(1) | We valued the stock awards using the closing price of our common stock on The NASDAQ Capital Market on December 31, 2018, the last business day of 2018, which was $2.38 per share. (2) | Represents options that are subject to a three-year vesting schedule pursuant to whichone-third of the options vest on theone-year anniversary of the grant date (which is 10 years prior to the option’s expiration date) and the remainder vest in equal quarterly installments thereafter, generally subject to the named executive officer’s continued employment or service with the Company. |
(3) | Represents performance shares that would have vested on March 31, 2019 if a certain90-day average closing price of our common stock on The NASDAQ Capital Marketsuch date was achieved, or on Decemberan earlier change of control based on the per share stock price in the change of control transaction, generally subject, in each case, to the named executive officer’s continued employment or service with the Company. These shares were canceled March 31, 2015, which2019 as the performance criteria was $4.54 per share.not achieved. |
(2)(4) | The option vests in two equal quarterly installments beginning March 13, 2016, providedRepresents options that vest on the fifth anniversary of the grant date (which is 10 years prior to the option’s expiration date), generally subject to the named executive remains employedofficer’s continued employment or service with us.the Company. |
(3)(5) | TheRepresents performance shares that vest on March 31, 2022 based on the achievement of a Company performance milestone, generally subject, in each case, to the named executive officer’s continued employment or service with the Company. The number of shares reported in the table represent the number of performance shares that would be earned assuming achievement of performance goal. |
(6) | Represents performance shares that vest on March 31, 2020 based on the achievement of certain key Company performance milestones. Amountsmilestones, generally subject to named executive officer’s continued employment with the Company. The number of shares reported in the table represent the target number of performance shares. |
(4) | The award vests in two equal annual installments beginning January 2, 2016, provided the executive remains employed with us. |
(5) | The option vests in two annual installments beginning April 1, 2016, provided the executive remains employed with us. |
(6) | The option vests in five equal quarterly installments beginning February 14, 2016, provided the executive remains employed with us. |
(7) | The option vests in three equal annual installments beginning February 14, 2015. |
(8) | The option vests in thirteen equal quarterly installments beginning February 12, 2016, provided the executive remains employed with us. |
(9) | The option vests in three equal annual installments beginning January 10, 2016, provided the executive remains employed with us. |
(10) | The performance-based option awards vest based on theshares that would be earned assuming 100% achievement of certain key Company performance milestones.goals. |
Option ExercisesEmployment Agreements
We entered into an employment agreement with Dr. Armen in 2005 and Stock Vestedsubsequently amended the agreement in 2009 and 2010. Dr. Armen’s employment agreement sets forth his initial base salary and target annual bonus opportunity, both of which have subsequently increased, and provides for 2015severance payments and benefits in the event of a qualifying termination of his employment, as described under “Potential Payments The following table shows
Upon Termination or Change in Control” below. Dr. Armen’s employment agreement includes restrictive covenants with respect to confidential information about restricted stock that vested in 2015 and the value realized on those awards byassignment of intellectual property, and includesnon-competition and employeenon-solicitation/no-hire covenants that apply for the greater of 18 months following his termination of employment or the period during which Dr. Armen receives severance payments and benefits. Through our named executive officerssubsidiary Agenus UK Limited, we entered into an employment agreement with Dr. Duncan in 2015. No stock options were exercised by our named executive officers2016. Dr. Duncan’s employment agreement sets forth his initial base salary and target annual bonus opportunity, both of which have subsequently increased, and provides for severance payments and benefits in 2015. | | | | | | | | | | | Stock Awards | | Name | | Number of Shares Acquired On Vesting (#) | | | Value Realized On Vesting ($)(1) | | Ozer Baysal | | | 6,250 | | | | 24,875 | |
(1) | Determined by multiplying the number of shares that vested by the closing price of our common stock on the date of vesting. |
Pension Benefits for 2015the event of a qualifying termination of his employment, as described under “Potential Payments Upon Termination or Change in Control” below.
We dohave not entered into an employment agreement with Dr. Buell. We have any plans providingentered into change of control agreements with Drs. Duncan and Buell. Their change of control agreements are described under “Potential Payments Upon Termination or Change of Control” below. Retirement Benefits We maintain a 401(k) retirement plan in which our eligible U.S. employees, including Drs. Armen and Buell, are able to participate and provide employer matching contributions under such plan equal to $0.50 for payments or other benefitseach $1.00 contributed by an employee. Our employer matching contribution is capped at 3% of an employee’s overall contributions to our named executive officers at, following, or in connection with, retirement. Nonqualified Defined Contribution and Other Nonqualified Deferred Compensation Plans for 2015
401(k) plan. We do not have any nonqualifiedcontribute to a private defined contribution plans or other deferred compensation planspension plan for our named executive officers.U.K. employees, including Dr. Duncan. Under the terms of Dr. Duncan’s employment agreement, we are obligated to make pension contributions for Dr. Duncan in an amount equal to 10% of his base salary. Potential Payments Upon Termination or Change of Control We have entered into certain agreements and maintain certain plans that may require us to make certain payments and/or provide certain benefits towith each of our named executive officers that provide for certain payments and benefits in the event of a terminationcertain terminations of employment or a change of control. Dr. Armen, Dr. Stein and Ms. Valentine are each currently party to employment and change of control agreements providing for payments in connection with such officers’ termination of employment or a change of control. Ms. Klaskin, Mr. Baysal and Mr. Ballantyne are each party to a change of control arrangement providing for payments in connection with a change of control. A “change of control” is defined in each of the agreements and plan generally as (i) the acquisition by any individual, entity or group of 50% or more of the common stock of the Company, (ii) a change in the incumbent Board such that incumbent directors cease to constitute at least a majority of our Board, (iii) a sale or other disposition of all or substantially all of the assets of the Company, or (iv) approval by the stockholders of the Company of a complete liquidation or dissolution of the Company. The following text and tables summarize the potential payments to each applicable named executive officer assuming that the triggering event occurred on December 31, 2015,2018, the last day of our fiscal year. As used in the following summary, the terms “cause,” “good reason” and “change of control” have the meaning set forth in the applicable agreement.Our Chief Executive Officer Under Dr. Armen’s employment and change in control agreement, if we terminate Dr. Armen’s employment without cause or if he terminates his employment for good reason, (as defined), he is entitled to receive from the Company: his base salary for a period of 18 months, plus a lump sum payment of 150% of the higher of his target annual incentive bonus for thatthe year of termination or his last actual annual incentive bonus,bonus; Company-paid coverage under our medical and dental plans for a period of 18 months following the date of termination,termination; a lump sum payment of $15,000 for outplacement assistance,assistance; agross-up for any taxes with respect to such outplacement assistance payment,payment; agross-up payment for any taxes, interest and penalties imposed by Section 4999 of the Code,Code; and at the Compensation Committee’s discretion, the acceleration of vesting of any unvested stock options. Under Dr. Armen’s employment and change in control agreement, “good reason” means the occurrence of any of the following events:
| (i) | failure to continue Dr. Armen in the position of Chief Executive Officer, |
| (ii) | a material and substantial diminution in the nature or scope of his responsibilities, duties or authority, |
| (iii) | a material reduction in base salary or benefits, or |
| (iv) | relocation of Dr. Armen’s principal office, without his prior consent, to a location more than 30 miles away (in the event of a change of control). |
Upon a change of control, 100% of any of Dr. Armen’s outstanding unvested performance shares immediately vest and 50% of any of Dr. Armen’s outstanding unvested stock options and shares of restricted stock as of the change of control date become vested and exercisable and, in the case of shares of restricted stock, no longer subject to forfeiture. If a change of control occurs and, within 24 months, we terminate Dr. Armen’s employment without cause or if he terminates his employment for good reason, he is entitled to receive from the Company: a lump sum payment of 24 months of base salary plus two times the higher of his target annual incentive bonus for thatthe year of termination or his last actual annual incentive bonus, Company-paid coverage under our medical and dental plans for a period of 24 months following the date of termination, a lump sum payment of $15,000 for outplacement assistance, agross-up for any taxes with respect to such outplacement assistance payment, agross-up payment for any taxes, interest and penalties imposed by Section 4999 of the Code and acceleration of vesting for all unvestedthen-unvested stock options, performance shares and shares of restricted stock as of the date of termination. Additionally, under Dr. Armen’s employment and change in control agreement, he is subject to post-terminationnon-competition andnon-solicitation restrictions that apply for the greater of a period of 18 months post-termination or the period during which he is receiving post-termination payments from us. The following table shows the severance payments and benefits that would be payable to Dr. Armen in the event of a termination of employment without cause or resignation for good reason, including within 24 months following a change of control, assuming such termination and change of control occurred on December 31, 2018. | Executive Benefits and Payments Upon Termination or Change of Control | | Termination in Connection with a Change of Control* ($) | | | Termination without Cause or with Good Reason* ($) | | | Termination without Cause or Resignation for Good Reason within 24 months following a Change of Control* ($) | | | Termination without Cause or with Good Reason* ($) | | Base Salary | | | 1,150,000 | | | | 862,500 | | | | 1,233,000 | | | | 924,750 | | Bonus Payment | | | 980,000 | | | | 735,000 | | | | 1,050,000 | | | | 787,500 | | Acceleration of Vesting of Equity | | | 1,331,985 | | | | n/a | | | | 1,862,255 | | | | N/A | | Perquisites and Other Personal Benefits | | | 48,904 | | | | 41,888 | | | | 53,653 | | | | 44,551 | | Gross-up Payments for Change of Control Excise Taxes | | | 1,392,375 | | | | n/a | | | | — | | | | N/A | | Total: | | | 4,903,264 | | | | 1,639,388 | | | | 4,198,908 | | | | 1,756,801 | |
* We used the following assumptions to calculate these payments: Represents theThe value associated with cashing out all stock options and performance shares that accelerate as a result of the event described in the table is based on a stock price of $4.54,$2.38, which was the closing market price of our common stock on December 31, 2015.2018, the last business day of 2018. Awards were valued based on the number of shares associated with the then-unvested portion of each accelerated award multiplied by the difference between $4.54$2.38 and the exercise price related to such award (if any). For purposes of the table, we have assumed that performance shares that accelerate vest assuming achievement of the performance metrics at target.maximum levels. Upon a change of control without an associated termination of employment, the acceleration of vested equity would be valued at $1,156,071.$1,092,325.
We assumed in each case that the termination of employment is not forwithout cause, the executiveDr. Armen does not violate hisnon-competition ornon-solicitation agreements with us following such termination, the executivehe does not receive medical and dental insurance coverage from another employer within two years (or 18 months, as applicable) of such termination, or change of control, and the executivehe does not incur legal fees requiring reimbursement from us. We used the same assumptions for health care benefits that we used for our financial reporting under generally accepted accounting principles in the United States. Gross-up payments assume a December 31, 2015 change of control and termination date. For purposes of thesecalculating hisgross-up payments, the following are included as parachute payments: cash severance payable upon termination in connection with a change of control, the value of any outplacement services and benefits continuation due in the event of such a termination (including a taxgross-up in respect of outplacement services), and the value of the acceleration of outstanding equity awards, all determined in accordance with applicable tax regulations.
We have assumed that all outstanding options are cashed out in the assumed transaction for an amount equal to the excess, if any, of $4.54$2.38 (the closing price of our common stock on December 31, 2015)2018) over the exercise price per share under the option, multiplied by the number of shares subject to the option.option and that all performance shares vest in full. Finally, these figures assume that none of the parachute payments will be discounted as attributable to reasonable compensation and no value is attributed to the executive executing anon-competition agreement in connection with the assumed termination of employment. Other Named Executive Officers Under theDr. Duncan’s employment and change in control agreement, for Dr. Stein and Ms. Valentine, if we terminate Dr. Stein’s or Ms. Valentine’sDuncan’s employment without cause or if Dr. Stein or Ms. Valentine terminates his/her employmentother than for a material reduction in base salary or benefits (“Compensation Reduction”), each of Dr. Stein and Ms. Valentinegross misconduct, he is entitled 6 months’ notice of such termination or to receive from the Company: his/herhis base salary for a period of 126 months plus a lump sum payment of the higher of the officer’s target incentive bonus for that year or her last actual incentive bonus,and
Company-paid coverage under our medical and dental plans for a period of 126 months following the date of termination,termination. The following table shows the severance payments and benefits that would be payable to Dr. Duncan in the event of a lump sum paymenttermination of $15,000employment, other than for outplacement assistance, a gross-up for any taxes with respect togross misconduct, assuming such outplacement assistance payment,
a gross-up payment for any taxes, interest and penalties imposed by Section 4999 of the Code, and
at the Compensation Committee’s discretion, the acceleration of vesting of any unvested equity awards.
Under the employmenttermination and change of control occurred on December 31, 2018.
| | | | | Executive Benefits and Payments Upon Termination or Change of Control | | Termination other than for Gross Misconduct* ($) | | Base Salary | | | 180,000 | | Pension Payment | | | 18,000 | | Perquisites and Other Personal Benefits | | | 22,685 | | Total: | | | 220,685 | |
* The amounts reported in controlthis table have been converted to U.S. dollars based on a conversion ratio of 1.33 British pounds to one U.S. dollar for 2018, the average annual exchange rate. Under agreements for Dr. Steinwith Drs. Duncan and Ms. Valentine,Buell, upon a change of control: 100% of any of Dr. Stein’s or Ms. Valentine’s outstanding unvested performance shares as of the change of control date immediately vest. 50% of any of Dr. Stein’s or Ms. Valentine’s outstanding unvested stock options and shares of restricted stock as of the change of control date become vested and exercisable, and in the case of shares of restricted stock, no longer subject to forfeiture.
If a change of control occurs and, within 18 months, we terminate Dr. Stein’s or Ms. Valentine’s employment without cause or if Dr. Stein or Ms. Valentine terminates his/her employment for a Compensation Reduction or good reason (as defined below), each of Dr. Stein and Ms. Valentine is entitled to receive from the Company:
a lump sum payment of 18 months of base salary plus 150% of the higher of his/her target incentive bonus for that year or his/her last actual incentive bonus,
coverage under our medical and dental plans for a period of 18 months following the date of termination,
a lump sum payment of $15,000 for outplacement assistance,
a gross-up for any taxes with respect to such outplacement assistance payment,
for Ms. Valentine only, gross-up payment for any taxes, interest and penalties imposed by Section 4999 of the Code, and
acceleration of vesting for all unvested stock options and shares of restricted stock as of the date of termination.
Under the employment and change in control agreements for Dr. Stein and Ms. Valentine, “good reason” means the occurrence of any of the following events:
| (i) | relocation of Dr. Stein’s or Ms. Valentine’s principal office, without their prior consent, to a location more than 30 miles away, |
| (ii) | failure of the Company to continue Dr. Stein or Ms. Valentine in the position held immediately prior to the change of control, or |
| (iii) | a material and substantial diminution in the nature or scope of his/her responsibilities, duties or authority. |
Under the change of control arrangement with Ms. Klaskin, upon a change of control:
100% of any of Ms. Klaskin’sexecutive’s outstanding unvested performance shares as of the change of control date immediately vest;
50% of each of Ms. Klaskin’s outstanding unvested stock options and shares of unvested restricted stock as of the change of control date become vested and exercisable, and in the case of restricted stock, no longer subject to forfeiture; and If a change of control occurs and, within 18 months, we terminate Ms. Klaskin’s employment without cause or if Ms. Klaskin terminates her employment for good reason, she is entitled to receive from the Company:
a lump sum payment of 18 months of base salary plus 150% of the higher of her target incentive bonus for that year or her last actual incentive bonus,
coverage under our medical and dental plans for 18 months following the date of termination,
a lump sum payment of $15,000 for outplacement assistance,
a gross-up for any taxes with respect to such outplacement assistance payment, and
the acceleration of vesting of all unvested stock options and unvested restricted stock as of the date of the change in control.
Under the change of control arrangements with Mr. Ballantyne and Mr. Baysal, upon a change of control:
100% of each officer’s outstanding unvested performance shares as of the change of control date immediately vest;
50% of each officer’sexecutive’s outstanding unvested stock options and shares of unvested restricted stock as of the change of control date become vested and exercisable, and in the case of restricted stock, no longer subject to forfeiture; and
If a change of control occurs and, within 18 months, we terminate the officer’sexecutive’s employment without cause or if either officer terminates his employmentthe executive resigns for good reason, he isthe executive will be entitled to receive from the Company: a lump sum payment of 12 months of base salary plus 100% of the higher of his or her target annual incentive bonus for thatthe year of termination or his or her last actual annual incentive bonus,bonus; Company-subsidized coverage under our medical and dental plans for 12 months following the date of termination,termination; a lump sum payment of $10,000 for outplacement assistance,assistance; agross-up for any taxes with respect to such outplacement assistance payment,payment; and the acceleration of vesting of all unvested stock options and unvested restricted stock as of the date of the change inof control. Under the changeDr Buell is not be entitled to any severance payments or benefits in connection with any other termination of control arrangement with Mr. Ballantyne, Ms. Klaskin,her employment.
Drs. Duncan and Mr. Baysal, “good reason” means: (i) a material reduction in his/her base salary, benefits, duties or responsibilities; or (ii) relocation of his/her principal office, without his/her consent, to a location to a location more than 30 miles away. Additionally, under Mr. Ballantyne’s, Ms. Klaskin’s, Mr. Baysal’s, Dr. Stein’s and Ms. Valentine’s arrangements, theyBuell are each subject to a post-terminationnon-competition andnon-solicitation period restrictions that apply for the greater of 12 months post-termination or the period during which the officerexecutive is receiving post-termination payments from us.
The following table shows the severance payments and benefits that would be payable to Drs. Duncan and Buell in the event of a termination of employment without cause or resignation for good reason within 18 months following a change of control, assuming such termination and change of control occurred on December 31, 2018. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Termination in Connection with a Change of Control* ($) | | | | | | Termination without Cause or For Compensation Reduction or with Good Reason* ($) | | Executive Benefits and Payments Upon Termination or Change of Control | | Dr. Stein | | | Mr. Ballantyne | | | Ms. Klaskin | | | Mr. Baysal | | | Ms. Valentine | | | Mr. Ballantyne | | | Ms. Klaskin | | | Mr. Baysal | | | Dr. Stein | | | Ms. Valentine | | Base Salary | | | 600,000 | | | | 350,000 | | | | 375,000 | | | | 209,000 | | | | 510,000 | | | | n/a | | | | n/a | | | | n/a | | | | 400,000 | | | | 340,000 | | Bonus Payment | | | 374,400 | | | | 140,000 | | | | 163,125 | | | | 92,796 | | | | 330,480 | | | | n/a | | | | n/a | | | | n/a | | | | 249,600 | | | | 220,320 | | Acceleration of Vesting of Equity | | | 817,402 | | | | 298,310 | | | | 211,243 | | | | 306,620 | | | | 428,851 | | | | n/a | | | | n/a | | | | n/a | | | | n/a | | | | n/a | | Perquisites and Other Personal Benefits | | | 44,688 | | | | 11,172 | | | | 19,557 | | | | 12,714 | | | | 48,613 | | | | n/a | | | | n/a | | | | n/a | | | | 33,516 | | | | 38,068 | | Gross-up Payments for Change of Control Excise Taxes | | | n/a | | | | n/a | | | | n/a | | | | n/a | | | | 530,468 | | | | n/a | | | | n/a | | | | n/a | | | | n/a | | | | n/a | | Total: | | | 1,836,490 | | | | 799,482 | | | | 768,925 | | | | 621,130 | | | | 1,848,412 | | | | n/a | | | | n/a | | | | n/a | | | | 683,116 | | | | 598,388 | |
* | We used the following assumptions to calculate these payments: |
| | | | | | | | | Executive Benefits and Payments Upon Termination or Change of Control | | Dr. Duncan | | | Dr. Buell | | Base Salary | | | 360,000 | | | | 400,000 | | Bonus Payment | | | 166,663 | | | | 250,000 | | Acceleration of Vesting of Equity | | | 103,768 | | | | 168,376 | | Perquisites and Other Personal Benefits | | | 17,565 | | | | 19,755 | | Total: | | | 647,996 | | | | 838,131 | |
* We used the following assumptions to calculate these payments: Represents theThe value associated with cashing out all stock options and performance shares and, for Mr. Baysal, restricted shares that accelerate as a result of the event described in the table,is based on a stock price of $4.54,$2.38, which was the closing market price of our common stock on December 31, 2015.2018, the last business day of 2018. Awards were valued based on the number of shares associated with the then-unvested portion each accelerated award multiplied by the difference between $4.54$2.38 and the exercise price related to such award (if any). For purposes of the table, we have assumed that performance shares that accelerate vest in full, assuming achievement of the performance metrics at target. Upon a change of control without termination, the acceleration of vested equity would be valued at $635,985, $298,310, $176,647, $242,376, and $383,468 for Dr. Stein, Mr. Ballantyne, Ms. Klaskin, Mr. Baysal, and Ms. Valentine, respectively.maximum levels.
We assumed in each case that termination of employment is not forwithout cause, the executive does not violate his or hernon-competition ornon-solicitation agreements with us following such termination, the executive does not receive medical and dental insurance coverage from another employer within 1812 months of such termination, or change of control, and the executive does not incur legal fees requiring reimbursement from us. We used the same assumptions for health care benefits that we used for our financial reporting under generally accepted accounting principles in the United States. Gross-up payments assume a December 31, 2015 change of control and termination date. For purposes of these payments, the following are included as parachute payments: cash severance payable upon termination in connection with a change of control, the value of any outplacement services and benefits continuation due in the event of such a termination, and the value of the acceleration of outstanding equity awards, all determined in accordance with applicable tax regulations. We have assumed that all outstanding options are cashed out in the assumed transaction for an amount equal to the excess, if any, of $4.54 (the closing price of our common stock on December 31, 2015) over the exercise price per share under the option, multiplied by the number of shares subject to the option. Finally, these figures assume that none of the parachute payments will be discounted as attributable to reasonable compensation and no value is attributed to the executive executing a non-competition agreement in connection with the assumed termination of employment.
Change of Control Arrangements Under Our 2009 Equity Incentive Plan
Under our 2009 Equity Incentive Plan, in the event of a change of control (as determined by the Board), the Board may make a provision for the continuation, acceleration or assumption or substitution of unvested options and restricted stock, or provide for a cash-out of outstanding awards.
DIRECTOR COMPENSATION The following table shows the compensation paid or awarded to eachnon-employee director for his or her service as anon-employee director in 2015:2018: | Name | | Fees Earned or Paid in Cash(1) ($) | | | Option Awards(2)(3) ($) | | | All Other Compensation ($) | | | Total ($) | | | Fees Earned or Paid in Cash(1) ($) | | Option Awards(2)(4) ($) | | | Stock Awards(3) ($) | | Total ($) | | Brian Corvese | | | 59,000 | | | | 103,881 | | | | — | | | | 162,881 | | | | 115,875 | (5) | | 43,702 | | | | 98,000 | (6) | | 233,702 | | Tom Dechaene | | | 47,500 | | | | 103,881 | | | | — | | | | 151,381 | | | Allison Jeynes-Ellis | | | | 15,000 | | | 92,782 | | | | 60,000 | | | 167,782 | | Wadih Jordan | | | 46,000 | | | | 103,881 | | | | — | | | | 149,881 | | | | 70,000 | | | 43,702 | | | | — | | | 113,702 | | Shahzad Malik | | | 40,750 | | | | 103,881 | | | | — | | | | 144,631 | | | Shalini Sharp | | | 40,750 | | | | 103,881 | | | | — | | | | 144,631 | | | Ulf Wiinberg | | | | 73,375 | (5) | | 43,702 | | | | 78,000 | (6) | | 171,202 | | Timothy Wright | | | 80,000 | | | | 103,881 | | | | — | | | | 183,881 | | | | 115,000 | | | 43,702 | | | | 60,000 | | | 218,702 | |
(1) | Includes fees earned in 20152018 but deferred pursuant to our Directors’ Deferred Compensation Plan (as amended). |
(2) | Amounts shown reflect the grant date fair value of stock options awardedgranted during 20152018 determined in accordance with ASC Topic 718, disregarding the effects of estimated forfeitures. Please see the notesNote 12 to our consolidated financial statements included inof our Annual Report on Form10-K for the year ended December 31, 2015 as filed on March 15, 20162018 for the assumptions used in valuing such awards. Each director was granted 18,750 options during 2015. |
(3) | AggregateAmounts shown reflect the grant date fair value of restricted stock units granted to members of the Executive Committee of the Board during 2018, determined in accordance with ASC Topic 718, disregarding the effects of estimated forfeitures. Please see Note 12 to our consolidated financial statements of our Annual Report on Form10-K for the year ended December 31, 2018 for the assumptions used in valuing such awards. |
(4) | The aggregate number of stock option awards and RSUs held by each director as of December 31, 2015:2018 was: |
| | | | | | | | | | | Stock Options | | | RSUs | | Brian Corvese | | | 202,916 | | | | 21,276 | | Allison Jeynes-Ellis | | | 75,000 | | | | 28,985 | | Wadih Jordan | | | 207,550 | | | | — | | Ulf Wiinberg | | | 167,500 | | | | 15,957 | | Timothy Wright | | | 223,417 | | | | 15,957 | |
(5) | Includes $5,875 earned as a member of the AgenTus Therapeutics, Inc. board of directors. |
(6) | | | | Brian CorveseIncludes AgenTus Therapeutics, Inc. stock award valued at $18,000.
| | | 82,916 | | Tom Dechaene
| | | 81,250 | | Wadih Jordan
| | | 81,250 | | Shahzad Malik
| | | 58,750 | | Shalini Sharp
| | | 186,749 | | Timothy Wright
| | | 103,417 | |
Employee directors do not receive any additional compensation for their service as a director. Each year, the Compensation Committee reviews the compensation we pay to ournon-employee directors. The committee compares our Board compensation to compensation paid tonon-employee directors by similarly sized public companies in similar businesses.our peer group, described above. The committee also considers the responsibilities that we ask our Board members to assume and the amount of time required to perform those responsibilities. Cash and Equity Compensation forNon-Employee Directors for 20152018 | Type of Fee | | | | | | | Annual retainer | | $ | 34,000 | | | $ | 40,000 | | Additional annual retainer for Lead Director | | $ | 18,000 | | | $ | 20,000 | | Additional annual retainer for Audit and Finance Committee Chair | | $ | 18,000 | | | $ | 20,000 | | Additional annual retainer for Audit and Finance Committee member | | $ | 9,000 | | | $ | 10,000 | | Additional annual retainer for Compensation Committee Chair | | $ | 12,000 | | | $ | 20,000 | | Additional annual retainer for Compensation Committee member | | $ | 7,000 | | | $ | 10,000 | | Additional annual retainer for Corporate Governance and Nominating Committee Chair | | $ | 7,500 | | | $ | 15,000 | | Additional annual retainer for Corporate Governance and Nominating Committee member | | $ | 4,500 | | | $ | 7,500 | | Additional annual retainer for Business & Development Advisory Committee member | | $ | 4,500 | | | Initial stock option grant(1) | | | 25,000 shares | | | Annual stock option grant(1) | | | 18,750 shares | | | Additional annual retainer for Executive Committee Chair | | | $ | 40,000 | |
| | | | | Type of Fee | | | | Additional annual retainer for Executive Committee member | | $ | 20,000 | | Additional annual RSU grant for Executive Committee Chair(1) | | $ | 80,000 | | Additional annual RSU grant for Executive Committee member(1) | | $ | 60,000 | | Additional meeting fee for each individual Board or Committee meeting in excess of 10 meetings | | $ | 1,500 | | Initial stock option grant(2) | | | 75,000 shares | | Annual stock option grant(3) | | | 50,000 shares | |
(1) | EachRSU grants to the Executive Committee Chair and members vest in full on theone-year anniversary of the grant date. The number of shares underlying the award is based on the closing price of the Company’s common stock on Nasdaq on the grant date. |
(2) | Initial stock option grant vestsgrants vest over three years in equal annual installments. Any unvested portion vests automaticallyinstallments on each anniversary of the date of grant, generally subject to continued service through the applicable vesting date. |
(3) | Annual stock option grants vest entirely on the last dayearlier of (i) theone-year anniversary of the term of a director who does not stand for reelection atgrant date and (ii) the end of his or her term.following year’s annual stockholder meeting, in each case, generally subject to continued service through the vesting date. |
Agenus also reimburses eachnon-employee directors director for reasonable travel andout-of-pocket expenses in connection with his or her service as director. Our Directors’ Deferred Compensation Plan (as amended) (the “DDCP”) permits eachnon-employee director to defer all or a portion of his or her cash compensation until his or her service ends or until a specified date. A director may credit his or her deferred cash into an interest bearing account, an equity account tied to the value of our common stock, or a combination of both. As a matter of policy, directors are encouraged to elect to defer twenty-five percent of their cash compensation in the form ofinto an equity account under the DDCP. The Board has adopted a policy guideline that encourages directors to hold 10,000 shares of our common stock within a reasonable period of time following their election or appointment to the Board. In addition to purchasing shares in the open market, directors may utilize the DDCP or the Agenus Board Compensation Policy, which allows directors to receive their compensation in stock, to acquire these shares. In accordance with the requirements of the DDCP, elections to defer compensation thereunder must be made prior to the end of the third quarter of the prior calendar year. In some cases, a director, due to securities law restrictions, may be unable to purchase such shares until such election takes effect. OWNERSHIP OF OUR COMMON STOCK Ownership By Management On April 18, 2016,24, 2019, Agenus had [●] shares of common stock issued and outstanding. The table below shows certain information about the beneficial ownership of Agenus common stock, as of April 18, 2016,24, 2019, by: each of our current directors, each nominee for director,
each of our named executive officers, and all of our current directors and executive officers as a group. In accordance with SEC rules, we have included in the column “Number of Issued Shares” all shares of common stock over which the person has sole or shared voting or investment power as of April 18, 2016,24, 2019, and we have included in the column “Number of Shares Issuable” all shares of common stock that the person has the right to acquire within 60 days after April 18, 201624, 2019 through the exercise of any stock options, the vesting of restricted shares, or in the case of directors, any shares to be distributed under the DDCP. All shares that a person has a right to acquire within 60 days of April 18, 201624, 2019 are deemed outstanding for the purpose of computing the percentage beneficially owned by the person, but are not deemed outstanding for the purpose of computing the percentage beneficially owned by any other person.person Unless otherwise indicated, each person has the sole power (or shares the power with a spouse) to invest and vote the shares of common stock listed opposite the person’s name. Where applicable, ownership is subject to community property laws. Our inclusion of shares in this table as beneficially owned is not an admission of beneficial ownership of those shares by the person listed in the table. Except as noted, the address of each stockholder is c/o Agenus Inc., 3 Forbes Road, Lexington, Massachusetts 02421. | | | | | | | | | | | | | | | | | Name of beneficial owner | | Number of Issued Shares | | | Number of Shares Issuable | | | Total | | | Percent of Class | | Garo H. Armen, Ph.D.(1) | | | 1,467,531 | (2) | | | 1,831,590 | (3) | | | 3,299,121 | | | | | % | Wadih Jordan | | | — | | | | 133,515 | (4) | | | 133,515 | | | | | * | Timothy R. Wright | | | 1,666 | | | | 163,437 | (5) | | | 165,103 | | | | | * | Brian Corvese | | | — | | | | 59,166 | | | | 59,166 | | | | | * | Shalini Sharp | | | 104,270 | (6) | | | 162,999 | | | | 267,269 | | | | | * | Shahzad Malik, M.D(7) | | | 1,587,302 | | | | 26,668 | | | | 1,613,970 | | | | | % | C. Evan Ballantyne | | | 10,000 | | | | 37,500 | | | | 47,500 | | | | | * | Christine M. Klaskin | | | 44,940 | | | | 278,566 | | | | 323,506 | | | | | * | Ozer Baysal | | | 15,600 | | | | 199,500 | | | | 215,100 | | | | | * | Robert Stein | | | — | | | | 282,293 | | | | 282,293 | | | | | * | Karen H. Valentine | | | 51,534 | | | | 378,666 | | | | 430,200 | | | | | * | All current directors and executive officers as a group (11 persons) | | | 3,282,843 | | | | 3,553,900 | (8) | | | 6,836,743 | | | | | % |
| | | | | | | | | | | | | | | | | Name of beneficial owner | | Number of Issued Shares | | | Number of Shares Issuable | | | Total | | | Percent of Class | | Garo H. Armen, Ph.D.(1) | | | 1,362,407 | | | | 2,883,090 | | | | 4,245,497 | | | | [ | ●]% | Wadih Jordan | | | — | | | | 466,986 | (2) | | | 466,986 | | | | | * | Allison Jeynes-Ellis | | | — | | | | — | | | | — | | | | | * | Timothy R. Wright | | | 17,581 | | | | 451,568 | (3) | | | 469,149 | | | | | * | Brian Corvese | | | 21,220 | | | | 224,192 | | | | 245,412 | | | | | * | Ulf Wiinberg | | | 45,915 | | | | 225,002 | (4) | | | 270,917 | | | | | * | Alexander Duncan, Ph.D. | | | 21,026 | | | | 427,323 | | | | 448,349 | | | | | | Jennifer Buell, Ph.D. | | | 35,656 | | | | 437,325 | | | | 472,981 | | | | | * | All current directors and executive officers as a group (11 persons) | | | 1,646,777 | | | | 6,243,128 | (5) | | | 7,889,905 | | | | [ | ●]% |
(1) | Excludes shares owned through Antigenics Holdings LLC (“Holdings”). Dr. Armen is Chief Executive Officer, Chairman of the Board of Managers and a member of Holdings which owns 4,046 shares of our common stock. |
(2) | Includes 216,303 shares or our common stock held by the Garo Armen 2014 2 Year GRAT. Dr. Armen is the trustee and has investment authority for the GRAT. |
(3) | Includes 284,785 shares issuable upon exercise of warrants. |
(4) | Includes 76,015129,718 deferred shares to be distributed in accordance with the terms of our DDCP. |
(5)(3) | Includes 83,770106,097 deferred shares to be distributed in accordance with the terms of our DDCP. |
(6) | Represents shares held by the Sharp Family Trust. Ms. Sharp is a trustee of the Sharp Family Trust. |
(7)(4) | Includes 54,556 and 1,532,74641,545 deferred shares beneficially owned by Advent Life Sciences and Advent Life Sciences Fund II, respectively, for which Dr. Malik is a General Partner and shares voting and investment authority overto be distributed in accordance with the shares. Dr. Malik disclaims beneficial ownershipterms of such shares except to the extent of his pecuniary interest therein.our DDCP. |
(8)(5) | Includes 159,785277,360 deferred shares to be distributed in accordance with the terms of our DDCP and excludes shares held by Holdings as described in footnote (2)(1). |
Ownership By Certain Beneficial Owners This table shows certain information, based on filings with the SEC, about the beneficial ownership of our capital stock as of April 18, 201624, 2019 by each person known to us owning beneficially more than 5% of any class of our capital stock. Unless otherwise indicated in a footnote to this table, each person has the sole power to invest and vote the shares of common stock listed opposite the person’s name. | | | | | | | | | | | | | Name and Address of beneficial Owner | | Title of Class | | | Number of Shares | | | Percent of Class | | Brad M. Kelley 1410 Moran Road Franklin, TN 37069-6300 | |
| Common
Series A-1 Preferred |
| |
| 1,591,039
31,620 |
(1) | |
| [●]
100 | %
% | FMR LLC
245 Summer Street
Boston, MA 02210
| | | Common | | | | 4,789,278 | (2) | | | | % | Incyte Corporation 1801 AugustineCut-Off Wilmington, DE 19803 | | | Common | | | | 7,763,968 | (3)17,763,968 | | | | [●] | % | RTW Investments LP 412 West 15th Street New York, NY 10011 | |
| Common
Series C-1 Preferred |
| |
| 9,490,284
15,459 |
(2) | |
| [●]
100 | %
% | Gilead Sciences, Inc. 333 Lakeside Drive Foster City, CA 94404 | | | Common | | | | 11,111,111 | (3) | | | [●] | % | BlackRock, Inc. 55 East 52nd Street New York, NY 10055 | | | Common | | | | 6,846,902 | (4) | | | [●] | % |
(1) | Mr. Kelley owns 31,620 shares of our SeriesA-1 Convertible Preferred Stock, our only shares of outstanding SeriesA-1 preferred stock. These shares have an initial conversion price of $94.86 and are currently convertible into 333,333 shares of our common stock. If Mr. Kelley had converted all 31,620 shares of SeriesA-1 Convertible Preferred Stock into shares of common stock as of April 18, 2016,24, 20189 he would have held 1,924,372 shares of our common stock, or [●]% of the shares outstanding. |
(2) | As reported inBased solely upon information provided to us by RTW Investments, LP., RTW Master Fund, Ltd., and one or more of its funds, which are managed by RTW Investments, LP, (collectively, “RTW”), RTW owns (i) 9,490,284 shares of our common stock and (ii) 15,459 shares of our Series C-1 convertible preferred stock, which are convertible into common stock on a one-for-one thousand basis, or 15,459,000 shares of our common stock. Under the Schedule 13GCertificate of Designation of preferences and Rights and Limitations of SeriesC-1 Convertible Preferred Stock, RTW is limited to holding no greater than 9.99% of our shares of common stock, such limitation may be increased to up to 19.99% 60 days after notice by RTW to the Company. If RTW converted all 15,459 shares of Series C-1 Convertible Preferred Stock into shares of common stock as filed by FMR LLC on February 12, 2016.of April 24, 2019, it would have held 24,949,284 shares of our common stock, or [●]% of the shares outstanding. |
(3) | As reported in theBased solely upon information set forth on Schedule 13G as filed with the SEC on January 29, 2019 by Incyte CorporationGilead Sciences, Inc. |
(4) | Based solely upon information set forth on Schedule 13G filed with the SEC on February 20, 2015.8, 2019 by BlackRock, Inc. |
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE Our executive officers, directors, and 10% stockholders are required under Section 16(a) of the 1934 Act, to file reports of ownership and changes in ownership of our securities with the SEC. Based solely on a review of the copies of reports furnished to us, we believe that during our 20152018 fiscal year, our directors, executive officers, and 10% stockholders complied with all applicable Section 16(a) filing requirements.requirements, with the following exceptions: a Form 4 reporting the grant of an option to purchase common stock for the Chief Operating Officer, Jennifer Buell, was filed three days late, and a Form 4 reporting a grant of restricted stock units and an option to purchase common stock for a new Director, Allison M. Jeynes-Ellis, was filed three days late, each due to inadvertence. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Related Party Transactions Children of Armenia Fund Our Audit and Finance Committee approved a charitable contribution to the Children of Armenia Fund (“COAF”) totaling $125,000 for 2016.2018. Dr. Garo H. Armen, Agenus’ Chairman and Chief Executive Officer, is the founder and chairman of COAF. The 20162018 charitable contribution iswas comprised of a cash component and anon-cash component. The cash component iswas $75,000, which Agenus is payingpaid in quarterly installments. Thenon-cash component iswas $50,000, which iswas the estimated value of a portion of Agenus’ office space in its New York office that is beingwas (and continues to be) made available to COAF employees. Incyte
In January 2015, Agenus and 4-Antibody entered into a global license, development and commercialization agreement (the “Collaboration Agreement”) with Incyte Corporation and a wholly-owned subsidiary thereof, pursuant to which the parties agreed to develop and commercialize novel immuno-therapeutics using Agenus’ proprietary antibody discovery platforms. The collaboration was initially focused on four checkpoint modulator programs directed at GITR, OX40, LAG-3 and TIM-3, and in November 2015 the parties expanded the collaboration to include three additional CPM programs with undisclosed targets. In February 2015, Incyte made upfront payments to Agenus totaling $25.0 million. The parties will share all costs and profits for the GITR and OX40 antibody programs on a 50:50 basis, with Agenus eligible to receive potential milestone payments. Incyte is obligated to reimburse Agenus for all development costs that it incurs in connection with the LAG-3 and TIM-3 antibody programs, and Agenus will be eligible to receive potential milestone payments and royalties in connection with these programs.
For each profit-share product, Agenus will be eligible to receive up to $20.0 million in future contingent development milestones. For each royalty-bearing product, Agenus will be eligible to receive (i) up to $155.0 million in future contingent development, regulatory, and commercialization milestone payments and (ii) tiered royalties on global net sales at rates generally ranging from 6%-12%. For each royalty-bearing product, Agenus will also have the right to elect to co-fund 30% of development costs incurred following initiation of pivotal clinical trials in return for an increase in royalty rates.
Under the Collaboration Agreement, Incyte also agreed to certain standstill provisions that preclude it from acquiring more than 15% of Agenus’ outstanding voting stock, including shares acquired pursuant to the Stock Purchase Agreement described below, and requires that such stock be held solely for investment purposes.
In January 2015, Agenus and Incyte Corporation also entered into a Stock Purchase Agreement (the “Stock Purchase Agreement”), pursuant to which Incyte purchased, on February 18, 2015, approximately 7.76 million shares of Agenus common stock for an aggregate purchase price of $35 million, or approximately $4.51 per share. As of April 18, 2016, Incyte owns approximately % of the outstanding shares of Agenus common stock.
Advent
Effective February 12, 2014, the Board elected Shahzad Malik, M.D. as a Dr. Malik’s election to the Board was pursuant to the terms of the Share Exchange Agreement dated January 10, 2014 (the “Exchange Agreement”) providing for our acquisition of all of the outstanding capital stock of 4-Antibody. Other than the foregoing, there are no arrangements or understandings between Dr. Malik and any other person pursuant to which Dr. Malik was appointed as a director. Dr. Malik is a General Partner of Advent Venture Partners LLP (“Advent”). Advent, through its affiliated entities was, collectively, 4-Antibody’s largest shareholder prior to the completion of the transactions contemplated by the Exchange Agreement. Advent and its affiliated entities, and not Dr. Malik in his individual capacity, received 996,088 shares of our common stock, having a value of
approximately $3 million, as consideration at the closing of the acquisition. Additionally, Advent and its affiliated entities, and not Dr. Malik in his individual capacity, received approximately $6.2 million in February 2015 in connection with the achievement of certain milestones under the Exchange Agreement. Dr. Malik is also a General Partner of Advent Life Sciences LLP. On May 27, 2015, Advent Life Sciences LLP participated in our underwritten offering and purchased 1,587,302 shares of our common stock at $6.30 per share. Other than the transactions previously disclosed in the Company’s Current Reports on Form 8-K filed with the SEC on January 13, 2014 and February 13, 2014, Dr. Malik is not a party to any material plan, contract or arrangement entered into or materially amended in connection with his election to the Board.
Related Party Transaction Policies and Procedures The Audit and Finance Committee of the Board is responsible for reviewing and approving all material transactions with any related party on a continuing basis. Related parties can include any of our directors or executive officers, certain of our stockholders, and their immediate family members. This obligation is set forth in writing in our Audit and Finance Committee Charter. A copy of the Audit and Finance Committee Charter is posted on the corporate governance section of our website athttp://investor.agenusbio.com/corporate-governanceboard-committees. No material on our website is part of this proxy statement. In evaluating related party transactions, our Audit and Finance Committee members apply the same standards of good faith and fiduciary duty they apply to their general responsibilities as a committee of the Board and as individual directors. The Audit and Finance Committee will approve a related party transaction when, in its good faith judgment, the transaction is fair to, and in the best interest of, Agenus. To identify related party transactions each year, we submit and require our directors and executive officers to complete Director and Officer Questionnaires identifying any transactions with us in which the officer or director or their family members have an interest. We also review related party transactions due to the potential for a conflict of interest. A conflict of interest occurs when an individual’s private interest interferes, or appears to interfere, in any way with our interests. Our Code of Ethics requires all directors, officers, and employees who may have a potential or apparent conflict of interest to immediately notify our Chief Compliance Officer for review and approval by management and our Corporate Governance and Nominating Committee. A copy of our Code of Ethics is posted on the corporate governance section of our website athttp://investor.agenusbio.com/corporate-governanceboard-committees. No material on our website is part of this proxy statement. EQUITY PLANS
Securities Authorized For Issuance Under Equity Compensation Plans
The following table provides information about the securities authorized for issuance under our equity compensation plans as of December 31, 2015:
| | | | | | | | | | | | | Plan Category | | Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights(1) | | | Weighted Average Exercise Price of Outstanding Options, Warrants and Rights | | | Number of Securities Remaining Available for Future Issuance under Equity Compensation Plan (Excluding Securities Reflected in Column (a)) | | | | (a) | | | (b) | | | (c) | | Equity compensation plans approved by security holders | | | 10,104,529 | | | $ | 3.97 | | | | 2,731,440 | (2) | Equity compensation plans not approved by security holders | | | 150,000 | | | $ | 9.78 | | | | 1,500,000 | (3) | | | | | | | | | | | | | | Total | | | 10,254,529 | | | | | | | | 4,231,440 | | | | | | | | | | | | | | |
(1) | Includes 178,090 shares issuable under our DDCP at a weighted average price of $5.79. |
(2) | Includes 138,790 shares that may be issued under our 2009 Employee Stock Purchase Plan and 97,939 shares available under our DDCP. |
(3) | Includes 1,500,000 shares reserved for issuance under the Agenus Inc. 2015 Inducement Equity Plan. |
PROPOSAL 2—TO APPROVE AN AMENDMENT TO OUR AMENDED AND RESTATED CERTIFICATE OF INCORPORATION (AS AMENDED) TO INCREASE THE NUMBER OF SHARES OF COMMON STOCK AUTHORIZED FOR ISSUANCE THEREUNDER FROM 140,000,000240,000,000 TO 240,000,000400,000,000
Description of Proposed Amendment to our Amended and Restated Certificate of Incorporation (as Amended) The Board has adopted, subject to stockholder approval, an amendment to our Amended and Restated Certificate of Incorporation (as amended). This amendment would increase the authorized number of shares of Agenus’ common stock from 140,000,000240,000,000 shares to 240,000,000.400,000,000. No increase would be made to shares of Agenus’ preferred stock. As of April 18, 2016,24, 2019, there were [●] shares of common stock outstanding and held by Agenus stockholders. As of April 18, 2016,24, 2019, there were an aggregate of 6,070,298 shares of common stock reserved for future issuance under our 2009 Equity Incentive Plan, our 2009 Employee Stock Purchase Plan and our 2015 Inducement Equity Plan. The Board is recommending this increase in authorized shares of common stock to give the Company the ability to issue shares for future corporate needs. These additional shares may be used by Agenus for business and financial purposes that may include future stock splits, capital raises, establishment of certain strategic relationships, acquisitions of other companies, businesses, or products, equity incentives and compensation for existing, new and future employees and other transactions that the Board deems are in Agenus’ interest. The additional authorized shares would enable us to act quickly in response to appropriate opportunities that may arise for these types of transactions. This proposed increase would allow us to generally move on such opportunities without the delayed necessity of obtaining further stockholder approval. The Company does not have any specific plans, arrangements or understandings to issue any of the shares that would be newly available for issuance if this Proposal No. 2 is approved. If approval is not received for this amendment, we believe it will compromise our ability to competitively pursue future business and financial endeavors with common stock consideration, and this could have an adverse effect on our business. The additional shares of common stock that would be authorized under this amendment would have rights identical to the currently outstanding Agenus common stock. Adoption of the proposed amendment and any issuance of the common stock would not affect the rights of Agenus common stockholders except for effects incidental to increasing the number of shares of the common stock outstanding. Incidental effects of the increase in the outstanding number of shares may include dilution of earnings per share and voting rights of current holders of common stock. If the amendment is adopted, it will become effective upon filing of a certificate of amendment of our Amended and Restated Certificate of Incorporation with the Secretary of the State of Delaware. In addition to the purposes set forth above, Agenus could also use the additional shares of common stock to oppose a hostile takeover attempt or delay or prevent changes of control or management of the Company. For example, without further stockholder approval, the Board could sell shares of common stock in a private transaction to purchasers who would oppose a takeover or favor the current Board. Although this proposal to increase the authorized common stock has been prompted by business and financial considerations and not by the threat of any known or threatened hostile takeover attempt, stockholders should be aware that approval of this proposal could facilitate future efforts by Agenus to deter or prevent changes in control of the Company, including transactions that the Board determines are not in the best interests of Agenus or its stockholders, even though the stockholders would have received a premium for their shares over then-current market prices. At the present time, the Board has no intention to use these additional shares for anti-takeover purposes and this amendment is not part of a plan by management to adopt a series of amendments to the certificate of incorporation andby-laws having an anti-takeover effect. If the amendment is adopted, it will become effective upon filing of a certificate of amendment of our Amended and Restated Certificate of Incorporation with the Secretary of the State of Delaware. The proposed amendment to our Amended and Restated Certificate of Incorporation is included as Appendix A to this proxy statement. Vote Required To approve Proposal 2, stockholders holding a majority of the outstanding shares of Agenus common stock entitled to vote at the 20162019 Annual Meeting must vote FOR Proposal 2. Banks, brokers and nominees will be permitted to use their discretion to vote shares for which voting instructions are not submitted with respect to Proposal 2 because Proposal 2 will be classified as a routine item. If the broker, bank, or nominee does not vote your unvoted shares, this “brokernon-vote” will have the same effect as a vote against Proposal 2. Abstentions will also have the same effect as a vote against Proposal 2. The Board of Directors recommends a vote FOR Proposal 2. PROPOSAL 3—TO APPROVE OUR AMENDED AND RESTATED 20092019 EQUITY INCENTIVE PLAN Our 2009 Equity Incentive Plan (the(as amended, our “2009 Plan”) was originally approved by our stockholders on June 10, 2009. On each of June 13, 2012, June 12, 2013, April 23, 20142009 and June 24, 2015 our stockholders approved amendments to the 2009 Plan.was subsequently amended in 2016 and 2018. On April 8, 2016, the10, 2019, our Board approved the amended and restated 2009 Plan (the “Amended Plan”),adopted, subject to stockholder approval.approval, the 2019 Equity Incentive Plan (our “2019 Plan”). We are requesting that stockholders approve the Amended Plan to (i) increase the maximum number of shares of our common stock available for issuance under the Amended Plan by an additional 6,000,000 shares and (ii) enable us to grant, if desired, awards under the Amended Plan that are intended to qualify as exempt “performance-based compensation” under Section 162(m) of the Code (and therefore not be subject to the Section 162(m) limits on deductibility of compensation paid to certain of our executive officers). The Amended Plan also amends the 2009 Plan to add certain features that are consistent with principles of good corporate governance, including setting an annual limit on awards that may be granted to non-employee directors and to removing so-called liberal share recycling provisions.2019 Plan. The material terms of the Amendedour 2019 Plan are described under “Summary of the Amendedour 2019 Plan” below. If stockholders do not approve this Proposal No. 3, we will not be able to grant awards that are intended to qualify as exempt “performance-based compensation” under Section 162(m) of the Code and the proposed 6,000,000 additional sharesour 2019 Plan will not become available for grant under the Amended Plan, but theeffective and our 2009 Plan will otherwise remain in effect in accordance with its terms. In addition, if stockholders do not approve this Proposal No. 3, certain awards that were approved by our Compensation Committee and Board and granted under our 2009 Plan that would be satisfied by the issuance of shares under our 2019 Plan, contingent upon obtaining stockholder approval of this proposal,our 2019 Plan, as described in more detail under “New Plan Benefits” below, will be rescinded.automatically forfeited. If our 2019 Plan is approved, we will no longer make grants under our 2009 Plan. Reasons to Vote for Seeking Stockholder Approvalthis Proposal Equity Awardsawards are a Key Partkey part of our Compensation Program for Employees Generallycompensation program The Board believesWe believe that equity compensation has been, and will continue to be, a critical component of our compensation package because it (i) developscontributes to a culture of ownership among our employees and other service providers, (ii) aligns theirour employees’ interests with the interests of our other stockholders and (iii) preserves our cash resources. From January 2014It has been our practice to February 2016, we more than tripled our employee headcount (from 68 employeesgrant equity awards to 230). Unlike many companies, we have a practice of granting equity-based awards deep in our organization, believing that we will succeed if our employees feel invested in us, our business and our future. In July 2015, each employee of the company received a grant of performance shares and, of the grants made in March 2016, the majority of them were granted to key memberssubstantially all of our R&D team. In 2016, we anticipate that we will continue building up our R&D capabilitiesfull-time employees upon hire and capacity to support our global allianceon an annual basis. We compete for talent in an extremely competitive industry, often with Incyte and will make certain key strategic hires. To date, we have successfully competed for top talent, often in direct competition with much larger pharmaceutical companies with greater resources,resources. We believe that our ability to compensate with equity awards is essential to our efforts to attract and retain top talent, which we have been successful in part because of our use of equity-based compensation. doing to date.Equity awards are an essential part of our compensation package, are central to our employment value proposition, and are necessary for us to continue competing for top talent as we grow.
AsEquity awards incentivize the achievement of April 8, 2016, when the Amended Plan was adopted, there were 1,649,460 shares available for grant under the 2009 Plan. Without the proposed increase, the Company’s ability to provide equity incentives for its planned new hires, as well as its employeeskey business objectives and management team, would be limited. In turn, this would place the Company at a competitive disadvantage because our ability to attract, motivate and retain key personnel would be compromised during this critical period of growth.
We Have Used Equityincreases in Lieu of Cash Compensation for Key Employeesstockholder value
In furtherance of our efforts to develop a culture of ownership, align the interests of our management team with stockholders and conserve cash, since 2006 the Company has delivered a significant portion of annual incentive bonuses paid to our management team in shares of the Company’s common stock, particularly during
periods when the Company’s cash resources have been scarce and the Company deemed it prudent to preserve its cash balance. In addition, from 2009 through June 25, 2014, our Chief Executive Officer, Dr. Armen, at his election and for the purposes of preserving the Company’s cash, opted to receive stock in lieu of cash for approximately 30% of his base salary. From 2009 through 2012, Dr. Armen received approximately 50% of his total annual base salary and target bonus in shares of common stock, whereby the cash component of such compensation has been utilized largely for the purpose of meeting his payroll tax obligations, including on the value of shares received in lieu of cash.
Our Equity Program is Performance-Based
Our equity program generallyprimarily consists of stock options whichand performance shares. Stock options are performance-based sincebecause no value is createdrealized unless our stock price increases from the date of grant. We have also from time to time granted stock options that are subject to performance-based vesting conditions to incentivize the options are granted, and performance shares.achievement of key business objectives or specific increases in stock price. Performance shares granted in 2015 vest based on the achievement of key milestonesbusiness objectives or specific increases in stock price. We believe that are significant to the success of our business. Of the 3,402,244 shares that were granted in the form of equity awards have been and will continue to be critical to our success and that they play an important role in incentivizing employees across our Company to achieve our key business objectives and drive increases in 2015 (excluding new hire grants), approximately 42%stockholder value. Additional shares are necessary in order for us to meet our anticipated equity compensation needs As of March 31, 2019, there were in the form of stock options that vest based on time and approximately 58% were in the form of performance shares.5,347,889 shares remaining available for issuance under our 2009 Plan. As described in more detail in the “New Plan Benefits” table below, we have granted awards under our 2009 Plan in March 2016 we granted performancerespect of 5,990,921 shares to a select groupthat would be satisfied by the issuance of key membersshares under our 2019 Plan, contingent upon obtaining stockholder approval of our R&D team2019 Plan. If stockholders do not approve our 2019 Plan, these awards will be automatically forfeited and our ability to grant equity awards to our planned new hires, as well as our executive officers that vest only upon the achievement of rigorous stock price hurdles ranging from $10 to $20 per share (the closing priceexisting employees and management team, will be severely limited, which would place us at a competitive disadvantage. After a review of our common stock on April 12, 2016 was $4.34 per share).historical practices and our anticipated future growth, we believe that the shares that would become available under our 2019 Plan if this proposal is approved would enable us to continue to grant equity awards for approximately two years, which is vital to our ability to attract and retain the talent required to support our continued growth in the extremely competitive labor market in which we compete. Although We Grant Equity Awards on a Broad-Based Level, We Have Managed Our Burn Ratewe grant equity awards deeply, we have responsibly managed our burn rate and overhang In settingdetermining the amount of the increase for which stockholder approval is being sought, theshare pool under our 2019 Plan, our Board considered the historical amountsnumber of equity awards granted by the Company in the past three years. In 2013, 20142016, 2017 and 2015,2018, the Company made equity awards representing a totalin respect of 1,720,3525,569,427 shares, 3,303,6895,210,642 shares and 4,570,7336,966,234 shares, respectively.respectively, under our 2009 Plan (assuming maximum performance, for awards subject to performance-based vesting). The weighted average number of shares of our common stock outstanding in 2013, 20142016, 2017 and 2015 were 29,765,547, 59,753,5522018 was 87,070,189, 98,415,414 and 78,212,094,110,772,328, respectively. The Company’s three-year average burn rate is 6.7%5.99%. We believe our historical burn rate is reasonable for a company of our size in our industry, especially given our broad-basebroad-based use of equity awards to compensate our employees and other key service providers. We will continue to monitor our equity use in future years to ensure our burn rate is within competitive market norms. If Proposal No. 3 is approved, thereIn determining the number of shares that would be an additional 6,000,000 sharesbecome available for grant under the Amended Plan. In setting the amount of the increase for which stockholder approval is being sought in Proposal No. 3, theour 2019 Plan, our Board also considered the total amountshares subject to outstanding awards and the dilution that would result from the share pool under our 2019 Plan. As of stock optionsMarch 31, 2019, there were 19,569,887 shares subject to outstanding awards under our 2009 Plan and, other awards outstanding under existing grants. The Company had outstanding, as of April 8, 2016, 86,528,934this same date, the shares including unvestedsubject to outstanding equity awards and available for issuance under our 2009 Plan represented approximately 15% of our outstanding shares of restricted stock. Accordingly, our 11,408,570 outstanding options and other outstanding awards (commonly referred to as the “overhang”) represent approximately 13%, with performance-based awards included in such calculation assuming maximum level achievement of applicable performance goals. The table below includes aggregate information regarding equity awards outstanding and the number of shares available for future awards under our outstanding shares. For these purposes, outstanding shares include unvested restricted shares of2009 Plan, our common stock awarded2009 Employee Stock Purchase Plan, the DDCP and outstandingour 2015 Inducement Equity Plan, in each case, as of March 31, 2019, and the applicable date.number of shares that would be available for issuance under our 2019 Plan if this proposal is approved by stockholders.
After a review
| | | | | | | | | | | Number of Shares | | | As a percentage of stock outstanding (as of March 31, 2019) | | Outstanding stock options under 2009 Plan | | | 18,111,797 | | | | 14 | % | Outstanding restricted shares and performance shares (with performance shares measured at maximum level achievement of applicable performance goals) under 2009 Plan | | | 1,458,090 | | | | 1 | % | Total shares subject to outstanding awards under 2009 Plan | | | 19,569,887 | | | | 15 | % | Total shares available for future issuance under 2009 Plan(1) | | | 5,347,889 | | | | 4 | % | Total shares proposed to be available for issuance under 2019 Plan(1)(2) | | | 11,000,000 | | | | 8 | % | Total shares subject to existing equity awards under 2009 Plan, available for future issuance under 2009 Plan and proposed to be available for issuance under 2019 Plan | | | 35,917,776 | | | | 27 | % | Total shares available for future issuance under 2009 Employee Stock Purchase Plan | | | 0 | | | | 0.0 | % | Total shares subject to existing equity awards under 2015 Inducement Equity Plan | | | 562,113 | | | | 0.4 | % | Total shares available for future issuance under 2015 Inducement Equity Plan | | | 722,409 | | | | 0.5 | % | Total shares subject to existing equity awards and available for future issuance under 2015 Inducement Equity Plan | | | 1,284,522 | | | | 1 | % | Total shares subject to existing equity awards under DDCP | | | 292,289 | | | | 0.2 | % | Total shares available for future issuance under DDCP | | | 60,630 | | | | 0.05 | % | Total shares subject to existing equity awards, available for future issuance and proposed to be available for issuance under DDCP | | | 352,919 | | | | 0.3 | % | Total shares subject to existing equity awards, available for future issuance and proposed to be available for issuance | | | 37,555,217 | | | | 28 | % |
(1) | The number in this row includes as available for future issuance the awards described under “New Plan Benefits” below, which were granted under our 2009 Plan and are expected to be satisfied with shares under our 2019 Plan, contingent upon stockholder approval of our 2019 Plan. |
(2) | Share counting provisions, including adjustments to the number of shares available under our 2019 Plan, are described below under “Authorized Shares” and “Adjustments.” |
Our 2019 Plan is consistent with principles of our historical practices and an estimation of our future growth, thegood corporate governance Our Board believes that the proposed share increase under the Amended Plan would facilitate our ability to continue to grant equity incentives for approximately the next two years, which is vital to our ability to attract and retain the highly skilled individuals required to support the Company’s continued growth in the extremely competitive labor markets in which we compete. We Believe It Is in the Best Interest of the Company to Have the Ability to Grant Awards that May Qualify as Exempt Performance-Based Compensation under Section 162(m)
In addition, approval of the Amended Plan by our stockholders would permit us, if desired, to grant stock options, stock appreciation rights and performance-based stock awards under the Amended Plan that may qualify
as “qualified performance-based compensation” within the meaning of Section 162(m) of the Code. Section 162(m) disallows a deduction to any publicly held corporation and its affiliates for certain employee compensation that exceeds $1 million. However, compensation that satisfies the requirements of an exception for “qualified performance-based compensation” is not subject to this deduction limitation. For compensation awarded under a plan to fit within this exception under Section 162(m), among other things, the material terms of the related performance goals must be disclosed to and approved by the corporation’s shareholders not less frequently than every five years. Under Section 162(m), the material terms include the class of eligible employees, a description of the business criteria on which the performance goals may be based and the maximum amount that can be paid to any participant for a specified period. For the Amended Plan, these terms are described below under “Eligibility to Receive Awards,” “Annual Individual Limits” and “Performance Criteria.” Although stockholder approval is one of the requirements of the exception to the deductibility limits under Section 162(m), even with stockholder approval, the Board cannot guarantee that awards under the Amended Plan will be deductible as qualified performance-based compensation under Section 162(m). In addition, the Board has and will continue to have authority to pay or provide compensation (including under the Amended Plan) that is not deductible under Section 162(m) in order to maintain a competitive compensation program and provide compensation that will attract and retain highly qualified executives.
The Board believes that the Amended2019 Plan will promote the interests of shareholdersstockholders and is consistent with principles of good corporate governance, including:
| • | | No Discounted Stock Options or SARs. All stock option and stock appreciation rights (“SAR”) awards under the Amendedour 2019 Plan must have an exercise or base price that is not less than the fair market value of the underlying common stock on the date of grant. |
| • | | No Repricing. Other than in connection with a corporate transaction affecting the Company, the Amendedour 2019 Plan prohibits any repricing of stock options or SARs. |
| • | | Limits on Awards. The AmendedOur 2019 Plan limits the number of stock options, SARs and other awards that may be granted to plan participants. It also contains a separate limit on the valueamount of awards that may be madecompensation payable tonon-employee directors in any year. |
| • | | Performance Awards. Under the Amended Plan, the Committee may grant performance-based awards intended to qualify as exempt performance-based compensation under Section 162(m), as well as other performance-based awards.
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| • | | No Liberal Share Recycling. Shares underlying stock options and other awards issued under the Amendedour 2019 Plan will not be recycled into the share pool under the Amended Plan if they are withheld in payment of the exercise price of the award or to satisfy tax withholding obligations in respect of the award. The number of shares available for delivery under the Amendedour 2019 Plan will not be increased by any shares that have been delivered under the Amendedour 2019 Plan that are subsequently repurchased using proceeds directly attributable to stock option exercises. |
| • | | Minimum Vesting Periods. Awards under our 2019 Plan may not be scheduled to vest, in whole or in part, within one year of grant (subject to an exception for up to 5% of the share pool that may be granted without regard for this minimum scheduled vesting period). |
| • | | No Reload Awards. Our 2019 Plan prohibits the grant of “reload” awards. |
| • | | No Dividends on Unvested Awards. Dividend and dividend equivalents may not be paid on a current basis on unvested awards. |
| • | | No Liberal Change of Control Definition. Our 2019 Plan does not include a “liberal” change of control definition. |
Summary of the Amendedour 2019 Plan The following is a brief summary of the material terms of the Amendedour 2019 Plan. A copy of the Amendedour 2019 Plan is attached as Appendix B to this proxy statement, and we urge stockholders to read it in its entirety. The following description of certain featuresthe material terms of the Amendedour 2019 Plan is qualified in its entirety by reference to the full text of the Amendedour 2019 Plan. Administration.The Amended Our 2019 Plan iswill generally be administered by our Compensation Committee, which will have the Board, who has thediscretionary authority to among other things,interpret the plan; determine eligibility for grant and amendgrant awards; determine, modify, accelerate or waive the terms and conditionconditions of any award; determine whether awards will be settled in sharesthe form of our common stock, cash, other property, other awards or a combinationsettlement of the foregoing; adopt, amendawards; prescribe forms, rules and repeal the rulesprocedures relating to the Amended Plan; interpretplan and correct the provisions of the Amended Plan and any award;awards; and otherwise do all things necessary or desirable to carry out the purposes of the Amended Plan. The Boardplan or any award. Our Compensation Committee (or our board of directors, with respect to such matters over which it retains authority) may delegate certainto one or more of its members (or one or more members of our Board of Directors) such of its duties, powers under the Amended Plan,and responsibilities as it may determine and, to the extent permitted by law, to one or moremay delegate certain of its committees or subcommittees,duties, powers and responsibilities to officers, of the Company oremployees and other employees or persons. As used herein,in this summary, the term “Board”“Administrator” refers to theour Compensation Committee, our Board of Directors or itsany authorized delegates, as applicable. Eligibility to Receive Awards. Key employees, officers,Employees, directors, consultants and advisors of the Company and its affiliates are eligible to receive awards under the Amendedour 2019 Plan. Eligibility for options intended to be incentive stock options (“ISOs”) is limited to employees of the Company or certain affiliates. As of April 8, 2016,March 31, 2019, we estimate that approximately 235255 employees, 5 fivenon-employee directors and 1697 consultants and advisors would be eligible to participate in the Amendedour 2019 Plan. Authorized Shares.Subject to adjustment as described below, the maximum number of shares of common stock that may be delivered in satisfaction of awards under the Amendedour 2019 Plan is 20,200,00011,000,000 shares, plus the number of shares available for issuance under our 2009 Plan on the date stockholders approve our 2019 Plan (not to exceed 5,262,242 shares) and any shares of underlying awards under our 2009 Plan that on or after such date become available for grant under our 2009 Plan (not to exceed 19,655,534 shares) (the “Share Pool”), of which 1,649,460 shares remain available for grant as of April 8, 2016 and of which 6,000,000 shall become available upon stockholder approval of the Amended Plan.. Up to 7,649,46011,000,000 shares from the Share Pool may be issued in satisfaction of ISOs. The following rules apply in respect of the Share Pool: Any shares of stock underlying the portion of an awardawards settled in cash or that expires,expire, become unexercisable, without having been exercised, terminates,terminate, or is surrendered,are forfeited to or repurchased by the Company due to failure to vestwithout the issuance of shares will not reduce the Share Pool. All shares covering any portion of a stock appreciation right thatany portion of which is settled in stock and any shares withheld from a stock option or other award in satisfaction of the exercise or purchase price or tax withholding obligations will be treated as having delivered under the Amended Plan and will not be added back toreduce the Share Pool. The Share Pool will not be increased by any shares that are delivered under the Amendedour 2019 Plan that are subsequently repurchased by the Company using proceeds directly attributable to stock option exercises. Shares issued underin substitution for equity awards of an acquired company that are converted, replaced or adjusted in connection with the acquisition will not reduce the Share Pool. Shares that may be delivered under the Amendedour 2019 Plan may be authorized but unissued shares of our common stock or previously issued shares of our common stock acquired by the Company. Shares may be delivered under our 2019 Plan in satisfaction of awards granted under other compensation arrangements of the Company, including our 2009 Plan. The closing price of our common stock as reported on NASDAQ on April 12, 201624, 2019 was $4.34$[●] per share. Annual Individual Limits.With respect to any personparticipant in any calendar year, (other than a non-employee director, whose awards are subject to the limitations described below), the maximum number of shares for whichsubject to stock options that may be granted, and the maximum number of shares subject to SARs that may be granted, underand the Amended Plan is, in each case, 1,665,000 shares. The maximum number of shares subject to awards other awards that are denominated in shares of commonthan stock or the value of which could be paid in cash or other property under such awards,options and SARs that may be delivered to any person (other than a non-employee director) in any calendar yeargranted is 647,682 shares.2,500,000 shares, 2,500,000 shares and 1,500,000 shares, respectively. In the case of anon-employee director, with respect to his or her services as a director, the maximum grant-date fair marketaggregate value (determined in accordanceof all compensation granted or paid to the director with applicable financial accounting rules) of awards granted under the Amended Plan inrespect to any calendar year, is $500,000, except such limit is $800,000including equity awards, may not exceed $600,000 (or $850,000 for the calendar year in which suchthe director is first elected or appointed to the Board. The foregoing limits do not apply to any award granted pursuant to a director’s election to receive shares in lieu of cash retainers or other fees.elected). Types of Awards. TheOur 2019 Plan provides for the grant of stock options, stock appreciation rights,SARs, restricted and unrestricted stock and stock units, performance awards, and other stock-based awards which we refer to collectively as awards. Any award that is subject to performance criteria is referred to as a performance award. Dividendsare convertible into or dividendotherwise based on our common stock. Dividend equivalents may also be provided in connection with awards under the Amended Plan. Stock Options and SARs. The Board may grant incentive stock options intended to comply with Section 422 of the Code (“ISOs”), stock options not intended to so qualify and SARs. For each stock option or SAR granted under theour 2019 Plan the Board determines the number of shares covered by the stock option or SAR, the exercise price or base value from which appreciation is measured and the conditions and limitations applicable to such award and the common stock issued thereunder. The exercise price of a stock option (or base value of a SAR) granted under the Amended Plan shall be no less than 100% of the fair market value of a share of our common stock on the date of grant (110% in the case of certain ISOs), except in the case of certain substitute awards. Other than in connection with certain corporate transactions, stock options or SARs granted under the Amended Plan may not be repriced or substituted for by new stock options or SARs having a lower exercise price or base value, nor may any consideration be paid upon the termination, cancellation, voluntary surrender or exchange of any stock options or SARs, in each case, without shareholder approval. No stock option or SARbut will be granted for a term in excess of ten years (or five years, in the case of certain ISOs).
Stock Awards and Restricted Stock Awards. The Board may grant stock awards, which may, but need not be subject to the same risk of forfeiture as applies to the underlying award.
| • | | Stock Options and SARs. The Administrator may grant stock options, including ISOs, and SARs. A stock option is a right entitling the holder to acquire shares of our common stock upon payment of the |
| applicable exercise price. A SAR is a right entitling the holder upon exercise to receive an amount (payable in cash or shares of equivalent value) equal to the excess of the fair market value of the shares subject to the right over the base value from which appreciation is measured. The per share exercise price of each stock option, and the per share base value of each SAR, granted under our 2019 Plan may not be less than 100% of the fair market value of a share of our common stock on the date of grant (110% in the case of certain ISOs). The Administrator may not grant stock options that provide for automatic “reload” grants of additional stock options. |
| • | | Restricted and Unrestricted Stock and Stock Units. The Administrator may grant awards of stock, stock units, restricted stock and restricted stock units. A stock unit is an unfunded and unsecured promise, denominated in shares, to deliver shares or cash measured by the value of shares in the future, and a restricted stock unit is a stock unit that is subject to the satisfaction of specified performance or other vesting conditions. Restricted stock is stock subject to restrictions requiring that it be forfeited, redelivered or offered for sale to us if specified performance or other vesting conditions are not satisfied. |
| • | | Performance Awards. The Administrator may grant performance awards, which are awards subject to performance vesting conditions. |
| • | | Other Stock-Based Awards. The Administrator may grant other awards that are convertible into or otherwise based on shares of our common stock, subject to such terms and conditions as are determined by the Administrator. |
| • | | Substitute Awards.The Administrator may grant substitute awards, which may have terms and conditions that are inconsistent with the terms and conditions of our 2019 Plan. |
Vesting; Terms of Awards. The Board shallAdministrator will determine the terms and conditions of any stock award granted under the Plan. Other Stock-Based Awards. The Board may grant other awards, including restricted stock units, based on or with reference to our common stock and having such terms or conditions as the Board may determine.
Performance Awards.The Board may grant awards subject to performance criteria and such other terms and conditions as may be determined by the Board. Performance awards may be granted as awards that are intended to qualify as exempt performance-based compensation under Section 162(m) of the Code and awards that are not intended to so qualify.
Vesting; Terms of Awards. The Board determines the terms of all awards granted under the Amendedour 2019 Plan, including the time or times an award will vest, becomevests or becomes exercisable, the terms and conditions on which an option or remainSAR remains exercisable, and the effect of termination of a participant’s employment or service on awards. No award under our 2019 Plan may at any time acceleratebe scheduled to vest, in whole or in part, prior to the vesting or exercisabilitydate that is one year following the date the award is granted, except that awards that result in the issuance of an award.aggregate of up to five percent of the Share Pool may be granted without regard to suchone-year minimum scheduled vesting period.
Termination of Employment or Other Status.The Board determinesAdministrator will determine the effect of disability, death, retirement, authorized leave or absence or other change in thetermination of employment or other status of a participantservice on an award.awards. Transferability of Awards.Except as the BoardAdministrator may otherwise determine, awards may not be sold, assigned, transferred pledged or otherwise encumbered, exceptother than by will or by the laws of descent and distribution, and, during the life of the participant, are exercisable onlydistribution. Corporate Transactions. Except as otherwise provided in an award agreement or by the participant. Performance Criteria.The Amended Plan provides that grants of performance awards may be made subject to achieving “performance criteria” over a specified performance period. Performance criteria with respect to those awards that are intended to qualify as “performance-based compensation” for purposes of Section 162(m) of the Code are limited to objectively determinable measure(s) of performance relating to any or any combination of the following (measured either absolutely or comparatively (including, without limitation, by reference to an index or indices or a specified peer group or other group of companies) and determined on a consolidated basis or, as the context permits, on a divisional, subsidiary, line of business, project or geographical basis or any combinations thereof and subject to such adjustments, if any, as the Board specifies, consistent with the requirements of Section 162(m) of the Code): sales; revenues; assets; expenses; earnings before or after deduction for all or any portion of interest, taxes, depreciation, amortization or equity expense, whether or not on a continuing operations or an aggregate or per share basis; return on equity, investment, capital, capital employed or assets; one or more operating ratios; operating income or profit, including on an after-tax basis; net income; debt levels or reduction, leverage ratios or credit rating; market share; capital expenditures; cash flow (including, but not limited to, operating cash flow and free cash flow); stock price; stockholder return; sales of particular products or services; customer acquisition, expansion and retention; regulatory compliance; regulatory or other
filings or approvals; research, development, clinical, regulatory, manufacturing or product development milestones; discovery, preclinical or clinical stage scientific discoveries, objectives or inventions; manufacturing or process developments; acquisitions and divestitures (in whole orAdministrator, in part); new or expanded joint ventures, strategic alliances, licenses, collaborations or partnerships, or achievement of milestones under any of the foregoing; spin-offs, split-ups and the like; reorganizations; recapitalizations, restructurings, financings (issuance of debt or equity), refinancings or other capital raising transactions; receipt of alternative financing; implementation or completion of critical projects; employee satisfaction; achievements in strengthening the Company’s intellectual property position; recruiting and maintaining personnel; transactions that would constitute a change of control; or any combination of the foregoing.
Performance criteria and any targets with respect thereto need not be based upon an increase, a positive or improved result or avoidance of loss. To the extent consistent with the requirements for satisfying the performance-based compensation exception under Section 162(m) of the Code, the Board may provide in the case of any award intended to qualify for such exception that one or more of the performance criteria applicable to such award will be adjusted in an objectively determinable manner to reflect events (for example, the impact of charges for restructurings, discontinued operations, mergers, acquisitions, and other unusual or infrequently occurring items, and the cumulative effects of tax or accounting changes, each as defined by U.S. generally accepted accounting principles) occurring during the performance period that affect the applicable performance criteria.
Corporate Transactions.In the event of a sale of the Company in which the stockholders no longer own a majority of outstanding equity securities, a consolidation, merger or a similar transaction in which the Company is not the surviving corporation a sale of all or substantially allwhich results in the assets or capital stock of the Company, or any other change in control or acquisition of the Companymajority of our common stock by a single person or group, a sale or transfer of substantially all of our assets or a dissolution or liquidation of the Company:
For each unvested award that is then outstanding and eligible to vest based on performance, the Administrator shall determine the extent to which the applicable performance vesting conditions have been achieved as determinedof the consummation of such transaction and the award, to the extent earned based on performance, will thereafter be eligible to vest based on continued employment or service, as applicable; Each such award, and each unvested award that is outstanding as of the consummation of the transaction that is eligible to vest solely based on continued employment or service, as applicable, will be assumed, continued or substituted for by the Board,acquiror, survivor or affiliate thereof and will vest on the Boardsame schedule, except that if the participant’s employment or service, as applicable, is terminated for any reason other than cause within two years following such transaction, the award (or any award substituted therefor) will vest in full; Each award that is outstanding as of the consummation of the transaction that is not assumed, continued or substituted for will vest in full in connection with the consummation of the covered transaction. The Administrator may provide for payment with respect to outstandingsome or all awards on the same basisthat are not assumed, continued or on different basis and on the terms and conditions as the Board determines, provide for: the continuation of the awards by the Company;
the assumption or substitution of awards by the acquirer or surviving entity;
upon written notice, the termination of all unexercised awards unless the vested portion is exercised within a specified period following the date of such notice;
the cash payment to the holder of an unexercised awardsubstituted for equal to the difference between the fair market value of the award and itsunderlying shares over the applicable exercise or purchase price or base price, if applicable, or the vested portion thereof, including any vesting that may be accelerated; orof such award.
any combination of the foregoing.
Adjustments.In the event of certain corporate transactions (including, but not limited to, a stock dividend, stock split stock dividend, extraordinary cash dividend, recapitalization, reorganization, merger, consolidation,or combination exchange of shares liquidation, spin-off, or split-up)(including a reverse stock split), recapitalization or other change in the Company’s corporate orour capital structure, the BoardAdministrator will make appropriate adjustments to the maximum number and class of securitiesshares that may be delivered in satisfaction of awardsissued under our 2019 Plan, the Amended Plan,individual limits described above, the number and classkind of securities vesting schedule, exercise price or base value subject to, outstandingand, if applicable, the exercise or subsequently grantedpurchase prices (or base values) of, outstanding awards, and any other provision of awards effectedprovisions affected by the change.such event. The BoardAdministrator may also make similarsuch adjustments to take into account forother distributions to shareholders or any other events asevent if it determines that adjustments are appropriate to avoid distortion in the operation of the Amended Plan.our 2019 Plan or any award. Clawback.Awards granted under The Administrator may provide that any outstanding award or the Amended Plan are subject to forfeiture, termination and rescission, and a participant will be obligated to return any paymentsproceeds from, or other amounts received in respect of, any award or stock acquired under any award will be subject to forfeiture and disgorgement to us, with interest and related earnings, if the participant to whom the award was granted is not in compliance with the plan or the applicable award or anynon-competition,non-solicitation,no-hire,non-disparagement, confidentiality, invention assignment or other restrictive covenant. Each award will be subject to any of our policies or those of our subsidiaries that provides for the forfeiture, disgorgement or clawback with respect to incentive compensation that includes awards under the plan and will be subject to forfeiture and disgorgement to the extent provided in the award, as may be required by law or as provided inapplicable stock exchange listing standards. Amendment and Termination. The Administrator may at any applicable Company clawbacktime amend our 2019 Plan or recoupment policy. Amendment or Termination; Term.The Board may amend, modify or terminate any outstanding award and may at any time terminate our 2019 Plan as to future grants. However, except as expressly provided thatin our 2019 Plan or the consentapplicable award, the Administrator may not alter the terms of the participant is required if it wouldan award so as to materially and adversely affect a participant’s rights without the participant. The Board may amend, suspendparticipant’s consent, unless the Administrator expressly reserved the right to do so at the time the award was granted. Any amendments to our 2019 Plan will be conditioned on shareholder approval to the extent required by law or terminate the Amended Plan or any portion thereof at any time, applicable stock exchange requirements.subject to any applicable stockholder approval requirements. No awards shall be granted under the Amended Plan after the completion of ten years from the date on which the plan, as amended and restated, was approved by the Company’s stockholders, but awards previously granted may extend beyond that time.
Certain Federal Income Tax Consequences of the Amendedour 2019 Plan The following is a summary of certain U.S. federal income tax consequences associated with awards granted under theour 2019 Plan. This summary does not purport to cover federal employment tax or other U.S. federal tax consequences that may be associated with the Amendedour 2019 Plan, nor does it cover state, local ornon-U.S. taxes, except as may be specifically noted. taxes. Stock Options (other than ISOs).In general, a participant has no taxable income upon the grant of a stock option that is not intended to be an ISO (an “NSO”) but realizes income in connection with the exercise of the NSO in an amount equal to the excess (at the time of exercise) of the fair market value of the shares acquired upon exercise over the exercise price. A corresponding deduction is generally available to the Company. Upon a subsequent sale or exchange of the shares, any recognized gain or loss is treated as a capital gain or loss for which the Company is not entitled to a deduction. ISOs. In general, a participant realizes no taxable income upon the grant or exercise of an ISO. However, the exercise of an ISO may result in an alternative minimum tax liability to the participant. With some exceptions, aGenerally, the disposition of shares purchased pursuant to an ISO within two years from the date of grant or within one year after exercise produces ordinary income to the participant (and generally a deduction to the Company) equal to the value of the shares at the time of exercise less the exercise price. Any additional gain recognized in the disposition is treated as a capital gain for which the Company is not entitled to a deduction. If the participant does not dispose of the shares until after the expiration of these one andtwo-year holding periods, any gain or loss recognized upon a subsequent sale of shares purchased pursuant to an ISO is generally treated as a long-term capital gain or loss for which the Company is not entitled to a deduction. SARs. The grant of a SAR does not itself result in taxable income, nor does taxable income result merely because a SAR becomes exercisable. In general, a participant who exercises a SAR for shares of stock or receives payment in cancellationrespect of a SARsuch exercise will have ordinary income equal to the amount of any cash and the fair market value of any stock received. A corresponding deduction is generally available to the Company. Unrestricted Stock Awards. A participant who purchases or is awarded unrestricted stock generally has ordinary income equal to the excess of the fair market value of the shares at that time over the purchase price, if any, and a corresponding deduction is generally available to the Company. Restricted Stock Awards. A participant who is awarded or purchases shares subject to a substantial risk of forfeiture generally does not have income until the risk of forfeiture lapses. When the risk of forfeiture lapses, the participant has ordinary income equal to the excess of the fair market value of the shares at that time over the purchase price, if any, and a corresponding deduction is generally available to the Company. However, a participant may make an election under Section 83(b) of the Code to be taxed on restricted stock when it is acquired rather than later, when the substantial risk of forfeiture lapses. A participant who makes an effective 83(b) election will realize ordinary income equal to the fair market value of the shares as of the time of acquisition less any price paid for the shares. A corresponding deduction will generally be available to the Company. If a participant makes an effective 83(b) election, no additional income results by reason of the lapsing of the restrictions. For purposes of determining capital gain or loss on a sale of shares awarded under the Amended Plan, the holding period in the shares begins when the participant recognizes taxable income with respect to the transfer. The participant’s tax basis in the shares equals the amount paid for the shares plus any income realized with
respect to the transfer. However, if a participant makes an effective 83(b) election and later forfeits the shares, the tax loss realized as a result of the forfeiture is limited to the excess of what the participant paid for the shares (if anything) over the amount (if any) realized in connection with the forfeiture.
Restricted Stock Units.The grant of a restricted stock unit does not itself generally result in taxable income. Instead, the participant is taxed upon vesting and settlement (and a corresponding deduction is generally available to the Company), unless he or she has made a proper election to defer receipt of the shares (or cash if the award is cash settled) under Section 409A of the Code. If the shares delivered are restricted for tax purposes, the participant will instead be subject to the rules described above for restricted stock. Section 162(m). Stock options, SARs, and certain performance awards under the Amended Plan are generally intended to be exempt or eligible for exemption from the deductibility limits of Section 162(m) of the Code. However, the Board will have discretionary authority to provide compensation that is not exempt from the limits on deductibility under Section 162(m) of the Code.
Certain Change of Control Payments. Under Section 280G of the Code, the vesting or accelerated exercisability of options or the vesting and payments of other awards in connection with a change of control of a corporation may be required to be valued and taken into account in determining whether participants have received compensatory payments, contingent on the change in control, in excess of certain limits. If these limits are exceeded, a substantial portion of amounts payable to the participant, including income recognized by reason of the grant, vesting or exercise of awards may be subject to an additional 20% federal tax and may be non-deductible to the Company.
New Plan Benefits Because future awards under the Amended Plan will be granted in the discretion of the Board or the Compensation Committee, the type, number, recipients, and other terms of such awards cannot be determined at this time.
The following table sets forth stock options and performance shares that were approved by the Compensation Committee and the Board to the persons and groups named below under the Amendedour 2009 Plan in March 2016, subject to receivingDecember 2018 and that would be satisfied by the requisiteissuance of shares under our 2019 Plan, contingent upon stockholder approval of stockholders of this Proposal No. 3.our 2019 Plan. Should such stockholder approval not be obtained, then these grants under the Amended Planawards will be rescinded.automatically forfeited. The number of performance shares included in the table below assumes that targetthe performance isgoals are achieved. A participant can receive between 50% and 150%earn either 0% or 100% of the target award based on achievement of share price goals (between $10 and $20 per share)specified milestones over a three-yearone-year performance period, with potential vesting to occur in three tranches over an additional two-year period. Stock options vest over a three-year period, withone-third vesting on theone-year anniversary of the grant date and the remainder vesting quarterly thereafter. Any other awards under our 2019 Plan would be granted by our Compensation Committee in its discretion. | | | | | | | | | Name and Position | | Number of Stock Options | | | Number of Performance Shares | | Garo H. Armen, Ph.D.,Chief Executive Officer | | | 555,000 | | | | 132,500 | | C. Evan Ballantyne,Chief Financial Officer | | | 75,000 | | | | 14,000 | | Christine M. Klaskin,Vice President, Finance | | | 30,000 | | | | 13,500 | | Ozer Baysal,Chief Business Officer | | | 40,000 | | | | 13,500 | | Robert B. Stein, Ph.D.,President, Research & Development | | | 250,000 | | | | 34,000 | �� | Karen H. Valentine,Chief Legal Officer and General Counsel | | | 140,000 | | | | 27,500 | | All executive officers as a group | | | 1,090,000 | | | | 235,000 | | All non-executive directors as a group | | | — | | | | — | | All non-executive officer employees as a group | | | 830,000 | | | | 199,000 | |
| | | | | | | | | Name and Position | | Number of Stock Options | | | Number of RSUs | | Garo H. Armen, Ph.D., Chief Executive Officer | | | 1,707,500 | | | | 647,682 | | Jennifer Buell, Ph.D.,Chief Operating Officer | | | 300,000 | | | | — | | Alexander Duncan, Ph.D.,Chief Technology Officer and Head of Research | | | 210,000 | | | | — | | | | | — | | | | — | | All executive officers as a group | | | 2,635,833 | | | | 647,682 | | Allnon-executive directors as a group | | | 457,500 | | | | — | | Allnon-executive officer employees as a group | | | 2,249,906 | | | | — | |
Vote Required To approve Proposal 3, stockholders holding a majority of Agenus common stock present or represented by proxy at the 20162019 Annual Meeting and voting on the matter must vote FOR Proposal 3. Abstentions and “brokernon-votes” will not be counted as votes cast or shares voting on Proposal 3 and will have no effect on the vote. The Board of Directors recommends a vote FOR Proposal 3. EQUITY PLANS Securities Authorized For Issuance Under Equity Compensation Plans The following table provides information about the securities authorized for issuance under our equity compensation plans as of December 31, 2018. The following table does not include any shares that would become available following the approval of our 2019 Plan. | | | | | | | | | | | | | Plan Category | | Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights(1) | | | Weighted Average Exercise Price of Outstanding Options, Warrants and Rights | | | Number of Securities Remaining Available for Future Issuance under Equity Compensation Plan (Excluding Securities Reflected in Column (a)) | | | | (a) | | | (b) | | | (c) | | Equity compensation plans approved by security holders | | | 20,517,827 | | | $ | 4.16 | | | | 4,737,121 | (2) | Equity compensation plans not approved by security holders(3) | | | 566,946 | | | $ | 3.85 | | | | 717,576 | | | | | | | | | | | | | | | Total | | | 21,084,773 | | | | | | | | 5,454,697 | | | | | | | | | | | | | | |
(1) | Includes 20,236,215 shares subject to awards under our 2009 Equity Incentive Plan, assuming maximum achievement of all applicable performance conditions, and 277,359 shares issuable under our DDCP at a price of $4.52. |
(2) | Includes shares that may be issued under our 2009 Equity Incentive Plan and 75,559 shares available under our DDCP. |
(3) | Represents the Agenus Inc. 2015 Inducement Equity Plan under which inducement grants may be made in accordance with Nasdaq rules. |
PROPOSAL 4—TO APPROVE OUR 2016 EXECUTIVE INCENTIVE PLAN On April 8, 2016, the Board adopted, subject to stockholder approval, the Agenus Inc. 2016 Executive Incentive Plan (the “EIP”). Under the EIP, executive officers and other key employees of the Company may receive short-term incentive compensation awards, subject to the satisfaction of specified performance criteria and other conditions over a performance period specified by the Compensation Committee.
Reasons for Seeking Stockholder Approval
We are requesting that stockholders approve the EIP to enable us to grant, if desired, short-term incentive compensation awards that are intended to qualify as exempt “performance-based compensation” under Section 162(m) of the Code (and therefore not be subject to the Section 162(m) limits on deductibility of compensation paid to certain of our executive officers). As described in further detail in Proposal No. 3 above, Section 162(m) of the Code disallows a deduction to any publicly held corporation and its affiliates for certain employee compensation that exceeds $1 million. However, compensation that satisfies the requirements of an exception for “qualified performance-based compensation” is not subject to this deduction limitation. For compensation awarded under a plan to fit within this exception under Section 162(m), among other things, the material terms of the related performance goals must be disclosed to and approved by the corporation’s shareholders not less frequently than every five years. Under Section 162(m) of the Code, the material terms include the class of eligible employees, a description of the business criteria on which the performance goals may be based and the maximum amount that can be paid to any participant for a specified period. For the EIP, these terms are described below under “Eligibility,” “Payment Limits” and “Performance Criteria.” We are asking stockholders for this approval so that we may grant, if desired, performance-based cash awards that are intended to be exempt from the tax deduction limitations of Section 162(m) to executive officers whose compensation is subject to such limitations. Although stockholder approval is one of the requirements of the exception to the deductibility limits under Section 162(m), even with stockholder approval, the Compensation Committee cannot guarantee that awards under the EIP will be deductible as qualified performance-based compensation under Section 162(m) of the Code.
Summary of the EIP
The following is a brief summary of the material terms of the EIP. A copy of the EIP is attached as Appendix C to this proxy statement, and we urge stockholders to read it in its entirety. The following description of certain features of the EIP is qualified in its entirety by reference to the full text of the EIP.
Administration. The EIP will be administered by the Compensation Committee, who has the authority to, among other things, interpret the EIP and awards, determine eligibility for and the terms and conditions of awards, and generally do all things necessary to administer the plan. Any interpretation or decision by the Compensation Committee with regard to the EIP or an award is final and conclusive.
Eligibility. Executive officers and other key employees of the Company and our affiliates will be selected from time to time by the Compensation Committee to participate in the EIP. As of April 8, 2016, six executive officers and nine other key employees would be eligible to participate in the EIP.
Awards. The Compensation Committee will select the participants who will receive awards, establish the performance period and performance criteria applicable to the award, the amount or amounts payable if the performance criteria are achieved, and such other terms and conditions as the Compensation Committee deems appropriate. The EIP permits the grant of awards that are intended to qualify as exempt performance-based compensation under Section 162(m) as well as awards that are not intended to so qualify.
Performance Criteria. Awards under the EIP will be made based on, and subject to achieving, “performance criteria” over a specified performance period, as established by the Compensation Committee. Performance
criteria with respect to those awards that are intended to qualify as “performance-based compensation” for purposes of Section 162(m) of the Code are limited to objectively determinable measure(s) of performance relating to any or any combination of the following (measured either absolutely or comparatively (including, without limitation, by reference to an index or indices or a specified peer group or a select group of companies) and determined on a consolidated basis or, as the context permits, on a divisional, subsidiary, line of business, project or geographical basis or in combinations thereof and subject to such adjustments, if any, as the Compensation Committee specifies, consistent with the requirements of Section 162(m) of the Code): sales; revenues; assets; expenses; earnings before or after deduction for all or any portion of interest, taxes, depreciation, amortization or equity expense, whether or not on a continuing operations or an aggregate or per share basis; return on equity, investment, capital, capital employed or assets; one or more operating ratios; operating income or profit, including on an after-tax basis; net income; debt levels or reduction, leverage ratios or credit rating; market share; capital expenditures; cash flow (including, but not limited to, operating cash flow and free cash flow); stock price; stockholder return; sales of particular products or services; customer acquisition, expansion and retention; regulatory compliance; regulatory or other filings or approvals; research, development, clinical, regulatory, manufacturing or product development milestones; discovery, preclinical or clinical stage scientific discoveries, objectives or inventions; manufacturing or process developments; acquisitions and divestitures (in whole or in part); new or expanded joint ventures, strategic alliances, licenses, collaborations or partnerships, or achievement of milestones under any of the foregoing; spin-offs, split-ups and the like; reorganizations; recapitalizations, restructurings, financings (issuance of debt or equity), refinancings or other capital raising transactions; receipt of alternative financing; implementation or completion of critical projects; employee satisfaction; achievements in strengthening the Company’s intellectual property position; recruiting and maintaining personnel; transactions that would constitute a change of control; or any combination of the foregoing.
Provided that the Compensation Committee has specified at least one performance criterion intended to qualify the award as performance-based under Section 162(m), it may specify other performance goals or criteria as a basis for its exercise of negative discretion with respect to the award. To the extent consistent with the requirements of Section 162(m), the Compensation Committee may establish that in the case of any award intended to qualify as exempt performance-based compensation under Section 162(m), that one or more of the performance criteria applicable to such award be adjusted in an objectively determinable manner to reflect events (for example, the impact of charges for restructurings, discontinued operations, mergers, acquisitions, and other unusual or infrequently occurring items, and the cumulative effects of tax on accounting changes, each as defined by U.S. generally accepted accounting principles) occurring during the performance period of such award that affect the applicable performance criteria. With respect to awards other than Section 162(m) awards, the Compensation Committee may provide that such award, and any related performance criteria, will be adjusted in any manner prescribed by the Compensation Committee in its sole discretion.
Payment. A participant will be entitled to payment under an award only if all conditions to payment have been satisfied in accordance with the EIP and the terms of the award. Following the close of a performance period, the Compensation Committee will determine (and, to the extent required by Section 162(m), certify) whether and to what extent the applicable performance criteria have been satisfied. The Compensation Committee will then determine the actual payment, if any, under each award. The Compensation Committee has the sole and absolute discretion to reduce (including to zero) the actual payment to be made under any award. The Compensation Committee will determine the payment dates for awards under the EIP. Generally, all payments under the EIP will be made, if at all, no later than March 15 of the calendar year following the calendar year in which the performance period ends, provided that the Compensation Committee may permit a participant to defer payment of an award in accordance with Section 409A of the Code.
Payment Limits. The maximum payment to any participant under the EIP in any fiscal year will in no event exceed $1,470,000.
Recovery of Compensation. Awards granted under the EIP are subject to forfeiture, termination and rescission, and a participant will be obligated to return any payments received in respect of awards to the extent
provided by the Compensation Committee in connection with a breach by the participant of the EIP, an award or any non-competition, non-solicitation, confidentiality or similar covenant or agreement or an overpayment due to inaccurate financial data. The Compensation Committee may also recover awards pursuant to any applicable Company clawback or recoupment policy or as otherwise required by law or applicable stock exchange listings.
Effective Date; Amendment and Termination. If approved by our stockholders, the EIP will be effective for performance periods beginning on or after January 1, 2017. The Compensation Committee may amend the EIP at any time, provided that any amendment will be approved by our stockholders if required by Section 162(m). The Compensation Committee may terminate the EIP at any time.
New Plan Benefits.
Because awards granted under the EIP will be based on the discretion of the Compensation Committee and any awards granted under the EIP will be based on the achievement of future performance criteria that will be established by the Compensation Committee, we cannot determine the amounts that will be earned in the future under the EIP.
Vote Required
To approve Proposal 4, stockholders holding a majority of Agenus common stock present or represented by proxy at the 2016 Annual Meeting and voting on the matter must vote FOR Proposal 4. Abstentions and “broker non-votes” will not be counted as votes cast or shares voting on Proposal 4 and will have no effect on the vote.
The Board of Directors recommends a vote FOR Proposal 4.
PROPOSAL 5—TO RATIFY THE APPOINTMENT OF KPMG LLP AS OUR INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31, 20162019 Our Audit and Finance Committee has selected KPMG LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2016.2019. Although stockholder approval of the selection of KPMG LLP is not required by law, our Board believes that it is advisable to give stockholders an opportunity to ratify this selection. If stockholders do not approve this proposal at the 20162019 Annual Meeting, our Audit and Finance Committee will reconsider their selection of KPMG LLP. If stockholders do ratify this appointment, the Audit and Finance Committee, which has direct authority to engage our independent registered public accounting firm, may appoint a different independent registered public accounting firm at any time during the year if the Audit and Finance Committee determines that the change would be in the best interests of Agenus and our stockholders. The Audit and Finance Committee has approved all services provided to Agenus by KPMG LLP during 2015.2018. Representatives of KPMG LLP are expected to be present at the 20162019 Annual Meeting. They will have the opportunity to make a statement if they desire to do so and will also be available to respond to appropriate questions from stockholders. KPMG LLP has served as our independent registered public accounting firm since 1997. Audit Fees Fees incurred by us for professional services rendered by KPMG LLP for the audit of the annual consolidated financial statements and of the effective operation of internal control over financial reporting, included in our Annual Report on Form10-K, for the reviews of the consolidated financial statements included in our Forms10-Q and for comfort letters, consents and review of registration statements were $836,100$811,870 for 20152018 and $639,751$783,250 for 2014.2017. Audit-Related Fees Fees paid to KPMG LLP for the audit of our 401(k) Retirement Plan were $28,000$30,750 in 20152018 and $27,146$30,000 in 2014.2017. Tax Fees Fees paid to KPMG LLP associated with tax compliance services were $111,681 in 2018 and $81,850 in 2017. Fees paid to KPMG LLP associated with tax consultation services were $15,134$61,962 in 20152018 and $1,215$294,054 in 2014.2017. All Other Fees We paid no other fees to KPMG LLP for 20152018 or 2014.2017. Pre-Approval of Audit andNon-Audit Services All of the KPMG LLP fees for 20152018 and 20142017 shown above werepre-approved by the Audit and Finance Committee. The Audit and Finance Committeepre-approves all audit and other permittednon-audit services provided by our independent registered public accounting firm.Pre-approval is generally provided for up to one year, is detailed as to the particular category of services and is subject to a monetary limit. Our independent registered public accounting firm and senior management periodically report to the Audit and Finance Committee the extent of services provided by the independent registered public accounting firm in accordance with thepre-approval, and the fees for the services performed to date. The Audit and Finance Committee may alsopre-approve particular services on acase-by-case basis. Vote Required To approve Proposal 5,4, a majority of the votes cast by stockholders present in person or by proxy and voting on the matter must vote FOR Proposal 5.4. If your shares are held by your broker, bank, or nominee in “street name,” and you do not vote your shares, your broker, bank, or nominee has authority to vote your unvoted shares on Proposal 5.4. If the broker, bank, or nominee does not vote your unvoted shares, there will be no effect on the vote because these “brokernon-votes” are not considered to be voting on the matter. Abstentions and “brokernon-votes” will not be counted as votes cast or shares voting on Proposal 5,4, and will have no effect on the vote. The Board of Directors recommends a vote FOR Proposal 5.4. REPORT OF THE AUDIT AND FINANCE COMMITTEE The Audit and Finance Committee of the Board consists entirely of independent directors who are not officers or employees of Agenus. The Board has adopted a written charter for the Audit and Finance Committee, the current version of which is available on our website at http://investor.agenusbio.com/corporate-governanceboard-committees. No material on our website is part of this proxy statement. In the course of its oversight of the Company’s reporting process, the Audit and Finance Committee of the Board has (1) reviewed and discussed with management the Company’s audited consolidated financial statements and management’s assessment of the effectiveness of internal control over financial reporting for the fiscal year ended December 31, 2015,2018, (2) discussed with KPMG LLP, our independent registered public accounting firm, the matters required to be discussed pursuant to Public Company Accounting Oversight Board Auditing Standard No. 161301 (Communications with Audit Committees), including the quality of the Company’s accounting principles, the reasonableness of significant judgments, and the clarity of disclosures in the financial statements, and (3) discussed with KPMG LLP matters relating to its independence, including a review of audit andnon-audit fees and the written disclosures and letter from KPMG LLP pursuant to applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant’s communications with the Audit and Finance Committee concerning independence. Based on the foregoing review and discussions, the Audit and Finance Committee recommended to the Board that the audited consolidated financial statements be included in the Company’s Annual Report onForm 10-K for the year ended December 31, 20152018 for filing with the SEC. By the Audit and Finance Committee, Brian Corvese, Chair Shahzad Malik, MDWadih Jordan
Timothy R. Wright ADDITIONAL INFORMATION Stockholder Proposals for 20172020 Annual Meeting of Stockholders Proposals to be included in the Company’s proxy statement. Under SEC rules, if a stockholder wants us to include a proposal in our proxy statement and form of proxy for presentation at our 20172020 Annual Meeting of Stockholders, the proposal must comply with Rule14a-8 under the Exchange Act and must also meet the advance notice requirements in our bylaws applicable to all stockholder proposals (as described in the following paragraphs). Proposals to be brought before an annual meeting.Under ourby-laws, a stockholder must follow certain procedures to nominate persons for election as directors or to introduce an item of business at an annual meeting of stockholders. Among other requirements, these procedures require any nomination or proposed item of business to be submitted in writing to our Chairman of the Board or Corporate Secretary at our principal executive offices. Assuming our 20172020 Annual Meeting of Stockholders is not more than 30 days before or 30 days after June 14, 2017,19, 2020, if you wish to bring business before the 20172020 Annual Meeting of Stockholders, you must give us written notice by December 29, 2016.26, 2019. However, if at least 60 days’ notice or prior public disclosure of the date of the 20172020 Annual Meeting of Stockholders is given or made and the date of the 20172020 Annual Meeting of Stockholders is not within 30 days before or after June 14, 2017,19, 2020, notice by the stockholder must be received by the Company 45 days prior to the date of the 20172020 Annual Meeting of Stockholders. If less than 60 days’ notice or prior public disclosure of the date of the 20172020 Annual Meeting of Stockholders is given or made and the date of the 20172020 Annual Meeting of Stockholders is not within 30 days before or after June 14, 2017,19, 2020, notice by the stockholder must be received by the Company no later than 15 days after the date Agenus sends notice of the 20172020 Annual Meeting of Stockholders. If a stockholder fails to provide timely notice of a proposal to be presented at the 20172020 Annual Meeting of Stockholders, the proxies designated by the Board will have discretionary authority to vote on the proposal. Householding of Meeting Materials Some banks, brokers, and other nominee record holders may be participating in the practice of “householding” proxy statements and annual reports. This means that only one copy of our proxy statement or annual report may have been sent to multiple stockholders in your household. We will promptly provide a separate copy of either document to you if you contact Investor Relations at Agenus Inc., 3 Forbes Road, Lexington, Massachusetts 02421, or telephone ore-mail Investor Relations at800-962-2436 orIR@agenusbio.com. If you want to receive separate copies of the annual report and proxy statement in the future or if you are receiving multiple copies and would like to receive only one copy for your household, you should contact your bank, broker or other nominee record holders, or you may contact us. Documents Incorporated by Reference The 2009 Equity Incentive Plan, the DDCP and the financial statements from our Annual Report onForm 10-K for the year ended December 31, 20152018 are incorporated by reference herein. APPENDIX A CERTIFICATE OF FIFTHSIXTH AMENDMENT TO THE AMENDED AND RESTATED CERTIFICATE OF INCORPORATION AGENUS INC., a corporation organized and existing under the laws of the State of Delaware, hereby certifies as follows: 1. The name of the corporation is Agenus Inc. (the “Corporation”“Corporation”). The Corporation’s original Certificate of Incorporation was filed with the Secretary of State of the State of Delaware on November 10, 1999 (the “Certificate“Certificate of Incorporation”Incorporation”). The Certificate of Incorporation was amended and restated on June 7, 2002 (the “Restated Certificate”“Restated Certificate”), which was further amended on June 15, 2007 by a Certificate of Amendment (the “First Amendment”“First Amendment”), which was further amended on January 5, 2011 by a Certificate of Ownership and Merger (the “Name“Name Change Amendment”Amendment”), which was further amended on September 30, 2011 by a Certificate of Second Amendment (the “Second Amendment”“Second Amendment”), which was further amended on June 15, 2012 by a Certificate of Third Amendment (the “Third Amendment”“Third Amendment”), which was further amended on April 24, 2014 by a Certificate of Fourth Amendment (the “Fourth Amendment), which was further amended on June 14, 2016 by a Certificate of Fifth Amendment (the “Fifth Amendment”) (the Restated Certificate, as amended by the First Amendment, the Name Change Amendment, the Second Amendment, the Third Amendment, and the Fourth Amendment, and the “Amended Certificate”Fifth Amendment, the “Amended Certificate”). This Certificate of FifthSixth Amendment (the “Fifth Amendment”“Sixth Amendment”) amends certain provisions of the Amended Certificate, and has been duly adopted in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware. 2. The Board of Directors of the Corporation has duly adopted a resolution, pursuant to Section 242 of the General Corporation Law of the State of Delaware, setting forth the following amendment to the Amended Certificate, and declaring the FifthSixth Amendment to be advisable. 3. This FifthSixth Amendment was duly adopted by the vote of the stockholders holding the requisite number of shares of outstanding stock of the Corporation entitled to vote thereon in accordance with the provisions of Sections 216 and 242 of the General Corporation Law of the State of Delaware. 4. The first sentence of the first paragraph of Article Fourth of the Amended Certificate is hereby amended to read as follows: “FIFTH: The Corporation shall be authorized to issue twofour hundred and fortyfive million (245,000,000)(405,000,000) shares of capital stock, which shall be divided into twofour hundred and forty million (240,000,000)(400,000,000) shares of Common Stock, par value $0.01 per share, and five million (5,000,000) shares of Preferred Stock, par value $0.01 per share.” 5. This FifthSixth Amendment shall be effective as of onJune 19, 2019 in accordance with the provisions of Section 103(d) of the General Corporation Law of the State of Delaware. 6. Except as set forth in this FifthSixth Amendment, the Restated Certificate remains in full force and effect. [Signature Page to Follow] IN WITNESS WHEREOF, the undersigned has duly executed this FifthSixth Amendment in the name of and on behalf of the Corporation on thisday of , 2016.June, 2019. | | | Name: Garo H. Armen | Title: Chief Executive Officer |
APPENDIX B AGENUS INC. AMENDED AND RESTATED 20092019 EQUITY INCENTIVE PLAN
(as of April 8, 2016)1. DEFINED TERMS
1.Purpose and EligibilityExhibit A
The purpose of this Amended and Restated 2009 Equity Incentive Plan (the “Plan”) of Agenus Inc., a Delaware corporation (the “Company”),which is to provide stock options and other equity-based interestsincorporated by reference, defines certain terms used in the CompanyPlan and includes certain operational rules related to key employees, officers, and directors of, and consultants and advisorsthose terms.
2. PURPOSE The Plan has been established to advance the Company and its Affiliates who, in the opinion of the Board, are in a position to contribute to the successinterests of the Company by providing for the grant to Participants of Stock and its Subsidiaries and all of whom are eligible to receive Awards under the Plan;provided that eligibility to receive Incentive Stock Options (as defined in Section 4(b)) shall be limited to those individuals described in Sections 4(a) and 4(b). Any person to whom an Award has been granted under the Plan is referred to as a “Participant.” Additional definitions are contained in Section 8.Stock-based Awards. 2.Administration3. ADMINISTRATION
a.Administration by Board of Directors. The Plan will be administered by the Board of DirectorsAdministrator. The Administrator has discretionary authority, subject only to the express provisions of the Company (the “Board”). The Board, in its sole discretion, shall havePlan, to interpret the authorityPlan; to determine eligibility for grant and amendgrant Awards; to determine, modify, accelerate or waive the terms and conditions of any Award; to determine whetherthe form of settlement of Awards will be settled(whether in cash, shares of Common Stock, cash,or other property, other Awards, or a combination thereof;property); to adopt, amendprescribe forms, rules and repeal rulesprocedures relating to the Plan; to interpret and correct the provisions of the Plan and any Award;Awards; and to otherwise do all things necessary or desirable to carry out the purposes of the Plan. All decisions by the Board shall be final and binding on all interested persons. Neither the Company norPlan or any memberAward. Determinations of the Board shall be liable for any action or determination relatingAdministrator made with respect to the Plan or any Award.Award are conclusive and bind all persons.
b.Delegation. To the extent permitted by applicable law, the Board may delegate (i) any or all of its powers under the Plan to one or more committees or subcommittees of the Board (each, a “Committee”), (ii) to one or more officers of the Company the power to grant Awards to employees or officers of the Company or any of its present or future Affiliates and (iii) to such employees or other persons as it determines such ministerial acts as it deems appropriate. All references in the Plan to the “Board” shall mean any such other person, persons, Committee or the Board, as applicable. Discretionary Awards to non-employee directors will only be granted and administered by a Committee, each member of which is an “independent director” as defined in the applicable NASDAQ Marketplace Rules.4. LIMITS ON AWARDS UNDER THE PLAN
3.Stock Available for Awards
a.(a)Number of Shares. Subject to adjustment underas provided in Section 3(e)7(b), the aggregate number of shares of Common Stock that may be deliveredissued in satisfaction of Awards under the Plan is 20,200,000(i) 11,000,000 shares of Common Stock, plus (ii) the number of which 1,649,460 shares remainof Stock available to grantfor issuance under the Prior Plan as of April 8, 2016 andthe Date of which 6,000,000Adoption (which will not exceed 5,262,242 shares), plus (iii) the number of shares shallof Stock underlying awards under the Prior Plan (which will not exceed 19,655,534 shares) that on or after the Date of Adoption expire or terminate or are surrendered without the delivery of shares of Stock, are forfeited to, or repurchased by, the Company, or otherwise become available subjectagain for grant under the Prior Plan, in each case, in accordance with its terms (collectively, the “Share Pool”). Up to stockholder approval11,000,000 of the Plan. Up to 6,000,000 shares of Common Stock from the Share Pool may be issued in satisfaction of Incentive Stock Options,ISOs, but nothing in this Section 3(a) shall4(a) will be construed as requiring that any, or any fixed number of, Incentive Stock OptionsISOs be awardedgranted under the Plan. For purposes of this Section 3(a)4(a), the number of shares of Common Stock that may be deliveredissued in satisfaction of Awards will be determined (i) without regard to anyby reducing the Share Pool by the number of shares of Common Stock underlying the portion of any Award that expires, becomes exercisable without having been exercised, terminates, is surrendered or forfeited to or repurchasedwithheld by the Company duein payment of the exercise price or purchase price of the Award or in satisfaction of tax withholding requirements with respect to failure to vest;the Award, (ii) by treating as having been deliveredreducing the Share Pool by the full number of shares of Common Stock covered by a SAR any portion of a stock appreciation right (a “SAR”) thatwhich is settled in Common Stock (and not only the number of shares of Common Stock delivered in settlement), and (iii) by treating as having been
deliveredincreasing the Share Pool by any shares of Common Stock withheld from an Option (as definedunderlying Awards settled in Section 4(a))cash or other Awardthat expire, become unexercisable, terminate or are forfeited to satisfyor repurchased by the tax withholding obligations with respect to such Option or other Award orCompany without the issuance (or retention, in paymentthe case of the exercise priceRestricted Stock) of such Option.Stock. For the avoidance of doubt, the number of shares of Common Stock available for delivery under the Plan shallShare Pool will not be increased by any shares of Common Stock that have been delivered under the Plan that are subsequently repurchased using proceeds directly attributable to Stock Option exercises. The limits set forth in this Section 3(a) shall4(a) will be construed to comply with the applicable requirements of Section 422 of422.
(b)Substitute Awards.TheAdministrator may grant Substitute Awards under the Code.Plan. To the extent consistent with the requirements of Section 422 of the Code and the regulations thereunder and other applicable legal requirements (including applicable stock exchange requirements), Commonshares of Stock issued underin respect of Substitute Awards shallwill be in addition to and will not reduce the numberShare Pool, but, notwithstanding anything in Section 4(a) to the contrary, if any Substitute Award is settled in cash or expires, becomes unexercisable, terminates or is forfeited to or repurchased by the Company without the issuance (or retention, in the case of Restricted Stock) of Stock, the shares of Common Stock previously subject to such Award will not increase the Share Pool or otherwise be available for Awardsfuture issuance under the Plan. The sharesAdministrator will determine the extent to which may be delivered underthe terms and conditions of the Plan apply to Substitute Awards, shall be in addition to the limitations set forth in this Section 3(a) on the number of shares available for issuance under the Plan, and suchif at all,provided,however, that Substitute Awards shallwill not be subject to the per-Participant Award limits described in Section 3(c) below.4(d). b.(c)Type of Shares. Shares of Common Stock delivered by the Company under the Plan may be authorized but unissued shares of Common Stock or previously issued shares of Common Stock acquired by the Company. No fractional shares of Common Stock will be delivered under the Plan;provided that the BoardAdministrator may, in its sole discretion, provide for the delivery of cash in lieu of any fractional shares that would otherwise be deliverable hereunder.
c.(d) Section 162(m)Individual Limits.
(1) The following additional limits will apply to Awards of the specified type granted (other than a non-employee member of the Board, whose Awards shall be subject to the limits set forth in subsection (d) below)any person in any calendar year: (1)(A) Stock Options: 1,665,0002,500,000 shares of Common Stock.
(2)(B) SARs: 1,665,0002,500,000 shares of Common Stock.
(3)(C) Awards (otherother than Stock Options or SARs) that are denominated inand SARs: 1,500,000 shares of Common Stock: 647,682 shares of Common Stock.
In applying the foregoing limits, (i) all Awards of the specified type granted to the same person in the same calendar year will beare aggregated and made subject to one limit; (ii) the share limits applicable to Stock Options and SARs refer to the number of shares of Common Stock underlying suchthose Awards; and (iii) the share limit under clause (3)(C) refers to the maximum number of shares of Common Stock that may be delivered,issued, or the value of which couldmay be paid in cash or other property, under an Award or Awards of the type specified in clause (3)(C), assuming a maximum payout. Thepayout levels. (2) In addition to the foregoing provisions will be construed in a manner consistentlimits, the aggregate value of all compensation granted or paid to any Director with Section 162(m) ofrespect to any calendar year, including Awards granted under the Code, including, without limitation, where applicable,Plan and cash fees or other compensation paid by the rules under Section 162(m) of the Code pertainingCompany to permissible deferrals of exempt awards. d.Limitation on Awards to Non-Employee Directors. Notwithstanding any other provisionsuch Director outside of the Plan, to the contrary, including subsection (c) above,in each case, for his or her services as a Director during such calendar year, may not exceed $600,000 in the case of a non-employee member of the Board (a “Director”), additional limits shall apply such that the maximum grant-date fair value of Awards granted in any calendar year during any part of which the Director is then eligible under the Plan shall be $500,000, or $800,000aggregate (or $850,000 for the calendar year in which suchthe Director is first elected or appointed to the Board, in each case, computedBoard), calculating the value of any Awards based on the grant date fair value in accordance with FASB ASC Topic 718 (or any successor provision). the Accounting Rules and assuming maximum payout levels.
5. ELIGIBILITY AND PARTICIPATION The foregoing additional limits related toAdministrator shall select Participants from among Employees and Directors of, the Company shall not apply to any Award or shares of Common Stock granted pursuant to a Director’s election to receive an Award or shares of Common Stock in lieu of cash retainers or other fees (to the extent such Award or shares of Common Stock have a fair value equal to the value of such cash retainers or other fees). e. Adjustment to Common Stock. In the event of any stock split, stock dividend, extraordinary cash dividend, recapitalization, reorganization, merger, consolidation, combination, exchange of shares, liquidation, spin-off, split-up, or other similar change in capitalization or event that constitutes an equity restructuring within
the meaning of FASB ASC Topic 718 (or any successor provision), the Board shall make appropriate adjustments to (i) the number and class of securities that may be delivered in satisfaction of Awards under the Plan, (ii) the numberconsultants and class of securities, vesting schedule and exercise price per share or base value subject to each then outstanding or subsequently granted Award, and (iii) any other provision of Awards effected by such change. The Board may also make adjustments of the type described in the preceding sentence to take into account distributions to stockholders other than those provided for in the preceding sentence, or any other event, if the Board determines that adjustments are appropriate to avoid distortion in the operation of the Plan, having due regard for the qualification of Incentive Stock Options under Section 422 of the Code, the requirements of Section 409A of the Code, and for the performance-based compensation rules of Section 162(m) of the Code, to the extent applicable. References in the Plan to shares of Common Stock will be construed to include any stock or securities resulting from an adjustment pursuant to this Section 3(e).
4.Stock Options and SARs
a.General. The Board may grant options to purchase Common Stock (each, an “Option”) and SARs, determine the number of shares of Common Stock to be covered by each Option or SAR, the exercise price (or the base value from which appreciation is measured) of each Option or SAR and the conditions and limitations applicable to the exercise of each Option, SAR and the Common Stock issued upon the exercise thereof, including vesting provisions, repurchase provisions and restrictions relating to applicable federal or state securities laws, as it considers advisable. SARs may be settled in shares of Common Stock, cash or other property. Notwithstanding anything in the Plan to the contrary, eligibility for Options other than Incentive Stock Options shall be limited to individuals who are providing direct services on the date of grant of the Optionadvisors to, the Company orand its Affiliates. Eligibility for ISOs is limited to a subsidiary of the Company that would beindividuals described in the first sentence of this Section 1.409A-1(b)(5)(iii)(E) of the Treasury regulations.
b.Incentive Stock Options. An Option that the Board intends to be an “incentive stock option,” as defined in Section 422 of the Code (an “Incentive Stock Option”), shall be granted only to individuals5 who are employees of the Company or of a “parent corporation” or “subsidiary corporation” of the Company as those terms are defined in Section 424 of the Code. All Incentive Stock Options thatEligibility for NSOs and SARs is limited to individuals who are granted pursuant to the Plan shall be subject to, and shall be construed consistently with, the requirements of Section 422 of the Code. The Board and the Company shall have no liability if an Option or any part thereof that is intended to be an Incentive Stock Option does not qualify as such. An Option or any part thereof that does not qualify as, or is not intended to be, an Incentive Stock Option is referred to herein as a “Nonstatutory Stock Option”.
c.Exercise Price. The Board shall establish the exercise price (or the base value from which appreciation is measured) at the time each Option or SAR is granted and specify such exercise price or base value in the applicable option or SAR agreement. Notwithstanding the foregoing, the exercise price (or the base value from which appreciation is to be measured) of each Award requiring exercise shall be no less than 100% (in the case of an Incentive Stock Option granted to a ten-percent shareholder within the meaning of subsection (b)(6) of Section 422, 110%) of the Fair Market Value of the Common Stock subject to the Award, determined as ofproviding direct services on the date of grant or such higher amount as the Board may determine in connection with the grant or as otherwise determined by the Board with respect to a Substitute Award.
d.Term. Each Option and SAR shall be exercisable at such times and subject to such terms and conditions as the Board may specify in the applicable Award agreement, provided, however, that no Option or SAR will be granted for a term in excess of 10 years (or 5 years, in the case of an Incentive Stock Option granted to a ten-percent shareholder within the meaning of Section 422(b)(6) of the Code).
e.Time and Manner of Exercise. Unless the Board expressly provides otherwise, Options and SARs may be exercised only by deliveryAward to the Company ofor to a written noticesubsidiary of exercise signed by the proper person, or any other form of notice approved by the Board, together with payment in full as specified in Section 4(f). Any attempt to exercise such an Award by any person other than the Participant will not be given effect unless the Board has received such evidence as it may require that the person exercising the Award has the right to do so.
f.Payment Upon Exercise. No shares shall be delivered pursuant to any exercise of an Option until the Company receives paymentthat would be described in fullthe first sentence ofSection 1.409A-1(b)(5)(iii)(E) of the exercise price in the manner provided in the applicable Treasury Regulations.
6. RULES APPLICABLE TO AWARDS (a) All Awards. (1)Award agreement. Methods of payment may include any of the following or any combination thereof or any other form of lawful consideration, as determined by the Board in its sole discretion: (i) cash, check or wire transfer of funds; (ii) promissory note; (iii) shares of Common Stock owned by the Participant valued at Fair Market Value; (iv) so-called “cashless exercise” or “net issuance”; and (v) arrangements with a broker or other financial institution for the prompt payment of the exercise price to the Company. g.Prohibition of RepricingProvisions. Subject to Section 3(e) and Section 7(e), the Board is prohibited from amending any outstanding Option or SAR granted under the Plan to provide an exercise price per share or base value that is lower than the then-current exercise price per share or base value of such outstanding Option without stockholder approval. The Board is also prohibited from (i) cancelling any outstanding Options or SARs and granting in substitution therefor new Options or SARs covering the same or a different number of shares of Common Stock and having an exercise price per share lower than the then-current exercise price per share of the cancelled Option or SAR, or (ii) cancelling any outstanding Options or SARs that have an exercise price or base value greater than the Fair Market Value of a share of Common Stock on the date of such cancellation in exchange for cash or other consideration, in each case, without stockholder approval.
h.No Reload Rights. No Option or SAR granted under the Plan shall contain any provision entitling a Participant to the automatic grant of additional Options or SARs in connection with any exercise of the original Option or SAR.
5.Stock Awards
a.Grants. The Board may grant Awards entitling Participants to acquire shares of Common Stock for any lawful consideration (a “Stock Award”). The Board may, but need not, provide that such Stock Award shall be subject to forfeiture to the Company in the event that conditions specified by the Board in the applicable Award agreement are not satisfied prior to the end of the applicable restriction period or periods established by the Board for such Award (a “Restricted Stock Award”).
b.Terms and Conditions. The BoardAdministrator shall determine the terms and conditions of any such Stock Award. In the case of a Restricted Stock Award, any stock certificates issued in respect thereof shall be registered in the name of the Participant and, unless otherwise determined by the Board, deposited by the Participant, together with a stock power endorsed in blank, with the Company (or its designee). After the expiration of the applicable restriction periods, the Company (or such designee) shall deliver the certificates no longerall Awards, subject to such restrictions to the Participant or, if the Participant has died, to the beneficiary designated by a Participant, in a manner determined by the Board, to receive amounts due to the Participant in the event of the Participant’s death (the “Designated Beneficiary”). In the absencelimitations provided herein. No term of an effective designation by a Participant, Designated BeneficiaryAward shall mean the Participant’s estate.
6.Other Stock-Basedprovide for automatic “reload” grants of additional Awards
The Board shall have the right to grant other Awards (“Other Stock-Based Awards”) based upon exercise of an Option or with reference to the Common Stock and having such terms and conditions as the Board may determine, including, without limitation, the grant or sale of shares of Common Stock based upon certain conditions, the grant of securities convertible into Common Stock and the grant of phantom stock awards or stock units, which may be settled in cash or stock.
7.General Provisions Applicable to All Awards
a.Transferability of Awards. Neither Incentive Stock Options nor, except as the Board may otherwise expressly determine or provide in an Award agreement, other Awards may not be sold, assigned, transferred, pledgedSAR or otherwise encumbered by the person to whom they are granted, either voluntarily or by operationas a term of law, except by will or the laws of descent and distribution, and, during the life of the Participant, Awards requiring exercise shall be exercisable only by the Participant. References to a Participant, to the extent relevant in the context, shall include references to authorized transferees.
b.Award Provisions. The Board will determine the terms of all Awards, including the time or times as which an Award will vest or become exercisable and the terms on which an Award requiring exercise will remain exercisable, in each case, provided that such terms and conditions do not contravene the provisions of the Plan. Each Award shall be evidenced by an Award agreement in such form as the Board shall determine or as executed by an officer of the Company pursuant to authority delegated by the Board.Award. By accepting (or, under such rules as the BoardAdministrator may prescribe, being deemed to have accepted) an Award, the Participant
will be deemed to have agreed to the terms and conditions of the Award and the Plan. Notwithstanding any provision of thisthe Plan to the contrary, Substitute Awards may contain terms and conditions that are inconsistent with the terms and conditions specified herein, as determined by the Board.Administrator. c.(2)Board DiscretionTerm of Plan. No Awards may be made after ten years from the Date of Adoption, but previously granted Awards may continue beyond that date in accordance with their terms.
(3)Transferability. Neither ISOs nor, except as the Administrator otherwise expressly provides in accordance with the third sentence of this Section 6(a)(3), other Awards may be transferred other than by will or by the laws of descent and distribution. During a Participant’s lifetime, ISOs and, except as the Administrator otherwise expressly provides in accordance with the third sentence of this Section 6(a)(3), SARs and NSOs may be exercised only by the Participant. The Administrator may permit the gratuitous transfer (i.e., transfer not for value) of Awards other than ISOs, subject to applicable securities and other laws and such terms of each type of Award need not be identical, and conditions as the Board need not treat Participants uniformly.Administrator may determine. d.(4)Termination of StatusVesting, etc.The BoardAdministrator shall determine the effect ontime or times at which an Award vests or becomes exercisable and the terms on which a Stock Option or SAR remains exercisable. Notwithstanding the foregoing, no Award may be scheduled to vest, in whole or in part, prior to the date that is one year following the date the Award is granted;provided,however, that Awards that result in the issuance (as determined in accordance with the rules set forth in Section 4(a)) of an aggregate of up to five percent of the disability, death, retirement, authorized leave of absence or other change in the employment or other status of a Participant and the extentShare Pool may be granted without regard to which, and the period during which, the Participant, or the Participant’s legal representative, conservator, guardian or Designated Beneficiary, may exercise rights under an Award.suchone-year minimum scheduled vesting period. Unless the BoardAdministrator expressly provides otherwise, however, the following rules will apply if a Participant’s employment or other service terminates:Employment ceases:
(i) Immediately(A) Except as provided in (B) and (C) below, immediately upon the cessation of the Participant’s employment or other service relationship,Employment each Award requiring exerciseStock Option and SAR (or portion thereof) that is then held by the Participant or by the Participant’s permitted transferees, if any, will (except as provided in (ii), (iii), and (iv) below) cease to be exercisable and will terminate, and alleach other AwardsAward that areis then held by the Participant or by the Participant’s permitted transferees, if any, to the extent not alreadythen vested, will be forfeited.
(ii)(B) Subject to (iii)(C) and (iv)(D) below, all Optionseach vested and SARsunexercised Stock Option and SAR (or portion thereof) held by the Participant or the Participant’s permitted transferees, if any, immediately prior to the cessation of the Participant’s employment or other service relationship,Employment, to the extent then exercisable, will remain exercisable for the lesser of (i) a period of three (3) months or (ii) the period ending on the latest date on which such Option or SAR could have been exercised without regard to this 7(d), and will thereupon immediately terminate.
(iii) Subject to (iv) below, all Options and SARs held by a Participant or the Participant’s permitted transferees, if any, immediately prior to the cessation of the Participant’s employment or other service relationship due to his or her death or Disability, to the extent then exercisable, will remain exercisable for the lesser of (i) the one-year period ending with the first anniversary of the date offollowing such cessation of employmentEmployment or other service relationship, as applicable (ii) the period ending on the latest date on which such Stock Option or SAR could have been exercised without regard to this Section 7(d)6(a)(4), and will thereupon immediately terminate.
(iv) All(C) Subject to (D) below, each vested and unexercised Stock OptionsOption and SARs (whether or not vested)SAR (or portion thereof) held by a Participant or the Participant’s permitted transferees, if any, immediately prior to the cessation of the Participant’s Employment due to his or her death or Disability, to the extent then exercisable, will remain exercisable for the lesser of (i) theone-year period ending on the first anniversary of such cessation of employment or other service relationship(ii) the period ending on the latest date on which such Stock Option or SAR could have been exercised without regard to this Section 6(a)(4), and will thereupon immediately terminate.
(D) All Awards (whether or not vested or exercisable) held by a Participant or the Participant’s permitted transferees, if any, immediately prior to the cessation of the Participant’s Employment will immediately terminate upon such cessation of employment or other service relationshipEmployment if the termination is for Cause or occurs in circumstances that in the sole determination of the BoardAdministrator would have constituted grounds for the Participant’s employment or other service relationshipEmployment to be terminated for Cause. Cause (in each case, without regard to the lapsing of any required notice or cure periods in connection therewith).e.(5)AcquisitionRecovery of the CompanyCompensation.
(i)Consequences of an Acquisition. In connection with an Acquisition (as defined below)The Administrator may provide in any case that any outstanding Award (whether or not vested or exercisable), the Board or the board of directors of the surviving or acquiring entity (as used in this Section 7(e)(i), also the “Board”) may, with respect to outstanding Awards (on the same basis or on different bases and on such terms and conditions as the Board shall specify) make appropriate provision for the continuation of such Awards by the Company or the assumption of, or substitution for, such Awards by the surviving or acquiring entity or for the substitution on an equitable basis for the shares then subject to such Awards either (a) the consideration payable with respect to the outstanding shares of Common Stock in connection with the Acquisition, (b) shares of stock of the surviving or acquiring corporation or (c) such other securities or other consideration as the Board deems appropriate, the fair market value of which (as determined by the Board in its sole discretion) shall not materially differproceeds from the Fair Market Value of the shares of Common Stock subject to such Awards immediately preceding the Acquisition. In addition to, in lieu of, or in combination with the foregoing, with respect to unexercised Options or other unexercised Awards, the Board may, on the same basis or on different bases and on such terms and conditions as the Board shall specify, upon written notice to the affected Participants, provide that one or more such Options or Awards (or the vested portion thereof) must be exercised, in whole or in part, within a specified number of days of the date of such notice, at the end of which period such unexercised Options or unexercised Awards (or the vested portion thereof) shall terminate in their entirety, and/or provide that one or more unexercised Options or unexercised Awards (or the vested portion thereof), in whole or in part, shall be terminated in their entirety in exchange for a cash payment equal to the Fair Market Value (as determined by the Board in its sole discretion) of the shares subject to such unexercised Options or unexercised Awards (or the vested portion thereof) minus the exercise price (or base price) thereof, if applicable, and that if the exercise or purchase price (or base value) of an Award is equal to or greater than the Fair Market Value of one share of Stock, such Award shall be cancelled for no consideration. Unless otherwise determined by the Board (on the same basis or on different bases and on such terms and conditions as the Board shall specify), any repurchase rights, vesting provisions or other rights of the Company that relate to an Option or other Award shall continue to apply to consideration, including cash, that has been substituted, assumed or amended for an Option or other Award pursuant to this paragraph. The Company may hold in escrow all or any portiondisposition of any such consideration in order to effectuateAward or
Stock acquired under any continuing restrictions. (ii)Acquisition Defined. An “Acquisition” shall mean: (w) the sale of the Company in which the stockholders of the Company in their capacity as such no longer own a majority of the outstanding equity securities of the Company (or its successor); or (x) a consolidation, merger or similar transaction in which the Company is not the surviving corporation; or (y) any sale of all or substantially all of the assets or capital stock of the Company (other than in a spin-off or similar transaction) or (z)Award, and any other change of control or acquisition of the business of the Company, as determined by the Board.
(iii)Substitute Awards. In connection with a merger or consolidation of an entity with the Company or an Affiliate or the acquisition by the Company of property or stock of an entity, the Board may grant Substitute Awards under the Plan. The Substitute Awards shall be granted on such terms and conditions as the Board considers appropriateamounts received in the circumstances.
f.Withholding. Each Participant shall pay to the Company, or make provisions satisfactory to the Company for paymentrespect of any taxes required by law to be withheld in connection with Awards to such Participant no later than the date of the event creating the tax liability. All payments with respect to anAward or Stock acquired under any Award will be subject to reductionforfeiture and disgorgement to the Company, with interest and other related earnings, if the Participant to whom the Award was granted is not in compliance with any provision of the Plan or any applicable Award, anynon-competition,non-solicitation,no-hire,non-disparagement, confidentiality, invention assignment, or other restrictive covenant by which he or she is bound. Each Award shall be subject to any policy of the Company or any of its Affiliates that provides for forfeiture, disgorgement or clawback with respect to incentive compensation that includes Awards under the Plan and shall be subject to forfeiture and disgorgement to the extent required by law or applicable stock exchange listing standards, including, without limitation, Section 10D of the Securities Exchange Act of 1934, as amended. Each Participant, by accepting or being deemed to have accepted an Award under the Plan, agrees (or will be deemed to have agreed) to the terms of this Section 6(a)(5) and to cooperate fully with the Administrator, and to cause any and all permitted transferees of the Participant to cooperate fully with the Administrator, to effectuate any forfeiture or disgorgement described in this Section 6(a)(5). Neither the Administrator nor the Company nor any other person, other than the Participant and his or her permitted transferees, if any, will be responsible for any adverse tax or other legallyconsequences to a Participant or contractually required withholdings.his or her permitted transferees, if any, that may arise in connection with this Section 6(a)(5).
(6)Taxes. The Boardissuance, delivery, vesting and retention of Stock, cash or other property under an Award are conditioned upon the full satisfaction by the Participant of all tax and other withholding requirements with respect to the Award. The Administrator shall prescribe such rules for the withholding of taxes and other amounts with respect to any Award as it deems necessary. The Administrator may in its sole discretion, allow Participants to satisfy such tax obligations in whole or in part by transferringhold back shares of Common Stock includingfrom an Award or permit a Participant to tender previously owned shares underlying the Award creating theof Stock in satisfaction of tax obligation, valued at their Fair Market Valueor other withholding requirements (but not in excess of the minimummaximum withholding required by law oramount consistent with the Award being subject to equity accounting treatment under the Accounting Rules). Any amounts withheld pursuant to this Section 6(a)(6) will be treated as though such greater amount that would not result in adverse accounting consequencesamounts had been made directly to the Company inParticipant. In addition, the discretion of the Board). The Company may, to the extent permitted by law, deduct any such tax obligationsand other withholding amounts from any payment of any kind otherwise due to a Participant. (7)Dividend Equivalents.The BoardAdministrator may imposeprovide for the payment of amounts (on terms and subject to conditions established by the Administrator) in lieu of cash dividends or other cash distributions with respect to Stock subject to an Award whether or not the holder of such Award is otherwise entitled to share in the actual dividend or distribution in respect of such Award;provided,however, that dividends or dividend equivalents relating to an Award that, at the dividend payment date, remains subject to a risk of forfeiture (whether service-based or performance-based) shall be subject to the same risk of forfeiture as applies to the underlying Award. Subject to Section 6(a)(10), any entitlement to dividend equivalents or similar entitlements will be established and administered either consistent with an exemption from, or in compliance with, the applicable requirements of Section 409A. Dividends or dividend equivalent amounts payable in respect of Awards that are subject to restrictions may be subject to such additional limitations or restrictions as the Administrator may impose. (8)Rights Limited. Nothing in the Plan or any Award will be construed as giving any person the right to be granted an Award or to continued employment or service with the Company or any of its Affiliates, or any rights as a stockholder except as to shares of Stock actually issued under the Plan. The loss of existing or potential profit in any Award will not constitute an element of damages in the event of a termination of a Participant’s Employment for any reason, even if the termination is in violation of an obligation of the Company or any of its Affiliates to the Participant. (9)Coordination with Other Plans.Shares of Stock and/or Awards under the Plan may be issued or granted in tandem with, or in satisfaction of or substitution for, other Awards under the Plan or awards made under other compensatory plans or programs of the Company or any of its Affiliates, including, without limitation, the Prior Plan, as the case may be. For example, but without limiting the generality of the foregoing, awards under other compensatory plans or programs of the Company or any of its Affiliates, including the Prior Plan, may be settled in Stock (including, without limitation, Unrestricted Stock) under the Plan if the Administrator so determines, in which case the shares delivered will be treated as issued under the Plan (and will reduce the Share Pool in accordance with the rules set forth in Section 4). (10) Section 409A. (A) Without limiting the generality of Section 11(b), each Award will contain such terms as the Administrator determines and will be construed and administered such that the Award either qualifies for an exemption from the requirements of Section 409A or satisfies such requirements. (B) If a Participant is determined on the date of the Participant’s termination of Employment to be a “specified employee” within the meaning of that term under Section 409A(a)(2)(B) of the Code, then, with regard to any payment that is considered nonqualified deferred compensation under Section 409A, to the extent applicable, payable on account of a “separation from service”, such payment will be made or provided on the date that is the earlier of (i) the first business day following the expiration of thesix-month period measured from the date of such “separation from service” and (ii) the date of the Participant’s death (the “Delay Period”). Upon the expiration of the Delay Period, all payments delayed pursuant to this Section 6(a)(10)(B) (whether they would have otherwise been payable in a single lump sum or in installments in the absence of such delay) will be paid on the first business day following the expiration of the Delay Period in a lump sum and any remaining payments due under the Award will be paid in accordance with the normal payment dates specified for them in the applicable Award agreement. (C) With regard to any payment considered to be nonqualified deferred compensation under Section 409A, to the extent applicable, that is payable upon a change in control of the Company or other similar event, to the extent required to avoid the imposition of any additional tax, interest, or penalty under Section 409A, no amount will be payable unless such change in control constitutes a “change in control event” within the meaning ofSection 1.409A-3(i)(5) of the Treasury Regulations. (D) For purposes of Section 409A, each payment made under the Plan will be treated as a separate payment. (b) Stock Options and SARs. (1)Time and Manner of Exercise.Unless the Administrator expressly provides otherwise, no Stock Option or SAR will be considered to have been exercised until the Administrator receives a notice of exercise in a form acceptable to the Administrator that is signed by the appropriate person and accompanied by any payment required under the Award. The Administrator may limit or restrict the exercisability of Stock Options or SARs in its discretion, including in connection with any Covered Transaction. Any attempt to exercise a Stock Option or SAR by any person other than the Participant will not be given effect unless the Administrator has received such evidence as it may require that the person exercising the Award has the right to do so. (2)Exercise Price. The exercise price (or the base value from which appreciation is to be measured) per share of each Award requiring exercise must be no less than 100% (in the case of an ISO granted to a10-percent stockholder within the meaning of Section 422(b)(6) of the Code, 110%) of the Fair Market Value of a share of Stock, determined as of the date of grant, or such higher amount as the Administrator may determine in connection with the grant. (3)Payment of Exercise Price. Where the exercise of an Award (or portion thereof) is to be accompanied by a payment, payment of the exercise price must be made by cash or check acceptable to the Administrator or, if so permitted by the Administrator and if legally permissible, (i) through the delivery of previously acquired unrestricted shares of Stock, or the withholding of unrestricted shares of Stock otherwise issuable upon exercise, in either case, that have a Fair Market Value equal to the exercise price; (ii) through a broker-assisted cashless exercise program acceptable to the Administrator; (iii) by other means acceptable to the Administrator; or (iv) by any combination of the foregoing permissible forms of payment. The delivery of previously acquired shares in payment of the exercise price under clause (i) above may be accomplished either by actual delivery or by constructive delivery through attestation of ownership, subject to such rules as the Administrator may prescribe. (4)Maximum Term. The maximum term of Stock Options and SARs must not exceed 10 years from the date of grant (or five years from the date of grant in the case of an ISO granted to a10-percent stockholder described in Section 6(b)(2)). (5)Repricing.Except in connection with a corporate transaction involving the Company (which term includes, without limitation, any stock dividend, stock split, extraordinary cash dividend, recapitalization, reorganization, merger, consolidation, split up,spin-off, combination or exchange of shares) or as otherwise contemplated by Section 7, the Company may not, without obtaining stockholder approval, (i) amend the terms of outstanding Stock Options or SARs to reduce the exercise price or base value of such Stock Options or SARs; (ii) cancel outstanding Stock Options or SARs in exchange for Stock Options or SARs with an exercise price or base value that is less than the exercise price or base value of the original Stock Options or SARs; or (iii) cancel outstanding Stock Options or SARs that have an exercise price or base value greater than the Fair Market Value of a share of Stock on the date of such cancellation in exchange for cash or other consideration. 7. | EFFECT OF CERTAIN TRANSACTIONS |
(a)Covered Transactions.Except as otherwise expressly provided in an Award agreement or by the Administrator, in the event of a Covered Transaction: (1) With respect to each unvested Award (or portion thereof) that is outstanding as of the consummation of the Covered Transaction that is eligible to vest based on performance, the Administrator shall determine the extent to which the applicable performance vesting conditions have been achieved as of the consummation of the Covered Transaction (or the end of the applicable performance period, if earlier) and the Award (or portion thereof), to the extent earned based on performance, shall thereafter be eligible to vest solely based on continued Employment. Each such Award (or portion thereof), and each unvested Award (or portion thereof) that is outstanding as of the consummation of the Covered Transaction that is eligible to vest solely based on continued Employment, shall be assumed, continued or substituted for by the acquiror or survivor or an affiliate of the acquiror or survivor with an award that preserves the value of the Award (or portion) as of the consummation of the Covered Transaction and vests on the same schedule as the Award so assumed, continued or substituted for;provided, that if within two (2) years following the consummation of the Covered Transaction, a Participant’s Employment is terminated by the Company or any successor thereof for any reason other than Cause, such Award or any award granted in substitution therefor (or portion thereof) shall vest in full. (2) Each unvested Award that is outstanding as of the consummation of a Covered Transaction that is not assumed, continued or substituted for as provided in Section 7(a)(1) shall vest in full in connection with the consummation of the Covered Transaction. (3) Subject to Section 7(a)(5), the Administrator may provide for payment (a “cash-out”), with respect to some or all Awards that are not assumed, continued or substituted for as described in Section 7(a)(1) above or any portion thereof (including only the vested portion thereof), equal in the case of each applicable Award or portion thereof to the excess, if any, of (i) the fair market value of a share of Stock multiplied by the number of shares of Stock subject to the Award or such portion, minus (ii) the aggregate exercise or purchase price, if any, of such Award or portion (or, in the case of a SAR, the aggregate base value above which appreciation is measured), in each case, on such payment and other terms and subject to such conditions (which need not be the same as the terms and conditions applicable to holders of Stock generally ) as the Administrator determines, including that any amounts paid in respect of such Award in connection with the Covered Transaction be placed in escrow or otherwise made subject to such restrictions as the Administrator deems appropriate. For the avoidance of doubt, if the per share exercise or purchase price (or base value) of an Award or portion thereof is equal to or greater than the fair market value of a share of Stock, such Award or portion may be cancelled with no payment due hereunder or otherwise in respect thereof. (4) Except as the Administrator may otherwise determine, each Award will automatically terminate (and in the case of outstanding shares of Restricted Stock, will automatically be forfeited) immediately upon the consummation of the Covered Transaction, other than (i) any Award that is assumed, continued or substituted for pursuant to Section 7(a)(1) and (ii) any Award that by its terms, or as a result of action taken by the Administrator, continues following the Covered Transaction. (5) Any share of Stock and any cash or other property delivered pursuant to Section 7(a)(2) or Section 7(a)(3) with respect to an Award may, in the discretion of the Administrator, contain such limitations or restrictions, if any, as the Administrator deems appropriate, including to reflect any performance or other vesting conditions to which the Award was subject and that did not lapse (and were not satisfied) in connection therewithwith the Covered Transaction. For purposes of the immediately preceding sentence, acash-out under Section 7(a)(3) will not, in and of itself, be treated as the lapsing (or satisfaction) of a performance or other vesting condition. In the case of Restricted Stock that does not vest and is not forfeited in connection with the Covered Transaction, the Administrator may require that any amounts delivered, exchanged or otherwise paid in respect of such Stock in connection with the Covered Transaction be necessaryplaced in escrow or otherwise made subject to such restrictions as the Administrator deems appropriate to carry out the intent of the Plan. (b) Changes in and Distributions with Respect to Stock. (1)Basic Adjustment Provisions. In the event of a stock dividend, stock split or combination of shares (including a reverse stock split), recapitalization or other change in the Company’s capital structure that constitutes an equity restructuring within the meaning of the Accounting Rules, the Administrator will make appropriate adjustments to the Share Pool, the individual limits described in Section 4(d), the number and kind of shares of stock or securities underlying Awards then outstanding or subsequently granted, any exercise or purchase prices (or base values) relating to Awards and any other provision of Awards affected by such change. (2)Certain Other Adjustments. The Administrator may also make adjustments of the type described in Section 7(b)(1) to take into account distributions to stockholders other than those provided for in Section 7(a) and 7(b)(1), or any other event, if the Administrator determines that adjustments are appropriate to avoid any transaction that might give rise to liability under Section 16(b) ofdistortion in the Exchange Act. g.Amendment of Awards. The Board may amend, modify or terminate any outstanding Award at any time, including, but not limited to, if the Board determines that the provisionsoperation of the Plan or any Award areAward.
(3)Continuing Application of Plan Terms. References in contraventionthe Plan to shares of Stock will be construed to include any lawstock or regulation of any governmental entity or self-regulatory organization with jurisdiction over the Company, or would have material adverse effects on the taxation of the Company or the Participant;provided, that the Participant’s consentsecurities resulting from an adjustment pursuant to such action shall be required unless the Board determines that the action, taking into account any related action, would not materially and adversely affect the Participant. For the avoidance of doubt, the foregoing shall not limit the Board’s ability underthis Section 3(e) or Section 7(e) to make adjustments to Awards in accordance with the terms of such sections.7. h.Conditions on Delivery of Stock.
8. | LEGAL CONDITIONS ON DELIVERY OF STOCK |
The Company will not be obligated to deliverissue any shares of Common Stock pursuant to the Plan or to remove restrictionsany restriction from shares of Common Stock previously deliveredissued under the Plan untiluntil: (i) the Company is satisfied that all legal matters in connection with the issuance of such shares have been addressed and resolved; (ii) if the outstanding Stock is at the time of issuance listed on any stock exchange or national market system, the shares to be issued have been listed or authorized to be listed on such exchange or system upon official notice of issuance; and (iii) all conditions of the Award have been metsatisfied or removed to the satisfaction of the Company, (ii) in the opinion of the Company’s counsel, all other legal matters in connection with the issuance and delivery of such shares have been satisfied, including any applicable securities laws and any applicable stock exchange or stock market rules and regulations, and (iii) the Participant has executed and delivered to the Company such representations or agreements as the Company may consider appropriate to satisfy the requirements of any applicable laws, rules or regulations.waived. The Company may require, as a condition to the exercise of thean Award or deliverythe issuance of shares of Common Stock under an Award, such representations or agreements as counsel for the Company may consider appropriate to avoid violation of the Securities Act of 1933, as amended, or any applicable state ornon-U.S. securities law. Any Common Stock required to be issued to Participants under the Plan will be evidenced in such manner as the Board may deemAdministrator determines appropriate, including book-entry registration or delivery of stock certificates. In the event that the BoardAdministrator determines that stock certificates will be issued to Participantsin connection with Stock issued under the Plan, the Administrator may require that such certificates evidencing Common Stock issued under the Plan bear an appropriate legend reflecting any restriction on transfer applicable to such Common Stock, and the Company may hold the certificates pending the lapse of the applicable restrictions. i.Acceleration.
9. | AMENDMENT AND TERMINATION |
The BoardAdministrator may at any time accelerateor times amend the vestingPlan or exercisabilityany outstanding Award for any purpose which may at the time be permitted by applicable law, and may at any time terminate the Plan as to any future grants of Awards;provided that, except as otherwise expressly provided in the Plan or the applicable Award, the Administrator may not, without the Participant’s consent, alter the terms of an Award despiteso as to materially and adversely affect the fact thatParticipant’s rights under the foregoing actions may (i) causeAward, unless the applicationAdministrator expressly reserved the right to do in the Plan or at the time the applicable Award was granted.Any amendments to the Plan will be conditioned upon stockholder approval only to the extent, if any, such approval is required by applicable law (including the Code) or stock exchange requirements, as determined by the Administrator. For the avoidance of Sections 280G and 4999doubt, no adjustment to any Award pursuant to the terms of Section 7 will be treated as an amendment to such Award requiring a Participant’s consent. 10. | OTHER COMPENSATION ARRANGEMENTS |
The existence of the Code if a change in ownershipPlan or controlthe grant of any Award will not affect the right of the Company occurs, (ii) disqualify all or partany of an Option as an Incentive Stock Option, or (iii) causeits Affiliates to grant any other adverse or potentially adverse taxperson bonuses or other consequences. Incompensation in addition to Awards under the eventPlan. (a)Waiver of the acceleration of the vestingJury Trial. By accepting or exercisability of any Award, including pursuantbeing deemed to Section 7(e), the Board may provide, as a condition of such accelerated vesting or exercisability, that the Common Stock or other substituted consideration, including cash, with respect to which vesting or exercisability has been accelerated shall be restricted and subject to forfeiture back to the Company on the terms and conditions as the Board may impose. j.Dividends, etc. In the discretion of the Board, anyhave accepted an Award under the Plan, may provide theeach Participant with dividends or dividend equivalents payable currently or deferred with or without interest. Any entitlementwaives (or will be deemed to dividend equivalents or similar entitlements shall be established and administered either consistent with an exemption from, or in compliance with the requirements of, Section 409A of the Code. Dividends or dividend equivalent amounts payable in respect of Awards may be subject to such limits or restrictions or alternative terms as the Board may impose.
k.Use for Settlement or Compensation. Awards may be made available as a form of payment in the settlement of other Awards granted under the Plan or as payment in lieu of compensation to which a Participant is otherwise entitled. For example, but without limiting the generality of the foregoing, awards under other compensatory plans or programs of the Company or its Affiliates may be settled in Common Stock under the Plan if the Board so determines, in which case the shares delivered shall be treated as awarded under the Plan (and shall reduce the number of shares thereafter available under the Plan in accordance with the rules set forth in Section 3). In any case where an award is made under another plan or program of the Company or its Affiliates and such award is intended to qualify as exempt performance-based compensation under Section 162(m) of the Code, and such award is settled by the delivery of Common Stock or another Award under the Plan, the applicable Section 162(m) limitations under both the other plan or program and under the Plan shall be appliedhave waived), to the Plan as necessary (as determinedmaximum extent permitted under applicable law, any right to a trial by the Board) to preserve the availability of such exemption.
l.Section 409A. Each Award shall contain such terms as the Board determines, and shall be construed and administered, such that the Award either (i) qualifies for an exemption from the requirements of Section 409A of the Codejury in any action, proceeding or (ii) satisfies such requirements. In construingcounterclaim concerning any rights under the Plan or any Award, relatingor under any amendment, waiver, consent, instrument, document or other agreement delivered or which in the future may be delivered in connection therewith, and agrees (or will be deemed to have agreed) that any such action, proceedings or counterclaim will be tried before a court and not before a jury. By accepting or being deemed to have accepted an Award under the Plan, each Participant certifies that no officer, representative, or attorney of the Company has represented, expressly or otherwise, that the Company would not, in the event of any action, proceeding, or counterclaim, seek to enforce the foregoing waivers. Notwithstanding anything to the payment upon a termination or cessation of employment of any amounts that constitute a deferral of compensation subjectcontrary in the Plan, nothing herein is to Section 409Abe construed as limiting the ability of the Code, referencesCompany and a Participant to terminationagree to submit any dispute arising under the terms of the Plan or cessationany Award to binding arbitration or as limiting the ability of employment, separation from service, retirement or similar or correlative terms shall be construedthe Company to require any individual to agree to submit such disputes to binding arbitration as a “separation from service” (as defined in Section 1.409A-1(h)condition of the Treasury regulations after giving effect to the presumptions contained therein)receiving an Award hereunder.
(b)Limitation of Liability. Notwithstanding anything to the contrary in the Plan or any Award, if atneither the timeCompany, nor any of its Affiliates, nor the Administrator, nor any person acting on behalf of the Participant’s terminationCompany, any of employment,its Affiliates, or the Participant is a “specified employee,” within the meaning of Treasury regulation 1.409A-1(i), as determined in the Board’s sole discretion, any and all amounts payable pursuantAdministrator, will be liable to any Award that constitute a deferralParticipant, to any permitted transferee, to the estate or beneficiary of compensation subjectany Participant or any permitted transferee, or to Section 409Aany other person by reason of any acceleration of income, any additional tax, or any penalty, interest or other liability asserted by reason of the Code and would (but for this provision) be payable within six (6) months following the datefailure of termination of employment, shall instead be paid on the next business day following the expiration of such six (6) month period or, if earlier, upon the Participant’s death; except (A)an Award to the extent of amounts that do not constitute a deferral of compensation within the meaning of Treasury Regulation Section 1.409A-1(b), as determined by the Board in its reasonable good faith discretion or (B) other amounts or benefits that are not subject tosatisfy the requirements of Section 422 or Section 409A or by reason of the Code. m.Section 162(m). This Section 7(m) applies to any Performance Award intended to qualify as exempt performance-based compensation under Section 162(m)4999 of the Code, asor otherwise asserted with respect to any Award.
12. | ESTABLISHMENT OFSUB-PLANS |
The Administrator may at any time and from time to time establish one or moresub-plans under the Plan (for local law compliance purposes or other purposes or administrative reasons determined by the Board. InAdministrator) by adopting supplements to the Plan containing, in each case, of any Performance Award to which this 7(m) applies (other than, with respect to clauses (ii), (iii) and (iv), Options and SARs), (i) such limitations on the Administrator’s discretion under the Plan and (ii) such Award will be construed and administered to the maximum extent permitted by law in a manner consistent with qualifying the Award for such exemption; (ii) the Board will preestablish, in writing and no later than 90 days after the commencement of the period of service to which the performance relates (or at such earlier time as is consistent with qualifying the Award for such exemption), one or more Performance Criteria applicable to such Award, the amount or amounts that will be payable or earned (subject to reduction as describe below) if the Performance Criteria are achieved, and such otheradditional terms and conditions, as the Administrator deems appropriatenecessary or desirable. Each supplement so established will be deemed to be part of the Plan but will apply only to Participants within the group to which the supplement applies (as determined by the Administrator). (a)Certain Requirements of Corporate Law. Awards and shares of Stock will be granted, issued and administered consistent with respectthe requirements of applicable Delaware law relating to the Award; (iii) atissuance of stock and the closeconsideration to be received therefor, and with the applicable requirements of the applicable Performance Periodstock exchanges or other trading systems on which the Board will certify whetherStock is listed or entered for trading, in each case, as determined by the applicable Performance Criteria have been attained; and (iv) no amount will be paid under such Award unless the Performance Criteria applicable to the payment of such amount have been so certified, exceptAdministrator. (b)Other Matters. Except as otherwise provided by the express terms of an Award agreement or under asub-plan described in Section 12, the domestic substantive laws of the State of Delaware govern the provisions of the Plan and of Awards under the Plan and all claims or disputes arising out of or based upon the Plan or any Award under the Plan or relating to the subject matter hereof or thereof, without giving effect to any choice or conflict of laws provision or rule that would cause the application of the domestic substantive laws of any other jurisdiction. (c)Jurisdiction.By accepting (or being deemed to have accepted) an Award, each Participant agrees or will be deemed to have agreed to (i) submit irrevocably and unconditionally to the jurisdiction of the federal and state courts located within the geographic boundaries of the United States District Court for the District of Delaware for the purpose of any suit, action or other proceeding arising out of or based upon the Plan or any Award; (ii) not commence any suit, action or other proceeding arising out of or based upon the Plan or any Award, except in the federal and state courts located within the geographic boundaries of the United States District Court for the District of Delaware; and (iii) waive, and not assert, by way of motion as a defense or otherwise, in any such suit, action or proceeding, any claim that he or she is not subject personally to the jurisdiction of the above-named courts that his or her property is exempt or immune from attachment or execution, that the suit, action or proceeding is brought in an inconvenient forum, that the venue of the suit, action or proceeding is improper or that the Plan or any Award or the subject matter thereof may not be enforced in or by such court. EXHIBIT A Definition of Terms The following terms, when used in the Plan, have the meanings and are subject to the provisions set forth below: “Accounting Rules”:Financial Accounting Standards Board consistent with such exemption; and (v)Accounting Standards Codification Topic 718, or any successor provision. “Administrator”:The Compensation Committee, except that the Compensation Committee may delegate (i) to one or more of its members (or one or more other members of the Board, including the full Board) such of its duties, powers and responsibilities as it may in its sole and absolute discretion (either in individual casesdetermine; (ii) to one or in ways that affect more than one Participant), reduceofficers of the actual payment, if any,Company the power to be made under such Awardgrant Awards to the extent consistent withpermitted by applicable law; and (iii) to such exemption. n.Forfeiture. Awards held by a Participant are subject to forfeiture, terminationEmployees or other persons as it determines such ministerial tasks as it deems appropriate. For purposes of the Plan, the term “Administrator” will include the Board, the Compensation Committee, and rescission, and a Participant will be obligated to return to the Company payments received with respect to Awards, in each case (i)person or persons delegated authority under the Plan to the extent provided in a Participant’s Award, (ii) in accordance with any applicable Company clawback or recoupment policy,of such delegation, as such policy may be amended and in effect from time to time, or (iii) as otherwise required by law or applicable stock exchange listing standards, including, without limitation, Section 10D of the Securities Exchange Act of 1934, as amended. Each Participant, by accepting an Award pursuant to the Plan, agrees to return the full amount required under this Section 7(n) at such time and in such manner as the Board shall determine in its sole discretion and consistent with applicable law. The Company will not be responsible for any adverse tax or other consequences to a Participant that may arise in connection with this Section 7(n).applicable.
8.Miscellaneous
a.Definitions.
(i) “Affiliate” means anyAffiliate”: Any corporation or other entity that stands in a relationship to the Company that would result in the Company and such corporation or other entity being treated as one employer under Section 414(b) and Section 414(c) of the Code.
“Award”:Any or a combination of the following: (i) Stock Options. (ii) “Award” means any Option, SAR,SARs. (iii) Restricted Stock. (iv) Unrestricted Stock. (v) Stock Award,Units, including Restricted Stock Award,Units. (vi) Performance Award and Other Stock-Based Award granted underAwards. (vii) Substitute Awards. (viii) Awards (other than Awards described in (i) through (vii) above) that are convertible into or otherwise based on Stock. “Board”:The Board of Directors of the Plan. Company.(iii) “Cause” means, inCause”:In the case of any Participant who is party to an employment, severance-benefit, change in control or similar agreement with the Company or any of its Affiliates that contains a definition of “Cause,” the definition set forth in such agreement shall apply with respect to such Participant under the Plan for so long as such agreement remains in effect. In the case of any other Participant, except as expressly provided otherwise in an Award agreement, “Cause”“Cause” shall mean, as determined by the BoardAdministrator in its sole discretion,: (i) the Participant’s willful failure to perform (other than by reason of Disability), or material negligence in the performance, his/her duties and responsibilities to the Company or any of its Affiliates; (ii) material breach by the Participant of any provision of the Plan, the Award agreement or any other agreement with the Company or any of its Affiliates; or (iii) other conduct by the Participant that is materially harmful to the business, interests or reputation of the Company or any of its Affiliates.
(iv) “Company” means Agenus Inc.
(v) “Code” means theCode”:The U.S. Internal Revenue Code of 1986, as from time to time amended and in effect, or any regulations promulgated thereunder.successor statute as from time to time in effect.
(vi)
“Common Stock” meansCompany”: Agenus Inc., a Delaware corporation. “Compensation Committee”:The Compensation Committee of the Board. “Covered Transaction”:Any of (i) a consolidation, merger or similar transaction or series of related transactions, including a sale or other disposition of stock, in which the Company is not the surviving corporation or which results in the acquisition of the majority of the Company’s then outstanding common stock by a single person or entity or by a group of persons and/or entities acting in concert, (ii) a sale or transfer of all or substantially all the Company’s assets, or (iii) a dissolution or liquidation of the Company, par value $0.01 per share.Company. Where a Covered Transaction involves a tender offer that is reasonably expected to be followed by a merger described in clause (i) (as determined by the Administrator), the Covered Transaction will be deemed to have occurred upon consummation of the tender offer. (vii) “Disability” means, inDate of Adoption”: The date the Plan was approved by the Company’s stockholders.
“Director”: A member of the Board who is not an Employee. “Disability”: In the case of any Participant who is party to an employment, severance-benefit, change in control or similar agreement with the Company or any of its Affiliates that contains a definition of “Disability,” the definition set forth in such agreement shall apply with respect to such Participant under the Plan for so long as such agreement remains in effect. In the case of any other Participant, except as expressly provided otherwise in an Award agreement, “Disability”“Disability” shall mean such Participant’s having been continuously disabled from performing duties assigned to the Participant for a period of not less than six consecutive calendar months, in which case such Disability shall be deemed to have commenced on the date following the end of such six consecutive calendar months. “Employee”:Any person who is employed by the Company or any of its Affiliates. “Employment”:A Participant’s employment or other service relationship with the Company or any of its Affiliates. Employment will be deemed to continue, unless the Administrator expressly provides otherwise, so long as the Participant is employed by, or otherwise is providing services in a capacity described in Section 5 to, the Company or any of its Affiliates. If a Participant’s employment or other service relationship is with any Affiliate of the Company and that entity ceases to be an Affiliate of the Company, the Participant’s Employment will be deemed to have terminated when the entity ceases to be an Affiliate of the Company unless the Participant transfers Employment to the Company or one of its remaining Affiliates. Notwithstanding the foregoing, in construing the provisions of any Award relating to the payment of “nonqualified deferred compensation” (subject to Section 409A) upon a termination or cessation of Employment, references to termination or cessation of employment, separation from service, retirement or similar or correlative terms will be construed to require a “separation from service” (as that term is defined in(viii) Section 1.409A-1(h) of the Treasury Regulations, after giving effect to the presumptions contained therein) from the Company and from all other corporations and trades or businesses, if any, that would be treated as a single “service recipient” with the Company underSection 1.409A-1(h)(3) of the Treasury Regulations. The Company may, but need not, elect in writing, subject to the applicable limitations under Section 409A, any of the special elective rules prescribed inSection 1.409A-1(h) of the Treasury Regulations for purposes of determining whether a “separation from service” has occurred. Any such written election will be deemed a part of the Plan. “Fair Market Value” means, asValue”:As of a particular date, (i) the closing price for a share of Common Stock as reported on the NASDAQ Stock Market (or on any other national securities exchange on which the Stock is then listed) for that date or, if no closing price is reported for that date, the closing price on the nextimmediately preceding date foron which a closing price was reported or (ii) in the event that the Common Stock is not traded on a national securities exchange, the fair market value of a share of Stock determined by the BoardAdministrator consistent with the rules of Section 422 and Section 409A of the Code, to the extent applicable. (ix)
“ISO”:A Stock Option intended to be an “incentive stock option” within the meaning of Section 422. Each Stock Option granted pursuant to the Plan will be treated as providing by its terms that it is to be an NSO unless, as of the date of grant, it is expressly designated as an ISO. “NSO”:A Stock Option that is not intended to be an “incentive stock option” within the meaning of Section 422. “Participant”:A natural person who is granted an Award under the Plan. “Performance Award” means anAward”: An Award subject to Performance Criteria. The Committee in its discretion may grant “Performance Awards that are intended to qualify as exempt performance-based compensation under Section 162(m) of the Code and Performance Awards that are not intended to so qualify. (x) “Performance Criteria” means specifiedCriteria”:Specified criteria, other than the mere continuation of employmentEmployment or the mere passage of time, the satisfaction of which is a condition for the grant, exercisability, vesting payment or full enjoyment of an Award. A Performance Criterion and any targets with respect thereto determined by the Board need not be based upon an increase, a positive or improved result or avoidance of lossloss.
“Plan”:The Agenus Inc. 2019 Equity Incentive Plan, as from time to time amended and mayin effect. “Prior Plan”:The Agenus Inc. Amended and Restated 2009 Equity Incentive Plan, as amended. “Restricted Stock”:Stock subject to restrictions requiring that it be appliedforfeited, redelivered or offered for sale to a Participant individually, or to a business unit or division or the Company if specified service or performance-based vesting conditions are not satisfied. “Restricted Stock Unit”:A Stock Unit that is, or as a whole. For Awards intended to qualify as exemptwhich the delivery of Stock or cash in lieu of Stock is, subject to the satisfaction of specified service or performance-based compensationvesting conditions. “SAR”:A right entitling the holder upon exercise to receive an amount (payable in cash or in shares of Stock of equivalent value) equal to the excess of the Fair Market Value of the shares of Stock subject to the right over the base value from which appreciation under the SAR is to be measured. “Section 409A”:Section 162(m)409A of the Code a Performance Criterion will mean an objectively determinable measure or objectively determinable measures of performance relating to any or any combination of the following or any derivation of the following (measured either absolutely or comparatively (including, without limitation, by reference to an index or indices or a specified peer group or a select group of companies) and determined either on a consolidated basis or, as the context permits, on a divisional, subsidiary, line of business, project or geographical basis or in combinations thereof and subject to such adjustments, if any, as the Board specifies, consistent with the requirements of Section 162(m)) of the Code: sales; revenues; assets; expenses; earnings before or after deduction for all or any portion of interest, taxes, depreciation, amortization or equity expense, whether or not on a continuing operations or an aggregate or per share basis; return on equity, investment, capital, capital employed or assets; one or more operating ratios; operating income or profit, including on an after-tax basis; net income; debt levels or reduction, leverage ratios or credit rating; market share; capital expenditures; cash flow (including, but not limited to, operating cash flow and free cash flow); stock price; stockholder return; sales of particular products or services; customer acquisition, expansion and retention; regulatory compliance; regulatory or other filings or approvals; research, development, clinical, regulatory, manufacturing or product development milestones; discovery, preclinical or clinical stage scientific discoveries, objectives or inventions; manufacturing or process developments; acquisitions and divestitures (in whole or in part); new or expanded joint ventures, strategic alliances, licenses, collaborations or partnerships, or achievement of milestones under any of the foregoing; spin-offs, split-ups and the like; reorganizations; recapitalizations, restructurings, financings (issuance of debt or equity), refinancings or other capital raising transactions; receipt of alternative financing; implementation or completion of critical projects; employee satisfaction; achievements in strengthening the Company’s intellectual property position; recruiting and maintaining personnel; transactions that would constitute a change of control; or any combination of the foregoing. Provided that the Board has specified at least one Performance Criterion intended to qualify an Award as performance-based under regulations thereunder.
“Section 422”:Section 162(m)422 of the Code and the Board may specify other performance goalsregulations thereunder. “Stock”:Common stock of the Company, par value $0.01 per share. “Stock Option”:An option entitling the holder to acquire shares of Stock upon payment of the exercise price. “Stock Unit”:An unfunded and unsecured promise, denominated in shares of Stock, to deliver Stock or criteria (whether or not enumeratedcash measured by the value of Stock in the Plan) as a basis for its exercise of negative discretion with respect to the Award. To the extent consistent with the requirements of Section 162(m) of the Code, the Board may establish that, in the case of any Award intended to qualify as exempt performance-based compensation under Section 162(m) of the Code, one or more of the Performance Criteria applicable to such Award will be adjusted in an objectively determinable manner to reflect events (for example, the impact of charges for restructurings, discontinued operations, mergers, acquisitions, and other unusual or infrequently occurring items, and the cumulative effects of tax or accounting changes, each as defined by U.S. generally accepted accounting principles) occurring during the Performance Period that affect the applicable Performance Criterion or Criteria. With respect to Awards that are not intended to qualify as exempt performance-based compensation under Section 162(m) of the Code, the Board may provide that such Award, and any related Performance Criterion or Criteria, will be adjusted in a manner as determined by the Committee in its sole discretion.future. (xi) “Performance Period” means one or more periods of time, established by the Board in its sole discretion, during which attainment of Performance Criteria with respect to one or more Performance Awards are to be measured.
(xii) “Substitute Awards” means Awards”:Awards issued under the Plan in substitution for equity awards of an acquired company that are converted, replaced or adjusted in connection with the acquisition.
b.No Right to Employment, Service on the Board or Other Status. No person shall have any claim or right to be granted an Award, and the grant of an Award shall“Unrestricted Stock”:Stock not be construed as giving any Participant the right to continued employment, service on the Board or any other relationship with the Company. The Company expressly reserves the right at any time to dismiss or otherwise terminate its relationship with a Participant free from any liability or claim under the Plan.
c.No Rights As Stockholder. Subject to the provisions of the applicable Award, no Participant or Designated Beneficiary shall have any rights as a stockholder with respect to any shares of Common Stock to be distributed with respect to an Award until becoming the record holder thereof.
d.Effect on Other Benefit Plans. Unless specifically provided otherwise in an applicable Award, the amount of any compensation deemed to be received by a Participant as a result of the receipt or exercise of an Award will not constitute “earnings” with respect to which any other benefits of such Participant are determined, including without limitation benefits under any pension, profit sharing, life insurance or salary continuation plan.
e.Authorization of Sub-Plans. The Board may from time to time establish one or more sub-plans under the Plan for purposes of satisfying applicable blue sky, securities or tax laws of various jurisdictions. The Board shall establish such sub-plans by adopting supplements to this Plan containing (i) such limitations on the Board’s discretion under the Plan as the Board deems necessary or desirable or (ii) such additional terms and conditions not otherwise inconsistent with the Plan as the Board shall deem necessary or desirable. All supplements adopted by the Board shall be deemed to be part of the Plan, but each supplement shall apply only to Participants within
the affected jurisdiction and the Company shall not be required to provide copies of any supplement to Participants in any jurisdiction which is not the subject of such supplement. Without limiting the generality of the foregoing, the Board may modify Awards granted to Participants who are foreign nationals or employed outside the United States or establish sub-plans or procedures under the Plan to recognize differences in laws, rules, regulations or customs of such foreign jurisdictions with respect to tax, securities, currency, employee benefit or other matters.
f.Effective Date and Term of Plan. The Plan was originally adopted by the Board on March 12, 2009, was subsequently amended on each of March 15, 2012, March 7, 2013, February 26, 2014 and March 12, 2015 and was amended and restated in its entirety as of April 8, 2016 (the “Amendment Date”). The Plan, as amended and restated, shall become effective on the date following the Amendment Date on which it is approved by the Company’s stockholders. No Awards shall be granted under the Plan after the completion of ten years from the date on which the Plan, as amended and restated, was approved by the Company’s stockholders, but Awards previously granted may extend beyond that time.
g.Amendment and Termination of Plan. The Board may amend, suspend or terminate the Plan or any portion thereof at any time, subject to any required stockholder approval under any applicable legal, regulatory or listing requirement.
h.Requirements of Corporate Law. Awards shall be granted and administered consistent with the requirements of applicable Delaware law relating to the issuance of stock and the consideration to be received therefor, and with the applicable requirements of the stock exchanges, other trading systems or national market on which the Stock is listed or entered for trading, in each case as determined by the Board.
i.Governing Law. The provisions of the Plan and all Awards made hereunder shall be governed by and interpreted in accordance with the laws of Delaware, without regard to any applicable conflicts of law, except as otherwise provided by the express terms of an Award agreement or under a sub-plan described in Section 8(e).
j.Jurisdiction. By accepting an Award, each Participant will be deemed to (a) have submitted irrevocably and unconditionally to the jurisdiction of the federal and state courts located within the geographic boundaries of the United States District Court for the District of Delaware for the purpose of any suit, action or other proceeding arising out of or based upon the Plan or any Award; (b) agree not to commence any suit, action or other proceeding arising out of or based upon the Plan or an Award, except in the federal and state courts located within the geographic boundaries of the United States District Court for the District of Delaware; and (c) waive, and agree not to assert, by way of motion as a defense or otherwise, in any such suit, action or proceeding, any claim that it is not subject personally to the jurisdiction of the above-named courts that its property is exempt or immune from attachment or execution, that the suit, action or proceeding is brought in an inconvenient forum, that the venue of the suit, action or proceeding is improper or that the Plan or an Award or the subject matter thereof may not be enforced in or by such court.
k.Waiver of Jury Trial. By accepting an Award under the Plan, each Participant waives any right to a trial by jury in any action, proceeding or counterclaim concerning any rights under the Plan and any Award, or under any amendment, waiver, consent, instrument, document or other agreement delivered or which in the future may be delivered in connection therewith, and agrees that any such action, proceedings or counterclaim shall be tried before a court and not before a jury. By accepting an Award under the Plan, each Participant certifies that no officer, representative, or attorney of the Company has represented, expressly or otherwise, that the Company would not, in the event of any action, proceeding or counterclaim, seek to enforce the foregoing waivers. Notwithstanding anything to the contrary in the Plan, nothing herein is to be construed as limiting the ability of the Company and a Participant to agree to submit disputes arisingrestrictions under the terms of the Plan or any Award made hereunder to binding arbitration or as limiting the ability of the Company to require any eligible individual to agree to submit such disputes to binding arbitration as a condition of receiving an Award hereunder.
l.Limitation of Liability. Notwithstanding anything to the contrary in the Plan, neither the Company, nor any Affiliate, nor the Board, nor any person acting on behalf of the Company, any Affiliate, or the Board, shall be liable to any Participant or to the estate or beneficiary of any Participant or to any other holder of an Award by reason of any acceleration of income, or any additional tax (including any interest and penalties), asserted by reason of the failure of an Award to satisfy the requirements of Section 422 or Section 409A or the Code or by reason of Section 4999 of the Code, or otherwise asserted with respect to the Award.
APPENDIX C
AGENUS INC.
2016 EXECUTIVE INCENTIVE PLAN
This 2016 Executive Incentive Plan (the “Plan”) has been established to advance the interests of Agenus Inc. (the “Company”) by providing for the grant of short-term incentive compensation awards to executive officers and other key employees of the Company and its Affiliates (as defined in Section II below). The Plan is intended to comply with the requirements for tax deductibility imposed by Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”) (Section 162(m) of the Code, together with the regulations thereunder, “Section 162(m)”), to the extent applicable.
I. ADMINISTRATION
The Plan will be administered by the Compensation Committee of the Board of Directors of the Company (the “Committee”). In the case of any Award (as defined in Section III below) intended to qualify as exemptperformance-based compensation under Section 162(m), as determined by the Committee (a “Section 162(m) Award”), (i) if any member of the Compensation Committee is not an “outside director” (as defined in Section 162(m)), the “Committee” for purposes of the Plan will consist of a subcommittee consisting solely of those Committee members who are “outside directors” as so defined (and where applicable, references in the Plan to the Committee shall be deemed to be references to such subcommittee) and (ii) the Committee may delegate to other persons administrative functions that do not involve discretion. In the case of Awards other than Section 162(m) Awards, the Committee may delegate to other persons such duties, powers and responsibilities as it deems appropriate. To the extent of any such delegation, references herein to the “Committee” shall be deemed to refer to the person or persons to whom such authority has been delegated.
The Committee shall have the authority to interpret the Plan and Awards, to determine eligibility for Awards, to determine the terms of and the conditions applicable to any Award, and generally to do all things necessary to administer the Plan. Any interpretation or decision by the Committee with regard to the Plan or any Award shall be final and conclusive on all parties.
II. ELIGIBILITY; PARTICIPANTS
Executive officers and other key employees of the Company and its Affiliates shall be eligible to participate in the Plan. An “Affiliate” means any corporation or other entity that stands in a relationship to the Company that would result in the Company and such corporation or other entity being treated as a single employer under Section 414(b) or Section 414(c) of the Code. The Committee shall select, from among those eligible, the persons who shall from time to time participate in the Plan (each, a “Participant”). Participation with respect to one Award under the Plan shall not entitle an individual to participate with respect to a subsequent Award or Awards, if any.
III. GRANT OF AWARDS
The term “Award” as used in the Plan means an award opportunity that is granted to a Participant with respect to a specified performance period consisting of the Company’s fiscal year or such other period as the Committee may determine (each such period, a “Performance Period”) to which the Award relates. Awards may be Section 162(m) Awards or other Awards. A Participant who is granted an Award shall be entitled to payment, if any, under the Award only if all conditions to payment have been satisfied in accordance with the Plan and the terms of the Award. By accepting (or, under such rules as the Committee may prescribe, being deemed to have accepted) an Award, the Participant agrees (or will be deemed to have agreed) to the terms of the Award and the Plan. The Committee shall select the Participants, if any, who are to receive Awards for a Performance Period and, in the case of each Award, shall establish the following:
(a) the Performance Criteria (as defined in Section IV below) applicable to the Award;
(b) the amount or amounts that will be payable (subject to adjustment in accordance with Section V) if the Performance Criteria are achieved; and
(c) such other terms and conditions as the Committee deems appropriate with respect to the Award.
For Section 162(m) Awards, (i) such terms shall be established by the Committee not later than (A) the ninetieth (90th) day after the beginning of the Performance Period, in the case of a Performance Period of 360 days or longer, or (B) the end of the period constituting the first quarter of the Performance Period, in the case of a Performance Period of less than 360 days, and (ii) once the Committee has established the terms of such Award in accordance with the foregoing, it shall not thereafter adjust such terms, except to reduce payments, if any, under the Award in accordance with Section V or as otherwise permitted in accordance with the requirements of Section 162(m), to the extent applicable.
IV. PERFORMANCE CRITERIA
As used in the Plan, the term “Performance Criteria” means specified criteria, other than the mere continuation of employment or the mere passage of time, the satisfaction of which is a condition for the vesting, payment or full enjoyment of an Award. A Performance Criterion and any targets with respect thereto determined by the Committee need not be based upon an increase, a positive or improved result or avoidance of loss and may be applied to a Participant individually, or to a business unit or division or the Company as a whole. For Section 162(m) Awards, a Performance Criterion will mean an objectively determinable measure or objectively determinable measures of performance relating to any or any combination of the following or any derivation of the following (measured either absolutely or comparatively (including, without limitation, by reference to an index or indices or a specified peer group or a select group of companies) and determined either on a consolidated basis or, as the context permits, on a divisional, subsidiary, line of business, project or geographical basis or in combinations thereof and subject to such adjustments, if any, as the Committee specifies, consistent with the requirements of Section 162(m)): sales; revenues; assets; expenses; earnings before or after deduction for all or any portion of interest, taxes, depreciation, amortization or equity expense, whether or not on a continuing operations or an aggregate or per share basis; return on equity, investment, capital, capital employed or assets; one or more operating ratios; operating income or profit, including on an after-tax basis; net income; debt levels or reduction, leverage ratios or credit rating; market share; capital expenditures; cash flow (including, but not limited to, operating cash flow and free cash flow); stock price; stockholder return; sales of particular products or services; customer acquisition, expansion and retention; regulatory compliance; regulatory or other filings or approvals; research, development, clinical, regulatory, manufacturing or product development milestones; discovery, preclinical or clinical stage scientific discoveries, objectives or inventions; manufacturing or process developments; acquisitions and divestitures (in whole or in part); new or expanded joint ventures, strategic alliances, licenses, collaborations or partnerships, or achievement of milestones under any of the foregoing; spin-offs, split-ups and the like; reorganizations; recapitalizations, restructurings, financings (issuance of debt or equity), refinancings or other capital raising transactions; receipt of alternative financing; implementation or completion of critical projects; employee satisfaction; achievements in strengthening the Company’s intellectual property position; recruiting and maintaining personnel; transactions that would constitute a change of control; or any combination of the foregoing. Provided that the Committee has specified at least one Performance Criterion under this Section IV intended to qualify an Award as performance-based under Section 162(m), the Committee may specify other performance goals or criteria (whether or not noted in this Section IV) as a basis for its exercise of negative discretion with respect to the Award. To the extent consistent with the requirements of Section 162(m), the Committee may establish that, in the case of any Section 162(m) Award, one or more of the Performance Criteria applicable to such Award will be adjusted in an objectively determinable manner to reflect events (for example, the impact of charges for restructurings, discontinued operations, mergers, acquisitions, and other unusual or infrequently occurring items, and the cumulative effects of tax or accounting changes, each as defined by U.S. generally accepted accounting principles) occurring during the Performance Period that affect the applicable Performance Criterion or Criteria. With respect to Awards other than Section 162(m) Awards, the Committee may provide that such Award, and any related Performance Criterion or Criteria, will be adjusted in a manner as determined by the Committee in its sole discretion.
V. CERTIFICATION OF PERFORMANCE; AMOUNT PAYABLE UNDER AWARDS
As soon as practicable after the close of a Performance Period, the Committee shall determine whether and to what extent, if at all, the Performance Criterion or Criteria applicable to each Award granted for the Performance Period have been satisfied and, in the case of Section 162(m) Awards, shall take such steps as it determines to be sufficient to satisfy the certification requirement under Section 162(m) as to such performance results. The Committee shall then determine the actual payment, if any, under each Award. No amount may be paid under a Section 162(m) Award unless the Performance Criterion or Criteria applicable to the payment of such amount have been certified as having been satisfied as set forth above. The Committee may, in its sole and absolute discretion and with or without specifying its reasons for doing so, after determining the amount that would otherwise be payable under any Award for a Performance Period, reduce (including to zero) the actual payment, if any, to be made under such Award. The Committee may exercise the discretion described in the immediately preceding sentence either in individual cases or in ways that affect more than one Participant. In each case the Committee’s discretionary determination, which may affect different Awards and Participants differently, will be binding on all parties.
VI. PAYMENT UNDER AWARDS
Except as otherwise determined by the Committee or as otherwise provided in this Section VI, all payments under the Plan will be made, if at all, no later than March 15 of the calendar year following the calendar year in which the Performance Period ends;provided, that the Committee may authorize elective deferrals of any payment under an Award in accordance with the deferral rules of Section 409A of the Code and the regulations thereunder (Section 409A of the Code, together with the regulations thereunder, “Section 409A”). Except as determined otherwise by the Committee, an Award payment will not be made unless the Participant has remained employed by the Company or its Affiliates through the date of payment. Any deferrals with respect to a Section 162(m) Award will be subject to adjustment for notional interest or other notional earnings in a manner consistent with (as determined by the Committee) the requirements of Section 162(m). Awards under the Plan are intended either to qualify for an exemption from, or to comply with the requirements of, Section 409A, but neither the Company nor any Affiliate, nor the Committee, nor any person acting on behalf of the Company, any Affiliate, or the Committee, will be liable for any adverse tax or other consequences to any Participant or to the estate or beneficiary of any Participant or to any other holder of an Award, including, but not limited to, by reason of the application of Section X below or any acceleration of income, or any additional tax (including any interest and penalties), asserted by reason of the failure of an Award to satisfy the requirements of Section 409A or by reason of Section 4999 of the Code, or otherwise asserted with respect to the Award.
VII. PAYMENT LIMITS
The maximum amount payable to any Participant in any fiscal year of the Company under Awards will be $1,470,000, which limitation, with respect to any such Awards for which payment is deferred in accordance with Section VI above, shall be applied without regard to such deferral.
VIII. TAX WITHHOLDING
All payments under the Plan shall be subject to reduction for applicable tax and other legally or contractually required withholdings.
IX. AMENDMENT AND TERMINATION
The Committee may amend the Plan at any time and from time to time; provided, that, with respect to Section 162(m) Awards, no amendment for which Section 162(m) would require stockholder approval in order to preserve the eligibility of such Awards as exemptperformance-based compensation shall be effective unless approved by the stockholders of the Company in a manner consistent with the requirements of Section 162(m). The Committee may at any time terminate the Plan.
X. MISCELLANEOUS
(a) Awards held by a Participant are subject to forfeiture, termination and rescission, and a Participant will be obligated to return to the Company payments received with respect to any Award, in each case to the extent provided by the Committee in connection with (i) a breach by the Participant of an Award agreement or the Plan, or any non-competition, non-solicitation, confidentiality or similar covenant or agreement with the Company or any Affiliate or (ii) an overpayment to the Participant of incentive compensation due to inaccurate financial data. Without limiting the generality of the foregoing, the Committee may recover Awards and payments under any Award in accordance with any applicable Company clawback or recoupment policy, as such policy may be amended and in effect from time to time, or as otherwise required by law, regulation or applicable stock exchange listing standards, including, without limitation, Section 10D of the Securities Exchange of 1934, as amended. Each Participant, by accepting an Award pursuant to the Plan, shall be deemed to have agreed to return the full amount required under this Section X(a) at such time and in such manner as the Committee shall determine in its sole discretion and consistent with applicable law.
(b) No person shall have any claim or right to be granted an Award, nor shall the selection for participation in the Plan for any Performance Period be construed as giving a Participant the right to be retained in the employ or service of the Company or its Affiliates for that Performance Period or for any other period. The loss of an Award will not constitute an element of damages in the event of termination of employment for any reason, even if the termination is in violation of an obligation of the Company or any Affiliate to the Participant.
(c) Section 162(m) Awards under the Plan shall be construed and administered in a manner consistent with the exemption of Award payments as exempt performance-based compensation under Section 162(m). Subject to the foregoing, the Committee shall have complete discretion to construe the Plan and all matters arising under the Plan.
(d) The Plan shall be governed by the laws of the Commonwealth of Massachusetts without giving effect to any choice of law provisions that might otherwise refer construction or interpretation of the Plan to the substantive laws of another jurisdiction. The Plan shall be effective for Performance Periods beginning on or after January 1, 2017 (to the extent the material terms of the Plan have been approved by the Company’s shareholders prior to such date).
* * * * * *
Approved by the Board of Directors April 8, 2016
| | | AGENUS INC. 3 FORBES ROAD LEXINGTON, MA 02421 | | VOTE BY INTERNET -– www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information up untilinformation. If you hold your shares directly and wish to vote over the internet, your vote must be received by 11:59 P.M. Eastern Time on June 13, 2016.18, 2019. If your shares are held in a Company stock plan and you wish to vote over the internet, your vote must be received by 11:59 P.M. Eastern Time on June 16, 2019. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS If you would like to reduce the costs incurred by Agenus Inc. in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards, and annual reports electronically viae-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the internet and, when prompted, indicate that you agree to receive or access stockholder materials electronically in future years. VOTE BY PHONE - –1-800-690-6903 Use any touch-tone telephone and follow the instructions. Your shares will be voted according to your instructions. If you hold your shares directly and wish to vote over the telephone, your vote must be received by 11:59 P.M. Eastern Time on June 13, 2016.18, 2019. If your shares are held in a Company stock plan and you wish to vote over the telephone, your vote must be received by 11:59 P.M. Eastern Time on June 16, 2019. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. |
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: KEEP THIS PORTION FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLY THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. | | | | | | | | | | | | | | | | | | | | | For All | | Withhold All | | For All Except | | To withhold authority to vote for any individual nominee(s), mark “For All Except” and write the number(s) of the nominee(s) on the line below. | | | | | | | | | The Board of Directors recommends you vote FOR the following: | | ¨☐
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| | | | | | | | | 1. Election of DirectorsDirector Nominees | | | | | | | | | | | | | | | | | 01 Brian J. Corvese 02 Timothy R. Wright | | | | | | | | | | |
| | | | | | | | | | | | | | | The Board of Directors recommends you vote FOR the following proposals: | | For | | Against | | Abstain | | | | | 2. To approve an amendment to our Amended and Restated Certificate of Incorporation (as amended) to increase the number of shares of common stock authorized for issuance thereunder from 140,000,000240,000,000 to 240,000,000.400,000,000. | | ¨☐ | | ¨☐ | | ¨☐ | | | | | 3. To approve our Amended and Restated 20092019 Equity Incentive Plan. | | ¨☐ | | ¨☐ | | ¨☐ | | | | | 4. To approve our 2016 Executive Incentive Plan. | | ¨ | | ¨ | | ¨ | | | | | 5. To ratify the appointment of KPMG LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2016.2019.
| | ¨ | | ¨ | | ¨ | | | | | NOTE:Such other business as may properly come before the meeting or any adjournment thereof. | | ☐ | | ☐ | | ☐ | | |
| | | | | | | | | | | | | | | Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name, by authorized officer. | | | | | | | | | | |
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Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Form10-K, Notice & Proxy Statement are available atwww.proxyvote.com. AGENUS INC. Annual Meeting of Stockholders June 14, 201619, 2019 at 5:00 PM This proxy is solicited on behalf of the Board of Directors The undersigned stockholder(s) of Agenus Inc. (the “Company”) hereby appoint(s) Garo H. Armen, PhD and Christine M. Klaskin, and each of them acting singly, the attorneys and proxies of the undersigned, with full power of substitution, to vote on behalf of the undersigned all of the shares of capital stock of the Company that the undersigned is entitled to vote at the Annual Meeting of Stockholders of the Company to be held on June 14, 2016,19, 2019, and at all adjournments thereof, hereby revoking any proxy heretofore given with respect to such shares. THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED BY THE UNDERSIGNED STOCKHOLDER(S). IF NO SPECIFICATION IS MADE, THIS PROXY WILL BE VOTED FOR ALL PROPOSALS. IN THEIR DISCRETION, THE PROXIES ARE ALSO AUTHORIZED TO VOTE UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING. PLEASE SIGN AND MAIL THIS PROXY TODAY. Continued and to be signed on reverse side 56014118_2
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