to change in control, he will receive
a severance payment equal to four times his then current base salary in one lump sum.
Ted Smith
Until the Business Combination, Mr. Smith served
as Nuvve OpCo’s Chief Operating Officer pursuant to an offer letter with Nuvve OpCo dated December 16, 2016. Under the offer letter,
Mr. Smith earned base salary at a rate of $227,500 per year, which was increased to $260,000 during 2020. In addition, Mr. Smith was eligible
to receive an annual bonus based on the achievement of criteria as approved by Nuvve OpCo’s board of directors with a target equal
to 100% of his annual base salary. In connection with the entry into his original offer letter dated December 16, 2016, Mr. Smith was
granted an option to purchase 660,000 shares of Nuvve OpCo common stock (which became 161,426 shares of Nuvve HoldCo common stock after
assumption by Nuvve HoldCo of such option) at an exercise price of $0.27 per share (which became an exercise price of $1.27 per share
upon assumption by Nuvve HoldCo of such option). The option vests as to 25% of the shares on the anniversary of the grant date and thereafter
vests as to the remaining 75% of the shares monthly in equal installments over a three-year period. During the term of his employment,
Mr. Smith was granted additional option awards by Nuvve OpCo, which are described below under “Outstanding Equity Awards Table”
and in the narrative disclosure to the table. Mr. Smith was awarded a discretionary cash bonus of $100,000 for 2020.
Upon consummation of the Business Combination,
Mr. Smith entered into a new employment agreement with Nuvve HoldCo providing for him to serve as Nuvve HoldCo’s President and Chief
Operating Officer.
Mr. Smith’s agreement has a term of three
years. Under the agreement, Mr. Smith (i) earns base salary at a rate of $425,000 per year, (ii) is eligible to receive an annual bonus
based on key performance indicators established by the compensation committee with a target equal to 100% of his base salary, (iii) is
eligible to receive a bonus of up to $75,000 per year at the discretion of the compensation committee, and (iv) received a signing bonus
of $50,000. In addition, upon the approval of the compensation committee, Mr. Smith received a grant under the 2020 Plan of options to
purchase 350,000 shares of Nuvve HoldCo common stock and a grant under the 2020 Plan of 25,547 shares of restricted stock (with a value
of $350,000 based on the closing market price on the date of grant). The options have an exercise price of $13.70 (the closing market
price on the date of grant), will vest as to one-quarter of the shares March 31, 2022 and will vest in equal quarterly installments during
the following three years. The restricted stock will vest in three equal installments on the first, second and third anniversary of the
grant date. Nuvve will reimburse Mr. Smith for the costs of his automobile lease (up to a maximum of $20,000 for the down payment and
$1,200 per month) and his mobile phone. Furthermore, Mr. Smith received approximately $260,000 in compensation in respect of his services
to Nuvve OpCo in prior years, which became payable in connection with the successful completion of the Business Combination. Mr. Smith
was awarded a discretionary cash bonus of $150,000 for 2021.
If Mr. Smith is terminated without “cause,”
he will continue to receive his then current base salary for the ensuing 18 months at the rate then in effect in accordance with Nuvve’s
standard payroll procedures and will continue to receive health insurance benefits during such period. If Mr. Smith is terminated without
“cause” or resigns for “good reason” within 12 months after Nuvve is subject to change in control, he will receive
a severance payment equal to three times his then current base salary in one lump sum.
David G. Robson
Upon consummation of the Business Combination,
Mr. Robson entered into an employment agreement with Nuvve HoldCo providing for him to serve as Nuvve HoldCo’s Chief Financial Officer.
Mr. Robson’s agreement has a term of three
years. Under the agreement, Mr. Robson (i) earns base salary at a rate of $400,000 per year, (ii) is eligible to receive an annual bonus
based on key performance indicators established by the compensation committee with a target equal to 100% of his base salary, and (iii)
received a signing bonus of $50,000. In addition, subject to approval of the compensation committee, Mr. Robson received a grant under
the 2020 Plan of options to purchase 300,000 shares of Nuvve HoldCo common stock and a grant under the 2020 Plan of 18,248 shares of restricted
stock (with a value of $250,000 based on the closing market price on the date of grant). The options have an exercise price of $13.70
(the closing market price on the date of grant), will vest as to one-quarter of the shares March 31, 2022 and will vest in equal quarterly
installments during the following three years. The restricted stock will vest in three equal installments on the first, second and third
anniversary of the grant date. Nuvve will reimburse Mr. Robson for the costs of his mobile phone.
If Mr. Robson is terminated without “cause,”
he will continue to receive his then current base salary for the ensuing 12 months at the rate then in effect in accordance with Nuvve’s
standard payroll procedures and will continue to receive health insurance benefits during such period. If Mr. Robson is terminated without
“cause” or resigns for “good reason” within 12 months after Nuvve is subject to change in control, he will receive
a severance payment equal to three times his then current base salary in one lump sum.
401(k) Retirement Plan
For 2021 and 2020, Nuvve provided a tax-qualified
Section 401(k) plan for all employees, including its named executive officers. Nuvve did not provide a match for participants’ elective
contributions to the 401(k) plan, nor did Nuvve provide to employees, including its named executive officers, any other retirement benefits,
including but not limited to tax-qualified defined benefit plans, supplemental executive retirement plans and nonqualified defined contribution
plans.
Outstanding Equity Awards at Year End
The following table presents information regarding
the outstanding stock options held by our named executive officers at December 31, 2021.
| |
Stock Option Grants | |
Stock Awards | |
Name | |
Number of Securities Underlying Unexercised Options Exercisable | | |
Number of Securities Underlying Unexercised Options Unexercis-able | | |
Option Exercise Price ($) | | |
Option
Expiration
Date | |
Number of
Shares or
Units of
Stock That
Have Not
Vested(4) | | |
Market Value
of Shares of
Units of Stock
That Have Not
Vested | |
Gregory Poilasne | |
| 65,667 | (1) | |
| 8,674 | (1) | |
$ | 1.27 | | |
6/30/2027 | |
| — | | |
| — | |
Gregory Poilasne | |
| — | | |
| 600,000 | (3) | |
$ | 13.70 | | |
3/23/2031 | |
| 43,795 | | |
$ | 599,992 | |
Ted Smith | |
| 21,240 | (2) | |
| — | | |
$ | 1.27 | | |
9/24/2025 | |
| — | | |
| — | |
Ted Smith | |
| 140,186 | (2) | |
| — | | |
$ | 1.27 | | |
6/30/2027 | |
| — | | |
| | |
Ted Smith | |
| 53,101 | (2) | |
| 53,101 | (2) | |
$ | 6.97 | | |
8/10/2030 | |
| — | | |
| — | |
Ted Smith | |
| — | | |
| 350,000 | (3) | |
$ | 13.70 | | |
3/23/2031 | |
| 25,547 | | |
$ | 349,994 | |
David D. Robson | |
| — | | |
| 300,000 | (3) | |
$ | 13.70 | | |
3/23/2031 | |
| 18,248 | | |
$ | 249,998 | |
(1) | Option vests monthly in equal installments over a five year
period. |
(2) | Option vests as to 25% of the shares on the anniversary of
the grant date and thereafter vests as to the remaining 75% of the shares monthly in equal installments over a three year period. |
(3) | The options vest as to one-quarter of the shares March 31,
2022 and vest in 12 equal quarterly installments during the following three years. |
(4) | The restricted stock will vest in three equal installments
on the first, second and third anniversary of the grant date. |
Potential Payments Upon Termination or Change
in Control
As indicated above, each of Mr. Poilasne, Mr.
Smith and Mr. Robson is entitled to a severance payment if his employment is terminated under specified circumstances, including upon
certain terminations in connection with a change in control of Nuvve.
In addition, the stock options and restricted
stock granted to Nuvve’s named executive officers under the 2020 Plan will be accelerated upon the occurrence of certain non-negotiated
change of control transactions. In the event of certain negotiated change of control transactions, the compensation committee may (i)
accelerate the vesting of the stock options and restricted stock awards under the 2020 Plan, or (ii) require the executive to relinquish
the stock options or restricted stock awards under the 2020 Plan to Nuvve upon the tender by Nuvve to the executive of cash in an amount
equal to the repurchase value of such award. Furthermore, in the event of a corporate transaction (as defined in the 2010 Plan), the administrator
of the 2010 Plan may arrange for acceleration of the vesting of the awards and/or for the acquiring corporation to assume or continue
the awards under the 2010 Plan.
Director Compensation
Our board of directors has established, based
upon the recommendation of the compensation committee, a compensation program for the non-employee members of the board. The compensation
program is designed to align the directors’ compensation with Nuvve’s business objectives and the creation of stockholder
value. The compensation committee and the board expect to review non-employee director compensation periodically to ensure that such compensation
remains competitive and enables Nuvve to recruit and retain qualified directors.
Under the non-employee directors’ compensation
program, each non-employee director will receive an annual cash retainer and will receive cash fees for serving as chair or as a member
of the audit, compensation or nominating and corporate governance committees, as follows:
| |
Amount | |
Annual Director Compensation Cash Retainer | |
$ | 40,000 | |
Additional Annual Compensation for Committee Chairs | |
| | |
Audit Committee | |
$ | 20,000 | |
Compensation Committee | |
$ | 15,000 | |
Nominating and Corporate Governance Committee | |
$ | 10,000 | |
Additional Annual Compensation for Committee Members (Other than Chairs) | |
| | |
Audit Committee | |
$ | 10,000 | |
Compensation Committee | |
$ | 7,500 | |
Nominating and Corporate Governance Committee | |
$ | 5,000 | |
In addition, each non-employee director, upon
their initial appointment or election, and on an annual basis, will receive a grant of restricted stock units with a fair market value
as of the grant date equal to $200,000, with the initial grant vesting in three equal installments on the first second and third anniversary
of the grant date, and with the annual grants vesting in full on the first anniversary of the grant date.
The following table sets forth compensation earned
during the year ended December 31, 2021 by each director who is not a named executive officer and served during the year ended December
31, 2021.
| |
Fees | | |
Stock | | |
Option | | |
| |
Name | |
Earned(1) | | |
Awards(2) | | |
Awards(2) | | |
Total | |
Richard A. Ashby | |
$ | 47,000 | | |
$ | 202,974 | | |
| — | | |
$ | 249,974 | |
Jon M. Montgomery | |
$ | 45,042 | | |
$ | 202,974 | | |
| — | | |
$ | 248,016 | |
H. David Sherman | |
$ | 52,875 | | |
$ | 202,974 | | |
| — | | |
$ | 255,849 | |
Angela Strand | |
$ | 45,042 | | |
$ | 202,974 | | |
$ | 15,594 | | |
$ | 263,610 | |
Kenji Yodose | |
$ | 35,250 | | |
$ | 202,974 | | |
| — | | |
$ | 238,224 | |
(1) | Represents annual director fees paid. The director fees paid to each person listed are consistent with
the director fees described herein above, including annual retainer and as a member and/or chair of a committee of the board. |
(2) | The amounts reported under “Stock Awards” and “Option Awards” are the estimated
grant date fair value of restricted stock units granted during the respective year, with such amount as determined under the ASC 718,
with respect to accounting for stock-based compensation expense. Such estimated fair value amounts do not necessarily correspond to the
potential actual value realized of such awards. The assumptions made in computing the estimated fair value of such awards are disclosed
in the notes to Nuvve’s consolidated financial statements for the fiscal year ended December 31, 2021. |
The following table presents information as of
December 31, 2021 regarding the outstanding stock options held by each director who is not a named executive officer and who served during
the year ended December 31, 2021.
| |
Stock Option Grants | | |
Stock Awards | |
| |
Number of | | |
Number of | | |
| | |
| | |
Number of | | |
Market Value of | |
| |
Securities | | |
Securities | | |
| | |
| | |
Shares or | | |
Shares or | |
| |
Underlying | | |
Underlying | | |
Stock | | |
Stock | | |
Units of | | |
Units of | |
| |
Stock | | |
Stock | | |
Option | | |
Option | | |
Stock | | |
Stock | |
| |
Options | | |
Options | | |
Exercise | | |
Expiration | | |
That Have | | |
That Have | |
| |
Exercisable | | |
Unexercisable | | |
Price | | |
Date | | |
Not Vested | | |
Not Vested | |
Richard A. Ashby | |
| — | | |
| — | | |
| — | | |
| — | | |
| 48,484 | | |
$ | 478,780 | |
Jon M. Montgomery | |
| — | | |
| — | | |
| — | | |
| — | | |
| 48,484 | | |
$ | 478,780 | |
H. David Sherman | |
| — | | |
| — | | |
| — | | |
| — | | |
| 48,484 | | |
$ | 478,780 | |
Angela Strand | |
| 3,761 | | |
| 6,859 | | |
$ | 8.71 | | |
| 1/20/2031 | | |
| 48,484 | | |
$ | 478,780 | |
Kenji Yodose | |
| — | | |
| — | | |
| — | | |
| — | | |
| 48,484 | | |
$ | 478,780 | |
As compensation for consulting services prior
to becoming a director, on August 11, 2020, Ms. Strand received an option to purchase 10,620 shares of Nuvve HoldCo common stock at an
exercise price of $8.71 per share (which had a grant date fair value of $56,842, as calculated using the Black-Scholes option pricing
model). The option vests in 48 equal monthly installments commencing on September 11, 2020 and ending on August 11, 2024.
Each of Mr. Ashby, Mr. Montgomery, Mr. Sherman,
Ms. Strand and Mr. Yodose received an initial grant of 24,242 restricted stock units on May 14, 2021 and an annual grant of 24,242 restricted
stock units on June 4, 2021. Each restricted stock unit represents the right to receive one share of Nuvve HoldCo common stock upon vesting
(subject to certain deferral rights). The initial grants vest in three equal annual installments on the first, second and third anniversary
of the date of grant and the annual grants vest in a single installment on the first anniversary of the date of grant.
Item
13. Certain Relationships and Related Transactions, and Director Independence
Certain Relationships and Related Transactions
Business Combination
In connection with the Business Combination, Nuvve
is party to the following agreements in which related parties of Nuvve have a material interest:
Merger Agreement
On the closing date of the Business Combination,
March 19, 2021 (the “Closing Date”), Nuvve HoldCo consummated the Business Combination with Newborn and Nuvve OpCo,
as contemplated by Merger Agreement. Prior to the Business Combination, Newborn was a publicly traded special purpose acquisition corporation,
Nuvve HoldCo was a wholly owned subsidiary of Newborn, and Nuvve OpCo was a private operating company. On the Closing Date, pursuant to
the Merger Agreement, (i) Newborn reincorporated to Delaware via the merger of Newborn with and into Nuvve HoldCo, with Nuvve HoldCo surviving
as the publicly traded entity (the “Reincorporation Merger”), and (ii) immediately after the Reincorporation Merger,
Nuvve HoldCo acquired Nuvve OpCo via the merger of Merger Sub with and into Nuvve OpCo, with Nuvve OpCo surviving as the wholly-owned
subsidiary of Nuvve HoldCo (the “Acquisition Merger”).
Upon the closing of the Reincorporation Merger,
each of Newborn’s outstanding units was automatically separated into its constituent securities and Newborn’s outstanding
securities (including the Newborn ordinary shares and Newborn warrants purchased by the investors in the PIPE consummated immediately
prior to the Business Combination) were converted into a like number of equivalent securities of Nuvve HoldCo, except that each of Newborn’s
rights was converted automatically into one-tenth of one share of Nuvve HoldCo common stock in accordance with its terms.
Upon the closing of the Acquisition Merger, each
share of Nuvve OpCo common stock outstanding immediately prior to the effective time of the Acquisition Merger (including the shares issued
upon conversion of Nuvve OpCo’s preferred stock and upon conversion of the bridge loan advanced to Nuvve OpCo upon the signing of
the Merger Agreement) automatically was converted into approximately 0.21240305 shares (the “Closing Exchange Ratio”)
of Nuvve HoldCo common stock, for an aggregate of 9,122,996 shares of Nuvve HoldCo common stock. Each outstanding option to purchase Nuvve
OpCo common stock was assumed by Nuvve HoldCo and converted into an option to purchase a number of shares of Nuvve HoldCo common stock
equal to the number of shares of Nuvve OpCo common stock subject to such option immediately prior to the effective time multiplied by
the Closing Exchange Ratio, for an aggregate of 1,303,610 shares of Nuvve HoldCo common stock, at an exercise price equal to the exercise
price immediately prior to the effective time divided by the Closing Exchange Ratio.
Purchase and Option Agreement
Pursuant to a purchase and option agreement, dated
as of November 11, 2020 (the “Purchase and Option Agreement”), between Nuvve and EDF Renewables, Inc. (“EDF
Renewables”), a former stockholder of Nuvve OpCo and the owner of more than 5% of Nuvve HoldCo common stock, immediately after
the closing, Nuvve repurchased 600,000 shares of Nuvve HoldCo common stock from EDF Renewables at a price of $10.00 per share. In addition,
on the Closing Date, EDF Renewables exercised its option to sell an additional $2,000,000 of shares of Nuvve HoldCo common stock back
to Nuvve at a price per share of $14.87 (the average closing price over the five preceding trading days), which was consummated on April
26, 2021. Gregory Poilasne, Nuvve’s Chairman and Chief Executive Officer, and Ted Smith, Nuvve’s President and Chief Operating
Officer, have committed to repurchase such shares from Nuvve at the same price Nuvve paid for them (or $14.87 per share).
Registration Rights Agreement
On the Closing Date, Nuvve entered into a registration
rights agreement (the “RRA”), by and among Nuvve HoldCo, Newborn’s initial shareholders and certain former Nuvve
OpCo stockholders, which provides for the registration of Nuvve HoldCo common stock received by Newborn’s initial shareholders and
such former Nuvve OpCo stockholders in the Reincorporation Merger and the Acquisition Merger, respectively. Newborn’s initial shareholders
and such former Nuvve OpCo stockholders are entitled to (i) make a written demand for registration under the Securities Act of all or
part of their shares and (ii) exercise “piggy-back” registration rights with respect to registration statements filed following
the consummation of the Business Combination. In connection with the RRA, Nuvve HoldCo filed a registration statement covering the resale
of their shares. Pursuant to the RRA, Nuvve HoldCo shall bear the expenses incurred in connection with the filing of the registration
statement.
Stockholder Agreement
On the Closing Date, Nuvve entered into a stockholder’s
agreement (the “Stockholder’s Agreement”), by and among Nuvve HoldCo and TTC, a former stockholder of Nuvve OpCo
and the owner of more than 5% of Nuvve HoldCo common stock, pursuant to which TTC will have the right to designate one member of Nuvve
HoldCo’s board of director for appointment or election as a director for so long as TTC continues to beneficially own 5% of the
outstanding Nuvve HoldCo common stock. Subject to certain exceptions, Nuvve will agree to appoint the designee as a director and include
the designee in management’s slate of director nominees. Kenji Yodose is TTC’s designee.
The descriptions of the Merger Agreement, Purchase
and Option Agreement, Indemnification Escrow Agreement, the Earn-out Escrow Agreement, the Letter of Transmittal, the Lock-Up Agreement,
the RRA and the Stockholder’s Agreement do not purport to be complete and are qualified in their entirety by the full text of such
documents, which are attached or incorporated by reference as exhibits to the Original Filing.
Newborn Formation and Initial Public Offering
On May 17, 2019, Newborn sold 1,150,000 ordinary
shares to its initial shareholders for an aggregate of $25,000. Newborn subsequently declared a share dividend of 0.25 shares for each
outstanding share, resulting in 1,437,500 ordinary shares being outstanding. On February 19, 2020, simultaneously with the closing of
its initial public offering, Newborn consummated a private placement of 272,500 private units with its sponsor at a price of $10.00 per
unit, generating total proceeds of $2,725,000. In the Business Combination, the Newborn ordinary shares were exchanged for shares of Nuvve
HoldCo common stock and the Newborn private units were automatically separated into their constituent securities and exchanged for shares
of Nuvve HoldCo common stock and pre-merger warrants (as defined in the Original Filing). The Newborn initial shareholders have entered
into lock-up agreements, pursuant to which certain shares of Nuvve HoldCo common stock and pre-merger warrants held by the initial shareholders
will be locked up for six months after the closing, with respect to 50% of such shares and warrants, and for one year, with respect to
the remaining 50% of such shares and warrants (subject to certain exceptions contained therein).
The private warrants held by Newborn initial shareholders
are identical to the public warrants, except that the private warrants (i) may be exercised on a cashless basis at the holder’s
option and (ii) will not be redeemable by Nuvve, in each case as long as they are held by the sponsor or its permitted transferees. Additionally,
because the Newborn private units were issued in a private transaction, the sponsor and its permitted transferees will be allowed to exercise
the pre-merger warrants for cash even if a registration statement covering the ordinary shares issuable upon exercise of such warrants
is not effective and receive unregistered ordinary shares.
Intellectual Property Acquisition and Research
Activities
On November 7, 2017, Nuvve entered into an IP
acquisition agreement with the University of Delaware, a beneficial owner of more than 5% of the outstanding Nuvve HoldCo common stock.
Pursuant to the IP acquisition agreement, the University of Delaware assigned to Nuvve certain of the key patents underlying its V2G technology.
Under the agreement, Nuvve agreed to make certain
milestone payments to the University of Delaware in the aggregate amount of up to $7,500,000 based on the achievement of certain substantial
commercialization targets.
The IP acquisition agreement terminates upon the
later of the date all the milestone payments described above are made and the expiration date of the patents transferred to Nuvve. If
the University of Delaware terminates the agreement upon the material breach by Nuvve of certain limited provisions of the IP assignment
agreement (which do not include the milestone payment provisions) that is not cured with 45 days after notice from the university, Nuvve
will be required to assign the patents back to the university. In the event the University of Delaware notifies Nuvve of a third party’s
interest in a region in which the patents are valid, and Nuvve does not within 60 days inform the university that either it intends to
address the region pursuant to a commercially reasonable development plan or it intends to enter into a license agreement with an identified
third party, Nuvve will be deemed to have granted to the University of Delaware an exclusive sublicensable license to the patents in the
unaddressed region.
In addition, on September 1, 2016, Nuvve entered
into a research agreement with the University of Delaware, whereby the university performs research activity as specified annually by
Nuvve. Under the terms of the agreement, Nuvve pays a minimum of $400,000 annually in equal quarterly installments. For each of the years
ended December 31, 2021 and 2020, $400,000 was paid under the research agreement.
Dreev Business Venture in Europe
On October 8, 2018, Nuvve entered into a cooperation
framework agreement with Électricité de France (“EDF”), a beneficial owner of more than 5% of the outstanding
Nuvve HoldCo common stock, which provides for Nuvve and EDF to act as partners in a business venture implementing the commercialization
of V2G technology in France, the United Kingdom, Belgium and Italy. Pursuant to the cooperation framework agreement, the parties formed
Dreev S.A.S. (“Dreev”), which initially was owned 49% by Nuvve and 51% by EDF.
On February 11, 2019, Nuvve and an EDF subsidiary
entered into a shareholders’ agreement setting forth their relationship as shareholders of Dreev. The shareholders’ agreement
includes certain rules for the governance of Dreev, as well as certain rights upon a sale of Dreev and certain put and call options rights
of Nuvve and the EDF subsidiary, including a call option for each party upon a change in control of the other party.
Also, on February 11, 2019, Nuvve and Dreev entered
into an intellectual property agreement, which provided for the license by Nuvve to Dreev of certain intellectual property rights necessary
for the business venture to pursue its purpose in its territory and the transfer of those rights to Dreev upon the occurrence of certain
events.
Nuvve and Dreev are party to a professional services
agreement, pursuant to which Nuvve agreed to make available certain employees to produce certain technical deliverables in connection
with the business venture’s implementation of V2G technology in its territory, and a provision agreement, pursuant to which Nuvve
seconded an employee to Dreev. Nuvve also agreed to design and produce DC chargers for the business venture.
On October 16, 2019, Nuvve and EDF entered into
a master agreement relating to the transfer of share capital of Dreev, pursuant to which the EDF subsidiary purchased approximately 36%
of Dreev from Nuvve for a purchase price of $2,304,898. In connection with the transfer, the cooperation framework agreement and intellectual
property agreement were amended to add Germany to the territories covered by the business venture. The intellectual property rights agreement
was further amended to provide for the immediate transfer to Dreev of the intellectual property rights described above. In exchange for
the transfer of the intellectual property rights and the expansion of the territory, Dreev paid $243,733 to Nuvve.
Under the various agreements, Dreev paid Nuvve
consulting, services and similar fees in the amount of $0 and $278,887 in the fiscal years ended December 31, 2021 and 2020, respectively.
System Development in Japan
On July 9, 2018, Nuvve entered into a foundation
agreement with TTC, a beneficial owner of more than 5% of the outstanding Nuvve HoldCo common stock, and on January 9, 2020, Nuvve entered
into a system development and license agreement with TTC. Under the foundation agreement, Nuvve develops charger systems incorporating
V2G technology for TTC in connection with various projects in Japan. Under the system development and license agreement, Nuvve agreed
to develop commercial V2G systems specifically targeted for the Japanese market for TTC and granted TTC an exclusive license to the intellectual
property for any such newly developed target V2G systems in Japan. Under the agreements, TTC paid Nuvve fees in the amount of $399,620
and $621,330 in the fiscal years ended December 31, 2021 and 2020, respectively.
On October 5, 2020, Nuvve entered into an agreement
with TTC whereby Nuvve agreed to reimburse TTC for certain legal fees, up to approximately $96,000, associated with a license agreement
between the parties. The reimbursement is payable upon the completion by Nuvve of an equity financing or the completion of the licensing
agreement. No legal fees have been accrued or paid under this agreement through December 31, 2021.
Compensation
Gregory Poilasne, Nuvve’s Chief Executive
Officer, and Ted Smith, Nuvve’s Chief Operating Officer, will receive approximately $1,548,000 and $260,000, respectively, in compensation
in respect of their services to Nuvve in prior years, which became due upon the successful completion of the Business Combination. This
deferred compensation was paid in April 2021. For a more complete discussion of Mr. Poilasne’s and Mr. Smith’s compensation
arrangements, including the compensation for prior services to Nuvve, see “Executive Officer and Director Compensation”
above and note 14 of the consolidated financial statements.
Expense Advances
On August 11, 2020, Nuvve issued to Gregory Poilasne,
its Chief Executive Officer, a convertible promissory note in satisfaction of accrued and unpaid compensation due to him. The convertible
promissory note was one of a series of notes with substantially identical terms. The convertible note bore interest 5% per annum and had
a maturity date of December 1, 2020. In connection with the bridge loan advanced to Nuvve OpCo upon the signing of the Merger Agreement,
on November 17, 2020, all of the convertible promissory notes were converted into shares of Nuvve Common Stock, with Mr. Poilasne receiving
457,939 shares upon conversion of all $477,454 in principal and accrued interest of the convertible promissory as of such date.
Mr. Poilasne has, from time to time, advanced
expenses to Nuvve, which Nuvve repaid without interest. No such advances are presently outstanding.
Consulting Services
A relative of Ted Smith, Nuvve’s Chief Operating
Officer, has provided professional services to Nuvve from time to time. Nuvve paid the relative fees in the amount of $0 and $50,513 in
the fiscal years ended December 31, 2021 and 2020, respectively.
Angela Strand, a director of Nuvve HoldCo, provided
consulting services to Nuvve during 2020. As compensation for such services, Nuvve paid her $6,625 in fees and granted her an option to
purchase 50,000 shares of Nuvve’s common stock at an exercise price of $1.85 per share (which had a grant date fair value of $56,842,
as calculated using the Black-Scholes option pricing model).
During 2020, Nuvve engaged a stockholder for consulting
services. During the fiscal years ended December 31, 2021 and 2020 no amounts were paid to the stockholder for these services. As of December
31, 2021, $42,500 due to the stockholder was included in accounts payable in the consolidated balance sheets forming part of Nuvve’s
consolidated financial statements.
Levo Joint Venture
On August 4, 2021, Nuvve formed the Levo joint
venture with Stonepeak Rocket Holdings LP (“Stonepeak”) and Evolve (together, the “Investors”).
Stonepeak is the beneficial owner of more than 5% of Nuvve HoldCo common stock.
In connection with the Levo joint venture, on
August 4, 2021, Nuvve’s wholly owned operating subsidiary, Nuvve OpCo, entered into the Amended and Restated Limited Liability Company
Agreement for Levo with the Investors (the “Levo LLCA”); Nuvve entered into a Development Services Agreement with Levo
(the “DSA”); Nuvve entered into a Parent Letter Agreement with the Investors and Levo (the “PLA”);
Nuvve entered into a Board Rights Agreement with Stonepeak (the “BRA”); and Nuvve entered into an Intellectual Property
License and Escrow Agreement with Levo (the “IP License and Escrow Agreement”).
Levo LLCA
The Levo LLCA governs the affairs of Levo and
the conduct of its business.
The membership interests authorized by the Levo
LLCA consist of Class A Common Units, Class B Preferred Units, Class C Common Units and Class D Incentive Units. On the Joint Venture
Date and the signing of the Levo LLCA, Levo issued 510,000 Class A Common Units to Nuvve OpCo, 2,801 Class B Preferred Units to the Investors,
and 490,000 Class C Common Units to the Investors. The Investors agreed to pay to Levo an aggregate purchase price of $2,801,000 for the
Class B Preferred Units and the Class C Common Units. The Investors will receive additional Class B Preferred Units for each $1,000 in
additional capital contributions made by them.
The Class B Preferred Units have an initial liquidation
preference of $1,000 per unit and are entitled to cumulative preferred distributions at a rate of 8% of the liquidation preference per
annum, payable quarterly. Available cash will be distributed quarterly, first, to the Class B Preferred Unit holders to pay the preferred
distributions for such quarter; second, to the Class B Preferred Unit holders to pay all amounts due and unpaid on such units (including
accumulated and unpaid preferred distributions); third, until the liquidation preference of the Class B Preferred Units is reduced to
$1.00, to both the Class B Preferred Unit holders and the Common Unit holders, with the percentage allocation between them varying based
on a leverage ratio; and thereafter, to the Common Unit holders. Distributions on the Class B Preferred Units in excess of the preferred
distributions will reduce the liquidation preference of the Class B Preferred Units. Until the completion of the first full twelve fiscal
quarters after the Investors have made aggregate capital contributions of at least $50 million, Levo may elect to pay the preferred distributions
in cash or in kind.
The Class D Incentive Units are profits interests
intended to provide incentives to certain key employees and service providers of Levo, its members and its affiliates. The Class D Incentive
Unit holders will receive certain distributions from and after the time that the Class B Preferred Unit holders have received a target
return on their investment and the Common Unit holders have received a return of their capital contributions.
At the earliest to occur of August 4, 2028, a
fundamental change (which includes, for example, a change of control of Nuvve HoldCo or Nuvve OpCo, certain changes in ownership of Levo,
a sale of all or substantially all of Levo’s assets, or an initial public offering or direct listing of Levo) (a “Fundamental
Change”) or a trigger event (which includes, for example, a failure to pay quarterly distributions or a material breach by Nuvve
HoldCo, Nuvve OpCo or their applicable affiliates of such person’s obligations under the transaction documents) (a “Trigger
Event”), Stonepeak will have the option to cause Levo to redeem the Class B Preferred Units in whole or in part from time to
time at a redemption price equal to the greater of the liquidation preference, a price based on a 12.5% internal rate of return, and a
price based on a 1.55 multiple on invested capital.
At any time following the earliest to occur of
August 4, 2028 and a Trigger Event, Stonepeak has the right to cause a sale of Levo. In addition, at any time following the earliest to
occur of August 4, 2023, the date on which Levo has entered into contracts with third parties to spend at least $500 million in aggregate
capital expenditures, and a Trigger Event, Stonepeak has the right to effect an underwritten initial public offering of Levo.
Levo will be managed by a board of managers consisting
of nine managers, of whom (i) five will be appointed by Nuvve OpCo, (ii) for so long as any Class B Preferred Units remain outstanding
or Stonepeak owns at least ten percent or more of the issued and outstanding Common Units, three will be appointed by Stonepeak, and (iii)
one will be an independent manager. For so long as Evolve owns more than two percent of the issued and outstanding Common Units, Evolve
will have the right to designate one person to act as an observer at all meetings of the board of managers, subject to certain limited
exceptions. Certain specified actions will require the approval of at least one of the Stonepeak managers, the representative of the Class
B Preferred Unit holders and/or Evolve.
Nuvve OpCo and its affiliates are required to
present to Levo all investment or business opportunities they become aware of and desire to pursue, to the extent such investment or business
opportunities are within the scope of, primarily relate to or compete with, Levo’s business, and shall not pursue any such business
opportunity, subject to certain exceptions, during the period ending on the earliest to occur of the funding of the full commitment amount
(generally $750 million, subject to increase or decrease in accordance with the Levo LLCA), the end of the commitment period (generally
August 4, 2024, subject to reduction or extension in certain circumstances) or a monetization event (including, for example, an underwritten
initial public offering or sale of Levo).
The Levo LLCA includes other customary provisions
for an agreement of its type, including tag-along rights, a right of first offer on transfers, and drag-along rights.
DSA
Under the DSA, Nuvve or one of its affiliates
will provide certain services to Levo and its subsidiaries, including operational, commercial, research and development, engineering,
business development, legal, regulatory, accounting, treasury, and finance services.
As payment for the services, upon conclusion of
the initial development period, which commenced on August 4, 2021 and runs through the date that Levo has entered into contracts with
third parties to spend at least $25,000,000, in the aggregate, of capital expenditures relating to qualifying business opportunities,
Levo will pay Nuvve an amount equal to 49% of each of Nuvve’s aggregate total of budgeted out-of-pocket and general and administrative
expenses allocable to the provision of the services, and a fixed monthly general and administrative fee, in each case, incurred during
such initial development period. After the expiration of the initial development period, Levo will pay Nuvve an amount equal to 100% of
its budgeted out-of-pocket and general and administrative expenses allocable to the provision of the services, and a fixed monthly general
and administrative fee.
The DSA may be terminated under certain conditions,
including by Levo for convenience upon 30 days’ written notice, by either party upon written notice to the other party upon a material
uncured breach of the DSA, by Nuvve on 90 days’ written notice if no business opportunities have been approved during the commitment
period under the Levo LLCA, or by either party upon 30 days’ notice following the earliest to occur of the 3rd anniversary of Levo’s
initial public offering, the 3rd anniversary of the date Nuvve ceases to own any Levo equity interests, and the 5th anniversary of the
date Nuvve OpCo ceases to have the right to designate a majority of Levo’s board of managers.
PLA
The PLA includes, among other provisions, certain
restrictive covenants with respect to Levo’s business, including a business opportunities covenant applicable to Nuvve that is identical
to the one in the Levo LLCA described above, and a covenant granting Stonepeak a right of first offer to participate in certain future
financing transactions of Levo. In addition, Nuvve agreed to reimburse each of the Investors for a portion of their out-of-pocket expenses
incurred in connection with the due diligence, documentation and negotiation of the agreements.
BRA
Under the BRA, so long as the Investors beneficially
own any Class B Preferred Units of Levo or at least 10% of Nuvve HoldCo common stock, Stonepeak has the right to designate two individuals
to act as observers (the “Board Observer”) at all meetings of Nuvve HoldCo’s board of directors; however, if
there is an Investor Director (as defined below) then serving on Nuvve HoldCo’s board, Stonepeak will have the right to appoint
one Board Observer instead of two. In addition, for so long as the Investors beneficially own at least 10% of Nuvve HoldCo common stock,
Stonepeak has the right to designate one individual (the “Investor Director”) for appointment as a member of Nuvve
HoldCo’s board of directors and as a member of one committee of the board of directors (or two committees, if the Investors beneficially
own at least 15% of Nuvve HoldCo common stock, or all committees, if the Investors beneficially own at least 25% of Nuvve HoldCo common
stock). Any such designee must meet certain qualification requirements.
IP License and Escrow Agreement
The IP License and Escrow Agreement provides that
(i) all intellectual property of Nuvve used in Levo’s business will be deposited into escrow, to be released to Levo upon the occurrence
of certain specified release events (including, for example, certain circumstances in which Nuvve ceases to provide the services under
the DSA and certain bankruptcy-related events), and (ii) Nuvve will grant a license to such intellectual property to Levo, which may be
exercised solely after the occurrence of one of the specified release events.
If (i) one of the specified release events has
occurred, (ii) the Investors have made capital contributions to Levo of at least $1 billion in respect of the Class B Preferred Units
or the commitment period has expired, and (iii) Nuvve and its subsidiaries no longer own any equity interests in Levo, from and after
such time and for so long as the license subsists and the intellectual property remains proprietary, Levo shall pay Nuvve (or its successor)
a royalty on all vehicle-to-grid net revenue generated by or on behalf of or otherwise attributable to Levo and its affiliates and sublicensees
from assets acquired or developed by Levo and its sublicensees.
Levo Warrants and the Levo SPA
In connection with the signing of the term sheet
for the Levo joint venture on May 17, 2021 (the “Letter Agreement”), Nuvve HoldCo issued warrants (the “Levo
Warrants”) to Stonepeak, which subsequently transferred its Levo Warrants to Stonepeak II, and to Evolve, in five separate series,
as follows (in each case, with 90% allocated to Stonepeak II and 10% allocated to Evolve):
| ● | Series B Warrants to purchase 2,000,000 shares of Nuvve HoldCo
common stock, in the aggregate, at an exercise price of $10.00 per share, which are fully vested upon issuance; |
| ● | Series C Warrants to purchase 1,000,000 shares of Nuvve HoldCo
common stock, in the aggregate, at an exercise price of $15.00 per share, which are vested as to 50% of the shares upon issuance and
vest as to the remaining 50% when Levo has entered into contracts with third parties for $125 million in aggregate capital expenditures; |
| ● | Series D Warrants to purchase 1,000,000 shares of Nuvve HoldCo
common stock, in the aggregate, at an exercise price of $20.00 per share, which are vested as to 50% of the shares upon issuance and
vest as to the remaining 50% when Levo has entered into contracts with third parties for $250 million in aggregate capital expenditures; |
| ● | Series E Warrants to purchase 1,000,000 shares of Nuvve HoldCo
common stock, in the aggregate, at an exercise price of $30.00 per share, which are vested as to 50% of the shares upon issuance and
vest as to the remaining 50% when Levo has entered into contracts with third parties for $375 million in aggregate capital expenditures;
and |
| ● | Series F Warrants to purchase 1,000,000 shares of Nuvve HoldCo
common stock, in the aggregate, at an exercise price of $40.00 per share, which are vested as to 50% of the shares upon issuance and
vest as to the remaining 50% when Levo has entered into contracts with third parties for $500 million in aggregate capital expenditures. |
The Levo Warrants may be exercised for cash or
on a cashless basis. The Levo Warrants expire on May 17, 2031. Nuvve will not be required to net cash settle the Levo Warrants under any
circumstances. The exercise price and number of shares issuable upon exercise of the Levo Warrants are subject to adjustment for changes
in Nuvve’s capital stock, including stock splits, stock combinations, stock dividends, reclassifications, distributions of purchase
rights and distributions of assets. If Nuvve completes a business combination, the Levo Warrants shall be converted into the right to
acquire the property they would have received if the Levo Warrants were exercised prior to such business combination.
In connection with the signing of the Letter Agreement,
Nuvve HoldCo also entered into a securities purchase agreement (the “Levo SPA”) with Stonepeak (which subsequently
transferred its rights under the Levo SPA to Stonepeak II) and Evolve. Under the Levo SPA, from time to time between November 13, 2021
and November 17, 2028, Stonepeak II and Evolve have an option to purchase, in their sole discretion, up to an aggregate of $250 million
in shares of Nuvve HoldCo common stock at a purchase price of $50.00 per share, with 90% allocated to Stonepeak II and 10% allocated to
Evolve. The Levo SPA includes customary representations and warranties, closing conditions and customary indemnification provisions. In
addition, Stonepeak II and Evolve may exercise the option on a cashless basis in the event of a change of control of Nuvve. The purchase
price under the Levo SPA is subject to adjustment for any stock dividend, stock split, reverse stock split, reclassification, or similar
change in our common stock.
Related Person Policy
Nuvve’s written related party transaction
policy requires Nuvve’s directors, nominees for director, officers, employees and 5% stockholders, and their immediate family members,
to avoid, wherever possible, all related party transactions. Related-party transactions are defined as transactions in which (1) the aggregate
amount involved will or may be expected to exceed $120,000 in any calendar year, (2) Nuvve or any of its subsidiaries is a participant,
and (3) any (a) executive officer, director or nominee for election as a director, (b) greater than 5% beneficial owner of Nuvve HoldCo
common stock, or (c) immediate family member, of the persons referred to in clauses (a) and (b), has or will have a direct or indirect
material interest (other than solely as a result of being a director or a less than 10% beneficial owner of another entity). In addition,
Nuvve’s written code of ethics requires Nuvve’s directors, officers and employees to avoid conflicts of interest. A conflict
of interest situation can arise when a person takes actions or has interests that may make it difficult to perform his or her work objectively
and effectively. Conflicts of interest may also arise if a person, or a member of his or her family, receives improper personal benefits
as a result of his or her position.
Nuvve’s audit committee, pursuant to its
written charter and related party transaction policy, is responsible for reviewing and approving related-party transactions to the extent
Nuvve enters into such transactions. All ongoing and future transactions between Nuvve and any of its officers and directors or their
respective affiliates shall be approved only if such transactions are on terms believed by the audit committee to be no less favorable
to Nuvve than are available from unaffiliated third parties and such transaction does not constitute a conflict of interest. The audit
committee, in its sole discretion, may impose such conditions as it deems appropriate on Nuvve or the related party in connection with
the approval of the related party transaction. Upon approval by the audit committee, the related party transaction and any conditions
thereon will be presented to the Board for approval by a majority of its disinterested independent members.
Prior to entering into the proposed transaction,
related parties are required to notify Nuvve’s Chief Financial Officer of the facts and circumstances of the proposed transaction.
Additionally, Nuvve requires each of its directors and executive officers to complete a directors’ and officers’ questionnaire
that elicits information about related party transactions.
These procedures are intended to determine whether
any such related party transaction impairs the independence of a director or presents a conflict of interest on the part of a director,
employee or officer.
Independence of Directors
As a result of Nuvve HoldCo common stock being
listed on the Nasdaq Capital Market, Nuvve adheres to the listing rules of the Nasdaq in affirmatively determining whether a director
is independent. The rules of Nasdaq generally define an “independent director” as a person, other than an executive officer
of a company or any other individual having a relationship which, in the opinion of the issuer’s board of directors, would interfere
with the exercise of independent judgment in carrying out the responsibilities of a director. The board of directors has consulted, and
will consult, with its counsel to ensure that the board’s determinations are consistent with those rules and all relevant securities
and other laws and regulations regarding the independence of directors.
The board of directors has determined that each
of Mr. Ashby, Ms. La Lande, Mr. Montgomery, Mr. Sherman, Ms. Strand and Mr. Yodose qualifies as an independent director, and that the
board consists of a majority of independent directors, as such term is defined under the rules of the SEC and Nasdaq. In addition, Nuvve
is subject to the rules of the SEC and Nasdaq relating to the membership, qualifications, and operations of the audit committee, the compensation
committee, and the nominating and corporate governance committee. The board of directors has determined that each of the members of the
audit committee, compensation committee and nominating and corporate governance committee is independent under the rules applicable to
members of such committee.