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The 2010
To |
4. | To |
5. | To approve an amendment (in the event it is deemed by the NeoStem Board of Directors to be advisable) to NeoStem's certificate of incorporation to effect a reverse stock split of NeoStem common stock at a ratio within the range of 1:2 to 1:10, as determined by the NeoStem Board of Directors; |
6. | To ratify the appointment of |
7. | To transact such other business as may properly come before the Annual Meeting or any adjournment or postponement thereof. |
By Order of the Board of Directors of NeoStem, Inc. | ||
To |
4. | To |
5. | To approve an amendment (in the event it is deemed by the NeoStem Board of Directors to be advisable) to NeoStem's certificate of incorporation to effect a reverse stock split of NeoStem common stock at a ratio within the range of 1:2 to 1:10, as determined by the NeoStem Board of Directors; |
6. | To ratify the appointment of |
7. | To transact such other business as may properly come before the Annual Meeting or any adjournment or postponement thereof. |
3. |
approval of an amendment |
4. | approval of the issuance of shares of NeoStem common stock to Aspire Capital Fund, LLC pursuant to the terms of the Common Stock Purchase Agreement, dated September 28, 2011, as such agreement may be amended from |
5. | approval of an amendment (in the event it is deemed by the NeoStem Board of Directors to be advisable) to NeoStem's certificate of incorporation to effect a reverse stock split of NeoStem common stock at a ratio within the range of 1:2 to 1:10, as determined by the NeoStem Board of Directors; and |
6. | the ratification of the appointment of |
Ÿ | Delivering a written notice to the Secretary of the Company by any means, including facsimile, bearing a date later than the date of the proxy, stating that the proxy is revoked; |
Ÿ | Signing and delivering a proxy relating to the same shares and bearing a later date prior to the vote at the Annual Meeting; or |
Ÿ | Attending the Annual Meeting and voting in person, although attendance at the meeting will not, by itself, revoke a proxy. Please note, however, that if your shares are held of record by a broker, bank, or other nominee and you wish to vote at the meeting, you must bring to the meeting a letter from the broker, bank, or other nominee confirming your beneficial ownership of the shares. |
Preferred Stock.
Preferred Stock.
On October 30, 2009, we consummated
3. | Approval of an amendment and restatement (the “Amended and Restated 2009 Plan”) of the NeoStem, Inc. 2009 Equity Compensation Plan (the “2009 Plan”) to, among other things, (a) reflect the merger of the NeoStem, Inc. 2009 Non-U.S. Based Equity Compensation Plan (the “2009 Non-U.S. Plan”) with and into the 2009 Plan, and (b) increase by 4,500,000 the aggregate number of shares authorized for issuance under the Amended and Restated 2009 Plan; |
4. | Approval of the issuance of shares of NeoStem common stock to Aspire Capital Fund, LLC pursuant to the terms of the Common Stock Purchase Agreement, dated September 28, 2011, as such agreement may be amended from time to time, in accordance with the stockholder approval requirements of NYSE MKT Company Guide Section 713; |
5. | Approval of an amendment (as determined by the NeoStem Board of Directors, in the event it is deemed by the NeoStem Board of Directors to be advisable) to NeoStem's certificate of incorporation to effect a reverse stock split of NeoStem common stock at a ratio within the range of 1:2 to 1:10; and |
6. | Ratification of the appointment of Grant Thornton LLP as NeoStem's independent registered public accounting firm for the fiscal year ending December 31, 2012. |
(b) | The affirmative vote of a majority of the voting power outstanding as of the Record Date is required for approval of an amendment (as determined by the NeoStem Board of Directors, in the event it is deemed by the NeoStem Board of Directors to be advisable) to NeoStem's certificate of incorporation to effect a reverse stock split of NeoStem common stock at a ratio within the range of 1:2 to 1:10 (Proposal 5). |
(c) | Directors will be elected by plurality vote (Proposal 1). |
3. | approval of an amendment and restatement (the “Amended and Restated 2009 Plan”) of the NeoStem, Inc. 2009 Equity Compensation Plan (the “2009 Plan”) to, among other things, (a) reflect the merger of the NeoStem, Inc. 2009 Non-U.S. Based Equity Compensation Plan (the “2009 Non-U.S. Plan”) with and into the 2009 Plan, and (b) increase by 4,500,000 the aggregate number of shares authorized for issuance under the Amended and Restated 2009 Plan; |
4. | Approval of the issuance of shares of NeoStem common stock to Aspire Capital Fund, LLC pursuant to the terms of the Common Stock Purchase Agreement, dated September 28, 2011, as such agreement may be amended from time to time, in accordance with the stockholder approval requirements of NYSE MKT Company Guide Section 713; |
5. | Approval of an amendment as determined by the NeoStem Board of Directors, (in the event it is deemed by the NeoStem |
6. | Ratification of the appointment of Grant Thornton LLP as NeoStem's independent registered public accounting firm for the fiscal year ending December 31, 2012. |
Our Board of Directors currently consists of seven members. We have a classified Board of Directors. That is, our Board of Directors consists of three separate classes of directors,effective as nearly equal in number as possible. Each class serves a three-year term and until their successors are duly elected and qualified. The classes are elected on a rotating or staggered basis, with each class being elected at the annual meeting of stockholders coinciding with the expiration of that class’s term. Pursuant to the General Corporation Law of the Statedate of Delaware (the “DGCL”), if a board of directors is classified, unless the certificate of incorporation otherwise provides, members of such board of directors may be removedAnnual Meeting.
The classification of our Board of Directors was implemented on October 30, 2009 following the approval of our stockholders. In implementing the classified Board of Directors, our Board assigned members of the Board to three separate classes, each class having initial terms as follows: Class I directors (Drew Bernstein, Eric H.C. Wei and Shi Mingsheng) have an initial term expiring at our 2010 annual meeting of stockholders; Class II directors (Steven S. Myers and Edward C. Geehr, M.D.) have an initial term expiring at our 2011 annual meeting of stockholders; and Class III directors (Robin L. Smith, M.D. and Richard Berman) have an initial term expiring at our 2012 annual meeting of stockholders.
Therefore, in accordance with the implementation of our classified Board of Directors, the terms of Class I directors (Drew Bernstein, Eric H.C. Wei and Shi Mingsheng) expire at the Annual Meeting, and the other directors continue in office. To fill the three Class I seats, our Board of Directors has nominated Drew Bernstein, Eric H.C. Wei and Shi Mingsheng for election as Class I directors at the forthcoming Annual Meeting, to hold office until ourthe next annual meeting of stockholders held in the third year following such election (that is, our annual meeting of stockholders to be held in 2013) and until their successors are duly elected and qualified.
Shares represented by proxies whichqualified, or until their earlier death, retirement, resignation or removal. The seven nominees are returned properly signed will be voted for the Board’s nominees unless the stockholder indicates on the proxy that authorityas follows: Robin L. Smith, M.D., Richard Berman, Steven S. Myers, Drew Bernstein, Eric H.C. Wei, Andrew Pecora, M.D., FACP and Martyn D. Greenacre.
Director Nominees
Name | Age | Director Since | ||
Robin L. Smith, M.D.(1) | 47 | 2006 | ||
Richard Berman | 70 | 2006 | ||
Steven S. Myers | 66 | 2006 | ||
Drew Bernstein | 56 | 2009 | ||
Eric H.C. Wei | 56 | 2009 | ||
Andrew Pecora, M.D., FACP(2) | 55 | 2011 | ||
Martyn D. Greenacre | 70 | 2011 |
Name | Age | Director Since: | Expiration of Term if Elected: | |||
Drew Bernstein | 53 | 2009 | 2013 | |||
Eric H.C. Wei | 53 | 2009 | 2013 | |||
Shi Mingsheng | 58 | 2010 | 2013 |
Name | Age | Director Since: | Expiration of Term: | |||
Robin L. Smith, M.D., MBA | 45 | 2006 | 2012 | |||
Richard Berman | 67 | 2006 | 2012 | |||
Steven S. Myers | 63 | 2006 | 2011 | |||
Edward C. Geehr, M.D. | 60 | 2009 | 2011 |
over $4 billion of M&A transactions. Mr. Berman is a past director of the Stern School of Business of NYU, where he received B.S. and M.B.A. degrees. Mr. Berman also has United States and foreign law degrees from Boston College and The Hague Academy of International Law, respectively. We believe that Mr. Berman's financial and business expertise, including his background in investment banking and mergers and acquisitions, and his extensive and diversified experience as a director in the Companypublic company context, give him the qualifications and skills to serve as director.
All Board members are expected to possess certain personal characteristics necessary to creating a functional Board: high personal and professional ethics, integrity and values; practical wisdom and mature judgment; an inquisitive and objective perspective; professional experience at a policy-making level in business or medicine; time availability for in-person participation at Board and committee meetings; and a commitment to representing the long-term interests of our stockholders. We look for a range of professional backgrounds including senior management operational experience, accounting and finance capabilities, deep industry-related experience, business development leadership, and medical and scientific proficiencies.
Mr. Bernstein received his B.S. degree from the University of Maryland Business School. He is licensed in the State of New York and other states and is a member of the AICPA, the NYSSCPA and the NSA.
Pursuant to the terms of the Merger Agreement, Shi Mingshengsector.
managementsignificant experience in the pharmaceutical industrydesign of clinical trials (Phase 1 to 3), institutional review board practices, conduct of clinical trials, clinical research, and payor relationships both domestically and on a global basis. Dr. Pecora received an M.D. from the University of Medicine and Dentistry of New Jersey, graduating with honors. He went on to complete his medical education in generalinternal medicine at New York Hospital and in hematology and oncology at EryeMemorial Sloan-Kettering Cancer Center, both in particular, give himNew York City. He is board certified in internal medicine, hematology, and oncology. Dr. Pecora's appointment to the qualificationsNeoStem Board of Directors was a term of the Company's merger agreement with PCT which closed in January 2011. The Board of Directors has concluded that Dr. Pecora should continue serving as a director based on his diversified experience in healthcare, including his expertise in clinical trial design and skillsproduct development, and his management experience.
Dr. Robin L. Smith joined usserves on the Audit Committee. Mr. Greenacre has served as Chairman of our AdvisoryLife Mist Technologies, Inc. a privately-held fire suppression equipment company, since 2002. He previously was Chairman of the Board of BMP Sunstone Corporation, which was acquired by Sanofi-Aventis in September 2005February 2011. Mr. Greenacre also served as a director of Cephalon Inc., a biopharmaceutical company that was acquired by Teva Pharmaceutical Industries in October 2011, and effective June 2, 2006, becameOrchestra Therapeutics, an immuno-pharmaceutical company. He currently has the role of Chairman of the Board of Acusphere, Inc., a drug delivery company, and sits on the board of Curis, Inc., a biotechnology company. From 1997 to 2001, Mr. Greenacre served as Chief Executive Officer and Chairmandirector of the Board. Dr. Smith, who receivedDelsys Pharmaceutical Corporation, a medical degree from Yale Universityformulation and drug delivery system company, where he helped raise more than $50 million in 1992equity and a master’s degree in business administration from the Wharton School inpartnership financing and formed three development partnerships with leading pharmaceutical companies. From 1993 to 1997, brings to us extensive experience in medical enterprises and business development. From 2000 to 2003, Dr. SmithMr. Greenacre served as President and Chief Executive Officer of IP2M, a multi-platform media company specializing in healthcare. During her term, the company was selected as one of the ten fastest growing technology companies in Houston. IP2M was sold to a publicly-traded company in February 2003. Previously, from 1998 to 2000, she was Executive Vice President and Chief Medical Officer for HealthHelp,Zynaxis Inc., a National Radiology Managementbiopharmaceutical company, that managed 14 percent of the healthcare dollars paid for by large insurance companies.
Dr. Smith has acted as a senior advisor to, and investor in, both publicly-traded and privately-held companies including, but not limited to, CBH, Phase III Medical, our predecessor, the Madelin Fund, HC Innovations Inc., Navstar Media Holdings, Strike Force, Health Quest, Red Lion Partners and All American Pet, where she played a significant role in restructuring and or growing the companies. Dr. Smith served on the Board of Directors of two privately-held companies, Talon Air and Biomega, and also served on the Chemotherapy Foundation Board of Trustees and The New York Theatre Ballet. She currently serves on the Board of Trustees of the NYU Medical Center Board, is a member of the Board of Directors for the New York University Hospital for Joint Diseases, and serves on the Board of Choose Living. Dr. Smith is the President and serves on the Board of Directors of The Stem for Life Foundation. We believe that Dr. Smith’s expertise in business development and medicine, including her extensive and diversified experience serving in executive and board capacities in medical enterprises and healthcare-based entities, as well as her leadership of the Company over the past four years, give her the qualifications and skills to serve as director.
Richard Berman joined our Board of Directors in November 2006, serves as Chairman of the Compensation Committee and until March 2009 and June 2009, respectively, served as Chairman of the Nominating and Governance Committee and Chairman of the Audit Committee. Mr. Berman continues to serve as a member of the Audit Committee and the Nominating and Governance Committee. Mr. Berman’s business career spans over thirty-five years of venture capital, management and merger and acquisitions experience. Mr. Berman is on the board of directors of five additional public companies: Broadcaster, Inc. (OTC: BCSR.OB), NexMed, Inc. (Nasdaq: NEXM), National Investment Managers, Inc. (Chairman) (OTC: NIVM.OB), Advaxis, Inc. (OTC: ADXS.OB) and Easylink Services International, Inc. (Nasdaq: ESIC). Previously, Mr. Berman worked at Goldman Sachs, and was Senior Vice President of Bankers Trust Company, where he started the M&A and Leveraged Buyout Departments. Mr. Berman helped create the largest battery company in the world by merging Prestolite, General Battery and Exide to form Exide Technologies (Nasdaq: XIDE), helped create what is now Soho (NYC) by developing five buildings, and advised on over $4 billion of M&A transactions. Mr. Berman is a past director of the Stern School of Business of NYU, where he received B.S. and M.B.A. degrees. Mr. Berman also has United States and foreign law degrees from Boston College and The Hague Academy of International Law, respectively. We believe that Mr. Berman’s financial and business expertise, including his background in investment banking and mergers and acquisitions, as well as his extensive and diversified experience as a director in the public company context, give him the qualifications and skills to serve as director.
Mr. Myers joined our Board of Directors in November 2006 and serves on the Compensation Committee, the Audit Committee and the Nominating and Governance Committee. In March 2009, Mr. Myers became Chairman of the Nominating and Governance Committee. Mr. Myers is the founder, and until his retirement in March 2007, was the Chairman and CEO, of SM&A (NasdaqGM:WINS), the world’s leading provider of Competition Management Services. SM&A helps businesses win structured competitive procurements and design successful transitions from proposals to programs. Since 1982, SM&A has managed over 1,000 proposals worth more than $340 billion for its clients. SM&A routinely supports clients such as Boeing, Lockheed Martin, Accenture, Raytheon, Northrop Grumman, Motorola, and other Fortune 500 companies.
Mr. Myers graduated from Stanford University with a B.S. in Mathematics and had a successful career in the aerospace and defense sector supporting DoD and NASA programs before founding SM&A. He has a strong technical background in systems engineering and program management. Mr. Myers is also founder, President and CEO of Dolphin Capital Holdings, Inc, which owns, operates and leases business jet aircraft and does private equity investing in innovative enterprises. A serial entrepreneur, Mr. Myers has spearheaded a number of business innovations in aerospace and defense and in business aviation. He is a highly accomplished aviator. We believe that Mr. Myers’ technical background and diversified entrepreneurial and business expertise, including his having established and managed innovative enterprises (in the areas of proposal development for competitive procurements, aircraft leasing and private equity investment), together with his technical experience in the aerospace and defense sector, give him the qualifications and skills to serve as director.
Dr. Geehr was appointed to our Board of Directors upon the consummation of the Merger in October 2009, at which time Dr. Geehr also was appointed to the Board’s Nominating and Governance Committee. Until 2009, Dr. Geehr served as Executive Vice President of Operations for Abraxis BioScience, a fully integrated biotechnology company developing progressive therapeutics and core technologies for cancer and other clinical illnesses, where he was responsible for global commercial operations. Priora critical acquisition, divesting a non-performing business and negotiating a strategic merger. From 1989 to joining Abraxis1992, Mr. Greenacre was Chairman, Europe, SmithKline Beecham Pharmaceutical Company. He joined SmithKline & French in 2008,1973, where he held positions of increasing responsibility in its European organization. Mr. Greenacre received a B.A. from Harvard College and an MBA from Harvard Business School. The Board of Directors has concluded that Mr. Greenacre should continue serving as a director based on his diversified board and management experience, particularly in the biotechnology field.
Name | Age | Position | ||
Robin L. Smith, M.D. | 47 | Chief Executive Officer and Chairman of the Board | ||
Andrew L. Pecora, M.D., F.A.C.P. | 54 | Chief Medical Officer of NeoStem, Chief Medical Officer of PCT and Chief Scientific Officer of Amorcyte(1) | ||
Robert A. Preti, PhD. | 55 | President and Chief Scientific Officer of PCT(2) | ||
Larry A. May | 62 | Vice President and Chief Financial Officer | ||
Catherine M. Vaczy | 51 | Vice President and General Counsel | ||
Joseph Talamo | 43 | Vice President, Corporate Controller and Chief Accounting Officer | ||
Martin Schmieg | 50 | Vice President, Corporate Development | ||
Madam Zhang Jian | 50 | General Manager, Erye(3) | ||
Shi Mingsheng | 60 | Chairman of the Board, Eyre(4) |
(1) | Pursuant to an employment agreement that became effective on January 19, 2011 and an amendment thereto effective on August 17, 2011, Dr. Pecora serves as Chief Medical Officer of NeoStem and PCT. Prior to our acquisition of PCT, Dr. Pecora had served from 1999 to 2011 as Chairman, Chief Executive Officer and Chief Medical Officer of PCT, and as a member of PCT's Board of Managers. Dr. Pecora serves as Chief Scientific Officer of Amorcyte for no additional consideration. |
(2) | Pursuant to an employment agreement that became effective on January 19, 2011 (the closing date of the PCT Merger) (the “Preti Employment Agreement”), Dr. Preti serves as President of PCT. He currently also serves as Chief Scientific Officer of PCT. Prior to our acquisition of PCT, Dr. Preti had served from 1999 to 2011 as President and Chief Scientific Officer for PCT, and as a member of PCT's Board of Managers. |
(3) | The Company acquired its Erye Interest in the Erye Merger in 2009. The Company has entered into the Equity Purchase Agreement providing for the sale of the Company's Erye Interest. Madam Zhang formerly served as the Company's Vice President of Pharmaceutical Operations from June 2010 to April 2012 and accordingly, she is no longer an executive officer of the Company. |
(4 | ) | The Company acquired its Erye Interest in the Erye Merger in 2009. Mr. Shi, the Chairman of the Board of Erye, was initially appointed to NeoStem's Board of Directors in March 2010 under the terms of the merger agreement governing the Erye Merger. In connection with the pending divestiture of our Erye Interest pursuant to the Equity Purchase Agreement, Mr. Shi is not on the slate for re-election to our Board at the Annual Meeting. As a result, Mr. Shi's term as a NeoStem director will expire at the Annual Meeting. |
See Dr. Smith’s biographical informationGroup Leader in the “Biographical Information — Continuing Directors (Classesdevelopment Marrow Tech's proprietary three-dimensional, matrix-based hematopoietic culture system for
2000 to May 2003, Mr. May served as the Chief Financial Officer of Saronyx, Inc., a company focused on developing productivity tools and secure communication systems for research scientists. From August 2003 to January 2005, Mr. May served as the Chief Financial Officer of NS California. In March 2005, Mr. May was appointed CEO of NS California and in May 2005 he was elected to the Board of Directors of NS California. He received a Bachelor of Science degree in Business Administration & Accounting in 1971 from the University of Missouri.
Dr. Harris
Cardiovascular Sciences Study Section from 1998 – 2002. Dr. Harris served onMartin Schmieg, age 50, serves as the editorial boards of several international peer reviewed medical journals and has authored 120 peer reviewed scientific papers.
Company's Vice President, Corporate Development. Mr. Salerno joined usSchmieg, who serves the Company in August, 2009 and has more thana full-time capacity, brings to the Company over 25 years of experience in business development for health care product and medical technology companies ranging from early-stage privately funded technology ventures to market driven public companies. While originally trained in accounting and finance, Mr. Schmieg's career has also included hands-on management of research and development, regulatory, manufacturing, marketing, sales, customer service, and business development functions. Over the past two years, Mr. Schmieg has worked as an executivea consultant for companies including Besser Consulting, LLC, Beckman Coulter Genomics (a Beckman Coulter company), Cardionet, Inc. (NASDAQ: BEAT), DakDak Photoaging Technologies, Inc. (acquired by Charles River Laboratories, Inc. (NYSE:CRL) in 2002), and entrepreneur in the life sciences industry.Carl Zeiss. From 2008 toMarch 2009 through September 2010, he served as Vice President Strategic Business Developmentof Nuvilex, Inc. (OTCQB: NVLX) which merged with GenomeQuest,Freedom2, Inc. where he served as President and CEO from April 2006 through March 2009. He has also held senior management positions with Isolagen, Inc. (now Fibrocell Science, Inc. (OTC BB: FCSC), Sirna Therapeutics, Inc. (acquired by Merck & Co. (NYSE: MRK) in 2006), Advanced Bionics Corporation (acquired by Sonova Holdings AG (SIX: SOON) in 2009) and Cytometrics, Inc, (acquired by Lekam Medical Limited) where he was responsible for guiding their entry intoalso a co-founder and served on the next-generation DNA sequencing bioinformaticsboard of directors.
Teresa Lepore joined us and began serving
Mr. Duignan was the Senior Vice President of Finance at Advaxis, Inc. (OTCBB: ADXS) from September 2009 until he joined us as our Vice President of Finance in November 2009. Prior to Advaxis, Mr. Duignan was the Chief Financial Officer of Enliven Marketing Technologies Corporation (NASDAQ: ENLV) from 2006 until the company was sold in 2008. Mr. Duignan worked for Enliven from 2002 to 2008, during which time he served as Assistant Controller, Controller, Chief Accounting Officer, and Chief Financial Officer. Prior to Enliven, Mr. Duignan worked at PricewaterhouseCoopers LLP from 1997 to 2001 in their technology group within the audit practice. Mr. Duignan received a B.S. in Accounting from Fairfield University in 1997 and is a Certified Public Accountant.
Ms. Zhang Jian has been the General Manager of Erye since 2003. She was elected to be the Chairwoman and a director of CBH on April 30, 2007.2007, and served to 2009. From the end of 2007 until the consummation of the Erye Merger in 2009, Ms. Zhang Jian was the Chief Financial Officer (CFO) of CBH. Prior to being the General Manager for Erye, she served for more than 5 years as the deputy general manager of Suzhou Number 2 Pharmaceutical Company and more than a year as the deputy general manager of Suzhou Number 4 Pharmaceutical Company after working in various positions in charge of human resources and quality control. Ms. Zhang graduated from Central Television University majoring in electronics and later graduated with a certificate in accounting from Suzhou Adult Education University and a graduate degree in finance and accounting from the School of Finance and Economics of Suzhou University. Ms. Zhang has extensive background and experience in the pharmaceuticals industry having worked in various managerial positions and various aspects of the industry. She is an expert in managing a growth company, havinghas turned Erye into a successful operation after taking it over from the PRC government with Mr. Shi Mingsheng and others in 2003. FromThe Company has entered into a definitive Equity Purchase Agreement providing for the end of 2007 until the consummationsale of the Merger, Ms. Zhang JianCompany's Erye Interest, which is expected to close by fourth quarter 2012, subject to the satisfaction of certain closing conditions including the receipt of requisite PRC regulatory approvals.
Peter Sun has been General ManagerDirectors on March 11, 2010 pursuant to our 2009 acquisition of NeoStem (China), Inc. since 2009.the Erye Interest. In connection with the pending divestiture of our Erye Interest pursuant to the Equity Purchase Agreement, Mr. Sun bringsShi is not on the slate for re-election to us nearly twenty years of business experience in pharmaceutical, biotech and medical sectors. He is a licensed physician specializing in endocrinology. Previously, Mr. Sun was Vice President of Operations at Sun Biomedical Laboratories, a U.S. based medical device manufacturing and marketing company that is a leader in rapid test devices using saliva samples. He was also Chief Executive Officer and President at Panagin Pharmaceuticals, a biotechnology research and development and marketing company based in Vancouver, Canada. It is focused on saponin-based small molecules, including their pharmaceuticals clinical, development and marketing. Mr. Sun has a Master’s degree in Biotechnology and Pharmacology from the University of British Columbia.
Dr. Marasco, 56, is an Associate Professor in the Department of Cancer Immunology & AIDS at the Dana-Farber Cancer InstituteAnnual Meeting, and Associate Professoras a result Mr. Shi's term as a NeoStem director will expire at the Annual Meeting. Mr. Shi was previously a director of Medicine at Harvard Medical School. In November 2006 Dr. Marasco relinquished his position as Founding Director withCBH (from which NeoStem acquired its interest in Erye), from 2007 to focus his efforts on heading and expanding NeoStem’s new Scientific and Medical Advisory Boards. This transition became effective in January 2007. In addition, Dr. Marasco will assist our initiatives of establishing partnerships with leading academic institutions focused on stem cell therapies and translational research and will help us source stem cell-related intellectual property. Dr. Marasco continues to advise us on identifying and engaging leading physicians and scientists who are innovators in using adult stem cell treatments in the fields of cardiology, macular degeneration, diabetes, wound and burn healing, skeletal repair, and anti-aging/regenerative medicine.
Dr. Marasco is a licensed physician-scientist with training in internal medicine and specialty training in infectious diseases. His clinical practice sub-specialty is in the treatment of immunocompromised (cancer, bone marrow and solid organ transplant) patients. Dr. Marasco’s research laboratory is primarily focused on the areas of therapeutic human monoclonal antibody development. These studies include developing passive immunotherapy to treat both global and emerging infectious diseases including SARS, West Nile Virus and related Denge virus infections. Their most recent and highly touted discovery was in the development of the “universal” influenza vaccines that are active against seasonal influenza, avian “bird” flu and the 2009 pandemic H1N1 influenza strains. His laboratory is also recognized internationally for its pioneering studies in the field of gene therapy, particularly for the prevention and treatment of HIV-1/AIDS. Dr. Marasco2009. Currently, Mr. Shi is also the Scientific Directorchairman of Suzhou Erye Economy and Trading Co. Ltd. (“EET”), which entity owns the remaining 49% ownership interest in Erye and is a party to the Equity Purchase Agreement. Prior to these affiliations, Mr. Shi served for five years as the assistant director of Suzhou No. 4 Pharmaceutical Limited Company, and for seven years as the deputy director of Suzhou No. 4 Pharmaceutical Limited Company, and for five years as the factory director of Suzhou No. 2 Pharmaceutical Limited Company, the predecessor company of Erye. Mr. Shi has a bachelor's degree in Economics & Management from the Party School of the National Foundation for Cancer Research Center for Therapeutic Antibody Engineering (the “Center”). The CenterCPC. Mr. Shi holds a professional title which is located at the Dana-Farber Cancer Institute and is working with investigators globally to develop new human monoclonal antibody drugs for the treatment of human cancers.
Cai Jianqian, 67, serves as our PRC Scientific Advisor pursuant to our Consulting Agreement with Shandong Life Science and Technology Research Institute, of which Ms. Cai is President. Ms. Cai Jianqian graduated from the Shandong University of Traditional Chinese Medicine and has held the positions of Chief of the Administration of Chinese Medicine of Shandong Province, standing Council Member of the China Association of Chinese Medicine, Chairman of the Medicated Diet Association, Member of the lecturer team on Chinese acupuncture and moxibustion, and Corporate Representative of the Shandong Provincial Association of Chinese Medicine. Ms. Cai held the governmental office responsible for the administration of the medical industry in the PRC for many years, was responsible for creating the development strategies and long-term and middle-term planning of the industry, and is considered by many to be instrumental in the continual improvement of the standards of medicine, education and research in the Chinese medicine industry. She was appointed in 1983 to head Chinese Medical Affairs of Shandong Province, and during her tenure the number of Chinese medicine hospitals in Shandong Province increased from eight to 150. In addition to being responsible for having established the Shandong Academy of Chinese Medicine and the Shandong Academy of Acupuncture and Moxibustion, she has been consistently praised by the Ministry of Health and the State Administration of Traditional Chinese Medicine for having made Shandong province one of the top ranked provinces in the PRC for Chinese medicine advancement.
Ms. Cai Jianqian is a Council member of the American General Medical Association as well as an editorial member ofThe Journal of American General Medicine. She is responsible for having established The Chinese Traditional Medicine Center in Chicago, two Chinese medicine hospitals in South Africa, twelve Chinese medicine outpatient clinics in Switzerland and the Chinese medicine rehabilitation centers in Poland and Russia.
Ms. Cai Jianqian has been extensively published in her field and is well regarded for her work in the research and development of new drugs, including the clinical study of complex diseases and acute illness, including cancer. She has been awarded an International MD and is certified by the International Open Traditional Medicine University & Institute of Medical Science of the United Nations, and the International Association of Traditional Medicine in Colombo in 1999.
Ÿ | The Board's review and approval of our business plans and budget (prepared and presented to the Board by the Chief Executive Officer and other management), including the projected opportunities and challenges facing our business; |
Ÿ | At least quarterly review of our business developments, business plan implementation and financial results; |
Ÿ | Our Audit Committee's oversight of our internal controls over financial reporting and its discussions with management and the independent accountants regarding the quality and adequacy of our internal controls and financial reporting; and |
Ÿ | Our Compensation Committee's review and recommendations to the Board regarding our executive officer compensation and its relationship to our business plans. |
The Audit Committee has a charter that requires the committee to oversee our accounting and financial reporting process, our system of internal controls regarding finance, accounting, legal compliance and ethics, and the audits of our financial statements, a current copy of which charter is available to stockholders on our website,www.neostem.com. The primary duties of the Audit Committee consist of, among other things:
Ÿ | serving as an independent and objective party to monitor our financial reporting process, internal control system and disclosure control system; |
Ÿ | reviewing and appraising the audit efforts of our independent accountants; |
Ÿ | assuming direct responsibility for the appointment, compensation, retention and oversight of the work of the outside auditors and for the resolution of disputes between the outside auditors and our management regarding financial reporting issues; |
Ÿ | providing an open avenue of communication among the independent accountants, financial and senior management and the Board; and |
Ÿ | reviewing and approving all related party transactions. |
The Compensation Committee oversees the determination of all matters relating to employee compensation and benefits and specifically reviews and approves salaries, bonuses and equity-based compensation for our executive officers.
Ÿ | evaluate the performance of the Chief Executive Officer in light of our goals and objectives and determine the Chief Executive Officer's compensation based on this evaluation and such other factors as the Committee shall deem appropriate; |
Ÿ | approve all salary, bonus, and long-term incentive awards for executive officers; |
Ÿ | approve the aggregate amounts and methodology for determination of all salary, bonus, and long-term incentive awards for all employees other than executive officers; |
Ÿ | review and recommend equity-based compensation plans to the full Board of Directors and approve all grants and awards thereunder; |
Ÿ | review and approve changes to our equity-based compensation plans other than those changes that require stockholder approval under the plans, the requirements of the NYSE MKT or any exchange on which our securities may be listed and/or any applicable law; |
Ÿ | review and recommend to the full Board changes to our equity-based compensation plans that require stockholder approval under the plans, the requirements of the NYSE MKT or any exchange on which our securities may be listed and/or any applicable law; |
Ÿ | review and approve changes in our retirement, health, welfare and other benefit programs that result in a material change in costs or the benefit levels provided; |
Ÿ | administer our equity-based compensation plans; and |
Ÿ | approve, as required by applicable law, the annual Committee report on executive compensation (if required) for inclusion in our proxy statement. |
The Compensation Committee may form and delegate its authority to subcommittees as appropriate. Additionally, the Chief Executive Officer may make recommendations to the Compensation Committee relating to executive and director compensation.
ŸŸ | should possess the highest personal and professional standards of integrity and ethical values; |
Ÿ | must be committed to promoting and enhancing the long term value of our Company for our stockholders; |
Ÿ | should not have any interests that would materially impair his or her ability to (i) exercise independent judgment or (ii) otherwise discharge the fiduciary duties owed as a director to our Company and our stockholders; |
Ÿ | must have demonstrated achievement in one of more fields of business, professional, governmental, community, scientific or educational endeavor, and possess mature and objective business judgment and expertise; |
Ÿ | must have a general appreciation regarding major issues facing public companies of a size and operational scope similar to ours; |
Ÿ | must have adequate time to devote to the Board of Directors and its committees; and |
Ÿ | is expected to have sound judgment, derived from management or policy-making experience that demonstrates an ability to function effectively in an oversight role. |
Given the expansion of our Company’s business into the People’s Republic of China, and recognizing that our business efforts extend beyond the borders of the United States, one of our directors (Mr. Shi) is a citizen of the People’s Republic of China. We are currently seeking at least one additional Board member from China.
candidate(s), those who appear best suited to meet our needs may be invited to participate in a series of interviews, which are used as a further means of evaluating potential candidates. On the basis of information learned during this process, the Board of Directors will determine which nominee(s) to include in the slate of candidates that the Board of Directors recommends for election at each annual meeting of our stockholders.
Meeting) of the NeoStem, Inc. 2012 Employee Stock Purchase Plan (the “2012 Employee Stock Purchase Plan”). If approved by stockholders, the 2012 Employee Stock Purchase Plan will be effective on January 1, 2013.
Plan Category | Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) | Weighted-average exercise price of outstanding options, warrants and rights (b) | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c) | |||||||
Equity compensation plans approved by security holders (1) | 17,143,505 | $ | 1.71 | 10,425,422 | ||||||
Equity compensation plans not approved by security holders (2) | 1,708,000 | $ | 1.71 | — | ||||||
Total | 18,851,505 | $ | 1.71 | 10,425,422 |
(1) | In the above table, the equity compensation plans approved by stockholders include the NeoStem, Inc. 2003 Equity Participation Plan (the “2003 Plan”), the NeoStem, Inc. 2009 Equity Compensation Plan (the “2009 Plan”) and the 2009 Non-U.S. Based Equity Compensation Plan (the “2009 Non-U.S. Plan”). These plans were NeoStem's only equity compensation plans approved by security holders in existence as of December 31, 2011. The above table does not give effect to (i) the adoption of the 2012 Employee Stock Purchase Plan proposed by this Proposal 2 or (ii) the increase by 4,500,000 in the aggregate number of shares covered by the 2009 Plan and the 2009 Non-U.S. Plan in connection with the amendment and restatement of such plans into a single Amended and Restated 2009 as proposed by Proposal 3. |
(2) | Consists of individual grants of warrants to seventeen service providers to the Company, no one of which is individually material. |
▪ | 5,700,000 shares of our Common Stock reserved for issuance under the 2009 Non-U.S. Plan that will be added to the number of reserved shares under the 2009 Plan as a result of the merger of the 2009 Non-U.S. Plan with the 2009 Plan (as of the effective date of the merger, 5,700,000 shares of our Common Stock were authorized for issuance under the 2009 Non-U.S. Plan of which 885,000 had been granted as stock awards, 1,345,000 are subject to outstanding option awards and 3,470,000 remain available for issuance). Outstanding options and awards under the 2009 Non-U.S. Plan as of the date of the merger of the 2009 Non-U.S. Plan with and into the 2009 Plan remain outstanding immediately following the merger, but will be subject to the terms of the Amended and Restated 2009 Plan; and |
▪ | 4,500,000 additional shares of our Common Stock. |
▪ | The Amended and Restated 2009 Plan uses the term “Change in Control” while the 2009 Plan and the 2009 Non-U.S. Plan each use the term “Corporate Transaction Event”, each defined as follows: |
▪ | Effects of a change in control: |
In April 2009, the NeoStem Board of Directors adoptedAmending and Restating the 2009 Plan subject to stockholder approval, which approval was obtained in May 2009. On July 12, 2009, our Board of Directors adopted an amendment toand Merging the 2009 Non-U.S. Plan to increaseWith and Into the number of shares of Common Stock authorized for issuance thereunder from 3,800,000 shares to 9,750,000 shares, and stockholder approval for the increase was obtained on October 29, 2009 at a special meeting of the Company’s stockholders (the “Special Meeting”).
Plan
The
The 9,750,000 shares currently authorized for issuance under the 2009 Planwould represent 22.2%approximately
(as proposed by this Proposal 3)
Proxy Statement.
No option may be exercisable for more than ten years (five years in the case of an incentive option granted to a ten-percent stockholder) from the date of grant. Options granted under the Amended and Restated 2009 Plan will be exercisable at such time or times as the Compensation Committee prescribes at the time of grant. No employee may receive incentive stock options that first become exercisable in any calendar year in an amount exceeding $100,000.
recipient. Prior to the delivery of shares of our Common Stock with respect to an award of restricted stock units, the recipient shall have no rights as a shareholder of NeoStem.
Amendment, Termination. Our Board of Directors may at any time amend the Amended and Restated 2009 Plan for the purpose of satisfying the requirements of the Code, or other applicable law or regulation or for any other legal purpose, provided that, without the consent of our stockholders, our Board of Directors may not (a) increase the number of shares of our Common Stock available under the Amended and Restated 2009 Plan, (b) change the group of individuals eligible to receive options, stock appreciation rights and/or other plan awards, or (c) extend the term of the Amended and Restated 2009 Plan.
As noted above, the exercise of an incentive stock option could subject an optionee to the alternative minimum tax. The application of the alternative minimum tax to any particular optionee depends upon the particular facts and circumstances which exist with respect to the optionee in the year of exercise. However, as a general rule, the amount by which the fair market value of our Common Stock on the date of exercise of an option exceeds the exercise price of the option will constitute an item of “adjustment” for purposes of determining the alternative minimum taxable income on which the alternative tax may be imposed. As such, this item will enter into the tax base on which the alternative minimum tax is computed, and may therefore cause the alternative minimum tax to become applicable in any given year.
Name and Position | Dollar Value ($) | Number of Units | ||
Andrew L. Pecora, M.D., FACP | (1) | (1) | ||
Chief Medical Officer and Director | ||||
Executive Group | (1) | (1) | ||
Non-Executive Director Group | (2) | (2) | ||
Non-Executive Officer Employee Group | $189,000 (3) | 300,000 shares underlying option grant (3) |
Name or Category | Number of Shares Subject to Stock Option Awards | Number of Shares Granted as Stock Awards | ||||||
Named Executive Officers: | ||||||||
Robin L. Smith, M.D. Chief Executive Officer | 1,779,678 | 700,000 | ||||||
Mark Weinreb President through October 2, 2009 | 100,000 | 0 | ||||||
Catherine M. Vaczy Vice President and General Counsel | 528,955 | 175,000 | ||||||
Larry A. May Vice President and Chief Financial Officer | 191,476 | 0 | ||||||
All current Executive Officers as a group (including the Named Executive Officers identified above) | 3,590,109 | 881,250 | ||||||
Non-Executive Directors as a Group | 1,450,755 | 205,000 | ||||||
Nominees for election as Directors: | ||||||||
Drew Bernstein | 400,000 | 0 | ||||||
Eric H. C. Wei | 150,000 | 0 | ||||||
Shi Mingsheng | 0 | 0 | ||||||
All employees, including all current officers who are not executive officers, as a group | 901,474* | 105,000 |
Name or Category | Number of Shares Subject to Stock Option Awards | Number of Shares Granted as Stock Awards | ||||
Named Executive Officers: | ||||||
Robin L. Smith, MD* | 5,172,305 | 1,336,870 | ||||
Chief Executive Officer | ||||||
Andrew Pecora, M.D., FACP* | 1,215,000 | 16,014 | ||||
Chief Medical Officer and Director | ||||||
Robert Preti | 731,400 | 12,465 | ||||
President and Chief Scientific Officer of PCT | ||||||
All current Executive Officers as a group | 10,267,883 | 1,572,518 | ||||
All current Directors who are not Executive Officers as a group | 2,289,144 | 1,021,224 | ||||
Director nominees: | ||||||
Richard Berman | 313,387 | 185,306 | ||||
Steven S. Myers | 313,387 | 390,306 | ||||
Drew Bernstein | 588,685 | — | ||||
Eric H.C. Wei | 150,000 | 135,306 | ||||
Martyn D. Greenacre | — | 135,306 | ||||
All Employees, including all current officers who are not Executive Officers, as a group | 4,126,962 | — |
The following table gives information relevant to securities issuable pursuant to our equity compensation plans as__________
Plan Category | (a) Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights | (b) Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights | (c) Number of Securities Remaining Available For Future Issuance Under Equity Compensation Plan (Excluding Securities Reflected In Column (a)) | |||||||||
Equity Compensation Plans Approved by Stockholders | 10,215,574 | $ | 1.94 | 3,727,319 | ||||||||
Equity Compensation Plans Not Approved by Stockholders | 0 | 0 | 0 | |||||||||
TOTAL | 10,215,574 | $ | 1.94 | 3,727,319 |
In the above table, the equity compensation plans approved by stockholders include the NeoStem, Inc. 2003 Equity Participation Plan (the “2003 Plan”), the 2009 Plan and the NeoStem, Inc. 2009 Non-U.S. Based Equity Compensation Plan (the “2009 Non-U.S. Plan”). These plans were our only equity compensation plans in existenceInformation as of April 13, 2010. The above table does not give effect to the plan amendments proposed by this Proposal 2 or Proposal 3 (discussed below).
The affirmative vote of a majority of the votes cast in person or by proxy is required to approve Proposal 2.
At the Annual Meeting, you are being asked to approve an amendment to the NeoStem, Inc. 2009 Non-U.S. Based Equity Compensation Plan (the “2009 Non-U.S. Plan”) in order to increase the number of shares of Common Stock available for issuance thereunder by 4,000,000 shares, from 4,700,000 shares to 8,700,000 shares. As of April 13, 2010, warrants to purchase 1,650,000 shares of Common Stock were outstanding under the 2009 Non-U.S. Plan, and 875,000 shares had been granted as stock awards under the 2009 Non-U.S. Plan. Accordingly, 2,175,000 shares of Common Stock were available for issuance under the 2009 Non-U.S. Plan (of which an aggregate of approximately 890,000 warrants to purchase shares are expected to be issued in the near term). Approval of the amendment to the 2009 Non-U.S. Plan is intended to ensure that our Company can continue to provide an incentive to our employees, directors and consultants who are providing services to our Company outside the United States by enabling them to share in our future growth. If approved by the stockholders, all of the additional shares will be available for grant as either non-qualified stock options or incentive stock options within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”).
On July 12, 2009, our Board of Directors adopted the 2009 Non-U.S. Plan, subject to the approval of our stockholders. On October 29, 2009, the stockholders of our Company duly adopted the 2009 Non-U.S. Plan at the Special Meeting. Persons eligible to receive restricted and unrestricted stock awards, warrants, stock appreciation rights or other awards under the 2009 Non-U.S. Plan are those service providers to our Company and its subsidiaries and affiliates providing services outside of the United States, including employees and consultants of our Company and its subsidiaries and affiliates, who, in the opinion of the Compensation Committee, are in a position to contribute to our success.
The general purpose of the 2009 Non-U.S. Plan is to provide an incentive to our employees and consultants who are providing services to NeoStem outside the United States by enabling them to share in the future growth of our business. The adoption of this plan was motivated by our then-impending acquisition of CBH, and as a result of the Merger, a majority interest in Suzhou Erye Pharmaceuticals Company, Ltd (“Erye”), a Sino foreign joint venture organized under the laws of the People’s Republic of China, as well as our other expansion plans into China. As a result, our Company will benefit from the services of a number of individuals providing services to our Company or to one of our subsidiaries outside of the United States and in particular in the People’s Republic of China. As with U.S.-based employees, the Board of Directors believes that the granting of warrants, restricted stock awards, unrestricted stock awards and similar kinds of equity-based compensation to our employees and consultants who are providing services to our Company outside the United States promotes continuity of management and increases incentive and personal interest in the welfare of our Company by those who are primarily responsible for shaping and carrying out our long range plans and securing our growth and financial success.
The 2009 Non-U.S. Plan as adopted by our Board of Directors and approved by the stockholders currently authorizes for issuance a maximum of only 4,700,000 shares. Following the consummation of the Merger with CBH, our Company has become a larger company with additional employees, consultants and directors. Our Company intends to continue to use equity awards as a key component of its compensation program.
In the viewpoint of our Board of Directors, the size of the post-Merger Company renders it advisable that the number of shares authorized for issuance under the 2009 Non-U.S. Plan be increased from 4,700,000 shares to 8,700,000 shares. With a larger pool of issuable shares to draw upon, the plan administrator will be in a better position to adequately (i) attract and retain employees and consultants who are able to provide services outside of the United States and are in a position to make significant contributions to our success,
(ii) reward our overseas employees and consultants for these contributions, and (iii) encourage employees and consultants providing services overseas to take into account our Company’s long-term interests through ownership of its shares. In so increasing the shares authorized for issuance under the 2009 Non-U.S. Plan, the ultimate objectives of the 2009 Non-U.S. Plan will be better served.
The 4,700,000 shares currently authorized for issuance under the 2009 Non-U.S. Plan represent 10.7% of our outstanding shares of Common Stock as of the record date. If the 2009 Non-U.S. Plan is amended pursuant to this Proposal 3, the 8,700,000 shares authorized for issuance under the 2009 Non-U.S. Plan would represent 19.8% of our outstanding shares of Common Stock as of the record date.
The following description of the principal terms of the 2009 Non-U.S. Plan is a summary and is qualified in its entirety by reference to the full text of the 2009 Non-U.S. Plan, as filed with the SEC asAnnex G to our Pre-Effective Amendment No. 4 to Registrations Statement on Form S-4/A, File No. 333-160578. The copy of the 2009 Non-U.S. Plan attached to such Registration Statement asAnnex G is the version of the 2009 Non-U.S. Plan currently in effect, and as such, it does not give effect to the amendment to the 2009 Non-U.S. Plan that is presented for stockholder consideration by this Proposal 3 and set forth inExhibit A to this proxy statement.
Administration. The 2009 Non-U.S. Plan is administered by the Compensation Committee of our Board of Directors. The Compensation Committee may grant warrants to purchase shares of Common Stock, stock appreciation rights and restricted stock units payable in shares of Common Stock, as well as restricted or unrestricted shares of Common Stock. The Compensation Committee also has broad authority to determine the terms and conditions of each warrant or other kind of equity award, to adopt, amend and rescind rules and regulations for the administration of the 2009 Non-U.S. Plan and to amend or modify outstanding awards of warrants, restricted stock, stock purchase rights or other equity awards authorized under the 2009 Non-U.S. Plan (including the repricing of either individual awards or all of the awards outstanding under the 2009 Non-U.S. Plan). Our Board of Directors may delegate authority to the chief executive officer and/or other executive officers to grant warrants to employees providing services outside the United States (other than themselves), subject to guidelines established by our Board of Directors and consistent with the 2009 Non-U.S. Plan. No warrants, stock purchase rights or awards may be made under the 2009 Non-U.S. Plan on or after July 12, 2019, but the 2009 Non-U.S. Plan will continue thereafter while previously granted warrants, stock appreciation rights or awards remain subject to the 2009 Non-U.S. Plan.
Eligibility. Persons eligible to receive warrants, stock appreciation rights or other awards under the 2009 Non-U.S. Plan are those service providers to our Company and its subsidiaries and affiliates providing services outside of the United States, including employees and consultants of our Company and its subsidiaries and affiliates, who, in the opinion of the Compensation Committee, are in a position to contribute to our success.
Shares Subject to the 2009 Non-U.S. Plan. The aggregate number of shares of Common Stock available for issuance in connection with warrants and awards granted under the 2009 Non-U.S. Plan is 4,700,000 (or 8,700,000 shares, in the event this Proposal 3 to amend the 2009 Non-U.S. Plan is approved by the stockholders), subject to customary adjustments for stock splits, stock dividends or similar transactions. If any warrant or stock appreciation right granted under the 2009 Non-U.S. Plan terminates without having been exercised in full or if any award is forfeited, the number of shares of Common Stock as to which such warrant or award was forfeited will be available for future grants under the 2009 Non-U.S. Plan.
Terms and Conditions of Warrants. The Compensation Committee will determine the exercise price of warrants granted under the 2009 Non-U.S. Plan, provided that the exercise price is equal to or greater than the fair market value of the Common Stock on the date of grant.
If on the date of grant the Common Stock is listed on a stock exchange or is quoted on the automated quotation system of Nasdaq, the fair market value shall generally be the closing sale price on the date of grant (or, if no trades were made on the date of grant, for the last trading day before the date of grant). If no such prices are available, the fair market value shall be determined in good faith by the Compensation Committee based on the reasonable application of a reasonable valuation method. On April 28, 2010, the closing sale price of a share of Common Stock on NYSE Amex was $1.99.
No warrant issued to an employee may be exercisable for more than ten years from the date of grant and no warrant issued to a consultant may be exercisable for more than five years from the date of grant. Warrants granted under the 2009 Non-U.S. Plan will be exercisable at such time or times as the Compensation Committee prescribes at the time of grant.
Generally, the exercise price must be denominated in United States dollars and may be paid (a) in cash or by certified check, bank draft or money order, (b) through delivery of shares of Common Stock having a fair market value equal to the purchase price, or (c) a combination of these methods. The Compensation Committee is also authorized to establish a cashless exercise program and to permit the exercise price (or tax withholding obligations) to be satisfied by reducing from the shares otherwise issuable upon exercise a number of shares having a fair market value equal to the exercise price.
Warrants granted under the 2009 Non-U.S. Plan may be granted with a “reload” feature under which a warrantee will be granted a new warrant for a number of shares that is equal to the number of shares applied by the warrantee to satisfy the exercise price or tax withholdings of a previous warrant grant.
No warrant may be transferred other than by will or by the laws of descent and distribution, and during a recipient’s lifetime a warrant may be exercised only by the recipient. However, the Compensation Committee may permit the holder of a warrant or stock appreciation right to transfer the warrant or right to immediate family members or a family trust for estate planning purposes. Unless otherwise provided by the Compensation Committee, warrants that are exercisable at the time of a recipient’s termination of service with our Company will continue to be exercisable for 90 days, unless the warrantee terminates his or her service with our Company due to death or disability, in which case the warrant will continue to be exercisable for one year, or upon a voluntary termination or for cause, in which case the warrant will cease to be exercisable upon termination.
Stock Appreciation Rights. A stock appreciation right may be granted by the Compensation Committee either alone, or in tandem with, other warrants or awards under the 2009 Non-U.S. Plan. A stock appreciation right will relate to a number of shares of Common Stock as the Compensation Committee determines at the time of grant. Each stock appreciation right will have an exercise period determined by the Compensation Committee not to exceed ten years from the date of grant. Upon exercise of a stock appreciation right, the holder will receive a number of shares of Common Stock equal to (i) the number of shares for which the stock appreciation right is exercised times the appreciation in the fair market value of a share of Common Stock between the date the stock appreciation right was granted and its date of exercise; divided by (ii) the fair market value of a share of Common Stock on the date that the stock appreciation right is exercised. The Compensation Committee will determine the extent to which a holder of a stock appreciation right may exercise the right following termination of service with our Company.
Terms and Conditions of Stock Awards. The Compensation Committee may also grant a restricted or unrestricted stock award and/or a restricted stock unit award to any eligible employee or consultant. Under a restricted stock award, shares of common stock that are the subject of the award are generally subject to forfeiture to the extent that the recipient terminates service with our Company prior to the award having vested or if the performance goals established by the Compensation Committee as a condition of vesting are not achieved. Shares of Common Stock subject to a restricted stock award cannot be sold, transferred, assigned, pledged or otherwise encumbered or disposed of by the recipient of the award unless and until the applicable restrictions lapse. Unless otherwise determined by the Compensation Committee, holders of restricted shares will have the right to vote such shares and to receive any cash dividends with respect thereto during the restriction period. Any stock dividends will be subject to the same restrictions as the underlying shares of restricted stock.
Under a restricted stock unit award, restricted stock units that are the subject of the award are generally subject to forfeiture to the extent that the recipient terminates service with us prior to the award having vested or if the performance goals established by the Compensation Committee as a condition of vesting are not achieved. To the extent that the award of restricted stock units vests, the recipient shall become entitled to receive a number of shares of Common Stock equal to the number of restricted stock units that became vested. Restricted stock units cannot be sold, transferred, assigned, pledged or otherwise encumbered or disposed of by the recipient of the award and during a recipient’s lifetime may be exercised only by the recipient. Prior to the delivery of shares of Common Stock with respect to an award of restricted stock units, the recipient shall have no rights as a stockholder of our Company.
Unrestricted stock awards are grants of shares of Common Stock that are not subject to forfeiture.
To the extent that the Compensation Committee grants stock awards that are subject to the satisfaction of performance goals specified by the Compensation Committee (“performance awards”), the Compensation Committee shall establish the specified levels of performance goals. Performance goals may be weighted for different factors and measures. The Compensation Committee will have discretion to make adjustments to a performance award in certain circumstances, such as when a person is promoted into a position of eligibility for a performance award, is transferred between eligible positions with different performance goals, terminates employment and is subsequently rehired, takes a leave of absence, or other circumstances deemed appropriate by the Compensation Committee. The Compensation Committee may also increase or decrease a stock award to any individual. The Compensation Committee will certify the degree of attainment of performance goals after the end of each year.
Effect of Certain Corporate Transactions. In the event that our Company merges or consolidates with another corporation, or if our Company liquidates or sells substantially all of its assets, or if a person or entity or a group of persons and/or entities acting in concert becomes the beneficial owner of more than 50% of the combined voting power of our Company’s outstanding securities, then each holder of a warrant or stock appreciation right will be entitled, upon exercise of the warrant or stock appreciation right, to receive, in lieu of shares of Common Stock, the securities or other property to which the holder would have been entitled if the warrant or stock appreciation right had been exercised immediately prior to such event. The Board may waive any restrictions applicable to warrants or stock appreciation rights so that they may be exercised prior to such an event. In connection with such an event, the successor corporation may assume other awards granted under the 2009 Non-U.S. Plan. However, if the successor corporation does not assume the awards, then all vesting periods and other conditions applicable to the awards will be deemed to have been satisfied as a result of such an event. Our Board of Directors may also treat all vesting periods and other conditions applicable to the awards as having been satisfied as a result of such an event regardless of whether or not the awards would have been assumed or continued by the successor corporation. Our Merger with CBH did not constitute a corporate transaction for this purpose.
Amendment, Termination. Our Board may at any time amend the 2009 Non-U.S. Plan. However, any amendment requiring stockholder approval under applicable law will not be effected without the consent of the Company’s stockholders. The 2009 Non-U.S. Plan specifically contemplates that our Board of Directors will adopt amendments as necessary so that the grant of awards under the plan to grantees of another foreign jurisdiction will comply will the applicable laws and regulations of the jurisdiction. Specifically, if it is determined that the 2009 Non-U.S. Plan is subject to Circular 78 (as hereinafter defined), or any implementation measures or registration guidance relating to Circular 78 or other similar rules are promulgated in the future, which clearly indicates that the 2009 Non-U.S. Plan is subject to registration under Circular 78 or other corresponding rules, our Board of Directors will register the 2009 Non-U.S. Plan with the State Administration of Foreign Exchange for the People’s Republic of China (“SAFE”) in accordance with Circular 78 or other corresponding rules and will amend the 2009 Non-U.S. Plan as necessary in order to comply with the rules and regulations set forth in Circular 78 or other corresponding rules.
Because only service providers of our Company and our subsidiaries and affiliates that perform services outside of the United States are eligible for awards under the 2009 Non-U.S. Plan, there are no United States federal income tax consequences of warrants and other awards under the 2009 Non-U.S. Plan.
The grantees, however, are subject to the income tax consequences with respect to warrants and other awards under the 2009 Non-U.S. Plan in the foreign jurisdiction in which the grantees provide services to our Company or to one of our subsidiaries or affiliates.
Following is a summary of the tax consequences of warrant and other grants under the 2009 Non-U.S. Plan under Individual Income Tax Law of the People’s Republic of China:
Service providers granted warrants under the 2009 Non-U.S. Plan are subject to taxation under theLaws of the People’s Republic of China on Individual Income Tax, which was promulgated by the National People’s Congress on September 10, 1980 and became effective on the same day, which was amended on October 31, 1983, August 30, 1999, October 27, 2005, June 29, 2007 and December 29, 2007, respectively; and theImplementation Measures on the Laws of the People’s Republic of China on Individual Income Tax, which was promulgated by the State Council on January 28, 1994 and became effective on the same day, which was amended on December 19, 2005 and February 18, 2008, respectively. Further, The Ministry of Finance and/or the State Administration of Taxation promulgated a series of regulations and notices specifically addressing the taxation of warrants, including but not limited to theCircular on Issues concerning the Collection of Individual Income Tax on Income Derived from Individual Stock Options promulgated on March 28, 2005 and effective on July 1, 2005, theSupplementary Notice regarding Issues relating to Individual Income Tax onIncome Derived from Individual Stock Options promulgated on September 30, 2006 and became effective on the same day, and theNotice regarding Issues relating to Individual Income Tax relating to Stock Incentive promulgated on August 24, 2009 and effective on the same day (collectively, “Relevant Tax Rules”).
The subsidiaries and affiliates of our Company in the PRC are required by Relevant Tax Rules to submit relevant documents and materials relating to the 2009 Non-U.S. Plan to their competent tax administration authorities for filing.
Under Relevant Tax Rules, except as otherwise required, service providers are generally not taxed on the grant of a warrant. The service provider is taxed on the exercise of the warrant on the difference between the warrant’s exercise price and the fair market value of the company’s common stock as his/her “wages or salaries”. If the service provider sells the warrant before exercising it, he/she shall be taxed on the net income he/she receives. When calculating the taxes to be levied, the taxable income, i.e., the proceeds received on exercise, could be divided by the number of months the service provider actually works for his/her employer, with the maximum of 12 months; and the taxes that shall be levied in each month are calculated at a progressive tax rate ranging from 5% to 45% of the taxable income. The tax rate applicable to the proceeds received on exercise of the warranties may be calculated independently from the service providers’ other wages. However, if (i) the service provider is not the employee of our Company, or the first tier or the second tier subsidiary of our Company in which our Company holds at least 30% of all the equity interests; or (ii) the subsidiaries and affiliates of our Company in the PRC fail to make the required filing with competent tax authorities, the taxable income cannot be divided by the number of months the service provider actually works for his/her employer when calculating the taxes to be levied.
If the warrant received by the service provider can be traded publicly, the service provider shall be deemed to have received assets with determinable value when the warrant is granted, and thus such service provider shall be taxed in the month in which the warrant is granted at the progressive tax rate ranging from 5% to 45% on the difference between the warrant purchase price (if any) and the fair market value of such warrant.
If the service provider retains the company’s common stock after exercise, future dividends are taxed upon receipt as his/her “interest, dividend or bonus” and at a rate of 20% and future sales of the common stock are taxed at the time of sale at a rate of 20% of the appreciated value following exercise. Stock appreciation rights are subject to identical tax treatment.
As and when appropriate, our Company shall have the right to require each warrantee purchasing shares of Common Stock and each grantee receiving an award of shares of Common Stock under the 2009 Non-U.S. Plan to pay and to withhold form the proceeds of any exercise of such award any taxes required by the law of the nation in which the grantee provides services to our Company or one of our subsidiaries or affiliates.
On April 6, 2007, the State Administration of Foreign Exchange for the People’s Republic of China (“SAFE”) issued the “Operating Procedures for Administration of Domestic Individuals Participating in the Employee Stock Ownership Plan or Stock Option Plan of An Overseas Listed Company,” also known as “Circular 78.” It is not clear whether Circular 78 covers all forms of equity compensation plans or only those which provide for the granting of stock options. For any plans which are so covered and are adopted by a non-PRC listed company after April 6, 2007, Circular 78 requires all participants who are PRC citizens to register with and obtain approvals from SAFE prior to their participation in the plan. In addition, Circular 78 also requires PRC citizens to register with SAFE and make the necessary applications and filings if they participated in an overseas listed company’s covered equity compensation plan prior to April 6, 2007. Circular 78 may require our officers and directors who receive option grants and are PRC citizens to register with SAFE. We believe that the registration and approval requirements contemplated in Circular 78 will be burdensome and time consuming. If it is determined that any of our equity compensation plans are subject to Circular 78, failure to comply with such provisions may subject us and participants of our equity incentive plan who are PRC citizens to fines and legal sanctions and prevent us from being able to grant equity compensation to our PRC employees. In that case, our ability to compensate our employees and directors through equity compensation would be hindered and our business operations may be adversely affected.
The grant of warrants and other awards under the 2009 Non-U.S. Plan is discretionary, and except to the extent indicated above, we cannot determine now the specific number or type of warrants or awards to be granted in the future to any particular person or group. Any such grants of warrants or other awards would be made in the sole discretion of the Compensation Committee in such amounts and to such persons as it deemed appropriate. Grants under the 2009 Non-U.S. Plan are subject to, among other things, applicable law including any required registration in the PRC.
As of April 13, 2010, awards covering 2,525,000 shares of our Common Stock had been granted under the 2009 Non-U.S. Plan. This amount includes 1,650,000 shares subject to awards of warrants and 875,000 shares granted as stock awards. The following table shows information regarding the distribution of these awards among the persons and groups identified below:
Name or Category | Number of Shares Subject to Awards of Warrants | Number of Shares Granted as Stock Awards | ||||||
All current Executive Officers as a group | 600,000 | 350,000 | ||||||
Non-Executive Directors as a Group | 0 | 125,000 | ||||||
Nominees for election as Directors: | ||||||||
Drew Bernstein | 0 | 0 | ||||||
Eric Wei | 0 | 125,000 | ||||||
Shi Mingsheng | 0 | 175,000 | ||||||
Each other person who received or is to receive 5% of such options, warrants or rights*: | ||||||||
Peter Sun General Manager, NeoStem (China) | 600,000 | 0 | ||||||
Daisy Tai Shiaowen Vice President, Administration | 500,000 | 0 | ||||||
Chris Peng Mao Director of Asian Expansion & Strategic Development | 300,000 | 300,000 | ||||||
All employees, including all current officers who are not executive officers, as a group | 800,000 | 300,000 |
For information relevant to securities issuable pursuant to ourNeoStem's existing equity compensation plans, please seerefer to the table set forth in Proposal 2, above, under the caption “Securities Issuable Pursuant to NeoStem’s“Disclosure of Equity Compensation Plans,” included in the discussionPlan Information as of Proposal 2, above.
Assumed Average Purchase Price | Number of Shares to be Sold if Full Purchase | (1) | Percentage of Outstanding Shares After Giving Effect to the Sale of Aspire Capital | (2) | Proceeds from the Sale of Shares to Aspire Capital Under the Purchase Agreement | (3) | |||||||||
$ | 0.50 | 40,000,000 | 20.7 | % | $ | 20,000,000 | |||||||||
$ | 1.00 | 20,000,000 | 11.5 | % | $ | 20,000,000 | |||||||||
$ | 1.50 | 13,333,333 | 8.0 | % | $ | 20,000,000 | |||||||||
$ | 2.00 | 10,000,000 | 6.1 | % | $ | 20,000,000 | |||||||||
$ | 2.50 | 8,000,000 | 5.0 | % | $ | 20,000,000 | |||||||||
$ | 3.00 | 6,666,666 | 4.2 | % | $ | 20,000,000 | |||||||||
$ | 5.00 | 4,000,000 | 2.5 | % | $ | 20,000,000 |
Number of Shares of Common Stock Authorized | Number of Shares Issued and Outstanding | (1)(3) | Number of Shares Reserved for Issuance | (2)(3) | Number of Shares Authorized but Neither Issued nor Reserved for Future Issuance | (1)(2)(3) | |||||||||
Prior to any Reverse Stock Split | 500,000,000 | 153,516,485 | 92,713,864 | 253,769,651 | |||||||||||
After Assumed 1:2 Reverse Stock Split | 500,000,000 | 76,758,243 | 46,356,932 | 376,884,825 | |||||||||||
After Assumed 1:10 Reverse Stock Split | 500,000,000 | 15,351,649 | 9,271,386 | 475,376,965 |
(1) | These estimates assume a total of 153,516,485 shares of Common Stock issued and outstanding immediately prior to the reverse stock split, which is based on the 153,516,485 shares issued and outstanding as of August 24, 2012. |
(2) | The following 92,713,864 shares of Common Stock are included in the Number of Shares Reserved for Issuance: (i) 56,228,491 shares issuable upon the exercise of NeoStem warrants outstanding as of August 24, 2012; (ii) 22,481,892 shares issuable upon the exercise of options outstanding as of August 24, 2012 (iii) 10,000 shares issuable upon conversion of 10,000 shares of Series B Preferred Stock outstanding as of August 24, 2012; (iv) 5,928,297 shares which represents 200% of the shares issuable upon the conversion of the Series E 7% Senior Convertible Preferred Stock (“Series E Preferred Stock”) pursuant to the contractual provisions related to the Series E Preferred Stock; (v) an additional aggregate of 3,972,416 shares reserved for issuance under our 2003 Equity Participation Plan, 2009 Plan and 2009 Non-U.S. Plan (excluding shares and options already issued and therefore included in the numbers in footnotes (1) and (2)(ii) above); and (vi) up to 4,092,768 shares of Common Stock which may become issuable as "Contingent Shares" upon achievement of specified business milestones pursuant to the Amorcyte Merger Agreement. All shares reserved for issuance would be proportionately reduced by the same ratio at which outstanding shares are adjusted, in the event a reverse stock split is effected. These estimates do not reflect the effect of (i) the 5,000,000 shares of our Common Stock which would be reserved for issuance pursuant to the 2012 Employee Stock Purchase Plan, if the stockholders approve Proposal 2, or (ii) the additional 4,500,000 shares that would be reserved for issuance under our equity compensation plans following the approval of the Amended and Restated 2009 Plan, if the stockholders approve Proposal 3. |
(3) | These estimates also do not reflect the potential effect of rounding up for fractional shares that may result from the reverse stock split. |
year ended December 31, 2011. Grant Thornton was initially appointed as our independent registered public accounting firm in 2011.
ratification at the Annual Meeting.
Grant Thornton.
Fee Category | Fiscal 2009 Fees | Fiscal 2008 Fees | ||||||
Audit Fees(1) | $ | 391,800 | $ | 104,000 | ||||
Audit-Related Fees(2) | $ | 206,200 | $ | 100,335 | ||||
Tax Fees(3) | $ | 18,900 | $ | 19,800 | ||||
All Other Fees(4) | $ | — | $ | — | ||||
Total Fees | $ | 616,900 | $ | 224,135 |
Fee Category | Fiscal 2011 Fees | Fiscal 2010 Fees | ||||||
Audit Fees(1) | $ | 605,521 | $ | 787,500 | ||||
Audit-Related Fees(2) | $ | — | $ | — | ||||
Tax Fees(3) | $ | — | $ | — | ||||
All Other Fees(4) | $ | 1,938 | $ | 2,400 | ||||
Total Fees | $ | 607,459 | $ | 789,900 |
(1) | Audit Fees consist of aggregate fees billed or expected to be billed for professional services rendered for the audit of the |
(2) | Audit-Related Fees consist of aggregate fees billed for assurance and related services that are reasonably related to the performance of the audit or review of the |
(3) | Tax Fees consist of aggregate fees billed or expected to be billed for professional services rendered for tax compliance, tax advice and tax planning. These fees related to preparation of the |
(4) | All Other Fees consist of aggregate fees billed for products and services provided by |
Ÿ | each of our current executive officers; |
Ÿ | each of our current directors; |
Ÿ | all of our current directors and executive officers as a group; and |
Ÿ | each person who is known by us to beneficially own 5% or more of our Common Stock. |
Name and Address of Beneficial Holder | Number of Shares Beneficially Owned | Percentage of Common Stock Beneficially Owned | |||||
Robin L. Smith, M.D | 6,342,858 | (1) | 4.0 | % | |||
Chief Executive Officer and Chairman of the Board | |||||||
Andrew L. Pecora, M.D., F.A.C.P. | 2,875,779 | (2) | 1.9 | % | |||
Chief Medical Officer and Director of NeoStem, | |||||||
Chief Medical Officer of PCT and Chief Scientific Officer of Amorcyte | |||||||
Robert A. Preti, Ph.D. | 2,407,303 | (3) | 1.6 | % | |||
President and Chief Scientific Officer of PCT | |||||||
Richard Berman | 468,027 | (4) | 0.3 | % | |||
Director | |||||||
Steven S. Myers | 1,552,640 | (5) | 1.0 | % | |||
Director | |||||||
Drew Bernstein | 522,019 | (6) | 0.3 | % | |||
Director | |||||||
Edward C. Geehr, M.D. | 353,685 | (7) | 0.2 | % | |||
Director | |||||||
Eric H.C. Wei | 26,645,180 | (8) (9) | 16.9 | % | |||
Director | |||||||
RimAsia Capital Partners, L.P. | 26,529,874 | (9) | 16.8 | % | |||
RimAsia Capital Partners GP, L.P. | |||||||
RimAsia Capital Partners GP, Ltd. | |||||||
RimAsia Capital Partners Manager, Ltd. | |||||||
1807 Harbour Centre | |||||||
25 Harbour Road | |||||||
Wanchai Hong Kong | |||||||
Martyn Greenacre | 635,306 | (10) | 0.4 | % | |||
Director | |||||||
Shi Mingsheng | 4,985,770 | (11) (12) (13) | 3.2 | % | |||
Director of NeoStem and Chairman of the Board, Erye | |||||||
Fullbright Finance Limited (“Fullbright”) | 4,290,770 | (12) (13) | 2.8 | % | |||
Suite 1307, Tongmei Center | |||||||
43 East Queen’s Road | |||||||
Wanchai Hong Kong | |||||||
All Directors and Executive Officers as a group (fourteen persons) | 49,510,083 | (14) (15) | 29.3 | % |
Name and Address of Beneficial Holder | Number of Shares Beneficially Owned | Percentage of Common Stock Beneficially Owned | ||||||
Robin L. Smith, MD Chief Executive Officer and Chairman of the Board | 2,430,333 | (1) | 5.4 | % | ||||
Catherine M. Vaczy Vice President and General Counsel | 797,148 | (2) | 1.8 | % | ||||
Larry A. May Vice President and Chief Financial Officer | 302,253 | (3) | 0.7 | % | ||||
Alan G. Harris Vice President of Drug Development and Regulatory Affairs | 56,250 | (4) | 0.1 | % | ||||
Anthony M. Salerno Vice President of Strategy Development and Academic Affairs | 0 | 0 | % | |||||
Teresa L. Lepore Vice President of Sales and Marketing | 50,000 | (5) | 0.1 | % | ||||
Christopher C. Duignan Vice President of Finance | 50,000 | (6) | 0.1 | % | ||||
Peter Sun General Manager, NeoStem (China) | 0 | 0 | % | |||||
Richard Berman Director | 240,751 | (7) | 0.5 | % | ||||
Steven S. Myers Director | 786,103 | (8) | 1.8 | % | ||||
Drew Bernstein Director | 200,000 | 0.5 | % | |||||
Edward C. Geehr, MD Director | 0 | 0 | % | |||||
Eric H.C. Wei Director | 26,409,874 | (9)(10) | 46.3 | % | ||||
RimAsia Capital Partners, L.P. RimAsia Capital Partners GP, L.P. RimAsia Capital Partners GP, Ltd. 1807 Harbour Centre 25 Harbour Road Wanchai Hong Kong | 26,409,874 | (10) | 46.3 | % | ||||
Shi Mingsheng Director of the Company and Chairman of the Board, Erye | 4,465,770 | (11)(13) | 9.9 | % | ||||
Madam Zhang Jian, General Manager, Erye | 4,465,770 | (12)(13) | 9.9 | % | ||||
Fullbright Finance Limited (“Fullbright”) Suite 1307, Tongmei Center 43 East Queen’s Road Wanchai Hong Kong | 4,290,770 | (13) | 9.5 | % | ||||
Enhance BioMedical Holdings Limited (“Enhance”) 6555 Bo Yuan Road Shanghai, 201804 PRC | 8,000,000 | (14) | 16.7 | % | ||||
All Directors and Executive Officers as a group (fifteen persons) | 35,963,482 | (15) | 59.0 | % |
The address for each officer and director is c/o NeoStem, Inc., 420 Lexington Avenue, Suite 450,350, New York, NY 10170.
On May 17, 2010, RimAsia at its option converted its shares of Series C Preferred Stock into 9,086,124 shares of our Common Stock, and on May 25, 2010, received a cash payment of $153,500 which is equal to the dividends accrued but unpaid through from January 1, 2010 to May 17, 2010.
NeoStem. Madam Zhang Jian was formerly an executive officer of Erye and is currently an officer of Erye. On June 18, 2012, we entered into the Equity Purchase Agreement providing for the sale of our Erye Interest to EET and Fullbright (Fullbright subsequently assigning its rights under the Equity Purchase Agreement to its affiliate Highacheive Holdings Limited), described in the first paragraph of this “Certain Relationships and Related Party Transactions” section of this proxy statement.
In connection with the Merger, the exercise price of certain ofprovide comparative data on compensation practices in our outstanding warrants was reduced. Certain of ourindustry for executive officers, Board members and directors held warrants to purchaseBoard committee members. This included compensation review for our common stock at $8.00 per share,Chief Executive Officer, senior executive officers (including the named executive officers in the table below) and following the Merger, the exercise price of such warrants was reduced to approximately $6.18 per share. These warrants are held by our Chairman and CEO — Robin L. Smith (25,427), our Vice President and General Counsel — Catherine M. Vaczy (2,000), andfor our directors — Richard Berman (11,364) and Steven Myers (22,728). Certain stock options were also re-priced. For a description of the repricing of certain employee stock options, please see the discussion under the caption “Outstanding Equity Awards at Fiscal Year-End — The Repricing,” below.
In connection with the Merger, each of the then officers and directors of CBH, and each of RimAsia (then a beneficial holder of more than 5% of our voting securities), Erye and EET,no committee assignments, as well as certain holders of CBH Common Stock at the Effective Time, entered into a lock-up and voting agreement, pursuant to which they agreed to vote their shares of CBH Common Stock in favor of the Merger and to the other transactions contemplated by the Merger Agreement and agreed not to sell their CBH Common Stock and/or our common stock from November 2, 2008 through the expiration of the six-month period immediately following the consummation of the Merger. Similarly, our officers and directors entered into a lock-up and voting agreement, pursuant to which they agreed to vote their shares of our common stock in favor of the Merger and to the other transactions contemplated by the Merger Agreement and agreed not to sell their shares of our common stock during the same period.
Robin L. Smith, our Chairman and Chief Executive Officer, and Steven Myers, a member of our Board of Directors and a membermembers of each of our Audit, Committee, our Compensation Committee and our Nominating and Governance Committees. Their report for 2011 provided competitive benchmarks for base salaries, bonuses, equity, perquisites and benefits, their observations and their broad recommendations. Although the Compensation Committee (of which Nominatingconsiders Markson's advice and Governance Committee Mr. Myers became Chairman in March 2009), were holders of CBH Common Stock at the time. Dr. Smith was the beneficial owner of 389,966 shares of CBH Common Stock that were acquired commencing in 2005. Mr. Myers was the beneficial owner of 285,714 shares of CBH Common Stock that were acquired in 2005. Accordingly, a special committee of the Company’s Board of Directors (comprised of Mark Weinreb, Richard Berman and Joseph Zuckerman) approved on behalf of the Company the execution of the Merger agreement and the transactions contemplated thereby. Based on the $2.03 closing price ofrecommendations about our common stock on September 18, 2009 and the conversion of CBH Common Stock into our Common Stock in the Merger, the approximate transaction value of the holdings in CBH of each of Dr. Smith and Mr. Myers was $152,126 and $111,457, respectively.
In our private placement of units in November 2008, Fullbright (then a beneficial holder of more than 5% of our voting securities), a corporation organized in the British Virgin Islands, and the principal shareholders of which are Madam Zhang Jian, then an officerexecutive and director of CBH and an officer of Erye, Shi Mingsheng, then an officer and director of CBH, a director of Erye and Chairman of Fullbright purchased 400,000 units for an aggregate consideration of $500,000. The per unit price was $1.25 and each unit was comprised of one share of our common stock and one redeemable five-year warrant to purchase one share of our common stock at a purchase price of $1.75 per share. In connection with Fullbright’s purchase of the units, EET, the principal shareholders of which are also the principal shareholders of Fullbright, borrowed $500,000 from RimAsia. The Company understands that in connection with Fullbright’s borrowing from RimAsia, the units acquired by Fullbright were pledged to RimAsia as collateral and subsequently, to the Company. Further, in our June/July 2009 private placement, Fullbright acquired, for a purchase price of $800,000, 64,000 shares of our Series D Stock,compensation program together with warrants to purchase 640,000 shares of our common stock;input from management, the Company understands that all securities purchased by Fullbright in the June/July 2009 Private Placement were pledged to RimAsia and subsequently, to the Company.
On February 25, 2009 and March 6, 2009, respectively, we issued promissory notes (the “Notes”) to RimAsia (then a beneficial holder of more than 5% of our voting securities) in the principal amounts of $400,000 and $750,000, respectively.Compensation Committee ultimately makes its own decisions about these matters. The Notes had an interest rate of 10% per annum and were due and payable on October 31, 2009 or earlier, in the event we raised over $10 million through an equity financing.
In April 2009, RimAsia (then a beneficial holder of more than 5% of our voting securities) purchased our Series D Convertible Redeemable Preferred Stock and warrants for aggregate consideration of $5,000,000. A portion of the proceeds were used to repay the principal and interest on the Notes issued to RimAsia in February and March 2009 and certain other costs advanced by RimAsia in connection with our expansion activities in China. Mr. Wei, now our director, is managing partner of RimAsia.
On April 23, 2009, we entered into a Consulting Agreement with Shandong Life Science and Technology Research Institute (“SLSI”), of which Ms. Cai Jianqian is President. Ms. Cai is the mother of then CBH Chief Executive Officer Chris Peng Mao. Ms. Cai also was CBH stockholder at the time we entered into the Consulting Agreement. Pursuant to the Consulting Agreement, Ms. Cai agrees to provide consulting services to us in the area of business development, strategic planning and government affairs in the healthcare industry in the PRC. In return for the consulting services, we have agreed to pay SLSI an annual fee of $100,000 and we issued SLSI 250,000 warrants under our 2009 Non-U.S. Plan, to become exercisable over approximately a two year period. In addition, in connection with expanding our relationship with SLSI in July 2009, we agreed to grant to SLSI an additional 100,000 shares under the 2009 Non-U.S. Plan (having an approximate value of $204,000). Grants under the 2009 Non-U.S. Plan will be subject to, among other things, applicable law including any required registration in the PRC.
On April 30, 2009 the Company entered into a License and Referral Agreement with Promethean Corporation (“Promethean”) through its subsidiary Ceres Living, Inc. (“Ceres”) to use certain Company marks and publications in connection with certain sales and marketing activities relating to its nutritional supplement known as AIO Premium Cellular (the “Product”); andCompensation Committee has again engaged Markson in connection with the license, Ceres will pay to our Company orCompany's 2012 compensation.
Ceres shall engage in a referral service with respect to our Company’s adult stem cell collection and storage activities. Ceres will receive a specified fee from our Company for each client referred who completes and pays for a stem cell collection. The term of the agreement is three years with each party having the right to renew annually, thereafter. The CEO of Promethean is in an exclusive relationship with the CEO of our Company. Our Company has earned $6,320 in royalties in connection with this agreement
In June 2009, we signed an agreement (the “Network Agreement”) with Enhance BioMedical Holdings Limited (“Enhance BioMedical”), a Shanghai corporation and beneficial owner of approximately 16.7% of our common stock, to develop a stem cell collection and treatment network using our proprietary stem cell technologies in Shanghai and Taiwan, as well as the Chinese provinces of Jiangsu, Zhejiang, Fujian, Anhui and Jiangxi. Enhance BioMedical is a subsidiary of Enhance Holding Corporation, a multinational conglomerate with successful businesses in various market sectors including healthcare. Enhance BioMedical invested $5 million in our April 2009 private placement. Under the Network Agreement, Enhance BioMedical has the exclusive rights to utilize our proprietary adult stem cell technologies identified by us from time to time to provide adult stem cell services and therapies in the Asian territory. We agreed to provide training to Enhance BioMedical staff in the proprietary knowledge, technology and operating procedures needed to provide Enhance BioMedical clients with these services. In return, we will receive a technical assistance fee. We also will be entitled to a stated royalty on gross revenues generated by Enhance BioMedical from providing the NeoStem stem cell services for the duration of the renewable 10-year Network Agreement and also may receive other fees in connection with assisting in the launching of the network that we estimate will have a value in excess of $120,000.
On July 1, 2009, we, CBH, CBC and RimAsia, which, at the time was a significant stockholder of ours and CBH, entered into a Funding Agreement pursuant to which RimAsia agreed to supply additional funding to both us and CBH in an amount up to $1.6 million. Pursuant to the terms of the Funding Agreement such amount would be deemed settled upon the receipt by RimAsia of certain Merger consideration. RimAsia received a total of 6,458,009 shares of our common stock and 8,177,512 shares of our Series C Convertible Preferred Stock in the Merger, each with a liquidation preference of $1.125 and convertible into shares of our common stock at an initial conversion price of $.90, which satisfied our obligations under the Funding Agreement.
At December 31, 2009, Erye owed EET $7,234,293. Included in the amount owed to EET are:
The 2008 note is a non-interest bearing note. Total interest for the two months that the Company owned Erye amounted to $68,077.
The following table sets forth certain summary compensation information concerning the annual and long-term compensation of ourwith respect to NeoStem's Chief Executive Officer and the threeNeoStem's two other most highly compensated executive officers, for services as executive officers for the last two fiscal years.*
Name and Principal Function | Year | Salary | Bonus | Stock Awards(1) | Option Awards(1) | All Other Compensation | Total Compensation | |||||||||||||||||||||
Robin Smith, Chief Executive Officer | 2009 | $ | 302,500 | $ | 275,000 | (2) | $ | 1,236,250 | (3) | $ | 3,322,252 | (4) | $ | 30,378 | (5) | $ | 5,166,380 | |||||||||||
2008 | $ | 261,893 | (6) | $ | 250,000 | (7) | $ | — | $ | 192,315 | (8) | $ | 23,528 | (9) | $ | 727,736 | ||||||||||||
Mark Weinreb, former President* | 2009 | $ | 209,000 | $ | 40,000 | $ | — | $ | 499,154 | (10) | $ | 26,804 | (11) | $ | 744,958 | |||||||||||||
2008 | $ | 210,000 | $ | 30,000 | $ | — | $ | 192,315 | (12) | $ | 32,167 | (13) | $ | 464,482 | ||||||||||||||
Catherine Vaczy, Vice President and General Counsel | 2009 | $ | 177,722 | $ | 55,000 | $ | 327,750 | (14) | $ | 954,610 | (15) | $ | 18,921 | (16) | $ | 1,534,003 | ||||||||||||
2008 | $ | 167,722 | (17) | $ | 10,000 | (18) | $ | — | $ | 61,636 | (19) | $ | 11,500 | (20) | $ | 250,858 | ||||||||||||
Larry May, Vice President and Chief Financial Officer | 2009 | $ | 165,000 | $ | 12,500 | $ | — | $ | 381,330 | (21) | $ | 9,000 | (22) | $ | 567,830 | |||||||||||||
2008 | $ | 165,000 | (22) | $ | — | $ | — | $ | 61,636 | (24) | $ | 9,000 | (22) | $ | 235,636 |
Name and Principal Function | Year | Salary | Bonus | Stock Awards | (1) | Option Awards | (1) | All Other Compensation | Total Compensation | |||||||||||||||||||||
Robin Smith | 2011 | $ | 375,176 | (2) | $ | 330,000 | (3) | — | $ | 2,912,100 | (4) | $ | 30,496 | (5) | $ | 3,647,772 | ||||||||||||||
Chief Executive Officer | 2010 | $ | 341,069 | $ | 382,024 | (6) | — | — | $ | 80,653 | (7) | $ | 803,746 | |||||||||||||||||
Andrew L. Pecora | 2011 | $ | 174,231 | (8) | — | — | $ | 688,741 | — | $ | 862,972 | |||||||||||||||||||
Chief Medical Officer and Director | 2010 | — | — | — | — | — | — | |||||||||||||||||||||||
Robert Preti | 2011 | $ | 300,808 | (9) | — | — | $ | 439,002 | $ | 6,359 | (10) | $ | 746,169 | |||||||||||||||||
President and Chief Scientific Officer of PCT | 2010 | — | — | — | — | — | — |
(1) | Amounts shown under “Stock |
Pursuant to |
(4) | Includes |
(5) | Consisted of (i) a car allowance of $12,000, |
(6) |
(7) | Consisted of (i) a car allowance of |
(8) | As a result of the PCT Merger and Dr. Pecora's employment as Chief Medical Officer of PCT effective upon the PCT Merger, Dr. Pecora is considered to be an executive officer of the Company effective January 19, 2011. Salary reflected in this table is pursuant to an employment agreement effective on such date, as subsequently amended. Dr. Pecora's Participating Salary in the 2012 Option Program is $35,000, his full gross salary for the Election Period. |
(9) | As a result of the PCT Merger and Dr. Preti's employment as President of PCT effective upon the PCT Merger, Dr. Preti is considered to be an executive officer of the Company effective January 19, 2011. Salary reflected in this table is pursuant to an employment agreement effective on such date. Dr. Preti's Participating Salary in the 2012 Option Program is $13,750. |
The employment agreements for members of our management (including Messrs. May and Weinreb and Ms. Vaczy but excluding the Chief Executive Officer) expired between December 31, 2008 and January 19, 2009. However, we have continued to compensate these individuals based on their base salary, stated bonus and employee benefits that would otherwise be due to such individuals under such agreements and effective July 8, 2009, Ms. Vaczy’s employment agreement was extended subject to certain different and additional terms and she further received a salary increase to $191,000 by action of the Compensation Committee on October 29, 2009. Mr. Weinreb resigned as our President effective October 2, 2009. For a description of the Separation Agreement and General Release entered into between us and Mr. Weinreb, please see the discussion under the heading “Mark Weinreb — President through October 2, 2009,” below.
effective date of Dr. Smith’s employment agreement was June 2, 2006.has been subsequently amended from time to time. Under this agreement, as amended through July 29, 2009 (as so amended, the “Agreement”), Dr. Smith was employed through December 31, 2011 and as of September 27, 2009 was entitled to receive a base salary of $180,000$332,750 per year to be increased to $236,000 after the first year(increasing by 10% on each annual anniversary of the effective date of her employment agreement. Dr. Smith was also eligible forSeptember 27), an annual bonus determined by the Board of at least $275,000, and certain other perquisites including a car allowance, of $1,000 per month and variable life insurance, with payments not to exceed $1,200 per month.
On January 26, 2007, in connection with the January 2007 private placement, we entered into a letter agreement with Dr. Smith, pursuant to which Dr. Smith’s employment agreement dated as of May 26, 2006 was amended to provide that: (a) the term of her employment would be extended to December 31, 2010 and (b) upon the first closings in the January 2007 private placement, Dr. Smith’s base salary would be increased to $250,000. Other than as set forth therein, Dr. Smith’s original employment agreement and all amendments thereto remain in full force and effect. As considerationreimbursement for her agreement to substantially extend her employment term, among other agreements contained in this amendment, on January 18, 2007 Dr. Smith was also granted an option under our 2003 Equity Participation Plan to purchase 55,000 shares of our common stock at a per share exercise price equal to $5.00 vesting as to (i) 25,000 shares upon the first closings in the January 2007 private placement; (ii) 15,000 shares on June 30, 2007; and (iii) 15,000 shares on December 31, 2007.
Effective as of September 27, 2007, we entered into a letter agreement with Dr. Smith, pursuant to which Dr. Smith’s employment agreement was further amended to provide that: (a) Dr. Smith’s base salary would be increased to $275,000; (b) her base salary would be increased by 10% on each one-year anniversary of the agreement; (c) a cash bonus of $187,500 (an amount equal to 75% of her base salary) would be paid October 1, 2007; (d) Dr. Smith’s bonus for 2008 was set in the amount of $250,000 (an amount equal to 100% of her base salary) to be paid October 1, 2008; and (e) we agreed to pay membership and annual fees for a club in New York of Dr. Smith’s choiceclub to be used for business entertaining and meetings.
On January 9, 2008, we entered into a letter agreement with Dr. Smith elects from time to time to receive her net salary (and bonus) in shares of the Company's common stock, pursuant to which Dr. Smith’s employment agreement was further amendedan arrangement approved by the Compensation Committee. Pursuant to provide that, in response to our efforts to conserve cash,an arrangement approved by the Compensation Committee, Dr. Smith would be paid $50,000elected to receive an aggregate of $172,761 of her 20082011 salary, and has continued in 2012 to receive a significant portion of her salary, in shares of our common stock, net of shares in payment of applicable withholding taxes valued at the closing price of our common stock on the date of issuance. Accordingly, Dr. Smith was issued 16,574 shares of our common stock pursuant to our 2003 Equity Participation Plan which was based on a price per share of $1.70, the closing price of our common stock on the date of approval by the Compensation CommitteeCommon Stock of the Board of Directors. The cash component of her salary for 2008 was $225,000.
On August 29, 2008, we entered into a letter agreement with Dr. Smith, pursuant to which, in response to our efforts to conserve cash, Dr. Smith agreed to accept shares of our common stock in lieu of unpaid accrued salary. Dr. Smith agreed to accept in lieu of $24,437.50 in unpaid salary accrued during the period July 15, 2008 through August 31, 2008, 33,941 shares of our common stock. The number of shares so issued was based on $0.72, the closing price of our common stock on the date of approval by the Compensation Committee of the Board of Directors, for which we agreed to pay total withholding taxes. All such shares wereCompany issued under our 20032009 Equity Participation Plan.Compensation Plan at the then-market price. In connection therewith, the vesting of 15,0002011, Dr. Smith elected to accept her entire bonus in shares of our common stock granted to Dr. Smith under the 2003 Equity Participation Plan on September 27, 2007 was accelerated from September 27, 2008 to August 28, 2008.
Effective July 1, 2009, the cash component of Dr. Smith’s annual salary was increased to $302,500. On July 29, 2009, we amended the terms of our employment agreement with Dr. Smith by means of a letter agreement to extend the term of Dr. Smith’s employment to December 31, 2011 and subject to consummationCommon Stock of the Merger, awarded to Dr Smith a $275,000 cash bonus for 2009 and comparable minimum annual bonuses for 2010 and 2011. As of April 13, 2010,Company. Dr. Smith had been paid $175,000 of the bonus for 2009.
We maintain key-man life insurance on Dr. SmithSmith's Participating Salary in the amount of $3,000,000.2012 Option Program is $100,656, her full gross salary for the Election Period. As of October 29, 2009, Thethe Compensation Committee of the Board approved the reimbursement to Dr. Smith of premiums, up to $4,000 annually, for disability insurance covering Dr. Smith.
PerOn April 4, 2011, the Company entered into an amendment of the Agreement. Pursuant to the amendment, (i) the term of the Agreement was extended from December 31, 2011 to December 31, 2012; (ii) Dr. Smith’s January 26, 2007 letterSmith will receive cash bonuses on October 1,
Per Dr. Smith’s May 26, 2006 employment agreement, uponcoverage term.
Director
Effective as of September 28, 2007, our employment agreement with Mr. Weinreb, as amended, provided for: (a) aPCT Merger (the “Commencement Date”). The Pecora Employment Agreement, provides for, among other things, (i) an annual base salary of $210,000; (b)$180,000 and (ii) an option to purchase 400,000 shares of NeoStem Common Stock under NeoStem's 2009 Equity Compensation Plan at a quarterly bonusper share exercise price of $7,500 payable at$1.50, vesting as to 100,000 shares on each of the endfirst, second, third and fourth annual anniversaries of each quarterly period during the term commencing as of September 30, 2007; and (c) severance payments suchCommencement Date. The Pecora Employment Agreement further provides that in the event of termination of employment, any severance to which Mr. Weinreb wouldupon Termination without Cause (as defined) or Resignation for Good Reason (as defined) Dr. Pecora will be entitled under the Agreement shall equal the lesser of one yearto continuation of his base salary or his base salary payable for the remainder of the term, in each case paid out over a 12 month periodthree (3) months in accordance with thecustomary payroll policiespractices in consideration for executing a release and practices of our Company. In addition, on February 27, 2008 the Compensation Committee authorized a cash bonus of $20,000 to be paid to Mr. Weinreb for every 200 paid adult stem cell collections at collection centers.
Effective October 2, 2009 (the “Termination Date”), Mark Weinreb resigned as our President. In connection with Mr. Weinreb’s resignation, weconfidentiality, non-compete, non-solicitation and Mr. Weinreb entered into a Separation Agreementinventions assignment agreement and General Release (the “Separation Agreement”). Under the terms of the Separation Agreement, we (i) continued to pay Mr. Weinreb’s regular salary of $17,500 per month through December 31, 2009; (ii) paid Mr. Weinreb a bonus of $32,500 ($7,500 of which was his standard quarterly bonus); and (iii) agreed to make COBRA payments for a period of one year on Mr. Weinreb’s behalf for himself and his family. All unvested options to purchase our common stock were forfeited as of the Termination Date, except that options to purchase an aggregate of 20,000 shares of our common stock (half at an exercise price of $4.95 and the balance at $1.63) were not to be forfeited and were vested in accordance with their terms upon the completion
of the Merger. The Separation Agreement contains other customary terms and provisions, including mutual releases and non-disparagement provisions, as well as remedies for breaches of the Agreement and the Covenant Agreement.
Mr. Weinreb’s outstanding options issued under our 2003 Equity Participation PlanOn August 17, 2011 (the “2003 Plan”“Effective Date”) were re-priced on October 30, 2009 to an exercise price of $1.90, which was the fair market value on the date of the Repricing, to the extent that the exercise prices of such options exceeded fair market value on the date of the Repricing. All of Mr. Weinreb’s outstanding options were amended so that the period during which he may exercise a vested option ends on the earlier of: (i) the original expiration date of each such option; (ii) the second anniversary of the Termination Date; and (iii) the date on which we determine in good faith that Mr. Weinreb has violated the terms of a previously-executed Employee Confidentiality, Invention Assignment and Non-Compete Agreement (the “Covenant Agreement”); provided that we agreed that an option to purchase 100,000 shares at $1.95 issued under the our 2009 Equity Compensation Plan (the “2009 Plan”) will remain exercisable for its original ten year term unless clause (iii), above, is applicable. Mr. Weinreb remains subject to the terms of a November 2, 2008 Lock-Up and Voting Agreement, which provides that he may not sell any shares of our common stock for a period of six months following the closing of the Merger; provided, that subject to the approval of CBH, commencing December 1, 2009, Mr. Weinreb may sell up to 30,000 shares of our common stock per calendar month in accordance with applicable securities laws.
On April 20, 2005, we entered into a letter agreement with Catherine M. VaczyDr. Pecora pursuant to which Ms. Vaczy servedthe Pecora Employment Agreement was amended to provide that: (a) his title was changed to also include Chief Medical Officer of NeoStem, Inc.; and (b) his annual salary was increased to $210,000. Dr. Pecora was also granted options to purchase an additional 500,000 shares of the Company's common stock under the 2009 Equity Plan at a per share exercise price of $0.71, vesting as to 100,000 shares on each of the first, second, third, fourth and fifth annual anniversaries of the Effective Date of the amendment. Other than as set forth therein, the Pecora Employment Agreement remained in full force and effect. Upon our Vice President and General Counsel. The termacquisition of this original agreement was three years.
On January 26, 2007, we entered into another letter agreement with Ms. Vaczy pursuantAmorcyte in October 2011, Dr. Pecora agreed to which Ms. Vaczy continuescontinue to serve as our Vice President and General Counsel. Subject to the terms and conditionsChief Scientific Officer of the letter agreement, the term of Ms. Vaczy’s employment in such capacity would continue through December 31, 2008. In considerationAmorcyte for her services under the letter agreement, Ms. Vaczy was entitled to receive a minimum annual salary of $150,000 during 2007 (such amount being 20% less than the annual salary to which Ms. Vaczy would have been entitled commencingno additional compensation.
Ms. Vaczy was eligible for additional cash bonuses as follows, in each case as may be approved by the Compensation Committee of the Board of Directors: (a) for other tasks and responsibilities as mutually agreed, such as foundation legal counsel; (b) pursuant to milestones for 2008 as set no later than December 31, 2007 by Ms. Vaczy and our Chief Executive Officer, which the Chief Executive Officer shall recommend to the Compensation Committee of the Board of Directors for their vote thereon; and (c) as may be approved from time to time.
Ms. Vaczy was also entitled to payment or reimbursement of certain expenses (including a car allowance equal to $1,000 per month) incurred by her in connection with the performance of her duties and obligations under the letter agreement, and to participate in any incentive and employee benefit plans or programs which may be offered by us and in all other plans in which us executives participate.
On January 9, 2008,11, 2012, we entered into a letter agreement with Ms. Vaczy,Dr. Pecora which provides that Dr. Pecora shall devote no less than two days per week to his duties as Chief Medical Officer of PCT and NeoStem, with a corresponding decrease in his annual salary to $140,000. Additionally, pursuant to which Ms. Vaczy’s employment agreement dated as of January 26, 2007 was amended to provide that, in response to our efforts to conserve cash, Ms. Vaczy would be paid $11,250 of her 2008 salary in shares of our common stock. Accordingly, Ms. Vaczy was issued 3,729 shares of our common stock pursuant to our 2003 Equity Participation Plan which was based on a price per share of $1.70, the closing price of our common stock on the date of approval by the Compensation Committee of the Board of Directors. The cash component of her salary for 2008 will be $161,250.
On August 29, 2008, we entered into athis letter agreement, with Ms. Vaczy, pursuant to which, in response to our efforts to conserve cash, Ms. VaczyDr. Pecora has agreed to accept his net salary through the issuance to him of shares of ourthe Company's common stock at fair market value at the time of issuance; this is at his election determined on a quarterly basis and such shares shall be issued pursuant to the Company's 2009 Equity Compensation Plan. To
was based on $0.72, the closing price of our common stock on the date of approval by the Compensation Committee of the Board of Directors, for which we agreed to pay total withholding taxes. All such shares were issued under our 2003 Equity Participation Plan. In connection therewith, the vesting of 22,500 shares of Common Stock granted to Ms. Vaczy underparticipate in the 2003 Equity Participation Plan onCompany's 2012 Option Program with a Participating Salary for the period equal to $35,000, his full gross salary for the Election Period.
Ms. Vaczy’s January 26, 2007 employment agreement, as amended (the “Original Agreement”), expired by its terms on December 31, 2008. However, effective July 8, 2009,23, 2010 we entered into another lettera four year employment agreement with Dr. Preti (the “Extension”“Preti Employment Agreement”) with Ms. Vaczy pursuantwhich became effective on January 19, 2011, upon the closing of the PCT Merger (the “Commencement Date”). Pursuant to which the OriginalPreti Employment Agreement, was extended, subject to certain different and additional terms.Dr. Preti serves as President of PCT. The ExtensionPreti Employment Agreement provides that Ms. Vaczy’sfor, among other things, (i) an initial annual base salary during the one-year term will be $182,500. The Extension additionally provides for (i) a 25,000 share stock award upon execution under the 2009 Plan where we also pay the associated payroll taxes;of $330,000, which was increased to $350,000 on January 19, 2012, and (ii) a $5,000 cash bonus upon each of two milestone objectives established by the Board of Directors; (iii) an option granted on the effective date of the Extension under the 2009 Plan to purchase 200,000 shares of our common stock which shall vest and become exercisable as to 100,000 shares on July 8, 2009 and as to the remaining 100,000 shares upon stockholder approval of the Merger; and (iv) an option to purchase 100,000400,000 shares of our common stock to be granted on the date the stockholders approve the Merger and the expansion of the 2009 Plan option pool, such option to vest and become exercisable on July 8, 2010. The Extension provided that the options granted in connection with the Extension, as well as other options granted or to be granted to Ms. Vaczy, shall remain exercisable despite any termination of employment for a period of not less than two years from the date of termination of employment. The per share exercise prices of the options to be granted pursuant to the Extension shall equal the closing price of our common stock on the date of grant. The Extension provides that Ms. Vaczy must give us 60 days notice in the event she resigns. Any severance payments set forth in the Original Agreement to which Ms. Vaczy may become entitled shall be based on Ms. Vaczy’s then salary for a three month and not an annual period.
As of October 29, 2009, the Compensation Committee of our Board (i) awarded Ms. Vaczy a $50,000 cash bonus, 50% of which is payable currently and the remaining 50% is payable upon the achievement of a business milestone, (ii) increased Ms. Vaczy’s salary from $182,500 to $191,000 effective as of November 1, 2009, and (iii) approved the payment of dues to a private club of Ms. Vaczy’s choosing (not to exceed $6,000 annually).
As of November 4, 2009, the Board of Directors approved a grant to Ms. Vaczy, as the Secretary of the Board of Directors, for each year that she serves as Secretary, options to purchase 100,000 shares of our common stock. These options shall vest as to 33,333 shares on each of the first and second anniversary of the date of grant and as to the remaining 33,334 shares on the third anniversary of the date of grant. The exercise price of options shall be equal to the closing price of a share of our common stock on the date of grant.
Pursuant to Ms. Vaczy’s January 26, 2007 letter agreement, and the Extension, effective July 2009, upon our termination of Ms. Vaczy’s employment prior to the end of the term without cause or by Ms. Vaczy with good reason, any severance payments in the Original Agreement to which Ms. Vaczy may become entitled shall be based on Ms. Vaczy’s then salary for a three-month and not an annual period. In addition, the Extension provides that the options provided for in the Extension, as well as other options granted or to be granted to Ms. Vaczy, shall remain exercisable despite any termination of employment for a period of not less than two years from the date of termination of employment. The per share exercise prices of the options to be granted pursuant to the Extension equalled the closing price of our common stock on the date of grant.
On January 19, 2006 (the “Commencement Date”), we entered into an employment agreement with Larry A. May pursuant to which Mr. May served as our Chief Financial Officer. The term of this agreement was three years. The agreement acknowledged that Mr. May was to be based in or around Los Angeles, California, but provided that Mr. May would undertake reasonable travel approximately two times per month to our Company’s headquarters in New York.
Under the agreement, Mr. May was entitled to receive a base salary of $165,000. Mr. May was also entitled to (a) reimbursement for reasonable costs of health insurance that he obtained and (b) payment or reimbursement of all reasonable travel or other reasonable expenses that he incurred in connection with the
performance of his duties and obligationsNeoStem Common Stock under the agreement, including a monthly car allowance of $750. Additionally, pursuant to the terms of the agreement, on the Commencement Date Mr. May was granted under our 2003NeoStem, Inc. 2009 Equity ParticipationCompensation Plan an option to purchase 1,500 shares of our common stock at a per share exercise price equal to $5.00of $1.50, vesting as to 500100,000 shares on each of the first, second, third and thirdfourth annual anniversaries of the Commencement Date. Upon our terminationDate, and (iii) eligibility for cash bonuses as determined by the compensation committee of Mr. May’s employmentNeoStem's Board of Directors. The Preti Employment Agreement further provides that upon Termination without Cause (as defined) or Resignation for any reason except for cause, we wereGood Reason (as defined), Dr. Preti will be entitled to pay to Mr. Maycertain post-termination benefits in consideration of executing a release and a confidentiality, non-compete, non-solicitation and inventions assignment agreement and compliance therewith, including (i) continuation of his base salary atfor up to twelve (12) months in accordance with customary payroll practices, (ii) reimbursement of COBRA healthcare premiums for up to twelve (12) months, and (iii) the timeaccelerated vesting for all unvested option shares that would have vested during the twelve (12) months following termination of terminationemployment had Dr. Preti remained in the employ of PCT. The Preti Employment Agreement also gives PCT the option, in its sole discretion, to continue Dr. Preti's base salary for an additional twelve (12) months (for a total of twenty-four (24) months) in consideration for a twelve month extension of the one-year period following such termination.
On June 2, 2006, in connection with the June 2006 private placement, we entered into a letter agreement with Mr. May, pursuantnon-competition restrictive covenants to which Mr. May agreed to accept a 25% reduction in salary until certain business milestones were achieved. In consideration therefor, our Company (a) granted to Mr. May an option under our 2003 Equity Participation Plan to purchase 10,000 shares of our common stock at an exercise price of $5.30 per share, vesting in three equal installments upon the achievement of certain cumulative revenue milestones, and (b) accelerated the vesting of certain options already held by Mr. May. Also pursuant to the June 2, 2006 letter agreement, it was agreed that Mr. May would be paid accrued salaryDr. Preti is subject. Additionally, we maintain key-man life insurance on Dr. Preti in the amount of $12,692.30$3,000,000. On April 26, 2012, Dr. Preti elected to participate in the Company's 2012 Option Program with a Participating Salary equal to $13,750. An additional $20,000 of his annual salary is paid through elections on a quarterly basis through the issuance of shares of our common stock.
On January 18, 2007, in connection with the January 2007 private placement, we entered into another letter agreement with Mr. May, pursuant to which: (a) Mr. May’s base salary would be paid at an annual rate 20% less than the annual salary to which Mr. May would have been entitled pursuant to the January 19, 2006 employment agreement, (b) unused vacation time would be forfeited at the end of each calendar year, (c) any bonus above base salary would only be paid upon approval by our Compensation Committee, and (d) expense reimbursement would be governed by our Company’s standard policies and procedures applicable to all employees as in effect from time to time. The January 18, 2007 letter agreement was to terminate upon the first to occur of certain business milestones, or upon a decision of the Compensation Committee to terminate the letter agreement.
Mr. May’s January 19, 2006 employment agreement, as amended, expired, by its terms on January 18, 2009. However, Mr. May continues to serve as our Vice President and Chief Financial Officer, receiving the same compensation and employee benefits that would have otherwise be due prior to the expiration of his employment agreement.
Option Awards** | Stock Awards** | |||||||||||||||||||||||||||
Name | Number of Securities Underlying Unexercised Options # Exercisable | Number of Securities Underlying Unexercised Options # Unexercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options | Option Exercise Price*** | Option Expiration Date | 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 | |||||||||||||||||||||
Robin L. Smith | 54,000 | (1)(51) | — | $ | 1.90 | 6/1/2016 | ||||||||||||||||||||||
15,000 | (2) | — | $ | 1.90 | 12/4/2016 | |||||||||||||||||||||||
55,000 | (3) | — | $ | 1.90 | 1/17/2017 | |||||||||||||||||||||||
250,000 | (4) | — | $ | 1.90 | 9/26/2017 | |||||||||||||||||||||||
120,000 | (5) | — | $ | 1.63 | 2/26/2018 | |||||||||||||||||||||||
5,000 | (6) | — | $ | 1.13 | 10/30/2018 | |||||||||||||||||||||||
100,000 | (7) | — | $ | 1.95 | 5/20/2019 | |||||||||||||||||||||||
500,000 | (8) | — | $ | 1.71 | 7/6/2019 | |||||||||||||||||||||||
— | 500,000 | (9) | 250,000 | (9) | $ | 2.04 | 10/28/2019 | |||||||||||||||||||||
200,000 | (10) | $ | 310,000 | (10) | ||||||||||||||||||||||||
229,678 | (11) | — | $ | 1.90 | 10/29/2016 | |||||||||||||||||||||||
— | 200,000 | (12) | $ | 1.66 | 11/3/2019 |
Option Awards** | Stock Awards** | |||||||||||||||||||||||||||
Name | Number of Securities Underlying Unexercised Options # Exercisable | Number of Securities Underlying Unexercised Options # Unexercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options | Option Exercise Price*** | Option Expiration Date | 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 | |||||||||||||||||||||
Mark Weinreb | 25,000 | (13)(51) | — | $ | 1.90 | 10/2/2011 | (23) | |||||||||||||||||||||
500 | (14) | — | $ | 1.90 | 10/2/2011 | (23) | ||||||||||||||||||||||
40,000 | (15)(51) | — | $ | 1.90 | 10/2/2011 | (23) | ||||||||||||||||||||||
15,000 | (16) | — | $ | 1.90 | 10/2/2011 | (23) | ||||||||||||||||||||||
5,000 | (17) | — | $ | 1.90 | 10/2/2011 | (23) | ||||||||||||||||||||||
10,000 | (18) | — | $ | 1.90 | 10/2/2011 | (23) | ||||||||||||||||||||||
50,000 | (19) | — | $ | 1.90 | 10/2/2011 | (23) | ||||||||||||||||||||||
55,000 | (20) | — | $ | 1.63 | 10/2/2011 | (23) | ||||||||||||||||||||||
25,000 | (21) | — | $ | 1.63 | 10/2/2011 | (23) | ||||||||||||||||||||||
100,000 | (22) | — | $ | 1.95 | 5/20/2019 |
Option Awards** | |||||||||||||||||
Name | Number of Securities Underlying Unexercised Options # Exercisable | Number of Securities Underlying Unexercised Options # Unexercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options | Option Exercise Price | Option Expiration Date | ||||||||||||
Robin L. Smith | 54,000 | (1)(14) | — | — | $ | 1.90 | 6/1/2016 | ||||||||||
15,000 | (2) | — | — | $ | 1.90 | 12/4/2016 | |||||||||||
55,000 | (3) | — | — | $ | 1.90 | 1/17/2017 | |||||||||||
250,000 | (4) | — | — | $ | 1.90 | 9/26/2017 | |||||||||||
120,000 | (5) | — | — | $ | 1.63 | 2/26/2018 | |||||||||||
5,000 | (6) | — | — | $ | 1.13 | 10/30/2018 | |||||||||||
100,000 | (7) | — | — | $ | 1.95 | 5/20/2019 | |||||||||||
500,000 | (8) | — | — | $ | 1.71 | 7/6/2019 | |||||||||||
750,000 | (9) | — | — | $ | 2.04 | 10/28/2019 | |||||||||||
229,678 | (10) | — | — | $ | 1.90 | 10/28/2016 | |||||||||||
200,000 | (11) | — | — | $ | 1.66 | 11/3/2019 | |||||||||||
1,000,000 | (12) | 500,000 | (12) | — | $ | 1.74 | 4/3/2021 | ||||||||||
Andrew Pecora | — | 400,000 | (13) | — | $ | 1.50 | 1/19/2021 | ||||||||||
— | 500,000 | (14) | — | $ | 0.71 | 8/16/2021 | |||||||||||
Robert Preti | — | 400,000 | (15) | — | $ | 1.50 | 1/18/2021 |
Option Awards** | Stock Awards** | |||||||||||||||||||||||||||
Name | Number of Securities Underlying Unexercised Options # Exercisable | Number of Securities Underlying Unexercised Options # Unexercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options | Option Exercise Price*** | Option Expiration Date | 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 | |||||||||||||||||||||
Catherine M. Vaczy | 1,500 | (24) | — | $ | 1.90 | 4/19/2015 | ||||||||||||||||||||||
7,500 | (25)(51) | — | $ | 1.90 | 7/19/2015 | |||||||||||||||||||||||
2,000 | (26)(51) | — | $ | 1.90 | 12/21/2015 | |||||||||||||||||||||||
10,000 | (27) | — | $ | 1.90 | 6/1/2016 | |||||||||||||||||||||||
15,000 | (28) | — | $ | 1.90 | 12/4/2016 | |||||||||||||||||||||||
35,000 | (29) | — | $ | 1.90 | 9/26/2017 | |||||||||||||||||||||||
12,000 | (30) | — | $ | 1.70 | 12/18/2017 | |||||||||||||||||||||||
36,000 | (31) | — | $ | 1.63 | 2/27/2018 | |||||||||||||||||||||||
5,000 | (32) | — | $ | 1.13 | 10/30/2018 | |||||||||||||||||||||||
75,000 | (33) | — | $ | 1.95 | 5/20/2019 | |||||||||||||||||||||||
200,000 | (34) | — | $ | 1.71 | 7/7/2019 | |||||||||||||||||||||||
— | 100,000 | (35) | $ | 2.04 | 10/28/2019 | |||||||||||||||||||||||
53,955 | (36) | — | $ | 1.90 | 10/29/2016 | |||||||||||||||||||||||
— | 100,000 | (37) | $ | 1.66 | 11/3/2019 |
Option Awards** | Stock Awards** | |||||||||||||||||||||||||||
Name | Number of Securities Underlying Unexercised Options # Exercisable | Number of Securities Underlying Unexercised Options # Unexercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options | Option Exercise Price*** | Option Expiration Date | 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 | |||||||||||||||||||||
Larry A. May | 3,000 | (38) | — | $ | 1.90 | 9/10/2013 | ||||||||||||||||||||||
1,000 | (39) | — | $ | 1.90 | 11/14/2014 | |||||||||||||||||||||||
1,500 | (40)(51) | — | $ | 1.90 | 1/18/2016 | |||||||||||||||||||||||
10,000 | (41) | — | $ | 1.90 | 6/1/2016 | |||||||||||||||||||||||
5,000 | (42) | — | $ | 1.90 | 12/4/2016 | |||||||||||||||||||||||
— | — | 15,000 | (43) | $ | 1.90 | 12/4/2016 | ||||||||||||||||||||||
15,000 | (44) | — | $ | 1.90 | 9/26/2017 | |||||||||||||||||||||||
— | — | 5,000 | (45) | $ | 1.90 | 9/26/2017 | ||||||||||||||||||||||
36,000 | (46) | — | $ | 1.63 | 2/26/2018 | |||||||||||||||||||||||
5,000 | (47) | — | $ | 1.13 | 10/30/2018 | |||||||||||||||||||||||
150,000 | (48) | — | $ | 2.04 | 10/28/2019 | |||||||||||||||||||||||
34,084 | (49) | — | $ | 1.90 | 10/29/2016 | |||||||||||||||||||||||
— | — | 7,392 | (50) | $ | 1.90 | 10/29/2016 |
* | All numbers in this table and footnotes thereto have been adjusted (as appropriate) to reflect the one-for-ten reverse stock split effective as of August 31, 2006 and the one-for-ten reverse stock split effective as of August 9, 2007. |
** | All option |
(1) | Consists of options granted to Dr. Smith pursuant to the terms of her employment agreement dated as of May 26, 2006, which vested |
(2) | Consists of options granted to Dr. Smith by the Compensation Committee on December 5, 2006, which vested as to 10,000 options upon grant and as to 5,000 options on August 9, 2007 upon our Common Stock being listed for trading on the American Stock Exchange (now known as the NYSE |
(3) | This option was granted to Dr. Smith in connection with her entering into an amendment to her employment agreement on January 26, 2007, and vested as to (i) 25,000 options upon the first closings in |
(4) | Consists of options granted to Dr. Smith by the Compensation Committee September 27, 2007, which vested as to 150,000 options on the date of grant and as to 100,000 options upon consummation of the Erye Merger on October 30, 2009. |
(5) | Consists of options granted to Dr. Smith by the Compensation Committee on February 27, 2008, which vested (i) as to 40,000 options on the date of grant, (ii) as to 30,000 options upon consummation of the Erye Merger on October 30, 2009, (iii) as to 30,000 options on September 2, 2008 upon the achievement of a business milestone, and (iv) as to 20,000 options on October 31, 2008 upon the achievement of a business milestone. |
(6) | This option was granted to Dr. Smith by the Compensation Committee on October 31, 2008 and vested on November 2, 2008 upon the achievement of a business milestone. |
(7) | This option was granted to Dr. Smith by the Compensation Committee on May 8, 2009 and was vested in its entirety on the date of grant. |
(8) | This option was granted to Dr. Smith by the Compensation Committee on July 8, 2009 and vested as to 250,000 options on the date of grant and as to an additional 250,000 options upon consummation of the Erye Merger on October 30, 2009. |
(9) | An option was granted to Dr. Smith by the Compensation Committee effective October 29, 2009 upon |
(10) | This option was granted to Dr. Smith by the Compensation Committee as Discretionary Options on October 30, 2009 and was vested in its entirety on the date of grant. |
(11) |
Consists of options granted to |
(13) | Consists of options granted to |
(14) | This option was granted to |
Consists of options granted to |
On October 30, 2009, we amended our 2003 Equity Participation Plan (the “2003 Plan”) to grant our Board of Directors or an appropriate committee thereof the authority to reprice options, (ii) a one-time repricing of the exercise price of certain options and warrants to purchase shares of our Common Stock (the “Repricing”), and (iii) giving the Board of Directors or an appropriate committee thereof discretion to issue certain cash or equity awards in connection with the Repricing.
On October 30, 2009, we implemented the Repricing. We repriced an aggregate of 754,250 outstanding options (of which 500,500 were held by Dr. Smith, Ms. Vaczy and Mr. May and an additional 145,000 (not included in the 754,250 outstanding options) were held by Mr. Weinreb and agreed to by the Company pursuant to Mr. Weinreb’s Separation Agreement to be modified in accordance with the Repricing and to remain exercisable for an additional two years). Under the Repricing, options with a range of exercise prices from $2.39 to $25.00 were repriced to a strike price of $1.90 (the closing price of a share of our common stock on the NYSE Amex on the date of the Repricing). The following outstanding stock options held by our principal executive officer, principal financial officer and named executive officers were amended to reduce the strike price to $1.90: (i) for Robin L. Smith, an aggregate of 374,000 options with exercise prices ranging from $4.95 to $25.00; (ii) for Catherine M. Vaczy, an aggregate of 71,000 options with exercise prices ranging from $4.95 to $10.00; (iii) for Mark Weinreb, pursuant to a Separation Agreement, an aggregate of 145,500 options with exercise prices ranging from $3.00 to $10.00; and (iv) for Larry A. May, an aggregate of 55,500 options with exercise prices ranging from $4.95 to $18.00. We also repriced privately issued warrants (warrants issued other than to the public or the underwriters in our August 2007 public offering) to purchase approximately 1,203,890 shares of Common Stock with exercise prices ranging from $4.00 to $8.00, to a range of approximately $3.82 to $6.81. Certain of our named executive officers were holders of warrants to purchase shares of our common stock at $8.00 per share for which their exercise prices were reduced to approximately $6.18 per share. An aggregate of 27,427 of such warrants are held by named executive officers in the following quantities: Robin L. Smith (25,427) and Catherine M. Vaczy (2,000); and an aggregate of 34,092 of such warrants are held by two non-employee directors
Directors who are employees of the Company’sNeoStem or its wholly-owned subsidiaries do not receive additional cash compensation for serving as directors. Non-employeeNeoStem's non-employee directors of ours are reimbursed for out-of-pocket travel expenses incurred in their capacity as ourNeoStem directors. Pursuant to ourNeoStem's 2003 Equity Participation Plan, ourits 2009 Equity Compensation Plan and ourits 2009 Non-U.S. Based Equity Compensation Plan, all directors (including independent directors) are eligible to receive equity awards. Stock awards andThere were no option awards granted (or vesting) during 20092011 to our independentNeoStem's directors, areother than as reflected in the table and accompanying footnotesSummary Compensation Table or as reflected below.
There were no stock awards granted during 2011 to any of NeoStem's directors.
Name | Year | Fees Earned or Paid in Cash | Stock Awards(1) | Option Awards(1) | All Other Compensation | Total Compensation | ||||||||||||||||||
Richard Berman | 2009 | $ | 70,000 | $ | 132,800 | (2) | $ | 546,765 | (3) | $ | — | $ | 749,565 | |||||||||||
Steven S. Myers | 2009 | $ | — | $ | 65,350 | (4) | $ | 546,765 | (5) | $ | — | $ | 612,115 | |||||||||||
Joseph Zuckerman, M.D. | 2009 | $ | — | $ | — | $ | 238,689 | (6) | $ | — | $ | 238,689 | ||||||||||||
Drew Bernstein | 2009 | $ | — | $ | — | $ | 668,880 | (7) | $ | — | $ | 668,880 | ||||||||||||
Edward C. Geehr, M.D. | 2009 | $ | — | $ | — | $ | 281,235 | (8) | $ | — | $ | 281,235 | ||||||||||||
Eric H.C. Wei | 2009 | $ | — | $ | 255,000 | (9) | $ | 245,565 | (10) | $ | — | $ | 500,565 |
Name | Year | Fees Earned or Paid in Cash | Option Awards | (1) | Total Compensation | ||||||||||
Richard Berman | (2) | 2011 | $ | 60,000 | — | $ | 60,000 | ||||||||
Steven S. Myers | (3) | 2011 | $ | 60,000 | — | $ | 60,000 | ||||||||
Drew Bernstein | (4) | 2011 | $ | 60,000 | — | $ | 60,000 | ||||||||
Edward C. Geehr, M.D. | (5) | 2011 | $ | 60,000 | $ | 112,922 | (6) | $ | 172,922 | ||||||
Eric Wei | (7) | 2011 | $ | 60,000 | — | $ | 60,000 | ||||||||
Shi Mingsheng | (8) | 2011 | $ | 60,000 | — | $ | 60,000 | ||||||||
Martyn Greenacre | (9) | 2011 | $ | — | — | $ | — |
(1) | Amounts shown under |
(2) | At December 31, 2011, Mr. Berman had options to purchase 349,387 shares of NeoStem Common Stock outstanding, 282,721 of which were vested. |
(3) | At December 31, 2011, Mr. Myers had options to purchase 349,387 shares of NeoStem Common Stock outstanding, 282,721 of which were vested. At December 31, 2011, Mr. Myers had a total of 175,000 shares in stock awards outstanding, all of which were vested. |
(4) | At December 31, 2011, Mr. Bernstein had options to purchase 400,000 shares of NeoStem Common Stock outstanding, 333,334 of which were vested. |
(5) | At December 31, 2011, Dr. Geehr had options to purchase 265,000 shares of NeoStem Common Stock outstanding, 215,000 of which were vested. |
(6) | On |
(7) |
(8) | Mr. Shi did not participate in the equity portion of the |
(9) | Mr. Greenacre joined the Board on December 8, 2011. Mr. Greenacre's compensation as a Board member commenced under the 2012 Board of Directors Compensation Plan. |
Section 16(a) of the Securities Exchange Act of 1934 requires the Company’s directors and officers, and persons who own more than 10% of a registered class of the Company’s equity securities, to file initial reports of ownership and reports of changes in ownership$7,500 per calendar quarter commencing with the Securities and Exchange Commission. These persons are required byquarterly period ending March 31, 2012. Notwithstanding the Securities and Exchange Commissionforegoing, the Compensation Committee shall have the discretion to furnishrenew or adjust, as appropriate, this Board of Directors Compensation Plan at the Company with copiesend of all Section 16(a) reports that they file.
Based solely on a review of Forms 3, 4 and 5 and amendments thereto and/or written representations furnished to us, all parties subject to the reporting requirements of Section 16(a) filed all such required reports during andeach calendar year, including with respect to whether to continue offering the fiscal year ended December 31, 2009,choice under such plan between options and stock. In accordance with the following exceptions: (i) RimAsia Capital Partners, L.P., RimAsia Capital Partners GP, L.P., RimAsia Capital Partners GP, Ltd. and Eric Wei filed one late Formabove, on January 4, related2012 the Company issued an aggregate of 410,000 options to RimAsia’s acquisition of units comprised of Series D Stock and warrants to acquire our common stock; (ii) Enhance Biomedical Holdings Limited filed one late Form 3 related to its acquisition of our common stock upon the automatic conversion of its Series D Stock following the affirmative vote of holders of a majority of the voting power of our common stock on October 29, 2009; (iii) Shi Mingsheng filed one late Form 3 relating to his indirect beneficial ownership of thepurchase shares of our common stock held by FullbrightCommon Stock at a per share exercise price of $0.52 and one late Form 4 relating to his acquisition of580,000 shares of our common stock uponCommon Stock (120,000 of which were granted under the Company’s achievement of certain business milestones; (iv) Madam Zhang Jian filed one late Form 4 relating to her acquisition of shares of our common stock upon the Company’s achievement of certain business milestones; and (v) Fullbright filed one late Form 3 relating to its acquisition of shares of our common stock acquired in connection with the Merger and Fullbright filed one late Form 4 relating to its acquisition of shares of our common stock upon the Company’s achievement of certain business milestones.
We have adopted a Code of Ethics that applies to our directors, officers and employees, except our senior financial officers who are subject to a separate code of ethics. Both Codes of Ethics are available on our website,www.neostem.com.
FOR 2013
The Company’s Annual ReportMEETING MATERIALS
Thea Delaware corporation (the “Company”) and its stockholders by providing employees of the Company deliversand its proxy materialsDesignated Subsidiaries with an opportunity to purchase Common Stock of the Company through accumulated payroll deductions. By encouraging stock ownership, the Company seeks to attract, retain and annual reportsmotivate employees and to each stockholder of record. If any stockholders sharing an address wishencourage them to receive only one copy of each such document, they should send a letter with this requestdevote their best efforts to the Company’s principal executive offices, c/o Corporate Secretary, 420 Lexington Avenue, Suite 450, New York, New York 10170.
The Annual Meeting is called forbusiness and financial success of the purposes set forth in the Notice. The Board does not know of any matter for action by stockholders at such Annual Meeting other than the matters described in the Notice. However, the enclosed proxy will confer discretionary authority with respect to matters which are not known at the date of printing hereof which may properly come before the Annual Meeting.Company. It is the intention of the person namedCompany to have the Plan qualify as an “Employee Stock Purchase Plan” under Section 423 of the Code. The provisions of the Plan, accordingly, shall be construed in a manner consistent with the requirements of that section of the Code.
You are cordially invited to attendExercise Date if the Annual Meeting in person. Your participation in and discussionBoard determines that the termination of the Company’s affairsOffering Period or the Plan is in the best interests of the Company and its shareholders. Except as provided in Section 19 and this Section 20 hereof, no amendment may make any change in any Option theretofore granted which adversely affects the rights of any Participant. To the extent necessary to comply with Section 423 of the Code (or any successor rule or provision or any other applicable law, regulation or stock exchange rule), the Company shall obtain shareholder approval in such a manner and to such a degree as required.
1. | I hereby elect to participate in the NeoStem, Inc. 2012 Employee Stock Purchase Plan (the “Employee Stock Purchase Plan”) and subscribe to purchase shares of the Company's Common Stock in accordance with this Subscription Agreement and the Employee Stock Purchase Plan. |
2. | I hereby authorize payroll deductions from each paycheck in the amount of ____% of my covered cash Compensation on each payday (FROM 1 TO 15%) during the Offering Period in accordance with the Employee Stock Purchase Plan. (Please note that no fractional percentages are permitted.) |
3. | I understand that these payroll deductions shall be accumulated for the purchase of shares of Common Stock at the applicable Purchase Price determined in accordance with the Employee Stock Purchase Plan and that all of my payroll deductions received or held by the Company under the Plan may be used by the Company for any corporate purpose, and the Company shall not be obligated to segregate such payroll deductions. I understand that no interest or other earnings will accrue on my payroll deductions. |
4. | I understand that if I do not withdraw from an Offering Period, any accumulated payroll deductions will be used to automatically exercise my Option. |
5. | I have received and read the Prospectus for the Plan and am subscribing for the purchase shares of the Company's Common Stock after having considered the risks associated with an investment in such Common Stock. I have received a copy of the complete Employee Stock Purchase Plan. I understand that my participation in the Employee Stock Purchase Plan is in all respects subject to the terms of the Plan. |
6. | I understand that my ability to exercise the Option under this Subscription Agreement is subject to shareholder approval of the Employee Stock Purchase Plan. |
7. | Shares purchased for me under the Employee Stock Purchase Plan should be issued in the name(s) of (Employee or Employee and Spouse only):_______________________. |
8. | I understand that if I dispose of any shares received by me pursuant to the Plan within 2 years after the Enrollment Date (the first day of the Offering Period during which I purchased such shares) or one year after the Exercise Date, I will be treated for federal income tax purposes as having received ordinary income at the time of such disposition in an amount equal to the excess of the amount I received in such disposition over the price which I paid for the shares. I hereby agree to notify the Company in writing within 30 days after the date of any disposition of my shares and I will make adequate provision for Federal, state or other tax withholding obligations, if any, which arise upon the disposition of the Common Stock. The Company may, but will not be obligated to, withhold from my compensation the amount necessary to meet any applicable withholding obligation including any withholding necessary to make available to the Company any tax deductions or benefits attributable to sale or early disposition of Common Stock by me. If I dispose of such shares at any time after the expiration of the 2-year and 1-year holding periods, I understand that I will be treated for federal income tax purposes as having received income only at the time of such disposition, and that such income will be taxed as ordinary income only to the extent of an amount equal to the lesser of: (l) the excess of the fair market value of the shares at the time of such disposition over the purchase price which I paid for the shares; or (2) the excess of the fair market value of the shares at the time the Enrollment Date (the first day of the Offering Period during which I purchased such shares) over the purchase price which I paid for the shares. The remainder of the gain, if any, recognized on such disposition will be taxed as capital gain. |
9. | I hereby agree to be bound by the terms of the Employee Stock Purchase Plan. The effectiveness of this Subscription Agreement is dependent upon my eligibility to participate in the Employee Stock Purchase Plan. |
10. | In the event of my death, I hereby designate the following as my beneficiary(ies) to receive all payments and shares due me under the Employee Stock Purchase Plan: |
Proposal 2 presents(as amended and restated as of October 5, 2012), subject to stockholder approval at the 2012 annual meeting of stockholders on October 5, 2012 (the “
Plan (the “non-U.S. Plan”) was merged with and into the Plan. All options and awards outstanding under the non-U.S. Plan as of the Merger Date shall continue to be outstanding in accordance with and subject to the terms of this Plan and the terms and conditions of the applicable grant or award agreements. For purposes of such grant or award agreements, any and all references to the non-U.S. Plan shall be deemed to be references to this Plan.
1 | By action of the Administrator on December 15, 2010, all options granted to consultants shall carry a term of three years unless otherwise expressly provided in the applicable Grant Agreement. |
Other than All options and awards granted or awarded under the amendmentnon-U.S. Plan on or prior to the text of Section 3Merger Date shall be treated as set forth above, in all other respects the text of the NeoStem, Inc. 2009 Equity Compensation Plan would appear as such document was filed inAnnex F to our Pre-Effective Amendment No. 4 to Registration Statement on Form S-4/A, File No. 333-160578.
Proposal 3 presents for stockholder consideration the following amendment to Section 3 of the NeoStem, Inc. Non-U.S. Based Equity Compensation Plan:
3.Stock Subject to the Plan. Subject to the provisions of Section 16(a) of the Plan, the maximum aggregate number of Shares that may be issued under the Plan is 8,700,000 Shares. The Shares may be authorized but unissued, or reacquired, shares of Common Stock. If a Warrant or Stock Appreciation Right expires or becomes unexercisable without having been exercised in fullgranted or is canceled or terminated, or if any Sharesawarded under this Plan for purposes of Restricted Stock or Shares underlying a Stock Award are forfeited or reacquired bydetermining the Company, the Shares that were subject thereto shall be added back to thenumber of Shares available for issuance under this Plan in accordance with this Section 3.
Otherwritten notice, the Company shall deliver to the person exercising the Stock Appreciation Right stock certificates for the Shares to which that person is entitled under Section 14(d) hereof.