UNITED
STATES
SECURITIES AND
EXCHANGE COMMISSION
Washington, D.C.
20549
SCHEDULE
14A
Proxy Statement Pursuant to
Section 14(a) of
the Securities Exchange Act of 1934
(Amendment No.
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Preliminary Proxy
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Definitive Proxy Statement
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Definitive Additional
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Soliciting Material under
§240.14a‑12
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InVivo Therapeutics
Holdings Corp.
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(Name of Registrant as Specified In
Its Charter)
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(Name of Person(s) Filing Proxy
Statement, if other than the Registrant)
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which transaction applies:
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PRELIMINARY PROXY
MATERIALS
SUBJECT TO
COMPLETION

One Kendall Square,
Suite B14402
Cambridge, MA
02139
ANNUAL MEETING
POSTPONED TO JANUARY 21, 2020
November 26, 2019
Dear InVivo Stockholder:
I am pleased to invite you to attend
the 2019 Annual Meeting of Stockholders (the “Annual Meeting”) of
InVivo Therapeutics Holdings Corp., to be held on Tuesday,
January 21, 2020 at 11 a.m., local time, at the
WilmerHale Law Offices,
60 State Street, Boston, Massachusetts 02109.
The Annual Meeting had originally
been scheduled for June 11, 2019 and after two adjournments was
postponed. Any votes that you made for
proposals presented at the June annual meeting will be
disregarded. Your vote on the matters described in the
attached Notice of Annual Meeting and proxy statement is
critical.
Specific details regarding admission
to the Annual Meeting and the business to be conducted at the
Annual Meeting are more fully described in the accompanying Notice
of Annual Meeting and proxy statement. We encourage you to
carefully read these materials, as well as the enclosed Annual
Report for the fiscal year ended December 31,
2018.
Your vote is very important. Whether
or not you plan to attend the Annual Meeting, I hope you will vote
as soon as possible. You may vote via the Internet, by telephone,
or if you received a paper copy of the proxy card, by completing
and returning it in the envelope provided. Voting via the Internet,
by telephone or by written proxy will ensure your representation at
the Annual Meeting if you do not attend in person. Please review
the instructions on the proxy card regarding each of these voting
options.
Thank you for your continued
support.
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Sincerely,
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Richard Toselli,
M.D. President, Chief
Executive Officer and Director
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YOUR VOTE IS
EXTREMELY IMPORTANT!
To ensure your
representation at the Annual Meeting, please submit your proxy and
voting instructions by completing, signing and dating the proxy
card as promptly as possible and returning it in the enclosed
envelope (to which no postage needs to be affixed if mailed in the
United States), or by using one of the voting methods set forth in
the attached proxy statement.
INVIVO
THERAPEUTICS HOLDINGS CORP.
One Kendall Square,
Suite B14402
Cambridge, MA
02139
NOTICE OF 2019
ANNUAL MEETING OF STOCKHOLDERS
To Be Held On
Tuesday, January 21, 2020
To Our Stockholders:
The annual meeting
of InVivo Therapeutics Holdings Corp., a Nevada Corporation,
originally scheduled for June 11, 2019, has been postponed to
January 21, 2020. Any votes that you made for proposals
presented at the originally scheduled June annual meeting will be
disregarded.
As a result, notice is hereby given
that the 2019 Annual Meeting of Stockholders (the “Annual Meeting”)
of InVivo Therapeutics Holdings Corp. will be held on Tuesday,
January 21, 2020 at 11 a.m., local time, at the
WilmerHale Law Offices,
60 State Street, Boston, Massachusetts 02109, for the following purposes:
(1) to
elect two Class II directors, each for a three‑year
term;
(2) to
approve an amendment to the corporation’s Articles of Incorporation
to increase the
number of authorized shares of our common stock;
(3) to
approve an amendment to the corporation’s Articles of Incorporation
to authorize 1,000,000 shares of “blank-check” preferred
stock;
(4) to
approve an amendment to our 2015 Equity Incentive
Plan;
(5) to
approve, on an advisory basis, the compensation of our named
executive officers;
(6) to
approve, on an advisory basis, that holding future advisory votes
to approve executive compensation occur every three years;
and
(7) to
ratify the selection by the Audit Committee of RSM US LLP as
the corporation’s independent registered public accounting firm for
the fiscal year ending December 31, 2019.
Stockholders will also act on such
other business as may properly come before the meeting or any
adjournment or postponement thereof.
The Board of Directors has fixed
Friday, November 22, 2019, as the record date for the
determination of stockholders entitled to notice of, and to vote
at, the Annual Meeting. Accordingly, only stockholders of record at
the close of business on the record date will be entitled to notice
of, and to vote at, the Annual Meeting, or any adjournments
thereof.
All of our stockholders are cordially
invited and encouraged to attend the Annual Meeting in person. For
security reasons, you will need both an admission card and a
current government-issued picture identification (such as a
driver’s license or a passport) to enter the Annual Meeting. Please
follow the instructions on page 40 for more details on admission to
the Annual Meeting. To ensure your representation at the Annual
Meeting, you are urged to vote your shares of common stock using
one of the voting methods set forth in the attached proxy
statement. Any stockholder attending the Annual Meeting may vote in
person even if he or she previously submitted a proxy card. If your
shares of common stock are held by a bank, broker, or other agent,
please follow the instructions from your bank, broker, or other
agent to have your shares voted.
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By order of the Board of
Directors,
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Richard Toselli, M.D.
President, Chief Executive Officer and Director
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Cambridge, Massachusetts
November 26, 2019
Important Notice
Regarding the Availability of Proxy Materials for the Annual
Meeting: This proxy
statement, the Notice of Meeting and our Annual Report on
Form 10‑K for the fiscal year ended December 31,
2018 (the “Annual Report”), are available on the Internet, free of
charge, at http://www.cstproxy.com/invivotherapeutics/2019. On this
website, you will be able to access this proxy statement, our
Annual Report and any amendments or supplements to the foregoing
materials that are required to be furnished to
stockholders.
INVIVO THERAPEUTICS HOLDINGS
CORP.
PROXY STATEMENT
FOR THE ANNUAL MEETING OF
STOCKHOLDERS
TO BE HELD ON TUESDAY,
JANUARY 21, 2020
This proxy statement is being
furnished to you in connection with the solicitation by the Board
of Directors (the “Board”) of InVivo Therapeutics Holdings Corp.
(the “company,” “we,” “us,” or “our”) of proxies, in the
accompanying form, to be used at our 2019 Annual Meeting of
Stockholders (the “Annual Meeting”) to be held on Tuesday,
January 21, 2020 at 11 a.m., local time, at the
WilmerHale Law Offices,
60 State Street, Boston, Massachusetts 02109, and any adjournment or postponement thereof.
This proxy statement and the accompanying form of proxy are being
mailed to stockholders on or about December 4,
2019.
Questions and Answers about
Voting at the Annual Meeting and Related Matters
What am I voting on?
At the Annual Meeting, you will be
asked to vote on the following seven proposals. Our Board
recommendation for each proposal is set forth below.
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Proposal
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Board
Recommendation
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(1) to
elect two Class II directors, each to serve a three‑year term
expiring at the 2022 annual meeting
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FOR each
Director Nominee
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(2) to
approve an amendment to our Articles of Incorporation to increase
the number of authorized shares of our common stock
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FOR
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(3) to
approve an amendment to the corporation’s Articles of Incorporation
to
authorize 1,000,000 shares of “blank-check” preferred
stock
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FOR
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(4) to
approve an amendment to our 2015 Equity Incentive Plan
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FOR
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(5) to
approve, on an advisory basis, the compensation of our named
executive officers
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FOR
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(6) to
approve, on an advisory basis, that holding future advisory votes
to approve executive compensation occur every
three years
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FOR
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(7) to
ratify the selection by the Audit Committee of RSM US LLP as
our independent registered public accounting firm for the
fiscal year ending December 31, 2019
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FOR
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If other matters properly come before
the Annual Meeting, the proxy holders will have the authority to
vote on those matters on your behalf at their discretion. As of the
date of this proxy statement, we are not aware of any matters that
will come before the Annual Meeting other than those disclosed in
this proxy statement.
Who can vote?
Holders of record of our common stock
at the close of business on November 22, 2019, are entitled to
vote at the Annual Meeting. As of November 22, 2019, there
were 16,519,570 shares of our common stock issued and outstanding.
Each share of common stock issued and outstanding is entitled to
one vote.
What constitutes a quorum, and why is
a quorum required?
We are required to have a quorum of
stockholders present to conduct business at the Annual Meeting. The
presence, in person or by proxy, of stockholders holding a majority
of the shares of our common stock issued and
outstanding and entitled to vote at
the Annual Meeting constitutes a quorum, permitting us to transact
business at the Annual Meeting. Abstentions and broker non-votes
are counted as present for purposes of determining a quorum. If we
do not have a quorum, we will be forced to adjourn the Annual
Meeting to a later date.
What is the difference between a
stockholder of record and a beneficial owner?
If your shares are registered
directly in your name with our transfer agent, Continental Stock
Transfer & Trust Company, you are considered the
“stockholder of record” with respect to those shares.
If your shares are held by a
brokerage firm, bank, trustee or other nominee, you are considered
the “beneficial owner” of shares held in street name. This proxy
statement and our Annual Report have been forwarded to you by your
nominee who is considered the “stockholder of record” with respect
to those shares. As the beneficial owner, you have the right to
direct your nominee how to vote your shares by using the voting
instruction form included in the mailing.
How do I vote my shares?
Stockholder of Record
If your shares are registered
directly in your name, you may vote:
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By mail. Complete
and mail the enclosed proxy card in the enclosed postage‑prepaid
envelope. Your proxy will be voted in accordance with your
instructions. If you sign the proxy card but do not specify how you
want your shares voted, they will be voted as recommended by our
Board. Your proxy card must be mailed by the date shown on the
proxy card to be counted.
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Via the Internet. You may
vote via the Internet by going to http://www.cstproxyvote.com and
following the on‑screen instructions. Please have your proxy card
available when you access the web page. Your vote must be received
by 11:59 p.m., Eastern Daylight Time, on January 20,
2020, to be counted.
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By Telephone. You may
vote over the telephone by calling toll‑free 1‑866‑894‑0536 in the
U.S. or Canada and following the recorded instructions. Please have
your proxy card available when you call. Your vote must be received
by 11:59 p.m., Eastern Daylight Time, on January 20, 2020
to be counted.
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In Person at the Annual Meeting. If you
attend the Annual Meeting, you may deliver your completed proxy
card in person, or you may vote by completing a ballot, which will
be available at the Annual Meeting.
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Beneficial Owner of Shares Held in
Street Name
If you hold shares in street name,
the organization holding your account is considered the stockholder
of record for purposes of voting at the Annual Meeting. The
stockholder of record will provide you with instructions on how to
vote your shares. Internet and telephone voting will be offered to
stockholders owning shares through most banks and brokers.
Additionally, if you would like to vote in person at the Annual
Meeting, contact the broker or other nominee who holds your shares
to obtain a legal proxy from the broker or other nominee, and bring
it with you to the Annual Meeting. Please contact your broker or
other nominee for instructions regarding obtaining a legal proxy.
You will not be able to vote at the Annual Meeting if you hold
shares in street name unless you have obtained a legal proxy from
your broker.
What vote is required to approve each
proposal?
The affirmative vote of the holders
of a plurality of the votes cast at the Annual Meeting is required
for Proposal No.1, the election of the Class II directors.
The affirmative vote of the holders of a majority of the
voting power of our outstanding common stock is required for
Proposal No. 2, the approval of an amendment to our Articles
of Incorporation to increase the number of authorized shares of our
common stock, and Proposal No. 3, the approval of
an
amendment to our Articles of
Incorporation to authorize “blank-check” preferred stock.
Proposal No. 4, the approval of the amendment to our
2015 Equity Incentive Plan, Proposal No. 5, the advisory vote
on executive compensation, Proposal No. 6, the vote to approve
the frequency of future votes on executive compensation, and
Proposal No. 7, the ratification of RSM US LLP as our
independent registered public accounting firm, will be approved if
the number of votes cast in favor of the proposal exceeds the
number of votes cast in opposition to the proposal.
What if I sign and return my proxy
without making any selections?
If you sign and return your proxy
without making any selections, your shares will be voted as
recommended by the Board. If other matters properly come before the
Annual Meeting, the proxy holders will have the authority to vote
on those matters for you at their discretion. As of the date of
this proxy statement, we are not aware of any matters that will
come before the meeting other than those disclosed in this proxy
statement.
What if I am a beneficial owner and I
do not give the nominee voting instructions?
Brokerage firms have the authority to
vote shares for which their customers do not provide voting
instructions on certain “routine” matters. A “broker non-vote”
occurs when a nominee who holds shares for another does not vote on
a particular item because the nominee does not have discretionary
voting authority for that item and has not received instructions
from the owner of the shares. Broker non-votes are included in the
calculation of the number of votes considered to be present at the
Annual Meeting for purposes of determining the presence of a quorum
but are not counted as shares present and entitled to be voted with
respect to a matter on which the nominee has expressly not voted.
Proposals Nos. 1, 3, 4, 5 and 6 relate to “non-routine”
matters. Proposals 2 and 7 relate to “routine” matters. As a
result, without your voting instructions, a broker will be able to
vote your shares with respect to Proposals 2 and 7 but will not be
able to vote your shares with respect to Proposals 1, 3, 4, 5 and
6. As a result, a “broker non-vote” on Proposal 3 will have
the same effect as a vote “AGAINST” the proposal because the
proposal requires the affirmative vote of a majority of the voting
rights of our outstanding common stock.
What if I abstain or withhold
authority to vote on a proposal?
On Proposal No. 1, the election
of the Class II directors, votes withheld for a particular
director nominee will have no effect on the outcome of the election
of directors because directors are elected by a plurality of the
votes cast. On Proposal No. 2 and No. 3, the approval of
an amendment to our Articles of Incorporation, if you sign and
return your proxy marked “ABSTAIN,” it will have the same effect as
a vote “AGAINST” the proposal, because each proposal requires the
affirmative vote of a majority of the voting rights of our
outstanding common stock. On Proposals No. 4, 5, 6 and 7, if
you sign and return your proxy marked “ABSTAIN”, your shares will
not be voted on that proposal and will not be counted as votes cast
with regard to that proposal and, accordingly, will have no effect
on the voting on those proposals.
What does it mean if I receive more
than one proxy card?
If you receive more than one proxy
card, it means that you hold shares of our common stock in more
than one account. To ensure that all your shares are voted, sign
and return each proxy card. Alternatively, if you vote by telephone
or via the Internet, you will need to vote once for each proxy card
you receive.
Can I change my vote after I have
mailed a signed proxy card?
If you are the stockholder of record,
you can change your vote at any time before your proxy is voted at
the Annual Meeting by the following means:
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You can
send the company’s Secretary a written notice stating that you
revoke your earlier‑dated proxy.
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If you
signed and returned a proxy card by mail and want to change your
vote, you can complete, sign, date and deliver a new proxy card,
dated a later date than the first proxy card.
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If you
submitted your proxy by telephone or via the Internet, you may
change your vote or revoke your proxy with a later telephone or
Internet proxy, as the case may be. Your new vote must be received
by 11:59 p.m., Eastern Daylight Time, on January 20,
2020, to be counted.
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You can
attend the Annual Meeting and vote in person. Your attendance at
the Annual Meeting will not, however, by itself revoke your
proxy.
Even if you plan to attend the Annual Meeting, we recommend that
you also submit your proxy or voting instructions or vote by
telephone or via the Internet so that your vote will be counted if
you later decide not to attend the Annual Meeting.
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If you hold your shares in “street
name” and have instructed your broker, bank, or other agent to vote
your shares for you, you must follow the directions received from
your broker, bank, or another agent to change those
instructions.
Who can attend the Annual
Meeting?
Only stockholders and our invited
guests are invited to attend the Annual Meeting. To gain
admittance, you must bring an admission card and a current
government-issued picture identification (such as a driver's
license or a passport), where your name will be verified against
our stockholder list. If a broker or other nominee holds your
shares and you plan to attend the Annual Meeting, you should bring
a recent brokerage statement showing your ownership of the shares
as of the record date or a letter from the broker or other nominee
confirming such ownership, and a form of personal identification.
Please follow the instructions on page 40 for more details on
admission to the Annual Meeting.
If I plan to attend the Annual
Meeting, should I still vote by proxy?
Yes. Casting your vote in advance
does not affect your right to attend the Annual Meeting. If you
vote in advance and also attend the Annual Meeting, you do not need
to vote again at the Annual Meeting unless you want to change your
vote. Written ballots will be available at the meeting for
stockholders of record. Beneficial owners who wish to vote in
person must request a legal proxy from the broker or other nominee
and bring that legal proxy to the Annual Meeting.
PROPOSAL
NO. 1
ELECTION OF DIRECTORS
Our Board currently consists of five
directors serving on a classified board, consisting of three
classes. We currently have a vacancy in Class III. The
directors in each class serve a three‑year term. The terms of each
class expire at successive annual meetings so that the stockholders
elect one class of directors at each annual meeting. Directors
appointed due to an increase in the size of the Board may be filled
by the Board for a term of office continuing only until the next
election of directors by the company’s stockholders.
Upon the recommendation of the
Nominating and Corporate Governance Committee of the Board, the
Board has nominated each of Christina Morrison and Daniel Marshak
for election as a Class II director. Each Class II director that is
elected at the Annual Meeting will be elected to serve for a
three-year term that will expire at our annual meeting of
stockholders to be held in 2022. Ms. Morrison and Dr. Marshak have
agreed to stand for election and to serve if elected. If any of
Ms. Morrison or Dr. Marshak should become unable to
accept election, the persons named on the proxy card as proxies may
vote for another person selected by the Board. Management has no
reason to believe that any of Ms. Morrison or Dr. Marshak
will be unable to serve. Each nominee for election at the Annual
Meeting is a current member of our Board of Directors.
Biographical and certain other
information concerning our director nominees and our directors
continuing in office is set forth below. No director or executive
officer is related by blood, marriage or adoption to any other
director or executive officer.
Information as to our Board of
Directors and Nominees
Nominees for Class II Directors
with Terms to Expire at the 2022 Annual Meeting
Daniel R. Marshak,
Ph.D., 62, has been a director
of our company since September 2014. He has served as part-time
Chief Technology Officer to Phase Scientific International Ltd., a
medical device and clinical diagnostics company, since 2018. He
most recently served in a full-time role as Senior Vice President
and Chief Scientific Officer for PerkinElmer, Inc., a human
and environmental health company, until September 2014. Prior to
joining PerkinElmer in 2006, Dr. Marshak was Vice President
and Chief Technology Officer, Biotechnology, for Cambrex
Corporation (NYSE:CBM) and earlier, Chief Scientific Officer at
Osiris Therapeutics Inc. Dr. Marshak has received numerous
awards for scientific and academic achievements and is named as
inventor on six issued U.S. patents. Dr. Marshak has served on the
Board of Directors of Tecan Group (Swiss:TECN), a leading global
provider of laboratory instruments and solutions in
biopharmaceuticals, forensics and clinical diagnostics, since 2018.
He also serves on the Board of Directors of a private, early-stage
company, LifeVault Bio in Massachusetts, USA. Dr. Marshak is
the author of more than 100 scientific publications, including one
textbook, and has been the editor of five monographs. He held an
appointment as Adjunct Associate Professor at the Johns Hopkins
University School of Medicine, served as Senior Staff Investigator
at Cold Spring Harbor Laboratory, and previously taught graduate
biochemistry as an Assistant Professor at the State University of
New York, now Stony Brook University. Dr. Marshak received his
B.A. degree in biochemistry and molecular biology from Harvard
University, and he holds a Ph.D. in biochemistry and cell biology
from The Rockefeller University. Dr. Marshak brings to our
Board extensive industry experience and a deep understanding of the
science and technology behind our business.
Christina
Morrison, 53, has
served as a director of our company since June 2016.
Ms. Morrison has served as Chief Financial Officer of
Physicians Endoscopy, an ambulatory surgical center management
company, since April 2018. Prior to that Ms. Morrison
served as the Senior Vice President of Finance of Aramark,
a publicly traded
foodservice, facilities and
uniform services provider, from June 2013 until
July 2016. Prior to joining Aramark, Ms. Morrison was
Senior Vice President of Business and Financial Planning at
Merck & Co., Inc., a publicly traded pharmaceutical
company, from November 2009 to June 2013. Before that,
Ms. Morrison spent five years at Wyeth Pharmaceuticals, a
publicly traded pharmaceutical company, serving in a number of
leadership roles including Senior Vice President and Chief
Financial Officer of the pharmaceutical division. Ms. Morrison
holds an M.B.A. from the Tuck School of Business at Dartmouth
College and a B.S. in Economics from the Wharton School at the
University of Pennsylvania. Ms. Morrison brings to our Board
significant financial experience and a decade of experience in the
pharmaceutical industry.
Continuing Class III Directors
with Term Expiring at the 2020 Annual Meeting
Richard Toselli,
M.D. 62, has served as
our President and Chief Executive Officer and a director since
February 2018. Prior to being appointed President and Chief
Executive Officer and a director, Dr. Toselli served as our
Acting Chief Executive Officer from December 2017 to
February 2018. Since July 2017, Dr. Toselli has also
served as our Chief Medical Officer. Before joining the company,
Dr. Toselli served as the Chief Medical Officer for Cochlear
Limited, a medical device company, from June 2016 until
March 2017. Prior to that, Dr. Toselli served at Sanofi,
a pharmaceutical company, from July 2012 to June 2016 in
various levels of increasing responsibility, including Vice
President of Global Medical Affairs — Immunology and
Inflammation, Biologics Division; Vice President of Global Medical
Affairs and Head of the Biosurgery Discovery Performance Unit; and
Vice President of Global Medical Affairs, Biosurgery. Before his
time at Sanofi, he served as Chief Medical/Technology Officer for
Covidien Public Limited Company (now Medtronic Public Limited
Company), a medical device company, and earlier held the position
of Vice President of Evidence-Based Medicine for the device sector
at Johnson & Johnson, a medical device, pharmaceutical and
consumer packaged goods manufacturing company. Prior to that,
Dr. Toselli held various roles at DePuy Synthes
Spine, Inc., a medical device company, including Director of
Medical Affairs, Worldwide Vice President of Research and
Development, and Worldwide Vice President of Clinical Evidence and
External Relations. Dr. Toselli holds a Bachelor of Arts from
Providence College, his medical degree from Brown University, and a
Master of Business Administration from the UNC’s Kenan-Flagler
Business School. Dr. Toselli is a board-certified neurological
surgeon.
Robert J. Rosenthal, Ph.D.,
62, has been a director of our company since November 2019. Dr.
Rosenthal currently serves as Chairman of the Board of Taconic
Biosciences, Inc., a privately-held provider of research
models for the pharmaceutical and biotech industry, where from 2014
to 2018 he also served as Chief Executive Officer. Dr. Rosenthal
also currently serves as a director of the Bruker Corporation, a
publicly traded manufacturer of analytic instruments, since 2015.
Dr. Rosenthal has served since 2007 as a director of Safeguard
Scientifics, Inc., a publicly-traded provider of capital for
early- and growth-stage companies, and as Chairman of its board of
directors since May 2016. He also currently serves as a director of
Galvanic Applied Sciences, Inc., a privately-held Canadian
company, since 2013. Since 1995, Dr. Rosenthal previously
served in a variety of senior management positions with companies
involved in the development of diagnostics, therapeutics, medical
devices, and life sciences tools, most recently including from 2010
through 2012 as President and Chief Executive Officer of IMI
Intelligent Medical Implants, AG, a medical technology company, and
from 2005 through 2009 as President and Chief Executive Officer of
Magellan Biosciences, Inc., a provider of clinical diagnostics
and life sciences research tools. Earlier in his career,
Dr. Rosenthal served in senior management positions at Perkin
Elmer Inc. and Thermo Fisher Scientific, Inc.
Dr. Rosenthal holds a Ph.D. from Emory University and a Master
of Science degree from the State University of New York.
Dr. Rosenthal brings to our Board an extensive understanding
of and experience in strategic planning and positioning; corporate,
business and product development; operations management; capital
markets transactions; debt and equity financings; fund-raising;
merger and acquisition transactions; corporate finance; and
corporate governance.
Continuing Class I Directors
with Terms Expiring at the 2021 Annual Meeting
Richard J. Roberts,
Ph.D., 76, has been a director
of our company since October 2010 and a director of InVivo
Therapeutics Corporation, our wholly‑owned subsidiary, since
November 2008. Dr. Roberts initially joined InVivo
Therapeutics Corporation’s Scientific Advisory Board in
June 2007 and continued as a member of our Scientific Advisory
Board. He has served as Chief Scientific Officer at New England
Biolabs, a life sciences company, since February 2007.
Dr. Roberts was awarded the 1993 Nobel Prize in Physiology of
Medicine along with Phillip Allen Sharp for the discovery of
introns in eukaryotic DNA and the mechanism of gene‑splicing. He
holds a B.Sc. in Chemistry and a Ph.D. in Organic Chemistry from
the University of Sheffield, U.K. Dr. Roberts brings the Board
his significant experience and understanding of the science and
technology involved in our business.
C. Ann
Merrifield, 68, has been a
director of our company since November 2014. She currently
serves as a board director for a number of public and private
companies which include Flexion Therapeutics, a public
biotechnology company; Veritas Genetics, a private genomics
company; Lyra Therapeutics, a private biotechnology company; and
MassMutual Premier, Select, MML and MMLII Funds, a portfolio of
mutual funds. She also served on the board of Juniper
Pharmaceuticals, a specialty pharmaceuticals company, from 2015 to
2018 when it was acquired by Catalent. Previously, Ms. Merrifield
served as President, Chief Executive Officer and a director of
PathoGenetix, a genomics
company focused on developing an
automated system for rapid bacterial identification from 2012 until
July 2014 when the company filed for Chapter 7 bankruptcy. Prior to
then, she spent 18 years at Genzyme Corporation, serving in a
number of leadership roles including President of Genzyme
Biosurgery, President of Genzyme Genetics and Senior Vice President
Business Excellence. Ms. Merrifield also serves as a Trustee of
Partners Continuing Care, the post-acute care services division of
Partners HealthCare. She holds a B.A. in zoology and a Master of
Education from the University of Maine and an M.B.A. from the Tuck
School of Business at Dartmouth College. Ms. Merrifield brings to
our Board an invaluable amount of experience and expertise over her
long career in the life sciences industry.
Vote Required
The affirmative vote of a plurality
of the votes cast by the holders of our common stock, present or
represented by proxy at the Annual Meeting and entitled to vote, is
required for the election of our director nominees.
OUR BOARD UNANIMOUSLY RECOMMENDS A
VOTE “FOR” THE ELECTION OF EACH OF
THE CLASS II DIRECTOR
NOMINEES.
CORPORATE GOVERNANCE
Director Independence
Rule 5605 of the Nasdaq Listing
Rules requires a majority of a listed company’s board of
directors to be comprised of independent directors within
one year of listing. In addition, the Nasdaq Listing
Rules require that, subject to specified exceptions, each
member of a listed company’s audit, compensation, and nominating
and corporate governance committees be independent, that audit
committee members also satisfy independence criteria set forth in
Rule 10A‑3 under the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), and that compensation committee
members also satisfy heightened independence requirements contained
in the Nasdaq Listing Rules as well as Rule 10C‑1 under
the Exchange Act. Under Nasdaq Rule 5605(a)(2), a director
will only qualify as an “independent director” if, in the opinion
of our Board, that person does not have a relationship that would
interfere with the exercise of independent judgment in carrying out
the responsibilities of a director. In order to be considered
independent for purposes of Rule 10A‑3 under the Exchange Act,
a member of an audit committee of a listed company may not, other
than in his or her capacity as a member of the audit committee, the
Board, or any other Board committee, accept, directly or
indirectly, any consulting, advisory, or other compensatory fee
from the listed company or any of its subsidiaries or otherwise be
an affiliated person of the listed company or any of its
subsidiaries. When determining the independence of the members of
our compensation committee under the heightened independence
requirements contained in the Nasdaq Listing Rules and
Rule 10C‑1 under the Exchange Act, our Board is required to
consider all factors specifically relevant to determining whether a
director has a relationship with us that is material to that
director’s ability to be independent from management in connection
with the duties of a compensation committee member, including, but
not limited to: (1) the source of compensation of that
director, including any consulting, advisory, or other compensatory
fee paid by us to that director; and (2) whether that director
is affiliated with our company, a subsidiary of our company, or an
affiliate of a subsidiary of our company.
Our Board has reviewed the
composition of our Board and its committees and the independence of
each director, including those former directors who served in
the year 2018, including Jeffrey Hatfield and Kenneth
DiPietro. Based upon information requested from and provided by
each director concerning his or her background, employment, and
affiliations, including family relationships, our Board has
determined that each of our directors, other than Dr. Toselli,
is an “independent director” as defined under
Rule 5605(a)(2) of the Nasdaq Listing Rules.
Our Board also determined that
Ms. Morrison, Dr. Marshak, and Ms. Merrifield, who
comprise our audit committee, and Ms. Morrison,
Dr. Marshak, and Dr. Roberts, who comprise our
compensation committee, and Mr. DiPietro who formerly sat
on our compensation committee through May 2018, and
Mr. Hatfield who formerly sat on our audit committee and
compensation committee through December 2018, satisfy the
independence standards for such committees established by the
Securities and Exchange Commission (“SEC”) and the Nasdaq Listing
Rules, as applicable. In making such determinations, our Board
considered the relationships that each such non-employee director
has with our company and all other facts and circumstances our
Board deemed relevant in determining independence, including the
beneficial ownership of our capital stock by each non-employee
director.
Board Meetings and Attendance
The Board held 12 meetings during
2018. Each director attended at least 75% of the total
(i) regular Board meetings held during the period for which he
or she was a director and (ii) meetings of the
committee(s) of our Board on which he or she served (during
the periods that he or she served). Our directors are encouraged,
but not required, to attend our Annual Meeting of Stockholders.
Three directors then serving on the Board were in attendance at our
2018 Annual Meeting of Stockholders.
Board Leadership Structure
At the time our Board of Directors
appointed Dr. Toselli as our permanent Chief Executive Officer
in February 2018, our Board also determined to separate the
role of our Chief Executive Officer and the role of the Chair of
the Board. Ms. Merrifield, who previously served as our Lead
Director, was appointed in February 2018 and currently serves
as non-executive Chair of the Board. The Board’s determination to
separate the offices of Chair of the Board and
Chief Executive Officer
is expected to enhance board independence and oversight, and to
allow the Chief Executive Officer to better focus on his
responsibilities of managing the company, enhancing stockholder
value and expanding and strengthening our business while allowing
the Chair of the Board to lead the Board in its fundamental role of
providing advice to and independent oversight of
management.
The Board does not have a formal
policy on whether the positions of Chairman and Chief Executive
Officer should be separate and continues to believe that there is
no uniform solution for a board leadership structure. The company
has at times separated the positions of Chairman and Chief
Executive Officer and at times combined the two. Our Board will
periodically review the optimal leadership structure of the Board
and believes that the right structure should be informed by the
needs and circumstances of our company, the Board and our
stockholders.
Board Committees
The Board has designated three
principal standing committees: the Audit Committee, the Nominating
and Corporate Governance Committee, and the Compensation
Committee.
Audit Committee
The Audit Committee assists the Board
in fulfilling its responsibilities concerning our financial
reporting and internal controls. The Audit Committee facilitates
open communication among the Audit Committee, the Board, our
independent auditor, and management. The Audit Committee discusses
with management and our independent auditor the financial
information developed by us, our systems of internal controls and
our audit process. The Audit Committee is solely and directly
responsible for appointing, evaluating, retaining, and, where
necessary, terminating the engagement of our independent auditor.
The independent auditor meets with the Audit Committee (both with
and without the presence of our management) to review and discuss
various matters pertaining to the audit, including our financial
statements and its report on the company’s financial statements and
internal controls, as well as the scope and terms of the work of
our independent auditor and its recommendations concerning the
financial practices, controls, procedures and policies employed by
our company. The current members of our Audit Committee are
Ms. Morrison (Chairwoman), Dr. Marshak, and
Ms. Merrifield. The Audit Committee held four meetings in
2018.
The Audit Committee pre-approves all
audit services to be provided to us by our independent auditor and
all other services (including reviewing, attestation and non-audit
services) to be provided to us by the independent
auditor.
The Audit Committee is also charged
with establishing procedures for (i) the receipt, retention,
and treatment of complaints received by us regarding accounting,
internal accounting controls or auditing matters; and (ii) the
confidential, anonymous submission by our employees of concerns
regarding questionable accounting or auditing matters. The Audit
Committee reviews and oversees all related party transactions on an
ongoing basis. The Audit Committee is authorized, without further
action by the Board, to engage independent professional advisers
and counsel as it deems necessary or appropriate to carry out its
responsibilities. The Board has adopted a written charter for the
Audit Committee, which is reviewed annually and a copy of which is
available on the “Corporate Governance” page of the “Investor
Relations” section of our website at
www.invivotherapeutics.com.
The Board has determined that
Ms. Morrison is an “audit committee financial expert,” as
defined in Item 407(d)(5) of
Regulation S-K.
Nominating and Corporate Governance
Committee
The Nominating and Corporate
Governance Committee is charged with the responsibility of
reviewing our corporate governance policies, overseeing the annual
review of succession planning by the Board and with proposing
potential director nominees to the Board for consideration. The
Board has adopted a written charter for the Nominating and
Corporate Governance Committee, which is reviewed annually and a
copy of which is available in the “Investor Relations” section of
our website at www.invivotherapeutics.com.
The current members of our Nominating
and Corporate Governance Committee are Ms. Merrifield
(Chairwoman), Dr. Roberts and Ms. Morrison. The
Nominating and Corporate Governance Committee held five meetings in
2018.
Process for Stockholder
Nominations
The Nominating and Corporate
Governance Committee will consider director nominees recommended by
security holders pursuant to our company’s Policy Governing
Director Nominations and Stockholder‑Board Communications, which
policy is reviewed by the Nominating and Corporate Governance
Committee annually, a copy of which is available on the “Corporate
Governance” page of the “Investor Relations” section of our
website. To recommend a nominee, please write to the Nominating and
Corporate Governance Committee, InVivo Therapeutics Holdings Corp.,
One Kendall Square, Suite B14402 Cambridge, MA 02139, Attn:
Chair, Nominating and Corporate Governance Committee.
The Nominating and Corporate
Governance Committee has established a set of criteria by which it
will seek to evaluate candidates to serve on our Board. The
evaluation includes selection based on criteria including factors
such as experience and ability to exercise sound judgments in
matters that relate to the current and long-term objectives of the
company, high standards of personal and professional integrity,
demonstrated business judgment, complimentary skill sets that can
add to the functionality and collaboration with the current Board
members, independence, knowledge of our company generally, age and
dedication to the success of the company. While the value of
diversity is considered, it would not be weighted any more or less
in any evaluation process than any other criteria. The Nominating
and Corporate Governance Committee will assess all director
nominees using the same criteria and does not distinguish Board
candidates based on whether the candidate is recommended by a
stockholder of the company. During 2018, we did not receive any
director nominee suggestions from stockholders. Stockholder
recommendations for nomination must be in writing and include the
following:
|
·
|
|
the name
and address of the stockholder making the
recommendation;
|
|
·
|
|
the
number of shares of our common stock that such stockholder owns
beneficially and holds of record;
|
|
·
|
|
the name
and address of the individual recommended for consideration as a
director nominee;
|
|
·
|
|
the
principal occupation and experience of the director
nominee;
|
|
·
|
|
the total
number of shares of our common stock that the stockholder making
the recommendation will vote for the director nominee;
|
|
·
|
|
a written
statement from the stockholder making the recommendation stating
whether the director nominee has indicated his or her willingness
to serve if elected and why such recommended candidate would be
able to fulfill the duties of a director; and
|
|
·
|
|
any other
information regarding the director nominee that is required to be
included in a proxy statement filed pursuant to the rules of
the SEC.
|
The nominating and corporate
governance committee has utilized a third-party search firm to
identify board of director candidates in the past and may in the
future continue to use a third-party search firm in those
situations where particular qualifications are required or where
existing contacts are not sufficient to identify an appropriate
candidate.
Compensation Committee
The Compensation Committee reviews
and recommends compensation arrangements for our directors,
management, and employees and also assists the Board in reviewing
and approving matters such as company benefits and insurance plans,
including monitoring the performance thereof. The Board has adopted
a written charter for the
Compensation Committee, which is
reviewed annually and a copy of which is available on the
“Corporate Governance” page of the “Investor Relations”
section of our website at www.invivotherapeutics.com.
The Compensation Committee is
authorized under its charter to retain consultants to assist it in
the evaluation of executive compensation and to approve the fees
and other retention terms for its consultants. The Compensation
Committee has retained Pearl Meyer & Partners (“Pearl
Meyer”) as a compensation consultant to review our compensation
programs and provide advice to the Compensation Committee with
respect to executive compensation. Pearl Meyer does not provide any
other services to InVivo. The Committee annually reviews the
independence of the consultant’s work under rules adopted by
the SEC and Nasdaq and found no conflicts. As appropriate, the
Compensation Committee also looks to our human resources department
to support the Compensation Committee in its work and to provide
necessary information.
The current members of our
Compensation Committee are Dr. Marshak (Chairman),
Dr. Roberts and
Ms. Morrison. Mr. Hatfield and Mr. DiPietro,
who previously served on our Board through December 2018 and
May 2018 respectively, were also members of the Compensation
Committee during 2018. The Compensation Committee held seven
meetings in 2018.
Risk Management Oversight
The Board takes an active role, as a
whole and at the committee level, in overseeing management of our
company’s risks. Generally, the Board, with the assistance of its
committees, is involved in overseeing our major risk exposures and
monitors and assesses those risks in reviews with management and
with our outside advisors and independent registered public
accounting firm. The Audit Committee reviews regulatory risk,
operational risk, and enterprise risk, particularly as they relate
to financial reporting, on a regular basis with management and our
independent registered public accounting firm. The Nominating and
Corporate Governance Committee oversees the Board’s annual review
of our succession planning. The Compensation Committee monitors
compensation policies and compensation-related risks by review with
management and outside advisors.
Code of Business Conduct and Ethics
We have adopted a Code of Business
Conduct and Ethics, as amended, that applies to all employees,
officers, and directors of our company, including our principal
executive officer, principal financial officer and principal
accounting officer or controller, or persons performing similar
functions. Our Code of Business Conduct and Ethics is available on
the “Corporate Governance” page of the “Investor Relations”
section of our website at www.invivotherapeutics.com. A copy of our
Code of Business Conduct and Ethics can also be obtained free of
charge by contacting our Secretary, c/o InVivo Therapeutics
Holdings Corp., One Kendall Square, Suite B14402, Cambridge,
MA 02139. We intend to satisfy the disclosure requirement under
Item 5.05 of Form 8‑K regarding any amendment to, or
waiver from, a provision of our Code of Business Conduct and Ethics
by posting such information on our website.
Stockholder Communications to the
Board
All communications to our Board, our
Board committees or any individual director must be in writing and
addressed to our Secretary, c/o InVivo Therapeutics Holdings Corp.,
One Kendall Square, Suite B14402, Cambridge, MA 02139. All
communications will be reviewed by the Secretary and, unless
otherwise indicated in such communication, submitted to the Board
or an individual director, as appropriate.
DIRECTOR COMPENSATION
The following table sets forth the
compensation of our non-employee directors for 2018. For
information on the compensation of Dr. Toselli, our current
Chief Executive Officer, see “Executive Compensation”
below.
|
|
|
|
|
|
|
|
|
Fees Earned or
|
|
|
|
|
|
|
Paid in Cash
|
|
Option Awards
|
|
Total
|
Name
|
|
($)
|
|
($)(1)(2)
|
|
($)
|
Kenneth DiPietro (3)
|
|
20,353
|
|
6,442
|
|
26,795
|
Daniel Marshak
|
|
50,417
|
|
6,442
|
|
56,859
|
C. Ann Merrifield
|
|
75,000
|
|
6,442
|
|
81,442
|
Richard Roberts
|
|
43,750
|
|
6,442
|
|
50,192
|
Christina Morrison
|
|
53,750
|
|
6,442
|
|
60,192
|
Jeffrey Hatfield (4)
|
|
47,500
|
|
6,442
|
|
53,942
|
|
(1)
|
|
The
amounts shown in this column represent the aggregate grant date
fair value of the option awards computed in accordance with
Accounting Standards Codification (“ASC”) 718, not the actual
amounts paid to or realized by the director during 2018. The
assumptions used in determining grant date fair value of these
awards are set forth in Note 11 to our Consolidated Financial
Statements appearing in our Annual Report on Form 10‑K
filed with the SEC on April 1, 2019 and Note 12 to
our Consolidated Financial Statements appearing in our Annual
Report on Form 10-K for the year ended December 31, 2017 filed with
the SEC on March 12, 2018.
|
|
(2)
|
|
As of
December 31, 2018, the aggregate number of options to purchase
shares of our common stock outstanding for each director listed
above, including both vested and unvested shares, was as follows:
Dr. Marshak, 2,500 shares; Ms. Merrifield, 2,500 shares;
Dr. Roberts, 4,500 shares; Ms. Morrison, 2,000 shares;
and Mr. Hatfield, 1,459 shares.
|
|
(3)
|
|
Mr. DiPietro
did not seek reelection to the Board when his term expired at our
2018 Annual Meeting.
|
|
(4)
|
|
Mr. Hatfield
resigned from the Board December 31, 2018.
|
Our director compensation policy
provides for the following compensation to our non-employee
directors:
|
·
|
|
an annual
retainer of $35,000 per year, paid quarterly, to each
non-employee director;
|
|
·
|
|
an annual
retainer of $15,000, paid quarterly, to the Audit Committee
chairperson, and an annual retainer of $7,500, paid quarterly, to
each member of the Audit Committee of the Board;
|
|
·
|
|
an annual
retainer of $10,000, paid quarterly, to the Compensation Committee
chairperson, and an annual retainer of $5,000, paid quarterly, to
each member of the Compensation Committee of the Board;
|
|
·
|
|
an annual
retainer of $7,500, paid quarterly, to the Nominating and Corporate
Governance Committee chairperson, and an annual retainer of $3,750,
paid quarterly, to each member of the Nominating and Corporate
Governance Committee of the Board; and
|
|
·
|
|
an annual
retainer of $25,000, paid quarterly, to the Chair of the
Board.
|
Non-employee directors are reimbursed
for reasonable travel expenses in connection with attendance at
meetings of the Board or any of its committees that are conducted
in person and other activities directly related to the service to
the company.
At the Board’s discretion, each
non-employee director may also receive an annual grant of a stock
option to purchase shares of our common stock at an exercise price
equal to the closing price of our common stock on the date of
grant. The options vest in 12 equal installments on each monthly
anniversary of the date of grant until fully vested on the first
anniversary of the date of grant, provided that such director
remains a director of our company on each such vesting
date. These grants are reflected in the table above,
were last made to directors on January 19, 2018, and have an
exercise price of $17.25 per share. Although the Board historically
granted 500 shares of our common stock to each director as part of
the annual grant, including in 2018, the Board has the ability to
grant a different amount of shares for the annual director grant of
a stock option and may choose to increase the annual grant award
amount.
EXECUTIVE OFFICERS
Richard M.
Toselli is our President,
Chief Executive Officer, and a director. Please see Proposal
No. 1—Election of Directors—“Information as to our Board of
Directors and Nominees” above for biographical information
regarding Dr. Toselli.
Richard
Christopher, 50,
was appointed as our Chief Financial Officer in
January 2019. Previously, Mr. Christopher was the
Chief Financial Officer of iCAD, Inc. from December 2016
through January 2019. iCAD, Inc. is a Nasdaq-listed
company with a focus on therapies and solutions for the early
identification and treatment of cancer. Prior to
iCAD, Inc., Mr. Christopher was Chief Financial Officer
from March 2014 through December 2016 and Chief Operating
Officer from October 2015 through December 2016 of
Caliber Imaging & Diagnostics, Inc., a medical
technology company focused on cancer detection imaging solutions,
with primary applications in dermatology. Prior to Caliber and
starting in 2000, Mr. Christopher held various positions of
increasing responsibility at DUSA Pharmaceuticals, Inc., a
Nasdaq-listed dermatology company focused on the treatment of
precancerous skin lesions, where he ultimately served as Chief
Financial Officer from January 2005 through its acquisition
and integration into Sun Pharmaceuticals Industries Ltd in
April 2013. Mr. Christopher holds a Master of Science in
Accounting from Suffolk University and a Bachelor of Science in
Finance from Bentley University.
EXECUTIVE COMPENSATION
Set forth below is information
regarding the compensation of (i) our Chief Executive Officer
and (ii) two other individuals who would have been our next
most two highly compensated executive officers other than the
principal executive officer but for the fact they were not serving
as executive officers at the end of 2018. Such officers are
collectively referred to as our “named executive
officers.”
2018 Summary Compensation Table
The following table sets forth
information regarding the compensation awarded to, earned by, or
paid to our named executive officers.
Name and Principal
Position
|
|
Year
|
|
Salary ($)
|
|
Bonus
($)(1)
|
|
Stock
Awards
($)(2)
|
|
Option
Awards
($)(2)
|
|
Non-Equity
Incentive
Plan
Compensation
($)
|
|
All Other
Compensation
($)
|
|
Total ($)
|
Richard Toselli
|
|
2018
|
|
445,385 |
|
250,000 |
|
—
|
|
—
|
|
—
|
|
46,563 |
(4)
|
741,948 |
President and Chief Executive Officer (3)
|
|
2017
|
|
285,785 |
|
—
|
|
264,000 |
|
764,402 |
|
—
|
|
6,280 |
|
1,320,467 |
Christopher McNulty
|
|
2018
|
|
137,543 |
(6)
|
—
|
|
—
|
|
—
|
|
—
|
|
352,130 |
(7)
|
489,673 |
Former Chief Financial Officer
(5)
|
|
2017
|
|
328,127 |
|
—
|
|
—
|
|
362,290 |
|
—
|
|
17,220 |
|
707,637 |
|
2016
|
|
289,322 |
|
—
|
|
—
|
|
207,902 |
|
54,000 |
|
15,307 |
|
566,531 |
Pamela Stahl
|
|
2018
|
|
81,173 |
|
—
|
|
|
|
—
|
|
—
|
|
347,615 |
(9)
|
428,788 |
Former Chief Commercial Officer
(8)
|
|
2017
|
|
335,000 |
|
—
|
|
|
|
123,574 |
|
—
|
|
50,076 |
|
508,650 |
|
2016
|
|
92,202 |
|
465,962 |
|
|
|
1,020,056 |
|
—
|
|
102,776 |
|
1,680,996 |
|
(1)
|
|
See
below, “Narrative to Summary Compensation Table – Richard
Toselli, M.D., Chief Executive Officer” for a description of the
bonuses paid to Dr. Toselli in 2018. For Ms. Stahl in
2016, amount represents a cash payment of $348,712 for the value of
the shares of her former employer that she forfeited when she
resigned to join our company plus an annual bonus for 2016 equal to
$117,250, which was agreed as part of our negotiation of an
employment agreement with Ms. Stahl in connection with her
hire.
|
|
(2)
|
|
The
amounts shown in this column represent the aggregate grant date
fair value of the option awards computed in accordance with ASC
718, not the actual amounts paid to or realized by the individual.
The assumptions used in determining grant date fair value of these
awards are set forth in Note 12 to our Consolidated Financial
Statements appearing in our Annual Report on Form 10-K for the year
ended December 31, 2017 filed with the SEC on March 12,
2018 and Note 11 to our Consolidated Financial Statements
appearing in our Annual Report on Form 10-K filed with the SEC on
April 1, 2019.
|
|
(3)
|
|
Dr. Toselli
joined our company as Acting Chief Executive Officer effective
December 18, 2017 and was appointed our President, Chief
Executive Officer, and Director effective February 2, 2018.
Previously, he served as a consultant Chief Medical
Officer.
|
|
(4)
|
|
Represents
(i) $5,070 in vested restricted stock, (ii) $12,323 in
401(k) cash matching contributions under our
401(k) profit sharing plan, (iii) $1,427 in
401(k) company stock matching contributions under our
401(k) profit sharing plan (iv) $3,250 in commuting
expenses and (v) $24,493 in accommodation expenses.
|
|
(5)
|
|
Mr. McNulty,
our Former Chief Financial Officer, resigned from the Company
effective May 7, 2018.
|
|
(6)
|
|
Includes
a payment of $8,697 salary for unused vacation.
|
|
(7)
|
|
Represents
(i) $335,000 in severance to be paid out over 12 months
from date of resignation, (ii) $2,767 in 401(k) cash
matching contributions under our 401(k) profit sharing plan,
(iii) $1,098 in 401(k) company stock matching
contributions under our 401(k) profit sharing plan, (iv)
$11,315 in health benefits to be paid out over 6 months
from date of resignation and (v) $1,950 in commuting
expenses.
|
|
(8)
|
|
Ms. Stahl
resigned from the Company effective March 7, 2018.
|
|
(9)
|
|
Represents
(i) $335,000 in severance to be paid out over 12 months
from date of resignation, (ii) $11,315 in health benefits to
be paid out over 6 months from date of resignation and
(iii) $1,300 in commuting expenses.
|
Narrative to Summary Compensation
Table
Richard
Toselli, M.D., Chief Executive Officer. In connection with his appointment as acting
Chief Executive Officer in December 2017, we entered into an
employment agreement with Dr. Toselli. Under the
employment agreement, Dr. Toselli receives an annual base
salary, subject to adjustment from time to time, and is eligible to
receive an annual cash bonus equal to 50% of his annual salary,
subject to his performance of specified objectives to be
established by the Board (or a designated Board committee)
each year. Dr. Toselli is eligible to receive all
medical, dental and other benefits to the same extent as provided
to our other senior management employees. For 2018,
Dr. Toselli’ s salary was initially set at $445,385.
Dr. Toselli received a one-time sign-on bonus in the amount of
$100,000 that was conditioned on his remaining an active employee
on January 31, 2018 and was paid on February 1, 2018.
Additionally, Dr. Toselli received a one-time bonus of
$150,000 that was conditioned upon the approval by the U.S. Food
and Drug Administration of the company’s proposed plans with
respect to one or more clinical trials and was paid in
March 2018. In connection with becoming the company’s
Chief Executive Officer rather than Acting Chief Executive Officer,
Dr. Toselli became eligible for certain severance benefits
under his employment agreement.
In October 2018, we entered into
an amendment to Dr. Toselli’ s employment agreement to
increase his annual base salary from $435,000 to $480,000, clarify
that Dr. Toselli’ s annual bonus target of 50% of his base
salary for 2018 would be based on Dr. Toselli’ s new base
salary of $480,000 and provide for an additional bonus, in the
amount of $360,000, less applicable taxes and withholdings (the
“Additional Bonus”). The Additional Bonus was paid in two
installments of $120,000 on April 1, 2019 and $240,000 on
July 1, 2019.
Under our employment agreement with
Dr. Toselli, if his employment is terminated by us without
cause, or by Dr. Toselli for “good reason,” in the absence of
a “change in control” (as defined in our 2015 Equity Incentive
Plan) then (i) we are obligated to pay severance (consisting
of base salary in effect at the time of termination) to
Dr. Toselli for a period of 18 months, plus continued
health insurance benefits for a period of 18 months and
(ii) the unvested portion of any stock options held by him
will vest as with respect to an additional 12 months. If
Dr. Toselli’ s employment is terminated by us without cause,
or by Dr. Toselli for “good reason” within 12 months
following of a “change in control,” then (a) we are obligated
to pay severance (consisting of two times base salary in effect at
the time of termination and 100% of his target annual bonus) to
Dr. Toselli, plus continued health insurance benefits for a
period of 18 months, (b) pay a pro rata portion of
the annual bonus for the year in which the termination occurs
based on a good faith determination of the attainment of the
applicable goals and (c) the unvested portion of any stock
options held by him will vest fully. The severance payments and the
accelerated vesting of options are contingent on execution of a
general release of claims against our company and are in addition
to any accrued obligations to Dr. Toselli unpaid by us prior
to the time of termination.
Christopher
McNulty, former Chief Financial Officer. We entered into an employment agreement
with Mr. McNulty in March 2017. Under the terms of
his agreement, Mr. McNulty received an annual base salary,
subject to adjustment from time to time, and was eligible to
receive an annual cash bonus equal to 35% of his annual salary,
subject to his performance of specified objectives to be
established by the Board (or a designated Board committee)
each year. Mr. McNulty resigned from our company
effective May 11, 2018 and Mr. McNulty was entitled to
severance (consisting of base salary in effect at the time of
termination) for a period of one year, plus continued health
insurance benefits for a period of 6 months. The severance
payments were contingent upon execution of a general release of
claims against our company and are in addition to any accrued
obligations to Mr. McNulty unpaid by us prior to the date of
termination. In connection with his resignation, Mr. McNulty
received $346,315 in termination related benefits.
Pamela J. Stahl,
Former Chief Commercial Officer. We entered into an employment agreement
with Ms. Stahl in August 2016. Under the terms of her
agreement, Ms. Stahl received an annual base salary, subject
to adjustment from time to time, and was eligible to receive
benefits to the same extent as provided to our other senior
management employees, including medical and dental benefits, and
was eligible to receive an annual target bonus equal to 35% of her
annual salary, subject to her performance of specified objectives
to be established by our Chief Executive Officer each year.
Ms. Stahl resigned from the company effective March 7,
2018 and Ms. Stahl was entitled to severance (consisting of
base salary in effect at the time of termination) for a period of
one year, plus continued health insurance benefits for a
period of 6 months. The severance payments were contingent
upon execution of a general release of claims against our company
and are in addition to any accrued obligations to Ms. Stahl
unpaid by us prior to the date of
termination. In connection with
her resignation, Ms. Stahl received $392,700 in termination
related benefits, which includes $33,500 in outplacement
services.
Employment Agreement with
Mr. Christopher
In connection with his employment
with the Company and pursuant to the terms of an employment
agreement dated December 24, 2018, Mr. Christopher
receives an annual base salary of $330,000. Mr. Christopher is
also eligible for an annual bonus that targets
thirty-five percent (35%) of his annualized base salary based
upon achievement of certain performance goals. On
January 14, 2019, the Board granted Mr. Christopher a
non-statutory stock option to purchase up to 90,000 shares of the
Company’s common stock, as an inducement grant outside of the
Company’s 2015 Stock Incentive Plan pursuant to Nasdaq Listing
Rule 5635(c)(4) (the “Inducement Award”). The Inducement
Award has an exercise price per share equal to $1.53, the closing
price of a share of our common stock on the grant date, and will
vest as to one-third (1/3) of the shares of the underlying stock
option on January 14, 2020, one third (1/3) of the shares of
the underlying stock option on January 14, 2021 and the
remaining one third (1/3) of the shares of the underlying stock
option on January 14, 2022, provided that if within
one year following a change in control Mr. Christopher’s
employment is terminated by him for Good Reason (as defined in the
employment agreement) or by the Company or its successor without
Cause (as defined in the employment agreement), the Inducement
Award will be immediately exercisable in full.
Mr. Christopher is also entitled
to severance payments under his employment agreement. If we
terminate Mr. Christopher’s employment without Cause or if he
terminates his employment for Good Reason, in each case prior to,
or more than 12 months following, a change in control, then he
is entitled (A) to continue to be paid his base salary as in
effect on the termination date for a period of 12 months and
(B) to continue to receive his benefits under the company’s
employee group health insurance plan until the earlier of
(i) 6 months following the termination date or
(ii) the date he becomes eligible for coverage under a new
employer’s group health plan.
If we terminate
Mr. Christopher’s employment without Cause or he terminates
his employment for Good Reason, in each case within 12 months
following a Change in Control (as defined in the employment
agreement), then he is entitled (A) to an amount equal to 1.5
times his base salary as in effect on the termination date, plus
100% of his target annual bonus, in each case at the salary and
target annual bonus level in effect on the termination date or, if
higher, at any time within the six month period preceding the
Change in Control, (B) to acceleration in full of the vesting
on all outstanding, unvested equity awards held by him and
(C) to continue to receive his benefits under the company’s
employee group health insurance plan until the earlier of
(i) 12 months following the termination date or
(ii) the date he becomes eligible for coverage under a new
employer’s group health plan. The severance payments are
contingent upon Mr. Christopher executing a general release of
claims.
The employment agreement also
contains various restrictive covenants, including covenants
relating to non-solicitation, confidentiality and assignment of
inventions. In addition, under the terms of the employment
agreement, Mr. Christopher will also be eligible for medical,
dental and other fringe benefits available to our other senior
management members or any benefit plans established or adopted by
us.
Outstanding Equity Awards at Fiscal Year
End
The following table summarizes the
option and stock awards made to our named executive officers that
were outstanding on December 31, 2018.
|
|
Option Awards
|
|
Stock Awards
|
|
Name
|
|
Award
Grant Date
|
|
No. of
Securities
Underlying
Unexercised
Options (#)
Exercisable
|
|
No. of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
|
|
Option
Exercise
Price ($)
|
|
Option
Expiration
Date
|
|
Award
Grant
Date
|
|
Number of
Shares or
Units of
Stock That
Have Not
Vested (#)
|
|
Market
Value of
Shares or
Units of
Stock That
Have Not
Vested ($)
|
|
Equity Incentive
Plan
Awards:
Number
of Unearned
Shares, Units or
Other Rights
That Have Not
Vested (#)
|
|
Equity
Incentive Plan
Awards:
Market or
Payout Value
of Unearned
Shares, Units
or Other Rights
That have Not
Vested ($)
|
|
Richard Toselli
|
|
7/5/2017
|
|
4,605 |
|
8,395 |
|
63.75 |
|
7/5/2027
|
|
12/18/2017
|
|
—
|
|
—
|
|
9,000(1)
|
|
13,590 |
(2)
|
Christopher McNulty (3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pamela Stahl (3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Represents
12,000 RSU’s awarded to Dr. Toselli, which vested as to 25% of the
total underlying shares on the first anniversary of the grant date
and the remainder vests monthly in 36 equal monthly installments
until fully vested on the fourth anniversary of the grant
date.
|
|
(2)
|
|
The value
of the award is based on a price per restricted stock unit award of
$1.51, the closing sale price of our common stock on
December 31, 2018.
|
|
(3)
|
|
All of
Mr. McNulty and Ms. Stahl’s equity awards expired
prior to December 31, 2018.
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The following table sets forth
certain information as of September 30, 2019 with respect to
the beneficial ownership of our common stock by:
|
·
|
|
each of
our named executive officers; and
|
|
·
|
|
all of
our current executive officers and directors as a group.
|
We are not aware of any person that
beneficially owns more than 5% of the outstanding shares of our
common stock.
Unless otherwise indicated in the
footnotes to the following table, each person named in the table
has sole voting and investment power, and his or her address is c/o
InVivo Therapeutics Holdings Corp., One Kendall Square,
Suite B14402, Cambridge, MA 02139. Shares of our common stock
subject to options or warrants currently exercisable or exercisable
within 60 days of September 30, 2019 are deemed
outstanding for computing the share ownership and percentage
of the person holding such options and warrants, but are not deemed
outstanding for computing the percentage of any other person.
The percentage ownership of our common stock of each person or
entity named in the following table is based on 9,519,570 shares of
our common stock outstanding as of September 30,
2019.
|
|
|
|
|
|
Name of Beneficial Owner
|
|
Number of Shares
of Common Stock
Beneficially Owned
|
|
Percentage of Shares of
Common Stock
Beneficially Owned
|
|
Directors and Named Executive Officers:
|
|
|
|
|
|
Richard
Toselli, M.D. (1)
|
|
79,628 |
|
*
|
|
Dr. Daniel
Marshak (2)
|
|
2,500 |
|
*
|
|
C. Ann
Merrifield (3)
|
|
2,580 |
|
*
|
|
Dr. Richard
J. Roberts (4)
|
|
13,177 |
|
*
|
|
Christina
Morrison (5)
|
|
2,000 |
|
*
|
|
Christopher
McNulty (6)
|
|
303 |
|
*
|
|
Pamela
Stahl (7)
|
|
-
|
|
*
|
|
All
current executive officers and directors as a group
(6
persons) (8)
|
|
147,385 |
|
1.5% |
|
*Percentage of shares beneficially
owned does not exceed one percent.
|
(1)
|
|
Consists of (a) 3,042
shares of common stock owned by Dr. Toselli, (b) 7,586 shares of
common stock underlying options held by Dr. Toselli that are
exercisable as of September 30, 2019 or will become exercisable
within 60 days after such date and (c) 69,000 shares of restricted
Common Stock granted to Dr. Toselli.
|
|
(2)
|
|
Consists solely of
shares of common stock underlying options held by Dr. Marshak that
are exercisable as of September 30, 2019 or will become exercisable
within 60 days after such date.
|
|
(3)
|
|
Consists of (a) 80
shares of common stock owned by Ms. Merrifield and (b) 2,500 shares
of common stock underlying options held by Ms. Merrifield that are
exercisable as of September 30, 2019 or will become exercisable
within 60 days after such date.
|
|
(4)
|
|
Consists of (a) 8,677
shares of common stock owned by Dr. Roberts and (b) 4,500 shares of
common stock underlying options held by Dr. Roberts that are
exercisable as of September 30, 2019 or will become exercisable
within 60 days after such date.
|
|
(5)
|
|
Consists solely of
shares of common stock underlying options held by Ms. Morrison that
are exercisable as of September 30, 2019 or will become exercisable
within 60 days after such date.
|
|
(6)
|
|
Mr. McNulty, our Former
Chief Financial Officer, resigned from the Company effective May 7,
2018.
|
|
(7)
|
|
Ms. Stahl resigned from
the Company effective March 7, 2018.
|
|
(8)
|
|
Consists of (a) 11,799
shares of common stock owned by all current executive officers and
directors as a group (b) 19,086 shares of common stock underlying
options that are exercisable as of September 30, 2019 or will
become exercisable within 60 days after such date, (c) 116,500
shares of restricted Common stock and (d) excludes stock owned by
Mr. McNulty and Ms. Stahl who are no longer with the
Company.
|
SECTION 16(A) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE
Section 16(a) of the
Exchange Act requires our directors and executive officers and
persons who own more than 10% of a registered class of our equity
securities to file reports of beneficial ownership and changes in
beneficial ownership with the SEC. To our knowledge, based solely
on a review of copies of such reports furnished to us by our
officers and directors, we believe that, during the
fiscal year ended December 31, 2018, no person required
to file reports under Section 16(a) of the Exchange Act
failed to file such reports on a timely basis during such
fiscal year.
CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS
Related Party Transaction
Policy
Our board of directors has adopted
written policies and procedures for the review of related party
transactions. The Audit Committee reviews and oversees all related
party transactions on an ongoing basis. A “related party
transaction” is a transaction that meets the minimum threshold for
disclosure in the proxy statement under applicable SEC
rules (generally, transactions involving amounts exceeding
$120,000 in which a “related person” or entity has a direct or
indirect material interest). “Related persons” include our
executive officers, directors, beneficial owners of 5% or more of
our common stock, immediate family members of these persons and
entities in which one of these persons has a direct or indirect
material interest. When a potential related party transaction is
identified, management presents it to the Audit Committee to
determine whether to approve or ratify it.
The Audit Committee reviews the
material facts of any related party transaction and either approves
or disapproves of entering into the transaction. In the course of
reviewing the related party transaction, the Audit Committee
considers whether (i) the transaction is fair and reasonable
to our company, (ii) the transaction is in, or not
inconsistent with, our company’s best interests under all possible
circumstances, and (iii) the transaction will be on terms no
less favorable to our company than we could have obtained in an
arm’s-length transaction with an unrelated third party. If advance
approval of a related party transaction is not feasible, then the
transaction will be considered and, if the Audit Committee
determines it to be appropriate, ratified by the Audit Committee.
No director may participate in the approval of a transaction for
which he or she is a related party. When a related party
transaction is ongoing, any amendments or changes are reviewed, and
the transaction is reviewed annually for reasonableness and
fairness to our company.
Indemnification Agreements
Our articles of incorporation require
that we indemnify our officers, directors, employees, and agents to
the full extent permitted by the laws of the State of Nevada. Our
bylaws include an indemnification provision under which we have the
power to indemnify our directors and officers against all costs,
charges and expenses actually and reasonably incurred, including an
amount paid to settle an action or satisfy a judgment to which a
director or officer is made a party by reason of being or having
been a director or officer of the company. In addition, we have
entered into an indemnification agreement with each of our officers
and directors pursuant to which they will be indemnified by us,
subject to certain limitations, for any liabilities incurred by
them in connection with their role as officers or directors of the
company.
AUDIT COMMITTEE REPORT
The Audit Committee has reviewed our
audited financial statements for the fiscal year ended
December 31, 2018 and discussed them with our management and
RSM US LLP, our registered public accounting firm.
The Audit Committee has also
discussed with RSM US LLP the matters required to be discussed by
the statement on Auditing Standards No. 61, as amended (AICPA,
Professional Standards, Vol. 1, AU section 380), as adopted by the
Public Company Accounting Oversight Board in
Rule 3200T.
The Audit Committee has received the
written disclosures and the letter from our registered public
accounting firm required by applicable requirements of the Public
Company Accounting Oversight Board regarding the registered public
accounting firm’s communications with the Audit Committee
concerning independence, and has discussed with our registered
public accounting firm their independence.
Based on the review and discussions
referred to above, the Audit Committee recommended to the Board
that the audited financial statements of InVivo Therapeutics
Holdings Corp. be included in our Annual Report on Form 10‑K
for the year ended December 31, 2018, which has been
filed with the SEC.
|
|
|
By the Audit Committee of the Board
of Directors of InVivo
|
|
Therapeutics Holdings
Corp.
|
|
|
|
Christina Morrison,
Chairwoman
|
|
Daniel Marshak
|
|
C. Ann Merrifield
|
PROPOSAL
NO. 2
APPROVAL OF AMENDMENT TO ARTICLES OF
INCORPORATION TO INCREASE AUTHORIZED SHARES OF COMMON
STOCK
Our Board of Directors has adopted a
resolution (i) approving an amendment to Article Fourth
of our articles of incorporation that would increase the number of
authorized shares of common stock, par value $0.00001 per share,
from 25,000,000 shares to 500,000,000 shares (the “Common Stock
Amendment”) and (ii) directing that the Common Stock Amendment
be submitted to the stockholders for approval at the Annual
Meeting.
The Proposed Common Stock
Amendment
If the proposed Common Stock
Amendment is approved by our stockholders and subsequently filed
with the Nevada Secretary of State, Article Fourth of the
articles of incorporation would be amended and restated in its
entirety to read:
“The total number of shares that this
corporation is authorized to issue is Five Hundred Million
(500,000,000) shares of Common Stock having a par value of $0.00001
per share.”
Only the number of shares of common
stock the company is authorized to issue would be affected by this
Common Stock Amendment. Except for this change, the proposed Common
Stock Amendment would not affect any other provision of the
articles of incorporation. If approved by a majority of holders of
our outstanding shares of common stock entitled to vote as of the
record date, we will file the Common Stock Amendment, in
substantially the form attached hereto as Appendix A, with the
Nevada Secretary of State.
Reasons for the Common Stock
Amendment
Our Board believes that an increase
in the number of authorized shares of the company’s common stock
from 25,000,000 to 500,000,000 shares is in the best interests of
our stockholders. Increasing the number of authorized shares of
common stock will enable us to engage in capital raising
transactions and other strategic transactions involving the
issuance of equity securities. We anticipate that we will need to
implement a reverse stock split during the first quarter of 2020 in
order to regain complaince with Nasdaq Listing Rule 5550(a)(2),
which would reduce the authorized number of shares of common stock.
Additionally, although we have no specific current plans to
issue shares of common stock, after taking into account our
financing that closed on November 22, 2019, we have cash and cash
equivalents that will fund our operations through the first quarter
of 2020 and consequently expect that we will undertake financing
efforts in early 2020 in order to obtain sufficient
capital for us to execute on our business plan and remain
viable as a going concern. In light of our limited capital,
we must have the flexibility to engage in capital raising
transactions until we are able to generate sufficient revenue and
cash flow. Investors in prior transactions have purchased our
common stock or our derivative securities, such as warrants, for
which we must reserve unissued common stock.
As discussed in more detail below in
the section titled “Number of Shares of Common Stock Currently
Outstanding and Subject to Issuance,” we significantly rely on our
authorized common stock. We therefore may be limited in future
capital raising opportunities that would require the issuance of
shares of our common stock. Increasing the number of authorized
shares of common stock will enable us to issue common stock or
securities convertible or exercisable into common stock to
investors and other strategic partners. These transactions, if they
can be successfully negotiated and consummated, will help us fund
our business plan, including the funding of our clinical trials.
You should be aware that these potential capital raising
transactions or other strategic transactions involving the issuance
of additional shares of common stock will have a dilutive effect on
our existing stockholders, as further described in the section
below titled “Effects of Increase.”
If the increase is not approved, we
will be limited in our efforts to raise additional capital and
engage in strategic transactions. In such event, our operations,
financial condition and our ability to continue as a going concern
may be materially and adversely affected.
Number of Shares of Common Stock
Currently Outstanding and Subject to Issuance
As of September 30, 2019, we had
the following shares of common stock issued and outstanding and
shares of common stock reserved for issuance under the following
securities convertible or exercisable into common stock:
|
·
|
|
9,519,570
shares of our common stock issued and outstanding;
|
|
·
|
|
7,673,130
shares of our common stock issuable upon exercise of outstanding
warrants;
|
|
·
|
|
124,890
shares of our common stock issuable upon exercise of outstanding
stock options;
|
|
·
|
|
7,500
shares of our common stock issuable upon vesting of restricted
stock units;
|
|
·
|
|
6,146
shares of our common stock reserved for future issuance under our
incentive compensation plans and 401(k) plan; and
|
|
·
|
|
7,923
shares of common stock reserved for future sale under our employee
stock purchase plan.
|
Effects of Increase
The additional authorized but
unissued shares of common stock may generally be issued from time
to time for such proper corporate purposes as may be determined by
our Board or, as required by law or the rules of the Nasdaq
Stock Market, with the approval and authorization of our
stockholders. Our Board does not intend to solicit further
stockholder approval prior to the issuance of additional shares of
common stock, except as may be required by applicable law or by the
rules of the Nasdaq Stock Market.
The possible future issuance of
shares of our common stock or securities convertible or exercisable
into our common stock could affect our current stockholders in a
number of ways. The issuance of new shares of common stock will
cause immediate dilution of the ownership interests and the voting
power of our existing stockholders. New issuances of common stock
may also affect the number of dividends, if any, paid to such
stockholders and may reduce the share of the proceeds that they
would receive upon the future liquidation, if any, of the
company.
In addition, the future issuance of
shares of our common stock or securities convertible or exercisable
into shares of our common stock could:
|
·
|
|
dilute
the market price of our common stock, to the extent that the shares
of common stock are issued and sold at prices below current trading
prices, or, if the issuance consists of securities convertible or
exercisable into common stock, to the extent that the securities
provide for the conversion or exercise into common stock at prices
that could be below current trading prices of the common stock,
which dilution, in each case, may increase the volatility and
affect the market value of our trading securities;
|
|
·
|
|
dilute
the earnings per share, if any, and book value per share of the
outstanding shares of our common stock; and
|
|
·
|
|
make the
payment of dividends on common stock, if any, potentially more
expensive.
|
Although we do not have specific
current plans to issue common stock, we anticipate that we will
need to undertake financing efforts in early 2020 in order to
obtain sufficient capital for us to execute on our business plan
and remain viable as a going concern.
Anti-Takeover Effects
Although the Common Stock Amendment
is not motivated by anti-takeover concerns and is not considered by
our Board to be an anti-takeover measure, the availability of
additional authorized shares of common stock could enable the Board
to issue shares defensively in response to a takeover attempt or to
make an attempt to gain control of our company more difficult or
time-consuming. For example, shares of common stock could be issued
to purchasers who might side with management in opposing a takeover
bid that the Board determines is not in the best interests of our
stockholders, thus diluting the ownership and voting rights of the
person seeking to obtain control of our company. In certain
circumstances, the issuance of common stock without further action
by the stockholders may have the effect of delaying or preventing a
change in control of the company, may discourage bids for our
common stock at a premium over the prevailing market price and may
adversely affect the market price of our common stock. As a result,
increasing the authorized number of shares of our common stock
could render more difficult and less likely a hostile takeover of
our company by a third‑party, or a tender offer or proxy contest,
assumption of control by a holder of a large block of our stock,
and the possible removal of our incumbent management. We are not
aware of any proposed attempt to take over the company or of any
present attempt to acquire a large block of our common
stock.
Vote Required
The affirmative vote of stockholders
that represent a majority of the voting power entitled to vote on
the Common Stock Amendment is required to approve the Common Stock
Amendment. Abstentions will have the effect of a vote
“AGAINST” this Proposal.
OUR BOARD RECOMMENDS A VOTE
“FOR” THE APPROVAL OF THE COMMON STOCK
AMENDMENT.
PROPOSAL
NO. 3
APPROVAL OF AMENDMENT TO ARTICLES OF
INCORPORATION TO AUTHORIZE 1,000,000 SHARES OF “BLANK-CHECK”
PREFERRED STOCK
Our Board of Directors has adopted a
resolution (i) approving an amendment to Article Fourth
of our articles of incorporation that would provide authority to
issue up to 1,000,000 shares of “blank check” preferred stock, par
value $0.00001 per share (the “Preferred Amendment”) and
(ii) directing that the Preferred Amendment be submitted to
the stockholders for approval at the Annual Meeting.
The Proposed Preferred
Amendment
If the proposed Amendment is approved
by our stockholders and subsequently filed with the Nevada
Secretary of State, Article Fourth of the articles of
incorporation, as amended, would be amended to by deleting the
period at the end of the first sentence, and adding the
following:
“(the “Common Stock”), and One
Million (1,000,000) shares of Preferred Stock having a par value of
$0.00001 per share (the “Preferred Stock”).
4.1 Designation.
Shares of Preferred Stock may be issued from time to time in one or
more classes or series. The Board of Directors is hereby authorized
to fix by resolution or resolutions the classes, series, and number
of each class or series of stock as provided in Nevada Revised
Statutes Sections 78.195, 78.1955, and 78.196 (as amended from time
to time), as well as prescribe the voting powers, if any,
designations, powers, preferences, and the relative, participating,
optional, or other rights, if any, and the qualifications,
limitations, or restrictions thereof, of any unissued class or
series of Preferred Stock; to fix the number of shares constituting
such class or series; and to increase or decrease the number of
shares of any such class or series, but not below the number of
shares thereof then outstanding. In case the number of shares of
any series shall be decreased in accordance with the foregoing
sentence, the shares constituting such decrease shall resume the
status that they had prior to the adoption of the resolution
originally fixing the number of shares of such series.
4.2
Certificate. Before
the corporation may issue any shares of Preferred Stock of any
series, a Certificate of Designation setting forth a copy of the
resolution or resolutions of the Board of Directors, and
establishing the voting powers, if any, designations, powers,
preferences, and the relative, participating, optional, or other
rights, if any, and the qualifications, limitations, or
restrictions thereof, relating to the shares of Preferred Stock of
such series, and the number of shares of Preferred Stock of such
series authorized by the Board of Directors to be issued shall be
made and signed by an officer of the corporation and filed in the
manner prescribed by the NRS.
4.3
Amendments. Any
amendment to the provisions of this Article Fourth requires
the affirmative vote of at least a majority of each of (i) the
voting power of all stockholders present or represented by proxy at
a meeting and entitled to vote on all matters submitted to a vote
of stockholders and (ii) the voting power of any series of
Preferred Stock, the Certificate of Designation of which provides
that it shall have the right to vote on any amendment of the
corporation’s Articles of Incorporation, present or represented by
proxy at a meeting and entitled to vote thereon.”
Only the number of shares of
preferred stock the company is authorized to issue and the
requirements for the designation of a series of preferred stock
would be affected by this Preferred Amendment. Except for this
change, the proposed Preferred Amendment would not affect any other
provision of the articles of incorporation. If approved by a
majority of holders of our outstanding shares of common stock
entitled to vote as of the record date, we will file the Proposed
Amendment, in substantially the form attached hereto as
Appendix B, with the Nevada Secretary of State.
No specific shares of Preferred Stock
are being designated at this time and we do not currently have any
plans to issue shares of Preferred Stock. If our stockholders
approve the Preferred Amendment, the terms of the securities to be
authorized, including dividend or interest rates, conversion
prices, voting rights, redemption prices, maturity dates,
and
similar matters will be determined by
the board of directors if and when the board of directors
designates a specific series of preferred stock in accordance with
our Articles of Incorporation, as amended by the Preferred
Amendment.
Reasons for the Preferred
Amendment
Our Board believes that the
authorization of the “blank check” preferred stock will provide the
Company with increased financial and strategic flexibility in
meeting future capital requirements. It will allow preferred stock
to be available for issuance from time to time and with such
features as determined by our Board of Directors for any proper
corporate purpose.
If the increase is not approved, we
will be limited in our efforts to raise additional capital and
engage in strategic transactions. In such event, our operations,
financial condition and our ability to continue as a going concern
may be materially and adversely affected.
Effects of Increase
The additional authorized but
unissued shares of preferred stock may generally be issued from
time to time for such proper corporate purposes as may be
determined by our Board or, as required by law or the rules of
the Nasdaq Stock Market, with the approval and authorization of our
stockholders. Our Board does not intend to solicit further
stockholder approval prior to the issuance of shares of preferred
stock, except as may be required by applicable law or by the
rules of the Nasdaq Stock Market.
The possible future issuance of
shares of our preferred stock or securities convertible or
exercisable into our preferred stock could affect our current
stockholders in a number of ways. The issuance of new shares of
preferred stock could cause immediate dilution of the ownership
interests and the voting power of our existing stockholders. New
issuances of preferred stock may also affect the number of
dividends, if any, paid to such stockholders and may reduce the
share of the proceeds that they would receive upon the future
liquidation, if any, of the company.
In addition, the future issuance of
shares of our preferred stock or securities convertible or
exercisable into shares of our preferred stock could:
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dilute
the market price of our common stock, to the extent that the shares
of common stock are issued and sold at prices below current trading
prices, or, if the issuance consists of securities convertible or
exercisable into common stock, to the extent that the securities
provide for the conversion or exercise into common stock at prices
that could be below current trading prices of the common stock,
which dilution, in each case, may increase the volatility and
affect the market value of our trading securities;
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·
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dilute
the earnings per share, if any, and book value per share of the
outstanding shares of our common stock; and
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make the
payment of dividends on common stock, if any, potentially more
expensive.
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No
specific shares of Preferred Stock are being designated at this
time and we do not currently have any plans to issue shares of
Preferred Stock.
Anti-Takeover Effects
Although the Preferred Amendment is
not motivated by anti-takeover concerns and is not considered by
our Board to be an anti-takeover measure, the availability of
additional authorized shares of preferred stock could enable the
Board to issue shares defensively in response to a takeover attempt
or to make an attempt to gain control of our company more difficult
or time-consuming. For example, shares of preferred stock could be
issued to purchasers who might side with management in opposing a
takeover bid that the Board determines is not in the best interests
of our stockholders, thus diluting the ownership and voting rights
of the person seeking to obtain control of our company. In certain
circumstances, the issuance of preferred stock without further
action by the stockholders may have the effect of
delaying
or preventing a change in control of
the company, may discourage bids for our preferred stock at a
premium over the prevailing market price and may adversely affect
the market price of our preferred stock. As a result, increasing
the authorized number of shares of our common stock could render
more difficult and less likely a hostile takeover of our company by
a third‑party, or a tender offer or proxy contest, assumption of
control by a holder of a large block of our stock, and the possible
removal of our incumbent management. We are not aware of any
proposed attempt to take over the company or of any present attempt
to acquire a large block of our preferred stock.
Vote Required
The affirmative vote of stockholders
that represent a majority of the voting power entitled to vote on
the Preferred Amendment is required to approve the Preferred
Amendment. Abstentions and “broker non-votes” will have the
effect of a vote “AGAINST” this Proposal.
OUR BOARD RECOMMENDS A VOTE
“FOR” THE APPROVAL OF THE PREFERRED
AMENDMENT.
PROPOSAL
NO. 4
APPROVAL OF AMENDMENT TO 2015
EQUITY INCENTIVE PLAN
In March 2019, upon
recommendation of the Compensation Committee, our Board approved an
amendment to our existing 2015 Equity Incentive Plan (the “2015
Plan”; the amendment, the “2015 Plan Amendment”), subject to
stockholder approval. If approved by our stockholders, the 2015
Plan Amendment will become effective upon such approval.
The purpose of the 2015 Plan
Amendment is to replenish the shares available under the 2015 Plan
in order to give our company the continued ability to attract and
retain qualified officers, directors, employees and consultants
with appropriate equity-based awards, motivate high levels of
performance, recognize employee and other service provider
contributions to our success and align the interests of plan
participants with those of our stockholders, in accordance with our
executive compensation philosophy. The Board believes that the
ability to grant equity-based awards is needed for our company to
remain competitive for qualified employees, consultants and
non-employee directors in the biotechnology industry, particularly
against similar companies vying for a limited talent
pool.
Stockholder approval of the 2015 Plan
Amendment is required to: (i) comply with
Nasdaq rules requiring stockholder approval of equity
compensation plans; and (ii) comply with the incentive stock
option rules under Section 422 of the Code.
If the 2015 Plan Amendment is
approved, the maximum number of shares reserved for issuance under
the 2015 Plan will be increased by 800,000 shares to a total of
960,000 shares, which number has been adjusted to reflect the
1‑for-25 reverse stock split we completed on April 16,
2018, plus (i) the number of shares that remained
available for issuance under our 2010 Equity Incentive Plan, as
amended (the “Prior Plan”) as of the date that the 2015 plan became
effective and (ii) the number of shares that were subject to
outstanding awards under the Prior Plan the date the 2015 Plan
became effective that become available in the future due to
cancellation, forfeiture or expiration of such outstanding awards
and corresponding adjustments will be reflected in various share
limitations.
Shares Available Under Our 2015 Plans
and Share Usage
As of September 30, 2019, we had a
total of 2,046 shares available for issuance under our 2015 Plan.
As of September 30, 2019, we had an aggregate of 124,890 shares
subject to outstanding option awards, with a weighted average
exercise price of $35.15 per share and a weighted average remaining
term of 8.42 years. In addition, as of September 30, 2019, an
aggregate of 7,500 shares were subject to outstanding and unvested
RSUs under our 2015 Plan. Further as of September 30,
2019, an aggregate of 206,500 shares were subject to outstanding
and unvested restricted stock awards under our 2015
Plan. Other than options and RSUs, we do not have any
other types of awards outstanding. The record date common shares
outstanding November 22, 2019 was 16,519,570 shares.
In developing our share request for
the 2015 Plan Amendment and analyzing the impact of utilizing
equity as a means of compensation on our stockholders, we
considered both our “overhang” and our “burn rate”.
Overhang is a measure of potential
dilution which we define as the sum of (i) the total number of
shares underlying all equity awards outstanding and (ii) the total
number of shares available for future award grants, divided by the
number of shares outstanding. As of September 30, 2019, there were
338,890 shares underlying all equity awards outstanding, 2,046
shares available for future awards, and the common shares
outstanding was 9,519,570. Accordingly, our overhang at
September 30, 2019 was 3.6%. If the 800,000 additional
shares proposed to be authorized for grant under the 2015 Plan are
included in the calculation, our overhang on September 30, 2019
would have been 12%.
Burn rate provides a measure of the
potential dilutive impact of our equity award program which we
calculate by dividing the number of shares subject to equity awards
granted during the year by the basic weighted average number of
shares outstanding. Set forth below is a table that reflects our
burn rate for the 2018, 2017 and 2016 calendar years as well as an
average over those years.
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Fiscal
Year
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Number of
Options
Granted
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Number of
Time-based
Restricted
Stock Units
Granted (1)
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Total Grants
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Basic
Weighted
Average
Shares
Outstanding
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Unadjusted
Share Usage
(Burn Rate)
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2016
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13,330
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-
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13,330
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1,241,024 |
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1.1% |
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2017
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57,579
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23,800
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81,379
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1,318,003 |
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6.2% |
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2018
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15,524
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-
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15,524
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4,990,089 |
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0.3% |
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Three-Year
Average
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2.5% |
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Our only equity incentive plan with
shares available for future awards is our 2015 Plan. The
number of shares available for grant under the 2015 Plan is
insufficient to meet our anticipated needs. Therefore, the Board
decided to amend the 2015 Plan to replenish the shares available
under the plan in order to be able to continue to grant awards of
restricted stock, stock options, and other forms of equity
compensation to our employees and directors.
Awards Granted Under the 2015
plan
Since the initial approval of the
2015 Plan in 2015 through September 30, 2019, the following
number of equity awards have been granted to the individuals and
groups described in the table. No other equity awards have been
granted to any other individuals or groups under the 2015 Plan as
of such date.
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Name
of Beneficial Owner
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Number of
Shares
of
Common Stock
Underlying
Options Granted
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Number of
Shares
of Common
Stock Underlying
Restricted Stock
Units Granted
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Number
of
Restricted Shares
Granted
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Named Executive
Officers
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Richard Toselli,
President and
Chief Executive Officer
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13,000 |
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12,000 |
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69,000 |
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Christopher
McNulty, Former Chief
Financial Officer
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7,954 |
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-
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-
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Pamela Stahl,
Former Chief
Commercial Officer
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8,930 |
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-
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-
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All current executive
officers as a group
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13,000 |
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12,000 |
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116,500 |
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All directors who are
not executive officers as a group
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7,000 |
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-
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-
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All nominees for
election as a director:
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Christina
Morrison
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2,000 |
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-
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Daniel
Marshak
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1,500 |
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-
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-
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Associates of our
executive officers, directors and nomniees for director:
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-
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-
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-
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All other persons who
received 5% of such equity awards:
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Mark Perrin,
Former Chief
Executive Officer and former Chairman of the Board (1)
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17,975 |
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-
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Gloria Boye,
Former Clinical
Project Manager
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12,500 |
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-
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-
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William
D’Agostino, Senior Vice
President, Operations
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-
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-
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40,000 |
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Alex Aimetti,
Former Vice
President, Medical Education and Product Strategy
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-
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2,400 |
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-
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Melanie Golarz,
Former Senior
Director, Finance and Controller
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-
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2,400 |
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-
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Kristin Neff,
Former Vice
President, Clinical Operations
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-
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1,200 |
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-
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Heather Hamel,
Director, Legal
Affairs and Business Development
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-
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-
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22,500 |
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Joshua Kennedy,
Principal
Chemical Engineer
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-
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-
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17,500 |
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All employees,
including all current officers who are not executive officers as a
group
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104,303 |
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11,839 |
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90,000 |
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(1)
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Mark Perrin is our
former Chief Executive Officer and former Chairman of the Board;
who resigned from the Company effective December 18,
2017.
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Vote Required
This Proposal will be approved if the
if the number of votes cast in favor exceeds the number of votes
cast in opposition. Abstentions and “broker non-votes” will
have no effect
on this Proposal.
OUR BOARD RECOMMENDS A VOTE
"FOR" THE ADOPTION OF THE 2015 PLAN
AMENDMENT.
Summary of the 2015 Equity Incentive
Plan
The following is a general summary of
the 2015 Plan, as amended by the 2015 plan Amendment, and is
qualified in its entirety by the complete text of the 2015 Plan.
Stockholders are urged to read the actual text of the 2015 Plan, as
amended, in its entirety which is set forth
as Appendix C to
this proxy statement.
Plan
Administration. The 2015 Plan is administered by the
Compensation Committee of our Board of Directors, or such other
committee as the Board may appoint from time to time. The
Compensation Committee may delegate the administration of the 2015
Plan to members of the Board, officers, or employees of the
Company, subject to the terms of the 2015 Plan.
Subject to the terms of the 2015
Plan, the Compensation Committee has the authority to:
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decide which
individuals will receive awards under the 2015 Plan;
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specify the type
of award to be granted and the terms and conditions upon which an
award will be granted and may be earned (including, when and how an
award may be exercised or earned and the exercise price, if
applicable, associated with each award);
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prescribe any
other terms and conditions (including accelerated vesting or
forfeiture provisions) affecting an award;
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adopt, amend and
rescind rules and regulations relating to the 2015 Plan;
and
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make
all other decisions necessary or advisable for the administration
and interpretation of the 2015 Plan.
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Any decisions of the Compensation
Committee regarding the 2015 Plan shall be final, conclusive and
binding on all persons or entities, including the company and
participants.
Eligibility.
The
individuals eligible to receive awards under the 2015 Plan are
officers, directors, employees, and consultants who provide
services to us or any “related entity,” which means any subsidiary,
and any business, corporation, partnership, limited liability
company or other entity designated by the Board, in which the
Company or a Subsidiary holds a substantial ownership interest,
directly or indirectly. At this time, there is only one
related entity, our wholly owned subsdiary, InVivo Therapeutics,
Inc. However, only employees of the company (or related
entities) are eligible to receive incentive stock options, or ISOs.
There are approximately six employees of our Company, four
non-employee directors of our Company and three consultants to our
Company who would currently be eligible to participate
in the 2015 Plan. Actual participation and receipt of an award
under the 2015 Plan will be determined by the Compensation
Committee in its sole discretion.
Shares Subject
to the 2015 Plan. If the 2015 Plan Amendment is
approved, the maximum number of shares reserved for issuance under
the 2015 Plan will be increased by 800,000 shares to a total of
960,000 shares, which number has been adjusted to reflect the
1‑for-25 reverse stock split we completed on April 16,
2018, plus (i) the number of shares that remained available
for issuance under the Prior Plan, as of the date that the 2015
Plan became effective and (ii) the number of shares that were
subject to outstanding awards under the Prior Plan the date the
2015 Plan became effective that become available in the future due
to cancellation, forfeiture or expiration of such outstanding
awards.
Shares under the 2015 Plan may only
be reused for new grants if the shares were subject to an award
that was forfeited, expired or otherwise terminated without
issuance of the underlying shares, or if the award was settled for
cash and does not otherwise involve the issuance of underlying
shares.
The closing price of our common stock
was $0.13 on November 25, 2019.
Limitations
on Certain Types of Awards. If the
2015 Plan Amendment is approved, the maximum number of shares that may
be delivered under the 2015 Plan as a result of the exercise of the
incentive stock options is 960,000 shares. In addition, there are
individual participant limitations, including (i) no grant of
options and/or stock appreciation rights of more than 960,000 shares per participant per
fiscal year; (ii) no grant of restricted
stock, restricted stock units, performance shares and/or other
stock-based awards denominated in or valued by reference to a
designated number of shares, with respect to more than 960,000 shares per fiscal year;
and (iii) no grant of performance units payable in cash of
more than (x) $2,000,000 per fiscal year,
pro-rated for a performance period that is less than 12 months, and
(y) $2,000,000 per fiscal year with respect to any performance
period that is more than 12 months. No non-employee
director may be granted awards under the 2015 Plan that have a
grant date fair market value
(determined for financial accounting purposes) that exceeds
$1,000,000 in the aggregate per fiscal year.
Adjustments in
Capitalization. The Compensation Committee is
authorized to adjust the limitations on the number of shares
available for issuance under the 2015 Plan and the individual
limitations on the amount of certain awards and to adjust
outstanding awards (including adjustments to exercise prices of
options and other affected terms of awards) to the extent it deems
equitable in the event that a dividend or other distribution
(whether in cash, shares or other property), recapitalization,
forward or reverse split, reorganization, merger, consolidation,
spin-off, combination, repurchase, share exchange or other similar
corporate transaction or event affects the shares so that an
adjustment is appropriate.
Types of
Awards. The
2015 Plan provides for a variety of awards, including options,
restricted stock awards, restricted stock units, stock appreciation
rights (stock- and cash-settled) and other equity-based awards, as
well as dividend equivalents and "performance-based" awards. Any
award granted under the 2015 Plan will be evidenced by an award
agreement which will describe the terms and conditions of the
award, including, without limitation, the type of award granted,
when and how the award may be exercised or earned, and any exercise
price (as appropriate) associated with the award.
Options.
Options
provide for the right to purchase shares of our common stock at a
specified price, and usually will become exercisable in the
discretion of the Compensation Committee in one or more
installments after the grant date. The Compensation Committee will
determine the acceptable forms of consideration for exercising an
option, including the method of payment, to the extent permitted by
applicable law. Generally, our practice has been to grant awards
that are subject to a four-year vesting schedule with 25% vesting
on the first anniversary and the remainder vesting monthly
thereafter.
Options may be granted for any term
specified by the Compensation Committee, but shall not exceed
ten years. Options may not be granted at an exercise price
that is less than the fair market value of our common stock on the
date of grant. For purposes of the 2015 Plan, fair market value is
defined as the closing price for our common stock on the principal
stock exchange or market on which our common stock is traded on the
date of determination.
Options may take two forms,
nonstatutory options, or NSOs, and ISOs. ISOs will be designed to
comply with the provisions of the Code and will be subject to
certain restrictions contained in the Code in order to qualify as
ISOs. Among such restrictions, ISOs must:
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have
an exercise price not less than the fair market value of our common
stock on the date of grant, or if granted to certain individuals
who own or are deemed to own at least 10% of the total combined
voting power of all of our classes of stock ("10% stockholders"),
then such exercise price may not be less than 110% of the fair
market value of our common stock on the date of grant;
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be
granted only to our employees and employees of our subsidiary
entities;
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be
exercised within ten years after the date of grant, or with
respect to 10% stockholders, no more than five years after the
date of grant; and
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not
be first exercisable for more than $100,000 worth of value per
calendar year, determined based on the grant date fair market
value.
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If an award purported to be an ISO
fails to meet the requirements of the Code, then the award will
instead be considered an NSO.
Stock Appreciation
Rights. Stock appreciation rights, or SARs,
provide for the payment to the holder based upon increases in the
price of our common stock over a set base price, which may not be
less than the fair market value of our common stock on the date of
grant. Payment for SARs may be made in cash, common stock or any
combination of the two. SARs may be granted for any term specified
by the Compensation Committee, but shall not exceed
ten years.
Restricted Stock.
A restricted
stock award is the grant of shares of our common stock at a price
determined by the Compensation Committee (which price may be zero),
is nontransferable and unless otherwise determined by the
Compensation Committee at the time of award, may be forfeited upon
termination of employment or service during a restricted period.
The Compensation Committee may restrict the participant’s ability
to vote the shares of restricted stock or receive dividends on such
shares.
Restricted Stock
Units. Restricted stock units represent the
right to receive shares of our common stock at a specified date in
the future, subject to forfeiture of such right. If the restricted
stock unit has not been forfeited, then on the date specified in
the restricted stock unit agreement we shall deliver to the holder
of the restricted stock unit, unrestricted shares of common stock
which will be freely transferable. The Compensation Committee will
specify the purchase price, if any, to be paid by the grantee for
the common stock.
Bonus Stock and
Awards in Lieu of Obligations. The Compensation Committee is
authorized to grant shares of common stock to any eligible persons
as a bonus, or to grant shares or other awards in lieu of
obligations to pay cash or deliver other property under the 2015
Plan or under other plans or compensatory arrangement.
Other Stock-Based
Awards. The
Compensation Committee is authorized to grant awards that are
denominated or payable in, valued by reference to, or otherwise
based on or related to shares of our common stock. The Compensation
Committee determines the terms and conditions of such
awards.
Performance Awards.
Performance
awards are denominated in cash or shares of our common stock and
are linked to satisfaction of performance criteria established by
the Compensation Committee. The performance criteria to be achieved
during any performance period and the length of the performance
period will be determined by the Compensation Committee upon the
grant of the performance award. Performance awards may be valued by
reference to a designated number of shares (in which case they are
referred to as performance shares) or by reference to a designated
amount of property including cash (in which case they are referred
to as performance units). Performance awards may be settled by
delivery of cash, shares or other property, or any combination
thereof, as determined by the Compensation Committee.
One or more of the following criteria
shall be used by the Compensation Committee in establishing
performance goals for such awards; (1) earnings per share;
(2) achievement of domestic and international regulatory
milestones, including the submission of filings required to advance
products, services and technologies in clinical development and the
achievement of approvals by regulatory authorities relating to the
commercialization of products, services and technologies;
(3) the achievement of discovery, preclinical and clinical
stage scientific objectives, discoveries or inventions for
products, services and technologies under research and development;
(4) the entry into or completion of a phase of clinical
development for any product, service or technology;
(5) specified levels of product sales; (6) earnings
before or after discontinued operations, interest, taxes,
depreciation and/or amortization, operating profit before or after
discontinued operations and/or taxes, sales, sales growth, earnings
growth, cash flow or cash position, gross margins or working
capital;
(7) stock price, (8) return
on sales, assets, equity or investment; (9) operating income
or income from operations after excluding extraordinary or special
items (including, without limitation, stock-based compensation,
goodwill impairments, building and other significant asset sales,
asset write-downs, plant closures and related layoffs, and/or
amortization of intangibles); (10) net income;
(11) management of fixed costs or variable costs;
(12) identification or consummation of investment
opportunities or completion of specified projects in accordance
with corporate business plans, including financings, strategic
mergers, acquisitions or divestitures; (13) total shareholder
return; (14) debt reduction; (15) market share;
(16) entry into new markets, either geographically or by
business unit; and/or (17) the fair market value of a share.
Any of the above goals may be determined on an absolute or relative
basis or as compared to the performance of a published or special
index deemed applicable by the Compensation Committee including,
but not limited to, the NASDAQ Composite Index, the NASDAQ
Biotechnology Index or a group of companies that are comparable to
the company.
After the end of each performance
period, the Compensation Committee will determine and certify
whether the performance goals have been achieved. In determining
the achievement of such performance goals, the Compensation
Committee may, at the time the performance goals are set, require
that those goals be determined by excluding the impact of:
(i) restructurings, discontinued operations, and extraordinary
items (as defined pursuant to generally accepted accounting
principles), and other unusual or non-recurring charges;
(ii) changes in accounting standards required by generally
accepted accounting principles; or (iii) such other exclusions
or adjustments as the Compensation Committee specifies at the time
the award is granted.
The Compensation Committee may, in
its discretion, determine that the amount payable as a performance
award will be reduced from the amount of any potential
award.
Acceleration
of Vesting; Change in Control. Subject to certain limitations, the
Compensation Committee may, in its discretion, accelerate the
exercisability, the lapsing of restrictions or the expiration of
deferral or vesting periods of any award. In the event of a “change
in control” of the company, as defined in the 2015 Plan, and only
to the extent provided in any employment or other agreement between
the participant and the company or any related entity, or in any
award agreement, or to the extent otherwise determined by the
Compensation Committee in its sole discretion in each particular
case: (i) any option or stock appreciation right that was not
previously vested and exercisable at the time of the "change in
control" will become immediately vested and exercisable;
(ii) any restrictions, deferral of settlement and forfeiture
conditions applicable to a restricted stock award, restricted stock
unit award or any other stock-based award subject only to future
service requirements will lapse and such awards will be deemed
fully vested; and (iii) with respect to any outstanding award
subject to achievement of performance goals and conditions under
the 2015 Plan, the Compensation Committee may, in its discretion,
consider such awards to have been earned and payable based on
achievement of performance goals or based upon target performance
(either in full or pro-rata based on the portion of the performance
period completed as of the “change in control”).
Subject to any limitations contained
in the 2015 Plan relating to the vesting of awards in the event of
any merger, consolidation or other reorganization in which the
company does not survive, or in the event of any "change in
control," the agreement relating to such transaction or the
Compensation Committee may provide for: (i) the continuation
of the outstanding awards by the company, if the company is a
surviving entity; (ii) the assumption or substitution for
outstanding awards by the surviving entity or its parent or
subsidiary pursuant to the provisions contained in the 2015 Plan;
(iii) full exercisability or vesting and accelerated
expiration of the outstanding awards; or (iv) settlement of
the value of the outstanding awards in cash or cash equivalents or
other property followed by cancellation of such. The foregoing
actions may be taken without the consent or agreement of a
participant in the 2015 Plan and without any requirement that all
such participants be treated consistently.
Clawback.
The
Compensation Committee has the power and authority under the 2015
Plan to cancel an award, require reimbursement of an award, or
otherwise recoup awards made under the 2015 Plan if (1) there
is an accounting restatement of the company’s financial statements
or results and (2) the restatement results from the company’s
non-compliance with federal securities laws.
Awards Not
Transferable. Generally, the awards may not be
pledged, assigned or otherwise transferred other than by will or by
laws of descent and distribution.
Other
Adjustments. The Compensation Committee is
authorized to make adjustments in the terms and conditions of, and
the criteria included in, awards: (i) in recognition of
unusual or nonrecurring events (such as acquisitions and
dispositions of businesses and assets) affecting our company or any
subsidiary, or the financial statements of our company or any
subsidiary; (ii) in response to changes in applicable laws,
regulations, accounting principles, tax rates and regulations or
business conditions; or (iii) in view of the Compensation
Committee’s assessment of the business strategy of the company,
performance of comparable organizations, economic and business
conditions, personal performance of a participant, and any other
circumstances deemed relevant.
Term,
Amendment and Termination. The 2015 Plan became effective on
April 16, 2015, and will expire on April 15, 2025, the tenth
anniversary of its adoption by the Board, unless terminated
earlier. The Board may amend or terminate the 2015 Plan at any
time, subject to stockholder approval to the extent required by law
or applicable listing standards; provided that, in the case of
outstanding awards, no change may be made that materially and
adversely affects the rights of the participant without his or her
consent.
Federal Income Tax Consequences of
Awards
The following is a summary of the
United States federal income tax consequences that generally will
arise with respect to awards granted under the 2015 Plan. This
summary is based on the federal tax laws in effect as of the date
of this proxy statement. In addition, this summary assumes that all
awards are exempt from, or comply with, the rules under Section
409A of the Code regarding nonqualified deferred compensation.
Changes to these laws could alter the tax consequences described
below. The 2015 Plan is not qualified under the
provisions of section 401(a) of the Code and is not subject to any
of the provisions of the Employee Retirement Income Security Act of
1974.
Nonqualified Stock
Options. An
optionee generally is not taxable upon the grant of a nonqualified
stock option granted under the 2015 Plan. On exercise of a
nonqualified stock option granted under the 2015 Plan, an optionee
will recognize ordinary income equal to the excess, if any, of the
fair market value on the date of exercise of the shares acquired on
exercise of the option over the exercise price. If the optionee is
an employee of the company or a subsidiary, that income will be
subject to the withholding of Federal income tax. The optionee’s
tax basis in those shares will be equal to their fair market value
on the date of exercise of the option, and his or her holding
period for those shares will begin on that date.
The company generally will be
entitled to a deduction for Federal income tax purposes equal to
the amount of ordinary income taxable to the optionee, provided
that amount constitutes an ordinary and necessary business expense
for the company and is reasonable in amount, and either the
optionee includes that amount in income or the company timely
satisfies its reporting requirements with respect to that
amount. Any deduction is subject to the limitation under
Section 162(m) of the Code.
Incentive Stock
Options. Under the Code, an optionee generally
is not subject to tax upon the grant or exercise of an ISO. In
addition, if the optionee holds a share received on exercise of an
ISO for at least two years from the date the option was
granted and at least one year from the date the option was
exercised, which we refer to as the “Required Holding Period,” the
difference, if any, between the amount realized on a sale or other
taxable disposition of that share and the holder’s tax basis in
that share will be long-term capital gain or loss.
If an optionee disposes of a share
acquired on exercise of an ISO before the end of the Required
Holding Period, which we refer to as a “Disqualifying Disposition,”
the optionee generally will recognize ordinary income in
the year of the Disqualifying Disposition equal to the excess,
if any, of the fair market value of the share on the date the ISO
was exercised over the exercise price. If, however, the
Disqualifying Disposition is a sale or exchange on which a loss, if
realized, would be recognized for Federal income tax purposes, and
if the sales proceeds are less than the fair market value of the
share on the date of exercise of the option, the amount of ordinary
income recognized by the optionee will not exceed the gain, if any,
realized on the sale. If the amount realized on a Disqualifying
Disposition exceeds the fair market value of the share on the date
of exercise of the option, that excess will be short-term or
long-term capital gain, depending on whether the holding period for
the share exceeds one year.
For purposes of the alternative
minimum tax, the amount by which the fair market value of a share
acquired on exercise of an ISO exceeds the exercise price of that
option generally will be an adjustment included in the optionee’s
alternative minimum taxable income for the year in which the
option is exercised. If, however, there is a Disqualifying
Disposition of the share in the year in which the option is
exercised, there will be no adjustment with respect to that share.
If there is a Disqualifying Disposition in a later year, no
income with respect to the Disqualifying Disposition is included in
the optionee’s alternative minimum taxable income for
that year. In computing alternative minimum taxable income,
the tax basis of a share acquired on exercise of an ISO is
increased by the amount of the adjustment taken into account with
respect to that share for alternative minimum tax purposes in
the year the option is exercised.
The company is not allowed an income
tax deduction with respect to the grant or exercise of an ISO or
the disposition of a share acquired on exercise of an ISO after the
Required Holding Period. However, if there is a Disqualifying
Disposition of a share, the company generally is allowed a
deduction in an amount equal to the ordinary income includible in
income by the optionee, provided that amount constitutes an
ordinary and necessary business expense for the company and is
reasonable in amount, and either the employee includes that amount
in income or the company timely satisfies its reporting
requirements with respect to that amount. Any deduction is
subject to the limitation under Section 162(m) of the
Code.
Stock Awards.
Generally,
the recipient of a stock award will recognize ordinary compensation
income at the time the shares are received equal to the excess, if
any, of the fair market value of the shares received over any
amount paid by the recipient in exchange for the shares. If,
however, the shares are not vested when they are received under the
2015 Plan (for example, if the recipient is required to work for a
period of time in order to have the right to sell the shares), the
recipient generally will not recognize income until the shares
become vested, at which time the recipient will recognize ordinary
compensation income equal to the excess, if any, of the fair market
value of the shares on the date they become vested over any amount
paid by the recipient in exchange for the shares. A recipient may,
however, file an election with the Internal Revenue Service, within
30 days of his or her receipt of the award, to recognize
ordinary compensation income, as of the date the recipient receives
the award, equal to the excess, if any, of the fair market value of
the shares on the date the award is granted over any amount paid by
the recipient in exchange for the shares.
The recipient’s basis for the
determination of gain or loss upon the subsequent disposition of
shares acquired as awards will be the amount paid for the shares
plus any ordinary income recognized either when the shares are
received or when the shares become vested. Upon the disposition of
any shares received as a share award under the 2015 Plan, the
difference between the sales price and the recipient’s basis in the
shares will be treated as a capital gain or loss and generally will
be characterized as long-term capital gain or loss if the shares
have been held for more the one year from the date as of which
he or she would be required to recognize any compensation
income.
The company generally will be
entitled to a deduction for Federal income tax purposes equal to
the amount of ordinary income taxable to the recipient, provided
that amount constitutes an ordinary and necessary business expense
for the company, is reasonable in amount, either the recipient
includes that amount in income or the company timely satisfies its
reporting requirements with respect to that amount. Any
deduction is subject to the limitation under Section 162(m) of the
Code.
Stock Appreciation
Rights. The
company may grant stock appreciation rights, separate from any
other award, which we refer to as stand-alone stock appreciation
rights, or tandem stock appreciation rights, under the 2015 Plan.
Generally, the recipient of a stand-alone stock appreciation right
will not recognize any taxable income at the time the stand-alone
stock appreciation right is granted.
With respect to stand-alone stock
appreciation rights, if the recipient receives the appreciation
inherent in the stock appreciation rights in cash, the cash will be
taxable as ordinary compensation income to the recipient at the
time that the cash is received. If the recipient receives the
appreciation inherent in the stock appreciation rights in shares,
the recipient will recognize ordinary compensation income equal to
the excess of the fair market value of the shares on the day they
are received over any amounts paid by the recipient for the
shares.
In general, there will be no Federal
income tax deduction allowed to the company upon the grant or
termination of stand-alone stock appreciation rights or tandem
stock appreciation rights. Upon the exercise of either a
stand-alone
stock appreciation right or a tandem
stock appreciation right, however, the company generally will be
entitled to a deduction for Federal income tax purposes equal to
the amount of ordinary income that the recipient is required to
recognize as a result of the exercise, provided that the deduction
is not otherwise disallowed under the Code, and subject to the
limitation under Section 162(m) of the Code.
Dividend
Equivalents. Generally, the recipient of a
dividend equivalent award will recognize ordinary compensation
income at the time the dividend equivalent award is received equal
to the fair market value of the amount received. The company
generally will be entitled to a deduction for Federal income tax
purposes equal to the amount of ordinary income that the recipient
is required to recognize as a result of the dividend equivalent
award, provided that the deduction is not otherwise disallowed
under the Code and subject to the limitation under Section 162(m)
of the Code.
New Plan Benefits
No grants have been made with respect
to the additional shares of our common stock to be reserved for
issuance under the 2015 Plan. In addition, the number of
shares of our common stock that may be granted to officers,
directors, employees and consultants is indeterminable at this
time, as those grants generally are subject to the discretion of
the Compensation Committee.
PROPOSAL
NO. 5
ADVISORY VOTE ON NAMED EXECUTIVE
OFFICER COMPENSATION
The Dodd-Frank Wall Street Reform and
Consumer Protection Act of 2010 (known as the “Dodd-Frank Act”) and
Section 14A of the Exchange Act require that we provide our
stockholders with the opportunity to vote to approve, on a
non-binding, advisory basis, the compensation of our named
executive officers as disclosed in this proxy statement in
accordance with the compensation disclosure rules of the SEC.
This proposal, which is commonly referred to as “Say on Pay,” gives
our stockholders the opportunity to express whether they support
our company’s executive compensation program.
Our compensation programs are
designed to attract, motivate, retain and reward high quality
executives and to align the interests of our executives with our
stockholders by having a “pay for performance” philosophy, tying a
portion of our executive officers’ and senior management’s
compensation to our overall company business goals and individual
performance goals. For additional information on the compensation
for our named executive officers, including specific information
about compensation in 2018, please see the information in this
proxy statement under the heading “Executive Compensation” along
with the compensation tables and narrative descriptions that
follow.
We currently provide our stockholders
with the opportunity to cast the Say on Pay vote every
three years. In accordance with the Dodd-Frank Act, the Say on
Pay vote will be an advisory vote regarding our company’s named
executive officer compensation program generally and does not
examine any particular compensation element individually. Because
the Say on Pay vote is advisory, it is not binding on our company,
our Compensation Committee or our Board. However, the Compensation
Committee intends to review the results of the advisory vote and
will be cognizant of the feedback received from the voting results
as it completes its annual review and engages in the compensation
planning process.
Accordingly, we ask our stockholders
to vote on the following resolution at the Annual
Meeting:
“RESOLVED, that the compensation paid
to the company’s named executive officers, as disclosed in the
proxy statement for the Annual Meeting pursuant to the compensation
disclosure rules of the Securities Exchange Commission,
including the compensation tables and related narrative disclosure,
is hereby approved.”
Vote Required
This Proposal will be approved if the
if the number of votes cast in favor exceeds the number of votes
cast in opposition. Abstentions and “broker non-votes” will
have no effect
on this Proposal.
OUR BOARD BELIEVES
THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS IS APPROPRIATE AND
PROMOTES THE BEST INTERESTS OF OUR STOCKHOLDERS, AND THEREFORE
RECOMMENDS A VOTE "FOR"
APPROVAL OF THIS RESOLUTION.
PROPOSAL
NO. 6
ADVISORY VOTE ON THE FREQUENCY
OF
FUTURE EXECUTIVE COMPENSATION
ADVISORY VOTES
In Proposal No. 5, we are
providing our stockholders the opportunity to vote to approve, on
an advisory, non-binding basis, the compensation of our named
executive officers. In this Proposal No. 6, we are asking our
stockholders to cast a non-binding, advisory vote regarding the
frequency of future executive compensation advisory votes pursuant
to the Dodd-Frank Act and Section 14A of the Exchange Act.
Stockholders may vote for a frequency of every one, two, or
three years, or may abstain.
The Board of Directors will take into
consideration the outcome of this vote in making a determination
about the frequency of future executive compensation advisory
votes. However, because this vote is advisory and non-binding, the
Board of Directors may decide that it is in the best interests of
our stockholders and the Company to hold the advisory vote to
approve executive compensation more or less frequently.
After careful consideration, the
Board of Directors believes that the executive compensation
advisory vote should be held every three years, and therefore
our Board of Directors recommends that you vote for a frequency of
every THREE YEARS for future executive compensation advisory
vote.
The Board of Directors believes that
a once every three years, or triennial, executive compensation
advisory vote will allow our stockholders to evaluate executive
compensation on a more thorough, long-term basis than a more
frequent vote. Consistent with our view that our executive
compensation program should serve as an incentive and retention
tool, we take a long-term view of executive compensation and
encourage our stockholders to do the same. Too-frequent executive
compensation advisory votes may encourage short-term analysis of
executive compensation. Annual or biennial executive compensation
advisory votes also may not allow stockholders sufficient time to
evaluate the effect of changes we make to executive
compensation.
A triennial vote will also give our
Board of Directors sufficient time to engage with stockholders to
better understand their views about executive compensation and
respond effectively to their concerns. Independent of the timing of
the executive compensation advisory vote, we encourage stockholders
to contact the Board of Directors at any time to provide feedback
about corporate governance and executive compensation
matters.
Vote Required
This Proposal will be approved if the
if the number of votes cast in favor of “three years” exceeds the
number of votes cast in favor of “one year” and the number of votes
case in favor of “two years”. Abstentions and “broker
non-votes” will have no effect on this Proposal.
OUR BOARD UNANIMOUSLY BELIEVES THAT HOLDING THE
EXECUTIVE COMPENSATION ADVISORY VOTE EVERY THREE YEARS IS IN
THE BEST INTERESTS OF THE COMPANY AND ITS STOCKHOLDERS AND
THEREFORE RECOMMENDS A VOTE FOR A FREQUENCY OF EVERY
“THREE YEARS”.
PROPOSAL
NO. 7
RATIFICATION OF THE APPOINTMENT
OF
INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
The Audit Committee has selected RSM
US, LLP (“RSM”) as our independent registered public
accounting firm to audit our financial statements for the
fiscal year ending December 31, 2019. The Board is asking
our stockholders to ratify the appointment of RSM as our
independent registered public accounting firm. Although stockholder
approval of our Audit Committee’s appointment of RSM as our
independent registered public accounting firm for the year
ended December 31, 2019 is not required, we believe that it is
advisable to give stockholders an opportunity to ratify this
appointment. If the stockholders do not ratify the appointment of
RSM as our independent registered public accounting firm, the Audit
Committee may reconsider its appointment. Even if the appointment
is ratified, the Audit Committee, in its discretion, may direct the
appointment of a different independent registered public accounting
firm at any time during the year if the Audit Committee
determines that such a change would be in the best interests of our
company and stockholders. A representative of RSM is expected to be
present at the Annual Meeting and will have the opportunity to make
a statement if he or she desires to do so and will be available to
respond to appropriate questions from stockholders.
During the company’s
fiscal years ended December 31, 2013 and
December 31, 2014, and the subsequent interim period of
January 1, 2015 through the engagement of RSM on
August 7, 2015, neither the company, nor anyone on its behalf,
consulted with RSM regarding either (i) 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 consolidated financial statements, and neither a
written report nor oral advice was provided to the company that RSM
concluded was an important factor considered by the company in
reaching a decision as to the accounting, auditing or financial
reporting issue, or (ii) any matter that was either the
subject of a “disagreement,” as defined in
Item 304(a)(1)(iv) of Regulation S-K and the related
instructions, or a “reportable event,” as that term is defined in
Item 304(a)(1)(v) of Regulation S-K.
Independent Registered Public
Accounting Firm Fees
Audit Fees
|
|
|
|
|
|
Firm
|
|
Year
|
|
Fees ($)(1)
|
|
RSM US,
LLP
|
|
2018
|
|
194,531
|
|
|
|
2017
|
|
227,874
|
|
|
(1)
|
|
Audit fees in each of 2018 and 2017 consisted of fees incurred for
professional services rendered for the audit of consolidated
financial statements and internal control over financial reporting
and for reviews of our interim consolidated financial statements
included in our quarterly reports on Form 10‑Q.
|
Audit-Related Fees
|
|
|
|
|
|
Firm
|
|
Year
|
|
Fees ($)(1)
|
|
RSM US,
LLP
|
|
2018
|
|
65,625
|
|
|
|
2017
|
|
78,750
|
|
WOLF
& COMPANY, P.C.
|
|
2018
|
|
18,000
|
|
|
|
2017
|
|
9,000
|
|
|
(1)
|
|
Audit-related
fees in 2017 and 2018 paid to RSM consisted of fees related to the
delivery of comfort letters in conjunction with proposed common
stock financings. Audit-related fees in 2018 paid to
Wolf & Co. consisted of fees related to consents
provided in connection with Form S‑1 filings. Audit-related
fees in 2017 paid to Wolf & Co. consisted of fees
related to consents provided in connection with preparing the
company’s Form 10‑K for the 2016 fiscal year.
Effective in August 2015, our Audit Committee approved RSM as
our independent registered accountants, replacing Wolf &
Company, P.C.
|
Tax Fees
There were no fees paid to RSM or
Wolf & Company, P.C. for any tax‑related services in 2017
or 2016.
All Other Fees
There were no other fees paid to RSM
or Wolf & Company, P.C. in 2018 or 2017.
Policy on Audit Committee
Pre-Approval of Audit and Permissible Non-Audit Services
Our Audit Committee is responsible
for pre-approving all services provided by our independent
registered public accounting firm. All of the above services and
fees were reviewed and approved by the Audit Committee before the
services were rendered. The Audit Committee has considered the
nature and amount of fees billed by RSM and believes that the
provision of services for activities unrelated to the audit is
compatible with maintaining RSM’s independence.
Vote Required
This Proposal will be approved if the
if the number of votes cast in favor exceeds the number of votes
cast in opposition. Abstentions and “broker non-votes” will
have no effect
on this Proposal.
OUR BOARD
UNANIMOUSLY RECOMMENDS A VOTE “FOR”
THE RATIFICATION OF THE APPOINTMENT OF RSM US, LLP AS OUR
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE
FISCAL YEAR ENDING DECEMBER 31, 2019.
OTHER
MATTERS
Securities Authorized for Issuance
under Equity Compensation Plans
The following table provides certain
information about shares of our common stock that may be issued
under our existing equity compensation plan as of December 31,
2018, which consists of our 2007 Equity Incentive Plan, 2010 Equity
Incentive Plan, 2015 Equity Incentive Plan, and Employee Stock
Purchase Plan or other equity compensation plans not approved by
security holders.
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
|
|
(c)
|
|
|
|
Number of
|
|
|
|
Number of securities
|
|
|
|
securities
|
|
(b)
|
|
remaining available
|
|
|
|
to be issued upon
|
|
Weighted-average
|
|
for future issuance
|
|
|
|
the exercise of
|
|
exercise price
|
|
under equity
|
|
|
|
outstanding
|
|
of outstanding
|
|
compensation plans
|
|
|
|
options,
|
|
options,
|
|
(excluding securities
|
|
|
|
warrants and
|
|
warrants
|
|
reflected in column
|
|
Plan
Category
|
|
rights
|
|
|
and
rights
|
|
(a)
|
|
Equity compensation
plans approved by security holders
|
|
65,099
|
|
$
|
84.96
|
|
188,552
|
|
Total
|
|
65,099
|
|
$
|
84.96
|
|
188,552
|
|
The table above does not include the
Inducement Award awarded to our new Chief Financial Officer as the
effective date of the grant was January 14, 2019. See
“Executive Compensation – Narrative to Summary Compensation
Table - Employment Agreement with Mr. Christopher”
for more information on the Inducement Award. In accordance
with the rules of the Nasdaq Stock Market, the Inducement
Award was not approved by our stockholders.
We
Have Security and Admission Policies for the Annual Meeting
We invite all InVivo
shareowners (as of the record date) to attend the annual meeting.
Attendance is limited to InVivo shareowners as of the record date
(or their named representatives) and members of their immediate
family. We reserve the right to limit the number of representatives
who may attend. Given the security policies at the annual meeting
venue (the WilmerHale law offices), and for the safety of all
meeting attendees, we have implemented the following admission
policies. For security reasons, you will need both an admission
card and a current government-issued picture identification (such
as a driver’s license or a passport) to enter the meeting. Please
follow the instructions below and an admission card will be mailed
to you. The company reserves the right to implement additional
security procedures to ensure the safety of meeting attendees
and/or InVivo property.
How
You Can Obtain an Admission Card for the Annual Meeting
In order to obtain an
admission card to the annual meeting, please e-mail
IR@invivotherapeutics.com by 5 pm (Eastern time) on Friday,
January 17, 2020, with the following information:
|
·
|
|
A copy of your voting
instruction card / proxy cards
|
Upon receipt and review
of your e-mail, InVivo will e-mail you an admission ticket for the
2019 Annual Meeting.
In the event that you
do not have access to e-mail or would otherwise prefer to request
an admission card via regular mail, please contact our Secretary at
(617) 863‑5530.
Householding Information
Some banks, brokers and other nominee
record holders may participate in the practice of “householding”
proxy statements and annual reports. This means that only one copy
of our proxy statement and Annual Report may have been sent to
multiple stockholders in your household. We will promptly deliver a
separate copy of the proxy statement and the Annual Report to any
beneficial owner at a shared address to which a single copy of any
of those documents was delivered if you write or call us at the
following address or telephone number: InVivo Therapeutics Holdings
Corp., One Kendall Square, Suite B14402, Cambridge, MA 02139,
Attn: Secretary, telephone: (617) 863‑5500. If you want to
receive separate copies of the proxy statement and the annual
report in the future, or if you are receiving multiple copies and
would like to receive only one copy for your household, you should
contact your bank, broker, or other nominee record holder, or you
may contact us at the above address and telephone
number.
Expenses of Proxy Solicitation
The solicitation of proxies will be
conducted by telephone or mail, and we will bear all attendant
expenses. These expenses will include the expense of preparing and
mailing proxy materials for the Annual Meeting. Brokerage firms and
other custodians, nominees and fiduciaries will be requested to
forward the proxy materials to beneficial owners and to obtain
authorization for the execution of proxies, and we will reimburse
such brokerage firms, other custodians, nominees and fiduciaries
for reasonable expenses incurred in sending proxy materials to
beneficial owners of our common stock. We may conduct further
solicitation personally or telephonically through our directors,
officers, and employees, none of whom will receive additional
compensation for assisting with the solicitation. We have retained
the services of Laurel Hill Advisory Group, LLC, to assist in
the solicitation of proxies at the cost of approximately $3,000,
plus reimbursement of certain expenses.
Stockholder Proposals
Stockholder
proposals for inclusion in our proxy statement: If a stockholder wishes to present a
proposal, including nominations for election to our board of
directors, to be included in our proxy statement and form of proxy
for the 2020 annual meeting of stockholders, the proposal must be
received by our Secretary c/o InVivo Therapeutics Holdings Corp.,
One Kendall Square, Suite B14402, Cambridge, MA 02139, no
later than a reasonable time before we begin to print and mail
proxy materials for the 2020 annual meeting because we anticipate
that the date of the 2020 annual meeting will be changed by more
than 30 days from the anniversary date of the Annual Meeting. We
have typically held our annual meeting in late May or June, and our
2019 Annual Meeting was originally scheduled for June 11, 2019 but
had to be postponed; however, we expect to revert to our typical
timing for the 2020 annual meeting.
If the date of the 2020 annual
meeting is not changed by more than 30 days, the proposal must be
received no later than the close of business on July 28, 2020. Such
proposal must comply with the applicable rules of the SEC in order
to be included in our proxy statement or proxy relating to the 2020
annual meeting.
Other stockholder
proposals: A stockholder
proposal not included in our proxy statement for the 2020 annual
meeting of stockholders, including proposed nominations for
director, will not be eligible for presentation at the 2020 annual
meeting unless the stockholder gives timely notice of the proposal
in writing to our Secretary at our principal executive offices and
otherwise complies with the provisions of our amended and restated
bylaws. To be timely, the stockholder is required to give written
notice to our Secretary c/o InVivo Therapeutics Holdings Corp., One
Kendall Square, Suite B14402, Cambridge, MA 02139, of his or
her proposed director nomination or the proposal of other business
to be considered by the stockholders. Such written notice must be
made in accordance with Article II, Section 13 of our
amended and restated bylaws, which require appropriate notice to us
of a director nomination or proposal of other business for
consideration not less than 60 days nor more than 90 days
prior to the date of the first anniversary of this Annual Meeting.
Because we anticipate that the 2020 annual meeting of stockholders
will be held more than 30 days before the anniversary date, to
be timely, notice must be provided not earlier than the close of
business the 90th day prior to the 2020 annual meeting of
stockholders and not later than the close of business on the later
of the 60th day prior to the 2020 annual meeting of
stockholders or the 10th day following the day on which public
announcement of the date of the 2020 annual meeting of stockholders
is first made by us.
The notice must also meet all other
requirements contained in our amended and restated bylaws,
including the requirement to contain specified information about
the stockholder making the proposal and the proposed business to be
brought before the meeting or the director nominee.
Other
Business
As of the date of this proxy
statement, we do not know of any matters to be presented at the
Annual Meeting other than those described in this proxy statement.
If any other matters should properly come before the Annual
Meeting, proxies in the enclosed form will be voted on those
matters in accordance with the judgment of the person or persons
voting the proxies, unless otherwise specified.
(This page has been left blank
intentionally.)
Appendix A
CERTIFICATE OF AMENDMENT
TO
ARTICLES OF INCORPORATION
FOR NEVADA PROFIT
CORPORATIONS
(Pursuant to NRS
78.385 and 78.390).
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BARBARA
K. CEGAVSKE Secretary of State 202 North Carson Street Carson City,
Nevada 89701-4201 (775) 684-5708 Website: www.nvsos.gov TYPE OR
PRINT - USE DARK INK ONLY - DO NOT HIGHLIGHT to the date of the
certificate. following: This form must be accompanied by
appropriate fees. Page 1 of 2 Revised: 1/1/2019 1. Entity
information: Name of entity as on file with the Nevada Secretary of
State: Entity or Nevada Business Identification Number (NVID): 2.
Restated or Amended and Restated Articles: (Select one) (If
amending and restating only, complete section 1,2 3, 5 and 6)
Certificate to Accompany Restated Articles or Amended and Restated
Articles Restated Articles - No amendments; articles are restated
only and are signed by an officer of the corporation who has been
authorized to execute the certificate by resolution of the board of
directors adopted on: The certificate correctly sets forth the text
of the articles or certificate as amended Amended and Restated
Articles * Restated or Amended and Restated Articles must be
included with this filing type. 3. Type of Amendment Filing Being
Completed: (Select only one box) (If amending, complete section 1,
3, 5 and 6.) Certificate of Amendment to Articles of Incorporation
(Pursuant to NRS 78.380 - Before Issuance of Stock) The undersigned
declare that they constitute at least two-thirds of the (Check only
one box)incorporatorsboard of directors The undersigned
affirmatively declare that to the date of this certificate, no
stock of the corporation has been issued Certificate of Amendment
to Articles of Incorporation (Pursuant to NRS 78.385 and 78.390 -
After Issuance of Stock) The vote by which the stockholders holding
shares in the corporation entitling them to exercise at least a
majority of the voting power, or such greater proportion of the
voting power as may be required in the case of a vote by classes or
series, or as may be required by the provisions of the articles of
incorporation* have voted in favor of the amendment is: Majority of
Officer's Statement (foreign qualified entities only) - outstanding
shares Name in home state, if using a modified name in Nevada:
Jurisdiction of formation: Changes to takes the following effect:
The entity name has been amended.Dissolution The purpose of the
entity has been amended.Merger The authorized shares have been
amended.Conversion * Officer's Statement must be submitted with
either a certified copy of or a certificate evidencing the filing
of any document, amendatory or otherwise, relating to the original
articles in the place of the corporations creation. Other: (specify
changes) C7829-2003 InVivo Therapeutics Holdings Corp. Profit
Corporation: Certificate of Amendment (PURSUANT TO NRS 78.380 &
78.385/78.390) Certificate to Accompany Restated Articles or
Amended and Restated Articles (PURSUANT TO NRS 78.403) Officer's
Statement (PURSUANT TO NRS 80.030)
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BARBARA
K. CEGAVSKE Secretary of State 202 North Carson Street Carson City,
Nevada 89701-4201 (775) 684-5708 Website: www.nvsos.gov Please
include any required or optional information in space below:
(attach additional page(s) if necessary) This form must be
accompanied by appropriate fees. Page 2 of 2 Revised: 1/1/2019
Profit Corporation: Certificate of Amendment (PURSUANT TO NRS
78.380 & 78.385/78.390) Certificate to Accompany Restated
Articles or Amended and Restated Articles (PURSUANT TO NRS 78.403)
Officer's Statement (PURSUANT TO NRS 80.030) 4. Effective Date and
Time: (Optional) Date:Time: (must not be later than 90 days after
the certificate is filed) 5. Information Being Changed: (Domestic
corporations only) Changes to takes the following effect: The
entity name has been amended. The registered agent has been
changed. (attach Certificate of Acceptance from new registered
agent) The purpose of the entity has been amended. The authorized
shares have been amended. The directors, managers or general
partners have been amended. IRS tax language has been added.
Articles have been added. Articles have been deleted. Other. The
articles have been amended as follows: (provide article numbers, if
available) (attach additional page(s) if necessary) 6. Signature:
(Required) X Signature of Officer or Authorized SignerTitle X
Signature of Officer or Authorized SignerTitle *If any proposed
amendment would alter or change any preference or any relative or
other right given to any class or series of outstanding shares,
then the amendment must be approved by the vote, in addition to the
affirmative vote otherwise required, of the holders of shares
representing a majority of the voting power of each class or series
affected by the amendment regardless to limitations or restrictions
on the voting power thereof. See attachment.
|
ATTACHMENT
TO
CERTIFICATE OF
AMENDMENT TO ARTICLES OF INCORPORATION
OF
INVIVO
THERAPEUTICS HOLDINGS CORP.
ENTITY NUMBER
C7829-2003
The Articles of
Incorporation of InVivo Therapeutics Holdings Corp., a Nevada
corporation (the “Corporation”),
as filed with the Nevada Secretary of State on April 2, 2013, shall
be and hereby is amended as follows:
RESOLVED, that Article
FOURTH of the Corporation’s Articles of Incorporation, as amended,
be and hereby is amended by replacing the phrase from the first use
of “The” to the first use of “share” with the following:
“The total number of
shares that this corporation is authorized to issue is Five Hundred
Million (500,000,000) shares of Common Stock have a par value of
$0.00001 per share.”
Appendix
B
CERTIFICATE OF AMENDMENT
TO
ARTICLES OF INCORPORATION
FOR NEVADA PROFIT
CORPORATIONS
(Pursuant to NRS
78.385 and 78.390).
|
|

|
BARBARA
K. CEGAVSKE Secretary of State 202 North Carson Street Carson City,
Nevada 89701-4201 (775) 684-5708 Website: www.nvsos.gov TYPE OR
PRINT - USE DARK INK ONLY - DO NOT HIGHLIGHT to the date of the
certificate. following: This form must be accompanied by
appropriate fees. Page 1 of 2 Revised: 1/1/2019 1. Entity
information: Name of entity as on file with the Nevada Secretary of
State: Entity or Nevada Business Identification Number (NVID): 2.
Restated or Amended and Restated Articles: (Select one) (If
amending and restating only, complete section 1,2 3, 5 and 6)
Certificate to Accompany Restated Articles or Amended and Restated
Articles Restated Articles - No amendments; articles are restated
only and are signed by an officer of the corporation who has been
authorized to execute the certificate by resolution of the board of
directors adopted on: The certificate correctly sets forth the text
of the articles or certificate as amended Amended and Restated
Articles * Restated or Amended and Restated Articles must be
included with this filing type. 3. Type of Amendment Filing Being
Completed: (Select only one box) (If amending, complete section 1,
3, 5 and 6.) Certificate of Amendment to Articles of Incorporation
(Pursuant to NRS 78.380 - Before Issuance of Stock) The undersigned
declare that they constitute at least two-thirds of the (Check only
one box)incorporatorsboard of directors The undersigned
affirmatively declare that to the date of this certificate, no
stock of the corporation has been issued Certificate of Amendment
to Articles of Incorporation (Pursuant to NRS 78.385 and 78.390 -
After Issuance of Stock) The vote by which the stockholders holding
shares in the corporation entitling them to exercise at least a
majority of the voting power, or such greater proportion of the
voting power as may be required in the case of a vote by classes or
series, or as may be required by the provisions of the articles of
incorporation* have voted in favor of the amendment is: Majority of
Officer's Statement (foreign qualified entities only) - outstanding
shares Name in home state, if using a modified name in Nevada:
Jurisdiction of formation: Changes to takes the following effect:
The entity name has been amended.Dissolution The purpose of the
entity has been amended.Merger The authorized shares have been
amended.Conversion * Officer's Statement must be submitted with
either a certified copy of or a certificate evidencing the filing
of any document, amendatory or otherwise, relating to the original
articles in the place of the corporations creation. Other: (specify
changes) C7829-2003 InVivo Therapeutics Holdings Corp. Profit
Corporation: Certificate of Amendment (PURSUANT TO NRS 78.380 &
78.385/78.390) Certificate to Accompany Restated Articles or
Amended and Restated Articles (PURSUANT TO NRS 78.403) Officer's
Statement (PURSUANT TO NRS 80.030)
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BARBARA
K. CEGAVSKE Secretary of State 202 North Carson Street Carson City,
Nevada 89701-4201 (775) 684-5708 Website: www.nvsos.gov Please
include any required or optional information in space below:
(attach additional page(s) if necessary) This form must be
accompanied by appropriate fees. Page 2 of 2 Revised: 1/1/2019
Profit Corporation: Certificate of Amendment (PURSUANT TO NRS
78.380 & 78.385/78.390) Certificate to Accompany Restated
Articles or Amended and Restated Articles (PURSUANT TO NRS 78.403)
Officer's Statement (PURSUANT TO NRS 80.030) 4. Effective Date and
Time: (Optional) Date:Time: (must not be later than 90 days after
the certificate is filed) 5. Information Being Changed: (Domestic
corporations only) Changes to takes the following effect: The
entity name has been amended. The registered agent has been
changed. (attach Certificate of Acceptance from new registered
agent) The purpose of the entity has been amended. The authorized
shares have been amended. The directors, managers or general
partners have been amended. IRS tax language has been added.
Articles have been added. Articles have been deleted. Other. The
articles have been amended as follows: (provide article numbers, if
available) (attach additional page(s) if necessary) 6. Signature:
(Required) X Signature of Officer or Authorized SignerTitle X
Signature of Officer or Authorized SignerTitle *If any proposed
amendment would alter or change any preference or any relative or
other right given to any class or series of outstanding shares,
then the amendment must be approved by the vote, in addition to the
affirmative vote otherwise required, of the holders of shares
representing a majority of the voting power of each class or series
affected by the amendment regardless to limitations or restrictions
on the voting power thereof. See attachment.
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ATTACHMENT
TO
CERTIFICATE OF
AMENDMENT TO ARTICLES OF INCORPORATION
OF
INVIVO
THERAPEUTICS HOLDINGS CORP.
ENTITY NUMBER C7829-2003
The Articles of Incorporation of InVivo Therapeutics Holdings
Corp., a Nevada corporation (the “Corporation”),
as filed with the Nevada Secretary of State on April 2, 2013, shall
be and hereby is amended as follows:
RESOLVED, that Article FOURTH of the Corporation’s Articles of
Incorporation, as amended, be and hereby is amended by deleting the
period at the end of the first sentence, and adding the
following:
“(the “Common Stock”), and One Million (1,000,000) shares of
Preferred Stock having a par value of $0.00001 per share (the
“Preferred Stock”).
4.1 Designation.
Shares of Preferred Stock may be issued from time to time in one or
more classes or series. The Board of Directors is hereby authorized
to fix by resolution or resolutions the classes, series, and number
of each class or series of stock as provided in Nevada Revised
Statutes Sections 78.195, 78.1955, and 78.196 (as amended from time
to time), as well as prescribe the voting powers, if any,
designations, powers, preferences, and the relative, participating,
optional, or other rights, if any, and the qualifications,
limitations, or restrictions thereof, of any unissued class or
series of Preferred Stock; to fix the number of shares constituting
such class or series; and to increase or decrease the number of
shares of any such class or series, but not below the number of
shares thereof then outstanding. In case the number of shares of
any series shall be decreased in accordance with the foregoing
sentence, the shares constituting such decrease shall resume the
status that they had prior to the adoption of the resolution
originally fixing the number of shares of such series.
4.2 Certificate.
Before the corporation may issue any shares of Preferred Stock of
any series, a Certificate of Designation setting forth a copy of
the resolution or resolutions of the Board of Directors, and
establishing the voting powers, if any, designations, powers,
preferences, and the relative, participating, optional, or other
rights, if any, and the qualifications, limitations, or
restrictions thereof, relating to the shares of Preferred Stock of
such series, and the number of shares of Preferred Stock of such
series authorized by the Board of Directors to be issued shall be
made and signed by an officer of the corporation and filed in the
manner prescribed by the NRS.
4.3 Amendments.
Any amendment to the provisions of this Article Fourth requires the
affirmative vote of at least a majority of each of (i) the voting
power of all stockholders present or represented by proxy at a
meeting and entitled to vote on all matters submitted to a vote of
stockholders and (ii) the voting power of any series of Preferred
Stock, the Certificate of Designation of which provides that it
shall have the right to vote on any amendment of the corporation's
Articles of Incorporation, present or represented by proxy at a
meeting and entitled to vote thereon.”
Appendix C
INVIVO THERAPEUTICS HOLDINGS
CORP.
2015 EQUITY INCENTIVE PLAN
INVIVO THERAPEUTICS HOLDINGS
CORP.
2015 EQUITY INCENTIVE PLAN
INVIVO THERAPEUTICS HOLDINGS
CORP.
2015 EQUITY INCENTIVE PLAN
1. Purpose.
The purpose of this INVIVO THERAPEUTICS HOLDINGS CORP. 2015 EQUITY
INCENTIVE PLAN (the “Plan”)
is to assist INVIVO THERAPEUTICS HOLDINGS CORP., a Nevada
corporation (the “Company”),
and its Related Entities (as defined below) in attracting,
motivating, retaining and rewarding high-quality executives and
other employees, officers, directors and consultants to the Company
or its Related Entities by enabling such persons to acquire or
increase a proprietary interest in the Company in order to
strengthen the mutuality of interests between such persons and the
Company’s shareholders, and providing such persons with performance
incentives to expend their maximum efforts in the creation of
shareholder value.
2. Definitions.
For purposes of the Plan, the following terms shall be defined as
set forth below, in addition to such terms defined in
Section 1 and elsewhere herein.
(a) “Award”
means any Option, Stock Appreciation Right, Restricted Stock Award,
Restricted Stock Unit Award, Share granted as a bonus or in lieu of
another Award, Dividend Equivalent, Other Stock-Based Award or
Performance Award, together with any other right or interest
relating to Shares or other property (including cash), granted to a
Participant under the Plan.
(b) “Award
Agreement” means any written
agreement, contract or other instrument or document evidencing any
Award granted by the Committee hereunder.
(c) “Beneficial
Owner”and
“Beneficial Ownership” shall
have the meaning ascribed to such term in Rule 13d-3 under the
Exchange Act and any successor to such Rule.
(d) “Beneficiary”
means the person, persons, trust or trusts that have been
designated by a Participant in his or her most recent written
beneficiary designation filed with the Committee to receive the
benefits specified under the Plan upon such Participant’s death or
to which Awards or other rights are transferred if and to the
extent permitted under Section 10(b) hereof. If, upon a
Participant’s death, there is no designated Beneficiary or
surviving designated Beneficiary, then the term Beneficiary means
the person, persons, trust or trusts entitled by will or the laws
of descent and distribution to receive such benefits.
(e) “Board”
means the Company’s Board of Directors.
(f) “Cause”
shall, with respect to any Participant, have the meaning specified
in the Award Agreement. In the absence of any definition in the
Award Agreement, “Cause” shall have the equivalent meaning or the
same meaning as “cause” or “for cause” set forth in any employment,
consulting, or other agreement for the performance of services
between the Participant and the Company or a Related Entity or, in
the absence of any such agreement or any such definition in such
agreement, such term shall mean (i) the failure by the
Participant to perform, in a reasonable manner, his or her duties
as assigned by the Company or a Related Entity; (ii) any
violation or breach by the Participant of his or her employment,
consulting or other similar agreement with the Company or a Related
Entity, if any; (iii) any violation or breach by the
Participant of any non-competition, non-solicitation, non-
disclosure and/or other similar agreement with the Company or a
Related Entity; (iv) any act by the Participant of dishonesty
or bad faith with respect to the Company or a Related Entity;
(v) any material violation or breach by the Participant of the
Company’s or Related Entity’s policy for employee conduct, if any;
(vi) use of alcohol, drugs or other similar substances in a
manner that adversely affects the Participant’s work performance,
or (vii) the commission by the Participant of any act,
misdemeanor, or crime reflecting unfavorably upon the Participant
or the Company or any Related Entity. The good faith determination
by the Committee of whether the Participant’s Continuous Service
was terminated by the Company for “Cause” shall be final and
binding for all purposes hereunder.
(g) “Change
in Control” means a Change in
Control as defined in Section 9(b) hereof.
(h) “Code”
means the Internal Revenue Code of 1986, as amended from time to
time, including regulations thereunder and successor provisions and
regulations thereto.
(i) “Committee”
means the Governance, Nominating and Compensation Committee of the
Board, a subcommittee thereof formed by the such committee to act
as the Committee under this Plan, or such other committee as the
Board of Directors shall appoint from time to time; provided,
however, that if the Board fails to designate a committee or if
there are no longer any members on the committee so designated by
the Board, or for any other reason determined by the Board, then
the Board shall serve as the Committee. While it is intended that
the Committee shall consist of at least two directors, each of whom
shall be (i) a “non-employee director” within the meaning of
Rule 16b-3 (or any successor rule) under the Exchange Act,
unless administration of the Plan by “non-employee directors” is
not then required in order for exemptions under Rule 16b-3 to
apply to transactions under the Plan, (ii) an “outside
director” within the meaning of Section 162(m) of the
Code, and (iii) “Independent,” the failure of the Committee to
be so comprised shall not invalidate any Award that otherwise
satisfies the terms of the Plan.
(j) “Consultant”
means any consultant or advisor who is a natural person and who
provides services to the Company or any Related Entity, so long as
such person (i) renders bona fide services that are not in
connection with the offer and sale of the Company’s securities in a
capital- raising transaction, (ii) does not directly or
indirectly promote or maintain a market for the Company’s
securities and (iii) otherwise qualifies as a de facto
employee or consultant under the applicable rules of the SEC
for registration of shares of stock on a Form S-8 registration
statement.
(k) “Continuous
Service” means the
uninterrupted provision of services to the Company or any Related
Entity in any capacity of Employee, Director or Consultant.
Continuous Service shall not be considered to be interrupted in the
case of (i) any approved leave of absence, (ii) transfers
among the Company, any Related Entities, or any successor entities,
in any capacity of Employee, Director or Consultant, or
(iii) any change in status as long as the individual remains
in the service of the Company or a Related Entity in any capacity
of Employee, Director or Consultant (except as otherwise provided
in the Award Agreement). An approved leave of absence shall include
sick leave, military leave, or any other authorized personal
leave.
(l) “Covered
Employee” means the Person
who, as of the end of the taxable year, either is the principal
executive officer of the Company or is serving as the acting
principal executive officer of the Company, and each other Person
whose compensation is required to be disclosed in the Company’s
filings with the SEC by reason of that person being among the three
highest compensated officers of the Company (other than the chief
financial officer) as of the end of a taxable year, or such other
person as shall be considered a “covered employee” for purposes of
Section 162(m) of the Code.
(m) “Director”
means a member of the Board or the board of directors of any
Related Entity.
(n) “Disability”
means a Participant’s eligibility to receive long-term disability
benefits under a plan sponsored by the Company or a Related Entity,
or if no such plan is applicable, a Participant’s inability to
perform the essential functions of his or her duties due to a
medically- determinable physical or mental impairment, illness or
injury, which can be expected to result in death or to be of
long-continued and indefinite duration as determined in the sole
discretion of the Committee. Notwithstanding the foregoing, in the
case of any Option that is an Incentive Stock Option, if and to the
extent required in order for the Option to satisfy the requirements
of Section 422 of the Code, the term “Disability” means
disabled within the meaning of Section 22(e)(3) of the
Code.
(o) “Dividend
Equivalent” means a right,
granted to a Participant under Section 6(g) hereof, to
receive cash, Shares, other Awards or other property equal in value
to dividends paid with respect to a specified number of Shares, or
other periodic payments.
(p) “Effective
Date” means the effective date
of the Plan, which shall be April 16, 2015.
(q) “Eligible
Person” means each officer,
Director, Employee or Consultant to the Company or any Related
Entity. The foregoing notwithstanding, only Employees of the
Company, or any parent corporation or subsidiary corporation of the
Company (as those terms are defined in
Sections 424(e) and (f) of the Code, respectively),
shall be Eligible Persons for purposes of receiving any Incentive
Stock Options. An Employee on leave of absence may, in the
discretion of the Committee, be considered as still in the employ
of the Company or a Related Entity for purposes of eligibility for
participation in the Plan.
(r) “Employee”
means any person, including an officer or Director, who is an
employee of the Company or any Related Entity, or is a prospective
employee of the Company or any Related Entity (conditioned upon and
effective not earlier than such person becoming an employee of the
Company or any Related Entity). The payment of a director’s fee by
the Company or a Related Entity shall not be sufficient to
constitute “employment” by the Company.
(s) “Exchange
Act” means the Securities
Exchange Act of 1934, as amended from time to time, including
rules thereunder and successor provisions and
rules thereto.
(t) “Fair
Market Value” means the fair
market value of Shares, Awards or other property as determined by
the Committee, or under procedures established by the Committee.
Unless otherwise determined by the Committee, the Fair Market Value
of a Share as of any given date shall be the closing sale price per
Share reported on a consolidated basis for stock listed on the
principal stock exchange or market on which Shares are traded on
the date as of which such value is being determined (or as of such
later measurement date as determined by the Committee on the date
the Award is authorized by the Committee), or, if there is no sale
on that date, then on the last previous day on which a sale was
reported.
(u) “Good
Reason” shall, with respect to
any Participant, have the meaning specified in the Award Agreement.
In the absence of any definition in the Award Agreement, “Good
Reason” shall have the equivalent meaning or the same meaning as
“good reason” or “for good reason” set forth in any employment,
consulting or other agreement for the performance of services
between the Participant and the Company or a Related Entity or, in
the absence of any such agreement or any such definition in such
agreement, such term shall mean (i) the assignment to the
Participant of any duties inconsistent in any material respect with
the Participant’s position (including status, offices, titles and
reporting requirements), authority, duties or responsibilities as
assigned by the Company or Related Entity, or any other action by
the Company or a Related Entity which results in a material
diminution in such position, authority, duties or responsibilities,
excluding for this purpose an isolated, insubstantial and
inadvertent action not taken in bad faith and which is remedied by
the Company or a Related Entity promptly after receipt of notice
thereof given by the Participant; (ii) any material failure by
the Company or a Related Entity to comply with its obligations to
the Participant as agreed upon, other than an isolated,
insubstantial and inadvertent failure not occurring in bad faith
and which is remedied by the Company or a Related Entity promptly
after receipt of notice thereof given by the Participant;
(iii) the Company’s or Related Entity’s requiring the
Participant to be based at any office or location outside of 50
miles from the location of employment or service as of the date of
Award, except for travel reasonably required in the performance of
the Participant’s responsibilities; (iv) any purported
termination by the Company or Related Entity of the Participant’s
Continuous Service other than for Cause, death or by reason of the
Participant’s Disability, or (v) any material reduction in the
Participant’s base salary (unless such reduction is part of a
Company-wide reduction that affects a majority of the persons of
comparable level to the Participant).
(v) “Incentive
Stock Option” means any Option
intended to be designated as an incentive stock option within the
meaning of Section 422 of the Code or any successor provision
thereto.
(w) “Incumbent
Board” means the Incumbent
Board as defined in Section 9(b)(ii) hereof.
(x) “Independent”,
when referring to either the Board or members of the Committee,
shall have the same meaning as used in the rules of the
Listing Market or, if the Listing Market does not have such rules,
the rules of The NASDAQ Stock Market, LLC.
(y) “Listing
Market” means the principal
stock exchange or market on which Shares are then
traded.
(z) “Option”
means a right granted to a Participant under
Section 6(b) hereof, to purchase Shares or other Awards
at a specified price during specified time periods.
(aa) “Optionee”
means a person to whom an Option is granted under this Plan or any
person who succeeds to the rights of such person under this
Plan.
(bb) “Other
Stock-Based Awards” means
Awards granted to a Participant under
Section 6(i) hereof.
(cc) “Participant”
means a person who has been granted an Award under the Plan which
remains outstanding, including a person who is no longer an
Eligible Person.
(dd) “Performance
Award” means any Award of
Performance Shares or Performance Units granted pursuant to
Section 6(h) hereof.
(ee) “Performance
Period” means the period
established by the Committee at the time any Performance Award is
granted or at any time thereafter during which any performance
goals specified by the Committee with respect to such Award are to
be measured.
(ff) “Performance
Share” means any grant
pursuant to Section 6(h) hereof of a unit valued by
reference to a designated number of Shares, which value may be paid
to the Participant by delivery of such property as the Committee
shall determine, including cash, Shares, other property, or any
combination thereof, upon achievement of such performance goals
during the Performance Period as the Committee shall establish at
the time of such grant or thereafter.
(gg) “Performance
Unit” means any grant pursuant
to Section 6(h) hereof of a unit valued by reference to a
designated amount of property (including cash) other than Shares,
which value may be paid to the Participant by delivery of such
property as the Committee shall determine, including cash, Shares,
other property, or any combination thereof, upon achievement of
such performance goals during the Performance Period as the
Committee shall establish at the time of such grant or
thereafter.
(hh) “Person”
shall have the meaning ascribed to such term in
Section 3(a)(9) of the Exchange Act and used in
Sections 13(d) and 14(d) thereof, and shall include
a “group” as defined in Section 13(d) thereof.
(ii) “Prior
Plan” means the InVivo
Therapeutics Holdings Corp. 2010 Equity Incentive Plan, as amended
from time to time.
(jj) “Related
Entity” means any Subsidiary,
and any business, corporation, partnership, limited liability
company or other entity designated by the Board, in which the
Company or a Subsidiary holds a substantial ownership interest,
directly or indirectly.
(kk) “Restricted
Stock” means any Share issued
with such risks of forfeiture and other restrictions as the
Committee, in its sole discretion, may impose (including any
restriction on the right to vote such Share and the right to
receive any dividends), which restrictions may lapse separately or
in combination at such time or times, in installments or otherwise,
as the Committee may deem appropriate.
(ll) “Restricted
Stock Award” means an Award
granted to a Participant under
Section 6(d) hereof.
(mm) “Restricted
Stock Unit” means a right to
receive Shares, including Restricted Stock, cash measured based
upon the value of Shares or a combination thereof, at the end of a
specified deferral period.
(nn) “Restricted
Stock Unit Award” means an
Award of Restricted Stock Unit granted to a Participant under
Section 6(e) hereof.
(oo) “Restriction
Period” means the period of
time specified by the Committee that Restricted Stock Awards shall
be subject to such restrictions on transferability, risk of
forfeiture and other restrictions, if any, as the Committee may
impose.
(pp) “Rule 16b-3”
means Rule 16b-3, as from time to time in effect and
applicable to the Plan and Participants, promulgated by the SEC
under Section 16 of the Exchange Act.
(qq) “SEC”
means the United States Securities and Exchange
Commission.
(rr) “Shares”
means the shares of common stock of the Company, and such other
securities as may be substituted (or resubstituted) for Shares
pursuant to Section 10(c) hereof.
(ss) “Stock
Appreciation Right” means a
right granted to a Participant under
Section 6(c) hereof.
(tt) “Subsidiary”
means any corporation or other entity in which the Company has a
direct or indirect ownership interest of 50% or more of the total
combined voting power of the then outstanding securities or
interests of such corporation or other entity entitled to vote
generally in the election of directors or in which the Company has
the right to receive 50% or more of the distribution of profits or
50% or more of the assets on liquidation or dissolution.
(uu) “Substitute
Awards” means Awards granted
or Shares issued by the Company in assumption of, or in
substitution or exchange for, Awards previously granted, or the
right or obligation to make future Awards, by an entity,
(i) acquired by the Company or any Related Entity,
(ii) which becomes a Related Entity after the date hereof, or
(iii) with which the Company or any Related Entity
combines.
3.
Administration.
(a) Authority of
the Committee. The Plan
shall be administered by the Committee, except to the extent (and
subject to the limitations imposed by
Section 3(b) hereof) the Board elects to administer the
Plan, in which case the Plan shall be administered by only those
members of the Board who are Independent members of the Board, in
which case references herein to the “Committee” shall be deemed to
include references to the Independent members of the Board. The
Committee shall have full and final authority, subject to and
consistent with the provisions of the Plan, to select Eligible
Persons to become Participants, grant Awards, determine the type,
number and other terms and conditions of, and all other matters
relating to, Awards, prescribe Award Agreements (which need not be
identical for each Participant) and rules and regulations for
the administration of the Plan, construe and interpret the Plan and
Award Agreements and correct defects, supply omissions or reconcile
inconsistencies therein, and to make all other decisions and
determinations as the Committee may deem necessary or advisable for
the administration of the Plan. In exercising any discretion
granted to the Committee under the Plan or pursuant to any Award,
the Committee shall not be required to follow past practices, act
in a manner consistent with past practices, or treat any Eligible
Person or Participant in a manner consistent with the treatment of
any other Eligible Persons or Participants. Decisions of the
Committee shall be final, conclusive and binding on all persons or
entities, including the Company, any Subsidiary or any Participant
or Beneficiary, or any transferee under
Section 10(b) hereof or any other person claiming rights
from or through any of the foregoing persons or
entities.
(b) Manner of
Exercise of Committee Authority. The Committee, and not the Board, shall
exercise sole and exclusive discretion (i) on any matter
relating to a Participant then subject to Section 16 of the
Exchange Act with respect to the Company to the extent necessary in
order that transactions by such Participant
shall be exempt under Rule 16b-3
under the Exchange Act or (ii) with respect to any Award that
is intended to qualify as “performance-based compensation” under
Section 162(m), to the extent necessary in order for such
Award to so qualify. The express grant of any specific power to the
Committee, and the taking of any action by the Committee, shall not
be construed as limiting any power or authority of the Committee.
The Committee may delegate to members of the Board, or officers or
managers of the Company or any Related Entity, or committees
thereof, the authority, subject to such terms and limitations as
the Committee shall determine, to perform such functions, including
administrative functions as the Committee may determine to the
extent that such delegation will not result in the loss of an
exemption under Rule 16b-3(d)(1) for Awards granted to
Participants subject to Section 16 of the Exchange Act in
respect of the Company and will not cause Awards intended to
qualify as “performance-based compensation” under Code
Section 162(m) to fail to so qualify. The Committee may
appoint agents to assist it in administering the Plan.
(c) Limitation of
Liability. The Committee
and the Board, and each member thereof, shall be entitled to, in
good faith, rely or act upon any report or other information
furnished to him or her by any officer or Employee, the Company’s
independent auditors, Consultants or any other agents assisting in
the administration of the Plan. Members of the Committee and the
Board, and any officer or Employee acting at the direction or on
behalf of the Committee or the Board, shall not be personally
liable for any action or determination taken or made in good faith
with respect to the Plan, and shall, to the extent permitted by
law, be fully indemnified and protected by the Company with respect
to any such action or determination
4.
Shares Subject to Plan.
(a) Limitation on
Overall Number of Shares Available for Delivery Under
Plan. Subject to
adjustment as provided in Section 10(c) hereof, the total
number of Shares reserved and available for delivery under the Plan
shall be equal to (i) 960,000, plus (ii) any Shares that
become available in connection with the cancellation, forfeiture,
or expiration of awards issued and outstanding as of the Effective
Date under the Prior Plan, plus (iii) any Shares remaining
available for delivery under the Prior Plan on the Effective Date
of the Plan. Any Shares delivered under the Plan may consist, in
whole or in part, of authorized and unissued shares or treasury
shares.
(b) Application of
Limitation to Grants of Awards. No Award may be granted if the number of
Shares to be delivered in connection with such an Award exceeds the
number of Shares remaining available for delivery under the Plan,
minus the number of Shares deliverable in settlement of or relating
to then outstanding Awards. The Committee may adopt reasonable
counting procedures to ensure appropriate counting, avoid double
counting (as, for example, in the case of tandem or substitute
awards) and make adjustments if the number of Shares actually
delivered differs from the number of Shares previously counted in
connection with an Award.
(c) Availability
of Shares Not Delivered under Awards and Adjustments to
Limits.
(i) If
any Shares subject to an Award are forfeited, expire or otherwise
terminate without issuance of such Shares, or an Award is settled
for cash or otherwise does not result in the issuance of all or a
portion of the Shares subject to such Award, then such Shares
shall, to the extent of such forfeiture, expiration, termination,
non-issuance or cash settlement, again be available for delivery
with respect to Awards under the Plan.
(ii) Substitute
Awards shall not reduce the Shares authorized for delivery under
the Plan or authorized for delivery to a Participant in any period.
Additionally, in the event that an entity acquired by the Company
or any Related Entity or with which the Company or any Related
Entity combined has shares available under a pre-existing plan
approved by its shareholders and not adopted in contemplation of
such acquisition or combination, the shares available for delivery
pursuant to the terms of such pre-existing plan (as adjusted, to
the extent appropriate, using the exchange ratio or other
adjustment or valuation ratio or formula used in such acquisition
or combination to determine the consideration payable to the
holders of common stock of the entities party to such acquisition
or
combination) may be used for Awards
under the Plan and shall not reduce the Shares authorized for
delivery under the Plan if and to the extent that the use of such
Shares would not require approval of the Company’s shareholders
under the rules of the Listing Market.
(iii) Any
Share that again becomes available for delivery pursuant to this
Section 4(c) shall be added back as one Share.
(iv) Notwithstanding
anything in this Section 4(c) to the contrary but subject
to adjustment as provided in Section 10(c) hereof, the
maximum aggregate number of Shares that may be delivered under the
Plan as a result of the exercise of the Incentive Stock Options
shall be 960,000 Shares.
(v) Notwithstanding
anything in this Section 4 to the contrary, but subject to
adjustment as provided in Section 10(c) hereof, in any
fiscal year of the Company during any part of which the Plan is in
effect, no Participant who is a Director but is not also an
Employee or Consultant may be granted any Awards that have a “fair
value” as of the date of grant, as determined in accordance with
FASB ASC Topic 718 (or any other applicable accounting guidance),
that exceed $1,000,000 in the aggregate.
(d) No Further
Awards Under Prior Plan.
In light of the adoption of this Plan, no further awards shall be
made under the Prior Plan on and after the Effective
Date.
5. Eligibility;
Per-Participant Limitations. Awards may be granted under the Plan only
to Eligible Persons. Subject
to adjustment as provided in Section 10(c) of this Plan,
in any fiscal year of the Company during any part of which the Plan
is in effect, no Participant may be granted (i) Options and/or
Stock Appreciation Rights with respect to more than 960,000 Shares
or (ii) Restricted Stock, Restricted Stock Units, Performance
Shares and/or Other Stock-Based Awards denominated in or valued by
reference to a designated number of Shares and that are subject to
Section 8 hereof, with respect to more than 960,000 Shares. In
addition, the maximum dollar value payable to any one Participant
with respect to Performance Units that are subject to
Section 8 hereof is (x) $2,000,000 with respect to any
12 month Performance Period (pro-rated for any Performance
Period that is less than 12 months based upon the ratio of the
number of days in the Performance Period as compared to 365), and
(y) with respect to any Performance Period that is more than
12 months, $2,000,000.
6.
Specific Terms of Awards.
(a) General.
Awards may be granted on the terms
and conditions set forth in this Section 6. In addition, the
Committee may impose on any Award or the exercise thereof, at the
date of grant or thereafter (subject to
Section 10(e) hereof), such additional terms and
conditions, not inconsistent with the provisions of the Plan, as
the Committee shall determine, including terms requiring forfeiture
of Awards in the event of termination of the Participant’s
Continuous Service and terms permitting a Participant to make
elections relating to his or her Award. Except as otherwise
expressly provided herein, the Committee shall retain full power
and discretion to accelerate, waive or modify, at any time, any
term or condition of an Award that is not mandatory under the Plan.
Except in cases in which the Committee is authorized to require
other forms of consideration under the Plan, or to the extent other
forms of consideration must be paid to satisfy the requirements of
Nevada law, no consideration other than services may be required
for the grant (as opposed to the exercise) of any Award.
(b) Options.
The Committee is authorized to grant
Options to any Eligible Person on the following terms and
conditions:
(i) Exercise
Price. Other than in
connection with Substitute Awards, the exercise price per Share
purchasable under an Option shall be determined by the Committee,
provided that such exercise price shall not be less than 100% of
the Fair Market Value of a Share on the date of grant of the Option
and shall not, in any event, be less than the par value of a Share
on the date of grant of the Option. If an
Employee owns or is deemed to own (by
reason of the attribution rules applicable under
Section 424(d) of the Code) more than 10% of the combined
voting power of all classes of stock of the Company (or any parent
corporation or subsidiary corporation of the Company, as those
terms are defined in Sections 424(e) and (f) of the
Code, respectively) and an Incentive Stock Option is granted to
such Employee, the exercise price of such Incentive Stock Option
(to the extent required by the Code at the time of grant) shall be
no less than 110% of the Fair Market Value of a Share on the date
such Incentive Stock Option is granted. Other than pursuant to
Section 10(c)(i) and (ii) hereof, the Committee
shall not be permitted to (A) lower the exercise price per
Share of an Option after it is granted, (B) cancel an Option
when the exercise price per Share exceeds the Fair Market Value of
the underlying Shares in exchange for cash or another Award,
(C) cancel an outstanding Option in exchange for an Option
with an exercise price that is less than the exercise price of the
original Options or (D) take any other action with respect to
an Option that may be treated as a repricing pursuant to the
applicable rules of the Listing Market, without approval of
the Company’s shareholders.
(ii) Time and
Method of Exercise. The
Committee shall determine the time or times at which or the
circumstances under which an Option may be exercised in whole or in
part (including based on achievement of performance goals or future
service requirements), the time or times at which Options shall
cease to be or become exercisable following termination of
Continuous Service or upon other conditions, the methods by which
the exercise price may be paid or deemed to be paid (including in
the discretion of the Committee a cashless exercise procedure), the
form of such payment, including, without limitation, cash, Shares
(including without limitation the withholding of Shares otherwise
deliverable pursuant to the Award), other Awards or awards granted
under other plans of the Company or a Related Entity, or other
property (including notes or other contractual obligations of
Participants to make payment on a deferred basis provided that such
deferred payments are not in violation of
Section 13(k) of the Exchange Act, or any rule or
regulation adopted thereunder or any other applicable law), and the
methods by or forms in which Shares will be delivered or deemed to
be delivered to Participants.
(iii) Incentive
Stock Options. The terms
of any Incentive Stock Option granted under the Plan shall comply
in all respects with the provisions of Section 422 of the
Code. Anything in the Plan to the contrary notwithstanding, no term
of the Plan relating to Incentive Stock Options (including any
Stock Appreciation Right issued in tandem therewith) shall be
interpreted, amended or altered, nor shall any discretion or
authority granted under the Plan be exercised, so as to disqualify
either the Plan or any Incentive Stock Option under
Section 422 of the Code, unless the Participant has first
requested, or consents to, the change that will result in such
disqualification. Thus, if and to the extent required to comply
with Section 422 of the Code, Options granted as Incentive
Stock Options shall be subject to the following special terms and
conditions:
(A) the Option shall not be
exercisable for more than ten years after the date such Incentive
Stock Option is granted; provided, however, that if a Participant
owns or is deemed to own (by reason of the attribution
rules of Section 424(d) of the Code) more than 10%
of the combined voting power of all classes of stock of the Company
(or any parent corporation or subsidiary corporation of the
Company, as those terms are defined in
Sections 424(e) and (f) of the Code, respectively)
and the Incentive Stock Option is granted to such Participant, the
term of the Incentive Stock Option shall be (to the extent required
by the Code at the time of the grant) for no more than five years
from the date of grant;
(B) The aggregate Fair Market Value
(determined as of the date the Incentive Stock Option is granted)
of the Shares with respect to which Incentive Stock Options granted
under the Plan and all other option plans of the Company (and any
parent corporation or subsidiary corporation of the Company, as
those terms are defined in Sections 424(e) and
(f) of the Code, respectively) that become exercisable for the
first time by the Participant during any calendar year shall not
(to the extent required by the Code at the time of the grant)
exceed $100,000; and
(C) if shares acquired by exercise of
an Incentive Stock Option are disposed of within two years
following the date the Incentive Stock Option is granted or one
year following the transfer of such Shares to the Participant upon
exercise, the Participant shall, promptly following such
disposition, notify the Company in writing of the date and terms of
such disposition and provide such other information regarding the
disposition as the Committee may reasonably require.
(c) Stock
Appreciation Rights. The
Committee may grant Stock Appreciation Rights to any Eligible
Person in conjunction with all or part of any Option granted under
the Plan or at any subsequent time during the term of such Option
(a “Tandem Stock
Appreciation Right”), or
without regard to any Option (a “Freestanding
Stock Appreciation Right”), in
each case upon such terms and conditions as the Committee may
establish in its sole discretion, not inconsistent with the
provisions of the Plan, including the following:
(i) Right to
Payment. A Stock
Appreciation Right shall confer on the Participant to whom it is
granted a right to receive, upon exercise thereof, the excess of
(A) the Fair Market Value of one Share on the date of exercise
over (B) the grant price of the Stock Appreciation Right as
determined by the Committee. The grant price of a Stock
Appreciation Right shall not be less than 100% of the Fair Market
Value of a Share on the date of grant; provided, however, that if
and to the extent that it would not violate Section 409A of
the Code, the grant price for a Stock Appreciation Right that is
granted as a Substitute Award for an outstanding Option may be
lower than 100% of the Fair Market Value of a Share on the date of
grant of the Stock Appreciation Right if it is not less than the
exercise price of the Option for which it is substituted. Other
than pursuant to Section 10(c)(i) and (ii) of this
Plan, the Committee shall not be permitted to (A) lower the
grant price per Share of a Stock Appreciation Right after it is
granted, (B) cancel a Stock Appreciation Right when the grant
price per Share exceeds the Fair Market Value of the underlying
Shares in exchange for cash or another Award, (C) cancel an
outstanding Stock Appreciation Right in exchange for a Stock
Appreciation Right with a grant price that is less than the grant
price of the original Stock Appreciation Right, or (D) take
any other action with respect to a Stock Appreciation Right that
may be treated as a repricing pursuant to the applicable
rules of the Listing Market, without shareholder
approval.
(ii) Other
Terms. The Committee
shall determine at the date of grant or thereafter, the time or
times at which and the circumstances under which a Stock
Appreciation Right may be exercised in whole or in part (including
based on achievement of performance goals or future service
requirements), the time or times at which Stock Appreciation Rights
shall cease to be or become exercisable following termination of
Continuous Service or upon other conditions, the method of
exercise, method of settlement, form of consideration payable in
settlement, method by or forms in which Shares will be delivered or
deemed to be delivered to Participants, whether or not a Stock
Appreciation Right shall be in tandem or in combination with any
other Award, and any other terms and conditions of any Stock
Appreciation Right.
(iii) Tandem Stock
Appreciation Rights. Any
Tandem Stock Appreciation Right may be granted at the same time as
or subsequently to the related Option is granted. Any Tandem Stock
Appreciation Right related to an Option may be exercised only when
the related Option would be exercisable and the Fair Market Value
of the Shares subject to the related Option exceeds the exercise
price at which Shares can be acquired pursuant to the Option. In
addition, if a Tandem Stock Appreciation Right exists with respect
to less than the full number of Shares covered by a related Option,
then an exercise or termination of such Option shall not reduce the
number of Shares to which the Tandem Stock Appreciation Right
applies until the number of Shares then exercisable under such
Option equals the number of Shares to which the Tandem Stock
Appreciation Right applies. Any Option related to a Tandem Stock
Appreciation Right shall no longer be exercisable to the extent the
Tandem Stock Appreciation Right has been exercised, and any Tandem
Stock Appreciation Right shall no longer be exercisable to the
extent the related Option has been exercised.
(d) Restricted
Stock Awards. The
Committee is authorized to grant Restricted Stock Awards to any
Eligible Person on the following terms and conditions:
(i) Grant and
Restrictions. Restricted
Stock Awards shall be subject to such restrictions on
transferability, risk of forfeiture and other restrictions, if any,
as the Committee may impose, or as otherwise provided in this Plan
during the Restriction Period. The terms of any Restricted Stock
Award granted under the Plan shall be set forth in a written Award
Agreement which shall contain provisions determined by the
Committee and not inconsistent with the Plan. The restrictions may
lapse separately or in combination at such times, under such
circumstances (including based on achievement of performance goals
and/or future service requirements), in such installments or
otherwise, as the Committee may determine at the date of grant or
thereafter. Except to the extent restricted under the terms of the
Plan and any Award Agreement relating to a Restricted Stock Award,
a Participant granted Restricted Stock shall have all of the rights
of a shareholder, including the right to vote the Restricted Stock
and the right to receive dividends thereon (subject to any
mandatory reinvestment or other requirement imposed by the
Committee). During the period that the Restricted Stock Award is
subject to a risk of forfeiture, subject to
Section 10(b) hereof and except as otherwise provided in
the Award Agreement, the Restricted Stock may not be sold,
transferred, pledged, hypothecated, margined or otherwise
encumbered by the Participant or Beneficiary.
(ii) Forfeiture.
Except as otherwise determined by the Committee, upon termination
of a Participant’s Continuous Service during the applicable
Restriction Period, the Participant’s Restricted Stock that is at
that time subject to a risk of forfeiture that has not lapsed or
otherwise been satisfied shall be forfeited and reacquired by the
Company; provided that the Committee may provide, by rule or
regulation or in any Award Agreement, or may determine in any
individual case, that forfeiture conditions relating to Restricted
Stock Awards shall be waived in whole or in part in the event of
terminations resulting from specified causes, and the Committee may
in other cases waive in whole or in part the forfeiture of
Restricted Stock.
(iii) Certificates
for Stock. Restricted
Stock granted under the Plan may be evidenced in such manner as the
Committee shall determine. If certificates representing Restricted
Stock are registered in the name of the Participant, the Committee
may require that such certificates bear an appropriate legend
referring to the terms, conditions and restrictions applicable to
such Restricted Stock, that the Company retain physical possession
of the certificates, and that the Participant deliver a stock power
to the Company, endorsed in blank, relating to the Restricted
Stock.
(iv) Dividends and
Splits. As a condition
to the grant of a Restricted Stock Award, the Committee may require
or permit a Participant to elect that any cash dividends paid on a
Share of Restricted Stock be automatically reinvested in additional
Shares of Restricted Stock or applied to the purchase of additional
Awards under the Plan, or except as otherwise provided in the last
sentence of Section 6(h) hereof, may require that payment
be delayed (with or without interest at such rate, if any, as the
Committee shall determine) and remain subject to restrictions and a
risk of forfeiture to the same extent as the Restricted Stock with
respect to which such cash dividend is payable, in each case in a
manner that does not violate the requirements of Section 409A
of the Code. Unless otherwise determined by the Committee, Shares
distributed in connection with a stock split or stock dividend, and
other property distributed as a dividend, shall be subject to
restrictions and a risk of forfeiture to the same extent as the
Restricted Stock with respect to which such Shares or other
property have been distributed.
(e) Restricted
Stock Unit Award. The
Committee is authorized to grant Restricted Stock Unit Awards to
any Eligible Person on the following terms and
conditions:
(i) Award and
Restrictions.
Satisfaction of a Restricted Stock Unit Award shall occur upon
expiration of the deferral period specified for such Restricted
Stock Unit Award by the Committee (or, if permitted by the
Committee, as elected by the Participant in a manner that does not
violate the
requirements of Section 409A of
the Code). In addition, a Restricted Stock Unit Award shall be
subject to such restrictions (which may include a risk of
forfeiture) as the Committee may impose, if any, which restrictions
may lapse at the expiration of the deferral period or at other
specified times (including based on achievement of performance
goals and/or future service requirements), separately or in
combination, in installments or otherwise, as the Committee may
determine. A Restricted Stock Unit Award may be satisfied by
delivery of Shares, cash equal to the Fair Market Value of the
specified number of Shares covered by the Restricted Stock Units,
or a combination thereof, as determined by the Committee at the
date of grant or thereafter. Prior to satisfaction of a Restricted
Stock Unit Award, a Restricted Stock Unit Award carries no voting
or dividend or other rights associated with Share ownership. Prior
to satisfaction of a Restricted Stock Unit Award, except as
otherwise provided in an Award Agreement and as permitted under
Section 409A of the Code, a Restricted Stock Unit Award may
not be sold, transferred, pledged, hypothecated, margined or
otherwise encumbered by the Participant or any
Beneficiary.
(ii) Forfeiture.
Except as otherwise determined by the Committee, upon termination
of a Participant’s Continuous Service during the applicable
deferral period or portion thereof to which forfeiture conditions
apply (as provided in the Award Agreement evidencing the Restricted
Stock Unit Award), the Participant’s Restricted Stock Unit Award
that is at that time subject to a risk of forfeiture that has not
lapsed or otherwise been satisfied shall be forfeited; provided
that the Committee may provide, by resolution or action or in any
Award Agreement, or may determine in any individual case, that
forfeiture conditions relating to a Restricted Stock Unit Award
shall be waived in whole or in part in the event of terminations
resulting from specified causes, and the Committee may in other
cases waive in whole or in part the forfeiture of any Restricted
Stock Unit Award.
(iii) Dividend
Equivalents. Unless
otherwise determined by the Committee at the date of grant, and
except as otherwise provided in the last sentence of
Section 6(h) hereof, any Dividend Equivalents that are
granted with respect to any Restricted Stock Unit Award shall be
either (A) paid with respect to such Restricted Stock Unit
Award at the dividend payment date in cash or in Shares of
unrestricted stock having a Fair Market Value equal to the amount
of such dividends, or (B) deferred with respect to such
Restricted Stock Unit Award and whether the amount or value thereof
shall be automatically deemed reinvested in additional Restricted
Stock Units or other Awards, or if not so reinvested shall earn
interest and at what rate for the period deferred, as the Committee
shall determine or permit the Participant to elect. The applicable
Award Agreement shall specify whether any Dividend Equivalents
shall be paid at the dividend payment date, deferred or deferred at
the election of the Participant. If the Participant may elect to
defer the Dividend Equivalents, such election shall be made at such
other times prescribed by the Committee as shall not result in a
violation of Section 409A of the Code.
(f) Bonus Stock
and Awards in Lieu of Obligations. The Committee is authorized to grant
Shares to any Eligible Persons as a bonus, or to grant Shares or
other Awards in lieu of obligations to pay cash or deliver other
property under the Plan or under other plans or compensatory
arrangements, provided that, in the case of Eligible Persons
subject to Section 16 of the Exchange Act, the amount of such
grants remains within the discretion of the Committee to the extent
necessary to ensure that acquisitions of Shares or other Awards are
exempt from liability under Section 16(b) of the Exchange
Act. Shares or Awards granted hereunder shall be subject to such
other terms as shall be determined by the Committee.
(g) Dividend
Equivalents. The
Committee is authorized to grant Dividend Equivalents to any
Eligible Person entitling the Eligible Person to receive cash,
Shares, other Awards, or other property equal in value to the
dividends paid with respect to a specified number of Shares, or
other periodic payments. Dividend Equivalents may be awarded on a
free-standing basis or in connection with another Award. Except as
otherwise provided in the last sentence of
Section 6(h) hereof, the Committee may provide that
Dividend Equivalents shall be paid or distributed when accrued or
at some later date, or whether such Dividend Equivalents shall be
deemed to have been reinvested in additional Shares, Awards, or
other investment vehicles, and subject to such restrictions on
transferability and risks of forfeiture, as the Committee may
specify. Notwithstanding the foregoing, Dividend Equivalents
credited in connection with an Award that vests based on the
achievement of
performance goals shall be subject to
restrictions and risk of forfeiture to the same extent as the Award
with respect to which such Dividend Equivalents have been
credited.
(h) Performance
Awards. The Committee is
authorized to grant Performance Awards to any Eligible Person
payable in cash, Shares, or other Awards, on terms and conditions
established by the Committee, subject to the provisions of
Section 8 hereof if and to the extent that the Committee
shall, in its sole discretion, determine that an Award shall be
subject to those provisions. The performance criteria to be
achieved during any Performance Period and the length of the
Performance Period shall be determined by the Committee upon the
grant of each Performance Award; provided, however, that a
Performance Period shall not be shorter than 12 months nor
longer than 5 years. Except as provided in Section 9 or
as may be provided in an Award Agreement, Performance Awards will
be distributed only after the end of the relevant Performance
Period. The performance goals to be achieved for each Performance
Period shall be conclusively determined by the Committee and may be
based upon the criteria set forth in Section 8(b) hereof,
or in the case of an Award that the Committee determines shall not
be subject to Section 8 hereof, any other criteria that the
Committee, in its sole discretion, shall determine should be used
for that purpose. The amount of the Award to be distributed shall
be conclusively determined by the Committee. Performance Awards may
be paid in a lump sum or in installments following the close of the
Performance Period or, in accordance with procedures established by
the Committee, on a deferred basis in a manner that does not
violate the requirements of Section 409A of the Code.
Notwithstanding any other provision of this Plan to the contrary,
cash dividends, Shares, and any other property (other than cash)
distributed as a dividend or otherwise with respect to any
Performance Awards or any other Awards that are subject to
satisfaction of performance goals, shall either (i) not be
paid or credited, or (ii) be accumulated, shall be subject to
satisfaction of the same performance goals to which the vesting of
the underlying Award is subject, and shall be paid at the time such
restrictions and risk of forfeiture lapses.
(i) Other
Stock-Based Awards. The
Committee is authorized, subject to limitations under applicable
law, to grant to any Eligible Person such other Awards that may be
denominated or payable in, valued in whole or in part by reference
to, or otherwise based on, or related to, Shares, as deemed by the
Committee to be consistent with the purposes of the Plan. Other
Stock-Based Awards may be granted to Participants either alone or
in addition to other Awards granted under the Plan, and such Other
Stock-Based Awards shall also be available as a form of payment in
the settlement of other Awards granted under the Plan. The
Committee shall determine the terms and conditions of such Awards.
Shares delivered pursuant to an Award in the nature of a purchase
right granted under this Section 6(i) shall be purchased
for such consideration, (including without limitation loans from
the Company or a Related Entity provided that such loans are not in
violation of Section 13(k) of the Exchange Act, or any
rule or regulation adopted thereunder or any other applicable
law) paid for at such times, by such methods, and in such forms,
including, without limitation, cash, Shares, other Awards or other
property, as the Committee shall determine.
7.
Certain Provisions Applicable to
Awards.
(a) Stand-Alone,
Additional, Tandem, and Substitute Awards. Awards granted under the Plan may, in the
discretion of the Committee, be granted either alone or in addition
to, in tandem with, or in substitution or exchange for, any other
Award or any award granted under another plan of the Company, any
Related Entity, or any business entity to be acquired by the
Company or a Related Entity, or any other right of a Participant to
receive payment from the Company or any Related Entity. Such
additional, tandem, and substitute or exchange Awards may be
granted at any time. If an Award is granted in substitution or
exchange for another Award or award, the Committee shall require
the surrender of such other Award or award in consideration for the
grant of the new Award. In addition, Awards may be granted in lieu
of cash compensation, including in lieu of cash amounts payable
under other plans of the Company or any Related Entity, in which
the value of Shares subject to the Award is equivalent in value to
the cash compensation (for example, Restricted Stock or Restricted
Stock Units), or in which the exercise price, grant price or
purchase price of the Award in the nature of a right that may be
exercised is equal to the Fair Market Value of the underlying
Shares minus the value of the cash compensation surrendered (for
example, Options or Stock Appreciation Right granted with an
exercise price or grant price “discounted” by the amount of the
cash compensation surrendered), provided that any such
determination to grant an Award in
lieu of cash compensation must be made in a manner intended to
comply with Section 409A of the Code.
(b) Term of
Awards. The term of each
Award shall be for such period as may be determined by the
Committee. The term of any Option or Stock Appreciation Right shall
not exceed a period of ten years (or in the case of an Incentive
Stock Option such shorter term as may be required under
Section 422 of the Code); provided, however, that in the event
that on the last day of the term of an Option or a Stock
Appreciation Right, other than an Incentive Stock Option,
(i) the exercise of the Option or Stock Appreciation Right is
prohibited by applicable law, or (ii) Shares may not be
purchased, or sold by certain employees or directors of the Company
due to the “black-out period” of a Company policy or a “lock-up”
agreement undertaken in connection with an issuance of securities
by the Company, the term of the Option or Stock Appreciation Right
shall be extended for a period of 30 days following the end of
the legal prohibition, black-out period or lock-up agreement,
provided that such extension of the term of the Option or Stock
Appreciation Right would not cause the Option or Stock Appreciation
Right to violate the requirements of Section 409A of the
Code.
(c) Form and
Timing of Payment Under Awards; Deferrals. Subject to the terms of the Plan and any
applicable Award Agreement, payments to be made by the Company or a
Related Entity upon the exercise of an Option or other Award or
settlement of an Award may be made in such forms as the Committee
shall determine, including, without limitation, cash, Shares, other
Awards or other property, and may be made in a single payment or
transfer, in installments, or on a deferred basis, provided that
any determination to pay in installments or on a deferred basis
shall be made by the Committee at the date of grant. Any
installment or deferral provided for in the preceding sentence
shall, however, be subject to the Company’s compliance with
applicable law and all applicable rules of the Listing Market,
and in a manner intended to be exempt from or otherwise satisfy the
requirements of Section 409A of the Code. Subject to
Section 7(e) hereof, the settlement of any Award may be
accelerated, and cash paid in lieu of Shares in connection with
such settlement, in the sole discretion of the Committee or upon
occurrence of one or more specified events (in addition to a Change
in Control). Any such settlement shall be at a value determined by
the Committee in its sole discretion, which, without limitation,
may in the case of an Option or Stock Appreciation Right be limited
to the amount if any by which the Fair Market Value of a Share on
the settlement date exceeds the exercise or grant price.
Installment or deferred payments may be required by the Committee
(subject to Section 7(e) of the Plan, including the
consent provisions thereof in the case of any deferral of an
outstanding Award not provided for in the original Award Agreement)
or permitted at the election of the Participant on terms and
conditions established by the Committee. The acceleration of the
settlement of any Award, and the payment of any Award in
installments or on a deferred basis, all shall be done in a manner
that is intended to be exempt from or otherwise satisfy the
requirements of Section 409A of the Code. The Committee may,
without limitation, make provision for the payment or crediting of
a reasonable interest rate on installment or deferred payments or
the grant or crediting of Dividend Equivalents or other amounts in
respect of installment or deferred payments denominated in
Shares.
(d) Exemptions
from Section 16(b) Liability. It is the intent of the Company that the
grant of any Awards to or other transaction by a Participant who is
subject to Section 16 of the Exchange Act shall be exempt from
Section 16 pursuant to an applicable exemption (except for
transactions acknowledged in writing to be non-exempt by such
Participant). Accordingly, if any provision of this Plan or any
Award Agreement does not comply with the requirements of
Rule 16b-3 then applicable to any such transaction, such
provision shall be construed or deemed amended to the extent
necessary to conform to the applicable requirements of
Rule 16b-3 so that such Participant shall avoid liability
under Section 16(b).
(e) Code
Section 409A.
(i) The Award Agreement for any
Award that the Committee reasonably determines to constitute a
“nonqualified deferred compensation plan” under Section 409A
of the Code (a “Section 409A
Plan”), and the provisions of
the Section 409A Plan applicable to that Award, shall be
construed in a manner consistent with the applicable requirements
of Section 409A of the Code, and the Committee, in its sole
discretion and without the consent of any Participant, may amend
any Award Agreement (and the provisions of the Plan
applicable thereto) if and to the
extent that the Committee determines that such amendment is
necessary or appropriate to comply with the requirements of
Section 409A of the Code.
(ii) If any Award constitutes a
Section 409A Plan, then the Award shall be subject to the
following additional requirements, if and to the extent required to
comply with Section 409A of the Code:
(A) Payments under the
Section 409A Plan may be made only upon (1) the
Participant’s “separation from service,” (2) the date the
Participant becomes “disabled,” (3) the Participant’s death,
(4) a “specified time (or pursuant to a fixed schedule)”
specified in the Award Agreement at the date of the deferral of
such compensation, (5) a “change in the ownership or effective
control of the corporation, or in the ownership of a substantial
portion of the assets” of the Company, or (6) the occurrence
of an “unforeseeable emergency”;
(B) The time or schedule for any
payment of the deferred compensation may not be accelerated, except
to the extent provided in applicable Treasury Regulations or other
applicable guidance issued by the Internal Revenue
Service;
(C) Any elections with respect
to the deferral of such compensation or the time and form of
distribution of such deferred compensation shall comply with the
requirements of Section 409A(a)(4) of the Code;
and
(D) In the case of any
Participant who is “specified employee,” a distribution on account
of a “separation from service” may not be made before the date
which is six months after the date of the Participant’s “separation
from service” (or, if earlier, the date of the Participant’s
death).
For purposes of the foregoing, the
terms in quotations shall have the same meanings as those terms
have for purposes of Section 409A of the Code, and the
limitations set forth herein shall be applied in such manner (and
only to the extent) as shall be necessary to comply with any
requirements of Section 409A of the Code that are applicable
to the Award.
(iii) Notwithstanding the
foregoing, or any provision of this Plan or any Award Agreement,
the Company does not make any representation to any Participant or
Beneficiary that any Awards made pursuant to this Plan are exempt
from, or satisfy, the requirements of, Section 409A of the
Code, and the Company shall have no liability or other obligation
to indemnify or hold harmless the Participant or any Beneficiary
for any tax, additional tax, interest or penalties that the
Participant or any Beneficiary may incur in the event that any
provision of this Plan, or any Award Agreement, or any amendment or
modification thereof, or any other action taken with respect
thereto, is deemed to violate any of the requirements of
Section 409A of the Code.
8.
Code Section 162(m) Provisions.
(a) Covered
Employees. The
provisions of this Section 8 shall be applicable to any
Restricted Stock Award, Restricted Stock Unit Award, Performance
Award, or Other Stock-Based Award if it is granted to an Eligible
Person who is, or is likely to be, as of the end of the tax year in
which the Company would claim a tax deduction in connection with
such Award, a Covered Employee, and is intended to qualify as
“performance-based compensation” that is exempt from the deduction
limitations imposed under Section 162(m) of the
Code.
(b) Performance
Criteria. If an Award is
subject to this Section 8, then the payment or distribution
thereof or the lapsing of restrictions thereon and the distribution
of cash, Shares or other property pursuant thereto, as applicable,
shall be contingent upon achievement of one or more objective
performance goals. Performance goals shall be objective and shall
otherwise meet the requirements of Section 162(m) of the
Code and regulations thereunder including the requirement that the
level or levels of performance targeted by the Committee result in
the achievement of performance goals being “substantially
uncertain.” One or more of the following business criteria for the
Company, on a consolidated basis, and/or for Related Entities, or
for business
or geographical units of the Company
and/or a Related Entity (except with respect to the total
shareholder return and earnings per share criteria), shall be used
by the Committee in establishing performance goals for such Awards:
(1) earnings per share; (2) achievement of domestic and
international regulatory milestones, including the submission of
filings required to advance products, services and technologies in
clinical development and the achievement of approvals by regulatory
authorities relating to the commercialization of products, services
and technologies; (3) the achievement of discovery,
preclinical and clinical stage scientific objectives, discoveries
or inventions for products, services and technologies under
research and development; (4) the entry into or completion of
a phase of clinical development for any product, service or
technology; (5) specified levels of product sales;
(6) earnings before or after discontinued operations,
interest, taxes, depreciation and/or amortization, operating profit
before or after discontinued operations and/or taxes, sales, sales
growth, earnings growth, cash flow or cash position, gross margins
or working capital; (7) stock price, (8) return on sales,
assets, equity or investment; (9) operating income or income
from operations after excluding extraordinary or special items
(including, without limitation, stock-based compensation, goodwill
impairments, building and other significant asset sales, asset
write-downs, plant closures and related layoffs, and/or
amortization of intangibles); (10) net income;
(11) management of fixed costs or variable costs;
(12) identification or consummation of investment
opportunities or completion of specified projects in accordance
with corporate business plans, including financings, strategic
mergers, acquisitions or divestitures; (13) total shareholder
return; (14) debt reduction; (15) market share;
(16) entry into new markets, either geographically or by
business unit; and/or (17) the Fair Market Value of a Share.
Any of the above goals may be determined on an absolute or relative
basis or as compared to the performance of a published or special
index deemed applicable by the Committee including, but not limited
to, the NASDAQ Composite Index, the NASDAQ Biotechnology Index or a
group of companies that are comparable to the Company. In
determining the achievement of the performance goals, the Committee
may, at the time the performance goals are set, require that those
goals be determined by excluding the impact of
(i) restructurings, discontinued operations, and extraordinary
items (as defined pursuant to generally accepted accounting
principles), and other unusual or non-recurring charges,
(ii) change in accounting standards required by generally
accepted accounting principles; or (iii) such other exclusions
or adjustments as the Committee specifies at the time the Award is
granted.
(c) Performance
Period; Timing For Establishing Performance
Goals. Achievement of
performance goals in respect of Performance Awards shall be
measured over a Performance Period no shorter than 12 months
and no longer than 5 years, as specified by the Committee.
Performance goals shall be established not later than 90 days
after the beginning of any Performance Period applicable to such
Performance Awards, or at such other date as may be required or
permitted for “performance-based compensation” under
Section 162(m) of the Code.
(d) Adjustments.
The Committee may, in its discretion, reduce the amount of a
settlement otherwise to be made in connection with Awards subject
to this Section 8, but may not exercise discretion to increase
any such amount payable to a Covered Employee in respect of an
Award subject to this Section 8. The Committee shall specify
the circumstances in which such Awards shall be paid or forfeited
in the event of termination of Continuous Service by the
Participant prior to the end of a Performance Period or settlement
of Awards.
(e) Committee
Certification. No
Participant shall receive any payment under the Plan that is
subject to this Section 8 unless the Committee has certified,
by resolution or other appropriate action in writing, that the
performance criteria and any other material terms previously
established by the Committee or set forth in the Plan, have been
satisfied to the extent necessary to qualify as “performance based
compensation” under Section 162(m) of the
Code.
9.
Change in Control.
(a) Effect of
“Change in Control.” If
and only to the extent provided in any employment or other
agreement between the Participant and the Company or any Related
Entity, or in any Award Agreement, or to
the extent otherwise determined by
the Committee in its sole discretion and without any requirement
that each Participant be treated consistently, upon the occurrence
of a “Change in Control,” as defined in
Section 9(b):
(i) Any Option or Stock
Appreciation Right that was not previously vested and exercisable
as of the time of the Change in Control, shall become immediately
vested and exercisable, subject to applicable restrictions set
forth in Section 10(a) hereof.
(ii) Any restrictions,
deferral of settlement, and forfeiture conditions applicable to a
Restricted Stock Award, Restricted Stock Unit Award or an Other
Stock-Based Award subject only to future service requirements
granted under the Plan shall lapse and such Awards shall be deemed
fully vested as of the time of the Change in Control, except to the
extent of any waiver by the Participant and subject to applicable
restrictions set forth in
Section 10(a) hereof.
(iii) With respect to any
outstanding Award subject to achievement of performance goals and
conditions under the Plan, the Committee may, in its discretion,
consider such Awards to have been earned and payable based on
achievement of performance goals or based upon target performance
(either in full or pro-rata based on the portion of the Performance
Period completed as of the Change in Control).
(iv) Notwithstanding the
foregoing or any provision in any Award Agreement to the contrary,
and unless the Committee otherwise determines in a specific
instance, or as is provided in any employment or other agreement
between the Participant and the Company any Subsidiary, and unless
the Committee otherwise determines in a specific instance, each
outstanding Option, Stock Appreciation Right, Restricted Stock
Award, Restricted Stock Unit Award, Performance Award or Other
Stock-Based Award shall not be accelerated as described in
Sections 9(a)(i), (ii) and (iii), if either (A) the
Company is the surviving entity in the Change in Control and the
Option, Stock Appreciation Right, Restricted Stock Award,
Restricted Stock Unit Award, Performance Award or Other Stock-Based
Award continues to be outstanding after the Change in Control on
substantially the same terms and conditions as were applicable
immediately prior to the Change in Control or (B) the
successor company or its parent company assumes or substitutes for
the applicable Award, as determined in accordance with
Section 10(c)(ii) hereof. For the purposes of this
Agreement, an Option, Stock Appreciation Right, Restricted Stock
Award, Restricted Stock Unit Award or Other Stock-Based Award shall
be considered assumed or substituted for if following the Change in
Control the Award confers the right to purchase or receive, for
each Share subject to the Option, Stock Appreciation Right,
Restricted Stock Award, Restricted Stock Unit Award or Other
Stock-Based Award immediately prior to the Change in Control, on
substantially the same vesting and other terms and conditions as
were applicable to the Award immediately prior to the Change in
Control, the consideration (whether stock, cash or other securities
or property) received in the transaction constituting a Change in
Control by holders of Shares for each Share held on the effective
date of such transaction (and if holders were offered a choice of
consideration, the type of consideration chosen by the holders of a
majority of the outstanding shares); provided, however, that if
such consideration received in the transaction constituting a
Change in Control is not solely common stock of the successor
company or its parent or subsidiary, the Committee may, with the
consent of the successor company or its parent or subsidiary,
provide that the consideration to be received upon the exercise or
vesting of an Option, Stock Appreciation Right, Restricted Stock
Award, Restricted Stock Unit Award or Other Stock-Based Award, for
each Share subject thereto, will be solely common stock of the
successor company or its parent or subsidiary substantially equal
in fair market value to the per share consideration received by
holders of Shares in the transaction constituting a Change in
Control. The determination of such substantial equality of value of
consideration shall be made by the Committee in its sole discretion
and its determination shall be conclusive and binding.
(b) Definition of
“Change in Control”.
Unless otherwise specified in any employment or other agreement for
services between the Participant and the Company or any Related
Entity, or in an Award Agreement, a “Change in
Control” shall mean the
occurrence of any of the following:
(i) The acquisition by any
Person of Beneficial Ownership (within the meaning of
Rule 13d-3 promulgated under the Exchange Act) of more than
50% of either (A) the value of then outstanding
equity
securities of the Company (the
“Outstanding
Company Stock”) or
(B) the combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the
election of directors (the “Outstanding
Company Voting Securities”)
(the foregoing Beneficial Ownership hereinafter being referred to
as a “Controlling
Interest”); provided, however,
that for purposes of this Section 9(b), the following
acquisitions shall not constitute or result in a Change in Control:
(1) any acquisition by the Company; (2) any acquisition
by any Person that as of the Effective Date owns Beneficial
Ownership of a Controlling Interest; (3) any acquisition by
any employee benefit plan (or related trust) sponsored or
maintained by the Company or any Related Entity; or (4) any
acquisition by any entity pursuant to a transaction which complies
with clauses (A), (B) and (C) of
subsection (iii) below; or
(ii) During any period of two
consecutive years (not including any period prior to the Effective
Date) individuals who constitute the Board on the Effective Date
(the “Incumbent
Board”) cease for any reason
to constitute at least a majority of the Board; provided, however,
that any individual becoming a director subsequent to the Effective
Date whose election, or nomination for election by the Company’s
shareholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be considered
as though such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of an actual or threatened
election contest with respect to the election or removal of
directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board;
or
(iii) Consummation of
(A) a reorganization, merger, statutory share exchange or
consolidation or similar transaction involving (1) the Company
or (2) any of its Subsidiaries, but in the case of this
clause (2) only if equity securities of the Company are
issued or issuable in connection with the transaction (each of the
events referred to in this clause (A) being hereinafter
referred to as a “Business
Reorganization”), or
(B) a sale or other disposition of all or substantially all of
the assets of the Company, or the acquisition of assets or equity
of another entity by the Company or any of its Subsidiaries (each
an “Asset
Sale”), in each case, unless,
following such Business Reorganization or Asset Sale, (1) all
or substantially all of the individuals and entities who were the
Beneficial Owners, respectively, of the Outstanding Company Stock
and Outstanding Company Voting Securities immediately prior to such
Business Reorganization or Asset Sale beneficially own, directly or
indirectly, more than 50% of the value of the then outstanding
equity securities and the combined voting power of the then
outstanding voting securities entitled to vote generally in the
election of members of the board of directors (or comparable
governing body of an entity that does not have such a board), as
the case may be, of the entity resulting from such Business
Reorganization or Asset Sale (including, without limitation, an
entity which as a result of such transaction owns the Company or
all or substantially all of the Company’s assets either directly or
through one or more subsidiaries) (the “Continuing
Entity”) in substantially the
same proportions as their ownership, immediately prior to such
Business Reorganization or Asset Sale, of the Outstanding Company
Stock and Outstanding Company Voting Securities, as the case may be
(excluding any outstanding equity or voting securities of the
Continuing Entity that such Beneficial Owners hold immediately
following the consummation of the Business Reorganization or Asset
Sale as a result of their ownership, prior to such consummation, of
equity or voting securities of any company or other entity involved
in or forming part of such Business Reorganization or Asset Sale
other than the Company), (2) no Person (excluding any employee
benefit plan (or related trust) of the Company or any Continuing
Entity or any entity controlled by the Continuing Corporation or
any Person that as of the Effective Date owns Beneficial Ownership
of a Controlling Interest) beneficially owns, directly or
indirectly, 50% or more of the value of the then outstanding equity
securities of the Continuing Entity or the combined voting power of
the then outstanding voting securities of the Continuing Entity
except to the extent that such ownership existed prior to the
Business Reorganization or Asset Sale and (3) at least a
majority of the members of the Board of Directors or other
governing body of the Continuing Entity were members of the
Incumbent Board at the time of the execution of the initial
agreement, or of the action of the Board, providing for such
Business Reorganization or Asset Sale.
10.
General Provisions.
(a) Compliance
With Legal and Other Requirements. The Company may, to the extent deemed
necessary or advisable by the Committee, postpone the issuance or
delivery of Shares or payment of other benefits under any Award
until completion of such registration or qualification of such
Shares or other required action under any federal or state law,
rule or regulation, listing or other required action with
respect to the Listing Market, or compliance with any other
obligation of the Company, as the Committee, may consider
appropriate, and may require any Participant to make such
representations, furnish such information and comply with or be
subject to such other conditions as it may consider appropriate in
connection with the issuance or delivery of Shares or payment of
other benefits in compliance with applicable laws, rules, and
regulations, listing requirements, or other obligations.
(b) Limits on
Transferability; Beneficiaries. No Award or other right or interest
granted under the Plan shall be pledged, hypothecated or otherwise
encumbered or subject to any lien, obligation or liability of such
Participant to any party, or assigned or transferred by such
Participant otherwise than by will or the laws of descent and
distribution or to a Beneficiary upon the death of a Participant,
and such Awards or rights that may be exercisable shall be
exercised during the lifetime of the Participant only by the
Participant or his or her guardian or legal representative, except
that Awards and other rights (other than Incentive Stock Options
and Stock Appreciation Rights in tandem therewith) may be
transferred to one or more Beneficiaries or other transferees
during the lifetime of the Participant, and may be exercised by
such transferees in accordance with the terms of such Award, but
only if and to the extent such transfers are permitted by the
Committee pursuant to the express terms of an Award Agreement
(subject to any terms and conditions which the Committee may impose
thereon), are by gift or pursuant to a domestic relations order,
and are to a “Permitted Assignee” that is a permissible transferee
under the applicable rules of the SEC for registration of
shares of stock on a Form S-8 registration statement. For this
purpose, a Permitted Assignee shall mean (i) the Participant’s
spouse, children or grandchildren (including any adopted and step
children or grandchildren), parents, grandparents or siblings,
(ii) a trust for the benefit of one or more of the Participant
or the persons referred to in clause (i), (iii) a
partnership, limited liability company or corporation in which the
Participant or the persons referred to in clause (i) are
the only partners, members or shareholders, or (iv) a
foundation in which any person or entity designated in
clauses (i), (ii) or (iii) above control the
management of assets. A Beneficiary, transferee, or other person
claiming any rights under the Plan from or through any Participant
shall be subject to all terms and conditions of the Plan and any
Award Agreement applicable to such Participant, except as otherwise
determined by the Committee, and to any additional terms and
conditions deemed necessary or appropriate by the
Committee.
(c) Adjustments.
(i) Adjustments to
Awards. In the event
that any extraordinary dividend or other distribution (whether in
the form of cash, Shares, or other property), recapitalization,
forward or reverse split, reorganization, merger, consolidation,
spin-off, combination, repurchase, share exchange, liquidation,
dissolution or other similar corporate transaction or event affects
the Shares and/or such other securities of the Company or any other
issuer, then the Committee shall, in such manner as it may deem
equitable, substitute, exchange or adjust any or all of
(A) the number and kind of Shares which may be delivered in
connection with Awards granted thereafter, (B) the number and
kind of Shares by which annual per-person Award limitations are
measured under Section 4 hereof, (C) the number and kind
of Shares subject to or deliverable in respect of outstanding
Awards, (D) the exercise price, grant price or purchase price
relating to any Award and/or make provision for payment of cash or
other property in respect of any outstanding Award, and
(E) any other aspect of any Award that the Committee
determines to be appropriate.
(ii) Adjustments in
Case of Certain Transactions. In the event of any merger, consolidation
or other reorganization in which the Company does not survive, or
in the event of any Change in Control (and subject to the
provisions of Section 9 of this Plan relating to vesting of
Awards in the event of any Change in Control), any outstanding
Awards may be dealt with in accordance with any of the
following approaches, without the
requirement of obtaining any consent or agreement of a Participant
as such, as determined by the agreement effectuating the
transaction or, if and to the extent not so determined, as
determined by the Committee: (A) the continuation of the
outstanding Awards by the Company, if the Company is a surviving
entity, (B) the assumption or substitution for, as those terms
are defined below, the outstanding Awards by the surviving entity
or its parent or subsidiary, (C) full exercisability or
vesting and accelerated expiration of the outstanding Awards, or
(D) settlement of the value of the outstanding Awards in cash
or cash equivalents or other property followed by cancellation of
such Awards (which value, in the case of Options or Stock
Appreciation Rights, shall be measured by the amount, if any, by
which the Fair Market Value of a Share exceeds the exercise or
grant price of the Option or Stock Appreciation Right as of the
effective date of the transaction). For the purposes of this
Agreement, an Option, Stock Appreciation Right, Restricted Stock
Award, Restricted Stock Unit Award or Other Stock-Based Award shall
be considered assumed or substituted for if following the Change in
Control the Award confers the right to purchase or receive, for
each Share subject to the Option, Stock Appreciation Right,
Restricted Stock Award, Restricted Stock Unit Award or Other
Stock-Based Award immediately prior to the Change in Control, on
substantially the same vesting and other terms and conditions as
were applicable to the Award immediately prior to the Change in
Control, the consideration (whether stock, cash or other securities
or property) received in the transaction constituting a Change in
Control by holders of Shares for each Share held on the effective
date of such transaction (and if holders were offered a choice of
consideration, the type of consideration chosen by the holders of a
majority of the outstanding shares); provided, however, that if
such consideration received in the transaction constituting a
Change in Control is not solely common stock of the successor
company or its parent or subsidiary, the Committee may, with the
consent of the successor company or its parent or subsidiary,
provide that the consideration to be received upon the exercise or
vesting of an Option, Stock Appreciation Right, Restricted Stock
Award, Restricted Stock Unit Award or Other Stock-Based Award, for
each Share subject thereto, will be solely common stock of the
successor company or its parent or subsidiary substantially equal
in fair market value to the per share consideration received by
holders of Shares in the transaction constituting a Change in
Control. The determination of such substantial equality of value of
consideration shall be made by the Committee in its sole discretion
and its determination shall be conclusive and binding. The
Committee shall give written notice of any proposed transaction
referred to in this Section 10(c)(ii) at a reasonable
period of time prior to the closing date for such transaction
(which notice may be given either before or after the approval of
such transaction), in order that Participants may have a reasonable
period of time prior to the closing date of such transaction within
which to exercise any Awards that are then exercisable (including
any Awards that may become exercisable upon the closing date of
such transaction). A Participant may condition his exercise of any
Awards upon the consummation of the transaction.
(iii) Other
Adjustments. The
Committee (and the Board if and only to the extent such authority
is not required to be exercised by the Committee to comply with
Section 162(m) of the Code) is authorized to make
adjustments in the terms and conditions of, and the criteria
included in, Awards (including Awards subject to satisfaction of
performance goals, or performance goals and conditions relating
thereto) in recognition of unusual or nonrecurring events
(including, without limitation, acquisitions and dispositions of
businesses and assets) affecting the Company, any Subsidiary or any
business unit, or the financial statements of the Company or any
Subsidiary, or in response to changes in applicable laws,
regulations, accounting principles, tax rates and regulations or
business conditions or in view of the Committee’s assessment of the
business strategy of the Company, any Subsidiary or business unit
thereof, performance of comparable organizations, economic and
business conditions, personal performance of a Participant, and any
other circumstances deemed relevant; provided that no such
adjustment shall be authorized or made if and to the extent that
such authority or the making of such adjustment would cause Awards
granted pursuant to Section 8(b) hereof to Participants
designated by the Committee as Covered Employees and intended to
qualify as “performance-based compensation” under Code
Section 162(m) and the regulations thereunder to
otherwise fail to qualify as “performance-based compensation” under
Code Section 162(m) and regulations thereunder.
Adjustments permitted hereby may include, without limitation,
increasing the exercise price of Options
and Stock Appreciation Rights,
increasing performance goals, or other adjustments that may be
adverse to the Participant. Notwithstanding the foregoing, no
adjustments may be made with respect to any Awards subject to
Section 8 hereof if and to the extent that such adjustment
would cause the Award to fail to qualify as “performance-based
compensation” under Section 162(m) of the
Code.
(d) Award
Agreements. Each Award
Agreement shall either be (i) in writing in a form approved by
the Committee and executed by the Company by an officer duly
authorized to act on its behalf, or (ii) an electronic notice
in a form approved by the Committee and recorded by the Company (or
its designee) in an electronic recordkeeping system used for the
purpose of tracking one or more types of Awards as the Committee
may provide; in each case and if required by the Committee, the
Award Agreement shall be executed or otherwise electronically
accepted by the recipient of the Award in such form and manner as
the Committee may require. The Committee may authorize any officer
of the Company to execute any or all Award Agreements on behalf of
the Company. The Award Agreement shall set forth the material terms
and conditions of the Award as established by the Committee
consistent with the provisions of the Plan.
(e) Taxes.
The Company and any Related Entity are authorized to withhold from
any Award granted, any payment relating to an Award under the Plan,
including from a distribution of Shares, or any payroll or other
payment to a Participant, amounts of withholding and other taxes
due or potentially payable in connection with any transaction
involving an Award, and to take such other action as the Committee
may deem advisable to enable the Company or any Related Entity and
Participants to satisfy obligations for the payment of withholding
taxes and other tax obligations relating to any Award. This
authority shall include authority to withhold or receive Shares or
other property and to make cash payments in respect thereof in
satisfaction of a Participant’s tax obligations, either on a
mandatory or elective basis in the discretion of the
Committee.
(f) Changes to the
Plan and Awards. The
Board may amend, alter, suspend, discontinue or terminate the Plan,
or the Committee’s authority to grant Awards under the Plan,
without the consent of shareholders or Participants, except that
any amendment or alteration to the Plan shall be subject to the
approval of the Company’s shareholders not later than the annual
meeting next following such Board action if such shareholder
approval is required by any federal or state law or regulation
(including, without limitation, Rule 16b-3 or Code
Section 162(m)) or the rules of the Listing Market, and
the Board may otherwise, in its discretion, determine to submit
other such changes to the Plan to shareholders for approval;
provided that, except as otherwise permitted by the Plan or Award
Agreement, without the consent of an affected Participant, no such
Board action may materially and adversely affect the rights of such
Participant under the terms of any previously granted and
outstanding Award. The Committee may waive any conditions or rights
under, or amend, alter, suspend, discontinue or terminate any Award
theretofore granted and any Award Agreement relating thereto,
except as otherwise provided in the Plan; provided that, except as
otherwise permitted by the Plan or Award Agreement, without the
consent of an affected Participant, no such Committee or the Board
action may materially and adversely affect the rights of such
Participant under terms of such Award.
(g) Limitation on
Rights Conferred Under Plan. Neither the Plan nor any action taken
hereunder or under any Award shall be construed as (i) giving
any Eligible Person or Participant the right to continue as an
Eligible Person or Participant or in the employ or service of the
Company or a Related Entity; (ii) interfering in any way with
the right of the Company or a Related Entity to terminate any
Eligible Person’s or Participant’s Continuous Service at any time,
(iii) giving an Eligible Person or Participant any claim to be
granted any Award under the Plan or to be treated uniformly with
other Participants and Employees, or (iv) conferring on a
Participant any of the rights of a shareholder of the Company or
any Related Entity including, without limitation, any right to
receive dividends or distributions, any right to vote or act by
written consent, any right to attend meetings of shareholders or
any right to receive any information concerning the Company’s or
any Related Entity’s business, financial condition, results of
operation or prospects, unless and until such time as the
Participant is duly issued Shares on the stock books of the Company
or any Related Entity in accordance with the terms of an Award.
None of the Company, its officers or its directors shall have any
fiduciary obligation to the Participant with respect to any Awards
unless and until the Participant is duly issued Shares pursuant to
the Award on the stock books of the Company in accordance with the
terms of an Award. Neither the Company, nor any Related Entity, nor
any of the their respective officers, directors, representatives or
agents is granting
any rights under the Plan to the
Participant whatsoever, oral or written, express or implied, other
than those rights expressly set forth in this Plan or the Award
Agreement.
(h) Clawback of
Benefits.
(i) The Company may
(A) cause the cancellation of any Award, (B) require
reimbursement of any Award by a Participant or Beneficiary, and
(C) effect any other right of recoupment of equity or other
compensation provided under this Plan or otherwise in accordance
with any Company policies that currently exist or that may from
time to time be adopted or modified in the future by the Company or
applicable law (each, a “Clawback
Policy”), provided that the
following conditions are satisfied: (1) there is an accounting
restatement of the Company’s financial statements or results and
(2) the restatement results from a noncompliance by the
Company with any requirements under or related to the federal
securities laws. In such an event, the claw back will be in an
amount of up to the total economic gain from any stock-based grants
within the five-year period preceding the restatement. By accepting
an Award, a Participant is also agreeing to be bound by any
existing or future Clawback Policy adopted by the Company, or any
amendments that may from time to time be made to the Clawback
Policy in the future by the Company in its discretion (including
without limitation any Clawback Policy adopted or amended to comply
with applicable laws or stock exchange requirements) and is further
agreeing that all of the Participant’s Award Agreements may be
unilaterally amended by the Company, without the Participant’s
consent, to the extent that the Company in its discretion
determines to be necessary or appropriate to comply with any
Clawback Policy.
(ii) If the Participant,
without the consent of the Company, while employed by or providing
services to the Company or any Subsidiary or after termination of
such employment or service, violates a non-competition,
non-solicitation or non-disclosure covenant or agreement or
otherwise engages in activity that is in conflict with Company’s
Corporate Governance Guidelines, Code of Business Conduct and
Ethics or any other corporate governance materials specified by the
SEC or exchange on which common stock of the Company is listed,
then (A) any outstanding, vested or unvested, earned or
unearned portion of the Award may, at the Committee’s discretion,
be canceled and (B) the Committee, in its discretion, may
require the Participant or other person to whom any payment has
been made or Shares or other property have been transferred in
connection with the Award to forfeit and pay over to the Company,
on demand, all or any portion of the gain (whether or not taxable)
realized upon the exercise of any Option or Stock Appreciation
Right and the value realized (whether or not taxable) on the
vesting or payment of any other Award during the time period
specified in the Award Agreement or otherwise specified by the
Committee.
(i) Unfunded
Status of Awards; Creation of Trusts. The Plan is intended to constitute an
“unfunded” plan for incentive and deferred compensation. With
respect to any payments not yet made to a Participant or obligation
to deliver Shares pursuant to an Award, nothing contained in the
Plan or any Award Agreement shall give any such Participant any
rights that are greater than those of a general creditor of the
Company or Related Entity that issues the Award; provided that the
Committee may authorize the creation of trusts and deposit therein
cash, Shares, other Awards or other property, or make other
arrangements to meet the obligations of the Company or Related
Entity under the Plan. Such trusts or other arrangements shall be
consistent with the “unfunded” status of the Plan unless the
Committee otherwise determines with the consent of each affected
Participant. The trustee of such trusts may be authorized to
dispose of trust assets and reinvest the proceeds in alternative
investments, subject to such terms and conditions as the Committee
may specify and in accordance with applicable law.
(j) Nonexclusivity
of the Plan. Neither the
adoption of the Plan by the Board nor its submission to the
shareholders of the Company for approval shall be construed as
creating any limitations on the power of the Board or a committee
thereof to adopt such other incentive arrangements as it may deem
desirable including incentive arrangements and awards which do not
qualify under Section 162(m) of the Code.
(k) Payments in
the Event of Forfeitures; Fractional Shares. Unless otherwise determined by the
Committee, in the event of a forfeiture of an Award with respect to
which a Participant paid cash or other consideration, the
Participant shall be repaid the amount of such cash or other
consideration. No fractional Shares shall be issued or delivered
pursuant to the Plan or any Award. The Committee shall determine
whether cash, other Awards or other property shall be issued or
paid in lieu of such fractional shares or whether such fractional
shares or any rights thereto shall be forfeited or otherwise
eliminated.
(l) Governing
Law. Except as otherwise
provided in any Award Agreement, the validity, construction and
effect of the Plan, any rules and regulations under the Plan,
and any Award Agreement shall be determined in accordance with the
laws of the State of Nevada without giving effect to principles of
conflict of laws, and applicable federal law.
(m) Non-U.S.
Laws. The Committee
shall have the authority to adopt such modifications, procedures,
and subplans as may be necessary or desirable to comply with
provisions of the laws of foreign countries in which the Company or
its Related Entities may operate to assure the viability of the
benefits from Awards granted to Participants performing services in
such countries and to meet the objectives of the Plan.
(n) Construction
and Interpretation.
Whenever used herein, nouns in the singular shall include the
plural, and the masculine pronoun shall include the feminine
gender. Headings of Articles and Sections hereof are inserted for
convenience and reference and constitute no part of the
Plan.
(o) Severability.
If any provision of the Plan or any Award Agreement shall be
determined to be illegal or unenforceable by any court of law in
any jurisdiction, the remaining provisions hereof and thereof shall
be severable and enforceable in accordance with their terms, and
all provisions shall remain enforceable in any other
jurisdiction.
(p) Plan Effective
Date and Shareholder Approval; Termination of
Plan. The Plan shall
become effective on the Effective Date, subject to subsequent
approval, within 12 months of its adoption by the Board, by
shareholders of the Company eligible to vote in the election of
directors, by a vote sufficient to meet the requirements of Code
Sections 162(m) (if applicable) and 422, Rule 16b-3
under the Exchange Act (if applicable), applicable requirements
under the rules of any stock exchange or automated quotation
system on which the Shares may be listed or quoted, and other laws,
regulations, and obligations of the Company applicable to the Plan.
Awards may be granted subject to shareholder approval, but may not
be exercised or otherwise settled in the event the shareholder
approval is not obtained. The Plan shall terminate at the earliest
of (a) such time as no Shares remain available for issuance
under the Plan, (b) termination of this Plan by the Board, or
(c) the tenth anniversary of the Effective Date. Awards
outstanding upon expiration of the Plan shall remain in effect
until they have been exercised or terminated, or have
expired.
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14656_Invivo_Proxy_Card-Front
YOUR VOTE IS IMPORTANT. PLEASE VOTE TODAY. Vote by Internet or
Telephone - QUIC K
EAS Y IMMEDIATE - 24
Hours a Day, 7 Days a Week or by Mail Your phone or Internet vote
authorizes the named proxies to vote your shares in the same manner
as if you marked, signed and returned the proxy card. Votes
submitted electronically over the Internet or by telephone must be
received by 11:59 p.m., Eastern Time, on January 20, 2020. INVIVO
THERAPEUTICS HOLDINGS CORP. INTERNET/MOBILE – www.cstproxyvote.com
Use the Internet to vote your proxy. Have your proxy card available
when you access the above website. Follow the prompts to vote your
shares. PHONE – 1 (866) 894-0536 Use a touch-tone telephone to vote
your proxy. Have your proxy card avail-able when you call. Follow
the voting instructions to vote your shares. MAIL – Mark, sign and
date your proxy card and return it in the postage-paid envelope
provided.
FOLD HERE • DO NOT
SEPARATE • INSERT IN ENVELOPE PROVIDED
Please mark your
votes like this PROXY THE BOARD OF DIRECTORS RECOMMENDS A VOTE
“FOR” THE ELECTION OF EACH OF THE NOMINEES “FOR” DIRECTOR AND “FOR”
PROPOSALS 2, 3, 4, 5, 7 AND FOR “3 YEARS” ON PROPOSAL 6. FOR
AGAINST ABSTAIN 1.Election of Directors. To elect two Class II
directors, each for a three-year term expiring at the 2022 Annual
Meeting. 5. Advisory Vote to Approve Named Executive Officer
Compensation. FOR NOMINEE WITHHOLD AUTHORITY Class II Nominees (1)
Christina Morrison (2) Daniel Marshak 3 Years 2 Years 1 Year
ABSTAIN 6. Advisory Vote to Approve Frequency of Advisory Vote on
Named Executive Officer Compensation. FOR AGAINST ABSTAIN FOR
AGAINST ABSTAIN 2. Approval of Authorized Common Amendment. To
approve an amendment to the corporation’s Articles of Incorporation
to increase the number of authorized shares of our common stock.
Approval of Preferred Amendment. To approve an amendment to the
corporation’s Articles of Incorporation to authorize 1,000,000
shares of “blank-check” preferred stock. Approval of Amendment to
Equity Incentive Plan. To approve an amendment to our 2015 Equity
Incentive Plan. 7. Ratification of Auditors. To ratify the
selection by the Audit Committee of RSM US LLP as the corporation’s
independent registered public accounting firm for the fiscal year
ending December 31, 2019. FOR AGAINST ABSTAIN 3. Note: Such other
matters as may properly come before the meeting. CONTROL NUMBER FOR
AGAINST ABSTAIN 4. Signature Signature, if held jointly Date , 2019
Note: Please sign exactly as name appears hereon. When shares are
held by joint owners, both should sign. When signing as attorney,
executor, administrator, trustee, guardian, or corporate officer,
please give title as such. X PLEASE DO NOT RETURN THE PROXY CARD IF
YOU ARE VOTING ELECTRONICALLY OR BY PHONE.
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14656_Invivo_Proxy_Card-Back
Important Notice Regarding the Availability of Proxy Materials for
the Annual Meeting of Stockholders to be held on January 21, 2020
To access the Company’s Proxy Statement for the 2019 Annual Meeting
of Stockholders and the Company’s 2018 Annual Report, visit:
http://www.cstproxy.com/invivotherapeutics/2019
FOLD HERE • DO NOT
SEPARATE • INSERT IN ENVELOPE PROVIDED
PROXY THIS PROXY IS
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS INVIVO THERAPEUTICS
HOLDINGS CORP. ANNUAL MEETING OF STOCKHOLDERS – JANUARY 21, 2020
The undersigned hereby appoints Richard Toselli, M.D., Richard
Christopher, and Heather Hamel, and each of them severally, as
proxies of the undersigned, each with full power to appoint his or
her substitute, to represent the undersigned at the 2019 Annual
Meeting of Stockholders (the “Annual Meeting”) of InVivo
Therapeutics Holdings Corp. (the “Company”) to be held at the
WilmerHale Law Offices, 60 State Street, Boston, Massachusetts
02109 on January 21, 2020 at 11:00 a.m., local time, or at any
adjournments or postponements thereof, and to vote thereat all
shares of common stock of the Company held of record by the
undersigned at the close of business on November 22, 2019 in
accordance with the instructions set forth on this proxy card and,
in their discretion, to vote such shares on any other business as
may properly come before the Annual Meeting and on matters incident
to the conduct of the Annual Meeting including the adjournment
thereof. Any proxy heretofore given by the undersigned with respect
to such stock is hereby revoked. THIS PROXY, WHEN PROPERLY
EXECUTED, WILL BE VOTED AS INDICATED. IF NO CONTRARY INDICATION IS
MADE, THIS PROXY WILL BE VOTED “FOR” THE ELECTION OF THE DIRECTOR
NOMINEES, “FOR” PROPOSALS 2, 3, 4, 5, 7 AND FOR “3 YEARS” ON
PROPOSAL 6, AND IN ACCORDANCE WITH THE DISCRETION OF THE PERSONS
NAMED AS PROXIES HEREIN ON ANY OTHER MATTERS THAT MAY PROPERLY COME
BEFORE THE ANNUAL MEETING INCLUDING THE ADJOURNMENT THEREOF.
(Continued, and to be marked, dated and signed, on the other
side)
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