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 ☐
Check
the appropriate box:
| ☐ |
Preliminary Proxy
Statement |
| ☐ |
Confidential, for Use of
the Commission Only (as permitted by Rule 14a-6(e)(2)) |
| ☒ |
Definitive Proxy Statement |
| ☐ |
Definitive Additional Materials |
| ☐ |
Soliciting Material Pursuant
to §240.14a-11(c) or §240.14a-2 |
SERVE
ROBOTICS INC.
(Name
of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
| ☒ |
No fee required. |
| ☐ |
Fee paid previously with preliminary
materials. |
| ☐ |
Fee computed on table in exhibit
required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11. |
SERVE ROBOTICS
INC.
730 Broadway
Redwood City, CA 94063
NOTICE OF ANNUAL
MEETING OF STOCKHOLDERS
To Be Held at 12:00 p.m. Pacific Time on July
22, 2024
Dear Stockholders of Serve Robotics Inc.:
We cordially invite you to
attend the 2024 annual meeting of stockholders (the “Annual Meeting”) of Serve Robotics Inc., a Delaware corporation, which
will be held on July 22, 2024 at 12:00 p.m. Pacific Time. The Annual Meeting will be held as a virtual meeting, which will be conducted
via live webcast. In order to attend the Annual Meeting, you must register in advance at www.virtualshareholdermeeting.com/SERV2024 prior
to the deadline of 11:45 a.m. Pacific Time on July 22, 2024. After completing the registration, you will receive a confirmation email,
which will include information about when you should expect to receive a unique link to gain access to the Annual Meeting. You will not
be able to attend the meeting in person. The meeting will be held for the following purposes, as more fully described in the accompanying
proxy statement (the “Proxy Statement”):
| 1. | To elect the two nominees to serve as Class I directors until
the 2027 annual meeting of stockholders and until their successors are duly elected and qualified; |
| 2. | To ratify the appointment of dbbmckennon as our independent
registered public accounting firm for our fiscal year ending December 31, 2024; |
| 3. | To approve an amendment to increase the shares authorized
for issuance under our 2023 Equity Incentive Plan (the “2023 Plan”); and |
| 4. | To transact such other business as may properly come before
the Annual Meeting or any adjournments or postponements thereof. |
Our board of directors has
fixed the close of business on May 28, 2024 as the record date for the Annual Meeting. Only stockholders of record on May 28, 2024 are
entitled to notice of and to vote at the Annual Meeting. Further information regarding voting rights and the matters to be voted upon
is presented in the accompanying Proxy Statement.
On or about June 7, 2024,
we expect to mail the Notice of Internet Availability of Proxy Materials (the “Notice”) to our stockholders. The Notice will
contain instructions on how to access our Proxy Statement and our annual report. The Notice provides instructions on how to vote via the
internet or by telephone and includes instructions on how to receive a paper copy of our proxy materials by mail. The accompanying Proxy
Statement and our annual report can be accessed directly at the following internet address: www.proxyvote.com. All you have to do is enter
the control number located on your Notice or proxy card.
YOUR VOTE IS IMPORTANT.
Whether or not you plan to attend the Annual Meeting, we urge you to submit your vote promptly via the internet, telephone or mail.
We appreciate your continued support of Serve
Robotics Inc.
By order of the board of directors,
Ali Kashani
Chief Executive Officer
Redwood City, California
June 7, 2024
TABLE OF CONTENTS
SERVE ROBOTICS INC.
PROXY STATEMENT
FOR THE
2024 ANNUAL MEETING
OF STOCKHOLDERS
To Be Held at 12:00 p.m. Pacific Time on July
22, 2024
This Proxy Statement and the
enclosed form of proxy are furnished in connection with the solicitation of proxies by our board of directors (the “Board”)
for use at the 2024 annual meeting of stockholders of Serve Robotics Inc., a Delaware corporation, and any postponements, adjournments
or continuations thereof (the “Annual Meeting”). The Annual Meeting will be held on July 22, 2024 at 12:00 p.m. Pacific Time.
The Annual Meeting will be held as a virtual meeting, which will be conducted via live webcast. In order to attend the Annual Meeting,
you must register in advance at www.virtualshareholdermeeting.com/SERV2024 prior to the deadline of 11:45am Pacific Time on July 22, 2024.
After completing the registration, you will receive a confirmation email, which will include information about when you should expect
to receive a unique link to gain access to the Annual Meeting. You will not be able to attend the meeting in person. The Notice of Internet
Availability of Proxy Materials (the “Notice”) containing instructions on how to access this Proxy Statement and our annual
report is first being mailed or available to stockholders on or about June 7, 2024 to all stockholders entitled to vote at the Annual
Meeting.
The information provided in
the “question and answer” format below is for your convenience only and is merely a summary of the information contained in
this Proxy Statement. You should read this entire Proxy Statement carefully. Information contained on, or that can be accessed through,
our website is not intended to be incorporated by reference into this Proxy Statement and references to our website address in this Proxy
Statement are inactive textual references only.
All references to “Serve”
refer to Serve Operating Co. (formerly known as Serve Robotics Inc.), a privately held Delaware corporation and our direct, wholly-owned
subsidiary. Unless otherwise stated or the context otherwise indicates, references to the “Company”, “we”, “our”,
“us” or similar terms refer to Serve Robotics Inc. (formerly named Patricia Acquisition Corp.) together with its wholly-owned
subsidiary, Serve. Serve holds all material assets and conducts all business activities and operations of Serve Robotics Inc.
What is Serve Robotics Inc.?
We
were incorporated as Patricia Acquisition Corp. in the State of Delaware on November 9, 2020. Prior to the Merger (as defined below),
Patricia Acquisition Corp. was a “shell company” (as defined in Rule 12b-2 under the Securities Exchange Act of 1934,
as amended (the “Exchange Act”)). On July 31, 2023, our wholly-owned subsidiary, Serve Acquisition Corp., a corporation
formed in the State of Delaware (“Acquisition Sub”), merged with and into Serve, pursuant to the terms of an Agreement and
Plan of Merger and Reorganization, by and between the Company, Acquisition Sub and Serve (the “Merger Agreement”). Pursuant
to this transaction (the “Merger”), Serve was the surviving corporation and became our wholly owned subsidiary, and all of
the outstanding stock of Serve was converted into shares of our common stock. All of Serve’s outstanding warrants and options were
assumed by us. Following the consummation of the Merger, Serve changed its name to “Serve Operating Co.” and we acquired the
business of Serve and continued the existing business operations of Serve as a public reporting company under the name “Serve Robotics
Inc.”
What matters am I voting on?
You will be voting on the
following proposals:
| ● | the
election of two Class I directors to serve until our 2027 annual meeting of stockholders
and until their successors are duly elected and qualified; |
| ● | the
ratification of the appointment of dbbmckennon as our independent registered public accounting
firm for our fiscal year ending December 31, 2024; and |
| ● | to
approve an amendment to increase the shares authorized for issuance under the 2023 Plan. |
Additionally,
stockholders may be asked to transact any other business as may properly come before the Annual Meeting or any adjournment or postponement
thereof. As of the date of this Proxy Statement, we are not aware of any other matters that will be presented for consideration at the
Annual Meeting.
How
does the Board recommend I vote on these proposals?
Our
Board recommends a vote:
| ● | “FOR”
the election of Sarfraz Maredia and David Goldberg as Class I directors. |
| ● | “FOR”
the ratification of the appointment of dbbmckennon as our independent registered public accounting
firm for our fiscal year ending December 31, 2024; and |
| ● | “FOR”
the amendment to increase the shares authorized for issuance under the 2023 Plan. |
Who
is entitled to vote?
Holders
of our common stock as of the close of business on May 28, 2024, the record date for the Annual Meeting (the “Record Date”),
will be entitled to notice of and to vote at the Annual Meeting.
Registered
Stockholders. If on the Record Date, shares of our common stock are registered directly in your name with our transfer agent, you
are considered the stockholder of record with respect to those shares and the Notice was provided to you directly by us. As the stockholder
of record, you have the right to grant your voting proxy directly to the individuals listed on the proxy card or vote on your own behalf
at the Annual Meeting. Throughout this Proxy Statement, we refer to these registered stockholders as “stockholders of record.”
Street
Name Stockholders. If on the Record Date, shares of our common stock are held on your behalf in a stock brokerage account, or by
a bank, trustee or other nominee, you are considered the beneficial owner of shares held in “street name,” and the Notice
was forwarded to you by your broker or nominee, who is considered the stockholder of record with respect to those shares. As the beneficial
owner, you have the right to direct your broker, bank or other nominee as to how to vote your shares and are also invited to attend the
Annual Meeting. However, since a beneficial owner is not the stockholder of record, you may not vote your shares of our common stock
on your own behalf at the Annual Meeting unless you follow your broker or nominee’s procedures for obtaining a legal proxy. Your
broker or nominee is obligated to provide you with instructions to vote before the Annual Meeting or to obtain a legal proxy if you wish
to vote on your own behalf at the Annual Meeting. If your broker or nominee is participating in an online program that allows you to
vote over the internet or by telephone, your Notice or other voting instruction form will include that information. If what you receive
from your broker or other nominee does not contain internet or telephone voting information, please complete and return the paper form
in the self-addressed, postage paid envelope provided by your broker or nominee. Throughout this Proxy Statement, we refer to stockholders
who hold their shares through a broker, bank, trustee or other nominee as “street name stockholders.”
A
list of stockholders of record entitled to vote shall be available to any stockholder for any purpose relevant to the Annual Meeting
for 10 days prior to the Annual Meeting upon request to the Corporate Secretary. Please send the request to Serve Robotics Inc.,
Attention: Corporate Secretary, 730 Broadway, Redwood City, CA 94063.
What
constitutes a quorum for the Annual Meeting?
A
quorum is required for stockholders to conduct business at the Annual Meeting. The presence, present by remote communication or represented
by proxy, of the holders of a majority of the outstanding shares of our common stock is necessary to establish a quorum at the meeting.
As of the close of business on the Record Date, there were 37,098,653 shares of our common stock outstanding. Shares present, virtually
or represented by proxy, including shares as to which authority to vote on any proposal is withheld, shares abstaining as to any proposal
and broker non-votes (where a broker submits a properly executed proxy but does not have authority to vote a stockholder’s shares)
on any proposal will be considered present at the meeting for purposes of establishing a quorum.
How
is the vote counted?
Under
our bylaws, any proposal other than an election of directors is decided by a majority of the votes properly cast for and against such
proposal, except where a larger vote is required by law, our certificate of incorporation or our bylaws. Abstentions and broker “non-votes”
are not included in the tabulation of the voting results on any such proposal and, therefore, do not have an impact on such proposals.
A broker “non-vote” occurs when a nominee holding shares for a beneficial owner does not vote on a particular proposal because
the nominee does not have discretionary voting power with respect to that item and has not received instructions from the beneficial
owner.
If
your shares are held in “street name” by a broker, bank or other nominee, your broker, bank or other nominee is required
to vote your shares according to your instructions. If you do not give instructions to your broker, bank or other nominee, the broker,
bank or other nominee will still be able to vote your shares with respect to certain “routine” items, but will not be allowed
to vote your shares with respect to “non-discretionary” items. Proposal No. 1 is a “non-routine” item. If you
do not instruct your broker how to vote with respect to this proposal, your broker, bank or other nominee may not vote for this proposal,
and those votes will be counted as broker “non-votes.” Proposal No. 2 is considered to be a “routine” item, and
your broker, bank or other nominee will be able to vote on this proposal even if it does not receive instructions from you. Proposal
No. 3 is considered to be a “non-routine” item. If you do not instruct your broker how to vote with respect to this proposal,
your broker, bank or other nominee may not vote for this proposal, and those votes will be counted as broker “non-votes.”
How
many votes do I have?
In
deciding all matters at the Annual Meeting, each stockholder will be entitled to one vote for each share of our common stock held by
them on the Record Date. Stockholders are not permitted to cumulate votes with respect to the election of directors.
How
many votes are needed to approve each proposal?
| ● | Proposal
No. 1: The election of directors requires a plurality vote of the shares of our
common stock present by remote communication or represented by proxy at the Annual Meeting
and entitled to vote. “Plurality” means that the nominees who receive the largest
number of votes cast “FOR” are elected as directors. Any shares not voted “FOR”
a particular nominee (as a result of an abstention or a broker non-vote) will not be counted
in such nominee’s favor and will have no effect on the outcome of the election. You
may vote “FOR” or “WITHHELD” on each of the nominees. |
| ● | Proposal
No. 2: The ratification of the appointment of dbbmckennon requires the affirmative
vote of a majority of the shares of our common stock present by remote communication or represented
by proxy at the Annual Meeting and entitled to vote. “Majority” means the number
of shares voted “FOR” Proposal No. 2 must exceed the number of votes “AGAINST”
Proposal No. 2. Abstentions and broker non-votes will have no effect on the outcome of this
proposal. |
| ● | Proposal
No. 3: The amendment to increase the shares issuable under our 2023 Equity Incentive
Plan requires the affirmative vote of a majority of the shares of our common stock present
by remote communication or represented by proxy at the Annual Meeting and entitled to vote.
“Majority” means the number of shares voted “FOR” Proposal No. 3
must exceed the number of votes “AGAINST” Proposal No. 3. Abstentions and broker
non-votes will have no effect on the outcome of this proposal. |
How
do I vote?
If
you are a stockholder of record, there are three ways to vote:
| ● | By
Internet: You may submit a proxy over the internet by following the instructions at www.proxyvote.com,
24 hours a day, seven days a week, until 11:59 p.m. Eastern Time on July 21, 2024
(have your Notice or proxy card in hand when you visit the website); |
| ● | By
Toll-Free Telephone: You may submit a proxy by calling 1-800-690-6903 24 hours a
day, seven days a week, until 11:59 p.m. Eastern Time on July 21, 2024 (have your Notice
or proxy card in hand when you call); or |
| ● | By
Mail: You may complete, sign and mail your proxy card (if you received printed proxy
materials) which must be received by us by 11:59 p.m. Eastern Time on July 21, 2024. |
If
you are a street name stockholder, you will receive voting instructions from your broker, bank or other nominee. You must follow the
voting instructions provided by your broker, bank trustee or other nominee in order to instruct your broker or other nominee on how to
vote your shares. Street name stockholders should generally be able to vote by returning an instruction card, by telephone or by internet.
However, the availability of telephone and internet voting will depend on the voting process of your broker or other nominee. As discussed
above, if you are a street name stockholder, you may not vote your shares on your own behalf at the Annual Meeting unless you obtain
a legal proxy from your broker, bank, trustee or other nominee.
Can
I change my vote after submitting my proxy?
Yes.
If you are a stockholder of record, you can change your vote or revoke your proxy any time before date of the Annual Meeting in any one
of the following ways:
| ● | You
may enter a new vote by internet or by telephone until 11:59 p.m. Eastern Time on July
21, 2024; |
| ● | You
may submit another properly completed proxy card by mail with a later date, which must be
received by us by 11:59 p.m. Eastern Time on July 21, 2024; or |
| ● | You
may send written notice that you are revoking your proxy to Serve Robotics Inc., Attention:
Corporate Secretary, 730 Broadway, Redwood City, CA 94063, which must be received by us by
11:59 p.m. Eastern Time on July 21, 2024. |
If
you are a street name stockholder, your broker or nominee can provide you with instructions on how to change your vote.
What
is the effect of giving a proxy?
Proxies
are solicited by and on behalf of our Board. Our Board has designated Touraj Parang and Brian Read as proxy holders. When proxies are
properly dated, executed and returned, the shares represented by such proxies will be voted at the Annual Meeting in accordance with
the instructions of the stockholder. If no specific instructions are given, however, the shares will be voted in accordance with the
recommendations of our Board as described under “How does the Board recommend I vote on these proposals?” above.
If any matters not described in this Proxy Statement are properly presented at the Annual Meeting, the proxy holders will use their own
judgment to determine how to vote the shares. If the Annual Meeting is adjourned to a later date, the proxy holders can vote the shares
on the new Annual Meeting date as well, unless you have properly revoked your proxy instructions before the new date, as described above.
How
can I participate in the virtual Annual Meeting?
There
is no physical location for the Annual Meeting. Stockholders of record as of the close of business on the Record Date are entitled to
participate virtually in the Annual Meeting, including to vote your shares online during the Annual Meeting and to ask questions during
the Annual Meeting by visiting www.virtualshareholdermeeting.com/SERV2024. To participate and vote in the Annual Meeting, you will need
the control number included on your proxy card or voting instruction form.
We
are committed to ensuring, to the extent possible, that stockholders will be given the same participation rights that they would be given
if they attended an in-person meeting. We will endeavor to answer as many stockholder-submitted questions as time permits that comply
with the Annual Meeting rules of conduct. We reserve the right to edit profanity or other inappropriate language and to exclude questions
regarding topics that are not pertinent to meeting matters or Company business. If we receive substantially similar questions, we may
group such questions together and provide a single response to avoid repetition.
The
meeting webcast will begin promptly at 12:00 p.m. Pacific Time. Online check-in will begin at 11:45 a.m. Pacific Time, and we encourage
you to allow ample time for check-in procedures. If you experience technical difficulties during the check-in process or during the meeting,
please call the technical support number provided on the log-in page of the virtual meeting. Additional information regarding the rules
and procedures for participating in the Annual Meeting will be set forth in our meeting rules of conduct, which stockholders can view
during the meeting at the meeting website. Regardless of whether you plan to participate in the Annual Meeting, it is important that
your shares be represented and voted at the Annual Meeting. Accordingly, we encourage you to vote in advance of the Annual Meeting. Please
be aware that participating in the Annual Meeting will not, by itself, revoke a proxy. See, “Can I change my vote after submitting
my proxy?” above for more details.
How
do I submit questions during the meeting?
Stockholders
may submit questions during the Annual Meeting by visiting www.proxyvote.com and using their 16-digit control number to enter the meeting.
Questions may be submitted by typing them into the text box provided.
Why
did I receive a Notice of Internet Availability of Proxy Materials instead of a full set of proxy materials?
In
accordance with the rules of the Securities and Exchange Commission (the “SEC”), we have elected to furnish our proxy materials,
including this Proxy Statement and our annual report, primarily via the internet. The Notice containing instructions on how to access
our proxy materials is first being mailed on or about June 7, 2024 to all stockholders entitled to vote at the Annual Meeting. Stockholders
may request to receive all future proxy materials in printed form by mail or electronically by e-mail by following the instructions contained
in the Notice. We encourage stockholders to take advantage of the availability of our proxy materials on the internet to help reduce
the environmental impact of our Annual Meeting.
How
are proxies solicited for the Annual Meeting and who will bear the cost of this solicitation?
Our
Board is soliciting proxies for use at the Annual Meeting. All expenses associated with this solicitation will be borne by us. We will
reimburse brokers or other nominees for reasonable expenses that they incur in sending our proxy materials to you if a broker or other
nominee holds shares of our common stock on your behalf. In addition, our directors and employees may also solicit proxies by telephone
or by personal or other means of communication. Our directors and employees will not be paid any additional compensation for soliciting
proxies.
How
may my brokerage firm or other nominee vote my shares if I fail to provide timely directions?
Brokerage
firms and other nominees, for example banks or agents, holding shares of our common stock in street name for their customers are generally
required to vote such shares in the manner directed by their customers. In the absence of timely directions, your broker will have discretion
to vote your shares on Proposal No. 2, our sole “routine” matter, but brokers and nominees cannot use their discretion
to vote “uninstructed” shares with respect to matters that are considered “non-routine” under the rules of the
New York Stock Exchange (“NYSE”), even though we are a Nasdaq-listed company. “Non-routine” matters are matters
that may substantially affect the rights or privileges of stockholders, such as mergers, stockholder proposals, election of directors
(even if not contested), executive compensation (including any advisory stockholder vote on executive compensation) and certain corporate
governance proposals, even if these proposals are supported by management. Accordingly, your broker or nominee may not vote your shares
on Proposals No. 1 or No. 3 without your instructions but may vote your shares on Proposal No. 2.
Where
can I find the voting results of the Annual Meeting?
We
will announce preliminary voting results at the Annual Meeting. We will also disclose voting results on a Current Report on Form 8-K
(“Form 8-K”) that we will file with the SEC within four business days after the Annual Meeting. If final voting results
are not available to us in time to file a Form 8-K within four business days after the Annual Meeting, we will file a Form 8-K
to publish preliminary results and will provide the final results in an amendment to the Form 8-K as soon as they become available.
What
is the deadline for stockholders to propose actions for consideration at next year’s annual meeting of stockholders or to nominate
individuals to serve as directors?
Stockholder
Proposals
Stockholders
may present proper proposals for inclusion in our Proxy Statement and for consideration at the next annual meeting of stockholders by
submitting their proposals in writing in a timely manner. For a stockholder proposal to be considered for inclusion in our Proxy Statement
for our 2025 annual meeting of stockholders, we must receive the written proposal at our principal executive offices not later than February
7, 2025. In addition, stockholder proposals must comply with the requirements of Rule 14a-8 regarding the inclusion of stockholder
proposals in company-sponsored proxy materials. Stockholder proposals should be addressed to:
Serve
Robotics Inc.
Attention: Corporate Secretary
730 Broadway
Redwood City, CA 94063
Our
amended and restated bylaws also establish an advance notice procedure for stockholders who wish to present a proposal before an annual
meeting of stockholders but do not intend for the proposal to be included in our Proxy Statement. Our amended and restated bylaws provide
that the only business that may be conducted at an annual meeting of stockholders is business that is (i) specified in our proxy
materials with respect to such meeting; (ii) otherwise properly brought before such meeting by or at the direction of our Board;
or (iii) properly brought before such meeting by a stockholder of record entitled to vote at the annual meeting who has delivered
timely written notice, which notice must contain the information specified in our amended and restated bylaws. To be timely for our 2025
annual meeting of stockholders, we must receive the written notice at our principal executive offices:
| ● | not
earlier than March 24, 2025 and |
| ● | not
later than the close of business on April 23, 2025. |
In
the event that we hold our 2025 annual meeting of stockholders more than 30 days before or more than 60 days after the one-year
anniversary of the Annual Meeting, notice of a stockholder proposal that is not intended to be included in our Proxy Statement must be
received no earlier than the close of business on the 120th day before our 2025 annual meeting of stockholders and no later than
the close of business on the later of the following two dates:
| ● | the
90th day prior to our 2025 annual meeting of stockholders; or |
| ● | the
10th day following the day on which public announcement of the date of our 2025 annual
meeting of stockholders is first made. |
If
a stockholder who has notified us of his, her or its intention to present a proposal at an annual meeting does not appear to present
his, her or its proposal at such annual meeting, such nomination shall be disregarded and such proposed business shall not be transacted,
notwithstanding that proxies in respect of such vote may have been received by the Company.
Nomination
of Director Candidates
You
may propose director candidates for consideration by our nominating and governance committee. Any such recommendations should include
the nominee’s name and qualifications for membership on our Board and should be directed to the address set forth above. For additional
information regarding stockholder recommendations for director candidates, see “Board of Directors and Corporate Governance—Stockholder
Recommendations for Nominations to the Board of Directors.”
In
addition, our amended and restated bylaws permit stockholders to nominate directors for election at an annual meeting of stockholders.
To nominate a director, the stockholder must provide the information required by our amended and restated bylaws and send timely notice
in accordance with our amended and restated bylaws, which, in general, require that the notice be received by us within the time periods
described above under “—Stockholder Proposals” for stockholder proposals that are not intended to be included
in a Proxy Statement. In addition to satisfying the foregoing requirements under our amended and restated bylaws, to comply with the
universal proxy rules in connection with our 2025 annual meeting of stockholders, stockholders who intend to solicit proxies in support
of director nominees other than our nominees must provide notice to the Company that sets forth the information required by Rule 14a-19
under the Exchange Act no later than May 23, 2025.
Availability
of Bylaws
Our
amended and restated bylaws are part of our public filings on the SEC’s website at www.sec.gov. You may also contact our principal
executive offices for a copy of the relevant bylaw provisions regarding the requirements for making stockholder proposals and nominating
director candidates.
BOARD
OF DIRECTORS AND CORPORATE GOVERNANCE
Our
business affairs are managed under the direction of our Board, which is currently composed of six members. Four of our current directors
(Messrs. Jordan, Maredia, Pourdad and Vincent) are independent within the meaning of the listing standards of The Nasdaq Stock Market
(“Nasdaq”), and, if elected, Mr. Goldberg will be independent. Our Board is divided into three staggered classes of directors.
At each annual meeting of stockholders, a class of directors will be elected for a three-year term to succeed the same class whose term
is then expiring.
Board
Leadership Structure
We
believe that all members of our Board should have a voice in the affairs and the management of the Company. Our Board does not have a
formal policy regarding the separation of the roles of Chief Executive Officer and Chairperson of the Board, as our Board believes that
it is in the best interests of the Company to make that determination based on the direction of the Company and the current membership
of the Board. The Board believes that our stockholders are best served at this time by having a Chairperson who is an integral part of
our Board structure and a critical aspect of effective corporate governance.
Dr. Kashani
has served as Chairman of our Board since July 2023. Our Board determined that having the Chief Executive Officer serve as Chairman of
the Board is in the best interest of our stockholders at this time because of the efficiencies achieved in having the role of Chief Executive
Officer and Chairman of the Board combined, and because the detailed knowledge of our day-to-day operations and business that the Chief
Executive Officer possesses greatly enhances the decision-making processes of our Board as a whole. Dr. Kashani brings considerable
skills and experience, as described below, to the role. As the Chairman of our Board, Dr. Kashani has significant responsibilities,
which are set forth in our bylaws, and include, in part:
| ● | Establishing
the agenda for regular meetings of our Board; |
| ● | Coordinating
with the committee chairs regarding meeting agendas and information requirements and presiding
over meetings of our Board; and |
| ● | Coordinating
the activities of the other directors and performing such other duties as our Board may establish
or delegate from time to time. |
The
active involvement of our independent directors, combined with the qualifications and significant responsibilities of our Chairman and
other directors, provides balance on our Board and promotes strong, independent oversight of our management and affairs.
Role
of the Board of Directors in Risk Oversight
One
of the key functions of our Board is informed oversight of our risk management process. Our Board does not anticipate having a standing
risk management committee, but rather anticipates administering this oversight function directly through our Board as a whole, as well
as through various standing committees of our Board that address risks inherent in their respective areas of oversight. In particular,
our Board is responsible for monitoring and assessing strategic risk exposure, and our audit committee has the responsibility to consider
and discuss any major financial risk exposures and the steps our management will take to monitor and control such exposures, including
guidelines and policies to govern the process by which risk assessment and management is undertaken.
Our
audit committee is responsible for reviewing and discussing our major financial risk exposures and the steps our management has taken
to monitor and control these exposures, including guidelines and policies with respect to risk assessment and risk management. Our audit
committee monitors compliance with legal and regulatory requirements and is responsible for the oversight of cybersecurity risks. Our
compensation committee assesses and monitors whether our compensation plans, policies and programs comply with applicable legal and regulatory
requirements.
Family
Relationships
There
are no family relationships between our Board and any of our executive officers.
Director
Independence
Our
common stock is listed on Nasdaq. Under the listing standards of Nasdaq, independent directors must comprise a majority of a listed company’s
board of directors, as affirmatively determined by the Board. In addition, the Nasdaq listing standards require that, subject to specified
exceptions, each member of a listed company’s audit, compensation and nominating and governance committees be independent. Under
the Nasdaq listing standards, a director will only qualify as an “independent director” if, in the opinion of that listed
company’s board of directors, that director does not have a relationship that would interfere with the exercise of independent
judgment in carrying out the responsibilities of a director.
Audit
committee members must also satisfy the additional independence criteria set forth in Rule 10A-3 under the Exchange Act, and the
Nasdaq listing standards. Compensation committee members must also satisfy the additional independence criteria set forth in Rule 10C-1
under the Exchange Act and the Nasdaq listing standards.
Our
Board has undertaken a review of the independence of each of our directors and director nominees. Based on information provided by each
director concerning his or her background, employment and affiliations, our Board has determined that each member of our Board other
than Dr. Kashani and Mr. Parang qualifies as “independent” as defined under the applicable Nasdaq and SEC rules. Our Board
has nominated David Goldberg to serve as a Class I director to be elected at the Annual Meeting and has determined that Mr. Goldberg
is “independent” under applicable Nasdaq and SEC rules.
In
making these determinations, our Board considered the current and prior relationships that each non-employee director has with the Company
and all other facts and circumstances our Board deemed relevant in determining their independence, including the beneficial ownership
of our capital stock by each non-employee director. Dr. Kashani and Mr. Parang are not deemed independent due to their positions as our
Chief Executive Officer and Chief Operating Officer, respectively.
Board
Meetings and Committees
Following
the closing of the Merger, our Board held two meetings (including regularly scheduled and special meetings) in the fiscal year ended
December 31, 2023. The audit committee met once following the closing of the Merger in the fiscal year ended December 31, 2023.
The compensation committee did not meet following the closing of the Merger in the fiscal year ended December 31, 2023. The nominating
and governance committee did not meet following the closing of the Merger in the fiscal year ended December 31, 2023. Each incumbent
director attended at least 75% of the aggregate of (i) the total number of meetings of our Board held during the period for which
he has been a director and (ii) the total number of meetings held by all committees of our Board on which he served during the periods
that he served.
Pursuant
to our corporate governance guidelines, we encourage, but do not require, directors to attend our annual meeting of stockholders.
Committees
of the Board of Directors
Our
Board has established an audit committee, a compensation committee and a nominating and governance committee. The composition and responsibilities
of each of the committees of our Board are described below. Members serve on these committees until their resignation or until otherwise
determined by our Board. Our Board may establish other committees as it deems necessary or appropriate from time to time.
Audit
Committee
The
audit committee currently consists of Messrs. Jordan, Pourdad and Vincent, and, assuming Mr. Goldberg is elected, will consist of Messrs.
Goldberg, Jordan and Vincent after the Annual Meeting. Our Board has determined that each member of the audit committee satisfies the
independence requirements under Nasdaq listing standards and Rule 10A-3(b)(1) of the Exchange Act. The chair of the audit committee
is Mr. Pourdad, and, assuming Mr. Goldberg is elected at the Annual Meeting, will be Mr. Goldberg. Our Board has determined that
each of Messers. Pourdad and Goldberg is an “audit committee financial expert” within the meaning of SEC regulations.
Each member of the audit committee can read and understand fundamental financial statements in accordance with applicable requirements.
In arriving at these determinations, our Board has examined each audit committee member’s scope of experience and the nature of
their employment.
The
primary purpose of the audit committee is to discharge the responsibilities of our Board with respect to our corporate accounting and
financial reporting processes, systems of internal control and financial statement audits, and to oversee our independent registered
public accounting firm. Specific responsibilities of the audit committee include:
| ● | helping
our Board oversee our corporate accounting and financial reporting processes; |
| ● | managing
the selection, engagement, qualifications, independence, and performance of a qualified firm
to serve as the independent registered public accounting firm to audit our financial statements; |
| ● | reviewing
and discussing the scope and results of the audit with the independent registered public
accounting firm, and reviewing, with management and the independent accountants, our interim
and year-end operating results; |
| ● | obtaining
and reviewing a report by the independent registered public accounting firm at least annually
that describes our internal quality control procedures, any material issues with such procedures
and any steps taken to deal with such issues when required by applicable law; |
| ● | establishing
procedures for employees to submit concerns anonymously about questionable accounting or
audit matters; |
| ● | overseeing
our policies on risk assessment and risk management; |
| ● | overseeing
compliance with our Code of Business Conduct and Ethics; |
| ● | reviewing
related person transactions; and |
| ● | approving
or, as required, pre-approving audit and permissible non-audit services to be performed by
the independent registered public accounting firm. |
Our
audit committee operates under a written charter that satisfies the applicable rules and regulations of the SEC and the Nasdaq listing
standards. A copy of the charter of our audit committee is available on our website at www.serverobotics.com under “Investors —
Governance disclosures.”
Compensation
Committee
Our
compensation committee consists of Messrs. Jordan and Vincent. The chair of the compensation committee is Mr. Vincent. Our Board
has determined that each member of the compensation committee is independent under the Nasdaq listing standards and a “non-employee
director” as defined in Rule 16b-3 promulgated under the Exchange Act.
The
primary purpose of our compensation committee is to discharge the responsibilities of our Board in overseeing the compensation policies,
plans and programs and to review and determine the compensation to be paid to executive officers, directors and other senior management,
as appropriate. Specific responsibilities of the compensation committee will include:
| ● | reviewing,
approving and determining, or making recommendations to our Board regarding, the compensation
of our Chief Executive Officer, other executive officers and senior management; |
| ● | reviewing
and recommending to our Board the compensation paid to our non-employee directors; |
| ● | administering
our equity incentive plans and other benefit programs; |
| ● | reviewing,
adopting, amending and terminating incentive compensation and equity plans, severance agreements,
profit sharing plans, bonus plans, change-of-control protections and any other compensatory
arrangements for our executive officers and other senior management; and |
| ● | reviewing
and establishing general policies relating to compensation and benefits of our employees,
including our overall compensation philosophy. |
Our
compensation committee operates under a written charter that satisfies the applicable rules and regulations of the SEC and the Nasdaq
listing standards. A copy of the charter of our compensation committee is available on our website at www.serverobotics.com under “Investors
— Governance disclosures.”
Compensation
Committee Processes and Procedures
The
compensation committee meets from time to time in executive session, and, from time to time, various members of management and other
employees as well as outside advisors or consultants may be invited by the compensation committee to make presentations, to provide financial
or other background information or advice or to otherwise participate in compensation committee meetings. Our Chief Executive Officer
may not participate in, or be present during, any deliberations or determinations of the compensation committee regarding his compensation.
In addition, under the charter, our compensation committee has the authority to obtain advice, reports or opinions from internal or external
counsel and other expert advisors, at the Company’s expense, that the compensation committee considers necessary or appropriate
in the performance of its duties. Our compensation committee has direct responsibility for the oversight of the work of any consultants
or advisers engaged for the purpose of advising the compensation committee. In particular, our compensation committee has the sole authority
to retain and terminate, in its sole discretion, compensation consultants, legal counsels or other advisors to assist in its evaluation
of Chief Executive Officer or executive officer compensation. Under the charter, our compensation committee may select, or receive advice
from, a compensation consultant, legal counsel or other adviser to the compensation committee, other than in-house legal counsel and
certain other types of advisers, only after taking into consideration six factors, prescribed by the SEC and Nasdaq, that bear upon the
adviser’s independence; however, there is no requirement that any adviser be independent.
Nominating
and Governance Committee
Our
nominating and governance committee currently consists of Mr. Pourdad, who also serves as chair, and, assuming Mr. Goldberg is elected,
will consist of Mr. Goldberg. Assuming Mr. Goldberg is elected at the Annual Meeting, he will also serve as chair of the nominating and
governance committee thereafter. Our Board has determined that Messrs. Pourdad and Goldberg are independent under applicable Nasdaq
listing standards.
Specific
responsibilities of our nominating and governance committee include:
| ● | identifying
and evaluating candidates, including the nomination of incumbent directors for reelection
and nominees recommended by stockholders, to serve on our Board; |
| ● | considering
and making recommendations to our Board regarding the composition and chairmanship of the
committees of our Board; |
| ● | instituting
plans or programs for the continuing education of our Board and the orientation of new directors; |
| ● | developing
and making recommendations to our Board regarding corporate governance guidelines and matters; |
| ● | overseeing
our corporate governance practices; |
| ● | overseeing
periodic evaluations of our Board’ performance, including committees of our Board;
and |
| ● | contributing
to succession planning. |
Our
nominating and governance committee operates under a written charter that satisfies the applicable Nasdaq listing standards. A copy of
the charter of our nominating and governance committee is available on our website at www.serverobotics.com under “Investors —
Governance disclosures.”
Diversity
of the Board of Directors
We
believe our Board should consist of individuals reflecting the diversity represented by our employees, customers, and communities in
which we operate. The below Board Diversity Matrix provides the self-identified personal characteristics of our six board members and
nominees. Each of the categories listed in the matrix table has the meaning as it is used in Nasdaq Rule 5605(f).
Board Diversity Matrix (as of June 7, 2024) |
| Total Number of Directors | |
6 |
| | |
Female | |
Male | |
Non-Binary | |
Did Not Disclose Gender |
| Part I: Gender Identity |
| Directors | |
0 | |
6 | |
0 | |
0 |
| Part II: Demographic Background | |
| |
| |
| |
|
| African American or Black | |
- | |
- | |
- | |
- |
| Alaskan Native or Native American | |
- | |
- | |
- | |
- |
| Asian | |
- | |
1 | |
- | |
- |
| Hispanic or Latinx | |
- | |
- | |
- | |
- |
| Native Hawaiian or Pacific Islander | |
- | |
- | |
- | |
- |
| White | |
- | |
4 | |
- | |
- |
| Two or More Races or Ethnicities | |
- | |
- | |
- | |
- |
| LGBTQ+ | |
- |
| Did Not Disclose Demographic Background | |
1 |
Considerations
in Evaluating Director Nominees
Our
nominating and governance committee uses a variety of methods for identifying and evaluating director nominees. In its evaluation of
director candidates, our nominating and governance committee will consider the current size and composition of our Board, the needs of
our Board and the respective committees of our Board. Some of the qualifications that our nominating and governance committee considers
include, without limitation, issues of character, integrity, judgment, diversity, independence, area of expertise, corporate experience,
length of service, potential conflicts of interest and other commitments. Nominees must also have the ability to offer advice and guidance
to our Chief Executive Officer based on past experience in positions with a high degree of responsibility and be leaders in the companies
or institutions with which they are affiliated. Director candidates must have sufficient time available in the judgment of our nominating
and governance committee to perform all Board and committee responsibilities. Members of our Board are expected to prepare for, attend,
and participate in all Board and applicable committee meetings. Other than the foregoing, there are no stated minimum criteria for director
nominees, although our nominating and governance committee may also consider such other factors as it may deem, from time to time, are
in our and our stockholders’ best interests.
Our
Board believes that it should be a diverse body, and our nominating and governance committee considers a broad range of backgrounds and
experiences. In making determinations regarding nominations of directors, our nominating and governance committee may take into account
the benefits of diverse viewpoints. Our nominating and governance committee also considers these and other factors as it oversees the
annual Board and committee evaluations. After completing its review and evaluation of director candidates, our nominating and governance
committee recommends to our full Board the director nominees for selection.
Stockholder
Recommendations for Nominations to the Board of Directors
Our
nominating and governance committee will consider candidates for director recommended by stockholders, so long as such recommendations
comply with our amended and restated certificate of incorporation and amended and restated bylaws and applicable laws, rules and regulations,
including those promulgated by the SEC. Our nominating and governance committee will evaluate such recommendations in accordance with
its charter, our amended and restated bylaws and our policies and procedures for director candidates, as well as the regular director
nominee criteria described above.
This
process is designed to ensure that our Board includes members with diverse backgrounds, skills and experience, including appropriate
financial and other expertise relevant to our business. Eligible stockholders wishing to recommend a candidate for nomination should
contact us in writing. Such recommendations must include information about the candidate, a statement of support by the recommending
stockholder, evidence of the recommending stockholder’s ownership of our common stock and a signed letter from the candidate confirming
willingness to serve on our Board. Our nominating and governance committee has discretion to decide which individuals to recommend for
nomination as directors.
Any
nomination must comply with the requirements set forth in our amended and restated bylaws and should be sent in writing to Serve Robotics
Inc., Attention: Corporate Secretary, 730 Broadway, Redwood City, CA 94063. To be timely for our 2025 annual meeting of stockholders,
we must receive the nomination no earlier than March 24, 2025 and no later than April 23, 2025. In addition, stockholders who intend
to solicit proxies in support of director nominees other than our nominees must also comply with the additional requirements of Rule 14a-19(b).
Communications
with the Board of Directors
Interested
parties wishing to communicate with our Board or with individual members of our Board may do so by writing to our Board or to the particular
members of our Board and mailing the correspondence to us at Serve Robotics Inc., Attention: Corporate Secretary, 730 Broadway Redwood
City, CA 94063. We will review all incoming communications and, if appropriate, such communications will be forwarded to the appropriate
member or members of our Board, or if none is specified, to the Chairperson of our Board.
Corporate
Governance Guidelines and Code of Business Conduct and Ethics
Our
Board has adopted Corporate Governance Guidelines that address items such as the qualifications and responsibilities of our directors
and director candidates and corporate governance policies and standards applicable to us in general. In addition, our Board has adopted
a Code of Business Conduct and Ethics that applies to all of our employees, officers and directors, including our Chief Executive Officer,
Chief Financial Officer and other executive and senior financial officers. The full text of our Corporate Governance Guidelines and our
Code of Business Conduct and Ethics is posted on the Governance disclosures portion of our website at www.serverobotics.com under “Investors
— Governance disclosures.” We will post amendments to our Code of Business Conduct and Ethics or waivers of our Code of Business
Conduct and Ethics for directors and executive officers on the same website.
Insider
Trading Policy and Anti-Hedging
Our
Board has adopted an Insider Trading Policy (the “Insider Trading Policy”) which governs the purchase, sale and/or other
dispositions of the Company’s securities and applies to all directors, officers, employees or contractors of the Company or its
subsidiaries. The Insider Trading Policy prohibits members of our Board and all employees, including “officers” under Section
16 of the Exchange Act, from purchasing any financial instruments (such as prepaid variable forward contracts, equity swaps, collars
or exchange funds) or otherwise engaging in any transactions that hedge the risk of Company stock ownership.
Rule
10b5-1 Trading Plan Policy
We
have adopted a Rule 10b5-1 Trading Plan Policy, which permits our officers, directors, and certain other persons to enter into trading
plans complying with Rule 10b5-1 under the Exchange Act. Generally, under these trading plans, the individual relinquishes control over
the transactions once the trading plan is put into place and can only put such plans into place while the individual is not in possession
of material non-public information. Accordingly, sales under these plans may occur at any time, including possibly before, simultaneously
with, or immediately after significant events involving our company.
Compensation
Recovery Policy
In
accordance with the requirements of the SEC and Nasdaq listing rules, our Board adopted a Compensation Recovery Policy (the “Compensation
Recovery Policy”) on January 24, 2024. The Compensation Recovery Policy provides that, in the event we are required to prepare
a restatement of financial statements due to material noncompliance with any financial reporting requirement under securities laws, we
will seek to recover any incentive-based compensation that was based upon the attainment of a financial reporting measure and that was
received by any current or former executive officer during the three-year period preceding the date that the restatement was required
if such compensation exceeds the amount that the executive officers would have received based on the restated financial statements.
Compensation
Committee Interlocks and Insider Participation
None
of our directors who serve as a member of our compensation committee is, or has at any time during the past year been, one of our officers
or employees. None of our executive officers currently serve, or has served during the last completed fiscal year, on the compensation
committee or board of directors of any other entity that has one or more executive officers that serves as a member of our Board or compensation
committee.
PROPOSAL
NO. 1
ELECTION OF DIRECTORS
Our
Board is currently composed of six members. In accordance with our amended and restated certificate of incorporation, our Board is divided
into three staggered classes of directors. At the 2024 Annual Meeting, two Class I directors will be elected for a three-year term.
Each
director’s term continues until the election and qualification of his or her successor, or such director’s earlier death,
resignation or removal. Any increase or decrease in the number of directors will be distributed among the three classes so that, as nearly
as possible, each class will consist of one-third of our directors. This classification of our Board may have the effect of delaying
or preventing changes in control of our company.
If
you are a stockholder of record and you sign your proxy card or vote by telephone or over the Internet but do not give instructions with
respect to the voting of directors, your shares will be voted “FOR” the election of Messrs. Maredia and Goldberg. If any
nominee becomes unavailable for election as a result of an unexpected occurrence, our Board may designate a substitute nominee, in which
event the persons named in the enclosed proxy will vote for the election of such substitute nominee, unless our Board chooses to reduce
the number of directors serving on our Board. Each person nominated for election has consented to being named as a nominee in this Proxy
Statement and has agreed to serve if elected. We have no reason to believe that any nominee will be unable to serve.
Directors
Not Standing for Re-Election at the Annual Meeting
Ali
Pourdad will not stand for re-election and will be departing our Board following the completion of his term at the Annual Meeting. Mr.
Pourdad has been a valued member of the Board, and we sincerely thank him for his leadership, guidance and service to the Company.
Directors
With Terms Expiring at the Annual Meeting
Sarfraz
Maredia’s term as a Class I director expires at the Annual Meeting.
Nominees
Our
nominating and governance committee has recommended, and our Board has approved, Sarfraz Maredia as nominee for re-election as a Class
I director at the Annual Meeting. Mr. Maredia joined our Board in July 2023. If elected, Mr. Maredia will serve as a Class I director
until our 2027 annual meeting of stockholders. Mr. Maredia is currently a director of our Company.
In
addition, our nominating and governance committee has recommended, and our Board has approved, David Goldberg as nominee for election
as a Class I director at the Annual Meeting. If elected, Mr. Goldberg will serve as a Class I director until our 2027 annual meeting
of stockholders.
| Name |
|
Class |
|
Age |
|
|
Position |
|
Current
Term
Expires |
|
|
Expiration of Term
For Which
Nominated |
|
| Sarfraz Maredia |
|
I |
|
|
41 |
|
|
Director |
|
|
2024 |
|
|
|
2027 |
|
| David Goldberg(1)(2) |
|
I |
|
|
42 |
|
|
Director |
|
|
2024 |
|
|
|
2027 |
|
| (1) | Member
of the audit committee. |
| (2) | Member
of the nominating and governance committee. |
Sarfraz
Maredia has served as a member of our Board since July 2023. Since September 2014, Mr. Maredia has been employed at Uber, most
recently as Vice President for Delivery and Head of Americas, where he leads Uber Eats’ marketplace business across the United
States, Canada and Latin America as well as overseeing Postmates. Prior to his service at Uber, Mr. Maredia joined IQVIA (formerly IMS
Health), a global information and technology services company focused on healthcare, in September 2011, where he was promoted to and
served as Vice President of Corporate Development until September 2014. He previously advised technology clients as a management consultant
at Bain & Company and worked as a private equity and public markets investor at TPG and Dodge & Cox, respectively. Mr. Maredia
received his Bachelor’s Degree in Finance from the University of Texas at Austin. We believe that Mr. Maredia’s unique position
leading one of the world’s largest on-demand delivery platforms, and his experience in leadership, operations, finance and technology
qualify him to serve on our Board.
David
Goldberg most recently served as a consultant to our company from September 2023 to March of 2024. Prior to that, he was the
Chief Financial Officer of REE Automotive, Ltd. (Nasdaq: REE), an electric vehicle developer and manufacturer, from February 2022 to
March 2023. Before joining REE Automotive, Mr. Goldberg had various roles at Magna International, including SVP – Corporate Development
from January 2021 to January 2022 and VP – Finance and Corporate Development from May 2018 to December 2020. Mr. Goldberg has a
degree in Business Administration from the Ivey Business School at Western University. We believe that Mr. Goldberg is qualified to serve
on our board of directors due to his experience and expertise in the automotive and mobility industries.
Continuing
Directors
| Name |
|
Class |
|
Age |
|
Position |
|
Current
Term
Expires |
| James Buckly Jordan(1)(2) |
|
II |
|
44 |
|
Director |
|
2025 |
| Olivier Vincent(1)(2) |
|
II |
|
60 |
|
Director |
|
2025 |
| Ali Kashani |
|
III |
|
39 |
|
Chief Executive Officer and Chairman of the Board |
|
2026 |
| Touraj Parang |
|
III |
|
51 |
|
President, Chief Operating Officer and Director |
|
2026 |
(1) Member
of the audit committee
(2) Member
of the compensation committee
Ali
Kashani co-founded Serve in January 2021 and has served as our Chief Executive Officer and a member of our Board since the Merger
in July 2023. Prior to co-founding Serve, he served as Vice President of Postmates Inc., an on-demand food delivery platform, from July
2017 to January 2021. Prior to Postmates, Dr. Kashani was the co-founder and Chief Technology Officer at Neurio Technology, Inc., a smart
home technology company acquired by Generac Power Systems, Inc. (NYSE: GNRC) in 2019. Dr. Kashani is an inventor with 15 granted or pending
patents. Dr. Kashani received both his Bachelor of Science in Computer Engineering and his Doctorate in Robotics from the University
of British Columbia and was awarded Natural Sciences and Engineering Research Council of Canada’s Alexander Graham Bell Canada
Graduate Scholarship. Dr. Kashani has served on our Board since the Company’s formation, and we believe he is qualified to remain
on the Board due to the institutional knowledge he brings as Co-Founder and Chief Executive Officer of the Company and his business and
robotics experience.
Touraj
Parang has served as our Chief Operating Officer since the Merger in July 2023. Mr. Parang has also served as Serve’s Chief
Operating Officer and as a member of Serve’s board of directors since March 2021, and was appointed President of Serve in July
2022. Prior to joining Serve, Mr. Parang worked at GoDaddy Inc. (NYSE: GDDY) from May 2014 to March 2021, where he began as Senior Director
of Corporate Development and most recently served as Vice President of Corporate Development. Prior to that, Mr. Parang was the founding
Chief Operating Officer of UpCounsel Technologies, Inc. (acquired by Enduring Ventures, Inc. in 2020), Vice President of Strategy and
Corporate Development at Webs, Inc. (acquired by Vistaprint N.V. in 2011) and co-founder and Chief Operating Office of Jaxtr, Inc. (acquired
by Sabse Technologies Inc. in 2009). Mr. Parang received his Bachelor of Arts in Philosophy and Economics from Stanford University and
his Juris Doctorate from Yale Law School. We believe that Mr. Parang is qualified to serve on our Board due to his extensive experience
with early-stage startups and prior leadership role at a publicly traded company.
James
Buckly Jordan has served as a member of our Board since July 2023 and as a member of Serve’s board of directors since October
2021. Mr. Jordan founded Vebu Labs, a food robotics and automation solutions company, in October 2018 and has served as its Chief Executive
Officer since then. He is also the co-founder of Miso Robotics, a food robotics company, which he co-founded in 2016 and for which he
currently serves as the acting President and Chairman of the board of directors. Mr. Jordan also founded Canyon Creek Capital, a venture
capital fund, in July 2018 and has served as its Managing Partner since then. He received his Bachelor of Arts in Political Science from
Indiana University and his Master of Business Administration from the University of California, Los Angeles Anderson School of Management.
We believe Mr. Jordan is qualified to serve on our Board due to his early-stage investment experience in technology companies.
Olivier
Vincent has served as a member of our Board since July 2023. Mr. Vincent co-founded and has served as Chief Executive Officer
of Autozen Technology Ltd., a marketplace start-up in the automobile world since March 2020. Prior to joining Autozen, Mr. Vincent served
as Chief Executive Officer of Spliqs, an AI technology company from January 2019 until March 2020. From December 2016 until January 2019,
Mr. Vincent served as President of WeatherBug, a weather application. Mr. Vincent has served on the board of directors of Wishpond Technologies
Ltd., a Canadian public company traded on the TSX (OTCMKTS: WPNDF), since December 2020. Mr. Vincent holds a Masters of Engineering in
Computer Science from Ecole Nationale Superieure de Techniques Avancées (ENSTA) Paris and a Masters of Business, Entrepreneurship
from Hautes Etudes Commerciales (HEC) Paris. We believe that Mr. Vincent is qualified to serve on our Board due to his experience growing
and managing technology companies.
Director
Compensation
Since
our incorporation, no compensation has been earned or paid to Ian Jacobs or Mark Tompkins, who were our sole directors prior to the Merger.
Serve became our wholly-owned subsidiary upon the closing of the Merger on July 31, 2023. In connection with the closing of the
Merger, and effective July 31, 2023, Messrs. Jacobs and Tompkins resigned from our Board, and our current directors were appointed to
our Board. No compensation was paid to our non-employee directors for the fiscal year ended December 31, 2023.
Dr.
Kashani and Mr. Parang are employed as our Chief Executive Officer and President and Chief Operating Officer, respectively, and receive
no compensation for their service as directors. The compensation received by Dr. Kashani and Mr. Parang as employees is shown in “Executive
Compensation⸺Summary Compensation Table” below.
On
February 16, 2024, we adopted our Outside Director Compensation Policy (the “Director Compensation Policy”), effective
as of January 1, 2024, pursuant to which we pay each non-employee director annual cash retainers and equity awards, as further described
below.
Pursuant
to the Director Compensation Policy, each non-employee director is entitled to receive an annual cash retainer for service on our Board
and an additional annual cash retainer for service on each committee on which the non-employee director is a member. All annual cash
retainers are paid quarterly in arrears. In addition, James Buckly Jordan, Ali Pourdad and Olivier Vincent will each receive an initial
cash compensation payment in the amount of $11,250, payable on March 31, 2024. No compensation has previously been paid to our non-employee
directors.
The
fees paid to our non-employee directors for service on our Board and for service on each committee of our Board of which the non-employee
director is a member are as follows:
Annual
Board Member Service Retainer
All
non-employee directors: $20,000
Annual
Committee Member Service Retainer
Member
of the audit committee: $5,000
Member
of the compensation committee: $5,000
Member
of the nominating and governance Committee: $5,000
The
Director Compensation Policy provides that at each annual stockholder meeting following a non-employee director’s appointment to
our Board and subject to such non-employee director’s service on our Board since December 31st of the calendar year prior
to such annual meeting, each non-employee director will be granted an option to purchase 20,000 shares of our common stock under
the 2023 Plan, which will vest in full upon the earlier of the first anniversary of the date of grant or the next annual stockholder
meeting, prorated for partial quarters of service (including the initial quarter of service), subject to the applicable non-employee
director’s continuous service through the applicable vesting date; provided that if we do not have an effective Form S-8 registration
statement on file with the SEC with sufficient shares available to cover the applicable equity award as of the date such award is granted
(an “Effective S-8”), the grant of such equity award shall be delayed until such time there is an Effective S-8.
Notwithstanding
the foregoing, for each non-employee director who remains in continuous service as a member of our Board until immediately prior to the
consummation of a change in control, any unvested portion of an equity award granted in consideration of such non-employee director’s
service as a member of our Board will vest in full immediately prior to, and contingent upon, the consummation of a change in control.
The
Director Compensation Policy further provides that upon consummation of our initial public offering and listing of our common stock on
Nasdaq or the New York Stock Exchange, non-employee director, other than Mr. Maredia, was granted an option to purchase 20,000 shares
of common stock under the 2023 Plan (each, an “Initial Equity Grant”). Each Initial Grant shall vest in full on the one-year
anniversary of the date of grant, subject to the applicable the non-employee director’s continued service as a member of our Board
through such date; provided that if we do not have an Effective S-8, the grant of such equity award shall be delayed until such time
as there is an Effective S-8. Our Board will have discretion to grant additional equity awards to certain non-employee directors for
services that exceed the expectations for a non-employee director or for other circumstances determined to be appropriate by our Board.
We also reimburse our directors for their reasonable out-of-pocket expenses in connection with attending meetings of our Board and board
committees.
The
non-employee director compensation program is intended to provide a total compensation package that enables us to attract and retain
qualified and experienced individuals to serve as directors and to align our directors’ interests with those of our stockholders.
Required
Vote
For
the election of directors, the two nominees receiving the most “FOR” votes from the holders of shares present or represented
by proxy and entitled to vote on the election of directors will be elected. Only votes “FOR” will affect the outcome.
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR”
EACH OF THE NOMINEES NAMED ABOVE.
PROPOSAL
NO. 2
RATIFICATION OF APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Our
audit committee has appointed dbbmckennon, independent registered public accounting firm, to audit our consolidated financial statements
for our year ending December 31, 2024. During our year ended December 31, 2023, dbbmckennon served as our independent registered
public accounting firm.
At
the Annual Meeting, our stockholders are being asked to ratify the appointment of dbbmckennon as our independent registered public accounting
firm for our fiscal year ending December 31, 2024. Our audit committee is submitting the appointment of dbbmckennon to our stockholders
because we value our stockholders’ views on our independent registered public accounting firm and as a matter of good corporate
governance. If the stockholders do not ratify this appointment, the audit committee will reconsider whether to retain dbbmckennon. Notwithstanding
the appointment of dbbmckennon and even if our stockholders ratify the appointment, our audit committee, in its discretion, may appoint
another independent registered public accounting firm at any time during our fiscal year if our audit committee believes that such a
change would be in the best interests of the Company and our stockholders. Representatives of dbbmckennon are expected to be present
at the Annual Meeting, and they will have an opportunity to make a statement if they desire, but will not be available to respond to
appropriate questions from our stockholders.
If
our stockholders do not ratify the appointment of dbbmckennon, our Board may reconsider the appointment.
Change
in Independent Registered Public Accounting Firm
Dismissal
of Raich Ende Malter & Co and Grassi & Co and Engagement of dbbmckennon
Raich
Ende Malter & Co. LLP (“REM”) was the Company’s independent registered public accounting firm from November 2020
through June 2022. Effective July 2022, Grassi & Co., CPAs, P.C. (“Grassi”) was appointed as the Company’s independent
registered public accounting firm. Following the Merger, (i) Grassi was dismissed as the independent registered public accounting firm
of the Company, and (ii) our Board engaged dbbmckennon as the independent registered public accounting firm to audit the Company’s
financial statements for the fiscal years ending December 31, 2023 and 2022. Set below under “Principal Accounting Fees and Services”
are aggregate fees billed by dbbmckennon, Grassi and REM for professional services rendered for the years ended December 31, 2023 and
2022.
During
the fiscal years ended December 31, 2022 and 2021, and the subsequent interim period through the date of Grassi’s dismissal, there
were no disagreements with Grassi on any matter of accounting principles or practices, financial statement disclosure or auditing scope
or procedure, which disagreements, if not resolved to the satisfaction of Grassi, would have caused it to make reference to the subject
matter thereof in connection with its report, nor did its report contain an adverse opinion or a disclaimer of opinion, or was qualified
or modified as to uncertainty, audit scope, or accounting principle.
During
the fiscal years ended December 31, 2022 and 2021, and the subsequent interim period through the date of Grassi’s dismissal, neither
the Company nor anyone acting on its behalf consulted dbbmckennon regarding the application of accounting principles to a specified transaction,
either completed or proposed, or the type of audit opinion that might be rendered on the Company’s financial statements.
Principal
Accounting Fees and Services
The
following table sets forth aggregate fees billed by dbbmckennon, Grassi and REM for professional services rendered for the years ended
December 31, 2023 and 2022.
| | |
2023 | | |
2022 | |
| Audit fees (1) | |
$ | 144,507 | | |
$ | 135,667 | |
| Audit-related fees (2) | |
| - | | |
| - | |
| Tax fees (3) | |
| - | | |
$ | 1,750 | |
| All other fees (4) | |
| - | | |
| - | |
| Total Fees | |
$ | 144,507 | | |
$ | 137,417 | |
| (1) | Audit
fees consist of fees billed for professional services rendered by our independent registered public accounting firm for the audit of
our annual consolidated financial statements and review of our interim consolidated financial statements or services that are normally
provided by our independent registered public accounting firm in connection with statutory and regulatory filings or engagements. The
fees for the audit services billed and to be billed dbbmckennon for the years ended December 31, 2023 and December 31, 2022
amounted to $144,507 and $111,917, respectively. The fees for the audit services billed by Grassi and REM for the year ended December 31,
2022 amounted to $23,750. |
| (2) | Audit-related
fees consist of assurance and related services that are reasonably related to the performance of audits or reviews of our financial statements
and were not reported above under “Audit fees”. The fees for the audit-related services billed or to be billed by dbbmckennon
amounted to $0 for the year ended December 31, 2023. There were no audit-related fees billed by Grassi and REM for the year ended
December 31, 2022. |
| (3) | Tax
fees consist of fees billed for professional services rendered by our independent registered public accounting firm for tax compliance,
tax advice, and tax planning. The fees for the tax services billed and to be billed by dbbmckennon amounted to $0 for the year ended
December 31, 2023. The fees for the tax services billed and to be billed by Grassi and REM for professional services for tax compliance,
tax advice, and tax planning for the year ended December 31, 2022 amounted to $1,750. |
| (4) | All
other fees consist of fees billed for all other services. There were no fees billed by dbbmckennon, Grassi and REM for other products
and services for the years ended December 31, 2023 and 2022. |
Audit
Committee Policy on Pre-Approval of Audit and Permissible Non-Audit Services of Independent Registered Public Accounting Firm
The
audit committee charter requires our audit committee to pre-approve all audit and permissible non-audit services and related engagement
fees and terms for services provided to the Company by the independent auditors (or subsequently approving non-audit services in those
circumstances where a subsequent approval is necessary and permissible). We did not have an audit committee prior to the closing of the
Merger. Since the closing of the Merger, the audit committee pre-approved all of the audit and audit-related fees billed by dbbmckennon
in accordance with SEC requirements.
Required
Vote
The
ratification of the appointment of dbbmckennon as our independent registered public accounting firm requires the affirmative vote of
a majority of the shares of our common stock present or by proxy at the Annual Meeting and entitled to vote thereon. Abstentions will
have the effect of a vote AGAINST the proposal and broker non-votes will have no effect.
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR”
THE RATIFICATION OF THE APPOINTMENT OF dbbmckennon.
PROPOSAL
NO. 3
APPROVAL OF THE COMPANY’S AMENDMENT TO 2023 EQUITY INCENTIVE PLAN
We
are seeking approval of the amendment to the Company’s 2023 Plan (the “2023 Plan Amendment”) to increase the
shares issuable under the 2023 Plan by 3,703,549 shares at the Annual meeting. Stockholders are encouraged to read the actual text
of the 2023 Plan Amendment, which is appended to this Proxy Statement as filed with the SEC as Annex A and may be accessed
from the SEC’s website at www.sec.gov.
If
stockholders approve the 2023 Plan Amendment, the 2023 Plan Amendment will become effective upon the date of the Annual Meeting.
Summary
of Material Changes to the 2023 Plan
The
2023 Plan Amendment will increase the number of shares authorized for issuance under the 2023 Plan by 3,703,549 additional shares. No
other substantive changes have been made to the 2023 Plan.
Purpose
of Share Reserve Increase
A
total of 1,594,800 shares of our common stock were originally reserved for issuance under the 2023 Plan. As of May 28, 2024, a total
of 500,958 shares of our common stock remained available for future grants under the 2023 Plan. If stockholders approve the 2023
Plan Amendment, the total number of shares authorized for issuance under the 2023 Plan would be increased by 3,703,549 shares, and
as a result, 4,204,507 shares would be available under the 2023 Plan for future awards. This amount excludes any shares that would
become available again under the 2023 Plan in connection with expired, cancelled, terminated or forfeited awards. In addition,
approval of the 2023 Plan Amendment would permit us to recycle for future awards any shares used to pay an award’s exercise
price or withholding obligation.
We
believe that the current share reserve amount is insufficient to meet our future needs with respect to attracting, motivating and retaining
key executives and employees in a competitive market for talent. If our stockholders do not approve the proposed share increase contemplated
by the 2023 Plan Amendment, we believe we will not be able to continue to offer competitive equity packages to retain our current employees
and hire new employees, and that we may not be competitive with other companies that offer equity incentives. We consider the 2023 Plan
to be a vital element of our employee compensation program and believe that the continued ability to grant stock awards at competitive
levels is in the best interest of the Company and our stockholders.
Summary
of the 2023 Plan
A
summary of the material terms of the 2023 Plan is provided below and the complete text of the 2023 Plan is attached as Annex A to this
proxy statement. The following summary of the 2023 Plan does not purport to be complete and is qualified in its entirety by reference
to Annex A.
Types
of Stock Awards
The
2023 Plan permits the grant of incentive stock options, nonstatutory stock options, stock appreciation rights (“SARs”),
restricted stock, restricted stock units (“RSUs”) and stock bonus awards (all such types of awards, collectively, “stock
awards”).
Share
Reserve
Number
of Shares
Subject
to adjustments as set forth in the 2023 Plan, the maximum aggregate number of shares of common stock that may be issued under the
2023 Plan will not exceed 1,594,800 shares. The shares may be authorized, but unissued, or reacquired common stock. Furthermore,
subject to adjustments as set forth in the 2023 Plan, in no event shall the maximum aggregate number of shares that may be issued
under the 2023 Plan pursuant to Incentive Stock Options exceed the number set forth above plus, to the extent allowable under Section 422
of the Internal Revenue Code of 1986, as amended (the “Code”) and the regulations promulgated thereunder, any shares that
again become available for issuance pursuant to the 2023 Plan.
The
number of shares available for issuance under the 2023 Plan may, at the discretion of the Plan Administrator (as defined below),
be increased on October 1st of each fiscal year beginning with the 2023 fiscal year until the 2023 Plan terminates,
in each case, in an amount equal to the lesser of (i) at the discretion of our board of directors, 4% of the shares of common stock
issued and outstanding on the last day of the immediately preceding month on a fully-diluted and as-converted basis and (ii) such other
number of shares determined by our board of directors.
Lapsed
Awards
To
the extent, stock awards or awards or shares issued under the 2021 Plan that are assumed by the Company pursuant to the Merger Agreement
(“Existing Plan Awards”) expire or are forfeited or becomes unexercisable for any reason without having been exercised in
full, or are surrendered pursuant to an exchange program (as defined in the 2023 Plan), the unissued shares that were subject thereto
shall continue to be available under the 2023 Plan for issuance pursuant to future stock awards. In addition, any shares which are
retained by us upon exercise of a stock award or Existing Plan Award in order to satisfy the exercise or purchase price for such stock
award or Existing Plan Award or any withholding taxes due with respect to such stock award or Existing Plan Award shall be treated as
not issued and shall continue to be available under the 2023 Plan for issuance pursuant to future stock awards. Shares issued under
the 2023 Plan or an Existing Plan Award and later forfeited to us due to the failure to vest or repurchased by us at the original
purchase price paid to us for the shares (including without limitation upon forfeiture to or repurchase by us in connection with a participant
ceasing to be a service provider) shall again be available for future grant under the 2023 Plan. To the extent a stock award under
the 2023 Plan or Existing Plan Award is paid out in cash rather than shares, such cash payment will not result in reducing the number
of shares available for issuance under the 2023 Plan.
Assumption
or Substitution of Awards
The
Plan Administrator (as defined below), from time to time, may determine to substitute or assume outstanding awards granted by another
company, whether in connection with an acquisition of such other company or otherwise, by either: (a) assuming such award under the 2023
Plan or (b) granting a stock award under the 2023 Plan in substitution of such other company’s award. Such assumption or substitution
will be permissible if the holder of the substituted or assumed award would have been eligible to be granted a stock award under the
2023 Plan if the other company had applied the rules of the 2023 Plan to such grant. In the event the Plan Administrator elects to assume
an award granted by another company, subject to the requirements of Section 409A of the Code (“Section 409A”), the purchase
price or the exercise price, as the case may be, and the number and nature of shares issuable upon exercise or settlement of any such
stock award will be adjusted appropriately. In the event the Plan Administrator elects to grant a new option in substitution rather than
assuming an existing option, such new option may be granted with a similarly adjusted exercise price. Any awards that are assumed or
substituted under the 2023 Plan shall not reduce the number of shares authorized for grant under the 2023 Plan or authorized for grant
to a participant in any fiscal year.
Eligibility
Employees,
directors and independent contractors or our affiliates are all eligible to participate in the 2023 Plan. However, Incentive Stock Options
may only be granted to employees.
Administration
The
2023 Plan is administered by our board of directors or a committee thereof, which committee will be constituted to satisfy applicable
laws (the “Plan Administrator”). To the extent desirable to qualify transactions under the 2023 Plan as exempt under Rule
16b-3 of the Exchange Act, the transactions contemplated un the 2023 Plan will be structured to satisfy the requirements for exemption
under Rule 16b-3.
Stock
awards granted to participants who are insiders subject to Section 16 of the Exchange Act must be approved by two or more “non-employee
directors” of our board of directors (as defined in the regulations promulgated under Section 16 of the Exchange Act).
Stock Options
Each stock option will be
designated in the stock award agreement as either an incentive stock option (which is entitled to potentially favorable tax treatment)
or a nonstatutory stock option. However, notwithstanding such designation, to the extent that the aggregate fair market value of the shares
with respect to which incentive stock options are exercisable for the first time by the participant during any calendar year exceeds $0.10
million, such stock options will be treated as nonstatutory stock options. Incentive stock options may only be granted to employees.
The term of each stock option
will be stated in the stock award agreement. In the case of an incentive stock option, the term will be ten years from the date of grant
or such shorter term as may be provided in the stock award agreement. Moreover, in the case of an incentive stock option granted to a
participant who owns stock representing more than 10% of the total combined voting power of all classes of our stock or the stock of any
subsidiary, the term of the incentive stock option will be five years from the date of grant or such shorter term as may be provided in
the stock award agreement.
The per share exercise price
for the shares to be issued pursuant to exercise of a stock option will be determined by the Plan Administrator, subject to the following:
in the case of an incentive stock option (i) granted to an employee who, at the time the incentive stock option is granted, owns stock
representing more than 10% of the voting power of all classes of our stock or the stock of any subsidiary, the per share exercise price
will be no less than 110% of the fair market value per share on the date of grant and (ii) granted to any other employee, the per share
exercise price will be no less than 100% of the fair market value per share on the date of grant. In the case of a nonstatutory stock
option, the per share exercise price will be no less than 100% of the fair market value per share on the date of grant. Notwithstanding
the foregoing, stock options may be granted with a per share exercise price of less than 100% of the fair market value per share on the
date of grant pursuant to a corporate reorganization, liquidation, etc., described in Section 424(a) of the Code.
At the time a stock option
is granted, the Plan Administrator will fix the period within which the stock option may be exercised and will determine any conditions
that must be satisfied before the stock option may be exercised. A stock option may become exercisable upon completion of a specified
period of service with us or one of our affiliates and/or based on the achievement of performance goals during a performance period as
set out in advance in the participant’s award agreement. If a stock option is exercisable based on the satisfaction of performance
goals, then the Plan Administrator will: (x) determine the nature, length and starting date of any performance period for such stock option;
(y) select the performance goals to be used to measure the performance and (z) determine what additional vesting conditions, if any, should
apply. Please refer to the discussion below under “—Performance Goals” for more information. The Plan Administrator
will also determine the acceptable form of consideration for exercising a stock option, including the method of payment.
If a participant ceases to
be a service provider other than for “Cause” (as defined in the 2023 Plan), the participant may exercise his or her stock
option within such period of time as is specified in the stock award agreement to the extent that the stock option is vested on the date
of termination (but in no event later than the expiration of the term of such stock option). In the absence of a specified time in the
stock award agreement, to the extent vested as of a participant’s termination, the stock option will remain exercisable for 12 months
following a termination for death or disability, and three months following a termination for any other reason. Any outstanding stock
option (including any vested portion thereof) held by a participant shall immediately terminate in its entirety upon the participant being
first notified of his or her termination for Cause.
Stock Appreciation Rights
(SARs)
The Plan Administrator will
determine the terms and conditions of each SAR, provided that the exercise price for each SAR will be no less than 100% of the fair market
value of the underlying shares of common stock on the date of grant. An SAR may become exercisable upon completion of a specified period
of service with us or one of our affiliates and/or based on the achievement of performance goals during a performance period as set out
in advance in the participant’s award agreement. If an SAR is exercisable based on the satisfaction of performance goals, then the
Plan Administrator will: (x) determine the nature, length and starting date of any performance period for such SAR; (y) select the performance
goals to be used to measure the performance and (z) determine what additional vesting conditions, if any, should apply. Please refer to
the discussion below under “—Performance Goals” for more information. Upon exercise of an SAR, a participant will receive
payment from us in an amount determined by multiplying the difference between the fair market value of a share on the date of exercise
over the exercise price by the number of shares with respect to which the SAR is exercised. SARs may be paid in cash or shares of common
stock, as determined by the Plan Administrator. SARs are exercisable at the times and on the terms established by the Plan Administrator.
Restricted Stock and RSUs
Restricted stock awards are
grants of shares of common stock that are subject to various restrictions, including restrictions on transferability and forfeiture provisions.
Shares of restricted stock will vest and the restrictions on such shares will lapse in accordance with terms and conditions established
by the Plan Administrator. Each RSU is a bookkeeping entry representing an amount equal to the fair market value of one share of common
stock. Restrictions may lapse upon the completion of a specified period of service with us or one of our affiliates and/or based on the
achievement of performance goals during a performance period as set out in advance in the participant’s award agreement. If the
unvested shares of restricted stock or RSUs are being earned upon the satisfaction of performance goals, then the Plan Administrator will:
(x) determine the nature, length and starting date of any performance period for each unvested share or RSU; (y) select the performance
goals to be used to measure the performance and (z) determine what additional vesting conditions, if any, should apply.
In determining whether restricted
stock or RSUs should be granted, and/or the vesting schedule for such a stock award, the Plan Administrator may impose whatever conditions
on vesting as it determines to be appropriate. For example, the Plan Administrator may determine to grant restricted stock or RSUs only
if performance goals established by the Plan Administrator are satisfied. Any performance goals may be applied on a Company-wide or an
individual business unit basis, as determined by the Plan Administrator. Please refer to the discussion below under “—Performance
Goals” for more information.
During the period of restriction,
participants holding restricted stock may exercise full voting rights and will be entitled to receive all dividends and other distributions
paid, in each case with respect to such shares unless the Plan Administrator determines otherwise. If any such dividends or distributions
are paid in shares, the shares will be subject to the same restrictions, including without limitation restrictions on transferability
and forfeitability, as the restricted stock with respect to which they were paid. During the period of restriction, such dividends or
other distributions shall be subject to the same restrictions and risk of forfeiture as the shares of restricted stock with respect to
which the dividends accrue and shall not be paid or distributed unless and until such related shares have vested and been earned.
During the vesting period,
participants holding RSUs will hold no voting rights by virtue of such RSUs. The Plan Administrator may, in its sole discretion, award
dividend equivalents in connection with the grant of RSUs that may be settled in cash, in shares of equivalent value, or in some combination
thereof.
Stock Bonus Awards
A stock bonus award is an
award of shares to an eligible person without a purchase price that is not subject to any restrictions. All stock bonus awards may but
are not required to be made pursuant to an award agreement. The Plan Administrator will determine the number of shares to be awarded to
the participant under a stock bonus award. Payment may be made in the form of cash, whole shares or a combination thereof, based on the
fair market value of the shares subject to the stock bonus award on the date of payment, as determined in the sole discretion of the Administrator.
Performance Goals
The Plan Administrator in
its discretion may make performance goals applicable to a participant with respect to a stock award. In the Plan Administrator’s
discretion, one or more of the following performance goals may apply: (1) sales or non-sales revenue; (2) return on revenues; (3) operating
income; (4) income or earnings including operating income; (5) income or earnings before or after taxes, interest, depreciation and/or
amortization; (6) income or earnings from continuing operations; (7) net income; (8) pre-tax income or after-tax income; (9) net income
excluding amortization of intangible assets, depreciation and impairment of goodwill and intangible assets and/or excluding charges attributable
to the adoption of new accounting pronouncements; (10) raising of financing or fundraising; (11) project financing; (12) revenue backlog;
(13) gross margin; (14) operating margin or profit margin; (15) capital expenditures, cost targets, reductions and savings and expense
management; (16) return on assets, return on investment, return on capital, or return on stockholder equity; (17) cash flow, free cash
flow, cash flow return on investment, net cash provided by operations, or cash flow in excess of cost of capital; (18) performance warranty
and/or guarantee claims; (19) stock price or total stockholder return; (20) earnings or book value per share; (21) economic value created;
(22) pre-tax profit or after-tax profit; (23) strategic business criteria; (24) objective goals relating to divestitures, joint ventures,
mergers, acquisitions and similar transactions; (25) objective goals relating to staff management, results from staff attitude and/or
opinion surveys, staff satisfaction scores, staff safety, staff accident and/or injury rates, compliance, headcount, performance management
and/or completion of critical staff training initiatives; (26) objective goals relating to projects and (27) enterprise resource planning.
Stock awards issued to participants may take into account other criteria (including subjective criteria).
Corporate Transaction
In the event of (i) a transfer
of all or substantially all of our assets, (ii) a merger, consolidation or other capital reorganization or business combination transaction
of us with or into another corporation, entity or person, (iii) the consummation of a transaction, or series of related transactions,
in which any person becomes the beneficial owner directly or indirectly, of more than 50% of our then outstanding capital stock or (iv)
a Change in Control (as defined in 2023 Plan), each outstanding stock award (vested or unvested) will be treated as the Plan Administrator
determines, which determination may provide for one or more of the following: (a) the continuation of such outstanding stock awards (if
we are the surviving corporation); (b) the assumption of such outstanding stock awards by the surviving corporation or its parent; (c)
the substitution by the surviving corporation or its parent of new stock options or other equity awards for such stock awards; (d) the
cancellation of such stock awards in exchange for a payment to the participants equal to the excess of (1) the fair market value of the
shares subject to such stock awards as of the closing date of such corporate transaction over (2) the exercise price or purchase price
paid or to be paid (if any) for the shares subject to the stock awards (which payment may be subject to the same conditions that apply
to the consideration that will be paid to holders of shares in connection with the transaction, subject to applicable law); (d) the full
or partial acceleration of exercisability or vesting and accelerated expiration of an outstanding stock award and lapse of our right to
repurchase or re-acquire shares acquired under a stock award or lapse of forfeiture rights with respect to shares acquired under a stock
award; (e) the opportunity for participants to exercise the stock options prior to the occurrence of the corporate transaction and the
termination (for no consideration) upon the consummation of such corporate transaction of any stock options not exercised prior thereto
or (f) the cancellation of outstanding stock awards in exchange for no consideration.
Change in Control
A stock award may be subject
to additional acceleration of vesting and exercisability upon or after a “Change in Control” (as defined in the 2023 Plan)
as may be provided in the award agreement for such stock award or as may be provided in any other written agreement between us or any
affiliate and the participant, but in the absence of such provision, no such acceleration will occur.
Amendment, Termination
and Duration of the 2023 Plan
The 2023 Plan will continue
in effect for a term of 10 years measured from the date the 2023 Plan was approved by the Board, unless terminated earlier under
the terms of the 2023 Plan. The Plan Administrator may at any time amend, alter, suspend or terminate the 2023 Plan.
U.S. Federal Tax Aspects
A participant who receives
a stock option or SAR will not have taxable income upon the grant of the stock option or SAR. For nonstatutory stock options and SARs,
the participant will recognize ordinary income upon exercise in an amount equal to the excess of the fair market value of the shares over
the exercise price—the appreciation value—on the date of exercise. Any additional gain or loss recognized upon any later disposition
of the shares generally will be long-term or short-term capital gain or loss, depending on whether the shares are held for more than one
year.
The purchase of shares upon
exercise of an incentive stock option will not result in any taxable income to the participant, except for purposes of the alternative
minimum tax. Gain or loss recognized by the participant on a later sale or other disposition of the shares will be capital gain or loss
and/or ordinary income depending upon whether the participant holds the shares transferred upon exercise for a specified period. If the
shares are held for the specified period, any gain generally will be taxed at long-term capital-gain rates. If the shares are not held
for the specified period, generally any gain up to the excess of the fair market value of the shares on the date of exercise over the
exercise price will be treated as ordinary income. Any additional gain generally will be taxable at long-term or short-term capital-gain
rates, depending on whether the participant held the shares for more than one year after the exercise date.
A participant who receives
restricted stock will not have taxable income until vesting unless the participant timely files an election under Section 83(b) of
the Code to be taxed at the time of grant (“Section 83(b) election”). The participant will recognize ordinary income
equal to the fair market value of the shares at the time of vesting less the amount paid for such shares (if any) if no such election
is made. Any additional gain or loss recognized upon any later disposition of the shares generally will be long-term or short-term capital
gain or loss, depending on whether the shares are held for more than one year. If a participant timely files a Section 83(b) election,
the participant will recognize ordinary income equal to the fair market value of the shares at the time of purchase or grant less the
amount paid for such shares (if any).
A participant who receives
RSUs, performance units or performance shares will not have taxable income upon grant of the stock award; instead the participant will
be taxed upon settlement of the stock award. The participant will recognize ordinary income equal to the fair market value of the shares
or the amount of cash received by the participant. In addition, Section 409A imposes certain restrictions on deferred compensation
arrangements. Stock awards that are treated as deferred compensation under Section 409A are intended to meet the requirements of
this section of the Code.
The Plan Administrator may,
at its discretion and pursuant to such procedures as it may specify from time to time, permit a participant to satisfy such withholding
or deduction obligations or any other tax-related items, in whole or in part by (without limitation) paying cash, electing to have us
withhold otherwise deliverable cash or shares, or delivering to us already-owned shares; provided that, unless the Plan Administrator
permits otherwise, any proceeds derived from a cashless exercise must be an approved broker-assisted cashless exercise or the cash or
shares withheld or delivered must be limited to avoid financial accounting charges under applicable accounting guidance or shares must
have been previously held for the minimum duration required to avoid financial accounting charges under applicable accounting guidance.
The fair market value of the shares to be withheld or delivered will be determined based on such methodology that we deem to be reasonable
and in accordance with applicable laws.
We will be entitled to a tax
deduction in connection with a stock award under the 2023 Plan only in an amount equal to the ordinary income realized by the participant
and at the time the participant recognizes the income. Section 162(m) of the Code places a limit of $1 million on the amount
of compensation that we may deduct as a business expense in any year with respect to certain of our most highly paid executive officers.
While the Plan Administrator considers the deductibility of compensation as one factor in determining executive compensation, the Plan
Administrator retains the discretion to award and pay compensation that is not deductible as it believes that it is in the best interests
of our stockholders to maintain flexibility in our approach to executive compensation and to structure a program that we consider to be
the most effective in attracting, motivating and retaining key employees.
THE BOARD OF DIRECTORS
RECOMMENDS A VOTE “FOR”
THE APPROVAL OF THE 2023 PLAN AMENDMENT.
REPORT OF THE AUDIT COMMITTEE
Our audit committee currently
consists of Messrs. Jordan, Pourdad and Vincent, all of whom are non-management directors. Mr. Pourdad is the chair of our audit
committee.
Our audit committee is a
committee of our Board comprised solely of independent directors as required by the Nasdaq listing standards and rules and regulations
of the SEC. Our audit committee operates under a written charter approved by the Board, which is available on the Company’s website
at www.serverobotics.com under “Investors — Governance disclosures.” The composition of our audit committee, the attributes
of its members and the responsibilities of our audit committee, as reflected in its charter, are intended to be in accordance with applicable
requirements for corporate audit committees. Our audit committee reviews and assesses the adequacy of its charter and our audit committee’s
performance on an annual basis.
Our audit committee has reviewed
and discussed the audited financial statements for the year ended December 31, 2023 with management. Our audit committee has discussed
with the independent registered public accounting firm the matters required to be discussed by the applicable requirements of the Public
Company Accounting Oversight Board (“PCAOB”) and SEC. Our audit committee has received the written disclosures and the letter
from the independent registered public accounting firm required by applicable requirements of the PCAOB regarding the independent accountants’
communications with the audit committee concerning independence and has discussed with the independent registered public accounting firm
the accounting firm’s independence.
Based on the foregoing, our
audit committee recommended to our Board that the audited financial statements be included in the Company’s Annual Report on Form 10-K
for the year ended December 31, 2023 for filing with the SEC.
Respectfully submitted by the
members of the audit committee of our Board:
Ali Pourdad (Chair)
James Buckly Jordan
Olivier Vincent
This
report of our audit committee is not “soliciting material,” is not deemed “filed” with the SEC and is not to be
incorporated by reference in any of our filings under the Securities Act of 1933, as amended, or the Exchange Act, whether made before
or after the date hereof and irrespective of any general incorporation language in any such filing, except to the extent specifically
incorporated by reference herein.
EXECUTIVE OFFICERS
Our executive officers and
their ages as of May 28, 2024 and positions with the Company are provided in the table below and in the additional biographical descriptions
set forth in the text below the table.
Executive Officers
| Name |
|
Age |
|
Position |
| Ali Kashani |
|
39 |
|
Chief Executive Officer and Chairman of the Board |
| Touraj Parang |
|
51 |
|
President, Chief Operating Officer and Director |
| Brian Read |
|
34 |
|
Chief Financial Officer |
| Euan Abraham |
|
47 |
|
Senior Vice President of Hardware Engineering |
Ali Kashani.
For a brief biography of Dr. Kashani, please see “Proposal No. 1. Election of Directors—Continuing Directors.”
Touraj Parang.
For a brief biography of Mr. Parang, please see “Proposal No. 1. Election of Directors—Continuing Directors.”
Brian
Read has served as our Chief Financial Officer since April 2024. Prior to Serve, Mr. Read served as a Controller for Apptronik
Inc. from April 2023 to April 2024, as a Global Controller at REE Automotive Ltd. (Nasdaq: REE) from February 2021 to March 2023 and as
an Assistant Global Controller at Coherent Corp. (NYSE: COHR) from January 2019 to January 2021. Mr. Read was also an associate and senior
associate at PricewaterhouseCoopers LLP from July 2011 to January 2017. Mr. Read holds a Bachelor of Science in Business Administration
(Accounting) from Duquesne University and is a Certified Public Accountant (Pennsylvania).
Euan Abraham has served as our Senior
Vice President of Hardware Engineering since January 2022. Prior to joining Serve, Mr. Abraham served as Senior Vice President, Hardware
Engineering at Latch, Inc. (Nasdaq: LTCH) from October 2018 to September 2021. Prior to that, he served as Vice President, Hardware Engineering
at GoPro, Inc. (Nasdaq: GPRO) from October 2015 to October 2018. Mr. Abraham received his Bachelor of Engineering at the University of
Sheffield.
EXECUTIVE COMPENSATION
As an “emerging growth
company,” we have opted to comply with the executive compensation disclosure rules applicable to “smaller reporting companies,”
as such term is defined in the rules promulgated under the Securities Act. This section discusses the material components of the executive
compensation program for the Company’s named executive officers who appear in the “—2023 Summary Compensation Table”
below. In 2023, the “named executive officers” and their positions with the Company were as follows:
| ● | Ali Kashani: Chief Executive Officer |
| ● | Touraj Parang: President & Chief Operating Officer |
| ● | Euan Abraham: Senior Vice President of Hardware Engineering |
This discussion may contain
forward-looking statements that are based on our current plans, considerations, expectations and determinations regarding future compensation
programs. Actual compensation programs that we adopt may differ materially from the currently planned programs summarized in this discussion.
2023 Summary Compensation Table
The following table sets forth
information concerning the compensation of the named executive officers for the Company’s most recent fiscal year.
Name and Principal
Position | |
Year | | |
Salary
($) | | |
Bonus
($) | | |
Stock
Awards
($)(1) | | |
Option
Awards
($)(1) | | |
Non-Equity
Incentive Plan
Compensation
($) | | |
All Other
Compensation
($) | | |
Total
($) | |
| Ali Kashani | |
| 2023 | | |
| 105,738 | | |
| — | | |
| — | | |
| 36,984 | | |
| — | | |
| — | | |
| 142,722 | |
| Chief Executive Officer | |
| 2022 | | |
| 192,992 | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 192,992 | |
| Touraj Parang | |
| 2023 | | |
| 238,500 | | |
| — | | |
| — | | |
| 11,655 | | |
| — | | |
| — | | |
| 250,155 | |
| President & Chief Operating Officer | |
| 2022 | | |
| 260,583 | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 260,583 | |
| Euan Abraham | |
| 2023 | | |
| 270,000 | | |
| — | | |
| — | | |
| 10,393 | | |
| — | | |
| — | | |
| 279,890 | |
| Senior Vice President of Hardware Engineering | |
| 2022 | | |
| 295,000 | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 295,000 | |
| (1) | Stock awards and option awards are reported at aggregate grant date fair value in the year granted, as
determined in accordance with the provisions of FASB ASC Topic 718. For the assumptions used in valuing these awards for purposes
of computing this expense, please see Note 10 of the Company’s financial statements for the year ended December 31, 2023. |
Salaries
In fiscal year 2023, Dr. Kashani
and Messrs. Parang and Abraham received an annual base salary of $105,738, $238,500 and $270,000, respectively, to compensate
them for services rendered to Serve. In fiscal year 2022, Dr. Kashani and Messrs. Parang and Abraham received an annual
base salary of $192,991, $260,583 and $295,000, respectively, to compensate them for services rendered to Serve. The base salary payable
to each of Dr. Kashani and Messrs. Parang and Abraham was intended to provide a fixed component of compensation reflecting
the executive’s skill set, experience, role and responsibilities.
Equity Awards
On April 27, 2021, Dr. Kashani
purchased 1,499,866 shares of Serve common stock for an aggregate purchase price of $1,866.67 (the “Kashani Time-Based Award”).
On May 6, 2021, Mr. Parang purchased 535,163 shares of Serve common stock for an aggregate purchase price of $828.92 (the
“Parang Time-Based Award”). On December 23, 2021, Mr. Abraham was granted an option to purchase 200,875 shares
of Serve common stock (the “Abraham Time-Based Award” and together with the Kashani Time-Based Award and the Parang Time-Based
Award, the “Time-Based Awards”). The Kashani Time-Based Award, the Parang Time-Based Award, and the Abraham Time-Based Award
are each scheduled to vest as to 25% of the shares on February 18, 2022, March 22, 2022, and November 1, 2022, respectively,
and as to 1/48th of the shares monthly over the 36 month-period thereafter, subject to the executive’s continued
employment through each vesting date.
On April 27, 2021, Dr. Kashani
purchased 749,933 shares of Serve common stock for an aggregate purchase price of $933.34 (the “Kashani Milestone-Based Award”).
On May 6, 2021, Mr. Parang purchased 267,581 shares of Serve common stock for an aggregate purchase price of $414.46 (the
“Parang Milestone-Based Award”). On December 23, 2021, Mr. Abraham was granted an option to purchase 100,437 shares
of Serve common stock (the “Abraham Milestone-Based Award” and together with the Kashani Milestone-Based Award and the Parang
Milestone-Based Award, the “Milestone-Based Awards”).
The Milestone-Based Awards
are each scheduled to vest as to 1/48th of the shares monthly over the 48 month-period following the achievement of a milestone
prior to September 30, 2022. Between October and November 2022, the Board retroactively amended the vesting schedule to permit
the 48-month vesting period to run from June 15, 2022, regardless of milestone achievement.
On June 6, 2023, Dr. Kashani
and Messrs. Parang and Abraham were each granted an option to purchase 45,182, 11,403, and 12,909 shares of Serve common stock, which
fully vested on the one-month anniversary of the closing of the Merger, subject to the executive’s continued employment through
the vesting date. In addition, on June 6, 2023, Dr. Kashani and Messrs. Parang and Abraham were each granted an option
to purchase 19,373, 8,451, and 4,795 shares of Serve common stock, which are scheduled to vest as to 1/48th of the option
shares on July 1, 2023 and monthly thereafter, subject to the executive’s continued employment through each vesting date.
Benefits
In 2023, the Company provided
benefits to its named executive officers on the same basis as provided to all of its employees, including medical, dental, vision, life
and AD&D, and short- and long-term disability insurance, flexible spending accounts, vacation and paid holidays. The named executive
officers are also eligible to participate in the Company’s 401(k) plan.
Outstanding Equity Awards at Fiscal Year-End
The following table sets forth
information regarding each unexercised stock option or unvested stock award held by each named executive officer as of December 31,
2023.
| | |
Option Awards(1) | | |
Stock Awards(2) | |
| Name | |
Grant Date | |
Number of
securities
underlying
unexercised
options
exercisable
(#) | | |
Number of
securities
underlying
unexercised
options
unexercisable
(#) | | |
Option
exercise
price
($)(3) | | |
Option
expiration
date
($) | | |
Number
of shares
that have
not
vested
(#) | | |
Market
value of
shares that
have not
vested
($)(4) | |
| Ali Kashani | |
4/27/2021 | |
| — | | |
| — | | |
| — | | |
| — | | |
| 437,461 | (5) | |
$ | 1,749,844 | |
| | |
4/27/2021 | |
| — | | |
| — | | |
| — | | |
| — | | |
| 468,708 | (6) | |
$ | 1,874,832 | |
| | |
6/7/2023(8) | |
| 45,182 | | |
| — | | |
$ | 0.95 | | |
| 6/6/2028 | | |
| — | | |
| — | |
| | |
6/7/2023(9) | |
| 2,421 | | |
| 16,952 | | |
$ | 0.95 | | |
| 6/6/2028 | | |
| — | | |
| — | |
| Touraj Parang | |
5/6/2021 | |
| — | | |
| — | | |
| — | | |
| — | | |
| 167,238 | (7) | |
$ | 668,952 | |
| | |
5/6/2021 | |
| — | | |
| — | | |
| — | | |
| — | | |
| 167,238 | (6) | |
$ | 668,952 | |
| | |
6/7/2023(8) | |
| 11,403 | | |
| — | | |
$ | 0.86 | | |
| 6/6/2033 | | |
| — | | |
| | |
| | |
6/7/2023(9) | |
| 1,055 | | |
| 7,396 | | |
$ | 0.86 | | |
| 6/6/2033 | | |
| — | | |
| | |
| Euan Abraham | |
12 /23/2021(10) | |
| 104,622 | | |
| 96,253 | | |
$ | 0.49 | | |
| 12/22/2031 | | |
| — | | |
| — | |
| | |
12/23/2021(11) | |
| 37,664 | | |
| 62,773 | | |
$ | 0.49 | | |
| 12/22/2031 | | |
| — | | |
| — | |
| | |
6/7/2023(8) | |
| 12,909 | | |
| — | | |
$ | 0.86 | | |
| 6/6/2033 | | |
| — | | |
| — | |
| | |
6/7/2023(9) | |
| 599 | | |
| 4,196 | | |
$ | 0.86 | | |
| 6/6/2033 | | |
| — | | |
| — | |
| (1) | All stock options listed above cover shares of our common stock following the closing of the Merger and
were granted under the 2021 Stock Plan. |
| (2) | All restricted shares listed above cover shares of our common stock following the closing of the Merger.
The restricted shares held by Mr. Parang were issued pursuant to the 2021 Stock Plan, while the restricted shares held by Dr. Kashani
were issued outside of the 2021 Stock Plan. |
| (3) | This column represents the fair market value of a share of Serve common stock on the date of grant, as
determined by the Board. |
| (4) | This column represents the number of unvested restricted shares outstanding as of December 31, 2023,
multiplied by $4.00, which is the per share value of Serve common stock as of December 31, 2023, based upon the purchase price per
share of common stock in the Private Placement (as defined below) in July through October 2023. |
| (5) | The restricted shares are subject to a 4-year vesting schedule, with 25% of the shares vesting on February 18,
2022 and 1/48th of the shares vesting monthly over the 36 month-period thereafter, subject to the executive’s continued
employment through each vesting date. |
| (6) | The restricted shares are subject to a 4-year vesting schedule running from the date the Board retroactively
determined that vesting should run regardless of Milestone achievement, with 1/48th of the shares vesting on July 15,
2022 and monthly thereafter, subject to the executive’s continued employment through each vesting date. |
| (7) | The restricted shares are subject to a 4-year vesting schedule, with 25% of the shares vesting on March 22,
2022 and 1/48th of the shares vesting monthly over the 36 month-period thereafter, subject to the executive’s continued
employment through each vesting date. |
| (8) | 100% of the option shares vested and became exercisable on the one-month anniversary of the closing of
the Merger, subject to the executive’s continued employment through the vesting date. |
| (9) | The options are subject to a 4-year vesting schedule, with 1/48th of the option shares vesting
on July 1, 2023 and monthly thereafter, subject to the executive’s continued employment through each vesting date. |
| (10) | The options are subject to a 4-year vesting schedule, with 25% of the option shares vesting on November 1,
2022 and 1/48th of the option shares vesting monthly over the 36-month period thereafter, subject to the executive’s
continued employment through each vesting date. |
| (11) | The options are subject to a 4-year vesting schedule running from the date the Board retroactively determined
that vesting should run regardless of Milestone achievement, with 1/48th of the option shares vesting on July 15, 2022
and monthly thereafter, subject to the executive’s continued employment through each vesting date. |
Executive Compensation Arrangements
Touraj Parang Offer Letter
On March 1, 2021, Serve
entered into an offer letter with the Company’s President and Chief Operating Officer, Touraj Parang, pursuant to which Mr. Parang
is entitled to an annual base salary of $250,000 per year.
Mr. Parang is eligible
to participate in the Company employee benefits plans maintained by the Company and generally made available to similarly situated employees.
Mr. Parang’s employment is “at-will” and may be terminated by either party at any time.
Subject to the approval of
our Board, Mr. Parang will be granted the Parang Time-Based Equity Award which consists of restricted stock award to purchase 666,040
shares of the Company’s common stock. The Parang Time-Based Equity Award will vest over 4 years at the rate of 25% of the total
number of the Parang Time-Based Equity Award shares on the one-year anniversary of Mr. Parang’s start date and 1/48th of the
total number of the Parang Time-Based Equity Award shares on each monthly anniversary thereafter, subject to his continuous service with
the Company through each vesting date. In addition, subject to the approval of our Board, Mr. Parang will be granted the Parang Milestone-Based
Equity Award which consists of restricted stock award to purchase 333,020 shares of the Company’s common stock. Once the milestone
is achieved, the Parang Milestone-Based Equity Award will vest over 4 years thereafter at the rate of 1/48th of the total number of Parang
Milestone-Based Equity Award shares on each monthly anniversary of the Parang Milestone Achievement Date, subject to his continuous service
with the Company through each vesting date. For additional information regarding the Parang Time-Based Award and Parang Milestone-Based
Award, please see the section below titled “—Potential Payments Upon Termination or Change in Control — Time-Based
Awards and Milestone-Based Awards.”
Mr. Parang will continue
to be employed by the Company under the terms of his offer letter with the Company.
For additional information
regarding a termination payment letter entered into with Mr. Parang in fiscal year 2021, please see the section below titled “—Potential
Payments Upon Termination or Change in Control—Parang Termination Payment Letter” in this Proxy Statement.
Euan Abraham Offer Letter
On October 7, 2021, Serve
entered into an offer letter whereby Euan Abraham agreed to serve as the Company’s Senior Vice President of Hardware Engineering
beginning January 1, 2022 pursuant to which Mr. Abraham is entitled to an annual base salary of $300,000 per year. In November 2022,
Mr. Abraham’s annual base salary was adjusted to $240,000 per year.
Mr. Abraham is eligible
to participate in the Company employee benefits plans maintained by the Company and generally made available to similarly situated employees.
Mr. Abraham’s employment is “at-will” and may be terminated by either party at any time.
Mr. Abraham will continue
to be employed by the Company under the terms of his offer letter with the Company.
Potential Payments Upon Termination or Change
in Control
Time-Based Awards and Milestone-Based Awards
The Time-Based Awards and
Milestone-Based Awards granted to Dr. Kashani and Mr. Parang will fully vest upon a termination of service by the Company without
“cause” or upon the executive’s resignation for “good reason” (each, an “involuntary termination”).
The acceleration of the Kashani Time-Based Award and the Kashani Milestone-Based Award is subject to Dr. Kashani’s return of
all Company property in his possession within 10 business days following the date of involuntary termination and his execution of
a general release of all claims that becomes effective no later than the 30th day after the date of involuntary termination.
In the event the applicable
executive’s service with the Company terminates for any reason, any unvested shares subject to the Time-Based Awards and Milestone-Based
Awards granted to Dr. Kashani and Mr. Parang may be repurchased by the Company within 3 months following the date of termination
at the original purchase price paid for the shares. In addition, in the event the applicable executive’s service with the Company
terminates for any reason on or prior to February 18, 2025, any vested shares subject to the Milestone-Based Awards granted to Dr. Kashani
and Mr. Parang may be repurchased by the Company within 3 months following the date of termination at the lesser of (x) a
purchase price per share of the Company’s common stock equal to $500 million divided by the then fully diluted capitalization
of the Company or (y) the then current fair market value per share of the Company’s common stock (the “Award Call Option”).
For purposes of the Time-Based
Awards and the Milestone-Based Awards granted to Dr. Kashani and Mr. Parang, “cause” means: (i) any material
breach by the executive of any material written agreement between the executive and the Company and the executive’s failure to cure
such breach within 30 days after receiving written notice thereof; (ii) any failure by the executive to comply with the Company’s
material written policies or rules as they may be in effect from time to time; (iii) neglect or persistent unsatisfactory performance
of the executive’s duties and the executive’s failure to cure such condition within 30 days after receiving written notice
thereof; (iv) the executive’s repeated failure to follow reasonable and lawful instructions from the Board and the executive’s
failure to cure such condition within 30 days after receiving written notice thereof; (v) the executive’s conviction of,
or plea of guilty or nolo contendere to, any crime that results in, or is reasonably expected to result in, material harm to the business
or reputation of the Company; (vi) the executive’s commission of or participation in an act of fraud against the Company; (vii) the
executive’s intentional material damage to the Company’s business, property or reputation; or (viii) the executive’s
unauthorized use or disclosure of any proprietary information or trade secrets of the Company or any other party to whom the executive
owes an obligation of nondisclosure as a result of the executive’s relationship with the Company.
For purposes of the Kashani
Time-Based Award and the Kashani Milestone-Based Award, “good reason” means the executive’s resignation due to the occurrence
of any of the following conditions which occurs without the executive’s written consent, provided that the requirements regarding
advance notice and an opportunity to cure set forth below are satisfied: (i) the executive’s then-current base salary is reduced
by more than 10% (other than as part of an across-the-board salary reduction applicable to all similarly situated employees); (ii) a
material reduction of the executive’s duties, authority, responsibilities or reporting relationship, relative to the executive’s
duties, authority, responsibilities or reporting relationship as in effect immediately prior to such reduction; or (iii) the Company
(or its successor) conditions the executive’s continued service on the executive being transferred to a site of employment that
would increase the executive’s one-way commute by more than 50 miles from the executive’s then-principal residence. In
order for the executive to resign for good reason, the executive must provide written notice to the Company of the existence of the good
reason condition within 30 days of the initial existence of such condition. Upon receipt of such notice, the Company will have 30 days
during which it may remedy the condition and not be required to provide for the acceleration described herein as a result of such proposed
resignation. If the condition is not remedied within such 30-day period, the executive may resign based on the condition specified in
the notice effective no later than 60 days following the expiration of the Company’s 30-day cure period.
For purposes of the Parang
Time-Based Award and the Parang Milestone-Based Award, “good reason” means the executive’s resignation due to the occurrence
of any of the following conditions which occurs without the executive’s written consent, provided that the requirements regarding
advance notice and an opportunity to cure set forth below are satisfied: (i) a reduction of the executive’s then current base
salary by 10% or more unless such reduction is part of a generalized salary reduction affecting similarly situated employees; (ii) a
change in the executive’s position with the Company that materially reduces the executive’s duties, level of authority or
responsibility; or (iii) the Company conditions the executive’s continued service with the Company on the executive’s
being transferred to a site of employment that would increase the executive’s one-way commute by more than 35 miles from Purchaser’s
then principal residence.
Parang Termination Payment Letter
On June 23, 2021, Serve
entered into a termination payment letter agreement with Mr. Parang (the “Parang Termination Payment Letter”), which
provides that if (i) the Company terminates Mr. Parang’s service with the Company without cause on or prior to February 18,
2025 and (ii) the Company exercises its Award Call Option with respect to all or a portion of the Parang Milestone-Based Award, then
the Company will pay Mr. Parang a termination payment equal to the product of (i) the shares repurchased by the Company pursuant
to the Award Call Option, multiplied by (ii) the excess, if any, of (x) the purchase price per share of the Company’s
common stock equal to $500 million divided by the Company’s then fully diluted capitalization as of the date of termination
over (y) the per share fair market value of the Company’s common stock as of the date of termination. The termination payment
will be paid in a lump sum on the first regularly scheduled payroll date after the 30th day following the date of termination.
The termination payment is subject to Mr. Parang’s return of all Company property in his possession within 10 business
days following the date of involuntary termination and his execution of a general release of all claims that becomes effective no later
than the 30th day after the date of termination.
Kashani Termination Payment Letter
On September 27, 2021,
Serve entered into a termination payment letter agreement with Dr. Kashani (the “Kashani Termination Payment Letter”),
which provides that if (i) the Company terminates Dr. Kashani’s service with the Company without cause on or prior to
February 18, 2025 and (ii) the Company exercises its Award Call Option with respect to all or a portion of the Kashani Milestone-Based
Award, then the Company will pay Dr. Kashani a termination payment equal to the product of (i) the shares repurchased by the
Company pursuant to the Award Call Option, multiplied by (ii) the excess, if any, of (x) the purchase price per share of the
Company’s common stock equal to $500 million divided by the Company’s then fully diluted capitalization as of the date
of termination over (y) the per share fair market value of the Company’s common stock as of the date of termination. The termination
payment will be paid in a lump sum on the first regularly scheduled payroll date after the 30th day following the date
of termination. The termination payment is subject to Dr. Kashani’s return of all Company property in his possession within
10 business days following the date of involuntary termination and his execution of a general release of all claims that becomes
effective no later than the 30th day after the date of termination.
Compensation Recovery Policy
In accordance with the final
rules adopted by the SEC and Nasdaq implementing the incentive-based compensation recovery provisions of the Dodd-Frank Act, our Board
approved the Serve Robotics Inc. Compensation Recovery Policy, effective as of October 2, 2023, which provides that in the event the
Company is required to restate any of its financial statements that have been filed with the SEC, then the compensation committee will
seek to recover any erroneously awarded performance-based incentive-based compensation (including any performance-based cash and equity
awards and salary increases earned wholly or in part based on the attainment of financial performance goals) received by any person who
is or was a Section 16 officer during the three-fiscal year recovery period.
Equity Compensation Plan
Information
The following table summarizes
our equity compensation plan information as of December 31, 2023. Information is included for equity compensation plans approved
by our stockholders. We do not have any equity compensation plans not approved by our stockholders.
Plan Category | |
Number
of
Securities to
be Issued
Upon
Exercise of
Outstanding
Options,
Warrants and
Rights
(a) | | |
Weighted
Average
Exercise
Price of
Outstanding
Options
(b) | | |
Number
of
Securities
Remaining
Available for
Future
Issuance Under Equity
Compensation
Plans
(Excluding
Securities
Reflected in
Column (a))
(c) | |
| Equity compensation plans approved by security holders | |
| 1,515,386 | (1) | |
$ | 0.61 | | |
| 1,313,949 | (2) |
| Equity compensation plans not approved by security holders | |
| — | | |
| — | | |
| — | |
| Total | |
| 1,515,386 | (1) | |
$ | 0.61 | | |
| 1,313,949 | (2) |
| (1) | Includes 1,515,386 shares of our common stock issuable
upon exercise of options originally granted under the 2021 Plan. |
| (2) | Includes 1,313,949 shares of our common stock available
for issuance under the 2023 Plan. The number of shares available for issuance under the 2023 Plan may, at the discretion of the Board
or a committee thereof, be increased on October 1st of each fiscal year beginning with the 2023 fiscal year until the 2023 Plan
terminates, in each case, in an amount equal to the lesser of (i) at the discretion of our Board, 4% of the shares of common stock
issued and outstanding on the last day of the immediately preceding month on a fully-diluted and as-converted basis and (ii) such
other number of shares determined by our Board. |
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The following table sets forth
certain information with respect to the beneficial ownership of our common stock as of May 28, 2024 for:
| ● | each person or group of affiliated persons known by us to be the beneficial owner of more than 5% of our
common stock; |
| ● | each of our named executive officers; |
| ● | each of our directors and nominees for director; and |
| ● | all of our current executive officers and directors as a group. |
We have determined beneficial
ownership in accordance with the rules and regulations of the SEC, and the information is not necessarily indicative of beneficial ownership
for any other purpose. Except as indicated by the footnotes below, we believe, based on information furnished to us, that the persons
and entities named in the table below have sole voting and sole investment power with respect to all shares of our capital stock that
they beneficially own, subject to applicable community property laws.
The percentage of shares beneficially
owned is computed on the basis of 37,098,653 shares of our common stock outstanding as of May 28, 2024. Unless otherwise indicated, the
address of each beneficial owner listed in the table below is c/o Serve Robotics Inc., Attention: Corporate Secretary, 730 Broadway, Redwood
City, CA 94063.
| Name of Beneficial Owner | |
Number of Shares
Beneficially Owned | | |
Percentage of Shares
Beneficially Owned | |
| 5% Stockholders | |
| | |
| |
| Postmates, LLC(1) | |
| 5,298,833 | | |
| 14.3 | % |
| NVIDIA(2) | |
| 3,727,033 | | |
| 10.0 | % |
| Directors, Director Nominees and Named Executive Officers | |
| | | |
| | |
| Ali Kashani(3) | |
| 2,361,754 | | |
| 6.4 | % |
| Shares subject to voting by proxy(4) | |
| 6,860,053 | | |
| 18.5 | % |
| Touraj Parang(5) | |
| 816,432 | | |
| 2.2 | % |
| James Buckly Jordan(6) | |
| 747,297 | | |
| 2.0 | % |
| Olivier Vincent | |
| 9,928 | | |
| * | |
| Ali Pourdad(7) | |
| 31,283 | | |
| * | |
| Euan Abraham(8) | |
| 200,433 | | |
| * | |
| Sarfraz Maredia | |
| - | | |
| * | |
| David Goldberg(9) | |
| 50,000 | | |
| * | |
| Brian Read | |
| - | | |
| * | |
| All directors, director nominees and executive officers as a group (nine persons) | |
| 8,024,639 | | |
| 21.4 | % |
| * | Represents beneficial ownership of less than one percent (1%)
of the outstanding shares of our common stock. |
| (1) | Postmates is the wholly-owned subsidiary of Uber. The address
of Uber is 1725 3rd Street, San Francisco, California 94158. The foregoing information is solely from a Schedule 13D reflecting
beneficial ownership of the Company’s common stock filed on May 8, 2024. |
| (2) | The address of NVIDIA is 2788 San Tomas Expressway, Santa Clara,
California 95051. |
| (3) | Consists of (i) 2,205,309 shares of common stock held directly
by Ali Kashani, (ii) 16,070 shares of common stock held by Nikki Stoddart, the spouse of Dr. Kashani, (iii) 80,350 shares
of common stock held by Salma Kashani, (iv) 8,035 shares of common stock held by Ali Sadeghi Hariri, (v) 1,562 shares
underlying warrants to purchase common stock which are exercisable within 60 days of May 28, 2024, and (vi) 50,428 shares
of common stock underlying options which are or will become exercisable within 60 days of May 28, 2024. Dr. Kashani shares
control of the shares of common stock held by Ms. Stoddart. 1,031,159 shares of common stock held by Dr. Kashani are subject
to a repurchase option held by the Company in the event that Dr. Kashani’s service with the Company is terminated. |
| (4) | Consists of shares of common stock held by holders of pre-Merger
common stock over which Dr. Kashani holds an irrevocable proxy, pursuant to the agreements between the Company and such stockholders.
The Company does not believe that the parties to these voting agreements constitute a “group” under Section 13 of the
Exchange Act, as Dr. Kashani exercises voting control over these shares. Dr. Kashani does not have dispositive control over
these shares of common stock. |
| (5) | Consists of (i) 794,709 shares of common stock held by
Touraj Parang, (ii) 2,008 shares of common stock held by Armin Parang, Mr. Parang’s brother, (iii) 2,008 shares
of common stock held by Payman Parang, Mr. Parang’s brother, (iv) 2,008 shares of common stock held by Shaghayegh
Ahkami, Mr. Parang’s sister-in-law, (v) 2,008 shares of common stock held by Shahyar Ahkami, Mr. Parang’s
brother-in-law, and (vi) 13,691 shares of common stock underlying options which are or will become exercisable within 60 days
of May 28, 2024. Mr. Parang disclaims beneficial ownership of the shares of common stock held by Armin Parang, Payman Parang, Shaghayegh
Ahkami and Shahyar Ahkami. 379,074 shares of common stock held by Mr. Parang are subject to a repurchase option held by the
Company in the event that Mr. Parang’s service with the Company is terminated. |
| (6) | Consists of (i) 1,771 shares of common stock held
directly by James Buckly Jordan, (ii) 659,035 shares of common stock held by Wavemaker Global Select II, LLC, (iii) 9,200 shares
held by Future VC, LLC, and (iv) 77,291 shares of common stock held by Match Robotics VC, LLC. James Buckly Jordan is the Managing
Partner of Wavemaker Global Select II, LLC and has dispositive power over the shares of common stock held thereby. Future VC, LLC and
Match Robotics VC, LLC are controlled by James Buckly Jordan. The address of Wavemaker Global Select II, LLC is 1 Nanson Road #03-00,
Singapore 238909. The address for Future VC, LLC is 1438 9th St., Santa Monica, California 90401. The address for Match Robotics
VC, LLC is 1134 11th Street, Suite 101, Santa Monica, California 90403. |
| (7) | Shares of common stock are held by Pourdad Capital Corp. over
which Ali Pourdad has control. |
| (8) | Consists of 200,433 options to purchase shares of common stock
which are or will become exercisable within 60 days of May 28, 2024. |
| (9) | Consists of 50,000 restricted stock units which have vested
vest or will vest within 60 days of May 28, 2024. |
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Below, we describe transactions
since January 1, 2023, in which the amounts involved exceeded or will exceed the lesser of (i) $120,000 and (ii) 1% of the average total
assets of the Company at year end for the last two completed fiscal years, between the Company and any of our directors, director nominees,
executive officers, or beneficial holders of more than 5% of Serve’s pre-Merger capital stock. Other than as described below, there
have not been transactions to which we have been a party other than compensation arrangements, which are described under “Executive
Compensation.” The following description is historical and has not been adjusted to give effect to the Merger.
Secured Subordinated Promissory Note with Ali
Kashani
On December 27, 2023, Serve
issued a Secured Subordinated Promissory Note (the “December 2023 Kashani Note”) to Ali Kashani, a holder of greater than
5% of the capital stock of Serve who serves as Chief Executive Officer and is a member of the Board, in exchange for a loan with the aggregate
principal amount of $70,000. Pursuant to the December 2023 Kashani Note, the loan accrued interest on the unpaid principal amount at a
rate of 7.67% per annum, computed as simple interest. Serve repaid the December 2023 Kashani Note on January 3, 2024.
On June 28, 2023, Serve issued
a Secured Subordinated Promissory Note (the “June 2023 Kashani Note”) to Dr. Kashani, in exchange for a loan with the aggregate
principal amount of $449,000. Pursuant to the June 2023 Kashani Note, the loan accrued interest on the unpaid principal amount at a rate
of 7.67% per annum, computed as simple interest. Dr. Kashani was entitled to an exit fee equal to 16% of the stated principal amount of
the June 2023 Kashani Note, less the total amount of interest that accrued on the June 2023 Kashani Note prior to the closing of the Merger
(the “Kashani Exit Fee”). Serve paid the Kashani Exit Fee and repaid the June 2023 Kashani Note upon the closing of the Merger.
On August 4, 2023, payment of $520,840 was made to Dr. Kashani as repayment of the promissory note, which includes $449,000 in principal
and $71,840 in interest. No additional fees were paid.
Consultant Agreement with David Goldberg
On September 18, 2023, Serve
entered into a consulting agreement (the “Consulting Agreement”) with Mr. Goldberg, a nominee for election as a Class I director
at the Annual Meeting. Pursuant to the Consulting Agreement, Mr. Goldberg was paid a one-time fee of $50,000 as well as an additional
payment of $125,000 that was contingent upon the Company closing new financing during the term of the Consulting Agreement, for a total
cash payment of $175,000. Additionally, in connection with the Consulting Agreement, the Company granted Mr. Goldberg a restricted stock
unit award of 50,000 shares of the Company’s common stock, all of which vested on May 18, 2024. The Consulting Agreement terminated
on March 18, 2024.
Related Party Transactions with Uber Technologies
Inc.
As described elsewhere in
this Proxy Statement, Serve is a spin-off of Uber. Serve was initially formed in 2017 as the X division of Postmates, which was acquired
by Uber in 2020. Uber held greater than 5% of Serve’s pre-Merger capital stock. Sarfraz Maredia is VP, Head of Americas, Delivery
at Uber and serves as a member of our Board.
Convertible Promissory Note
On January 2, 2024, we issued
a convertible promissory note (the “Postmates Convertible Promissory Note”) to Postmates. The Postmates Convertible Promissory
Note bore interest at a rate of 6.00% per year, compounded annually, and was due and payable upon request by Postmates on or after the
12-month anniversary of the original issuance date of the Postmates Convertible Promissory Note. We were not permitted to prepay or repay
the Postmates Convertible Promissory Note in cash without Postmates’ consent. The aggregate gross proceeds from the issuance of
the Postmates Convertible Promissory Note were $500,000. On April 22, 2024, the Postmates Convertible Promissory Note was converted into
210,025 shares of our common stock at a conversion price of $2.42 per share.
Master Framework Agreement and Project Plan
Uber and the Company entered
into the Master Framework Agreement, effective September 3, 2021 which was amended by Amendment No. 1 to the Master Framework Agreement,
dated June 7, 2022, Amendment No. 2 to the Master Framework Agreement, dated January 12, 2023 and Amendment No. 3 to the Master Framework
Agreement, dated September 6, 2023 (as amended, the “Master Framework Agreement”). The term of the Master Framework Agreement
has been extended twice and is currently effective until February 24, 2027 and automatically renews for one-year periods unless terminated.
Pursuant to the Master Framework Agreement, the Company agreed to provide delivery robots for Uber deliveries and Uber to pay delivery
fees based on the services provided by the delivery robots. In addition, among other things, under the Master Framework Agreement, the
Company is obligated to obtain and maintain the necessary regulatory approvals and licenses and certain types and levels of insurance
for the robots.
The Company and Uber entered
into separate Project Plans on February 3, 2022 (“Project Plan #1”) and May 26, 2022 (“Project Plan #2” and together
with Project Plan #1, the “Project Plans”) for deployment of the Company’s robots to perform concurrent deliveries on
Uber’s platform. Under Project Plan #1, Uber and the Company worked together to onboard 10 robots to perform concurrent deliveries
on Uber’s platform in a mutually agreed upon operating area in Los Angeles, California. Entering into Project Plan #2 signified
satisfactory completion of Project Plan #1. Under Project Plan #2, Uber and the Company are working together to deploy up to 2,000 robots
on Uber’s platform in multiple cities in the U.S. Each of these Project Plans is governed by the terms of the Master Framework Agreement.
Pursuant to the Project Plans, the Company and Uber have agreed to meet monthly to discuss completion dates and key milestones for the
Master Framework Agreement and to establish operating areas.
The Master Framework Agreement
provides for certain negotiated indemnification terms, including indemnification by the Company for damages resulting from third-party
intellectual property rights claims. The Project Plans require the Company to maintain commercial insurance during the term of the Project
Plans, including for general liability, auto liability and workers’ compensation.
Related Party Transactions with NVIDIA
Convertible Promissory Note
On January 2, 2024, we issued
a convertible promissory note (“the NVIDIA Convertible Promissory Note”) to NVIDIA. The NVIDIA Convertible Promissory Note
bore interest at a rate of 6.00% per year, compounded annually, and was due and payable upon request by NVIDIA on or after the 12-month
anniversary of the original issuance date of the NVIDIA Convertible Promissory Note. We were not permitted to prepay or repay the NVIDIA
Convertible Promissory Note in cash without NVIDIA’s consent. The aggregate gross proceeds from the issuance of the NVIDIA Convertible
Promissory Note were $2,500,000. On April 22, 2024, the NVIDIA Convertible Promissory Note was converted into 1,050,129 shares of our
common stock at a conversion price of $2.42 per share.
Equity Financings
2024 Underwritten Public Offering
In March 2024, we entered
into an underwriting agreement, or the Underwriting Agreement, with Aegis Capital Corp., pursuant to which we issued and sold 10,000,000
shares of our common stock at the public offering price of $4.00 per share. The aggregate net proceeds from the offering totaled approximately
$35.7 million after deducting underwriting discounts and commissions, as well as other offering expenses.
The following table sets forth
the number of shares of our common stock purchased in our registered public offering by a related party:
| Purchaser | |
Shares of
Common
Stock
Purchased | | |
Aggregate
Purchase
Price | |
| Postmates, LLC | |
| 1,125,000 | | |
$ | 4,500,000 | |
SAFEs
Between February 4, 2022 and
March 9, 2022, Serve issued SAFEs for an aggregate purchase amount of $10.59 million to investors of Serve (the “February 2022 SAFEs”).
Between December 1, 2022 and January 18, 2023, Serve issued SAFEs for an aggregate purchase amount of $4.97 million to investors of Serve
(the “December 2022 SAFEs” and, together with the February 2022 SAFEs, the “SAFEs”). The following table summarizes
the purchase of SAFEs by related persons:
| Purchaser | |
Aggregate
Purchase
Price for
SAFEs | |
| NEO 2.0, L.P.(1) | |
$ | 987,483 | |
| NEO 2.0a, L.P.(1) | |
$ | 12,517 | |
| NVIDIA | |
$ | 9,000,000 | |
| Postmates, LLC(2) | |
$ | 2,000,000 | |
| Wavemaker Pacific 4, L.P.(3) | |
$ | 1,000,000 | |
| (1) | The general partner of each of NEO 2.0., L.P. and NEO 2.0a,
L.P. is NEO GP. NEO GP and its affiliates hold greater than 5% of the pre-Merger capital stock of Serve. |
| (2) | Postmates, LLC is a wholly-owned subsidiary of Uber, which holds
greater than 5% of the pre-Merger capital stock of Serve. Sarfraz Maredia is VP, Head of Americas, Delivery at Uber and serves as a member
of the Board. |
| (3) | Wavemaker Pacific 4, L.P. holds greater than 5% of Serve’s
pre-Merger capital stock. |
Registration Rights Agreement
In connection with the Merger
and the sale of 3,183,671 shares of our common stock pursuant to a private placement offering in multiple closings (“Private Placement”),
on July 31, 2023, we entered into a registration rights agreement (the “Registration Rights Agreement”), pursuant to which
we agreed that promptly, but no later than 60 calendar days from the final closing of the Private Placement, we would file, subject to
customary exceptions, a registration statement with the SEC covering the registrable securities (the “Registration Statement”).
All of our current directors, executive officers and holders of more than 5% of our capital stock are parties to the Registration Rights
Agreement. We must use commercially reasonable efforts to keep the Registration Statement effective for five years from the date it was
declared effective by the SEC or until the date on which all registrable securities have been transferred other than to certain enumerated
permitted assignees under the Registration Rights Agreement.
Participation in Private Placement
Certain of our existing investors,
including investors affiliated with certain of our directors and officers, have purchased an aggregate of 1,258,221 shares of our common
stock in the Private Placement, for an aggregate gross purchase price of $5.01 million. Such purchases were made on the same terms as
the shares that were sold to other investors in the Private Placement and not pursuant to any pre-existing contractual rights or obligations.
Each of NVIDIA, and Postmates, LLC, who hold more than 5% of our capital stock, and Mr. Vincent and Dr. Kashani participated in the Private
Placement.
Other Transactions
We have granted stock options
to our directors and executive officers. For a description of these stock options, see “Executive Compensation” of
this Proxy Statement.
Indemnification Agreements
We maintain indemnification
agreements with each of our current directors and executive officers. The indemnification agreements and our amended and restated bylaws
require us to indemnify our directors to the fullest extent not prohibited by DGCL. Subject to very limited exceptions, our amended and
restated bylaws also require us to advance expenses incurred by our directors and officers.
Policies and Procedures for Related Party Transactions
We did not have a formal review
and approval policy for related party transactions at the time of some of the transactions described above. However, all of the transactions
described above were entered into after presentation, consideration and approval by our Board. On July 31, 2023, our audit committee adopted
a charter which requires the audit committee to conduct appropriate review and oversight of related party transactions.
WHERE YOU CAN FIND MORE INFORMATION
We file electronically with
the SEC annual, quarterly and current reports, proxy statements and other information. We make available on our website at www.serverobotics.com,
free of charge, copies of these reports, as soon as reasonably practicable after we electronically file the material with, or furnish
it to, the SEC. The SEC maintains a website that contains reports, proxy and information statements, and other information regarding issuers
that file electronically with the SEC. The address of that website is www.sec.gov. The information in or accessible through the websites
referred to above are not incorporated into, and are not considered part of, this proxy statement. Further, our references to the URLs
for these websites are intended to be inactive textual references only.
You should rely on the information
contained in this proxy statement to vote your shares at the Annual Meeting. We have not authorized anyone to provide you with information
that is different from what is contained in this proxy statement. You should not assume that the information in this proxy statement is
accurate as of any date other than that date, and the mailing of this proxy statement to stockholders at any time after that date does
not create an implication to the contrary. This proxy statement does not constitute a solicitation of a proxy in any jurisdiction where,
or to or from any person to whom, it is unlawful to make such proxy solicitations in such jurisdiction.
HOUSEHOLDING OF
ANNUAL MEETING MATERIALS
The SEC has adopted rules
that permit companies and intermediaries (such as banks and brokers) to satisfy the delivery requirements for proxy materials with respect
to two or more stockholders sharing the same address by delivering a single copy of the Proxy Statement, Annual Report on Form 10-K
or Notice of Internet Availability of Proxy Materials, as applicable, addressed to those stockholders. This process, which is commonly
referred to as “householding,” potentially means extra convenience for stockholders and cost savings for companies. This year,
a number of brokers with account holders who are our stockholders will be householding our proxy materials. A single Notice of Internet
Availability of Proxy Materials will be delivered to multiple stockholders sharing an address unless contrary instructions have been received
from the impacted stockholders. Once you have received notice from us (if you are a stockholder of record) or from your broker (if you
are a beneficial owner) that we or they will be householding communications to your address, householding will continue until you are
notified otherwise or until you revoke your consent. If, at any time, you no longer wish to participate in householding and would prefer
to receive separate proxy materials, including the Notice, or if you currently receive multiple copies and would like to request householding
of your communications, please notify your broker or us. Direct your written request to Serve Robotics Inc., Attention: Corporate Secretary,
730 Broadway, Redwood City, California 94063 or by telephone at (818) 860-1352. In the event a stockholder that received
multiple copies would like to receive only one copy for such stockholder’s household, such stockholder should contact their bank,
broker, or other nominee record holder, or contact us at the above address or phone number.
ANNUAL REPORT
Fiscal Year 2023 Annual Report and SEC Filings
Our financial statements for
our year ended December 31, 2023 are included in our Annual Report on Form 10-K. This Proxy Statement and our annual report
are posted on our website at www.serverobotics.com under “Investors” and are available from the SEC at its website at www.sec.gov.
You may also obtain a copy
of our annual report, without charge, by sending a written request to Serve Robotics Inc., Attention: Corporate Secretary, 730 Broadway,
Redwood City, California 94063.
STOCKHOLDER PROPOSALS
A stockholder who would like
to have a proposal considered for inclusion in our 2025 proxy statement must submit the proposal in accordance with the procedures outlined
in Rule 14a-8 of the Exchange Act so that it is received by us no later than April 23, 2025. However, if the date of the annual meeting
of stockholders in 2025, or the 2025 Annual Meeting, is changed by more than 30 days from the date of the previous year’s meeting,
then the deadline is a reasonable time before we begin to print and send our proxy statement for the 2025 Annual Meeting. SEC rules set
standards for eligibility and specify the types of stockholder proposals that may be excluded from a proxy statement. Stockholder proposals
should be addressed to Serve Robotics Inc., Attention: Corporate Secretary, 730 Broadway, Redwood City, CA 94063. We also encourage you
to submit any such proposals via email to investor.relations@serverobotics.com.
If a stockholder wishes to
propose a nomination of persons for election to our Board or present a proposal outside of Rule 14a-8 of the Exchange Act at an annual
meeting but does not wish to have the proposal considered for inclusion in our proxy statement and proxy card, our bylaws establish an
advance notice procedure for such nominations and proposals. Stockholders at an annual meeting may only consider proposals or nominations
specified in the notice of meeting or brought before the meeting (i) by or at the direction of the Board or (ii) by a stockholder who
was a stockholder of record at the time of giving notice, who is entitled to vote at the meeting, who is present (in person or by proxy)
at the meeting and who has delivered timely notice in proper form, containing the information specified in our bylaws, to our Corporate
Secretary at our principal executive offices of the stockholder’s intention to bring such business before the meeting.
In accordance with the advance
notice procedure specified in our bylaws, for any stockholder proposal submitted outside the processes of Rule 14a-8 of the Exchange Act
to be considered timely, the required notice must be in writing and received by our Corporate Secretary at our principal executive offices
not later than the close of business on the 90th day nor earlier than the close of business on the 120th day prior to the first anniversary
of the preceding year’s annual meeting. However, in the event that the date of the annual meeting is convened more than 30 days
before or more than 60 days after the first anniversary of the preceding year’s annual meeting, or if no annual meeting were held
in the preceding year, a stockholder’s notice must be so received not later than the close of business on the later of (i) the 90th
day prior to the scheduled date of such annual meeting or (ii) the 10th day following the day on which public announcement of the date
of such annual meeting was first made. Accordingly, for stockholder proposals to be brought before the 2025 Annual Meeting, the required
notice must be received by our corporate secretary at our principal executive offices not later than April 23, 2025 and no earlier than
March 24, 2025. Stockholder proposals and the required notice should be addressed to Serve Robotics Inc., Attention: Corporate Secretary,
730 Broadway, Redwood City, CA 94063.
To comply with the universal
proxy rules, stockholders who intend to solicit proxies in support of director nominees other than the company’s nominees in connection
with our 2025 Annual Meeting must provide notice that sets forth the information required by Rule 14a-19 under the Exchange Act no later
than May 23, 2025.
OTHER MATTERS
Our Board does not know of
any other matters to be presented at the Annual Meeting. If any additional matters are properly presented at the Annual Meeting, the persons
named in the enclosed proxy card will have discretion to vote the shares of our common stock they represent in accordance with their own
judgment on such matters.
It is important that your
shares of our common stock be represented at the Annual Meeting, regardless of the number of shares that you hold. You are, therefore,
urged to vote by telephone or by using the internet as instructed on the enclosed proxy card or execute and return, at your earliest convenience,
the enclosed proxy card in the envelope that has also been provided.
Ali Kashani
Chief Executive Officer
Redwood City, California
June 7, 2024
Appendix
A
SERVE
ROBOTICS INC.
2023
EQUITY INCENTIVE PLAN
1. Purposes
of the Plan. The purposes of this Plan are (a) to attract and retain the best available personnel to ensure the Company’s success
and accomplish the Company’s goals; (b) to incentivize Employees, Directors and Independent Contractors with long-term equity-based
compensation to align their interests with the Company’s stockholders, and (c) to promote the success of the Company’s business.
The
Plan permits the grant of Incentive Stock Options, Nonstatutory Stock Options, Restricted Stock, Restricted Stock Units, Stock Appreciation
Rights and Stock Bonus Awards.
2. Definitions.
As used herein, the following definitions will apply:
(a) “Administrator”
means the Board or any of its Committees as will be administering the Plan, in accordance with Section 4 of the Plan.
(b) “Affiliate”
means a Parent, a Subsidiary or any corporation or other entity that, directly or indirectly through one or more intermediaries, controls,
or is controlled by, or is under common control with, the Company.
(c) “Applicable
Laws” means all applicable laws, rules, regulations and requirements, including, but not limited to, all applicable U.S.
federal or state laws, rules and regulations, the rules and regulations of any stock exchange or quotation system on which the Common
Stock is listed or quoted, and the applicable laws, rules and regulations of any other country or jurisdiction where Awards are, or will
be, granted under the Plan or Participants reside or provide services to the Company or any Parent or Affiliate, as such laws, rules,
and regulations shall be in effect from time to time.
(d) “Award”
means, individually or collectively, a grant under the Plan of Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock
Units or Stock Bonus Awards.
(e) “Award
Agreement” means the written or electronic agreement setting forth the terms and provisions applicable to each Award granted
under the Plan. The Award Agreement is subject to the terms and conditions of the Plan.
(f) “Board”
means the Board of Directors of the Company.
(g) “Cause”
means, with respect to the termination of a Participant’s status as a Service Provider, except as otherwise defined in an Award
Agreement, (i) in the case where there is no employment agreement, consulting agreement, change in control agreement or similar agreement
in effect between the Company or an Affiliate of the Company and the Participant at the time of the grant of the Award (or where there
is such an agreement but it does not define “cause” (or words of like import) or where it only applies upon the occurrence
of a change in control and one has not yet taken place): (A) any material breach by Participant of any material written agreement between
Participant and the Company; (B) any failure by Participant to comply with the Company’s material written policies or rules as
they may be in effect from time to time; (C) neglect or persistent unsatisfactory performance of Participant’s duties; (D) Participant’s
repeated failure to follow reasonable and lawful instructions from the Board or Chief Executive Officer; (E) Participant’s indictment
for, conviction of, or plea of guilty or nolo contendere to, any felony or crime that results in, or is reasonably expected to result
in, a material adverse effect on the business or reputation of the Company; (F) Participant’s commission of or participation in
an act of fraud against the Company; (G) Participant’s intentional damage to the Company’s business, property or reputation;
or (H) Participant’s unauthorized use or disclosure of any proprietary information or trade secrets of the Company or any other
party to whom the Participant owes an obligation of nondisclosure as a result of his or her relationship with the Company; or (ii) in
the case where there is an employment agreement, consulting agreement, change in control agreement or similar agreement in effect between
the Company or an Affiliate and the Participant at the time of the grant of the Award that defines “cause” (or words of like
import), “cause” as defined under such agreement; provided, however, that with regard to any agreement under which the definition
of “cause” only applies on occurrence of a change in control, such definition of “cause” shall not apply until
a change in control actually takes place and then only with regard to a termination thereafter. For purposes of clarity, a termination
without “Cause” does not include any termination that occurs solely as a result of Participant’s death or Disability.
The determination as to whether a Participant’s status as a Service Provider for purposes of the Plan has been terminated for Cause
shall be made in good faith by the Company and shall be final and binding on the Participant. The foregoing definition does not in any
way limit the Company’s ability (or that of any Affiliate or any successor thereto, as appropriate) to terminate a Participant’s
employment or consulting relationship at any time, subject to Applicable Laws.
(h) “Change
in Control” except as may otherwise be provided in an Award Agreement or other applicable agreement, means the occurrence
of any of the following:
(i) The
consummation of a merger or consolidation of the Company with or into another entity or any other corporate reorganization, if the Company’s
stockholders immediately prior to such merger, consolidation or reorganization cease to directly or indirectly own immediately after
such merger, consolidation or reorganization at least a majority of the combined voting power of the continuing or surviving entity’s
securities outstanding immediately after such merger, consolidation or reorganization;
(ii) The
consummation of the sale, transfer or other disposition of all or substantially all of the Company’s assets (other than (x) to
a corporation or other entity of which at least a majority of its combined voting power is owned directly or indirectly by the Company,
(y) to a corporation or other entity owned directly or indirectly by the shareholders of the Company in substantially the same proportions
as their ownership of the Common Stock of the Company or (z) to a continuing or surviving entity described in Section 2(h)(i) in connection
with a merger, consolidation or reorganization which does not result in a Change in Control under Section 2(h)(i));
(iii) A
change in the effective control of the Company which occurs on the date that a majority of members of the Board is replaced during any
twelve (12) month period by Directors whose appointment or election is not endorsed by a majority of the members of the Board prior to
the date of the appointment or election; or
(iv) The
consummation of any transaction as a result of which any Person becomes the “beneficial owner” (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of the Company representing at least fifty percent (50%) of the total
voting power represented by the Company’s then outstanding voting securities. For purposes of this Section 2(h), the term “Person”
shall have the same meaning as when used in Sections 13(d) and 14(d) of the Exchange Act but shall exclude:
(1) a
trustee or other fiduciary holding securities under an employee benefit plan of the Company or an Affiliate;
(2) a
corporation or other entity owned directly or indirectly by the stockholders of the Company in substantially the same proportions as
their ownership of the Common Stock of the Company;
(3) the
Company; and
(4) a
corporation or other entity of which at least a majority of its combined voting power is owned directly or indirectly by the Company.
A
transaction shall not constitute a Change in Control if its sole purpose is to change the state of the Company’s incorporation
or to create a holding company that will be owned in substantially the same proportions by the persons who held the Company’s securities
immediately before such transactions. In addition, if any Person (as defined above) is considered to be in effective control of the Company,
the acquisition of additional control of the Company by the same Person will not be considered to cause a Change in Control. If required
for compliance with Section 409A of the Code, in no event will a Change in Control be deemed to have occurred if such transaction is
not also a “change in the ownership or effective control of” the Company or “a change in the ownership of a substantial
portion of the assets of” the Company as determined under Treasury Regulation Section 1.409A-3(i)(5) (without regard to any alternative
definition thereunder).
(i) “Code”
means the Internal Revenue Code of 1986, as amended. Reference to a specific section of the Code or regulation thereunder shall include
such section or regulation, any valid regulation promulgated under such section, and any comparable provision of any future legislation
or regulation amending, supplementing or superseding such section or regulation.
(j) “Committee”
means a committee of Directors or of other individuals satisfying Applicable Laws appointed by the Board in accordance with Section 4
hereof.
(k) “Common
Stock” means the common stock of the Company.
(l) “Company”
means Serve Robotics Inc., a Delaware corporation, or any successor thereto.
(m) “Determination
Date” means any time when the achievement of the Performance Goals associated with the applicable Performance Period remains
substantially uncertain; provided, however, that without limiting the foregoing, that if the Determination Date occurs on or before the
date on which 25% of the Performance Period has elapsed, the achievement of such Performance Goals shall be deemed to be substantially
uncertain.
(n) “Director”
means a member of the Board.
(o) “Disability”
means total and permanent disability as defined in Section 22(e)(3) of the Code in the case of Incentive Stock Options, and for
all other Awards, means as determined by the Social Security Administration or the long-term disability plan maintained by the Company;
provided however, that if the Participant resides outside of the United States, “Disability” shall have such meaning
as is required by Applicable Laws.
(p) “Effective Date”
means July 31, 2023.
(q) “Employee”
means any person, including Officers and Directors, employed by the Company or any Affiliate of the Company. Neither service as a Director
nor payment of a director’s fee by the Company will be sufficient to constitute “employment” by the Company.
(r) “Exchange
Act” means the Securities Exchange Act of 1934, as amended.
(s) “Exchange
Program” means a program under which outstanding Awards are amended to provide for a lower exercise price or surrendered
or cancelled in exchange for (i) Awards with a lower exercise price, (ii) a different type of Award or awards under a different equity
incentive plan, (iii) cash, or (iv) a combination of (i), (ii) and/or (iii). Notwithstanding the preceding, the term Exchange Program
does not include (x) any action described in Section 15 or any action taken in connection with a Change in Control transaction nor (y)
any transfer or other disposition permitted under Section 14. For the purpose of clarity, each of the actions described in the prior
sentence, none of which constitute an Exchange Program, may be undertaken (or authorized) by the Administrator in its sole discretion
without approval by the Company’s stockholders.
(t) “Existing
Plan” means the 2021 Stock Plan maintained by the Company as of immediately prior to the Effective Date.
(u) “Existing Plan
Awards” means awards or Shares issued under the Company’s 2021 Stock Plan that are assumed by the Company pursuant
to that certain Agreement and Plan of Merger and Reorganization by and among Patricia Acquisition Corp., Serve Acquisition Corp., and
Serve Robotics Inc., dated July 31, 2023.
(v) “Fair
Market Value” means, as of any date, the value of Common Stock determined as follows:
(i) If
the Common Stock is listed on any established stock exchange or a national market system, its Fair Market Value will be the closing sales
price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or system on the day of determination,
as reported in such source as the Administrator deems reliable;
(ii) If
the Common Stock is regularly quoted by a recognized securities dealer but selling prices are not reported, the Fair Market Value of
a Share will be the mean between the high bid and low asked prices for the Common Stock on the day of determination, as reported in such
source as the Administrator deems reliable; or
(iii) In
the absence of an established market for the Common Stock, the Fair Market Value will be determined in good faith by the Administrator
in compliance with Applicable Laws and regulations and in a manner that complies with Section 409A of the Code.
(w) “Fiscal
Year” means the fiscal year of the Company.
(x) “Incentive
Stock Option” means an Option that by its terms qualifies and is intended to qualify as an incentive stock option within
the meaning of Section 422 of the Code and the regulations promulgated thereunder.
(y) “Independent
Contractor” means any person, including an advisor, consultant or agent, engaged by the Company or an Affiliate to render
services to such entity or who renders, or has rendered, services to the Company, or any Parent, Subsidiary or affiliate and is compensated
for such services.
(z) “Inside
Director” means a Director who is an Employee.
(aa)
“Insider” means an officer or director of the Company or any other person whose transactions in Common
Stock are subject to Section 16 of the Exchange Act.
(bb)
“Nonstatutory Stock Option” means an Option that by its terms does not qualify or is not intended to
qualify as an Incentive Stock Option.
(cc)
“Officer” means a person who is an officer of the Company within the meaning of Section 16 of the
Exchange Act and the rules and regulations promulgated thereunder.
(dd)
“Option” means a stock option granted pursuant to the Plan.
(ee)
“Outside Director” means a Director who is not an Employee.
(ff)
“Parent” means any corporation (other than the Company) in an unbroken chain of corporations ending with
the Company if each of the corporations other than the Company owns stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations in such chain. A corporation that attains the status
of a Parent on a date after the adoption of the Plan shall be considered a Parent commencing as of such date.
(gg)
“Participant” means the holder of an outstanding Award.
(hh)
“Performance Goal” means a formula or standard determined by the Administrator with respect to each
Performance Period based on one or more of the following criteria and any adjustment(s) thereto established by the Administrator:
(1) sales or non-sales revenue; (2) return on revenues; (3) operating income; (4) income or earnings including operating income; (5)
income or earnings before or after taxes, interest, depreciation and/or amortization; (6) income or earnings from continuing
operations; (7) net income; (8) pre-tax income or after-tax income; (9) net income excluding amortization of intangible assets,
depreciation and impairment of goodwill and intangible assets and/or excluding charges attributable to the adoption of new
accounting pronouncements; (10) raising of financing or fundraising; (11) project financing; (12) revenue backlog; (13) gross
margin; (14) operating margin or profit margin; (15) capital expenditures, cost targets, reductions and savings and expense
management; (16) return on assets (gross or net), return on investment, return on capital, or return on stockholder equity; (17)
cash flow, free cash flow, cash flow return on investment (discounted or otherwise), net cash provided by operations, or cash flow
in excess of cost of capital; (18) performance warranty and/or guarantee claims; (19) stock price or total stockholder return; (20)
earnings or book value per share (basic or diluted); (21) economic value created; (22) pre-tax profit or after-tax profit; (23)
strategic business criteria, consisting of one or more objectives based on meeting specified market penetration or market share,
completion of strategic agreements such as licenses, joint ventures, acquisitions, and the like, geographic business expansion,
objective customer satisfaction or information technology goals, intellectual property asset metrics; (24) objective goals relating
to divestitures, joint ventures, mergers, acquisitions and similar transactions; (25) objective goals relating to staff management,
results from staff attitude and/or opinion surveys, staff satisfaction scores, staff safety, staff accident and/or injury rates,
compliance, headcount, performance management, completion of critical staff training initiatives; (26) objective goals relating to
projects, including project completion, timing and/or achievement of milestones, project budget, technical progress against work
plans; and (27) enterprise resource planning. Awards issued to Participants may take into account other criteria (including
subjective criteria). Performance Goals may differ from Participant to Participant, Performance Period to Performance Period and
from Award to Award. Any criteria used may be measured, as applicable, (i) in absolute terms, (ii) in relative terms (including, but
not limited to, any increase (or decrease) over the passage of time and/or any measurement against other companies or financial or
business or stock index metrics particular to the Company), (iii) on a per share and/or share per capita basis, (iv) against the
performance of the Company as a whole or against any Affiliate(s), or a particular segment(s), a business unit(s) or a product(s) of
the Company or individual project company, (v) on a pre-tax or after-tax basis, (vi) on a GAAP or non-GAAP basis, and/or (vi) using
an actual foreign exchange rate or on a foreign exchange neutral basis.
(ii) “Performance
Period” means the time period during which the Performance Goals or other vesting provisions must be satisfied for Awards.
Performance Periods may be of varying and overlapping duration, at the sole discretion of the Administrator.
(jj)
“Period of Restriction” means the period during which the transfer of Shares of Restricted Stock is
subject to restrictions and therefore, the Shares are subject to a substantial risk of forfeiture. Such restrictions may be based on
the passage of time, the achievement of target levels of performance, or the occurrence of other events as determined by the
Administrator.
(kk)
“Plan” means this 2021 Equity Incentive Plan.
(ll)
“Restricted Stock” means Shares issued pursuant to a Restricted Stock award under Section 7 of the Plan.
(mm)
“Restricted Stock Unit” means a bookkeeping entry representing an amount equal to the Fair Market Value of
one Share, granted pursuant to Section 8. Each Restricted Stock Unit represents an unfunded and unsecured obligation of the
Company.
(nn)
“Rule 16b-3” means Rule 16b-3 of the Exchange Act or any successor to Rule 16b-3, as in effect when
discretion is being exercised with respect to the Plan.
(oo) “Section 16(b)”
means Section 16(b) of the Exchange Act.
(pp)
“Service Provider” means an Employee, Director or Independent Contractor.
(qq)
“Share” means a share of the Common Stock, as adjusted in accordance with Section 15 of the
Plan.
(rr)
“Stock Appreciation Right” means an Award, granted alone or in connection with an Option, that pursuant to
Section 9 is designated as a Stock Appreciation Right.
(ss)
“Stock Bonus Award” means an Award granted pursuant to Section 10 of the Plan.
(tt)
“Subsidiary” means any corporation (other than the Company) in an unbroken chain of corporations beginning
with the Company if each of the corporations other than the last corporation in the unbroken chain owns stock possessing fifty
percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. A
corporation that attains the status of a Subsidiary on a date after the adoption of the Plan shall be considered a Subsidiary
commencing as of such date.
(uu)
“Tax-Related Items” means income tax, social insurance or other social contributions, national insurance,
social security, payroll tax, fringe benefits tax, payment on account or other tax-related items.
3. Stock Subject to the Plan.
(a) Stock Subject to the Plan.
Subject to the provisions of Sections 3(b) and 15, the maximum aggregate number of Shares that may be issued under the Plan will not exceed
1,594,800 new Shares. The Shares may be authorized, but unissued, or reacquired Common Stock. Notwithstanding the foregoing, subject to
the provisions of Section 15 below, in no event shall the maximum aggregate number of Shares that may be issued under the Plan pursuant
to Incentive Stock Options exceed the number set forth in this Section 3(a) plus, to the extent allowable under Section 422 of the Code
and the regulations promulgated thereunder, any Shares that again become available for issuance pursuant to Sections 3(b) and 3(c).
(b) Share
Reserve Increase. The number of Shares available for issuance under the Plan may be increased, at the discretion of the Administrator,
effective on October 1st of each Fiscal Year beginning with the 2023 Fiscal Year and ending on (and including) October 1st
of the 2033 Fiscal Year, in each case, in an amount equal to the lessor of (i) at the discretion of the Board, in an amount up
to 4% of the outstanding Shares on the last day of the immediately preceding month (calculated on a fully-diluted and as-converted basis)
and (ii) such other number of Shares determined by the Board.
(c) Lapsed
Awards. To the extent an Award or Existing Plan Award should expire or be forfeited or become unexercisable for any reason without
having been exercised in full, or is surrendered pursuant to an Exchange Program, the unissued Shares that were subject thereto shall,
unless the Plan shall have been terminated, continue to be available under the Plan for issuance pursuant to future Awards. In addition,
any Shares which are retained by the Company upon exercise of an Award or Existing Plan Award in order to satisfy the exercise or purchase
price for such Award or Existing Plan Award or any withholding taxes due with respect to such Award or Existing Plan Award shall be treated
as not issued and shall continue to be available under the Plan for issuance pursuant to future Awards. Shares issued under the
Plan or any Existing Plan Award and later forfeited to the Company due to the failure to vest or repurchased by the Company at the original
purchase price paid to the Company for the Shares (including, without limitation, upon forfeiture to or repurchase by the Company in
connection with a Participant ceasing to be a Service Provider) shall again be available for future grant under the Plan. To the extent
an Award under the Plan or Existing Plan Award is paid out in cash rather than Shares, such cash payment will not result in reducing
the number of Shares available for issuance under the Plan.
(d) Assumption
or Substitution of Awards by the Company. The Administrator, from time to time, may determine to substitute or assume outstanding
awards granted by another company, whether in connection with an acquisition of such other company or otherwise, by either: (a) assuming
such award under this Plan or (b) granting an Award under this Plan in substitution of such other company’s award. Such assumption
or substitution will be permissible if the holder of the substituted or assumed award would have been eligible to be granted an Award
under this Plan if the other company had applied the rules of this Plan to such grant. In the event the Administrator elects to assume
an award granted by another company, subject to the requirements of Section 409A of the Code, the purchase price or the exercise
price, as the case may be, and the number and nature of Shares issuable upon exercise or settlement of any such Award will be adjusted
appropriately. In the event the Administrator elects to grant a new Option in substitution rather than assuming an existing option, such
new Option may be granted with a similarly adjusted exercise price. Any awards that are assumed or substituted under this Plan shall
not reduce the number of Shares authorized for grant under the Plan or authorized for grant to a Participant in any fiscal year.
4. Administration
of the Plan.
(a) Procedure.
(i) Multiple
Administrative Bodies. Different Committees with respect to different groups of Service Providers may administer the Plan.
(ii) Rule
16b-3. To the extent desirable to qualify transactions hereunder as exempt under Rule 16b-3, the transactions contemplated hereunder
will be structured to satisfy the requirements for exemption under Rule 16b-3.
(iii) Other
Administration. Other than as provided above, the Plan will be administered by (A) the Board or (B) a Committee, which
committee will be constituted to satisfy Applicable Laws.
(b) Powers
of the Administrator. Subject to the provisions of the Plan, the Administrator will have the authority, in its discretion:
(i) to
determine the Fair Market Value in accordance with Section 2(t)(iii);
(ii) to
select the Service Providers to whom Awards may be granted hereunder;
(iii) to
determine the number of Shares to be covered by each Award granted hereunder;
(iv) to
approve forms of Award Agreements for use under the Plan;
(v) to
determine the terms and conditions, not inconsistent with the terms of the Plan, of any Award granted hereunder; such terms and conditions
include, but are not limited to, the exercise price, the time or times when Awards may be exercised (which may be based on Performance
Goals), any vesting acceleration or waiver of forfeiture restrictions, and any restriction or limitation regarding any Award or the Shares
relating thereto, based in each case on such factors as the Administrator will determine;
(vi) to
institute and determine the terms and conditions of an Exchange Program; provided however, that the Administrator shall not implement
an Exchange Program without the approval of the holders of a majority of the Shares that are present in person or by proxy and entitled
to vote at any annual or special meeting of the Company’s stockholders;
(vii) to
construe and interpret the terms of the Plan and Awards granted pursuant to the Plan;
(viii) correct
any defect, supply any omission or reconcile any inconsistency in this Plan, any Award or any Award Agreement;
(ix) to
prescribe, amend and rescind rules and regulations relating to the Plan, including rules and regulations established for the purpose
of satisfying non-U.S. Applicable Laws, for qualifying for favorable tax treatment under non-U.S. Applicable Laws or facilitating compliance
with non-U.S. Applicable Laws (sub-plans may be created for any of these purposes);
(x) to
modify or amend each Award (subject to Section 22 of the Plan), including but not limited to the discretionary authority to extend
the post-termination exercisability period of Awards, to accelerate vesting and to extend the maximum term of an Option (subject to Section
6(b) of the Plan regarding Incentive Stock Options);
(xi) adjust
Performance Goals to take into account changes in Applicable Laws or in accounting or tax rules, or such other extraordinary, unforeseeable,
nonrecurring or infrequently occurring events or circumstances as the Administrator deems necessary or appropriate to avoid windfalls
or hardships;
(xii) to
allow Participants to satisfy tax withholding obligations in such manner as prescribed in Section 16 of the Plan;
(xiii) to
authorize any person to execute on behalf of the Company any instrument required to effect the grant of an Award previously granted by
the Administrator;
(xiv) to
allow a Participant to defer the receipt of the payment of cash or the delivery of Shares that would otherwise be due to such Participant
under an Award; and
(xv) to
make all other determinations deemed necessary or advisable for administering the Plan.
(c) Effect
of Administrator’s Decision. The Administrator’s decisions, determinations and interpretations will be final and
binding on all Participants and any other holders of Awards.
(d) Delegation.
To the extent permitted by Applicable Laws, the Board or Committee, in its sole discretion and on such terms and conditions as it may
provide, may delegate all or any part of its authority and powers under the Plan to one or more Directors or officers of the Company.
To the extent permitted by Applicable Laws, the Board or Committee may delegate to one or more officers of the Company who may be (but
are not required to be) Insiders (“Officers”), the authority to do any of the following (i) designate Employees who are not
Insiders to be recipients of Awards, (ii) determine the number of Shares to be subject to such Awards granted to such designated Employees,
and (iii) take any and all actions on behalf of the Board or Committee other than any actions that affect the amount or form of compensation
of Insiders or have material tax, accounting, financial, human resource or legal consequences to the Company or its Affiliates; provided,
however, that the Board or Committee resolutions regarding any delegation with respect to (i) and (ii) will specify the total number
of Shares that may be subject to the Awards granted by such Officer and that such Officer may not grant an Award to himself or herself.
Any Awards will be granted on the form of Award Agreement most recently approved for use by the Board or Committee, unless otherwise
provided in the resolutions approving the delegation authority.
(e) Administration
of Awards Subject to Performance Goals. The Administrator will, in its sole discretion, determine the Performance Goals, if any,
applicable to any Award (including any adjustment(s) thereto that will be applied in determining the achievement of such Performance
Goals) on or prior to the Determination Date. The Performance Goals may differ from Participant to Participant and from Award to Award.
The Administrator shall determine and approve the extent to which such Performance Goals have been timely achieved and the extent to
which the Shares subject to such Award have thereby been earned.
(f) Section
16 of the Exchange Act. Awards granted to Participants who are Insiders must be approved by two or more “non-employee directors”
of the Board (as defined in the regulations promulgated under Section 16 of the Exchange Act).
5. Award
Eligibility. Nonstatutory Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units and Stock Bonus Awards
may be granted to Service Providers. Incentive Stock Options may be granted only to Employees.
6. Stock
Options.
(a) Limitations.
Each Option will be designated in the Award Agreement as either an Incentive Stock Option or a Nonstatutory Stock Option. However, notwithstanding
such designation, to the extent that the aggregate Fair Market Value of the Shares with respect to which Incentive Stock Options are
exercisable for the first time by the Participant during any calendar year (under all plans of the Company and any Affiliate) exceeds
one hundred thousand dollars ($100,000), such Options will be treated as Nonstatutory Stock Options. For purposes of this Section 6(a),
Incentive Stock Options will be taken into account in the order in which they were granted. The Fair Market Value of the Shares will
be determined as of the date the Option with respect to such Shares is granted. With respect to the Administrator’s authority in
Section 4(b)(x), if, at the time of any such extension, the exercise price per Share of the Option is less than the Fair Market Value
of a Share, the extension shall, unless otherwise determined by the Administrator, be limited to the earlier of (1) the maximum term
of the Option as set by its original terms, or (2) ten (10) years from the grant date. Unless otherwise determined by the Administrator,
any extension of the term of an Option pursuant to this Section 6(a) shall comply with Section 409A of the Code to the extent necessary
to avoid taxation thereunder.
(b) Term
of Option. The term of each Option will be stated in the Award Agreement. In the case of an Incentive Stock Option, the term will
be ten (10) years from the date of grant or such shorter term as may be provided in the Award Agreement. Moreover, in the case of an
Incentive Stock Option granted to a Participant who, at the time the Incentive Stock Option is granted, owns stock representing more
than ten percent (10%) of the total combined voting power of all classes of stock of the Company or any Affiliate, the term of the Incentive
Stock Option will be five (5) years from the date of grant or such shorter term as may be provided in the Award Agreement.
(c) Option
Exercise Price and Consideration.
(i) Exercise
Price. The per share exercise price for the Shares to be issued pursuant to exercise of an Option will be determined by the Administrator,
subject to the following:
(1) In
the case of an Incentive Stock Option
(A) granted
to an Employee who, at the time the Incentive Stock Option is granted, owns stock representing more than ten percent (10%) of the voting
power of all classes of stock of the Company or any Affiliate, the per Share exercise price will be no less than one hundred ten percent
(110%) of the Fair Market Value per Share on the date of grant.
(B) granted
to any Employee other than an Employee described in paragraph (A) immediately above, the per Share exercise price will be no less than
one hundred percent (100%) of the Fair Market Value per Share on the date of grant.
(2) In
the case of a Nonstatutory Stock Option, the per Share exercise price will be no less than one hundred percent (100%) of the Fair Market
Value per Share on the date of grant.
(3) Notwithstanding
the foregoing, Options may be granted with a per Share exercise price of less than one hundred percent (100%) of the Fair Market Value
per Share on the date of grant pursuant to a transaction described in, and in a manner consistent with, Section 424(a) of the Code.
(ii) Waiting
Period and Exercise Dates. At the time an Option is granted, the Administrator will fix the period within which the Option may be
exercised and will determine any conditions that must be satisfied before the Option may be exercised. An Option may become exercisable
upon completion of a specified period of service with the Company or an Affiliate and/or based on the achievement of Performance Goals
during a Performance Period as set out in advance in the Participant’s Award Agreement. If an Option is exercisable based on the
satisfaction of Performance Goals, then the Administrator will: (x) determine the nature, length and starting date of any Performance
Period for such Option; (y) select the Performance Goals to be used to measure the performance; and (z) determine what additional
vesting conditions, if any, should apply.
(iii) Form
of Consideration. The Administrator will determine the acceptable form of consideration for exercising an Option, including the method
of payment. In the case of an Incentive Stock Option, the Administrator will determine the acceptable form of consideration at the time
of grant. Such consideration for both types of Options may consist entirely of: (1) cash; (2) check; (3) promissory note, to the extent
permitted by Applicable Laws, (4) other Shares, provided that such Shares have a Fair Market Value on the date of surrender equal to
the aggregate exercise price of the Shares as to which such Option will be exercised and provided that accepting such Shares will not
result in any adverse accounting consequences to the Company, as the Administrator determines in its sole discretion; (5) consideration
received by the Company under a broker-assisted (or other) cashless exercise program (whether through a broker or otherwise) implemented
by the Company in connection with the Plan; (6) by net exercise; (7) such other consideration and method of payment for the issuance
of Shares to the extent permitted by Applicable Laws; or (8) any combination of the foregoing methods of payment.
(d) Exercise
of Option.
(i) Procedure
for Exercise; Rights as a Stockholder. Any Option granted hereunder will be exercisable according to the terms of the Plan and at
such times and under such conditions as determined by the Administrator and set forth in the Award Agreement. An Option may not be exercised
for a fraction of a Share.
An
Option will be deemed exercised when the Company receives: (i) a notice of exercise (in such form as the Administrator may specify
from time to time) from the person entitled to exercise the Option, and (ii) full payment for the Shares with respect to which the
Option is exercised (together with full payment of any applicable taxes or other amounts required to be withheld or deducted with respect
to the Option). Full payment may consist of any consideration and method of payment authorized by the Administrator and permitted by
the Award Agreement and the Plan. Shares issued upon exercise of an Option will be issued in the name of the Participant or, if requested
by the Participant, in the name of the Participant and his or her spouse. Until the Shares are issued (as evidenced by the appropriate
entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any
other rights as a stockholder will exist with respect to the Shares subject to an Option, notwithstanding the exercise of the Option.
The Company will issue (or cause to be issued) such Shares promptly after the Option is exercised. No adjustment will be made for a dividend
or other right for which the record date is prior to the date the Shares are issued, except as provided in Section 15 of the Plan.
(ii) Termination
of Relationship as a Service Provider. If a Participant ceases to be a Service Provider, other than upon the Participant’s
termination as the result of the Participant’s death, Disability or Cause, the Participant may exercise his or her Option within
such period of time as is specified in the Award Agreement to the extent that the Option is vested on the date of termination (but in
no event later than the expiration of the term of such Option as set forth in the Award Agreement). In the absence of a specified time
in the Award Agreement, the Option will remain exercisable for three (3) months following the Participant’s termination. Unless
otherwise provided by the Administrator, if on the date of termination the Participant is not vested as to his or her entire Option,
the Shares covered by the unvested portion of the Option will revert to the Plan. If after termination the Participant does not exercise
his or her Option within the time specified by the Administrator, the Option will terminate, and the Shares covered by such Option will
revert to the Plan.
(iii) Disability
of Participant. If a Participant ceases to be a Service Provider as a result of the Participant’s Disability, the Participant
may exercise his or her Option within such period of time as is specified in the Award Agreement to the extent the Option is vested on
the date of termination (but in no event later than the expiration of the term of such Option as set forth in the Award Agreement). In
the absence of a specified time in the Award Agreement, the Option will remain exercisable for twelve (12) months following the Participant’s
termination. Unless otherwise provided by the Administrator, if on the date of termination the Participant is not vested as to his or
her entire Option, the Shares covered by the unvested portion of the Option will revert to the Plan. If after termination the Participant
does not exercise his or her Option within the time specified herein, the Option will terminate, and the Shares covered by such Option
will revert to the Plan.
(iv) Death
of Participant. If a Participant dies while a Service Provider, the Option may be exercised following the Participant’s death
within such period of time as is specified in the Award Agreement to the extent that the Option is vested on the date of death (but in
no event may the Option be exercised later than the expiration of the term of such Option as set forth in the Award Agreement), by the
Participant’s designated beneficiary, provided such beneficiary has been designated prior to Participant’s death in a form
acceptable to the Administrator. If no such beneficiary has been designated by the Participant, then such Option may be exercised by
the personal representative of the Participant’s estate or by the person(s) to whom the Option is transferred pursuant to the Participant’s
will or in accordance with the laws of descent and distribution. In the absence of a specified time in the Award Agreement, the Option
will remain exercisable for twelve (12) months following Participant’s death. Unless otherwise provided by the Administrator, if
on the date of termination the Participant is not vested as to his or her entire Option, the Shares covered by the unvested portion of
the Option will revert to the Plan. If the Option is not so exercised within the time specified herein, the Option will terminate, and
the Shares covered by such Option will revert to the Plan.
(v) Termination
for Cause. If a Participant ceases to be a Service Provider as a result of being terminated for Cause, any outstanding Option (including
any vested portion thereof) held by such Participant shall immediately terminate in its entirety upon the Participant being first notified
of his or her termination for Cause and the Participant will be prohibited from exercising his or her Option from and after the date
of such termination. All the Participant’s rights under any Option, including the right to exercise the Option, may be suspended
pending an investigation of whether Participant will be terminated for Cause.
7. Restricted
Stock.
(a) Grant
of Restricted Stock. Subject to the terms and provisions of the Plan, the Administrator, at any time and from time to time, may grant
Shares of Restricted Stock to Service Providers in such amounts as the Administrator, in its sole discretion, will determine.
(b) Restricted
Stock Agreement. Each Award of Restricted Stock will be evidenced by an Award Agreement that will specify the Period of Restriction,
the number of Shares granted, and such other terms and conditions as the Administrator, in its sole discretion, will determine. Unless
the Administrator determines otherwise, the Company as escrow agent will hold Shares of Restricted Stock until the restrictions on such
Shares have lapsed. These restrictions may lapse upon the completion of a specified period of service with the Company or an Affiliate
and/or based on the achievement of Performance Goals during a Performance Period as set out in advance in the Participant’s Award
Agreement. If the unvested Shares of Restricted Stock are being earned upon the satisfaction of Performance Goals, then the Administrator
will: (x) determine the nature, length and starting date of any Performance Period for each unvested Share; (y) select the
Performance Goals to be used to measure the performance; and (z) determine what additional vesting conditions, if any, should apply.
(c) Transferability.
Except as provided in this Section 7 or the Award Agreement, Shares of Restricted Stock may not be sold, transferred, pledged, assigned,
or otherwise alienated or hypothecated until the end of the applicable Period of Restriction.
(d) Other
Restrictions. The Administrator, in its sole discretion, may impose such other restrictions on Shares of Restricted Stock as it may
deem advisable or appropriate.
(e) Removal
of Restrictions. Except as otherwise provided in this Section 7, Shares of Restricted Stock covered by each Restricted Stock grant
made under the Plan will be released from escrow as soon as practicable after the last day of the Period of Restriction or at such other
time as the Administrator may determine. The Administrator, in its discretion, may accelerate the time at which any restrictions will
lapse or be removed.
(f) Voting
Rights. During the Period of Restriction, Service Providers holding Shares of Restricted Stock granted hereunder may exercise full
voting rights with respect to those Shares, unless the Administrator determines otherwise.
(g) Dividends
and Other Distributions. During the Period of Restriction, Service Providers holding Shares of Restricted Stock will be entitled
to receive all dividends and other distributions paid with respect to such Shares, unless the Administrator provides otherwise. If any
such dividends or distributions are paid in Shares, the Shares will be subject to the same restrictions, including, without limitation,
restrictions on transferability and forfeitability, as the Shares of Restricted Stock with respect to which they were paid. During the
Period of Restriction, such dividends or other distributions shall be subject to the same restrictions and risk of forfeiture as the
shares of Restricted Stock with respect to which the dividends accrue and shall not be paid or distributed unless and until such related
Shares have vested and been earned.
(h) Return
of Restricted Stock to Company. On the date set forth in the Award Agreement, the Restricted Stock for which restrictions have not
lapsed will be cancelled and returned as unissued Shares to the Company and again will become available for grant under the Plan.
8. Restricted
Stock Units.
(a) Grant.
Restricted Stock Units may be granted at any time and from time to time as determined by the Administrator. After the Administrator determines
that it will grant Restricted Stock Units under the Plan, it will advise the Participant in an Award Agreement of the terms, conditions,
and restrictions (if any) related to the grant, including the number of Restricted Stock Units.
(b) Vesting
Criteria and Other Terms. The Administrator will set vesting criteria in its discretion, which, depending on the extent to which
the criteria are met, will determine the number of Restricted Stock Units that will be paid out to the Participant. A Restricted Stock
Unit Award may vest upon completion of a specified period of service with the Company or an Affiliate and/or based on the achievement
of Performance Goals during a Performance Period as set out in advance in the Participant’s Award Agreement. If Restricted Stock
Units vest based upon satisfaction of Performance Goals, then the Administrator will: (x) determine the nature, length and starting
date of any Performance Period for the Restricted Stock Units; (y) select the Performance Goals to be used to measure the performance;
and (z) determine what additional vesting conditions, if any, should apply.
(c) Earning
Restricted Stock Units. Upon meeting the applicable vesting criteria, the Participant will be entitled to receive a payout as determined
by the Administrator. Notwithstanding the foregoing, at any time after the grant of Restricted Stock Units, the Administrator, in its
sole discretion, may reduce or waive any vesting criteria that must be met to receive a payout.
(d) Dividend
Equivalents. The Administrator may, in its sole discretion, award dividend equivalents in connection with the grant of Restricted
Stock Units that may be settled in cash, in Shares of equivalent value, or in some combination thereof.
(e) Form
and Timing of Payment. Payment of earned Restricted Stock Units will be made upon the date(s) determined by the Administrator and
set forth in the Award Agreement. The Administrator, in its sole discretion, may only settle earned Restricted Stock Units in cash, Shares,
or a combination of both.
(f) Cancellation.
On the date set forth in the Award Agreement, all Shares underlying any unvested, unlapsed unearned Restricted Stock Units will be forfeited
to the Company for future issuance.
9. Stock
Appreciation Rights.
(a) Grant
of Stock Appreciation Rights. Subject to the terms and conditions of the Plan, a Stock Appreciation Right may be granted to Service
Providers at any time and from time to time as will be determined by the Administrator, in its sole discretion.
(b) Number
of Shares. The Administrator will have complete discretion to determine the number of Stock Appreciation Rights granted to any Service
Provider.
(c) Exercise
Price and Other Terms. The per share exercise price for the Shares to be issued pursuant to exercise of a Stock Appreciation Right
will be determined by the Administrator and will be no less than one hundred percent (100%) of the Fair Market Value per Share on the
date of grant. Otherwise, the Administrator, subject to the provisions of the Plan, will have complete discretion to determine the terms
and conditions of Stock Appreciation Rights granted under the Plan.
(d) Stock
Appreciation Right Agreement. Each Stock Appreciation Right grant will be evidenced by an Award Agreement that will specify the exercise
price, the term of the Stock Appreciation Right, the conditions of exercise, and such other terms and conditions as the Administrator,
in its sole discretion, will determine. A Stock Appreciation Right may become exercisable upon completion of a specified period of service
with the Company or an Affiliate and/or based on the achievement of Performance Goals during a Performance Period as set out in advance
in the Participant’s Award Agreement. If a Stock Appreciation Right is exercisable based on the satisfaction of Performance Goals,
then the Administrator will: (x) determine the nature, length and starting date of any Performance Period for such Stock Appreciation
Right; (y) select the Performance Goals to be used to measure the performance; and (z) determine what additional vesting conditions,
if any, should apply.
(e) Expiration
of Stock Appreciation Rights. A Stock Appreciation Right granted under the Plan will expire upon the date determined by the Administrator,
in its sole discretion, and set forth in the Award Agreement. Notwithstanding the foregoing, the rules of Section 6(b) relating
to the maximum term and Section 6(d) relating to exercise also will apply to Stock Appreciation Rights.
(f) Payment
of Stock Appreciation Right Amount. Upon exercise of a Stock Appreciation Right, a Participant will be entitled to receive payment
from the Company in an amount determined by multiplying:
(i) The
difference between the Fair Market Value of a Share on the date of exercise over the exercise price; times
(ii) The
number of Shares with respect to which the Stock Appreciation Right is exercised.
At
the discretion of the Administrator, the payment upon Stock Appreciation Right exercise may be in cash, in Shares of equivalent value,
or in some combination thereof.
10. Stock
Bonus Awards.
(a) Awards
of Stock Bonuses. A Stock Bonus Award is an award of Shares to an eligible person without a purchase price that is not subject to
any restrictions. All Stock Bonus Awards may but are not required to be made pursuant to an Award Agreement.
(b) Terms
of Stock Bonus Awards. The Administrator will determine the number of Shares to be awarded to the Participant under a Stock Bonus
Award.
(c) Form
of Payment to Participant. Payment may be made in the form of cash, whole Shares, or a combination thereof, based on the Fair Market
Value of the Shares subject to the Stock Bonus Award on the date of payment, as determined in the sole discretion of the Administrator.
11. Outside
Director Limitations. Stock awards granted during a single fiscal year under the Plan or otherwise, taken together with any cash
fees paid during such fiscal year for services on the Board, shall not exceed $500,000 in total value for any Outside Director. Such
applicable limit shall include the value of any stock awards that are received in lieu of all or a portion of any annual committee cash
retainers or other similar cash based payments. Stock awards granted to an individual while he or she was serving in the capacity as
an Employee or while he or she was an Independent Contractor but not an Outside Director will not count for purposes of the limitations
set forth in this Section 11.
12. Leaves
of Absence/Transfer Between Locations. The Administrator shall have the discretion to determine at any time whether and to what extent
the vesting of Awards shall be suspended during any leave of absence; provided, however, that in the absence of such determination, vesting
of Awards shall continue during any paid leave and shall be suspended during any unpaid leave (unless otherwise required by Applicable
Laws). A Participant will not cease to be an Employee in the case of (i) any leave of absence approved by the Participant’s
employer or (ii) transfers between locations of the Company or between the Company or any Affiliate. If an Employee is holding an
Incentive Stock Option and such leave exceeds three (3) months then, for purposes of Incentive Stock Option status only, such Employee’s
service as an Employee shall be deemed terminated on the first (1st) day following such three (3) month period and the Incentive
Stock Option shall thereafter automatically treated for tax purposes as a Nonstatutory Stock Option in accordance with Applicable Laws,
unless reemployment upon the expiration of such leave is guaranteed by contract or statute, or unless provided otherwise pursuant to
a written Company policy.
13. Change
in Time Commitment. In the event a Participant’s regular level of time commitment in the performance of his or her services
for the Company or any Affiliates is reduced (for example, and without limitation, if the Participant is an Employee of the Company and
the Employee has a change in status from full-time to part-time or takes an extended leave of absence) after the date of grant of any
Award, the Committee or the Administrator, in that party’s sole discretion, may (x) make a corresponding reduction in the
number of Shares or cash amount subject to any portion of such Award that is scheduled to vest or become payable after the date of such
change in time commitment, and (y) in lieu of or in combination with such a reduction, extend the vesting schedule applicable to
such Award (in accordance with Section 409A of the Code, as applicable). In the event of any such reduction, the Participant will
have no right with respect to any portion of the Award that is so amended.
14. Transferability
of Awards. Unless determined otherwise by the Administrator, an Award may not be sold, pledged, assigned, hypothecated, transferred,
or disposed of in any manner other than by will or by the laws of descent or distribution and may be exercised, during the lifetime of
the Participant, only by the Participant. If the Administrator makes an Award transferable, such Award will contain such additional terms
and conditions as the Administrator deems appropriate provided, however, that in no event may any Award be transferred for consideration
to a third-party financial institution.
15. Adjustments;
Dissolution or Liquidation; Merger or Change in Control.
(a) Adjustments.
In the event of a stock split, reverse stock split, stock dividend, combination, consolidation, recapitalization (including a recapitalization
through a large nonrecurring cash dividend) or reclassification of the Shares, subdivision of the Shares, a rights offering, a reorganization,
merger, spin-off, split-up, repurchase, or exchange of Common Stock or other securities of the Company or other significant corporate
transaction, or other change affecting the Common Stock occurs, the Administrator, in order to prevent dilution, diminution or enlargement
of the benefits or potential benefits intended to be made available under the Plan, will, in such manner as it may deem equitable, adjust
the number, kind and class of securities that may be delivered under the Plan and/or the number, class, kind and price of securities
covered by each outstanding Award. Notwithstanding the forgoing, all adjustments under this Section 15 shall be made in a manner that
does not result in taxation under Section 409A of the Code.
(b) Dissolution
or Liquidation. In the event of the proposed winding up, dissolution or liquidation of the Company, the Administrator will notify
each Participant as soon as practicable prior to the effective date of such proposed transaction. To the extent it has not been previously
exercised or settled, an Award will terminate immediately prior to the consummation of such proposed action.
(c) Corporate
Transaction. In the event of (i) a transfer of all or substantially all of the Company’s assets, (ii) a merger, consolidation
or other capital reorganization or business combination transaction of the Company with or into another corporation, entity or person,
(iii) the consummation of a transaction, or series of related transactions, in which any “person” (as such term is used in
Sections 13(d) and 14(d) of the Exchange Act) becomes the “beneficial owner” (as defined in Rule 13d-3 of the Exchange Act),
directly or indirectly, of more than 50% of the Company’s then outstanding capital stock or (iv) a Change in Control (each, a “Corporate
Transaction”), each outstanding Award (vested or unvested) will be treated as the Administrator determines, which determination
may be made without the consent of any Participant and need not treat all outstanding Awards (or portion thereof) in an identical manner.
Such determination, without the consent of any Participant, may provide (without limitation) for one or more of the following in the
event of a Corporate Transaction: (A) the continuation of such outstanding Awards by the Company (if the Company is the surviving corporation);
(B) the assumption of such outstanding Awards by the surviving corporation or its parent; (C) the substitution by the surviving corporation
or its parent of new options or other equity awards for such Awards; (D) the cancellation of such Awards in exchange for a payment to
the Participants equal to the excess of (1) the Fair Market Value of the Shares subject to such Awards as of the closing date of such
Corporate Transaction over (2) the exercise price or purchase price paid or to be paid (if any) for the Shares subject to the Awards;
provided further, that at the discretion of the Administrator, such payment may be subject to the same conditions that apply to the consideration
that will be paid to holders of Shares in connection with the transaction; provided, however, that any payout in connection with a terminated
award shall comply with Section 409A of the Code to the extent necessary to avoid taxation thereunder; (E) the full or partial acceleration
of exercisability or vesting and accelerated expiration of an outstanding Award and lapse of the Company’s right to repurchase
or re-acquire Shares acquired under an Award or lapse of forfeiture rights with respect to Shares acquired under an Award; (F) the opportunity
for Participants to exercise their Options prior to the occurrence of the Corporate Transaction and the termination (for no consideration)
upon the consummation of such Corporate Transaction of any Options not exercised prior thereto; or (G) the cancellation of outstanding
Awards in exchange for no consideration.
(d) Change
in Control. An Award may be subject to additional acceleration of vesting and exercisability upon or after a Change in Control as
may be provided in the Award Agreement for such Award or as may be provided in any other written agreement between the Company or any
Affiliate and the Participant, but in the absence of such provision, no such acceleration will occur.
16. Tax.
(a) Withholding
Requirements. Prior to the delivery of any Shares or cash pursuant to an Award (or exercise thereof) or prior to any time the Award
or Shares are subject to taxation or other Tax-Related Items, the Company and/or the Participant’s employer will have the power
and the right to deduct or withhold, or require a Participant to remit to the Company, an amount sufficient to satisfy any Tax-Related
Items or other items that are required to be withheld or deducted or otherwise applicable with respect to such Award.
(b) Withholding
Arrangements. The Administrator, in its sole discretion and pursuant to such procedures as it may specify from time to time, may
permit a Participant to satisfy such withholding or deduction obligations or any other Tax-Related Items, in whole or in part by (without
limitation) (a) paying cash, (b) electing to have the Company withhold otherwise deliverable cash or Shares, or (c) delivering to
the Company already-owned Shares; provided that, unless specifically permitted by the Company, any proceeds derived from a cashless exercise
must be an approved broker-assisted cashless exercise or the cash or Shares withheld or delivered must be limited to avoid financial
accounting charges under applicable accounting guidance or Shares must have been previously held for the minimum duration required to
avoid financial accounting charges under applicable accounting guidance. The Fair Market Value of the Shares to be withheld or delivered
will be determined based on such methodology that the Company deems to be reasonable and in accordance with Applicable Laws.
(c) Compliance
With Section 409A of the Code. Awards will be designed and operated in such a manner that they are either exempt from the application
of, or comply with, the requirements of Section 409A of the Code such that the grant, payment, settlement or deferral will not be
subject to the additional tax or interest applicable under Section 409A of the Code. The Plan and each Award Agreement under the
Plan is intended to meet the requirements of Section 409A of the Code (or an exemption therefrom) and will be construed and
interpreted in accordance with such intent, except as otherwise determined in the sole discretion of the Administrator. To the extent
that an Award or payment, or the settlement or deferral thereof, is subject to Section 409A of the Code the Award will be granted,
paid, settled or deferred in a manner that will meet the requirements of Section 409A of the Code (or an exemption therefrom), such
that the grant, payment, settlement or deferral will not be subject to the additional tax or interest applicable under Section 409A
of the Code. In no event will the Company be responsible for or reimburse a Participant for any taxes or other penalties incurred as
a result of applicable of Section 409A of the Code.
17. No
Effect on Employment or Service. Neither the Plan nor any Award will confer upon a Participant any right with respect to continuing
the Participant’s relationship as a Service Provider with the Company or any Affiliate, nor will they interfere in any way with
the Participant’s right or the Company’s or any Affiliate’s right to terminate such relationship at any time, with
or without cause, to the extent permitted by Applicable Laws.
18. Date
of Grant. The date of grant of an Award will be, for all purposes, the date on which the Administrator makes the determination granting
such Award, or such other later date as is determined by the Administrator. Notice of the determination will be provided to each Participant
within a reasonable time after the date of such grant.
19. Corporate
Records Control. In the event that the corporate records (e.g., Board consents, resolutions or minutes) documenting the corporate
action constituting the grant contain terms (e.g., exercise price, vesting schedule or number of Shares) that are inconsistent with those
in the Award Agreement or related grant documents as a result of a clerical error in the papering of the Award Agreement or related grant
documents, the corporate records will control and the Participant will have no legally binding right to the incorrect term in the Award
Agreement or related grant documents.
20. Clawback/Recovery.
The Administrator may specify in an Award Agreement that the Participant’s rights, payments, and/or benefits with respect to an
Award will be subject to reduction, cancellation, forfeiture, and/or recoupment upon the occurrence of certain specified events, in addition
to any applicable vesting, performance or other conditions and restrictions of an Award. Notwithstanding any provisions to the contrary
under this Plan, an Award granted under the Plan shall be subject to the Company’s clawback policy as may be established and/or
amended from time to time (the “Compensation Recovery Policy”). The Administrator may require a Participant to forfeit or
return to and/or reimburse the Company for all or a portion of the Award and/or Shares issued under the Award, any amounts paid under
the Award, and any payments or proceeds paid or provided upon disposition of the Shares issued under the Award, pursuant to the terms
of such Company policy or as necessary or appropriate to comply with Applicable Laws. For the avoidance of doubt, each Participant shall
be subject to compliance with Applicable Laws, the Company’s Code of Business Conduct and Ethics, and the Company’s corporate
policies, as applicable, including without limitation the Company’s Compensation Recovery Policy. Notwithstanding anything to the
contrary herein, (i) compliance with Applicable Law, the Company’s Code of Business Conduct and Ethics, and the Company’s
corporate policies, as applicable, shall be a pre-condition to earning, or vesting in respect of, any Award under this Plan and (ii)
any Awards under this Plan which are subject to the Company’s Compensation Recovery Policy will not be earned or vested, even if
already granted, paid or settled, until the Company’s Compensation Recovery Policy ceases to apply to such Awards and any other
vesting conditions applicable to such Awards are satisfied.
21. Term
of Plan. Subject to Section 25 of the Plan, the Plan will become effective as of the Effective Date. The Plan will continue in effect
for a term of ten (10) years measured from the earlier of the date the Board approves this Plan or the approval of this Plan by the Company’s
stockholders, unless terminated earlier under Section 22 of the Plan.
22. Amendment
and Termination of the Plan.
(a) Amendment
and Termination. The Administrator may at any time amend, alter, suspend or terminate the Plan.
(b) Stockholder
Approval. The Company will obtain stockholder approval of any Plan amendment to the extent necessary and desirable to comply with
Applicable Laws.
(c) Effect
of Amendment or Termination. No amendment, alteration, suspension or termination of the Plan will materially impair the rights of
any Participant, unless mutually agreed otherwise between the Participant and the Administrator, which agreement must be in writing and
signed by the Participant and the Company. Termination of the Plan will not affect the Administrator’s ability to exercise the
powers granted to it hereunder with respect to Awards granted under the Plan prior to the date of such termination.
23. Conditions
Upon Issuance of Shares.
(a) Legal
Compliance. Shares will not be issued pursuant to the exercise or vesting (as applicable) of an Award unless the exercise or vesting
of such Award and the issuance and delivery of such Shares will comply with Applicable Laws and will be further subject to the approval
of counsel for the Company with respect to such compliance.
(b) Investment
Representations. As a condition to the exercise of an Award, the Company may require the person exercising such Award to represent
and warrant at the time of any such exercise that the Shares are being purchased only for investment and without any present intention
to sell or distribute such Shares if, in the opinion of counsel for the Company, such a representation is required.
24. Inability
to Obtain Authority. The inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority
is deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any Shares hereunder, will relieve the Company
of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority will not have been obtained.
25. Stockholder
Approval. The Plan will be subject to approval by the stockholders of the Company within twelve (12) months after the date the Plan
is adopted by the Board. Such stockholder approval will be obtained in the manner and to the degree required under Applicable Laws.
26. Governing
Law. The Plan and all Awards hereunder shall be construed in accordance with and governed by the laws of the State of Delaware, but
without regard to its conflict of law provisions.
o O o
APPENDIX
B
AMENDMENT TO
THE SERVE ROBOTICS INC.
2023 EQUITY INCENTIVE PLAN
This Amendment (this “Amendment”)
to Serve Robotics Inc.’s 2023 Equity Incentive Plan (the “Plan”) is dated as of July 22, 2024.
WHEREAS, pursuant to Section 4(b)(ix) of the Plan,
the Administrator has the authority to amend the Plan, subject to the extent necessary and desirable to comply with Applicable Laws; and
WHEREAS, the Board deems it advisable and in the
best interests of the Company and its stockholders to amend the Plan to increase the number of shares for which awards may be granted
under the Plan by an additional 3,703,549 shares.
NOW THEREFORE, it is hereby acknowledged and agreed
that:
| 1. | Defined Terms. Capitalized terms used herein, but
not otherwise defined herein, have their respective meanings ascribed to them in the Plan. |
| 2. | Amendment. Section 3(a) of the Plan shall be, and
is, hereby amended and restated in its entirety as follows: |
Stock Subject to the Plan.
Subject to the provisions of Sections 3(b) and 15 of the Plan, the maximum aggregate number of Shares that may be issued under the
Plan is 5,250,004 Shares. The Shares may be authorized, but unissued, or reacquired Common Stock. Notwithstanding the foregoing, subject
to the provisions of Section 15 below, in no event shall the maximum aggregate number of Shares that may be issued under the Plan
pursuant to Incentive Stock Options exceed the number set forth in this Section 3(a) plus, to the extent allowable under Section 422
of the Code and the regulations promulgated thereunder, any Shares that again become available for issuance pursuant to Sections 3(b)
and 3(c).
| 3. | Reference to and Effect on the Plan. Except as specifically
amended hereby, the Plan shall remain in full force and effect and otherwise unmodified. All references in the Plan to the “Plan”
shall mean the Plan as amended hereby. |
| 4. | Effectiveness. This Amendment is effective as of the
date first written above. |
* * *
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