PALISADE BIO, INC.
10-Ks and 10-Qs
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UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A
(RULE
14a-101)
SCHEDULE
14A INFORMATION
Proxy
Statement Pursuant to Section 14(a) of the Securities
Exchange
Act of 1934 (Amendment No. )
Filed by
the Registrant x
Filed by
a Party other than the Registrant ¨
Check the
appropriate box:
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o
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Preliminary
Proxy Statement
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¨
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Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
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x
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Definitive
Proxy Statement
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¨
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Definitive
Additional Materials
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¨
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Soliciting
Material Pursuant to §240.14a-12
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NEURALSTEM,
INC.
(Name of
Registrant as Specified In Its Charter)
(Name of
Person(s) Filing Proxy Statement, if other than the
Registrant)
Payment
of Filing Fee (Check the appropriate box):
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x
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No
fee required.
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¨
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Fee
computed on table below per Exchange Act
Rules 14a-6(i)(1) and 0-11.
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(1)
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Title
of each class of securities to which transaction
applies:
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(2)
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Aggregate
number of securities to which transaction applies:
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(3)
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Per
unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (set forth the amount on which the filing fee
is calculated and state how it was determined):
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(4)
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Proposed
maximum aggregate value of transaction:
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(5)
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Total
fee paid:
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¨
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Fee
paid previously with preliminary materials.
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¨
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Check
box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its
filing.
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(1)
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Amount
Previously Paid:
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(2)
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Form,
Schedule or Registration Statement No.:
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(3)
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Filing
Party:
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(4)
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Date
Filed:
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Proxy Statement
June 4,
2010
Dear
Stockholder,
I am
pleased to invite you to the 2010 Annual Meeting of Stockholders of
Neuralstem, Inc. The meeting will be held at our headquarters located at
9700 Great Seneca Highway Rockville, Maryland, 20850, on Monday, July 12, 2010,
starting at 12:00 p.m. (local time). Only stockholders of record on June 4,
2010, are entitled to notice of, and to vote, at the meeting and at any
adjournment or postponement that may take place.
The
accompanying notice and proxy statement includes important information about the
matters to be acted on at the meeting.
Your vote
is important. On behalf of the Board, I urge you to vote promptly even if you
plan to attend the meeting. Voting now will not prevent you from voting in
person at the meeting if you are a stockholder of record and wish to do
so.
We look
forward to greeting you personally at the meeting.
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Sincerely,
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/s/ I. Richard Garr
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I.
Richard Garr
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Chief
Executive Officer
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NEURALSTEM,
INC.
9700
Great Seneca Highway
Rockville,
Maryland, 20850
(301)-366-4841
Important
Notice Regarding the Availability of Proxy Materials for the
Stockholder
Meeting to Be Held on July 12, 2010
The
proxy statement and annual report to security holders are available
at
http://proxy.neuralstem.com
NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS
To the
Stockholders of Neuralstem Inc.:
The 2010
Annual Meeting of Stockholders of Neuralstem, Inc., a Delaware corporation, will
be held at our headquarters located at 9700 Great Seneca Highway Rockville,
Maryland, 20850, on Monday, July12, 2010, starting at 12:00 p.m. (local
time).
Only
stockholders of record on June 4, 2010, are entitled to notice of, and to vote
at, the meeting and at any adjournment or postponement that may take place.
At the meeting we plan to:
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1.
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Elect
one (1) director to the Board of Directors for a term ending in 2013 and
until his successors is elected and
qualified;
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2.
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Ratify
the appointment of Stegman & Company as our independent registered
public accounting firm for 2010;
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3.
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Approve
the adoption of the 2010 Equity Compensation Plan;
and
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4.
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Transact
any other business that may properly come before the meeting or any
adjournment or postponement of the
meeting.
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Our Board
of Directors recommends that you vote FOR the election of the
director nominee named in this proxy statement, FOR the ratification of
the appointment of Stegman & Company as our independent registered public
accounting firm for 2010, and FOR the adoption of the 2010
Equity Compensation Plan.
We
cordially invite you to attend the meeting. To ensure your representation at the
meeting, please vote promptly even if you plan to attend the meeting. Voting now
will not prevent you from voting in person at the meeting if you are a
stockholder of record and wish to do so.
By Order
of the Board of Directors
/s/ I.
Richard Garr
I.
Richard Garr
Chief
Executive Officer
Rockville,
Maryland
June
4, 2010
IMPORTANT
Whether
or not you expect to attend the Annual Meeting in person, we urge you to vote
your shares at your earliest convenience. This will ensure the presence of a
quorum at the meeting. Promptly voting your shares by telephone, via the
Internet, or by signing, dating, and returning the enclosed proxy card will save
us the expenses and extra work of additional solicitation. Submitting your proxy
now will not prevent you from voting your shares at the meeting if you desire to
do so, as your proxy is revocable at your option.
NEURALSTEM, INC.
9700
Great Seneca Highway
Rockville,
Maryland, 20850
(301)-366-4841
PROXY
STATEMENT
GENERAL
We are
providing this proxy statement to you as part of a solicitation by the Board of
Directors of Neuralstem, Inc. for use at our 2010 Annual Meeting of
Stockholders and at any adjournment or postponement that may take place. We will
hold our Annual Meeting at our headquarters, located at 9700 Great Seneca
Highway Rockville, Maryland, 20850, on Monday July 12, 2010, starting at
12:00 p.m. (local time). Only stockholders of record on June 4,
2010 (“Record Date”), are entitled to notice of and to vote at the meeting and
at any adjournment or postponement that may take place.
We expect
to mail, or provide notice and electronic delivery of, this proxy statement and
accompanying proxy card to stockholders beginning on or about June 16,
2010. Unless the context otherwise requires, the terms "Neuralstem,"
"us," "we," and "our" references Neuralstem, Inc.
QUESTIONS
AND ANSWERS ABOUT THE PROXY MATERIALS
AND
THE MEETING
Q: Why
am I receiving these materials?
A: Our
Board is providing these proxy materials to you in connection with our 2010
Annual Meeting of Stockholders, which will take place on Monday July 12, 2010.
As a stockholder on the Record Date, you are invited to attend the
meeting. We also encourage you to vote on the matters described in this proxy
statement.
Q: What
information is contained in these materials?
A: This
proxy statement includes information about the nominee for director and the
other matters to be voted on at the meeting. The proxy statement also includes
information about the voting process and requirements, the compensation of
directors and some of our executive officers, and certain other required
information.
Q: What
can I vote on at the meeting?
A: There
are 3 matters to be voted on at the meeting:
(1) The
election of 1 director to our Board to hold office until the annual meeting of
stockholders in 2013 and until their successors are elected and
qualified;
(2) The
ratification of the appointment of Stegman & Company as our independent
registered public accounting firm for 2010; and
(3) The
adoption of the 2010 Equity Compensation Plan.
Q: How
does the Board recommend that I vote on each of the matters?
A: Our
Board recommends that you vote your shares:
·
FOR the director
nominee
1
·
FOR the ratification of
the appointment of Stegman & Company as our independent registered
public accounting firm for 2010; and
·
FOR the adoption of the 2010
Equity Compensation Plan
Q: What
classes of stock are entitled to be voted?
A: Each
share of our common stock outstanding on the Record Date is entitled to one vote
on each of the items being voted on at the meeting. On the Record Date, we
had 42,420,017 shares of common stock outstanding which are entitled to
vote at our Annual Meeting. We have no other classes of stock
outstanding.
Q: What
shares can I vote?
A: You
can vote all shares you owned on the Record Date. These shares include
(1) shares held directly in your name as the stockholder of record, and
(2) shares held for you as the beneficial owner through a stockbroker, bank
or other nominee.
Q: What
is the difference between holding shares as a stockholder of record and as a
beneficial owner?
A: Most
of our stockholders hold their shares through a stockbroker, bank or other
nominee rather than directly in their own name. There are some important
distinctions between shares held of record and those
beneficially owned.
Stockholder of Record
If your
shares are registered in your name with our transfer agent, American Stock
Transfer & Trust Company, you are the stockholder of record for those shares
and are receiving proxy-related materials directly from us. As the stockholder
of record, you have the right to grant your voting proxy directly to us or to
vote in person at the meeting.
Beneficial Owner
If your
shares are held in a stock brokerage account, by a bank or other nominee
(commonly referred to as being held in "street name") you are the beneficial
owner of those shares. Your broker, bank or nominee is the stockholder of record
and therefore has forwarded proxy-related materials to you as beneficial owner.
As the beneficial owner, you have the right to direct your broker, bank or other
nominee how to vote your shares and are also invited to attend the meeting.
However, since you are not the stockholder of record, you may not vote your
shares in person at the meeting unless you obtain a signed proxy from your
broker, bank or nominee giving you the right to vote the shares.
Q: How
do I vote if I am a stockholder of record (as described in the question and
answer above)?
A: You
can vote on the Internet or by telephone by following the instructions you
received in the mail or by email. If you received a full printed set of our
proxy materials in the mail, you can also vote by mail. Finally, you can vote in
person at the meeting.
Q: How
do I vote if I am a beneficial owner (as described in the question and answer
above)?
A: You
can vote on the Internet or by mail or telephone by following the instructions
you received in the mail or by email. Also, you can vote in person at the
meeting, BUT ONLY if you obtain a signed proxy from
your broker, bank or nominee giving you this right.
Q: Can
I change my vote or revoke my proxy?
A: Yes.
You can change your vote or revoke your proxy at any time before the final vote
at the meeting. You can do this by casting a later proxy through any of the
available methods described in the questions and answers above. If you are a
stockholder of record, you can also revoke your proxy by delivering a written
notice of your revocation to our Corporate Secretary at our
principal executive office at 9700 Great Seneca Highway Rockville,
Maryland, 20850. If you are a beneficial owner, you can revoke your proxy
by following the instructions sent to you by your broker, bank or other
nominee.
Q: What
does it mean if I get more than one set of proxy-related materials?
A: It
means you hold shares registered in more than one account. Follow the
instructions in each set of proxy-related materials to ensure that all of your
shares are voted.
2
Q: What
is the quorum requirement for the meeting?
A: For
a "quorum" to exist at the meeting, stockholders holding a majority of the votes
entitled to be cast by the stockholders entitled to vote generally must be
present in person or represented by proxy at the meeting. There must be a quorum
for any action to be taken at the meeting (other than adjournment or
postponement of the meeting). If you submit a properly completed proxy, even if
you abstain from voting, then your shares will be counted for purposes of
determining the presence of a quorum.
If a
broker indicates on a proxy that it lacks discretionary authority as to certain
shares to vote on a particular matter, commonly referred to as "broker
non-votes," those shares will still be counted for purposes of determining the
presence of a quorum at the meeting.
Q: What
is the voting requirement to approve each of the matters?
A:
In the election of directors, the nominee will be elected a director if he
receives the highest number of affirmative votes. WITHHOLDING AUTHORITY FOR THE
NOMINEE and broker non-votes will not have any effect on the
election of directors. You can find more information about the voting
requirement for director elections below under the heading "Proposal 1—Election of
Directors."
For each
of the other matters, approval requires the affirmative vote of stockholders
holding a majority of those shares present (in person or by proxy) and entitled
to vote on the matter. If you are a beneficial owner and do not provide the
stockholder of record with voting instructions, your shares may constitute
broker non-votes for certain matters (as described in the question and answer
immediately above). In tabulating the voting result for a proposal, shares that
constitute broker non-votes are not considered as being entitled to vote on that
proposal.
Please
note that this year the rules regarding how brokers may vote your shares have
changed. Brokers may no longer vote your shares on the election of directors in
the absence of your specific instructions as to how to vote so we encourage you
to provide instructions to your broker regarding the voting of your
shares.
Q: How
can I vote on each of the matters?
A: In
the election of director, you may vote FOR or WITHHOLD AUTHORITY FOR THE
NOMINEE. For the other matters, you may vote FOR or AGAINST the matter, or you may
indicate that you wish to ABSTAIN from voting on the
matter.
Q: How
will the votes be counted?
A: Your
shares will be voted according to your directions on your proxy. If you submit a
proxy with no further instructions, your shares will be voted in accordance with
the recommendations of our Board ( FOR the director nominee
named in this proxy statement, the ratification of the appointment of Stegman
& Company as our independent registered public accounting firm for 2010, and
adoption of the 2010 Equity Compensation Plan). If you WITHHOLD AUTHORITY FOR THE
NOMINEE from voting on the election of the director nominee, your vote
will not be considered a vote cast with respect to that director's election and
therefore will not be counted in determining whether the director received a
majority of the votes cast. If you ABSTAIN from voting on any of
the other proposals, it will have the same effect as a vote AGAINST that
proposal.
Q: Who
will count the votes?
A: We
will appoint one of our officers present at the meeting to act as the inspector of
elections for the meeting. Also, our transfer agent will separately tabulate all
votes FOR and AGAINST each matter, as well as
all abstentions and broker non-votes.
Q: Who
may attend the meeting?
A: All
stockholders as of the Record Date may attend. Please bring to the
meeting:
proof of ownership such as: a
copy of your proxy or voting instruction card; or a copy of a brokerage or bank
statement showing your share ownership as of the Record Date;
and
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proof of identification
such as a valid driver's license or
passport.
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3
Q: How
will voting on any other business be conducted?
A: We
do not expect any matters to be presented for a vote at the meeting other than
the matters described in this proxy statement. If you grant a proxy, either of
the officers named as proxy holders, I. Richard Garr and John Conron, or their
nominees or substitutes, will have the discretion to vote your shares on any
additional matters that are properly presented for a vote at the meeting and at
any adjournment or postponement that may take place. If, for any unforeseen
reason, any of our nominees is not available as a candidate for director, the
persons named as the proxy holder will vote your proxy for another candidate
nominated by our Board.
Q: Who
is paying for this proxy solicitation?
A: We
will pay the cost of soliciting the proxies. In addition, our
officers, directors and employees may solicit proxies or votes in person, by
telephone or by email. These people will not be paid any additional compensation
for these activities. We will send copies of proxy-related materials or
additional solicitation materials to brokers, fiduciaries and custodians who
will forward these materials to the beneficial owners of our shares. On request,
we will reimburse brokers and other persons representing beneficial owners of
shares for their reasonable expenses in forwarding these materials to beneficial
owners.
BENEFICIAL
OWNERSHIP OF SHARES OF COMMON STOCK
The
following table sets forth, as of March 9, 2010, information regarding
beneficial ownership of our capital stock by:
each
person, or group of affiliated persons, known by us to be the beneficial owner
of 5% or more of any class of our voting securities;
each of
our current directors and nominees;
each of
our current named executive officers; and
all
current directors and named executive officers as a group.
Beneficial
ownership is determined according to the rules of the SEC. Beneficial ownership
means that a person has or shares voting or investment power of a security and
includes any securities that person or group has the right to acquire within 60
days after the measurement date. This table is based on information supplied by
officers, directors and principal stockholders. Except as otherwise indicated,
we believe that each of the beneficial owners of the common stock listed below,
based on the information such beneficial owner has given to us, has sole
investment and voting power with respect to such beneficial owner’s shares,
except where community property laws may apply.
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Common Stock
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||||||||||||||||
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Name and Address of Beneficial
Owner(1)
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Shares
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Shares
Underlying
Convertible
Securities(2)
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Total
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Percent of
Class(2)
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Directors
and named executive officers
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I.
Richard Garr
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1,413,195 | 2,600,000 | 4,013,195 | 9.77 | % | |||||||||||
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Karl
Johe, Ph.D
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1,705,484 | 2,600,000 | 4,305,484 | 10.48 | % | |||||||||||
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Scott
Ogilvie
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— | 121,250 | 121,250 | * | % | |||||||||||
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William
Oldaker
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79,300 | 181,250 | 260,550 | * | % | |||||||||||
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John
Conron
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51,364 | 816,666 | 868,030 | 2.11 | % | |||||||||||
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All
directors and executive officers as a group
(5 persons)
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3,249,343 | 6,319,166 | 9,568,509 | 23.29 | % | |||||||||||
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*
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Less
than one percent.
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4
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(1)
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Except
as otherwise indicated, the persons named in this table have sole voting
and investment power with respect to all shares of common stock shown as
beneficially owned by them, subject to community property laws where
applicable and to the information contained in the footnotes to this
table. Unless otherwise indicated, the address of the beneficial owner is
c/o Neuralstem, Inc. 9700 Great Seneca Highway, Rockville,
MD.
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(2)
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Pursuant
to Rules 13d-3 and 13d-5 of the Exchange Act, beneficial ownership
includes any shares as to which a shareholder has sole or shared voting
power or investment power, and also any shares which the shareholder has
the right to acquire within 60 days, including upon exercise of common
shares purchase options or warrant. There are 33,751,300 shares of common
stock issued and outstanding as of March 9,
2010.
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SECTION 16(A)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section
16(a) of the Exchange Act requires our officers, directors, and stockholders
owning more than ten percent of our common stock, to file reports of ownership
and changes in ownership with the SEC and to furnish us with copies of such
reports. Based solely on our review of Form 3, 4 and 5’s, the following
table provides information regarding any of the reports which were filed late
during the fiscal year ended December 31, 2009:
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Name of Reporting Person
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Type of Report Filed Late
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No. of Transactions
Reported Late
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William
Oldaker
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Form
4 - Statement of Change in Beneficial Ownership
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1
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CORPORATE
GOVERNANCE
Board
of Directors
Our Board
consists of four members. Our business, property and affairs
are managed under the direction of the Board. Members of the Board are kept
informed of the our business through discussion with the Chief Executive Officer
and other officers, by reviewing materials provided to them and by participating
in meetings of the Board and its Committees.
Our Board
is responsible for establishing broad corporate policies and for overseeing our
overall management. In addition to considering various matters which require its
approval, the Board provides advice and counsel to, and ultimately monitors the
performance of, our senior management.
Board
Meetings
During
2009, the Board held 3 meetings and acted through unanimous written consent 3
times. Each Director attended at least 75% of all meetings of the Board and of
the Committees on which the Director served. The Board currently holds regularly
scheduled meetings and calls for special meetings or acts through unanimous
written consents as necessary. Meetings of the Board may be held telephonically.
Directors are expected to attend all board meetings and meetings of the
committees of the board on which they serve and to spend the time needed and
meet as frequently as necessary to properly discharge their duties. Though
we do not have a formal policy regarding attendance by directors at annual
meetings of stockholders, attendance is encouraged.
Classification
of Board
Pursuant
to our bylaws, we have a classified board of directors divided into three
classes with staggered three-year terms. Only one class may be elected each
year, while the directors in the other classes continue to hold office for the
remainder of their three-year terms. Each class is required to have
approximately the same number of directors. The Board may, on its own, determine
the size of the exact number of directors on the Board and may fill vacancies on
the Board. The procedure for electing and removing directors on a
classified board of directors generally makes it more difficult for stockholders
to change management control by replacing a majority of the board at any one
time, and the classified board structure may discourage a third party tender
offer or other attempt to gain control of the company and may maintain the
incumbency of directors. In addition, under our bylaws, directors may only be
removed from office by a vote of the majority of the shares then outstanding and
eligible to vote.
5
Independent
Directors
Our
common stock is listed on NYSE AMEX. As such, we are subject to the NYSE AMEX's
director independence standards. In accordance with these standards, in
determining independence the Board affirmatively determines whether a director
has a "material relationship" with Neuralstem that would compromise his or her
independence from management or would cause him or her to fail to meet the NYSE
AMEX's specific independence criteria. When assessing the "materiality" of a
director's relationship with Neuralstem, the Board considers all relevant facts
and circumstances, not merely from the director's standpoint, but from that of
the persons or organizations with which the director has an affiliation, and,
where applicable, the frequency and regularity of the services, and whether the
services are being carried out at arm's length in the ordinary course of
business. Material relationships can include commercial, consulting, charitable,
familial and other relationships. A relationship is not material if, in the
Board's judgment, it is not inconsistent with the NYSE AMEX's director
independence standards and it does not compromise a director's independence from
management.
Applying
the NYSE AMEX’s standards, our board of directors has determined that Messrs
Ogilvie and Oldaker are each “independent” as that term is defined by the NYSE
Amex. Messrs Ogilvie and Oldaker are the sole members of our: (i) Audit
Committee; (ii) Compensation Committee; and (iii) Nomination and Corporate
Governance Committee.
Communications
with Directors
We have
adopted a formal process for shareholder communications with our independent
directors. The policy, which is available on our website, www.neuralstem.com is as
follows:
Interested
parties are invited to communicate with the non-management members of the Board
by sending correspondence to the non-management members of the Board of
Directors, c/o Corporate Secretary, Neuralstem, Inc. 9700 Great Seneca Highway,
Rockville, Maryland 20850.
The
Corporate Secretary will review all such correspondence and forward to the
non-management members of the Board a summary of all such correspondence
received during the prior month and copies of all such correspondence that deals
with the functions of the Board or committees thereof or that otherwise is
determined to require attention of the non-management directors. Non-management
directors may at any time review the log of all correspondence received by us
that is addressed to the non-management members of the Board and request copies
of any such correspondence. Concerns relating to accounting, internal controls
or auditing matters will immediately be brought to the attention of the Chairman
of the Audit Committee.
Code
of Ethics
We have
adopted several guidelines intended to promote the honest and ethical conduct of
our officers, directors, employees and consultants. They include, our
"Code of Ethics” that applies to our officer, directors and employees and our
“Finance Code of Professional Conduct” that applies to our principal executive
officer, principal financial officer, principal accounting officer or
controller, or persons performing similar functions, and any persons who
participate in our financial reporting process. A copy of our codes
can be viewed on our website at www.neuralstem.com.
The codes
incorporate our guidelines designed to deter wrongdoing and to promote honest
and ethical conduct and compliance with applicable laws and regulations. The
codes also incorporate our expectations of our officers, directors and employees
that enable us to provide accurate and timely disclosure in our filings with the
SEC and other public communications. In addition, the codes incorporate
guidelines pertaining to topics such as complying with applicable laws, rules,
and regulations; reporting violations; and maintaining accountability for
adherence to the codes.
We
intend to disclose future amendments to certain provisions of our codes, or
waivers of such provisions on our web site within four business days following
the date of such amendment or waiver.
Corporate
Governance Guidelines
We have
recently adopted Corporate Governance Guidelines that are intended to ensure
that our Board has the necessary authority and practices in place to review and
evaluate our business operations and to make decisions that are independent of
management. The Corporate Governance Guidelines also are intended to align the
interests of directors and management with those of our shareholders. The
Corporate Governance Guidelines establish practices for the Board with regard to
its oversight of the company. Under our guidelines, the Board
annually conducts a self-evaluation to assess adherence to the Corporate
Governance Guidelines and identify opportunities to improve Board performance. A
copy of our codes can be viewed on our website at
www.neuralstem.com.
6
Committees
We have
established 3 corporate governance committees comprising of the: (i) Audit
Committee; (ii) Compensation Committee; and (iii) Nomination and Corporate
Governance Committee. The committee membership and the function of each of the
committees are described below. Each committee is governed by written
committee charters. We periodically review such charters and may
amend or update the process and procedures contained therein. In the
event of such amendment or update, we will promptly post our revised charter on
our website. A copy of each respective committee’s charter can be
viewed on our website at www.neuralstem.com.
The table
below identifies the Board’s standing committees and committee
membership:
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Director
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Audit Committee
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Nomination
and Corporate
Governance
Committee
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Compensation
Committee
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|||||
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William Oldaker
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Chair
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Member
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Member
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|||||
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Scott
Ogilvie
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Member
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Chair
|
Chair
|
|||||
|
Total
Meetings during 2009
|
4
|
1
|
1
|
|||||
|
Action Via Unanimous Written
Consent
|
0
|
0
|
0
|
Each
member of the Audit Committee, the Compensation Committee and the Nomination and
Corporate Governance Committee is considered independent under NYSE AMEX listing
criteria.
Audit
Committee
We have a
designated audit committee in accordance with section 3(a)(58)(A) of the
Exchange Act. The members of the Audit Committee are Messrs Ogilvie and Oldaker.
The Audit Committee assists our board in fulfilling its responsibility for the
oversight of the quality and integrity of our accounting, auditing, and
reporting practices, and such other duties as directed by the board. The
committee's purpose is to oversee our accounting and financial reporting
processes, the audits of our financial statements, the qualifications of our
public accounting firm engaged by us as our independent auditor to prepare or
issue an audit report on our financial statements, and the performance of our
internal audit function and independent auditor. The committee reviews and
assesses the qualitative aspects of financial reporting to shareholders, our
processes to manage business and financial risk, and compliance with significant
applicable legal, ethical, and regulatory requirements. The committee is
directly responsible for the appointment (subject to shareholder ratification),
compensation, retention, and oversight of our independent auditor.
Our board
of directors has determined that Mr. Ogilvie is an “audit committee financial
expert” within the meaning of SEC rules. An audit committee financial
expert is a person who can demonstrate the following
attributes: (1) an understanding of generally accepted
accounting principles and financial statements; (2) the ability to assess
the general application of such principles in connection with the accounting for
estimates, accruals and reserves; (3) experience preparing, auditing,
analyzing or evaluating financial statements that present a breadth and level of
complexity of accounting issues that are generally comparable to the breadth and
complexity of issues that can reasonably be expected to be raised by the
company’s financial statements, or experience actively supervising one or more
persons engaged in such activities; (4) an understanding of internal
controls and procedures for financial reporting; and (5) an understanding
of audit committee functions.
Nomination
and Corporate Governance Committee
The
Nomination and Corporate Governance Committee reviews and evaluates the
effectiveness of our executive development and succession planning processes, as
well as provides active leadership and oversight of these processes, and
oversight of our corporate governance policies. The Nomination and Corporate
Governance Committee also evaluates and recommends nominees for membership on
our board of directors and its committees. Messrs Ogilvie and Oldaker are the
members of the Nomination Committee.
7
There has
been no material change to the procedures by which security holders may
recommend nominees to our board of directors since we last provided such
disclosure. We do not have a formal policy with regard to the
consideration of diversity in identifying Director nominees, but the Nomination
and Corporate Governance Committee strives to nominate Directors with a variety
of complementary skills so that, as a group, the Board will possess the
appropriate talent, skills, and expertise to oversee our
businesses.
The
Nomination and Governance Committee evaluates candidates for the Board on the
basis of the process and standards set forth in its charter. Candidates may come
to the attention of the Nomination and Governance Committee through current
Board members, professional search firms, stockholders or other
persons. The Nomination and Governance Committee will consider nominees
recommended by our stockholders. Any stockholder wishing to propose a nominee
for consideration by the Nomination and Governance Committee should submit a
recommendation in writing to our Corporate Secretary at our principal executive
office, indicating the nominee's qualifications and other relevant biographical
information and providing confirmation of the nominee's consent to serve as a
director. The Nomination and Governance Committee does not intend to alter its
criteria for evaluating potential director candidates, including the criteria
set forth above, in the case of director candidates recommended by stockholders.
The Nomination and Governance Committee periodically considers recommendations
for director candidates.
If you
wish to raise a director nomination for next year's annual meeting, you must
comply with the notice and other requirements described below under the heading
“Shareholder
Proposals" Also, individuals wishing to raise a director for
nomination for next year’s annual meeting, are encouraged to review our Amended
and Restated Bylaws filed as an exhibit to our Annual Report filed with the
Securities and Exchange Commission.
Compensation
Committee
The
Compensation Committee's role is to discharge our board’s responsibilities
relating to compensation of our executives and to oversee and advise the board
of directors on the adoption of policies that govern our compensation and
benefit programs. Messrs Ogilvie and Oldaker are the members of the Compensation
Committee.
In making
its determinations with respect to compensation, the Compensation Committee
relies on recommendations from our Chief Executive Officer with respect to the
salaries of our senior management and bonus levels for all employees. The
Compensation Committee and Chief Executive Officer work together to finalize
these salary and bonus decisions. The Compensation Committee determines the
compensation of the Chief Executive Officer.
Leadership
Structure
The Board
does not have a policy regarding the separation of the roles of Chief Executive
Officer and Chairman of the Board as the Board believes it is in the best
interests of the Company to make that determination based on the position and
direction of the Company and the membership of the Board. At present, the
positions of Chairman and Chief Executive Officer are held by different
individuals. This structure makes the best use of the Chief Executive
Officer's and Chairman’s respective knowledge of the Company and its industry,
as well as fostering greater communication between the Company's management and
the Board.
Risk
Oversight
The
Company has a risk management program overseen by the Chief Executive Officer.
Material risks are identified and prioritized by management, and each
prioritized risk is referred to a Board Committee or the full Board for
oversight. For example, strategic risks are referred to the full Board while
financial risks are referred to the Audit Committees. The Board regularly
reviews information regarding the Company's liquidity and operations, as well as
the risks associated with each, and annually reviews the Company's risk
management program as a whole. Also, the Compensation Committee periodically
reviews the most important risks to the Company to ensure that compensation
programs do not encourage excessive risk-taking.
8
AUDIT
COMMITTEE REPORT
This
section of the proxy statement will not be deemed incorporated by reference by
any general statement incorporating by reference this proxy statement into any
filing under the Securities Act of 1933 or under the Securities Exchange Act of
1934, except to the extent that we specifically incorporate this information by
reference, and will not otherwise be deemed filed under these Acts.
The Audit
Committee is solely responsible for the appointment, compensation and oversight
of the work of the independent registered public accounting firm for the purpose
of preparing or issuing an audit report or related work.
Management
is responsible for our financial statements, internal controls and financial
reporting process. The independent registered public accounting firm is
responsible for performing an independent audit of our consolidated financial
statements in accordance with generally accepted auditing standards and for
issuing a report thereon. The Audit Committee's responsibility is to monitor and
oversee these processes. The members of the Audit Committee are not
professionally engaged in the practice of auditing or accounting and are not
experts in the fields of accounting or auditing, including with respect to
auditor independence. It is not the Audit Committee's duty or responsibility to
conduct auditing or accounting reviews or procedures. Therefore, the Audit
Committee has relied, without independent verification, on management's
representation that the financial statements have been prepared with integrity
and objectivity and in conformity with generally accepted
accounting principles and on the representations of the independent
registered public accounting firm included in its report on Neuralstem’s
financial statements. Furthermore, the Audit Committee's considerations and
discussions with management and the independent registered public accounting
firm do not assure that our financial statements are presented in accordance
with generally accepted accounting principles, that the audit of our financial
statements has been carried out in accordance with generally accepted auditing
standards, or that the independent registered public accounting firm is in fact
"independent."
The Audit
Committee has reviewed and discussed the audited financial statements with
management and the independent registered public accounting firm, including a
discussion of the quality, not just the acceptability, of the accounting
principles, the reasonableness of significant judgments and the clarity of
disclosures in the financial statements. The Audit Committee discussed with the
independent registered public accounting firm matters required to be discussed
by Statement on Auditing Standards No. 61 (Communication with Audit
Committees), as amended, as adopted by the Public Company Accounting Oversight
Board in Rule 3200T. Our independent registered public accounting firm also
provided to the Audit Committee the written disclosures and the letter required
by the applicable requirements of the Public Company Accounting Oversight Board
regarding the independent registered public accounting firm's communications
with the Audit Committee concerning independence, and the Audit Committee
discussed with the independent registered public accounting firm its
independence.
Based
upon these reviews and discussions and the report of the independent registered
public accounting firm to the Audit Committee, and subject to the limitations on
the role and responsibilities of the Audit Committee referred to above, the
Audit Committee, exercising its business judgment, recommended to our Board
on March 30, 2010, that the audited consolidated financial statements be
included in our Annual Report on Form 10-K for the year ended
December 31, 2009, filed with the SEC.
Scott
Ogilvie
William
Oldaker
DIRECTORS
AND EXECUTIVE OFFICERS
Executive
Officers and Significant Employees
The
following sets forth our current executive officers and information concerning
their age and background:
|
Name
|
|
Position
|
|
Age
|
|
Position Since
|
|
I.
Richard Garr
|
Chief
Executive Officer, President, General Counsel
|
57
|
1996
|
|||
|
Karl
Johe, Ph.D.
|
Chief
Scientific Officer
|
49
|
1996
|
|||
|
John
Conron
|
Chief
Financial Officer
|
59
|
4/2007
|
9
I. Richard
Garr – See Bio in the section of this Proxy entitled “Proposal 1 – Election of
Director”
Karl Johe,
Ph.D. – See Bio in the section of this Proxy entitled “Proposal 1 – Election of Director”
Mr. John
Conron has served as our Chief Financial Officer since April 1, 2007. Mr.
Conron, a Certified Public Accountant, has over 30 years of experience in the
field of corporate finance. Since 2003, Mr. Conron has been consulting early
stage companies by providing critical outsource CFO functions such as
implementation of accounting systems, creation and monitoring of internal
controls, Sarbanes Oxley compliance, audit preparation, financial modeling and
strategic planning. Prior to his work as a consultant, Mr. Conron worked for
Cyberstar, Inc., a wholly owned subsidiary of Loral Space & Communications,
Inc., where he held the position of CFO from 2000 to 2003. Mr. Conron joined
Cyberstar from Transworld Telecommunications, Inc., a Qualcom spin-off which
offered telecommunication services in Russia, where he served as
CFO. Mr. Conron also served as CFO and on the board of directors of
Mercury Communications in London. Mercury was the European subsidiary of Cable
& Wireless.
Family
Relationships
There are
no family relationships between any director, executive officer, or person
nominated or chosen by the registrant to become a director or executive
officer.
Executive
Compensation
The
following table sets forth information for our most recently completed fiscal
year concerning the compensation of (i) the Principal Executive Officer
(PEO) and (ii) all other executive officers of Neuralstem, Inc. who earned
over $100,000 in salary and bonus during the last most recently completed fiscal
year ended December 31, 2009(together the “Named Executive Officers”).
|
Name and
principal
position
(a)
|
Year
(b)
|
Salary
($)
(c)
|
Bonus
($)
(d)
(3)
|
Stock
Awards
($)
(e)
(3)
|
Option
Award
($)
(f)(2)
|
Nonequity
Incentive
Plan
compensation
($)
(g)
|
Non-qualified
deferred
compensation
earning
($)
(h)
|
All other
Compensation
($)
(i)(1)
|
Total
($)
(j)
|
|||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||||
|
I.
Richard Garr
|
2009
|
$ | 407,000 | 52,584 | 157,754 | - | 48,688 | $ | 666,026 | |||||||||||||||||||||||||
|
CEO
|
2008
|
$ | 436,750 | 33,917 | 312,033 | 3,437,056 | 88,523 | $ | 4,308,279 | |||||||||||||||||||||||||
|
President,
General Counsel (“PEO”)
|
||||||||||||||||||||||||||||||||||
|
Karl
Johe
|
2009
|
$ | 422,100 | 204,508 | 68,169 | - | 6,000 | $ | 700,777 | |||||||||||||||||||||||||
|
Chief
Scientific Officer
|
2008
|
$ | 427,250 | 341,700 | - | 3,437,056 | 6,000 | $ | 4,212,006 | |||||||||||||||||||||||||
|
John
Conron
|
2009
|
$ | 225,000 | 7,481 | 22,444 | - | 6,000 | $ | 260,925 | |||||||||||||||||||||||||
|
Chief
Financial Officer
|
2008
|
$ | 208,750 | 18,750 | 60,000 | 1,125,581 | 4,500 | $ | 1,417,581 | |||||||||||||||||||||||||
|
Thomas
Hazel
|
2009
|
$ | 180,000 | 15,000 | - | - | - | $ | 195,000 | |||||||||||||||||||||||||
|
SVP
of Research
|
2008
|
$ | 100,000 | 7,500 | - | 179,411 | - | $ | 286,911 | |||||||||||||||||||||||||
10
(1) Includes
automobile allowance, perquisites and other personal benefits.
(2) For
additional information regarding the valuation of Option Awards, refer to Note 2
of our financial statements in the section captioned “Stock Options
(3) On
March 30, 2010 the Compensation Committee made incentive bonus awards for 2009.
The 2009 incentive bonus plan awards will made in both fully paid, fully vested
common stock and cash. The common stock proportion of 2009 executive management
bonuses will be awarded in the form of 253,931 fully paid; fully vested; shares
of common stock. The stock award will be restricted. The shares will not be
tradable by the recipients for five years unless there is a “change of control”
or termination of employment. The share awards will be based on the
closing price of the shares on March 29, 2010. The shares awarded will be
provided by the 2007 Stock Option Plan. The restricted common shares will be
awarded as follows (assuming $2.05 per share):
|
2009 Equity Award Calculation
|
||||||||||||||||
|
Bonus
|
Equity
|
|
||||||||||||||
|
Present Value
|
Proportion
|
Equity Pool
|
Shares
|
|||||||||||||
|
Chairman
and Chief Science Officer
|
$ | 272,677 | 25 | % | $ | 68,169 | 33,253 | |||||||||
|
Chief
Executive Officer
|
$ | 210,338 | 75 | % | $ | 157,754 | 76,953 | |||||||||
|
Chief
Financial Officer
|
$ | 29,925 | 75 | % | $ | 22,444 | 10,948 | |||||||||
|
2009 Cash Award Calculation
|
||||||||||||
|
Base
|
Cash
|
Cash
|
||||||||||
|
Salary
|
Proportion
|
Award
|
||||||||||
|
Chairman
and Chief Science Officer
|
$ | 272,677 | 75 | % | 204,508 | |||||||
|
Chief
Executive Officer
|
$ | 210,338 | 25 | % | 52,585 | |||||||
|
Chief
Financial Officer
|
$ | 29,925 | 25 | % | 7,481 | |||||||
Employment
Agreements and Arrangements and Change-In-Control Arrangements
Employment
Agreement with I. Richard Garr
We have a
written employment agreement with Mr. Garr, our Chief Executive Officer and
General Counsel. Pursuant to the agreement, as in effective, Mr. Garr is
entitled to an annual salary of $407,000 paid semi-monthly of which $30,000 is
paid in connection with Mr. Garr’s duties as general
counsel. In addition, the agreement provides for certain
performance bonuses as determined from time to time by our Compensation
Committee. Mr. Garr’s employment agreement also provides for a $500 monthly
automobile allowance and the reimbursement of reasonable business expenses. The
term of the agreement is until October 31, 2012.
Mr.
Garr’s employment agreement also provides for severance (“Termination
Provisions”) in an amount equal to the greater of: (i) the aggregate
compensation remaining on his contract; or (ii) $1,000,000, in the event Mr.
Garr is terminated for any reason. In the event of termination, the agreement
also provides for the immediate vesting of 100% of stock options granted to Mr.
Garr during his term of employment. These termination provisions apply whether
employee is terminated for “cause” or “without cause.” Additionally, in the
event employee voluntarily terminates his employment following a change in
control and material reassignment of duties, he will also be entitled to the
termination provisions under the contract. In the event of early termination,
the Termination Provisions will require us to make a substantial payment to the
employee. By way of example, such payments would be approximately as
follows:
11
|
Officer
|
Termination
Date
|
Salary(1)
|
Auto (2)
|
Accelerated Vesting
of Options(3)
|
Total
|
|||||||||||||
|
I
Richard Garr
|
||||||||||||||||||
|
12/31/09
|
$ |
1,153,170
|
$ |
17,000
|
$
|
1,548,000
|
$ |
2,718,170
|
||||||||||
|
03/31/10
|
$ |
1,051,419
|
$ |
15,500
|
$
|
1,548,000
|
$ |
2,614,919
|
||||||||||
|
6/30/10
|
$ |
1,000,000
|
—
|
$
|
1,548,000
|
$ |
2,548,000
|
|||||||||||
|
After
7/1/10
|
$ |
1,000,000
|
—
|
$
|
1,548,000
|
$ |
2,548,000
|
|||||||||||
|
(1)
|
Assumes
an annual salary of $407,000. Does not include annual bonus or
salary increase.
|
|
(2)
|
Executive
is entitled to a $500 per month automobile
allowance.
|
|
(3)
|
Derived
from in the money stock options as of 12/31/09 using a market value of
$1.79 for the Company’s common
stock.
|
Mr.
Garr’s agreement contains non-solicitation, confidentiality and non-competition
covenants. The agreement may be terminated by either party with or without cause
and without prior notice subject to the termination provisions as
discussed.
Employment
Agreement with Karl Johe, Ph.D.
We have a
written employment agreement with Mr. Johe, our Chief Scientific Officer.
Pursuant to the agreement, as in effective, Mr. Johe is entitled to an annual
salary of $422,100 paid semi-monthly. In additional, the agreement
provides for certain performance bonuses as determined from time to time by our
Compensation Committee. Mr. Johe’s employment agreement also provides
for a $500 monthly automobile allowance and the reimbursement of reasonable
business expenses. The term of the agreement is until October 31,
2012.
Mr.
Johe’s employment agreement also provides for severance (“Termination
Provisions”) in an amount equal to the greater of: (i) the aggregate
compensation remaining on his contract; or (ii) $1,000,000, in the event Mr.
Johe is terminated for any reason. In the event of termination, the agreement
also provides for the immediate vesting of 100% of stock options granted to Mr.
Johe during his term of employment. These termination provisions apply whether
employee is terminated for “cause” or “without cause.” Additionally, in the
event employee voluntarily terminates his employment following a change in
control and material reassignment of duties, he will also be entitled to the
termination provisions under the contract. In the event of early termination,
the Termination Provisions will require us to make a substantial payment to the
employee. By way of example, such payments would be approximately as
follows:
|
Officer
|
Termination
Date
|
Salary(1)
|
Auto (2)
|
Accelerated Vesting
of Options(3)
|
Total
|
|||||||||||||
|
Karl
Johe, Ph.D
|
||||||||||||||||||
|
12/31/09
|
$ |
1,195,950
|
$ |
17,000
|
$
|
1,548,000
|
$ |
2,760,950
|
||||||||||
|
03/31/10
|
$ |
1,090,425
|
$ |
15,500
|
$
|
1,548,000
|
$ |
2,653,425
|
||||||||||
|
6/30/10
|
$ |
1,000,000
|
—
|
$
|
1,548,000
|
$ |
2,548,000
|
|||||||||||
|
After 7/1/10
|
$ |
1,000,000
|
—
|
$
|
1,548,000
|
$ |
2,548,000
|
|||||||||||
|
(1)
|
Assumes
an annual salary of $422,100. Does not include annual bonus or
salary increase.
|
|
(2)
|
Executive
is entitled to a $500 per month automobile
allowance.
|
|
(3)
|
Derived
from in the money stock options as of 12/31/09 using a market value of
$1.79 for the Company’s common
stock.
|
Mr.
Johe’s agreement contains non-solicitation, confidentiality and non-competition
covenants. The agreement may be terminated by either party with or without cause
and without prior notice subject to the termination provisions as
discussed.
12
Employment
Agreement with John Conron.
We have a
written employment agreement with Mr. Conron, our Chief Financial
Officer. Pursuant to the agreement, as in effect, Mr. Conron is
entitled to an annual salary of $225,000. In addition, the agreement
provides for certain performance bonuses as determined from time to time by our
Compensation Committee. Mr. Conron’s
employment agreement also provides for a $500 monthly automobile
allowance.
Employment
Arrangement with Thomas Hazel
We have a
written employee agreement with Mr. Hazel, our Senior Vice President of
Research. We pay Mr. Hazel an annual salary of $180,000 in
connection with his employment.
Outstanding
Equity Awards at Fiscal Year-End
The
following table provides information concerning unexercised options; stock that
has not vested; equity incentive; and awards for each Named Executive Officer
outstanding as of the end of the last completed fiscal year ending December 31,
2009.
|
Name
(a)
|
Number of
securities
underlying
unexercised
options
(#)
exercisable
(b)
|
Number of
securities
underlying
unexercised
options
(#)
unexercisable
(c)
|
Equity
incentive
plan
awards:
Number of
securities
underlying
unexercised
unearned
options
(#)
(d)
|
Option
exercise
price
($)
(e)
|
Option
expiration
date
(f)
|
Number
of shares
or units
of stock
that have
not
vested
(#)
(g)
|
Market
value of
shares of
units of
stock that
have not
vested
($)
(h)
|
Equity
incentive
plan
award:
Number
of un-
earned
shares,
units or
other
rights that
have not
vested
(#)
(i)
|
Equity
incentive
plan
awards:
Market or
payout
value of
unearned
shares,
units or
other
rights that
have not
vested
($)
(j)
|
|||||||||||
|
|
|
|||||||||||||||||||
|
I. Richard
Garr
|
(1)
|
1,200,000
|
0
|
$
|
0.50
|
7/28/15
|
||||||||||||||
|
|
(2)
|
700,000
|
1,400,000
|
$
|
3.66
|
1/1/18
|
||||||||||||||
|
Karl
Johe (3)
|
(4)
|
1,200,000
|
0
|
$
|
0.50
|
7/28/15
|
||||||||||||||
|
(5)
|
333,333
|
$
|
3.01
|
10/31/15
|
||||||||||||||||
|
|
(6)
|
700,000
|
1,400,000
|
$
|
3.66
|
1/1/18
|
||||||||||||||
|
John
Conron
|
(7)
|
100,000
|
$
|
3.15
|
4/1/15
|
|||||||||||||||
|
(8)
|
50,000
|
$
|
2.60
|
4/1/18
|
||||||||||||||||
|
(9)
|
333,333
|
666,667
|
$
|
2.60
|
4/1/18
|
|||||||||||||||
|
(1)
|
On
July 28, 2005, we granted our CEO an option to purchase 1,200,000 common
shares. The option was granted under our 2005 Stock
Plan. The option vests annually over 4 years at a rate of
300,000 per year. The applicable vesting dates are July 28,
2006, 2007, 2008 and 2009. The only vesting condition is Mr.
Garr’s continued employment.
|
|
(2)
|
On
January 21, 2008, we granted our CEO an option to purchase 2,100,000
common shares. The grant has an effective date of January 1,
2008. The option was granted under our 2007 Stock
Plan. The option vests at a rate of 700,000 per 14 month
period. The applicable vesting dates are February 28, 2009,
April 30, 2010, and June 30, 2011. The only vesting condition
is Mr. Garr’s continued employment.
|
|
(3)
|
Outstanding
equity awards for Mr. Johe do not include warrants to purchase an
aggregate of 3,000,000 common shares that were issued on June 5,
2007. For a further description of the transaction, please
refer to the section of this report entitled “Transactions with Related
Persons, Promoters and Certain Control Persons.”
|
|
(4)
|
On
July 28, 2005, we granted our CSO an option to purchase 1,200,000 common
shares. The option was granted under our 2005 Stock
Plan. The option vests annually over 4 years at a rate of
300,000 per year. The applicable vesting dates are July 28,
2006, 2007, 2008 and 2009. The only vesting condition is Mr.
Johe’s continued employment.
|
13
|
(5)
|
On
September 20, 2007, we granted our Chairman and Chief Scientific Officer,
an option to purchase an aggregate of 333,333 shares of our common stock
at a price per share of $3.01 pursuant to our 2005 Stock Plan. The option
expires 5 years from the date when they become
exercisable. The option vests on October 31,
2010. The option is immediately exercisable upon an event which
would result in an acceleration of Mr. Johe’s stock option grants
under his employment agreement.
|
|
(6)
|
On
January 21, 2008, we granted our CSO an option to purchase 2,100,000
common shares. The grant has an effective date of January 1,
2008. The option was granted under our 2007 Stock
Plan. The option vests at a rate of 700,000 per 14 month
period. The applicable vesting dates are February 28, 2009,
April 30, 2010, and June 30, 2011. The only vesting condition
is Mr. Johe’s continued employment.
|
|
(7)
|
In
April of 2007, we granted our CFO an option to purchase 100,000 common
shares pursuant to his employment contract. The option is fully
vested as of December 31, 2008.
|
|
(8)
|
On
April 1, 2008, we granted our CFO an option to purchase 50,000 common
shares. The grant was made pursuant to Mr. Conron’s employment
agreement. The option was fully vested at the grant
date.
|
|
(9)
|
On
April 1, 2008, we granted our CFO an option to purchase 1,000,000 common
shares. The option vests at an annual rate of 333,333 per
year. The vesting dates are April 1, 2009, 2010 and
2011. The only vesting condition is Mr. Conron’s continued
employment.
|
Director
Compensation
The
following table summarizes the compensation for our board of directors for the
fiscal year ended December 31, 2009:
|
Name
|
Fees Earned
or Paid in
Cash
($)
|
Stock
Awards
($)
|
Option
Awards
($)
|
Non-Equity
Incentive Plan
Compensation
($)
|
Nonqualified
Deferred
Compensation
Earnings
($)
|
All Other
Compensation
($)
|
Total
($)
|
|||||||||||
|
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
(f)
|
(g)
|
(h)
|
|||||||||||
|
William
Oldaker
|
||||||||||||||||||
|
Independent
Director(1)
|
20,000
|
$
|
10,959
|
$
|
30,959
|
|||||||||||||
|
Audit
Committee(2)
|
5,000
|
$
|
2,740
|
$
|
7,740
|
|||||||||||||
|
Compensation
Committee(2)
|
5,000
|
$
|
2,740
|
$
|
7,740
|
|||||||||||||
|
Nomination
Committee(2)
|
5,000
|
$
|
2,740
|
$
|
7,740
|
|||||||||||||
|
Scott
Ogilvie
|
||||||||||||||||||
|
Independent
Director(1)
|
20,000
|
$
|
10,959
|
$
|
30,959
|
|||||||||||||
|
Audit
Committee(2)
|
5,000
|
$
|
2,740
|
$
|
7,740
|
|||||||||||||
|
Compensation
Committee(2)
|
5,000
|
$
|
2,740
|
$
|
7,740
|
|||||||||||||
|
Nomination
Committee(2)
|
5,000
|
$
|
2,740
|
$
|
7,740
|
|||||||||||||
|
(1)
|
On
July 2, 2009, pursuant to our adopted director compensation plan, we
issued to each of Messrs Ogilvie and Oldaker options to purchase 20,000
shares of our common stock. The options were issued pursuant to our
2007 Stock Plan. The exercise price per share is $1.17 and will
expire 10 years from the date of grant. The individual grants vest
on July 2, 2010.
|
|
(2)
|
On
July 2, 2009, pursuant to our adopted director compensation plan, we
issued to each of Messrs Ogilvie and Oldaker, options to purchase 15.000
shares of our common stock (5,000 shares per each committee on which they
serve). The options were issued pursuant to our 2007 Stock Plan. The
exercise price per share is $1.17 and the options vest on July 2,
2010.
|
Director
Compensation Plan
Our
Compensation Committee has adopted a formal outside director compensation plan
to assist us in attracting and retaining qualified directors. Under
our plan, each eligible director shall receive:
14
Option
Grants
First
Year Grant. Upon joining the
board, individual will receive options to purchase 45,000 common shares. The
options shall vest as follows: (i) 25,000 shall vest on the one month
anniversary of joining the Board; and (ii) 20,000 shall vest quarterly over a
one year period commencing on the date such Director joins the Board. For
purpose of the First Year option grant, all current eligible directors will be
considered “First Year” directors and be eligible for such grant;
Annual
Grant. Starting on the
first year anniversary of service, and each subsequent anniversary thereafter,
each eligible director will be granted options to purchase 20,000 shares of
common stock. These Annual Grants will vest quarterly during the year;
and
Committee
Grant. Each Director
will receive options to purchase an additional 5,000 shares for each committee
on which he or she serves. These Committee Grants will vest quarterly during the
year.
The
exercise price for the options to be granted to the independent directors shall
be the market price of the stock on each applicable grant date. The options
shall expire 7 years from the grant date. The option will be granted pursuant to
our 2005 Stock Plan, or as directed by the Board of Directors.
Cash
Compensation
Board
Retention Amount. Each director
shall receive a $20,000 annual board retainer. The retainer shall be payable
quarterly commencing on January 1, 2008.
Committee
Retainer. In addition to
the Board Retention Amount, each director serving on a committee shall receive
an additional $5,000 per committee on which he serves.
TRANSACTIONS
WITH RELATED PERSONS, PROMOTERS AND CERTAIN CONTROL PERSONS
Summarized
below are certain transactions and business relationships between Neuralstem and
persons who are or were an executive officer, director or holder of more than
five percent of any class of our securities since January 1, 2009 or which have
been proposed since December 31, 2009.
Information
regarding disclosure of an employment relationship or transaction involving an
executive officer and any related compensation solely resulting from that
employment relationship or transaction is incorporated by reference from the
sections relating to executive officer contained in the Proxy.
Information
regarding disclosure of compensation to a director is incorporated by reference
from the section relating to director compensation contained in this
Proxy.
On
February 9, 2009, our compensation committee awarded Messrs Garr and Conron 2008
discretionary cash bonuses in the amount of $312,033 and $60,000,
respectively. Both individuals voluntarily agreed to defer such
bonuses until such later date as our cash position increased. On
December 28, 2009, we requested that Messrs Garr and Conron exchange their
respective obligations for restricted common shares in a private
placement. As a result of the exchange, Mr. Garr received 189,111
restricted shares and Mr. Conron received 36,364 restricted shares as payment in
full of their respective obligations. The purchase price per
share was $1.65. The transaction was unanimously approved by our
audit committee as well as our disinterested board members.
Equity
Compensation Plan Information
The
following table sets forth information with respect to our 2005 & 2007 Stock
Plans as of December 31, 2009.
15
|
(a)
|
(b)
|
(c)
|
||||||
|
Number of Securities
|
Weighted-Average
|
Number of Securities
|
||||||
|
to be Issued
|
Exercise Price of
|
Remaining Available for
|
||||||
|
upon Exercise of
|
Outstanding
|
Future Issuance under
|
||||||
|
Outstanding
|
Options,
|
Equity Compensation Plans
|
||||||
|
Options, Warrants
|
Warrants and
|
(Excluding Securities
|
||||||
|
and Rights
|
Rights
|
Reflected in Column (a))
|
||||||
|
Equity
compensation plans approved by security holders
|
|
|
|
|||||
|
2005
Stock Plan,
as amended
|
3,680,659
|
$
|
1.26
|
319,341
|
||||
|
2007
Stock Plan
|
5,615,475
|
3.38
|
534,525
|
|||||
|
Equity
compensation plans not approved by security holders
|
N/A
|
N/A
|
N/A
|
|||||
|
Total
|
9,296,134
|
$
|
2.52
|
853,866
|
||||
PROPOSAL
1
ELECTION
OF DIRECTOR
Our Board
is divided into three classes, the terms of which expire at successive annual
meetings.
At this
year’s annual meeting, the term of Mr. Oldaker will expire. One Director will be
elected at the annual meeting to serve for a three-year term which will expire
at our annual meeting in 2013. We have nominated Mr. Oldaker for this
position. Mr. Oldaker currently serves as a Director. If
elected, Mr. Oldaker will continue in office until his successor has been duly
elected and qualified, or until the earlier of his death, resignation or
retirement. We expect the nominee to be able to serve if elected. You
can find the principal occupation and other information about the nominee
below.
Unless
you indicate on your proxy that you are withholding authority for the nominee
from voting with respect to the nominee, the persons named as proxies will vote
all proxies received FOR the election of the nominee. The nominee has consented
to be named as a nominee in this proxy statement, and we expect that the nominee
will be able to serve if elected. If the nominee is unavailable for election,
the persons named as proxies will vote your shares FOR the election of a
substitute nominee proposed by our Board.
The
nominee receiving the highest number of affirmative “FOR” votes shall be elected
as directors.
The
Board of Directors recommends that you vote FOR Mr. Oldaker. Proxies will
be voted FOR the nominee named below unless you otherwise specify in your
proxy.
Nominee for Term Expiring in 2013 (Class II)
|
Name
|
Principal Occupation
|
Age
|
Director
Since
|
|||
|
William Oldaker)
|
Partner
at Oldaker Group LLC
Director
of Neuralstem, Inc.
|
68
|
2007
|
Mr. William
Oldaker, age 68, has served on our board of directors since April 12,
2007. Mr. Oldaker is a founder and partner in the Washington, D.C. law firm of
Oldaker Group LLC. Prior to founding the firm in 1993, Mr. Oldaker was a partner
in the Washington office of the law firm of Manatt, Phelps and Phillips from
1987 to 1993. In 2004, Mr. Oldaker was a founder of Washington First Bank in
Washington, D.C. and serves as a member of the board of directors. He previously
served as a director of Century National Bank, from 1982 until its acquisition
in 2001. Mr. Oldaker was appointed by President Clinton to serve as a
commissioner on the National Bioethics Advisory Commission, a post he held until
2001. He is a member of the Colorado, D.C. and Iowa Bar Associations, the Bar
Association for the Court of Appeals, D.C., and the Bar of the United
States Supreme Court. He is also a partner in The National Group, a consulting
firm. In evaluating Mr. Oldaker’s specific experience, qualifications,
attributes and skills in connection with his appointment to our board, we took
into account his extensive experience with managing and developing federal
government regulations and expertise in the legislative process. He also was a
founding member, and has served on the board of directors of a bank for almost
thirty years.
Directors Whose Terms Will
Expire in 2011 (Class III)
16
|
Name
|
Principal Occupation
|
Age
|
Director
Since
|
||||
|
I.
Richard Garr
|
Chief
Executive Officer, President, General Counsel and Director of Neuralstem,
Inc.
|
57 |
1996
|
||||
|
Karl
Johe, Ph.D
|
Chief
Scientific Officer, Chairman of the Board and Director of Neuralstem,
Inc.
|
49 |
1996
|
||||
Mr. I. Richard
Garr, JD, age 57, has been
a director and our Chief Executive Officer since 1996. Mr. Garr was
previously an attorney with Beli, Weil & Jacobs, the B&G Companies, and
Circle Management Companies. Mr. Garr is a graduate of Drew University (1976)
and the Columbus School of Law, The Catholic University of America (1979).
Additionally, he was a founder and current Board member of the First Star
Foundation, a children’s charity focused on abused children’s issues; a founder
of The Starlight Foundation Mid Atlantic chapter, which focuses on helping
seriously ill children; and is a past Honorary Chairman of the Brain Tumor
Society. In evaluating Mr. Garr’s specific experience, qualifications,
attributes and skills in connection with his appointment to our board, we took
into account his broad experience in Neural Stem Cells. He is among
the longest serving executives in the field.
Mr. Karl Johe,
Ph.D., age 49, has been a director, Chairman of the Board and our Chief
Scientific Officer since 1996. Dr. Johe has over 15 years of research and
laboratory experience. Dr. Johe is the sole inventor of Neuralstem’s granted
stem cell patents and is responsible for the strategic planning and development
of our therapeutic products. Dr. Johe received his Bachelor of Arts Degree in
Chemistry and a Master’s Degree from the University of Kansas. Dr. Johe received
his doctorate from the Albert Einstein College of Medicine of Yeshiva
University. From 1993 to January 1997, Dr. Johe served as a Staff Scientist at
the Laboratory of Molecular Biology of the National Institute of Neurological
Disease and Stroke in Bethesda, Maryland. While holding this position, Dr. Johe
conducted research on the isolation of neural stem cells, the elucidation of
mechanisms directing cell type specification of central nervous system stem
cells and the establishment of an in vitro model of mammalian neurogenesis. In
evaluating Dr. Johe’s specific experience, qualifications, attributes and skills
in connection with his appointment to our board, we took into account his
extensive experience in international science and business
communities. He is also multilingual.
Director
Whose Term Will Expire in 2012 (Class I)
|
Name
|
Principal Occupation
|
Age
|
Director
Since
|
||||
|
Scott
Ogilvie
|
CEO
and President of Gulf Enterprises International, Ltd.
Director
of Neuralstem, Inc.
|
55 |
2007
|
||||
Mr. Scott V.
Ogilvie, age 55, has served on our board of directors since April 12,
2007. Mr. Ogilvie is President of AFIN International, Inc., a private
equity/business advisory firm, which he founded in 2006. Prior to
December 31, 2009, he was CEO of Gulf Enterprises International, Ltd, (“Gulf”) a
company that brings strategic partners, expertise and investment capital to
the Middle East and North Africa. He held this position since August of 2006.
Mr. Ogilvie previously served as Chief Operating Officer of CIC Group, Inc., an
investment manager, a position he held from 2001 to 2007. He began his
career as a corporate and securities lawyer with Hill, Farrer & Burrill, and
has extensive public and private corporate board experience in finance, real
estate, and technology companies. During the past 5 years, Mr.
Ogilvie has served on the board of directors of Neuralstem, Inc. (NYSE
AMEX:CUR), Innovative Card Technologies, Inc. (OTCBB:INVC) and Preferred Voice
Inc, (OTCBD:PRFV) and GenSpera, Inc. (OTCBB: GNSZ). In evaluating Mr. Ogilvie’s
specific experience, qualifications, attributes and skills in connection with
his appointment to our board, we took into account his prior work in both public
and private organizations regarding corporate finance, securities and compliance
and international business development.
17
PROPOSAL
2
RATIFICATION
OF AUDIT COMMITTEE'S SELECTION OF STEGMAN & COMPANY AS OUR INDEPENDENT
REGISTERED
PUBLIC ACCOUNTING FIRM FOR 2010
The Audit
Committee has appointed Stegman & Company as the independent registered
public accounting firm to audit the accounts of Neuralstem for
2010. Stegman & Company has audited our accounts and records
since 2007. Representatives of Stegman & Company are expected to attend the
2010 annual meeting and to respond to appropriate questions, and they will have
the opportunity to make a statement if they wish.
We are
asking our stockholders to ratify the selection of Stegman & Company as our
independent registered public accounting firm. Although ratification is not
required, our Board is submitting the selection of Stegman & Company to
stockholders for ratification because we value our stockholders' views on our
independent registered public accounting firm and as a matter of good corporate
practice. In the event stockholders fail to ratify the appointment of Stegman
& Company, the Audit Committee will reconsider this appointment. Even if the
appointment is ratified, the Audit Committee, in its discretion, may direct the
appointment of a different independent registered public accounting firm at any
time during the year if the Audit Committee determines that the change would be
in the best interests of Neuralstem and our stockholders.
The
Board of Directors recommends that you vote FOR the ratification of Stegman
& Company as our independent registered public accounting firm for
2010. Proxies will be voted FOR the ratification of Stegman &
Company as our independent registered public accounting firm for 2010 unless you
otherwise specify in your proxy.
PROPOSAL
3
ADOPTION
OF 2010 EQUITY COMPENSATION PLAN
We are
asking our stockholders to approve the adoption of the 2010 Equity Compensation
Plan (the “Plan”). Under the Plan, we will reserve 7,000,000 common
shares for awards to our employees, directors, officers and
consultants. The Compensation Committee and the full board of
directors believe that in order to successfully attract and retain the best
possible candidates, we must continue to offer a competitive equity incentive
program. Upon review, our Compensation Committee and board determined that
the provisions as well as shares available for future awards under our existing
plans were insufficient to achieve such goal. Therefore, the
Compensation Committee recommended, and the full board of directors approved,
subject to stockholder approval, the adoption of the Plan.
Summary
of the Plan
The
following summary of the Plan is qualified in its entirety by the specific
language of the Plan as proposed to be amended, which is included in this proxy
statement as Appendix A.
General.
The Plan provides for the grant of incentive stock options, within the meaning
of Section 422 of the Code, to our employees and nonstatutory stock
options, restricted stock, performance units, performance shares, RSUs, and
other stock based awards to our employees, directors, and consultants. The
purpose of the Plan is to attract and retain the best available personnel for
positions of substantial responsibility, to provide additional incentive to our
employees, directors, and consultants and to promote the success of our
business.
Common Stock
Available Under the Plan. Assuming stockholders approve this proposal, a
total of 7,000,000 shares of common stock will have been reserved for issuance
pursuant to the Plan.
If an
award expires or is terminated or canceled without having been exercised or
settled in full, or is forfeited back to or repurchased by us, the terminated
portion of the award (or forfeited or repurchased shares subject to the
award) will become available for future grant or sale under the Plan (unless the
Plan has terminated). Shares are not deemed to be issued under the Plan with
respect to any portion of an award that is settled in cash or to the extent such
shares are withheld in satisfaction of tax withholding obligations. If the
exercise or purchase price of an award is paid for through the tender of shares,
or tax withholding obligations are met through the tender or withholding of
shares, those shares tendered or withheld will again be available for issuance
under the Plan. However, shares that have actually been transferred to a
financial institution or other person or entity selected by the Plan
administrator will not be returned to the Plan and will not be available for
future distribution under the Plan.
18
Administration of
the Plan. Our board of directors, or one or more committees appointed by
our board of directors, will administer our Plan (the “administrator”). In the
case of awards intended to qualify as “performance-based compensation” within
the meaning of Section 162(m) of the Code, the Compensation Committee will
consist of two or more “outside directors” within the meaning of
Section 162(m) of the Code to enable us to receive a federal tax deduction
for certain compensation paid under the Plan. The administrator has the power to
determine the terms of the awards, including the exercise price (which may be
changed by the administrator after the date of grant), the number of shares
subject to each award (subject to the limits under the Plan), the exercisability
of the awards and the form of consideration payable upon exercise. The
administrator also has the power to implement an award exchange program, an
award transfer program (whereby awards may be transferred to a financial
institution or other person or entity selected by the Plan administrator), and a
program through which participants may reduce cash compensation payable in
exchange for awards, and to create other stock based awards that are valued
in whole or in part by reference to (or are otherwise based on) shares of our
common stock (or the cash equivalent of such shares).
Eligibility.
Nonstatutory stock options, restricted stock, stock appreciation rights,
performance units, performance shares, RSUs, and other stock based awards may be
granted under the Plan to our employees, directors, and consultants. Incentive
stock options may be granted only to employees. As of December 31, 2009, we
had 8 employees, four directors (including two employee
directors) and 7 consultants and temporary workers.
Limitations.
Section 162(m) of the Code places limits on the deductibility for federal
income tax purposes of compensation paid to certain of our executive officers.
In order to preserve our ability to deduct the compensation income associated
with certain awards granted to such persons.
Options. A
stock option is the right to purchase shares of our common stock at a fixed
exercise price for a fixed period of time. Each option is evidenced by a stock
option agreement and is subject to the following terms and
conditions:
Number
of Options. The administrator will determine the number of shares granted
to any eligible individual pursuant to a stock option.
Exercise
Price. The administrator will determine the exercise price of options
granted under our Plan at the time the options are granted, but with respect to
nonstatutory stock options intended to qualify as “performance-based
compensation” within the meaning of Section 162(m) of the Code and all
incentive stock options, the exercise price generally must be at least equal to
the fair market value of our common stock on the date of grant. The exercise
price of an incentive stock option granted to a 10% stockholder may not be less
than 110% of the fair market value on the date such option is granted. The fair
market value of common stock generally is determined with reference to the
closing sale price for our common stock (or the closing bid if no sales were
reported) on the day the option is granted.
Exercise
of Option; Form of Consideration. The administrator determines when
options become exercisable, and may in its discretion, accelerate the vesting of
any outstanding option. The means of payment for shares issued upon exercise of
an option is specified in each option agreement. To the extent permitted by
applicable law, the Plan permits payment to be made by cash, check, promissory
note, other shares of our common stock (with some restrictions), cashless
exercises, a reduction in the amount of our liability to the participant, any
combination of the prior methods of payment or any other form of consideration
permitted by applicable law.
Term of
Option. The term of stock options will be stated in the stock option
agreement. However, the term of an incentive stock option may not exceed ten
years, except that with respect to any participant who owns 10% of the voting
power of all classes of our outstanding capital stock, the term must not exceed
five years. No option may be exercised after the expiration of its
term.
Termination
of Service. After termination of service, an option holder may exercise
his or her option for the period of time determined by the administrator and
stated in the option agreement. In the absence of a time specified in a
participant’s award agreement, a participant may exercise the option within
three months of such termination, to the extent that the option is vested on the
date of termination (but in no event later than the expiration of the term of
such option as set forth in the option agreement), unless such participant’s
service terminates due to the participant’s death or disability, in which case
the participant or, if the participant has died, the participant’s estate,
beneficiary designated in accordance with the administrator’s requirements
or the person who acquires the right to exercise the option by bequest or
inheritance may exercise the option, to the extent the option was vested on the
date of termination (or to the extent the vesting is accelerated upon the
participant’s death), within one year from the date of such
termination.
Nontransferability
of Options. Unless otherwise determined by the administrator, options
granted under the Plan are not transferable other than by will or the laws of
descent and distribution, and may be exercised during the optionee’s lifetime
only by the optionee. However, the administrator may at any time implement an
award transfer program (whereby awards may be transferred to a financial
institution or other person or entity selected by the Plan
administrator).
Restricted
Stock. Restricted stock awards are awards of shares of our common stock
that vest in accordance with terms and conditions established by the
administrator. The administrator may impose whatever conditions to vesting it
determines to be appropriate including, if the administrator has determined it
is desirable for the award to qualify as “performance-based compensation”
for purposes of Section 162(m) of the Code, that the restricted stock will
vest based on the achievement of performance goals. Each award of restricted
stock is evidenced by an award agreement specifying the terms and conditions of
the award. The administrator will determine the number of shares of restricted
stock granted to any employee. The administrator also determines the purchase
price of any grants of restricted stock and, unless the administrator determines
otherwise, shares that do not vest typically will be subject to forfeiture or to
our right of repurchase, which we may exercise upon the voluntary or involuntary
termination of the purchaser’s service with us for any reason including death or
disability.
19
Restricted Stock
Units. RSUs are awards of restricted stock, performance shares, or
performance units that are paid out in installments or on a deferred basis. The
administrator determines the terms and conditions of RSUs. Each RSU award will
be evidenced by an award agreement that will specify terms and conditions as the
administrator may determine in its sole discretion, including, without
limitation whatever conditions to vesting it determines to be appropriate. As
with awards of restricted stock, performance shares, and performance units, the
administrator may set restrictions with respect to the RSUs based on the
achievement of specific performance goals. The administrator also determines the
number of shares granted pursuant to a RSU award.
Performance
Shares and Performance Units. Performance units and performance shares
are awards that will result in a payment to a participant only if performance
goals established by the administrator are achieved or the awards otherwise
vest. The administrator will establish performance goals in its discretion,
which, depending on the extent to which they are met, will determine the number
and/or the value of performance units and performance shares to be paid out to
participants. The performance goals may be based upon the achievement of
company-wide, divisional, or individual goals (including solely continued
service), applicable securities laws or other basis determined by the
administrator. Payment for performance units and performance shares may be made
in cash or in shares of our common stock with equivalent value, or in some
combination, as determined by the administrator. Performance units will have an
initial dollar value established by the administrator prior to the grant date.
Performance shares will have an initial value equal to the fair market value of
our common stock on the grant date. The administrator also determines the
number of performance shares and performance units granted to any employee. Each
performance unit and performance share is evidenced by an award agreement, and
is subject to the terms and conditions determined by the
administrator.
Other Stock Based
Awards. The
administrator has the authority to create awards under the Plan in addition to
those specifically described in the Plan. These awards must be valued in whole
or in part by reference to, or must otherwise be based on, the shares of our
common stock (or the cash equivalent of such shares). These awards may be
granted either alone, in addition to, or in tandem with, other awards granted
under the Plan and/or cash awards made outside the Plan. Each other stock based
award will be evidenced by an award agreement that will specify terms and
conditions as the administrator may determine.
Transferability
of Awards. Unless the administrator determines otherwise, our Plan does
not allow for the transfer of awards other than by will, by the laws of descent
and distribution, or pursuant to an award transfer program which the
administrator has reserved the discretion to implement from time to time. Only
the participant may exercise an award during his or her lifetime.
Performance
Goals. As discussed above, under Section 162(m) of the Code, the
annual compensation paid to the chief executive officer, the chief financial
officer, and each of the other three most highly compensated executive officers
(our named executive officers) may not be deductible to the extent it exceeds
$1,000,000. However, we are able to preserve the deductibility of compensation
in excess of $1,000,000 if the conditions of Section 162(m) of
the Code are met. These conditions include stockholder approval of the
Plan, setting limits on the number of awards that any individual may receive,
and for awards other than options establishing performance criteria that must be
met before the award actually will vest or be paid. The administrator (in its
discretion) may make performance goals applicable to a participant.
The performance goals may differ from participant to participant and from
award to award. Any criteria used may be measured, as applicable, in absolute
terms or in relative terms (including passage of time and/or against another
company or companies), on a per-share basis, against the performance of the
company as a whole or any segment of the company, and on a pre-tax or after-tax
basis.
Adjustments upon
Changes in Capitalization. In the event that our stock changes by reason
of any dividend (excluding an ordinary dividend) or other distribution,
recapitalization, stock split, reverse stock split, reorganization, merger,
consolidation, split-up, spin-off, combination, repurchase, or exchange of our
securities, or other similar change in our capital structure, the administrator
will make the adjustments to the number and class of shares of common stock
subject to the Plan, the maximum number of shares of common stock that may be
issued to any individual in any fiscal year pursuant to awards, and the number,
class, and price of shares of common stock subject to any outstanding
award.
Adjustments upon
Liquidation or Dissolution. In the event of our
liquidation or dissolution, any unexercised award will terminate. The
administrator may, in its sole discretion, provide that each participant will
have the right to exercise all or any part of the award, including shares as to
which the award would not otherwise be exercisable.
20
Adjustments upon
Merger or Change in Control. Our Plan provides that in the event of a
merger with or into another corporation or our “change in control,” including
the sale of all or substantially all of our assets, the successor corporation
will assume or substitute an equivalent award for each outstanding award. Unless
determined otherwise by the administrator, any outstanding options not assumed
or substituted for will be fully vested and exercisable, including as to shares
that would not otherwise have been vested and exercisable, for a period of up to
15 days from the date of notice to the holder of such award. The option or stock
appreciation right will terminate at the end of such period. Unless determined
otherwise by the administrator, any restricted stock, performance shares,
performance units, RSUs, or other stock based awards not assumed or substituted
for will be fully vested as to all of the shares subject to the award, including
shares which would not otherwise be vested. In the event an outside director is
terminated immediately prior to or following a change in control, other
than pursuant to a voluntary resignation, the awards he or she received under
the Plan will fully vest and become immediately exercisable.
Amendment and
Termination of Our Plan. Our Plan will automatically terminate in 2020,
unless we terminate it sooner. In addition, our board of directors has the
authority to amend, suspend, or terminate our Plan provided it does not
adversely affect any award previously granted under our Plan.
Plan
Benefits
The
amount and timing of awards granted under the Plan are determined in the sole
discretion of the administrator and therefore cannot be determined in advance.
The future awards that would be received under the Plan by executive officers
and other employees are discretionary and are therefore not determinable at this
time.
U.S.
Federal Income Tax Information
Incentive Stock
Options. An optionee who is granted an incentive stock option does not
recognize taxable income at the time the option is granted or upon its exercise,
although the exercise is an adjustment item for alternative minimum tax purposes
and may subject the optionee to the alternative minimum tax. Upon a disposition
of the shares more than two years after grant of the option and one year after
exercise of the option, any gain or loss is treated as long-term capital
gain or loss. If these holding periods are not satisfied, the optionee
recognizes ordinary income at the time of disposition equal to the difference
between the exercise price and the lower of (i) the fair market value of
the shares at the date of the option exercise, or (ii) the sale price of
the shares. Any gain or loss recognized on such a premature disposition of the
shares in excess of the amount treated as ordinary income is treated as
long-term or short-term capital gain or loss, depending on the holding period.
Unless limited by Section 162(m) of the Code, we are generally entitled to
a deduction in the same amount as the ordinary income recognized by the
optionee.
Nonstatutory
Stock Options. An optionee does not recognize any taxable income at the
time he or she is granted a nonstatutory stock option. Upon exercise, the
optionee recognizes taxable income generally measured by the excess of the then
fair market value of the shares over the exercise price. Any taxable income
recognized in connection with an option exercise by an employee is subject to
tax withholding. Unless limited by Section 162(m) of the Code, we are
generally entitled to a deduction in the same amount as the ordinary income
recognized by the optionee. Upon a disposition of such shares by the optionee,
any difference between the sale price and the optionee’s exercise price, to the
extent not recognized as taxable income as provided above, is treated as
long-term or short-term capital gain or loss, depending on the holding
period.
Restricted Stock,
Restricted Stock Units,
Performance Shares and Performance Units. A participant generally will
not have taxable income at the time an award of restricted stock and RSUs are
granted. Instead, he or she will recognize ordinary income in the first taxable
year in which his or her interest in the shares underlying the award becomes
either (i) freely transferable, or (ii) no longer subject to
substantial risk of forfeiture (e.g., vested). However, a holder of a restricted
stock award may elect to recognize income at the time he or she receives the
award in an amount equal to the fair market value of the shares underlying the
award less any amount paid for the shares on the date the award is
granted.
Our Tax Impact
from Awards. We
generally will be entitled to a tax deduction in connection with an award under
the Plan in an amount equal to the ordinary income realized by a participant and
at the time the participant recognizes such income (for example, the exercise of
a nonstatutory stock option). Special rules limit the deductibility of
compensation paid to our named executive officers. Under Section 162(m) of
the Code, the annual compensation paid to named executive officers may not be
deductible to the extent it exceeds $1,000,000. However, we can preserve the
deductibility of certain compensation in excess of $1,000,000 if the conditions
of Section 162(m) of the Code are met. These conditions include stockholder
approval of the Plan and setting limits on the number of awards that any
individual may receive per year. The Plan has been designed to permit the
administrator to grant awards that qualify as performance-based for purposes of
satisfying the conditions of Section 162(m) of the Code, which permits us
to continue to receive a federal income tax deduction in connection with
such awards.
THE
FOREGOING IS ONLY A SUMMARY OF THE EFFECT OF U.S. FEDERAL INCOME TAXATION WITH
RESPECT TO THE GRANT AND EXERCISE OF AWARDS UNDER THE PLAN. IT DOES NOT PURPORT
TO BE COMPLETE, AND DOES NOT DISCUSS THE TAX CONSEQUENCES OF AN INDIVIDUAL’S
DEATH OR THE PROVISIONS OF THE INCOME TAX LAWS OF ANY MUNICIPALITY, STATE OR
FOREIGN COUNTRY IN WHICH ANY ELIGIBLE INDIVIDUAL MAY RESIDE.
21
The
Board of Directors recommends that you vote FOR the adoption of the 2010 Equity
Compensation Plan. Proxies will be voted FOR the adoption of the 2010
Equity Compensation Plan unless you otherwise specify in your
proxy.
PROPOSAL
4
The Board
does not know of any other matters that will be presented for consideration at
the Annual Meeting. If any other matters are properly brought before the
2010 Annual Meeting, the persons appointed as proxies will vote on such
matters in accordance with their best judgment.
INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
Audit
and Non-Audit Fees
The
following table summarizes the approximate aggregate fees billed to us or
expected to be billed to us by our independent auditors for our 2009 and 2008
fiscal years:
|
Type of Fees
|
2009
|
2008
|
||||||
|
Audit
Fees
|
||||||||
|
Stegman
& Company
|
$ | 69,256 | $ | 66,426 | ||||
|
Audit
Related Fees
|
- | - | ||||||
|
Tax
Fees
|
||||||||
|
Stegman
& Company
|
6,000 | 6,000 | ||||||
|
All
Other Fees
|
||||||||
|
Total
Fees
|
$ | 75,256 | $ | 78,426 | ||||
All of
the services performed by Stegman & Company described above were approved in
advance by the Audit Committee.
Pre-Approval
Policies and Procedures
The Audit
Committee is responsible for the appointment, compensation and oversight of the
work of our independent registered public accounting firm. Our Audit
Committee reviewed and pre-approved all audit and non-audit fees for services
provided by Stegman & Company and has determined that the provision of such
services to us during fiscal 2009 and in connection with the audit of our 2009
fiscal year financials is compatible with and did not impair independence. It is
the practice of the Audit Committee to consider and approve in advance all
auditing and non-auditing services provided to us by our independent auditors in
accordance with the applicable requirements of the SEC. Stegman & Company
did not provide us with any services, other than those listed above. Our
independent registered public accounting firm may not be retained to perform the
non-audit services specified in Section 10A(g) of the Exchange Act.
ANNUAL
REPORT ON FORM 10-K AND OTHER SEC FILINGS
Enclosed
herewith is our Annual Report on Form 10-K for the 2009 fiscal year. Additional
copies may be requested in writing. Such requests should be submitted to Mr.
John Conron, Chief Financial Officer, Neuralstem, Inc., 9700 Great Seneca
Highway, Rockville, Maryland 20850, Exhibits to Form 10-K, as amended, will also
be provided upon specific request. The materials will be provided without
charge.
You can
also obtain copies of this Proxy Statement, our Annual Report and exhibits, as
well as other filings we make with the SEC, on the SEC's website at
www.sec.gov.
22
SHAREHOLDER
PROPOSALS
Shareholders
who, in accordance with SEC Rule 14a-8, wish to present proposals for inclusion
in the proxy materials to be distributed in connection with next year’s Annual
Meeting Proxy Statement must submit their proposals so that they are received at
our principal executive offices no later than the close of business on February
16, 2011. As the rules of the SEC make clear, simply submitting a proposal does
not guarantee that it will be included.
In order
to be properly brought before the 2011 Annual Meeting, a shareholder’s notice of
a matter the shareholder wishes to present (other than a matter brought pursuant
to SEC Rule 14a-8), or the person or persons the shareholder wishes to nominate
as a director, must be delivered to our principal executive offices not less
than 90 nor more than 120 days before the first anniversary of the date of our
2010 Annual Meeting. As a result, any notice given by a
shareholder pursuant to these provisions of our Bylaws (and not pursuant to the
SEC Rule 14a-8) must be received no earlier than March 14, 2011, and no later
than April 13, 2011, unless our Annual Meeting date occurs more than 30 days
before or after July 12, 2011. In that case, we must receive proposals not
earlier than the close of business on the 120th day prior to the date of the
annual meeting and not later than the close of business on the later of the 90th
day prior to the date of the annual meeting or, if the first public announcement
of the date of the annual meeting is less than 100 days prior to the date of the
meeting, the 10th day following the day on which we first make a public
announcement of the date of the meeting.
To be in
proper form, a shareholder’s notice must include the specified information
concerning the proposal or nominee as described in our Bylaws. A shareholder who
wishes to submit a proposal or nomination is encouraged to seek independent
counsel about our Bylaw and SEC requirements. We will not consider any proposal
or nomination that does not meet the Bylaw and SEC requirements for submitting a
proposal or nomination. Pursuant to SEC Rule 14a-4(c)(1), if proposals are
received prior to the meeting they may be voted upon with the discretionary
authority granted to the proxies in this proxy statement and attached proxy
card.
Notices
of intention to present proposals at the 2011 Annual Meeting should be addressed
to Corporate Secretary, We reserve the right to reject, rule out of order, or
take other appropriate action with respect to any proposal that does not comply
with these and other applicable requirements.
SOLICITATION
COSTS AND EXPENSES
We will
bear the entire cost of solicitation of proxies, including preparation,
assembly, printing and mailing of this proxy statement, the proxy card and any
additional information furnished to shareholders. Copies of solicitation
materials will be furnished to banks, brokerage houses, fiduciaries and
custodians holding in their names shares of common stock beneficially owned by
others to forward to such beneficial owners. We may reimburse persons
representing beneficial owners of common stock for their costs of forwarding
solicitation materials to such beneficial owners. Original solicitation of
proxies by mail may be supplemented by telephone, telegram or personal
solicitation by our directors, officers or other regular employees. No
additional compensation will be paid to our directors, officers or other regular
employees for such services.
OTHER
MATTERS
We have
not received notice of and do not expect any matters to be presented for a vote
at the meeting, other than the proposals described in this proxy statement. If
you grant a proxy, each of the persons named as proxy holder, I. Richard Garr
and Karl Johe, or their nominees or substitutes, will have the discretion to
vote your shares on any additional matters properly presented for a vote at the
meeting. If for any unforeseen reason, any of our nominees are not available as
a candidate for director, the proxy holder will vote your proxy for such other
candidate or candidates nominated by our Board.
|
By
Order of the Board of Directors
|
||
|
/s/
I. Richard Garr
|
||
|
June
4, 2010
|
Chief
Executive Officer,
|
23
Appendix
A
NEURALSTEM,
INC.
2010 EQUITY
COMPENSATION PLAN
|
1.
|
Purposes of the
Plan. The purposes of this Plan
are:
|
|
•
|
to
attract and retain the best available personnel for positions of
substantial responsibility,
|
|
•
|
to
provide additional incentive to Employees, Directors and Consultants,
and
|
|
•
|
to
promote the success of the Company’s
business.
|
The Plan permits the grant of
Incentive Stock Options, Nonstatutory Stock Options, Restricted Stock,
Restricted Stock Units, Performance Units, Performance Shares and Other Stock
Based Awards.
|
2.
|
Definitions.
As used herein, the following definitions will
apply:
|
(a) “Administrator” means
the Board or any of its Committees as will be administering the Plan, in
accordance with Section 4 of the Plan.
(b) “Applicable Laws”
means the requirements relating to the administration of equity-based awards or
equity compensation plans under U.S. state corporate laws, U.S. federal and
state securities laws, the Code, any stock exchange or quotation system on which
the Common Stock is listed or quoted and the applicable laws of any foreign
country or jurisdiction where Awards are, or will be, granted under the
Plan.
(c) “Award” means,
individually or collectively, a grant under the Plan of Options, Restricted
Stock, Restricted Stock Units, Performance Units, Performance Shares or Other
Stock Based Awards.
(d) “Award Agreement”
means the written or electronic agreement setting forth the terms and provisions
applicable to each Award granted under the Plan. The Award Agreement is subject
to the terms and conditions of the Plan.
(e) “Award Transfer
Program” means any program instituted by the Administrator which would
permit Participants the opportunity to transfer any outstanding Awards to a
financial institution or other person or entity selected by the
Administrator.
(f) “Awarded Stock” means
the Common Stock subject to an Award.
(g) “Board” means the
Board of Directors of the Company.
(h) “Change in Control”
means the occurrence of any of the following events:
(i) Any
“person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act)
becomes the “beneficial owner” (as defined in Rule 13d-3 of the Exchange Act),
directly or indirectly, of securities of the Company representing fifty percent
(50%) or more of the total voting power represented by the Company’s then
outstanding voting securities and within three (3) years from the date of
such acquisition, a merger or consolidation of the Company with or into the
person (or affiliate thereof) holding such beneficial ownership of securities of
the Company is consummated; or
1
(ii) The
consummation of the sale or disposition by the Company of all or substantially
all of the Company’s assets; or
(iii) A
change in the composition of the Board occurring within a two-year period, as a
result of which fewer than a majority of the directors are Incumbent Directors.
“Incumbent Directors” means directors who either (A) are Directors as of
the effective date of the Plan, or (B) are elected, or nominated for
election, to the Board with the affirmative votes of at least a majority of the
Incumbent Directors at the time of such election or nomination (but will not
include an individual whose election or nomination is in connection with an
actual or threatened proxy contest relating to the election of directors to the
Company); or
(iv) The
consummation of a merger or consolidation of the Company with any other
corporation, other than a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity or its parent) at least fifty
percent (50%) of the total voting power represented by the voting
securities of the Company or such surviving entity or its parent outstanding
immediately after such merger or consolidation.
For
purposes of this Section, “affiliate” will mean, with respect to any specified
person, any other person that directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under common control with,
such specified person (“control,” “controlled by” and “under common control
with” will mean the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of a person, whether
through ownership of voting securities, by contact or credit arrangement, as
trustee or executor, or otherwise).
(i) “Code” means the
Internal Revenue Code of 1986, as amended. Any reference to a section of the
Code herein will be a reference to any successor or amended section of the
Code.
(j) “Committee” means a
committee of Directors or other individuals satisfying Applicable Laws appointed
by the Board in accordance with Section 4 of the Plan.
(k) “Common Stock” means
the Common Stock of the Company, or in the case of Performance Units and certain
Other Stock Based Awards, the cash equivalent thereof.
(l) “Company” means
Neuralstem, Inc., a Delaware corporation, or any successor thereto.
(m) “Consultant” means any
person, including an advisor, engaged by the Company or a Parent or Subsidiary
to render services to such entity.
(n) “Director” means a
member of the Board.
(o) “Disability” means
total and permanent disability as defined in Section 22(e)(3) of the Code,
provided that in the case of Awards other than Incentive Stock Options, the
Administrator in its discretion may determine whether a permanent and total
disability exists in accordance with uniform and non-discriminatory standards
adopted by the Administrator from time to time.
(p) “Dividend Equivalent”
means a credit, made at the discretion of the Administrator, to the account of a
Participant in an amount equal to the cash dividends paid on one Share for each
Share represented by an Award held by such Participant.
(q) “Employee” means any
person, including Officers and Directors, employed by the Company or any Parent
or Subsidiary of the Company. Neither service as a Director nor payment of a
director’s fee by the Company will be sufficient to constitute “employment” by
the Company.
2
(r) “Exchange Act” means
the Securities Exchange Act of 1934, as amended.
(s) “Exchange Program”
means a program under which outstanding Awards or awards under prior or
existing equity compensation plans are surrendered or cancelled in exchange for
Awards of the same type, or (ii) Awards of a different type, and/or
cash. Notwithstanding the foregoing, in no event will any exchange
pursuant to an Exchange Program result in the reduction of the exercise price of
an outstanding Award.
(t) “Fair Market Value”
means, as of any date and unless the Administrator determines otherwise, the
value of Common Stock determined as follows:
(i)
If the Common Stock is listed on any established stock
exchange or a national market system, its Fair Market Value will be the closing
sales price for such stock (or the closing bid, if no sales were reported) as
quoted on such exchange or system for the day of determination, as reported
in The Wall Street
Journal or such other source as the Administrator deems
reliable;
(ii) If
the Common Stock is regularly quoted by a recognized securities dealer but
selling prices are not reported, the Fair Market Value of a Share of Common
Stock will be the mean between the high bid and low asked prices for the Common
Stock for the day of determination, as reported in The Wall Street
Journal or such other source as the Administrator deems
reliable; or
(iii) In
the absence of an established market for the Common Stock, the Fair Market Value
will be determined in good faith by the Administrator.
(iv) Notwithstanding
the preceding, for federal, state, and local income tax reporting purposes and
for such other purposes as the Administrator deems appropriate, the Fair Market
Value shall be determined by the Administrator in accordance with uniform and
nondiscriminatory standards adopted by it from time to time.
(u) “Fiscal Year” means
the fiscal year of the Company.
(v) “Incentive Stock
Option” means an Option intended to qualify as an incentive stock option
within the meaning of Section 422 of the Code and the regulations
promulgated thereunder.
(w) “Individual
Objectives” means as to a Participant, the objective and measurable goals
set by a “management by objectives” process and approved by the Committee (in
its discretion).
(x) “Nonstatutory Stock
Option” means an Option that by its terms does not qualify or is not
intended to qualify as an Incentive Stock Option.
(y) “Officer” means a
person who is an officer of the Company within the meaning of Section 16 of
the Exchange Act and the rules and regulations promulgated
thereunder.
(z) “Option” means a stock
option granted pursuant to the Plan.
(aa) “Other Stock Based
Awards” means any other awards not specifically described in the Plan
that are valued in whole or in part by reference to, or are otherwise based on,
Shares and are created by the Administrator pursuant to
Section 11.
(bb) “Outside Director”
means a Director who is not an Employee.
3
(cc) “Parent” means a
“parent corporation,” whether now or hereafter existing, as defined in
Section 424(e) of the Code.
(dd) “Participant” means
the holder of an outstanding Award granted under the Plan.
(ee) “Performance Goals”
means the goal(s) (or combined goal(s)) determined by the Committee (in its
discretion) to be applicable to a Participant with respect to an Award. The
Performance Goals may differ from Participant to Participant and from Award to
Award. Any criteria used may be measured, as applicable, in absolute or relative
terms (including passage of time and/or against another company or companies),
on a per share basis, against the performance of the Company as a whole or any
segment of the Company, and on a pre-tax or after-tax basis.
(ff) “Performance Share”
means an Award granted to a Service Provider pursuant to Section 9 of the
Plan.
(gg)
“Performance
Unit” means an Award granted to a Service Provider pursuant to
Section 9 of the Plan.
(hh) “Period of
Restriction” means the period during which the transfer of Shares of
Restricted Stock are subject to restrictions and therefore, the Shares are
subject to a substantial risk of forfeiture. Such restrictions may be based on
the passage of time, the achievement of target levels of performance, or the
occurrence of other events as determined by the Administrator.
(ii) “Plan” means this 2010
Stock Plan.
(jj) “Restricted Stock”
means shares of Common Stock issued pursuant to a Restricted Stock award under
Section 8, Section 10 or Section 11 of the Plan or issued
pursuant to the early exercise of an Option.
(kk) “Restricted Stock
Unit” means an Award that the Administrator permits to be paid in
installments or on a deferred basis pursuant to Section 10 of the
Plan.
(ll) “Rule 16b-3” means
Rule 16b-3 of the Exchange Act or any successor to Rule 16b-3, as in effect when
discretion is being exercised with respect to the Plan.
(mm)
“Section
16(b)” means Section 16(b) of the Exchange Act.
(nn) “Service Provider”
means an Employee, Director or Consultant.
(oo) “Share” means a share
of the Common Stock, as adjusted in accordance with Section 14 of the
Plan.
(pp) “Subsidiary” means a
“subsidiary corporation”, whether now or hereafter existing, as defined in
Section 424(f) of the Code.
(qq) “Unvested Awards”
means Options or Restricted Stock that (i) were granted to an individual in
connection with such individual’s position as a Service Provider and
(ii) are still subject to vesting or lapsing of Company repurchase rights
or similar restrictions.
|
3.
|
Stock Subject to the
Plan.
|
(a) Stock Subject to the
Plan. Subject to the provisions of Sections 14 of the Plan, the
maximum number of Shares that may be issued under the Plan is 7,000,000. The
Shares may be authorized, but unissued, or reacquired Common Stock. Shares shall
not be deemed to have been issued pursuant to the Plan (i) with respect to
any portion of an Award that is settled in cash, or (ii) to the extent such
Shares are withheld in satisfaction of tax withholding obligations. Upon payment
in Shares pursuant to the exercise of an Award, the number of Shares available
for issuance under the Plan shall be reduced only by the number of Shares
actually issued in such payment. If a Participant pays the exercise price (or
purchase price, if applicable) of an Award through the tender of Shares, the
number of Shares so tendered shall again be available for issuance pursuant to
future Awards under the Plan. Notwithstanding anything in the Plan, or any Award
Agreement to the contrary, Shares attributable to Awards transferred under any
Award Transfer Program shall not be again available for grant under the
Plan.
4
(b) Lapsed Awards. If any
outstanding Award expires or is terminated or canceled without having been
exercised or settled in full, or if Shares acquired pursuant to an Award subject
to forfeiture or repurchase are forfeited or repurchased by the Company, the
Shares allocable to the terminated portion of such Award or such forfeited or
repurchased Shares shall again be available for grant under the
Plan.
|
4.
|
Administration of the
Plan.
|
(a)
Procedure.
(i)
Section 162(m).
To the extent that the Administrator determines it to be desirable and necessary
to qualify Awards granted hereunder as “performance-based compensation” within
the meaning of Section 162(m) of the Code, the Plan will be administered by
a Committee of two or more “outside directors” within the meaning of
Section 162(m) of the Code.
(ii) Rule 16b-3. To the
extent desirable to qualify transactions hereunder as exempt under Rule 16b-3,
the transactions contemplated hereunder will be structured to satisfy the
requirements for exemption under Rule 16b-3.
(iii) Other Administration.
Other than as provided above, the Plan will be administered by (A) the
Board or (B) a Committee, which committee will be constituted to satisfy
Applicable Laws.
(iv)
Delegation of Authority for
Day-to-Day Administration. Except to the extent prohibited by Applicable
Law, the Administrator may delegate to one or more individuals the day-to-day
administration of the Plan and any of the functions assigned to it in this Plan.
Such delegation may be revoked at any time.
(b) Powers of the
Administrator. Subject to the provisions of the Plan, and in the case of
a Committee, subject to the specific duties delegated by the Board to such
Committee, the Administrator will have the authority, in its
discretion:
(i)
to determine the Fair Market
Value;
(ii) to
select the Service Providers to whom Awards may be granted
hereunder;
(iii) to
determine the number of Shares to be covered by each Award granted
hereunder;
(iv) to
approve forms of agreement for use under the Plan;
(v) to
determine the terms and conditions, not inconsistent with the terms of the Plan,
of any Award granted hereunder. Such terms and conditions include, but are not
limited to, the exercise price, the time or times when Awards may be exercised
(which may be based on performance criteria), any vesting acceleration or waiver
of forfeiture or repurchase restrictions, and any restriction or limitation
regarding any Award or the Shares relating thereto, based in each case on such
factors as the Administrator, in its sole discretion, will
determine;
(vi) to
institute an Exchange Program;
5
(vii) to
construe and interpret the terms of the Plan and Awards granted pursuant to the
Plan;
(viii) to
prescribe, amend and rescind rules and regulations relating to the Plan,
including rules and regulations relating to sub-plans established for the
purpose of satisfying applicable foreign laws and/or qualifying for preferred
tax treatment under applicable foreign tax laws;
(ix) to
modify or amend each Award (subject to Section 17(c) and 17(d) of the
Plan), including the discretionary authority to extend the post-termination
exercisability period of Awards longer than is otherwise provided for in the
Plan;
(x) to
allow Participants to satisfy withholding tax obligations by electing to have
the Company withhold from the Shares or cash to be issued upon exercise or
vesting of an Award that number of Shares or cash having a Fair Market Value
equal to the minimum amount required to be withheld. The Fair Market Value of
any Shares to be withheld will be determined on the date that the amount of tax
to be withheld is to be determined. All elections by a Participant to have
Shares or cash withheld for this purpose will be made in such form and under
such conditions as the Administrator may deem necessary or
advisable;
(xi) to
authorize any person to execute on behalf of the Company any instrument required
to effect the grant of an Award previously granted by the
Administrator;
(xii) to
allow a Participant to defer the receipt of the payment of cash or the delivery
of Shares that would otherwise be due to such Participant under an
Award;
(xiii) to
implement an Award Transfer Program;
(xiv) to
determine whether Awards will be settled in Shares, cash or in any combination
thereof;
(xv) to
determine whether Awards will be adjusted for Dividend Equivalents;
(xvi) to
create Other Stock Based Awards for issuance under the Plan;
(xvii) to
establish a program whereby Service Providers designated by the Administrator
can reduce compensation otherwise payable in cash in exchange for Awards under
the Plan;
(xviii) to
impose such restrictions, conditions or limitations as it determines appropriate
as to the timing and manner of any resales by a Participant or other subsequent
transfers by the Participant of any Shares issued as a result of or under an
Award, including without limitation, (A) restrictions under an insider
trading policy, and (B) restrictions as to the use of a specified brokerage
firm for such resales or other transfers; and
(xix) to
make all other determinations deemed necessary or advisable for administering
the Plan.
(c) Effect of Administrator’s
Decision. The Administrator’s decisions, determinations and
interpretations will be final and binding on all Participants and any other
holders of Awards.
5. Eligibility.
Nonstatutory Stock Options, Restricted Stock, Performance Units, Performance
Shares, Restricted Stock Units and Other Stock Based Awards may be granted to
Service Providers. Incentive Stock Options may be granted only to
Employees.
6
6.
Limitations.
(a) ISO $100,000 Rule.
Each Option will be designated in the Award Agreement as either an Incentive
Stock Option or a Nonstatutory Stock Option. However, notwithstanding such
designation, to the extent that the aggregate Fair Market Value of the Shares
with respect to which Incentive Stock Options are exercisable for the first time
by the Participant during any calendar year (under all plans of the Company and
any Parent or Subsidiary) exceeds $100,000, such Options will be treated as
Nonstatutory Stock Options. For purposes of this Section 6(a), Incentive
Stock Options will be taken into account in the order in which they were
granted. The Fair Market Value of the Shares will be determined as of the time
the Option with respect to such Shares is granted.
(b) No Rights as a Service
Provider. Neither the Plan nor any Award shall confer upon a Participant
any right with respect to continuing his or her relationship as a Service
Provider, nor shall they interfere in any way with the right of the Participant
or the right of the Company or its Parent or Subsidiaries to terminate such
relationship at any time, with or without cause.
(c) 162(m) Limitation.
For purposes of qualifying Awards as “performance-based compensation” under
Section 162(m) of the Code, the Administrator, in its discretion, may set
restrictions based upon the achievement of Performance Goals. The Performance
Goals shall be set by the Administrator on or before the latest date permissible
to enable the Award to qualify as “performance-based compensation” under
Section 162(m) of the Code. In granting Awards which are intended to
qualify under Section 162(m) of the Code, the Administrator shall follow
any procedures determined by it from time to time to be necessary or appropriate
to ensure qualification of the Award under Section 162(m) of the Code
(e.g., in determining the Performance Goals).
7. Stock
Options.
(a) Term of Option. The
term of each Option will be stated in the Award Agreement. In the case of an
Incentive Stock Option, the term will be ten (10) years from the date of
grant or such shorter term as may be provided in the Award Agreement. Moreover,
in the case of an Incentive Stock Option granted to a Participant who, at the
time the Incentive Stock Option is granted, owns stock representing more than
ten percent (10%) of the total combined voting power of all classes of
stock of the Company or any Parent or Subsidiary, the term of the Incentive
Stock Option will be five (5) years from the date of grant or such shorter
term as may be provided in the Award Agreement.
(b) Option Exercise Price and
Consideration.
(i) Exercise Price. The
per Share exercise price for the Shares to be issued pursuant to exercise of an
Option will be determined by the Administrator, subject to the
following:
(1) In
the case of an Incentive Stock Option
(A) granted
to an Employee who, at the time the Incentive Stock Option is granted, owns
stock representing more than ten percent (10%) of the voting power of all
classes of stock of the Company or any Parent or Subsidiary, the per Share
exercise price will be no less than 110% of the Fair Market Value per Share on
the date of grant.
(B) granted
to any Employee other than an Employee described in paragraph
(A) immediately above, the per Share exercise price will be no less than
100% of the Fair Market Value per Share on the date of grant.
7
(2)
In the case of a Nonstatutory Stock Option, the per Share exercise
price will be determined by the Administrator. In the case of a Nonstatutory
Stock Option intended to qualify as “performance-based compensation” within the
meaning of Section 162(m) of the Code, the per Share exercise price will be
no less than 100% of the Fair Market Value per Share on the date of
grant.
(3) Notwithstanding
the foregoing, Incentive Stock Options may be granted with a per Share exercise
price of less than 100% of the Fair Market Value per Share on the date of grant
pursuant to a merger or other corporate transaction.
(ii) Waiting Period and Exercise
Dates. At the time an Option is granted, the Administrator will fix the
period within which the Option may be exercised and will determine any
conditions that must be satisfied before the Option may be
exercised.
(c) Form of
Consideration. The Administrator will determine the acceptable form of
consideration for exercising an Option, including the method of payment. In the
case of an Incentive Stock Option, the Administrator will determine the
acceptable form of consideration at the time of grant. Such consideration to the
extent permitted by Applicable Laws may consist entirely of:
(i) cash;
(ii) check;
(iii) promissory
note;
(iv) other
Shares which meet the conditions established by the Administrator to avoid
adverse accounting consequences (as determined by the
Administrator);
(v) consideration
received by the Company under a cashless exercise program implemented by the
Company in connection with the Plan;
(vi) a
reduction in the amount of any Company liability to the Participant, including
any liability attributable to the Participant’s participation in any
Company-sponsored deferred compensation program or arrangement;
(vii) any
combination of the foregoing methods of payment; or
(viii) such
other consideration and method of payment for the issuance of Shares to the
extent permitted by Applicable Laws.
(d) Exercise of
Option.
(i) Procedure for Exercise;
Rights as a Stockholder. Any Option granted hereunder will be exercisable
according to the terms of the Plan and at such times and under such conditions
as determined by the Administrator and set forth in the Award Agreement. An
Option may not be exercised for a fraction of a Share.
An Option
will be deemed exercised when the Company receives: (x) written or
electronic notice of exercise (in accordance with the Award Agreement) from the
person entitled to exercise the Option, and (y) full payment for the Shares
with respect to which the Option is exercised. Full payment may consist of any
consideration and method of payment authorized by the Administrator and
permitted by the Award Agreement and the Plan. Shares issued upon exercise of an
Option will be issued in the name of the Participant or, if requested by the
Participant, in the name of the Participant and his or her spouse. Until the
Shares are issued (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company), no right to vote
or receive dividends or any other rights as a stockholder will exist with
respect to the Awarded Stock, notwithstanding the exercise of the Option. The
Company will issue (or cause to be issued) such Shares promptly after the Option
is exercised. No adjustment will be made for a dividend or other right for which
the record date is prior to the date the Shares are issued, except as provided
in Section 14 of the Plan or the applicable Award Agreement.
8
Exercising
an Option in any manner will decrease the number of Shares thereafter available
for sale under the Option, by the number of Shares as to which the Option is
exercised.
(ii) Termination of Relationship
as a Service Provider. If a Participant ceases to be a Service Provider,
other than upon the Participant’s death or Disability, the Participant may
exercise his or her Option within such period of time as is specified in the
Award Agreement to the extent that the Option is vested on the date of
termination (but in no event later than the expiration of the term of such
Option as set forth in the Award Agreement). In the absence of a specified time
in the Award Agreement, the Option will remain exercisable for three
(3) months following the Participant’s termination. Unless otherwise
provided by the Administrator, if on the date of termination the Participant is
not vested as to his or her entire Option, the Shares covered by the unvested
portion of the Option will revert to the Plan on the date one (1) month
following the Participant’s termination. If after termination the Participant
does not exercise his or her Option within the time specified by the
Administrator, the Option will terminate, and the Shares covered by such Option
will revert to the Plan.
(iii) Disability of
Participant. If a Participant ceases to be a Service Provider as a result
of the Participant’s Disability, the Participant may exercise his or her Option
within such period of time as is specified in the Award Agreement to the extent
the Option is vested on the date of termination (but in no event later than the
expiration of the term of such Option as set forth in the Award Agreement). In
the absence of a specified time in the Award Agreement, the Option will remain
exercisable for twelve (12) months following the Participant’s termination.
Unless otherwise provided by the Administrator, if on the date of termination
the Participant is not vested as to his or her entire Option, the Shares covered
by the unvested portion of the Option will revert to the Plan on the date one
(1) month following the Participant’s termination. If after termination the
Participant does not exercise his or her Option within the time specified
herein, the Option will terminate, and the Shares covered by such Option will
revert to the Plan.
(iv) Death of Participant.
If a Participant dies while a Service Provider, the Option may be exercised
following the Participant’s death within such period of time as is specified in
the Award Agreement to the extent that the Option is vested on the date of death
(but in no event may the option be exercised later than the expiration of the
term of such Option as set forth in the Award Agreement), by the Participant’s
designated beneficiary, provided such beneficiary has been designated prior to
Participant’s death in a form acceptable to the Administrator. If no such
beneficiary has been designated by the Participant, then such Option may be
exercised by the personal representative of the Participant’s estate or by the
person(s) to whom the Option is transferred pursuant to the Participant’s will
or in accordance with the laws of descent and distribution. In the absence of a
specified time in the Award Agreement, the Option will remain exercisable for
twelve (12) months following Participant’s death. Unless otherwise provided
by the Administrator, if at the time of death Participant is not vested as to
his or her entire Option, the Shares covered by the unvested portion of the
Option will immediately revert to the Plan on the date one (1) month
following the Participant’s death. If the Option is not so exercised within the
time specified herein, the Option will terminate, and the Shares covered by such
Option will revert to the Plan.
(e) Buyout Provisions.
The Administrator may at any time offer to buy out for a payment in cash or
Shares an Option previously granted based on such terms and conditions as the
Administrator shall establish and communicate to the Participant at the time
that such offer is made.
9
8. Restricted
Stock.
(a) Grant of Restricted
Stock. Subject to the terms and provisions of the Plan, the
Administrator, at any time and from time to time, may grant Shares of Restricted
Stock to Service Providers in such amounts as the Administrator, in its sole
discretion, will determine. Subject to any restrictions specifically provided
for in this Plan, the Administrator shall have complete discretion to determine
(i) the number of Shares subject to a Restricted Stock award granted to any
Participant, and (ii) the conditions, if any, that must be satisfied, which
typically will be based principally or solely on continued provision of services
but may include a performance-based component, upon which is conditioned the
grant, vesting or issuance of Restricted Stock.
(b) Restricted Stock
Agreement. Each Award of Restricted Stock will be evidenced by an Award
Agreement that will specify the Period of Restriction, the number of Shares
granted, and such other terms and conditions as the Administrator, in its sole
discretion, will determine. Unless the Administrator determines otherwise,
Shares of Restricted Stock will be held by the Company as escrow agent until the
restrictions on such Shares have lapsed.
(c) Transferability.
Except as provided in this Section 8, Shares of Restricted Stock may not be
sold, transferred, pledged, assigned, or otherwise
(d) Other Restrictions.
The Administrator, in its sole discretion, may impose such other restrictions on
Shares of Restricted Stock as it may deem advisable or appropriate.
(e) Removal of
Restrictions. Except as otherwise provided in this Section 8, Shares
of Restricted Stock covered by each Restricted Stock grant made under the Plan
will be released from escrow as soon as practicable after the last day of the
Period of Restriction. The Administrator, in its discretion, may accelerate the
time at which any restrictions will lapse or be removed.
(f) Voting Rights. During
the Period of Restriction, Service Providers holding Shares of Restricted Stock
granted hereunder may exercise full voting rights with respect to those Shares,
unless the Administrator determines otherwise.
(g) Dividends and Other
Distributions. During the Period of Restriction, Service Providers
holding Shares of Restricted Stock will be entitled to receive all dividends and
other distributions paid with respect to such Shares unless otherwise provided
in the Award Agreement. If any such dividends or distributions are paid in
Shares, the Shares will be subject to the same restrictions on transferability
and forfeitability as the Shares of Restricted Stock with respect to which they
were paid.
(h) Return of Restricted Stock
to Company. On the date set forth in the Award Agreement, the Restricted
Stock for which restrictions have not lapsed will revert to the Company and
again will become available for grant under the Plan.
9. Performance Units and
Performance Shares.
(a) Grant of Performance
Units/Shares. Subject to the terms and conditions of the Plan,
Performance Units and Performance Shares may be granted to Service Providers at
any time and from time to time, as will be determined by the Administrator, in
its sole discretion. Subject to any restrictions specifically provided for in
this Plan, the Administrator will have complete discretion in determining the
number of Performance Units and Performance Shares granted to each
Participant.
(b) Value of Performance
Units/Shares. Each Performance Unit will have an initial value that is
established by the Administrator on or before the date of grant. Each
Performance Share will have an initial value equal to the Fair Market Value of a
Share on the date of grant.
10
(c) Performance Objectives and
Other Terms. The Administrator will set performance objectives in its
discretion which, depending on the extent to which they are met, will determine
the number or value of Performance Units/Shares that will be paid out to the
Service Providers. The time period during which the performance objectives must
be met will be called the “Performance Period.” Each Award of Performance Units/
Shares will be evidenced by an Award Agreement that will specify the Performance
Period, and such other terms and conditions as the Administrator, in its sole
discretion, will determine. The Administrator may set performance objectives
based upon the achievement of Company-wide, divisional, or individual goals,
applicable federal or state securities laws, or any other basis determined by
the Administrator in its discretion.
(d) Earning of Performance
Units/Shares. After the applicable Performance Period has ended, the
holder of Performance Units/Shares will be entitled to receive a payout of the
number of Performance Units/Shares earned by the Participant over the
Performance Period, to be determined as a function of the extent to which the
corresponding performance objectives have been achieved. After the grant of a
Performance Unit/Share, the Administrator, in its sole discretion, may reduce or
waive any performance objectives for such Performance Unit/Share.
(e) Form and Timing of Payment
of Performance Units/Shares. Payment of earned Performance Units/Shares
will be made as soon after the expiration of the applicable Performance Period
at the time determined by the Administrator. The Administrator, in its sole
discretion, may pay earned Performance Units/Shares in the form of cash, in
Shares (which have an aggregate Fair Market Value equal to the value of the
earned Performance Units/Shares at the close of the applicable Performance
Period) or in a combination thereof.
(f) Cancellation of Performance
Units/Shares. On the date set forth in the Award Agreement, all unearned
or unvested Performance Units/Shares will be forfeited to the Company, and again
will be available for grant under the Plan.
10. Restricted Stock
Units. Restricted Stock Units shall consist of a Restricted Stock,
Performance Share or Performance Unit Award that the Administrator, in its sole
discretion permits to be paid out in installments or on a deferred basis, in
accordance with rules and procedures established by the
Administrator.
11. Other Stock Based
Awards. Other Stock Based Awards may be granted either alone, in addition
to, or in tandem with, other Awards granted under the Plan and/or cash awards
made outside of the Plan. The Administrator shall have authority to determine
the Service Providers to whom and the time or times at which Other Stock Based
Awards shall be made, the amount of such Other Stock Based Awards, and all other
conditions of the Other Stock Based Awards including any dividend and/or voting
rights.
12. Leaves of Absence.
Unless the Administrator provides otherwise, vesting of Awards granted hereunder
will be suspended during any unpaid leave of absence and will resume on the date
the Participant returns to work on a regular schedule as determined by the
Company; provided, however, that no vesting credit will be awarded for the time
vesting has been suspended during such leave of absence. A Service Provider will
not cease to be an Employee in the case of (i) any leave of absence
approved by the Company or (ii) transfers between locations of the Company
or between the Company, its Parent, or any Subsidiary. For purposes
of Incentive Stock Options, no such leave may exceed ninety (90) days,
unless reemployment upon expiration of such leave is guaranteed by statute or
contract. If reemployment upon expiration of a leave of absence approved by the
Company is not so guaranteed, then three months following the 91
st day of such leave any Incentive Stock Option held by the
Participant will cease to be treated as an Incentive Stock Option and will be
treated for tax purposes as a Nonstatutory Stock Option.
13. Non-Transferability of
Awards. Unless determined otherwise by the Administrator, an Award may
not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any
manner other than by will or by the laws of descent or distribution and may be
exercised, during the lifetime of the Participant, only by the Participant. If
the Administrator makes an Award transferable, such Award will contain such
additional terms and conditions as the Administrator deems
appropriate.
11
14. Adjustments; Dissolution or
Liquidation; Merger or Change in Control.
(a) Adjustments. In the
event that any dividend (excluding an ordinary dividend) or other distribution
(whether in the form of cash, Shares, other securities, or other property),
recapitalization, stock split, reverse stock split, reorganization, merger,
consolidation, split-up, spin-off, combination, repurchase, or exchange of
Shares or other securities of the Company, or other change in the corporate
structure of the Company affecting the Shares occurs, then the Administrator
shall appropriately adjust the number and class of Shares which may be delivered
under the Plan, the 162(m) limits under Section 6(c) of the Plan, and the
number, class, and price of Shares subject to outstanding Awards.
Notwithstanding the preceding, the number of Shares subject to any Award always
shall be a whole number.
(b) Dissolution or
Liquidation. In the event that any dividend (excluding an ordinary
dividend) or other distribution (whether in the form of cash, Shares, other
securities, or other property), recapitalization, stock split, reverse stock
split, reorganization, merger, consolidation, split-up, spin-off, combination,
repurchase, or exchange of Shares or other securities of the Company, or other
change in the corporate structure of the Company affecting the Shares occurs
then the Administrator shall appropriately adjust the number and class of Shares
which may be delivered under the Plan, the 162(m) limits under Section 6(c)
of the Plan, and the number, class, and price of Shares subject to outstanding
Awards. Notwithstanding the preceding, the number of Shares subject to any Award
always shall be a whole number.
(c) Merger or Change in
Control. In the absence of any specific language contained in
the Award Agreement:
(i)
Stock Options. In the
event of a merger or Change in Control, each outstanding Option shall be assumed
or an equivalent option substituted by the successor corporation or a Parent or
Subsidiary of the successor corporation. With respect to Options granted to an
Outside Director that are assumed or substituted for, if immediately prior to or
after the merger or Change in Control the Participant’s status as a Director or
a director of the successor corporation, as applicable, is terminated other than
upon a voluntary resignation by the Participant, then the Participant shall
fully vest in and have the right to exercise such Options as to all of the
Awarded Stock, including Shares as to which it would not otherwise be vested or
exercisable. Unless determined otherwise by the Administrator, in the event that
the successor corporation refuses to assume or substitute for the Option, the
Participant shall fully vest in and have the right to exercise the Option as to
all of the Awarded Stock, including Shares as to which it would not otherwise be
vested or exercisable. If an Option is not assumed or substituted in the event
of a merger or Change in Control, the Administrator shall notify the Participant
in writing or electronically that the Option shall be exercisable, to the extent
vested, for a period of up to fifteen (15) days from the date of such
notice, and the Option shall terminate upon the expiration of such period. For
the purposes of this paragraph, the Option shall be considered assumed if,
following the merger or Change in Control, the option confers the right to
purchase or receive, for each Share of Awarded Stock subject to the Option
immediately prior to the merger or Change in Control, the consideration (whether
stock, cash, or other securities or property) received in the merger or Change
in Control by holders of Common Stock for each Share held on the effective date
of the transaction (and if holders were offered a choice of consideration, the
type of consideration chosen by the holders of a majority of the outstanding
Shares); provided, however, that if such consideration received in the merger or
Change in Control is not solely common stock of the successor corporation or its
Parent, the Administrator may, with the consent of the successor corporation,
provide for the consideration to be received upon the exercise of the Option,
for each Share of Awarded Stock subject to the Option, to be solely common stock
of the successor corporation or its Parent equal in fair market value to the per
share consideration received by holders of Common Stock in the merger or Change
in Control. Notwithstanding anything herein to the contrary, an Award that
vests, is earned or paid-out upon the satisfaction of one or more performance
goals will not be considered assumed if the Company or its successor modifies
any of such performance goals without the Participant’s consent; provided,
however, a modification to such performance goals only to reflect the successor
corporation’s post-merger or post-Change in Control corporate structure will not
be deemed to invalidate an otherwise valid Award assumption.
12
(ii) Restricted Stock,
Performance Shares, Performance Units, Restricted Stock Units and Other Stock
Based Awards. In the event of a merger or Change in Control, each
outstanding Restricted Stock, Performance Share, Performance Unit, Other Stock
Based Award and Restricted Stock Unit awards shall be assumed or an equivalent
Restricted Stock, Performance Share, Performance Unit, Other Stock Based Award
and Restricted Stock Unit award substituted by the successor corporation or a
Parent or Subsidiary of the successor corporation. With respect to Awards
granted to an Outside Director that are assumed or substituted for, if
immediately prior to or after the merger or Change in Control the Participant’s
status as a Director or a director of the successor corporation, as applicable,
is terminated other than upon a voluntary resignation by the Participant, then
the Participant shall fully vest in such Awards, including Shares as to which it
would not otherwise be vested. Unless determined otherwise by the Administrator,
in the event that the successor corporation refuses to assume or substitute for
the Restricted Stock, Performance Share, Performance Unit, Other Stock Based
Award or Restricted Stock Unit award, the Participant shall fully vest in the
Restricted Stock, Performance Share, Performance Unit, Other Stock Based Award
or Restricted Stock Unit including as to Shares which would not otherwise be
vested. For the purposes of this paragraph, a Restricted Stock, Performance
Share, Performance Unit, Other Stock Based Award and Restricted Stock Unit award
shall be considered assumed if, following the merger or Change in Control, the
award confers the right to purchase or receive, for each Share subject to the
Award immediately prior to the merger or Change in Control, the consideration
(whether stock, cash, or other securities or property) received in the merger or
Change in Control by holders of Common Stock for each Share held on the
effective date of the transaction (and if holders were offered a choice of
consideration, the type of consideration chosen by the holders of a majority of
the outstanding Shares); provided, however, that if such consideration received
in the merger or Change in Control is not solely common stock of the successor
corporation or its Parent, the Administrator may, with the consent of the
successor corporation, provide for the consideration to be received, for each
Share and each unit/right to acquire a Share subject to the Award, to be solely
common stock of the successor corporation or its Parent equal in fair market
value to the per share consideration received by holders of Common Stock in the
merger or Change in Control. Notwithstanding anything herein to the contrary, an
Award that vests, is earned or paid-out upon the satisfaction of one or more
performance goals will not be considered assumed if the Company or its successor
modifies any of such performance goals without the Participant’s consent;
provided, however, a modification to such performance goals only to reflect the
successor corporation’s post-merger or post-Change in Control corporate
structure will not be deemed to invalidate an otherwise valid Award
assumption.
15. Date of Grant. The
date of grant of an Award will be, for all purposes, the date on which the
Administrator makes the determination granting such Award, or such other later
date as is determined by the Administrator. Notice of the determination will be
provided to each Participant within a reasonable time after the date of such
grant.
16. Term of Plan. Subject
to Section 21 of the Plan, the Plan will become effective upon its adoption
by the Board. It will continue in effect for a term of ten (10) years
unless terminated earlier under Section 17 of the Plan.
17. Amendment and Termination of
the Plan.
(a) Amendment and
Termination. The Board may at any time amend, alter, suspend or terminate
the Plan.
(b) Stockholder
Approval. The Company will obtain stockholder approval of any Plan
amendment to the extent necessary and desirable to comply with Applicable
Laws.
(c) Effect of Amendment or
Termination. Subject to Section 19 of the Plan, no amendment,
alteration, suspension or termination of the Plan will impair the rights of any
Participant, unless mutually agreed otherwise between the Participant and the
Administrator, which agreement must be in writing and signed by the Participant
and the Company. Termination of the Plan will not affect the Administrator’s
ability to exercise the powers granted to it hereunder with respect to Awards
granted under the Plan prior to the date of such termination.
13
(d) No Repricing.
Notwithstanding any other provision herein or in any agreement evidencing
any Award, in no case (except due to an adjustment contemplated by Section 14 or
any repricing that may be approved by shareholders) shall any action be taken
with respect to the Plan or any Award hereunder that would constitute a
repricing (by amendment, substitution, cancellation and regrant, exchange or
other means) of the per share exercise price of any Award.
18. Conditions Upon Issuance of
Shares.
(a) Legal Compliance.
Shares will not be issued pursuant to the exercise of an Award unless the
exercise of such Award and the issuance and delivery of such Shares will comply
with Applicable Laws and will be further subject to the approval of counsel for
the Company with respect to such compliance.
(b) Investment
Representations. As a condition to the exercise or receipt of an Award,
the Company may require the person exercising or receiving such Award to
represent and warrant at the time of any such exercise or receipt that the
Shares are being purchased only for investment and without any present intention
to sell or distribute such Shares if, in the opinion of counsel for the Company,
such a representation is required.
19. Severability.
Notwithstanding any contrary provision of the Plan or an Award to the contrary,
if any one or more of the provisions (or any part thereof) of this Plan or the
Awards shall be held invalid, illegal or unenforceable in any respect, such
provision shall be modified so as to make it valid, legal and enforceable, and
the validity, legality and enforceability of the remaining provisions (or any
part thereof) of the Plan or Award, as applicable, shall not in any way be
affected or impaired thereby.
20. Inability to Obtain
Authority. The inability of the Company to obtain authority from any
regulatory body having jurisdiction, which authority is deemed by the Company’s
counsel to be necessary to the lawful issuance and sale of any Shares hereunder,
will relieve the Company of any liability in respect of the failure to issue or
sell such Shares as to which such requisite authority will not have been
obtained.
21. Stockholder Approval.
The Plan will be subject to approval by the stockholders of the Company within
twelve (12) months after the date the Plan is adopted. Such stockholder
approval will be obtained in the manner and to the degree required under
Applicable Laws.
22. Nonexclusivity Of The
Plan. Neither the adoption of this Plan by the Board, the submission of
this Plan to the stockholders of the Company for approval, nor any provision of
this Plan will be construed as creating any limitations on the power of the
Board to adopt such additional compensation arrangements as it may deem
desirable, including, without limitation, the granting of stock options and
other equity awards otherwise than under this Plan, and such arrangements may be
either generally applicable or applicable only in specific cases.
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TABLE OF CONTENTS