SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant
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x
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Filed by a Party other than the Registrant
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Check the appropriate box:
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to § 240.14a-12
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Axovant Sciences Ltd.
(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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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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Title of each class of securities to which
transaction applies:
Aggregate number of securities to which transaction
applies:
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):
Proposed maximum aggregate value of transaction:
Total fee paid:
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Fee
paid previously with preliminary materials.
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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.
Amount Previously Paid:
Form, Schedule or Registration Statement No.:
Filing Party:
Date Filed:
Suite 1, 3rd Floor
11-12 St. James’s Square
London
SW1Y 4LB
United Kingdom
NOTICE OF ANNUAL GENERAL MEETING OF SHAREHOLDERS
To Be Held On August 18, 2017
Dear Shareholder:
You are cordially invited
to attend the Axovant Sciences Ltd. 2017 Annual General Meeting of Shareholders, or the Annual Meeting, which will be held at the
Offices of Cooley (UK) LLP, Dashwood, 69 Old Broad Street, London, EC2M 1QS, United Kingdom on Friday, August 18, 2017 at 9:00
a.m. local time for the following purposes:
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1.
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To elect the Board of Directors’ three nominees for director, David T. Hung, M.D., Atul Pande,
M.D. and Vivek Ramaswamy, to serve as Class II Directors until our 2020 Annual General Meeting of Shareholders and until their
successors are duly elected.
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2.
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To approve our Amended and Restated 2015 Equity Incentive Plan to increase the aggregate number
of common shares authorized for issuance thereunder by 4,000,000 common shares and make certain changes to share limits and share
increase provisions.
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3.
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To ratify the selection by the Audit Committee of the Board of Directors of Ernst & Young LLP
as our independent registered public accounting firm for our fiscal year ending March 31, 2018, to appoint Ernst & Young LLP
as our auditor for statutory purposes under the Bermuda Companies Act 1981, as amended, for our fiscal year ending March 31,
2018 and to authorize the Board of Directors, through the Audit Committee, to set the remuneration for Ernst & Young LLP as
our auditor for our fiscal year ending March 31, 2018.
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4.
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To conduct any other business properly brought before the Annual Meeting.
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We will also lay before
the Annual Meeting our audited financial statements as of and for our fiscal year ended March 31, 2017, pursuant to the provisions
of the Bermuda Companies Act 1981, as amended, and our Bye-laws.
These items of business
are more fully described in the Proxy Statement accompanying this Notice. The record date for the Annual Meeting is Friday, July
14, 2017. Only shareholders of record at the close of business on that date are entitled to notice of and may vote at the Annual
Meeting or any adjournment thereof.
Important Notice Regarding the Availability of Proxy Materials for the Shareholders’ Meeting to Be Held on
Friday, August 18, 2017 at 9:00 a.m. Local Time
at the Offices of Cooley (UK) LLP, Dashwood, 69 Old Broad Street, London, EC2M 1QS, United Kingdom.
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The Proxy Statement and Annual Report to Shareholders
are available at www.axovant.com/investors/proxy-materials.
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By Order of the Board of Directors
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David T. Hung, M.D.
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Principal Executive Officer
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London, United Kingdom
July 21, 2017
You are cordially invited to attend the Annual Meeting in person. Whether or not you expect to attend the Annual Meeting, please ensure your representation at the Annual Meeting by completing, signing and dating the enclosed proxy card and returning it in the accompanying postage-paid envelope. Even if you have voted by proxy, you may still vote in person if you attend the Annual Meeting. Please note, however, that if your shares are held of record by a broker, bank or other nominee and you wish to vote at the Annual Meeting, you must obtain a proxy issued in your name from that record holder.
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Suite 1, 3rd Floor
11-12 St. James’s Square
London
SW1Y 4LB
United Kingdom
PROXY STATEMENT
FOR THE 2017 ANNUAL GENERAL MEETING OF SHAREHOLDERS
To Be Held On August 18, 2017
QUESTIONS AND ANSWERS ABOUT THESE PROXY
MATERIALS AND VOTING
Why am I receiving these materials?
We have sent you these proxy materials because
the Board of Directors, or the Board, of Axovant Sciences Ltd., or Axovant, is soliciting your proxy to vote at the 2017 Annual
General Meeting of Shareholders, or the Annual Meeting, including at any adjournments or postponements of the Annual Meeting. You
are invited to attend the Annual Meeting to vote on the proposals described in this proxy statement. However, you do not need to
attend the Annual Meeting to vote your shares. Instead, you may simply complete, sign and return the enclosed proxy card.
We intend to mail these proxy materials on
or about July 21, 2017 to all shareholders of record entitled to vote at the Annual Meeting.
Where and when will the Annual Meeting be held?
The Annual Meeting will be held on Friday,
August 18, 2017 at 9:00 a.m. local time at the Offices of Cooley (UK) LLP, Dashwood, 69 Old Broad Street, London, EC2M 1QS, United
Kingdom. Directions to the Annual Meeting may be found by visiting https://www.cooley.com/about/offices/london. Information on
how to vote in person at the Annual Meeting is discussed below.
Who can vote at the Annual Meeting?
Only shareholders of record at the close of
business on Friday, July 14, 2017 will be entitled to vote at the Annual Meeting. On this record date, there were 107,487,925 common
shares outstanding and entitled to vote.
Shareholder of Record: Common Shares Registered
in Your Name
If, on Friday, July 14, 2017, your common shares
were registered directly in your name with our transfer agent, American Stock Transfer & Trust Company, LLC, then you are a
shareholder of record. As a shareholder of record, you may vote in person at the Annual Meeting or vote by proxy. Whether or not
you plan to attend the Annual Meeting, we urge you to fill out and return the enclosed proxy card to ensure your vote is counted.
Beneficial Owner: Common Shares Registered
in the Name of a Broker or Bank
If, on Friday, July 14, 2017,
your common
shares were held, not in your name, but rather in an account at a brokerage firm, bank, dealer or other similar organization, then
you are the beneficial owner of shares held in “street name” and these proxy materials are
being forwarded to
you by that organization. The organization holding your account is considered to be the shareholder of record for purposes of voting
at the Annual Meeting. As a beneficial owner, you have the right to direct your broker or other agent regarding how to vote the
shares in your account. You are also invited to attend the Annual Meeting. However, since you are not the shareholder of record,
you may not vote your shares in person at the meeting unless you request and obtain a valid proxy from your broker or other agent.
What am I voting on?
There are three matters scheduled for a vote:
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Election of the Board’s three nominees for director, David T. Hung, M.D., Atul Pande, M.D.
and Vivek Ramaswamy, to serve as Class II Directors until our 2020 Annual General Meeting of Shareholders and until their successors
are duly elected.
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Approval of our Amended and Restated 2015 Equity Incentive Plan to increase the aggregate number
of common shares authorized for issuance thereunder by 4,000,000 common shares and make certain changes to share limits and share
increase provisions.
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Ratification of the selection by the Audit Committee of the Board of Ernst & Young LLP as our
independent registered public accounting firm for our fiscal year ending March 31, 2018, the appointment of Ernst & Young LLP
as our auditor for statutory purposes under the Bermuda Companies Act 1981, as amended, or the Companies Act, for our fiscal year
ending March 31, 2018 and the authorization for the Board, through the Audit Committee, to set the remuneration for Ernst &
Young LLP as our auditor for our fiscal year ending March 31, 2018.
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In addition to the three matters scheduled
for a vote, in accordance with the Companies Act and our Bye-law 78, our audited financial statements as of and for our fiscal
year ended March 31, 2017 will be laid before the Annual Meeting. These financial statements were audited by Ernst & Young
LLP. The Audit Committee of the Board has approved these financial statements. There is no requirement under Bermuda law that these
statements be approved by shareholders and no such approval will be sought at the Annual Meeting. Copies of these proxy materials
have been provided to Ernst & Young LLP, our auditor for our fiscal year ended March 31, 2017, as required by the Companies
Act.
What if another matter is properly brought before the Annual
Meeting?
The Board knows of no other matters that will
be presented for consideration at the Annual Meeting. If any other matters are properly brought before the meeting, it is the intention
of the persons named in the accompanying proxy to vote on those matters in accordance with their best judgment.
How do I vote?
You may vote “For” all three of
the nominees to the Board, you may vote “Against” any nominee(s) you specify or you may abstain from voting. For the
other matters to be voted on, you may vote “For” or “Against” or abstain from voting.
The procedures for voting are described below.
Shareholder of Record: Common Shares
Registered in Your Name
If you are a shareholder of record, you may
vote in person at the Annual Meeting, or you may vote by proxy using the enclosed proxy card. Whether or not you plan to attend
the Annual Meeting, we urge you to vote by proxy to ensure your vote is counted. You may still attend the Annual Meeting and vote
in person, even if you have already voted by proxy.
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To vote in person, come to the Annual Meeting and we will give you a ballot when you arrive.
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To vote using the enclosed proxy card, simply complete, sign and date the enclosed proxy card and return it promptly in the
accompanying postage-paid envelope. If you return your signed proxy card to us before the Annual Meeting, we will vote your shares
as you direct.
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Beneficial Owner: Common Shares Registered
in the Name of Broker or Bank
If you are a beneficial owner of shares registered
in the name of your broker, bank, or other agent, you should have received a voting instruction form with these proxy materials
from that organization rather than from Axovant. Simply complete and mail the voting instruction form to ensure that your vote
is counted. Alternatively, you may vote by telephone or over the internet as instructed by your broker or bank. To vote in person
at the Annual Meeting, you must obtain a valid proxy from your broker, bank or other agent. Follow the instructions from your broker
or bank included with these proxy materials, or contact your broker or bank to request a proxy form.
Internet proxy voting may be provided to allow you to vote your shares online, with procedures designed to ensure the authenticity and correctness of your proxy vote instructions. However, please be aware that you must bear any costs associated with your internet access, such as usage charges from internet access providers and telephone companies.
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Will I be entitled to vote all of my shares at the Annual Meeting?
If your shares are treated as “Controlled
Shares” (as described below) of any “United States Person” (as defined under section 957(c) of the Internal Revenue
Code of 1986, as amended, or the Code) and such United States Person is treated as owning 9.5% or more of the voting power of all
issued shares of Axovant (in the absence of the adjustments to voting rights provided in our Bye-laws and as described below) or
otherwise treated as a “United States Shareholder” (as defined under section 951 of the Code) (such United States Person,
other than a “9.5% Excluded U.S. Member” as defined in our Bye-laws, is referred to as a 9.5% U.S. Member), then the
voting rights of your shares that are treated as Controlled Shares of such 9.5% U.S. Member will be reduced, in the aggregate with
other Controlled Shares of such 9.5% U.S. Member, to the extent necessary for Controlled Shares of such 9.5% U.S. Member to constitute
less than 9.5% of the voting power of all issued and outstanding shares, under a formula specified in our Bye-laws. The formula
is applied repeatedly until there is no 9.5% U.S. Member.
In addition, the Board may limit a shareholder’s
voting rights when it deems it appropriate to do so to (1) avoid the existence of any 9.5% U.S. Member; or (2) avoid adverse tax,
legal or regulatory consequences to us, any of our subsidiaries or any direct or indirect shareholder or its affiliates. As provided
in our Bye-laws, “Controlled Shares” of a United States Person refer to all shares that such United States Person is
treated as owning directly, indirectly or constructively (within the meaning of section 958 of the Code). The amount of any reduction
of votes that occurs by operation of the above limitations will generally be reallocated proportionately among our other shareholders
whose shares are not Controlled Shares of a 9.5% U.S. Member so long as such reallocation does not cause any person to become a
9.5% U.S. Member. The applicability of the voting power reduction provisions to any particular shareholder depends on facts and
circumstances that may be known only to the shareholder or related persons. Accordingly, we request that any holder of shares with
reason to believe that it may be a 9.5% U.S. Member in the absence of the adjustments to voting rights provided in our Bye-laws,
contact us promptly so that we may determine whether the voting power of such holder’s shares has been or should be reduced.
By submitting a proxy, a holder of shares will
be deemed to have confirmed that, to its knowledge, it is not, and is not acting on behalf of, a 9.5% U.S. Member. The Board is
empowered to require any shareholder to provide information as to that shareholder’s beneficial ownership of shares, the
names of persons having beneficial ownership of the shareholder’s shares, relationships with other shareholders or any other
facts the Board may consider relevant to the determination of the number of shares attributable to any person. The Board may disregard
the votes attached to shares of any holder who fails to respond to such a request or who, in its judgment, submits incomplete or
inaccurate information. The Board retains certain discretion to make such final adjustments that it considers fair and reasonable
in all the circumstances as to the aggregate number of votes attaching to the shares of any shareholder to ensure that no person
will be a 9.5% U.S. Member at any time.
How many votes do I have?
Except as just described, on each matter to
be voted upon, you have one vote for each common share you owned as of the close of business on Friday, July 14, 2017.
What happens if I do not vote?
Shareholder of Record: Shares Registered
in Your Name
If you are a shareholder of record and do not
vote in person at the Annual Meeting or do not complete and deliver your proxy card, your shares will not be voted.
Beneficial Owner: Shares Registered
in the Name of Broker or Bank
If you are a beneficial owner and do not instruct
your broker, bank, or other agent how to vote your shares, the question of whether your broker or nominee will still be able to
vote your shares depends on whether the New York Stock Exchange, or the NYSE, deems the particular proposal to be a “routine”
matter. Brokers and nominees can use their discretion to vote “uninstructed” shares with respect to matters that are
considered to be “routine,” but not with respect to “non-routine” matters. Under the rules and interpretations
of the NYSE, “non-routine” matters are matters that may substantially affect the rights or privileges of shareholders,
such as mergers, shareholder proposals, elections of directors (even if not contested) and certain corporate governance proposals
(even if management-supported). Accordingly, your broker or nominee may not vote your shares on Proposals 1 or 2 without your instructions,
but may vote your shares on Proposal 3, even in the absence of your instruction.
What if I return a proxy card or otherwise vote but do not
make specific choices?
If you return a signed and dated proxy card
or otherwise vote without marking voting selections, your shares will be voted, as applicable:
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“For” the election of all three nominees for director;
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“For” the approval of our Amended and Restated 2015 Equity Incentive Plan to increase
the aggregate number of common shares authorized for issuance thereunder by 4,000,000 common shares and make certain changes to
share limits and share increase provisions; and
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“For” the ratification of the selection of Ernst & Young LLP as our independent
registered public accounting firm, appointment of Ernst & Young LLP as our auditor for our fiscal year ending March 31, 2018
and authorization for the Board, through the Audit Committee, to set the remuneration for Ernst & Young LLP.
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If any other matter is properly presented at
the meeting, your proxyholder (one of the individuals named on your proxy card) will vote your shares using his or her best judgment.
Who is paying for this proxy solicitation?
We will pay for the entire cost of soliciting
proxies. In addition to these proxy materials, our directors and employees may also solicit proxies in person, by telephone or
by other means of communication. Directors and employees will not be paid any additional compensation for soliciting proxies. We
may also reimburse brokerage firms, banks and other agents for the cost of forwarding proxy materials to beneficial owners.
What does it mean if I receive more than one set of proxy materials?
If you receive more than one set of proxy materials,
your shares may be registered in more than one name or in different accounts. Please follow the voting instructions on the proxy
card in each set of proxy materials to ensure that all of your shares are voted.
Can I change my vote after submitting my proxy?
Shareholder of Record: Shares Registered
in Your Name
Yes. You can revoke your proxy at any time
before the final vote at the Annual Meeting. If you are the record holder of your shares, you may revoke your proxy in any one
of the following ways:
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You may submit another properly completed proxy card with a later date.
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You may send a timely written notice that you are revoking your proxy to Axovant Sciences Ltd.,
Attn: Corporate Secretary, at Clarendon House, 2 Church Street, Hamilton HM 11, Bermuda.
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You may attend the Annual Meeting and vote in person. Simply attending the Annual Meeting will
not, by itself, revoke your proxy.
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Your most current proxy card is the one that
is counted.
Beneficial Owner: Shares Registered
in the Name of Broker or Bank
If your shares are held by your broker or bank
as a nominee or agent, you should follow the instructions provided by your broker or bank.
When are shareholder proposals and director nominations due
for next year’s Annual General Meeting of Shareholders?
To be considered for inclusion in next year’s
proxy materials, your proposal must be submitted in writing by Friday, March 23, 2018 to Axovant Sciences Ltd., Attn: Corporate
Secretary, at Clarendon House, 2 Church Street, Hamilton HM 11, Bermuda. If
you wish to nominate an individual for election
at, or bring business other than through a shareholder proposal before, the 2018 Annual General Meeting of Shareholders, you
must deliver your notice to Axovant’s Corporate Secretary no earlier than April 20, 2018 and no later than May 20, 2018.
Your notice to the Corporate Secretary must set forth the information specified in our Bye-laws. For more information, and for
the detailed requirements, please refer to the Bye-laws filed as Exhibit 3.4 to our Registration Statement on Form S-1/A (File
No. 333-204073), filed with the U.S. Securities and Exchange Commission, or the SEC, on June 1, 2015.
How are votes counted?
Votes will be counted in the first instance
on a show of hands. If a poll is demanded, however, in accordance with the Bye-laws, every person present at the Annual Meeting
will have one vote for each common share of which such person is the holder or for which such person holds a proxy. A poll vote
will be taken by ballot if so demanded in accordance with our Bye-laws. With respect to Proposals 1 and 2, votes “For”
and “Against” and abstentions and broker non-votes will be separately counted. With respect to Proposal 3, votes “For”
and “Against” and abstentions will be separately counted.
What are “broker non-votes”?
As discussed above, when a beneficial owner
of shares held in “street name” does not give instructions to the broker or nominee holding the shares as to how to
vote on matters deemed by the NYSE to be “non-routine” (
e.g.
, election of directors), the broker or nominee
cannot vote the shares. These unvoted shares are counted as “broker non-votes.”
How many votes are needed to approve each proposal?
All proposals will be decided by the affirmative
votes of a majority of the votes cast in accordance with our Bye-laws. Only votes “For” or “Against” will
affect the outcome. Abstentions and broker non-votes are not considered to be votes cast and therefore will have no effect.
What is the quorum requirement?
A quorum of shareholders is necessary to hold
a valid meeting. A quorum will be present if two or more persons are present at the start of the Annual Meeting and represent in
person or by proxy in excess of 50% of our total issued voting shares. On the record date, there were 107,487,925 common shares
outstanding and entitled to vote. Therefore, the holders of 53,743,963 common shares must be present in person or represented by
proxy at the Annual Meeting to have a quorum.
Your shares will be counted towards the quorum
only if you submit a valid proxy (or one is submitted on your behalf by your broker, bank or other nominee) or if you vote in person
at the Annual Meeting. Abstentions and broker non-votes will be counted towards the quorum requirement. If, within half an hour
from the time appointed for the Annual Meeting, a quorum is not present, then the meeting will stand adjourned to the same day
one week later, at the same time and place or to such other day, time or place as the Corporate Secretary may determine. Unless
the meeting is adjourned to a specific date, place and time announced at the Annual Meeting being adjourned, fresh notice of the
date, place and time for the resumption of the adjourned meeting will be given to each shareholder entitled to attend and vote
thereat in accordance with our Bye-laws.
How can I find out the results of the voting at the Annual
Meeting?
Preliminary voting results will be announced
at the Annual Meeting. In addition, final voting results will be published in a Current Report on Form 8-K that we expect to file
within four business days after the Annual Meeting. If final voting results are not available to us in time to file a Current Report
on Form 8-K within four business days after the Annual Meeting, we intend to file a Current Report on Form 8-K to publish preliminary
results and, within four business days after the final results are known to us, file an additional Current Report on Form 8-K to
publish the final results.
What proxy materials are available on the internet?
The proxy statement, Annual Report on Form
10-K and annual report to
shareholders are available at www.axovant.com/investors/proxy-materials.
Proposal
1
Election
Of Directors
The Board presently has eight members and is
divided into three classes. Each class consists, as nearly as possible, of one-third of the total number of directors, and each
class has a three-year term. We have three Class II directors, whose terms of office expire in 2017; two Class III directors, whose
terms of office expire in 2018; and three Class I directors, whose terms of office expire in 2019. Vacancies on the Board may be
filled by the Board or by the shareholders in a general meeting. A director elected to fill a vacancy in a class, including vacancies
created by an increase in the number of directors, will serve for the remainder of the full term of that class.
Each of the nominees listed below is a current
director who was previously elected by our shareholders, other than David T. Hung, M.D. In April 2017, Dr. Hung was appointed to
the Board in connection with his appointment to serve as our Principal Executive Officer. If elected at the Annual Meeting, each
of these nominees would serve until the 2020 Annual General Meeting of Shareholders and until his successor has been duly elected,
or, if sooner, until the director’s death, resignation or removal.
To be elected, a nominee must receive “For”
votes representing a majority of the votes cast on that nominee’s election. As this is an uncontested election, any nominee
who receives a greater number of votes “Against” than votes “For” such election will not be elected to
the Board, and the position on the Board that would have been filled by that director nominee will become vacant.
Shares represented by executed proxies will
be voted, if authority to do so is not withheld, for the election of the three nominees named below. If any nominee becomes unavailable
for election as a result of an unexpected occurrence, shares that would have been voted for that nominee will instead be voted
for the election of a substitute nominee proposed by Axovant. Each person nominated for election has agreed to serve if elected.
Axovant’s management has no reason to believe that any nominee will be unable to serve.
The following table identifies the nominees
for election and the continuing members of the Board, as well as any position they hold at Axovant, any committee membership and
their ages as of June 30, 2017:
Name
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Age
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Director Since
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Position
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Audit
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Compensation
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Nominating
and
Corporate
Governance
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Kathryn E. Falberg
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56
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2017
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Director
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ü
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David T. Hung, M.D.
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60
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2017
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Director and Principal Executive Officer
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Patrick Machado
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53
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2017
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Director
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ü
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ü
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Berndt Modig
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58
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2015
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Director
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ü
*
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ü
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Ilan Oren
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33
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2015
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Director
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ü
*
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ü
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Atul Pande, M.D.
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62
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2015
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Director
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ü
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ü
*
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Vivek Ramaswamy
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31
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2015
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Director
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W. Anthony Vernon
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61
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2017
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Director
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ü
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ü
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Following is a brief biography of each nominee
for election and each director whose term will continue after the Annual Meeting.
Nominees for Election for a Three-Year Term Expiring at the
2020 Annual General Meeting of Shareholders
David T. Hung, M.D.
Dr. Hung has served as a member of the Board,
as our Principal Executive Officer and as the Chief Executive Officer of our wholly owned subsidiary, Axovant Sciences, Inc. since
April 2017. Dr. Hung was a co-founder of Medivation, Inc., a biopharmaceutical company, and served as its President and Chief Executive
Officer and as a member of its board of directors, from December 2004 until its acquisition by Pfizer Inc., a biopharmaceutical
company, in September 2016. From 1998 until 2001, Dr. Hung was employed by ProDuct Health, Inc., a medical device company, as Chief
Scientific Officer and then as
President and Chief Executive Officer. Dr.
Hung served as a consultant to Cytyc Corporation from 2001 until 2002 to assist with transitional matters related to Cytyc Corporation’s
acquisition of ProDuct Health, Inc. Dr. Hung served as a director of Opexa Therapeutics, Inc., a biopharmaceutical company, from
May 2006 to October 2011. Dr. Hung received his A.B. in Biology from Harvard College and his M.D. from the University of California,
San Francisco, School of Medicine. We believe that Dr. Hung’s experience as Chief Executive Officer and director of Medivation,
Inc. qualify him to serve on the Board.
Atul Pande, M.D.
Dr. Pande has served as a member of the Board
since March 2015. Since February 2017, Dr. Pande has served as Chief Medical Officer of PureTech Health PLC, a biopharmaceutical
company, since April 2014, Dr. Pande has served as President of Verity BioConsulting LLC, a drug development consulting firm, and
since December 2014 has served as Chief Medical Officer of Tal Medical, Inc., a clinical-stage medical device company. From 2007
to April 2014, Dr. Pande was Senior Vice President and Senior Advisor, Pharmaceutical R&D at GlaxoSmithKline plc, a
pharmaceutical
company
. He has also held senior roles at Pfizer Inc., Parke-Davis/Warner-Lambert, a subsidiary of Pfizer Inc. and Lilly
Research Laboratories, a division of Eli Lilly & Co., each of which are
pharmaceutical
companies
. Dr. Pande is also a non-executive board member of Autifony Therapeutics Limited, a biotechnology company, and
Karuna Pharmaceuticals Inc., a pharmaceutical company, and serves on the Scientific Advisory Boards of Cennerv Pharma PTE LTD,
a drug discovery and development company, and Centrexion Corporation, a company focused on advancing the treatment of chronic pain.
Dr. Pande received his MBBS (Bachelor of Medicine, Bachelor of Surgery) from the University of Lucknow, India and completed his
research fellowship training in psychiatry at the University of Michigan Medical School and his postgraduate specialty training
and psychiatry residency program at Western University. We believe that Dr. Pande’s medical background and significant knowledge
of the life sciences industry qualify him to serve on the Board.
Vivek Ramaswamy
Mr. Ramaswamy has served as a member of the
Board since March 2015. From March 2015 to April 2017, Mr. Ramaswamy served as our Principal Executive Officer and as the Chief
Executive Officer of our wholly owned subsidiary, Axovant Sciences, Inc. Mr. Ramaswamy is the founder, and currently serves as
President and Chief Executive Officer, of Roivant Sciences, Inc., a drug development and commercialization company that is wholly
owned by Roivant Sciences Ltd., our majority shareholder, a position he has held since May 2014. From August 2007 to May 2014,
Mr. Ramaswamy was a member of the investment team at QVT Financial LP. In addition, in 2007, Mr. Ramaswamy co-founded and served
as the President of Campus Venture Network, Inc., a technology company that was acquired in 2009. Mr. Ramaswamy currently serves
as a director of Myovant Sciences Ltd.,
a biopharmaceutical company
, and Roivant Sciences
Ltd., as well as chairman of the board of directors of Arbutus Biopharma Corporation, a biopharmaceutical company. Mr. Ramaswamy
received his A.B. in Biology from Harvard College and his J.D. from Yale Law School. We believe that Mr. Ramaswamy’s experience
as Chief Executive Officer of Roivant Sciences, Inc. and Axovant Sciences, Inc. and as a director of public biopharmaceutical companies,
as well as his experience as a life sciences investor, qualify him to serve on the Board.
The Board Of Directors Recommends
A Vote “
For
” Each Named Nominee.
Directors Continuing in Office Until the 2018 Annual General
Meeting of Shareholders
Patrick Machado
Mr. Machado has served as a member of the Board
since June 2017. Mr. Machado is a co-founder of Medivation, Inc., a biopharmaceutical company, and served on its board of
directors from April 2014 to September 2016, when Medivation, Inc. was acquired by Pfizer Inc. Prior to his retirement in April
2014, Mr. Machado served as Medivation’s Chief Financial Officer since its inception in September 2003 and as its
Chief Business Officer since December 2009. From 1998 until 2001, Mr. Machado was employed by ProDuct Health, Inc., a
medical device company, as Vice President, Chief Financial Officer and General Counsel from 1998 to 2000, and as Senior Vice President
and Chief Financial Officer from 2000 to 2001. From 2001 until 2002, Mr. Machado served as a consultant to Cytyc Corporation,
a medical device company, to assist with transitional matters related to Cytyc Corporation’s acquisition of ProDuct Health,
Inc. Mr. Machado currently serves as a director of Chimerix, Inc., SCYNEXIS, Inc., Inotek Pharmaceuticals Corporation,
Adverum Biotechnologies, Inc., Armaron Bio Pty Ltd. and Roivant Sciences Ltd. all of which are biopharmaceutical companies. Mr. Machado received
his B.A. in German and his B.S. in Economics from Santa Clara University and his J.D. from Harvard Law School. We believe that
Mr. Machado’s expertise and deep experience in business development and the pharmaceutical industry qualify him to serve
on the Board.
Berndt Modig
Mr. Modig has served as a member of the Board
since March 2015. Since March 2016, Mr. Modig has served as Chief Executive Officer of Pharvaris B.V., a pre-clinical stage biotechnology
company focusing on rare diseases. He served as Chief Financial Officer of Prosensa Holding N.V., a pharmaceutical company, from
March 2010 until its acquisition by BioMarin Pharmaceutical Inc. in January 2015. From October 2003 to November 2008, Mr.
Modig was Chief Financial Officer at Jerini AG, a pharmaceutical company, where he directed private financing rounds, its initial
public offering in 2005, and its acquisition by Shire plc in 2008. Before that, Mr. Modig served as Chief Financial Officer at
Surplex AG, a reseller of used industrial equipment, from 2001 to 2003, and as Finance Director Europe of U.S.-based Hayward Industrial
Products Inc., a thermoplastic valve manufacturer, from 1999 to 2001. In previous positions, Mr. Modig was a partner in the Brussels-based
private equity firm Agra Industria from 1994 to 1999 and a Senior Manager in the Financial Services Industry Group of Price Waterhouse
LLP in New York from 1991 to 1994. Mr. Modig currently serves as a director and member of the audit committee of Affimed N.V. and
as a director and the chair of the audit committee of Auris Medical Holding AG, both pharmaceutical companies. He also serves on
the supervisory board of Kiadis Pharma N.V., a biopharmaceutical company. He previously served as a director of Mobile Loyalty
plc, an online and mobile advertising service provider. Mr. Modig received his bachelor’s degree in business administration,
economics and German from the University of Lund, Sweden and his M.B.A. from INSEAD, Fontainebleau, France and is a Certified Public
Accountant (inactive). We believe that Mr. Modig’s extensive international experience in finance and operations, private
equity, and mergers and acquisitions qualifies him to serve on the Board.
Directors Continuing in Office Until the 2019 Annual General
Meeting of Shareholders
Kathryn E. Falberg
Ms. Falberg has been a member of the Board
since April 2017. Previously, Ms. Falberg served as Executive Vice President and Chief Financial Officer of Jazz Pharmaceuticals
plc, a multi-national specialty biopharmaceutical company, from March 2012 to March 2014 after serving as Senior Vice President
and Chief Financial Officer since December 2009. Her responsibilities at Jazz Pharmaceuticals plc included strategy, corporate
development, corporate communications and information technology. From 2001 through 2009, Ms. Falberg served as a corporate
director and audit committee chair for several companies. From 1995 to 2001, Ms. Falberg was with Amgen Inc., a biotechnology
company, where she served as Senior Vice President, Finance and Strategy and Chief Financial Officer and prior to that as Vice
President, Corporate Controller and Chief Accounting Officer, and Vice President, Treasurer. Ms. Falberg also serves
as a director of the biopharmaceutical companies Aimmune Therapeutics, Inc. and Urogen Pharma Ltd., and The Trade Desk, Inc., a
technology company. Previously, Ms. Falberg served on the boards of directors of Medivation, Inc., Halozyme Therapeutics,
Inc., aTyr Pharma, Inc. and BioMarin Pharmaceutical Inc., each of which are
pharmaceutical
companies.
Ms. Falberg received her B.A. in Economics and her M.B.A. in Finance from the University of California,
Los Angeles and is a Certified Public Accountant (inactive). We believe that Ms. Falberg’s extensive leadership and board
experience in the biopharmaceutical industry qualify her to serve on the Board.
Ilan Oren
Mr. Oren has served as a member of the Board
since March 2015. Since September 2011, Mr. Oren has served as Vice President, Business Development at Dexcel Pharma Technologies
Ltd., an international pharmaceutical company involved in the development, manufacture and commercialization of pharmaceuticals.
Mr. Oren currently serves as a director of Roivant Sciences Ltd. and he previously served as a director of Cynapsus Therapeutics
Inc., a specialty pharmaceutical company, until its acquisition in 2016. Mr. Oren received his B.A. in Economics from Harvard College.
We believe that Mr. Oren’s extensive leadership experience and knowledge of the life sciences industry qualify him to serve
on the Board.
W. Anthony Vernon
Mr. Vernon has been a member of the Board since
April 2017. Mr. Vernon served as senior advisor to Kraft Foods Group, Inc., a food and beverage company, from January 2015 through
May 2015, and Chief Executive Officer for Kraft Foods Group, Inc. from October 2012 to December 2014. Mr. Vernon previously served
as Executive Vice President and President at Kraft Foods of North America from 2009 to October 2012. From 2006 to 2009, Mr.
Vernon was the Healthcare Industry Partner at Ripplewood Holdings, Inc., a private equity firm. Mr. Vernon previously led a number
of Johnson & Johnson’s largest franchises during a 23-year career at Johnson & Johnson, a company engaged in the
research and development, manufacture and sale of products in the healthcare field. From 2004 until 2005, Mr. Vernon was employed
as Company Group Chairman of Depuy Inc., an orthopedics company, which is a subsidiary of Johnson & Johnson. From 2001 until
2004, Mr. Vernon served as President and Chief Executive Officer of Centocor, Inc., a biomedicines company, which is a division
of Johnson & Johnson.
He has also served as President of McNeil Consumer
Products and Nutritionals, Worldwide President of The Johnson & Johnson-Merck Joint Venture and as a member of Johnson &
Johnson’s Group Operating Committees for Consumer Healthcare and Nutritionals, Biopharmaceuticals, and Medical Devices and
Diagnostics. Mr. Vernon serves as a director of NovoCure Ltd., a medical device company, Intersect ENT, Inc., a medical device
company, and McCormick & Company, a company that manufactures, markets and distributes spices, seasoning mixes and condiments,
and formerly served as a director of Medivation, Inc., Kraft Foods Group, Inc. and The White Wave Foods Company, a food and beverage
company. Mr. Vernon received his B.A. from Lawrence University and his M.B.A. from the Northwestern University Kellogg Graduate
School of Management. We believe that Mr. Vernon’s experience as Chief Executive Officer of Kraft Foods Group, Inc. and his
extensive experience as a life sciences investor, qualify him to serve on the Board.
Information Regarding the Board of Directors
and Corporate Governance
Independence of the Board of Directors
We are a “controlled company” within
the meaning of applicable NYSE listing rules and, as a result, are exempt from the NYSE corporate governance requirements that
a majority of the Board be “independent,” and that our Nominating and Corporate Governance Committee and Compensation
Committee consist solely of independent directors. Notwithstanding the fact that we may rely on these exemptions, the Board has
undertaken a review of the independence of its directors and director nominees. The Board consults with our counsel to ensure that
the Board’s determinations are consistent with relevant securities and other laws and regulations regarding the definition
of “independent,” including those set forth in pertinent listing standards of the NYSE, as in effect from time to time.
Consistent with these considerations, after
review of all relevant identified transactions or relationships between each director, or any of his or her family members, and
Axovant, our senior management and our independent auditors, the Board has affirmatively determined that the following four directors
are independent directors within the meaning of the applicable NYSE
listing rules: Ms. Falberg, Mr. Modig, Dr. Pande and
Mr. Vernon. In making this determination, the Board found that none of these directors had a material or other disqualifying relationship
with us that could compromise his or her ability to exercise independent judgment in carrying out his or her responsibilities.
The Board has determined that Messrs. Machado, Oren and Ramaswamy, by virtue of their positions as directors of Roivant Sciences
Ltd., and, in the case of Dr. Hung, by virtue of his position as our Principal Executive Officer, are not independent under applicable
SEC and NYSE listing rules.
Board Leadership Structure
The Board does not currently have a Chairperson.
In the event that the Board were to appoint a Chairperson, our corporate governance guidelines provide that the same person may
serve as both our Principal Executive Officer and Chairperson of the Board. In the event such person does serve in such a dual
capacity, if the Chairperson is not otherwise an independent director or if a Chairperson is not designated, the Board may designate
one of the independent directors as the lead independent director for Board leadership purposes. At the present time, the Board
believes that the current Board members, together with our management, possess the requisite leadership and industry skills, expertise
and experiences to effectively oversee our business and affairs. Moreover, the Board prefers to retain the flexibility to select
the appropriate leadership structure based upon the existence of various conditions, including, but not limited to, business, financial
or other market conditions, affecting us at any given time. Notwithstanding the foregoing, the non-management directors of the
Board regularly participate in executive sessions outside of the presence of any management directors or other members of our management.
Role of the Board in Risk Oversight
One of the Board’s key functions is informed
oversight of our risk management process. The Board does not have a standing risk management committee, but rather administers
this oversight function directly through the Board as a whole, as well as through various Board standing committees that address
risks inherent in their respective areas of oversight. In particular, the Board is responsible for monitoring and assessing strategic
risk exposure, including a determination of the nature and level of risk appropriate for us. The Audit Committee of the Board has
the responsibility to consider and discuss our major financial risk exposures and the steps our management has taken to monitor
and control these exposures, including guidelines and policies to govern the process by which risk assessment and management is
undertaken. The Audit Committee of the Board also monitors compliance with legal and regulatory requirements and is responsible
for oversight of the performance of our internal audit function. The Nominating and Corporate Governance Committee of the Board
monitors the effectiveness of our corporate governance guidelines, including whether they are successful in preventing illegal
or improper liability-creating conduct. The Compensation Committee of the Board assesses and monitors whether any of our compensation
policies and programs have the potential to encourage excessive risk-taking. It is the responsibility of the committee chairs to
report findings regarding material risk exposures to the Board as quickly as possible.
Meetings of The Board of Directors; Attendance at Annual Meeting
of Shareholders
The Board met four
times during our
fiscal year ended March 31, 2017. The Audit Committee met 10 times; the Compensation Committee met seven times; and the Nominating
and Corporate Governance Committee met four times during our fiscal year ended March 31, 2017. Each Board member attended 75% or
more of the aggregate number of meetings of the Board and of the committees on which he or she served that were held during the
portion of the last fiscal year for which he or she
was a director or committee member.
As required under applicable NYSE listing rules,
in our fiscal year ended March 31, 2017, our non-management directors met in regularly scheduled executive sessions at which only
non-management directors were present. Mr. Oren typically presided over the executive sessions.
Our policy is that directors are invited to
attend the Annual General Meetings of Shareholders. Two members of the Board attended our 2016 Annual General Meeting of Shareholders.
Information Regarding Committees of the Board of Directors
The Board has an Audit Committee, a Compensation
Committee and a Nominating and Corporate Governance Committee. Below is a description of each of these committees. Each committee
has the authority to engage legal counsel or other experts or consultants, as it deems appropriate to carry out its responsibilities.
Copies of the written charters of the Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee,
each as adopted by the Board, are available on our website at http://investors.axovant.com/investors/corporate-governance.
The Board has determined that
each member
of each committee, other than Messrs. Oren and Machado, meets the applicable NYSE rules and regulations regarding “independence”
and each such member is free of any relationship that would impair his or her individual exercise of independent judgment with
regard to Axovant.
Audit Committee
The Audit Committee of the Board was established
by the Board in accordance with Section 3(a)(58)(A) of the Exchange Act to oversee our corporate accounting and financial reporting
processes and audits of our financial statements. The Board reviews the NYSE listing standards definition of independence for Audit
Committee members on an annual basis and has determined that each of Mr. Modig, Ms. Falberg and Mr. Vernon satisfies the independence
requirements under applicable NYSE listing rules and Rule 10A-3 of the Exchange Act.
The Board has also determined that Mr. Modig,
Ms. Falberg and Mr. Vernon each qualifies as an “audit committee financial expert,” as defined in applicable SEC rules
and regulations.
The Board made a qualitative assessment of Mr. Modig’s level of knowledge and experience based on
a number of factors, including his formal education and experience as a chief financial officer at public reporting companies.
In addition to our Audit Committee, Mr. Modig also serves on the audit committees of two other public companies, Auris Medical
Holding AG and Affimed N.V. The Board has determined that this simultaneous service does not impair Mr. Modig’s ability to
effectively serve on our Audit Committee. Likewise, the Board made a qualitative assessment of Ms. Falberg’s level of knowledge
and experience based on a number of factors, including her formal education and experience as chief financial officer of public
reporting biotechnology companies. In addition to our Audit Committee, Ms. Falberg also serves on the audit committees of two other
public biopharmaceutical companies, Aimmune Therapeutics, Inc. and Urogen Pharma Ltd. The Board has determined that this simultaneous
service does not impair Ms. Falberg’s ability to effectively serve on our Audit Committee. Finally, the Board also made a
qualitative assessment of Mr. Vernon’s level of knowledge and experience based on a number of factors, including his formal
education and experience as chief executive officer of a public company and a partner of a private equity firm.
The principal duties and responsibilities of
the Audit Committee include:
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recommending and retaining an independent registered public accounting firm to serve as our independent
auditors, for purposes of the Companies Act, overseeing our independent auditors’ work and determining our independent auditors’
compensation;
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evaluating the performance of and assessing the qualifications of our independent auditors;
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approving in advance all audit services and non-audit services to be provided to us by our independent
auditors;
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monitoring the rotation of partners of the independent auditors on our audit engagement team as
required by law;
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assessing and taking other appropriate action to oversee the independence of our independent auditors;
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reviewing the financial statements proposed to be included in our Annual Report on Form 10-K to
be filed with the SEC and recommending to the Board whether such financial statements should be so included;
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reviewing and discussing with management and our independent auditors the results of the annual
audit and the independent auditor’s review of our quarterly financial statements, including, as appropriate, a review of
our disclosures under “Management’s Discussion and Analysis of Financial Condition and Results of Operations”
in our periodic reports filed with the SEC;
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reviewing and discussing with management and our independent auditors, as appropriate, our guidelines
and policies with respect to risk assessment and management, including risks related to our accounting matters, financial reporting
and legal and regulatory compliance; and reviewing and discussing with management, as appropriate, insurance programs;
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conferring with management and our independent auditors, as appropriate, regarding the scope, adequacy
and effectiveness of our internal control over financial reporting;
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coordinating the Board’s oversight of the performance of our internal audit function;
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reviewing and approving or rejecting transactions between us and any related persons; and
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establishing procedures for the receipt, retention and treatment of complaints received by us regarding
accounting, internal accounting controls, auditing or compliance matters and the confidential and anonymous submission by our employees
of concerns regarding questionable accounting or auditing matters.
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Report of the Audit Committee of the Board of Directors*
The Audit Committee has reviewed and discussed
the audited financial statements for our fiscal year ended March 31, 2017 with our management. The Audit Committee has discussed
with the independent registered public accounting firm the matters required to be discussed by Auditing Standard No. 16,
Communications
with Audit Committees,
as adopted by the Public Company Accounting Oversight Board, or the PCAOB. The Audit Committee has also
received the written disclosures and the letter from the independent registered public accounting firm required by applicable requirements
of the PCAOB regarding the independent accountants’ communications with the Audit Committee concerning independence, and
has discussed with the independent registered public accounting firm the accounting firm’s independence. Based on the foregoing,
the Audit Committee has recommended to the Board that the audited financial statements be included in our Annual Report on Form
10-K for our fiscal year ended March 31, 2017.
Mr. Berndt Modig
Ms. Kathryn Falberg
Mr. W. Anthony Vernon
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The material in this report is not “soliciting material,” is not deemed “filed” with the SEC and
is not to be incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, whether
made before or after the date hereof and irrespective of any general incorporation language in any such filing.
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Compensation Committee
The Compensation Committee is composed of Messrs.
Oren, Machado, Modig and Vernon and Dr. Pande. The Board has determined that Messrs. Modig and Vernon and Dr. Pande are “independent,”
as independence is currently defined in applicable NYSE listing rules, and that all members of the Compensation Committee are “non-employee
directors,” as defined in Rule 16b-3 under the Exchange Act, and “outside directors,” as defined in Section 162(m)
of the Code.
The Compensation Committee of the Board acts
on behalf of the Board to, among other things, oversee our compensation strategy, policies, plans and programs and to review and
determine the compensation to be paid to our executive officers. In general, the Compensation Committee of the Board performs the
same policy- and compensation-setting functions for our
subsidiaries and their executive officers as
it does for us, and references herein to our personnel, policies, plans and programs include those of our subsidiaries as well.
The principal duties and responsibilities of the Compensation Committee include:
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reviewing, modifying and approving our overall compensation strategy and policies, including: (1)
reviewing and approving corporate goals and objectives relevant to the compensation of our executive officers and other senior
management, as appropriate; (2) evaluating and approving, or recommending to the Board for approval, compensation plans and programs
advisable for us, including modifications and terminations to those plans and programs; (3) establishing policies with respect
to equity compensation arrangements; (4) assessing the adequacy and competitiveness of our executive compensation programs among
comparable companies in our industry; and (5) reviewing and approving the terms of any employment agreements, severance arrangements,
change-of-control protections and any other compensatory arrangement for our executive officers and other senior management, as
appropriate;
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establishing and approving individual and corporate goals and objectives of our Principal Executive
Officer and our other executive officers and senior management and evaluating performance of the Principal Executive Officer and
our other executive officers and senior management, as appropriate, in light of these stated objectives;
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reviewing and approving the type and amount of compensation to be paid or awarded to Board members;
and
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adopting, amending, administering, and terminating our equity compensation plans, pension and profit
sharing plans, bonus plans, deferred compensation plans and similar programs.
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Compensation Committee Processes
and Procedures
The Compensation Committee meets at least once
annually
and with greater frequency if necessary. The agenda for each meeting is usually developed by the Chairperson of
the Compensation Committee, in consultation with the Vice President of Human Resources and legal counsel.
The Compensation
Committee meets regularly in executive session. However, from time to time, various members of management and other employees as
well as outside advisors or consultants
may be invited by the Compensation Committee to make
presentations, to provide
financial or other
background information, to provide advice or to otherwise participate in Compensation Committee meetings.
The Principal Executive Officer may not participate in, or be present during, the voting or deliberations of the Compensation Committee
regarding his compensation. The charter of the Compensation Committee grants the Compensation Committee full access to all books,
records, facilities and personnel of Axovant.
In addition, under the charter, the Compensation
Committee has the authority to obtain, at our expense, advice and assistance from internal or external legal, accounting or other
advisors and consultants that any member of the Compensation Committee deems necessary or appropriate in the discharge of his or
her responsibilities. If the Compensation Committee chooses to retain or obtain the advice of a compensation consultant, independent
legal counsel, or other advisor, it has the direct responsibility for the appointment, compensation and oversight of the work of
such party, and we will provide for appropriate funding, as determined by the Compensation Committee, for the payment to such party.
In addition, the Compensation Committee has the sole authority to retain and terminate any compensation consultant to assist in
its evaluation of
executive
and director compensation, including the sole authority to approve the consultant’s
reasonable fees and other retention terms, all at our expense. Under the charter, the Compensation Committee may select a compensation
consultant, legal counsel or other advisor (other than in-house legal counsel and certain other types of advisors) only after taking
into consideration all factors relevant to that party’s independence from management, including the six factors prescribed
by the SEC and NYSE; however, there is no requirement that any advisor be independent.
During the past fiscal year, after taking into
consideration the six factors prescribed by the SEC and NYSE, the Compensation Committee engaged Radford, a national compensation
consulting firm, to provide executive compensation advisory services based, in part, on its reputation and extensive experience
in the industry. The Compensation Committee determined that Radford was independent from management and had no conflicts of interest
in connection with the advisory services to be provided. Specifically, the Compensation Committee requested that Radford develop
a comparative group of companies and perform analyses of competitive performance and compensation levels for that group. Radford
also conducted individual interviews with members of the Compensation Committee and senior management
to learn more
about our business operations and strategy, key performance metrics and strategic goals, as well as the labor markets in which
we compete.
Radford ultimately developed recommendations that were presented to the Compensation Committee for its consideration.
Following an active dialogue with Radford, the Compensation Committee approved the recommendations.
The Compensation Committee generally makes
adjustments to annual compensation, determines bonuses and equity awards and establishes new performance objectives at one or more
meetings held during the first quarter of the year. However, the Compensation Committee also considers matters related to individual
compensation, such as compensation for new executive hires, as well as high-level strategic issues, such as the efficacy of our
compensation strategy, potential modifications to that strategy and new trends, plans or approaches to compensation, at various
meetings throughout the year.
Generally, the Compensation Committee’s
process comprises two related elements:
the determination of compensation levels and the establishment of performance objectives
for the current year. For executives other than the Principal Executive Officer, the Compensation Committee solicits and considers
evaluations and recommendations submitted to the Compensation Committee
by the Principal Executive Officer.
The evaluation
of the performance of the Principal Executive Officer is conducted by the Compensation Committee, which determines any adjustments
to his
compensation
as well as awards to be granted. For all executives and directors, the Compensation Committee
may review and consider, as appropriate,
materials such as financial reports and projections, operational data, tax and
accounting information, tally sheets that set forth the total compensation that may become payable to executives in various hypothetical
scenarios, executive and director share ownership information, company share performance data, analyses of historical executive
compensation levels and current company-wide compensation levels and recommendations of the Compensation Committee’s compensation
consultant, including analyses of executive and director compensation paid at other companies identified by the consultant.
Compensation Committee Interlocks and
Insider Participation
During
our fiscal year ended March 31, 2017, the Compensation Committee was comprised of
Messrs. Oren and Modig and Dr. Pande
.
No member of the Compensation Committee is an officer or employee of Axovant, and none of our executive officers serve as a director
or member of a compensation committee of any entity that has one or more executive officers serving as a member of the Board or
Compensation Committee.
Nominating and Corporate Governance Committee
The Nominating and Corporate Governance Committee
is composed of Dr. Pande and Messrs. Machado and Oren. The Board has determined that Dr. Pande is “independent,”
as independence is currently defined in applicable NYSE listing rules.
The principal duties and responsibilities of
the Nominating and Corporate Governance Committee include:
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identifying, reviewing and evaluating candidates to serve as directors, consistent with criteria
approved by the Board;
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reviewing, evaluating and considering the recommendation for nomination of incumbent directors
for re-election to the Board;
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reviewing, discussing and assessing the performance of the Board, including Board committees, such
assessment to include evaluation of the Board’s contribution as a whole and effectiveness in serving the best interests of
Axovant and its shareholders, specific areas in which the Board and/or management believe contributions could be improved, overall
Board composition and makeup, including the reelection of current Board members, and the independence of directors;
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overseeing the Board’s committee structure and operations, evaluating the performance of
the members of the committees of the Board, reviewing the composition of such committees, and recommending to the Board the membership
of each such committee;
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reviewing, discussing and assessing our corporate governance principles;
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reviewing our policy statements to determine adherence to our Code of Business Ethics and Conduct;
and
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overseeing and reviewing the processes and procedures we use to provide accurate, relevant and
appropriately detailed information to the Board and its committees on a timely basis.
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The Nominating and Corporate Governance Committee
believes that candidates for director should have certain minimum qualifications, including the ability to read and understand
basic financial statements, being over 21 years of age and having the highest personal integrity and ethics. The Nominating and
Corporate Governance Committee also intends to consider such factors as possessing relevant expertise upon which to be able to
offer advice and guidance to management, having sufficient
time to devote to the affairs of Axovant, demonstrated
excellence in his or her field, having the ability to exercise sound business judgment, diversity and having the commitment to
rigorously represent the long-term interests of our shareholders. However, the Nominating and Corporate Governance Committee retains
the right to modify these qualifications from time to time. Candidates for director nominees are reviewed in the context of the
current composition of the Board, our operating requirements and the long-term interests of our shareholders. In conducting this
assessment, the Nominating and Corporate Governance Committee typically considers diversity, age, skills and such other factors
as it deems appropriate, given the current needs of the Board and Axovant, to maintain a balance of knowledge, experience and capability.
In the case of incumbent directors whose terms
of office are set to expire, the Nominating and Corporate Governance Committee reviews these directors’ overall service to
us during their terms, including the number of meetings attended, level of participation, quality of performance and any other
relationships and transactions that might impair the directors’ independence. The Nominating and Corporate Governance Committee
also takes into account the results of the Board’s self-evaluation, conducted annually on a group and individual basis.
In the case of new director candidates, the
Nominating and Corporate Governance Committee also determines whether the nominee is independent for NYSE purposes, which determination
is based upon applicable NYSE listing standards, applicable SEC rules and regulations and the advice of counsel, if necessary.
The Nominating and Corporate Governance Committee then uses its network of contacts to compile a list of potential candidates,
but may also engage, if it deems appropriate, a professional search firm. The Nominating and Corporate Governance Committee conducts
any appropriate and necessary inquiries into the backgrounds and qualifications of possible candidates after considering the function
and needs of the Board. The Nominating and Corporate Governance Committee meets to discuss and consider the candidates’ qualifications
and then selects a nominee for recommendation to the Board by majority vote.
The Nominating and Corporate Governance Committee
will consider director candidates recommended by shareholders. The Nominating and Corporate Governance Committee does not intend
to alter the manner in which it evaluates candidates, including the minimum criteria set forth above, based on whether or not the
candidate was recommended by a shareholder. Shareholders who wish to recommend individuals for consideration by the Nominating
and Corporate Governance Committee to become nominees for election to the Board may do so by delivering a written recommendation
to the Nominating and Corporate Governance Committee at the following address: Axovant Sciences Ltd., Attn: Corporate Secretary,
at Clarendon House, 2 Church Street, Hamilton HM 11, Bermuda, at least 90 days, but not more than 120 days, prior to the anniversary
date of the mailing of our proxy statement for the last Annual General Meeting of Shareholders. Submissions must include the full
name of the proposed nominee, a description of the proposed nominee’s business experience for at least the previous five
years, complete biographical information, a description of the proposed nominee’s qualifications as a director and a representation
that the nominating shareholder is a beneficial or record holder of our common shares and has been a holder for at least one year.
Any such submission must be accompanied by the written consent of the proposed nominee to be named as a nominee and to serve as
a director if elected.
Shareholder Communications with the Board of Directors
The Board has adopted a formal process by which
shareholders may communicate with the Board or any of its directors. Shareholders who wish to communicate with the Board or an
individual director may do so by sending written communications to the Board or such director at Axovant Sciences Ltd., Attn: Corporate
Secretary, at Clarendon House, 2 Church Street, Hamilton HM 11, Bermuda. The Corporate Secretary will forward each communication
to the Legal Department of Axovant Sciences, Inc., and the communication will be further forwarded to the Board or individual directors
to whom the communication is addressed unless the communication contains advertisements or solicitations or is unduly hostile,
threatening or similarly inappropriate, in which case the communication will be discarded.
In addition to shareholder communications with
directors, any interested person may communicate directly with the presiding director of the Board’s executive sessions or
the independent or non-management directors as a group. Persons interested in communicating directly with the independent or non-management
directors regarding their concerns or issues may do so by addressing correspondence to a particular director, or to the independent
or non-management directors generally, in care of Axovant Sciences Ltd., Attn: Corporate Secretary, at Clarendon House, 2 Church
Street, Hamilton HM 11, Bermuda. If no particular director is named, letters will be forwarded, depending upon the subject matter,
to the Chairperson of the Audit, Compensation, or Nominating and Corporate Governance Committee.
Code of Business Ethics and Conduct
The Board has adopted a
Code of Business
Ethics and Conduct, or Code of Conduct, that applies to all of our directors, officers, employees, consultants and independent
contractors. The Code of Conduct is available on our website at
http://investors.axovant.com/investors/corporate-governance.
If we make any substantive amendments to the Code of Conduct or grant any waiver from a provision of the Code of Conduct to
any executive officer or director, we will promptly disclose the nature of the amendment or waiver on our website or otherwise
as required by applicable law and NYSE listing requirements.
Corporate Governance Guidelines
The Board has adopted Corporate Governance
Guidelines to establish the authority and practices to review and evaluate our business operations as needed and to make decisions
that are independent of our management. The guidelines are also intended to align the interests of directors and management with
those of our shareholders. The Corporate Governance Guidelines set forth the practices that the Board intends to follow with respect
to a number of areas, including its composition and selection, role, meetings, committees, access to management and use of outside
advisors, Principal Executive Officer evaluation and succession planning, and board assessment and compensation. The Corporate
Governance Guidelines may be viewed at http://investors.axovant.com/investors/corporate-governance.
PROPOSAL 2
APPROVAL OF AMENDED AND RESTATED 2015 EQUITY
INCENTIVE PLAN
Overview
In March 2015, the Board and our shareholders
adopted our 2015 Equity Incentive Plan and in May 2015, the Board and the shareholders approved an amendment to our 2015 Equity
Incentive Plan to increase the aggregate number of common shares authorized for issuance thereunder by 2,000,000 to an aggregate
of 9,500,000. We refer to the amended 2015 Equity Incentive Plan as the Plan. Pursuant to the terms of the Plan, an additional
3,000,000 common shares and 3,966,000 common shares were authorized for issuance under the Plan, effective April 1, 2016 and April
1, 2017, respectively.
In this Proposal 2, we are requesting that
our shareholders approve Axovant’s Amended and Restated 2015 Equity Incentive Plan, or the Amended Plan, to: (1) increase
the aggregate number of common shares authorized for issuance thereunder by 4,000,000 to an aggregate of 20,466,000 common shares;
(2) for purposes of Section 162(m) of the Internal Revenue Code, as amended, or the Code (as further described under “Performance-Based
Compensation” below), increase the per-employee limit on (a) the number of shares subject to appreciation-only equity awards
that may be granted to any employee under the Plan during any specified period from 2,000,000 to 7,000,000 common shares, (b) the
number of shares subject to performance-based stock awards that may be granted to any employee under the Plan during any specified
period from 2,000,000 to 7,000,000 common shares, and (c) the amount of cash subject to performance-based cash awards that may
be granted to any employee under the Plan during any specified period from $1,000,000 to $7,000,000; and (3) adjust the automatic
annual share reserve increase from 4% of the total number of shares of capital stock outstanding on March 31 of the preceding calendar
year to 4% of the total number of shares of capital stock outstanding on March 31 of the preceding fiscal year.
Our management, Board and Compensation Committee
believe that equity awards are a key aspect of our ability to attract and retain qualified personnel in the face of intense competition
for experienced drug developers and other personnel among many biopharmaceutical and health care companies. The Board, upon the
recommendation of the Compensation Committee, has approved Axovant’s Amended Plan. If the shareholders do not approve Proposal
2, as a consequence, the Plan will remain in effect, but our ability to grant equity awards at competitive levels will be seriously
diminished, and we believe that it will negatively affect our ability to recruit and retain highly qualified personnel and our
ability to manage future growth. Without the approval of Proposal 2, management expects that the current common shares available
for grant under the Plan will not be sufficient to maintain our equity award practices for new employees or for promotions or merit
awards for current employees.
As of June 30, 2017, a total of 107,473,925
common shares were outstanding and there were 1,623,630 shares available for grant under the Plan. As of June 30, 2017, stock options
to purchase approximately 14,271,950 shares were outstanding and no awards other than stock options were outstanding. As of June
30, 2017, the last reported sale price of our common shares as reported on the NYSE was $23.19 per share, the weighted-average
exercise price of all stock options outstanding was $13.04, and the weighted-average remaining term of such stock options was 9.03
years. Axovant recognizes that equity compensation awards dilute stockholder equity and must be used judiciously. Since April 1,
2016, our average burn rate (total shares used for equity compensation awards each year divided by weighted average outstanding
shares for the year) was 2.7%. Axovant’s dilution level or “overhang” (shares subject to equity compensation
awards outstanding at fiscal year-end or available to be used for equity compensation, divided by fully diluted shares outstanding)
at March 31, 2017, the end of fiscal year 2016, was 11.6%.
Performance-Based Compensation
The Plan provides for performance-based awards
that are intended to satisfy the requirements for “performance-based compensation” within the meaning of Section 162(m)
of the Code. The Board believes that it is in the best interests of Axovant and our stockholders to maintain a plan under which
performance-based stock and cash compensation awards made to certain executive officers may be deducted by Axovant for federal
income tax purposes.
Section 162(m) disallows a U.S. tax deduction
to any publicly held corporation and its affiliates for certain compensation paid to any “covered employee” (the chief
executive officer and the next three most highly compensated officers other than the chief financial officer) to the extent that
the compensation paid to the covered employee for the taxable year exceeds $1,000,000. However, certain kinds of compensation,
including qualified “performance-based compensation,” are not subject to this deduction limitation. In order for compensation
awarded under a plan to qualify as “performance-based compensation” under Section 162(m), among other requirements,
the following terms and conditions must be disclosed to and approved by the stockholders before the compensation is paid: (1) a
description of the employees eligible to receive such awards; (2) a
description of the business criteria upon which
the performance goals for performance-based awards may be based; and (3) a per-employee limit on the number of shares subject to
performance-based stock awards and the amount of cash subject to performance-based cash awards that may be granted or paid to any
employee under the plan during any specified period. Our shareholders previously approved the Plan, as described above, including
the terms and conditions necessary for us to grant awards under the Plan that may qualify as “performance-based compensation”
under Section 162(m). Approval of the Amended Plan will also constitute approval of terms and conditions set forth in the Amended
Plan that will permit us to grant awards under the Amended Plan that may qualify as “performance-based” compensation
within the meaning of Section 162(m). However, in certain circumstances, we may determine to grant compensation to covered employees
that is not intended to qualify as “performance-based compensation” for purposes of Section 162(m). Moreover, even
if we grant compensation that is intended to qualify as “performance-based compensation” for purposes of Section 162(m),
we cannot guarantee that such compensation ultimately will be deductible by us.
Description of Amended Plan
The material features of the Amended Plan are
outlined below. This summary is qualified in its entirety by reference to the complete text of the Amended Plan. Stockholders are
encouraged to read the actual text of the Amended Plan, which is appended to this proxy statement as Appendix A and may be accessed
from the SEC’s website at www.sec.gov.
Authorized Shares
The maximum number of common shares that may
be issued under the Amended Plan is 20,466,000 common shares. The number of common shares reserved for issuance under the Amended
Plan will automatically increase on April 1 of each year, from April 1, 2018 continuing through April 1, 2025, by 4% of the total
number of our common shares outstanding on March 31 of the preceding fiscal year, or a lesser number of shares as may be determined
by the Board. The maximum number of shares that may be issued pursuant to the exercise of incentive options under the Amended Plan
is 47,500,000.
Shares issued under the Amended Plan may be
authorized but unissued or reacquired common shares. Shares subject to stock awards granted under the Amended Plan that expire
or terminate without being exercised in full, or that are paid out in cash rather than in shares, will not reduce the number of
shares available for issuance under the Amended Plan. Additionally, shares issued pursuant to stock awards under the Amended Plan
that we repurchase or that are forfeited, as well as shares reacquired by us as consideration for the exercise or purchase price
of a stock award or to satisfy tax withholding obligations related to a stock award, will become available for future grant under
the Amended Plan.
Eligibility
Our 95 employees, seven non-employee directors
and approximately 50 consultants as of June 30, 2017 are eligible to participate in the Amended Plan. Only employees may be granted
incentive stock options.
Administration
The Board, or a duly authorized committee thereof,
will have the authority to administer the Amended Plan. The Board will delegate its authority to administer the Amended Plan to
our Compensation Committee under the terms of the Compensation Committee’s charter. The Board may also delegate to one or
more of our officers the authority to (1) designate employees other than officers to receive specified stock awards and (2) determine
the number of our common shares to be subject to such stock awards. Subject to the terms of the Amended Plan, the administrator
has the authority to determine the terms of awards, including recipients, the exercise price or strike price of stock awards, if
any, the number of shares subject to each stock award, the fair market value of a common share, the vesting schedule applicable
to the awards, together with any vesting acceleration, the form of consideration, if any, payable upon exercise or settlement of
the stock award and the terms and conditions of the award agreements for use under the Amended Plan. The administrator may be referred
to in this summary as the Board or the Plan Administrator.
The Plan Administrator has the power to modify
outstanding awards under our Amended Plan. Subject to the terms of the Amended Plan, the Plan Administrator has the authority to
reprice any outstanding option or stock appreciation right, cancel and re-grant any outstanding option or stock appreciation right
in exchange for new stock awards, cash or other consideration, or take any other action that is treated as a repricing under generally
accepted accounting principles, with the consent of any adversely affected participant.
Section 162(m) Limits
At such time as necessary for compliance with
Section 162(m) of the Code, no participant may be granted stock awards covering more than 7,000,000 common shares under the Amended
Plan during any calendar year pursuant to options, stock appreciation rights and other stock awards whose value is determined by
reference to an increase over an exercise price or strike price of at least 100% of the fair market value of our common shares
on the date of grant. Additionally, no participant may be granted in a calendar year a performance stock award covering more than
7,000,000 common shares or a performance cash award having a maximum value in excess of $7,000,000 under the Amended Plan. These
limitations enable us to grant awards that will be exempt from the $1.0 million limitation on the income tax deductibility of compensation
paid per covered executive officer imposed by Section 162(m) of the Code.
Stock Options
Stock
options may be granted under the Amended Plan pursuant to stock option agreements. The Amended Plan permits the grant of stock
options that are intended to qualify as incentive stock options, or ISOs, and nonstatutory stock options, or NSOs.
The
exercise price of a stock option granted under the Amended Plan may not be less than 100% of the fair market value of the common
stock subject to the stock option on the date of grant and, in some cases (see “Limitations on Incentive Stock Options”
below), may not be less than 110% of such fair market value.
The
term of stock options granted under the Amended Plan may not exceed ten years and, in some cases (see “Limitations on Incentive
Stock Options” below), may not exceed five years. Acceptable forms of consideration for the purchase of our common stock
pursuant to the exercise of a stock option under the Amended Plan will be determined by the Plan Administrator and may include
payment: (1) by cash, check, bank draft or money order payable to us; (2) pursuant to a program developed under Regulation
T as promulgated by the Federal Reserve Board; (3) by delivery to us of shares of our common stock (either by actual delivery
or attestation); (4) by a net exercise arrangement (for NSOs only); or (5) in other legal consideration approved by the
Plan Administrator.
Stock
options granted under the Amended Plan may become exercisable in cumulative increments, or “vest,” as determined by
the Plan Administrator at the rate specified in the stock option agreement. Shares covered by different stock options granted under
the Amended Plan may be subject to different vesting schedules as the Plan Administrator may determine.
The
Plan Administrator may impose limitations on the transferability of stock options granted under the Amended Plan in its discretion.
Generally, a participant may not transfer a stock option granted under the Amended Plan other than by will or the laws of descent
and distribution or, subject to approval by the Plan Administrator, pursuant to a domestic relations order or an official marital
settlement agreement. However, the Plan Administrator may permit transfer of a stock option in a manner that is not prohibited
by applicable tax and securities laws. In addition, subject to approval by the Plan Administrator, a participant may designate
a beneficiary who may exercise the stock option following the participant’s death.
Limitations on
Incentive Stock Options
The
aggregate fair market value, determined at the time of grant, of shares of our common stock with respect to ISOs that are exercisable
for the first time by a participant during any calendar year under all of our stock plans may not exceed $100,000. The stock options
or portions of stock options that exceed this limit or otherwise fail to qualify as ISOs are treated as NSOs. No ISO may be granted
to any person who, at the time of grant, owns or is deemed to own stock possessing more than 10% of our total combined voting power
or that of any affiliate unless the following conditions are satisfied:
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the exercise price of the ISO must be at least 110% of the fair market value of the common
stock subject to the ISO on the date of grant; and
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the term of the ISO must not exceed five years from the date of grant.
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Stock Appreciation
Rights
Stock
appreciation rights may be granted under the Amended Plan pursuant to stock appreciation right agreements. Each stock appreciation
right is denominated in common stock share equivalents. The strike price of each stock appreciation right will be determined by
the Plan Administrator, but will in no event be less than 100% of the fair market value of the common stock subject to the stock
appreciation right on the date of grant. The Plan Administrator may also impose restrictions or conditions
upon
the vesting of stock appreciation rights that it deems appropriate. The appreciation distribution payable upon exercise of a stock
appreciation right may be paid in shares of our common stock, in cash, in a combination of cash and stock, or in any other form
of consideration determined by the Plan Administrator and set forth in the stock appreciation right agreement. Stock appreciation
rights will be subject to the same conditions upon termination of continuous service and restrictions on transfer as stock options
under the Amended Plan.
Restricted Stock
Awards
Restricted
stock awards may be granted under the Amended Plan pursuant to restricted stock award agreements. A restricted stock award may
be granted in consideration for cash, check, bank draft or money order payable to us, the participant’s services performed
for us or any of our affiliates, or any other form of legal consideration acceptable to the Plan Administrator. Shares of our common
stock acquired under a restricted stock award may be subject to forfeiture to or repurchase by us in accordance with a vesting
schedule to be determined by the Plan Administrator. Rights to acquire shares of our common stock under a restricted stock award
may be transferred only upon such terms and conditions as are set forth in the restricted stock award agreement. A restricted stock
award agreement may provide that any dividends paid on restricted stock will be subject to the same vesting conditions as apply
to the shares subject to the restricted stock award. Upon a participant’s termination of continuous service for any reason,
any shares subject to restricted stock awards held by the participant that have not vested as of such termination date may be forfeited
to or repurchased by us.
Restricted Stock
Unit Awards
Restricted
stock unit awards may be granted under the Amended Plan pursuant to restricted stock unit award agreements. Payment of any purchase
price may be made in any form of legal consideration acceptable to the Plan Administrator. A restricted stock unit award may be
settled by the delivery of shares of our common stock, in cash, in a combination of cash and stock, or in any other form of consideration
determined by the Plan Administrator and set forth in the restricted stock unit award agreement. Restricted stock unit awards may
be subject to vesting in accordance with a vesting schedule to be determined by the Plan Administrator. Dividend equivalents may
be credited in respect of shares of our common stock covered by a restricted stock unit award, provided that any additional shares
credited by reason of such dividend equivalents will be subject to all of the same terms and conditions of the underlying restricted
stock unit award. Except as otherwise provided in a participant’s restricted stock unit award agreement or other written
agreement with us or one of our affiliates, restricted stock units that have not vested will be forfeited upon the participant’s
termination of continuous service for any reason.
Performance Awards
The
Amended Plan allows us to grant performance stock and cash awards, including such awards that may qualify as performance-based
compensation that is not subject to the $1.0 million limitation on the income tax deductibility of compensation paid per covered
employee imposed by Section 162(m) of the Code.
A
performance stock award is a stock award that is payable (including that may be granted, may vest, or may be exercised) contingent
upon the attainment of pre-determined performance goals during a performance period. A performance stock award may require the
completion of a specified period of continuous service. The length of any performance period, the performance goals to be achieved
during the performance period, and the measure of whether and to what degree such performance goals have been attained will be
determined by our Compensation Committee, except that the Plan Administrator also may make any such determinations to the extent
that the award is not intended to qualify as performance-based compensation under Section 162(m) of the Code. In addition,
to the extent permitted by applicable law and the performance stock award agreement, the Plan Administrator may determine that
cash may be used in payment of performance stock awards.
A
performance cash award is a cash award that is payable contingent upon the attainment of pre-determined performance goals during
a performance period. A performance cash award may require the completion of a specified period of continuous service. The length
of any performance period, the performance goals to be achieved during the performance period, and the measure of whether and to
what degree such performance goals have been attained will be determined by our Compensation Committee, except that the Plan Administrator
also may make any such determinations to the extent that the award is not intended to qualify as performance-based compensation
under Section 162(m) of the Code. The Plan Administrator may specify the form of payment of performance cash awards, which
may be cash or other property, or may provide for a participant to have the option for his or her performance cash award to be
paid in cash or other property.
In
granting a performance stock or cash award intended to qualify as “performance-based compensation” under Section 162(m)
of the Code, our Compensation Committee will set a period of time, or a performance period, over which the attainment of one or
more goals, or performance goals, will be measured. Within the time period prescribed by Section 162(m) of the Code (no
later
than the earlier of the 90th day of a performance period and the date on which 25% of the performance period has elapsed, and in
any event at a time when the achievement of the performance goals remains substantially uncertain), our Compensation Committee
will establish the performance goals, based upon one or more criteria, or performance criteria, enumerated in the Amended Plan
and described below. As soon as administratively practicable following the end of the performance period, our Compensation Committee
will certify in writing whether the performance goals have been satisfied.
Performance
goals under the Amended Plan will be based on any one or more of the following performance criteria: (1) earnings (including earnings
per share and net earnings); (2) earnings before interest, taxes and depreciation; (3) earnings before interest, taxes, depreciation
and amortization; (4) earnings before interest, taxes, depreciation, amortization and legal settlements; (5) earnings before interest,
taxes, depreciation, amortization, legal settlements and other income (expense); (6) earnings before interest, taxes, depreciation,
amortization, legal settlements, other income (expense) and stock-based compensation; (7) earnings before interest, taxes, depreciation,
amortization, legal settlements, other income (expense), stock-based compensation and changes in deferred revenue; (8) total stockholder
return; (9) return on equity or average stockholder’s equity; (10) return on assets, investment, or capital employed; (11)
stock price; (12) margin (including gross margin); (13) income (before or after taxes); (14) operating income; (15) operating income
after taxes; (16) pre-tax profit; (17) operating cash flow; (18) sales or revenue targets; (19) increases in revenue or product
revenue; (20) expenses and cost reduction goals; (21) improvement in or attainment of working capital levels; (22) economic value
added (or an equivalent metric); (23) market share; (24) cash flow; (25) cash flow per share; (26) share price performance; (27)
debt reduction; (28) implementation or completion of projects or processes; (29) employee retention; (30) stockholders’ equity;
(31) capital expenditures; (32) debt levels; (33) operating profit or net operating profit; (34) workforce diversity; (35) growth
of net income or operating income; (36) billings; (37) bookings; (38) initiation or completion of phases of clinical trials and/or
studies by specified dates; (39) patient enrollment rates, (40) budget management; (41) regulatory body and/or pricing approval
with respect to products, studies and/or trials; (42) commercial launch of products; (43) progress of partnered programs; (44)
strategic partnerships or transactions; and (45) to the extent that an Award is not intended to comply with Section 162(m) of the
Code, other measures of performance selected by the Plan Administrator.
Performance
Goals may be based on a Company-wide basis, with respect to one or more business units, divisions, Affiliates, or business segments,
and in either absolute terms or relative to the performance of one or more comparable companies or the performance of one or more
relevant indices. Unless specified otherwise by the Plan Administrator (A) in the Award Agreement at the time the Award is granted
or (B) in such other document setting forth the Performance Goals at the time the Performance Goals are established, the Plan Administrator
will appropriately make adjustments in the method of calculating the attainment of Performance Goals for a Performance Period as
follows: (1) to exclude restructuring and/or other nonrecurring charges; (2) to exclude exchange rate effects; (3) to exclude the
effects of changes to generally accepted accounting principles; (4) to exclude the effects of any statutory adjustments to corporate
tax rates; (5) to exclude the effects of any “extraordinary items” as determined under generally accepted accounting
principles; (6) to exclude the dilutive effects of acquisitions or joint ventures; (7) to assume that any business divested by
the Company achieved performance objectives at targeted levels during the balance of a Performance Period following such divestiture;
(8) to exclude the effect of any change in the outstanding shares of common stock of the Company by reason of any stock dividend
or split, stock repurchase, reorganization, recapitalization, merger, consolidation, spin-off, combination or exchange of shares
or other similar corporate change, or any distributions to common stockholders other than regular cash dividends; (9) to exclude
the effects of stock based compensation and the award of bonuses under the Company’s bonus plans; (10) to exclude costs incurred
in connection with potential acquisitions or divestitures that are required to expensed under generally accepted accounting principles;
(11) to exclude the goodwill and intangible asset impairment charges that are required to be recorded under generally accepted
accounting principles; (12) to exclude the effect of any other unusual, non-recurring gain or loss or other extraordinary item;
(13) to exclude the effects of the timing of acceptance for review and/or approval of submissions to the Food and Drug Administration
or any other regulatory body and (14) to exclude the effects of entering into or achieving milestones involved in licensing, collaboration,
or other business development transactions. In addition, the Plan Administrator retains the discretion to reduce or eliminate the
compensation or economic benefit due upon attainment of Performance Goals and to define the manner of calculating the Performance
Criteria it selects to use for such Performance Period. Partial achievement of the specified criteria may result in the payment
or vesting corresponding to the degree of achievement as specified in the Stock Award Agreement or the written terms of a Performance
Cash Award. In addition, our Compensation Committee (or, to the extent that an award is not intended to qualify as “performance-based
compensation” under Section 162(m) of the Code, the Plan Administrator) retains the discretion to reduce or eliminate
the compensation or economic benefit due upon the attainment of any performance goals and to define the manner of calculating the
performance criteria it selects to use for a performance period.
Other Stock Awards
Other
forms of stock awards valued in whole or in part by reference to, or otherwise based on, our common stock may be granted either
alone or in addition to other stock awards under the Amended Plan. The Plan Administrator will have sole and complete authority
to determine the persons to whom and the time or times at which such other stock awards will be granted, the number of shares of
our common stock to be granted and all other terms and conditions of such other stock awards.
Changes to Capital Structure
In the event there is a specified type of change
in our capital structure, such as a split, reverse split or recapitalization, appropriate adjustments will be made to (1) the class
and maximum number of shares reserved for issuance under our Amended Plan, (2) the class and maximum number of shares by which
the share reserve may increase automatically each year, (3) the class and maximum number of shares that may be issued upon the
exercise of incentive stock options, (4) the class and maximum number of shares subject to stock awards that can be granted to
any person in a calendar year (as established under the Amended Plan pursuant to Section 162(m) of the Code), and (5) the class
and number of shares and exercise price, strike price or purchase price, if applicable, of all outstanding stock awards.
Corporate Transactions
The Amended Plan provides that in the event
of a specified corporate transaction as defined in the Amended Plan, the administrator will determine how to treat each outstanding
stock award. The administrator may:
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arrange for the assumption, continuation or substitution of a stock award by a successor corporation;
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arrange for the assignment of any reacquisition or repurchase rights held by us to a successor
corporation;
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accelerate the vesting of the stock award and provide for its termination prior to the effective
time of the corporate transaction;
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arrange for the lapse, in whole or in part, of any reacquisition or repurchase right held by us;
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cancel the stock award prior to the transaction in exchange for a cash payment, which may be reduced
by the exercise price payable in connection with the stock award; or
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make a payment, in such form as determined by the administrator, equal to the excess, if any, of
the value of the property that would have been received if such award was exercised immediately prior to the effective time of
the corporate transaction over any exercise price payable.
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The administrator is not obligated to treat
all stock awards or portions of stock awards, even those that are of the same type, in the same manner. The administrator may take
different actions with respect to the vested and unvested portions of a stock award.
Change in Control
The administrator may provide, in an individual
award agreement or in any other written agreement between us and the participant, that the stock award will be subject to additional
acceleration of vesting and exercisability in the event of a change in control, as defined in the Amended Plan. In the absence
of such a provision, no such acceleration of the stock award will occur.
Plan Amendment or Termination
The Board has the authority to amend, suspend,
or terminate the Amended Plan, provided that such action does not materially impair the existing rights of any participant without
such participant’s written consent. No incentive options may be granted after the tenth anniversary of the date the Board
adopted the Amended Plan.
U.S. Federal Income Tax
Consequences
The
following is a summary of the principal United States federal income tax consequences to participants and us with respect to participation
in the Amended Plan. This summary is not intended to be exhaustive and does not discuss the income tax laws
of
any local, state or foreign jurisdiction in which a participant may reside. The information is based upon current federal income
tax rules and therefore is subject to change when those rules change. Because the tax consequences to any participant may depend
on his or her particular situation, each participant should consult the participant’s tax adviser regarding the federal,
state, local and other tax consequences of the grant or exercise of an award or the disposition of stock acquired the Amended Plan.
The Amended Plan is not qualified under the provisions of Section 401(a) of the Code and is not subject to any of the provisions
of the Employee Retirement Income Security Act of 1974. Our ability to realize the benefit of any tax deductions described below
depends on our generation of taxable income as well as the requirement of reasonableness, the provisions of Section 162(m)
of the Code and the satisfaction of our tax reporting obligations.
Nonstatutory Stock
Options
Generally,
there is no taxation upon the grant of an NSO if the stock option is granted with an exercise price equal to the fair market value
of the underlying stock on the grant date. Upon exercise, a participant will recognize ordinary income equal to the excess, if
any, of the fair market value of the underlying stock on the date of exercise of the stock option over the exercise price. If the
participant is employed by us or one of our affiliates, that income will be subject to withholding taxes. The participant’s
tax basis in those shares will be equal to their fair market value on the date of exercise of the stock option, and the participant’s
capital gain holding period for those shares will begin on that date.
Subject
to the requirement of reasonableness, the provisions of Section 162(m) of the Code and the satisfaction of a tax reporting
obligation, we will generally be entitled to a tax deduction equal to the taxable ordinary income realized by the participant.
Incentive Stock
Options
The
Amended Plan provides for the grant of stock options that are intended to qualify as “incentive stock options,” as
defined in Section 422 of the Code. Under the Code, a participant generally is not subject to ordinary income tax upon the
grant or exercise of an ISO. If the participant holds a share received upon exercise of an ISO for more than two years from the
date the stock option was granted and more than one year from the date the stock option was exercised, which is referred to as
the required holding period, the difference, if any, between the amount realized on a sale or other taxable disposition of that
share and the participant’s tax basis in that share will be long-term capital gain or loss.
If,
however, a participant disposes of a share acquired upon exercise of an ISO before the end of the required holding period, which
is referred to as a disqualifying disposition, the participant generally will recognize ordinary income in the year of the disqualifying
disposition equal to the excess, if any, of the fair market value of the share on the date of exercise of the stock option over
the exercise price. However, if the sales proceeds are less than the fair market value of the share on the date of exercise of
the stock option, the amount of ordinary income recognized by the participant will not exceed the gain, if any, realized on the
sale. If the amount realized on a disqualifying disposition exceeds the fair market value of the share on the date of exercise
of the stock option, that excess will be short-term or long-term capital gain, depending on whether the holding period for the
share exceeds one year.
For
purposes of the alternative minimum tax, the amount by which the fair market value of a share of stock acquired upon exercise of
an ISO exceeds the exercise price of the stock option generally will be an adjustment included in the participant’s alternative
minimum taxable income for the year in which the stock option is exercised. If, however, there is a disqualifying disposition of
the share in the year in which the stock option is exercised, there will be no adjustment for alternative minimum tax purposes
with respect to that share. In computing alternative minimum taxable income, the tax basis of a share acquired upon exercise of
an ISO is increased by the amount of the adjustment taken into account with respect to that share for alternative minimum tax purposes
in the year the stock option is exercised.
We
are not allowed a tax deduction with respect to the grant or exercise of an ISO or the disposition of a share acquired upon exercise
of an ISO after the required holding period. If there is a disqualifying disposition of a share, however, we will generally be
entitled to a tax deduction equal to the taxable ordinary income realized by the participant, subject to the requirement of reasonableness
and the provisions of Section 162(m) of the Code, and provided that either the employee includes that amount in income or
we timely satisfy our reporting requirements with respect to that amount.
Restricted Stock
Awards
Generally,
the recipient of a restricted stock award will recognize ordinary income at the time the stock is received equal to the excess,
if any, of the fair market value of the stock received over any amount paid by the recipient in exchange for the stock. If, however,
the stock is not vested when it is received (for example, if the employee is required to work for a period of time in
order
to have the right to sell the stock), the recipient generally will not recognize income until the stock becomes vested, at which
time the recipient will recognize ordinary income equal to the excess, if any, of the fair market value of the stock on the date
it becomes vested over any amount paid by the recipient in exchange for the stock. A recipient may, however, file an election with
the Internal Revenue Service, within 30 days following his or her receipt of the stock award, to recognize ordinary income,
as of the date the recipient receives the award, equal to the excess, if any, of the fair market value of the stock on the date
the award is granted over any amount paid by the recipient for the stock.
The
recipient’s basis for the determination of gain or loss upon the subsequent disposition of shares acquired from a restricted
stock award will be the amount paid for such shares plus any ordinary income recognized either when the stock is received or when
the stock becomes vested.
Subject
to the requirement of reasonableness, the provisions of Section 162(m) of the Code and the satisfaction of a tax reporting
obligation, we will generally be entitled to a tax deduction equal to the taxable ordinary income realized by the recipient of
the restricted stock award.
Restricted Stock
Unit Awards
Generally,
the recipient of a restricted stock unit award structured to comply with the requirements of Section 409A of the Code or an
exception to Section 409A of the Code will recognize ordinary income at the time the stock is delivered equal to the excess,
if any, of the fair market value of the stock received over any amount paid by the recipient in exchange for the stock. To comply
with the requirements of Section 409A of the Code, the stock subject to a restricted stock unit award may generally only be
delivered upon one of the following events: a fixed calendar date (or dates), separation from service, death, disability or a change
in control. If delivery occurs on another date, unless the restricted stock unit award otherwise complies with or qualifies for
an exception to the requirements of Section 409A of the Code (including delivery upon achievement of a performance goal),
in addition to the tax treatment described above, the recipient will owe an additional 20% federal tax and interest on any taxes
owed.
The
recipient’s basis for the determination of gain or loss upon the subsequent disposition of shares acquired from a restricted
stock unit award will be the amount paid for such shares plus any ordinary income recognized when the stock is delivered.
Subject
to the requirement of reasonableness, the provisions of Section 162(m) of the Code and the satisfaction of a tax reporting
obligation, we will generally be entitled to a tax deduction equal to the taxable ordinary income realized by the recipient of
the restricted stock unit award.
Stock Appreciation
Rights
Generally,
if a stock appreciation right is granted with an exercise price equal to the fair market value of the underlying stock on the grant
date, the recipient will recognize ordinary income equal to the fair market value of the stock or cash received upon such exercise.
Subject to the requirement of reasonableness, the provisions of Section 162(m) of the Code, and the satisfaction of a tax
reporting obligation, we will generally be entitled to a tax deduction equal to the taxable ordinary income realized by the recipient
of the stock appreciation right.
Equity Compensation Plan Benefits
The following table shows, for each of our
named executive officers and the various groups indicated, the number of stock options underlying shares of our common stock that
have been granted (even if not currently outstanding) under the Plan since its approval by the stockholders in March 2015 and through
June 30, 2017.
Plan Category
|
|
Common Shares
Subject to Grant
(#)
|
|
Vivek Ramaswamy, director nominee
|
|
|
357,000
|
|
Gregory M. Weinhoff, M.D.
|
|
|
829,096
|
|
Lawrence T. Friedhoff, M.D., Ph.D.
|
|
|
600,000
|
|
All current executive officers as a group
|
|
|
7,381,496
|
|
All current non-executive directors as a group
|
|
|
805,000
|
|
All current employees as a group (including all current non-executive directors)
|
|
|
13,372,893
|
|
David T. Hung, M.D., director nominee
|
|
|
4,000,000
|
|
Atul Pande, M.D., director nominee
|
|
|
149,000
|
|
Equity Compensation Plan Information
The following table shows information regarding
our equity compensation plan as of March 31, 2017:
Plan Category
|
|
Common Shares to be
issued
upon exercise of
outstanding options
and rights (#)
(a)
|
|
|
Weighted-average
exercise price
of outstanding
options and rights ($)
(b)
|
|
|
Common Shares
available for
future issuance
under equity
compensation
plans (excluding
securities reflected
in column (a)) (#)
(c)
|
|
Equity compensation plans approved by shareholders
|
|
|
7,840,034
|
|
|
$
|
7.49
|
(1)
|
|
|
4,646,047
|
(2)
|
Equity compensation plans not approved by shareholders
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Total
|
|
|
7,840,034
|
|
|
$
|
7.49
|
|
|
|
4,646,047
|
|
|
(1)
|
Represents the weighted-average exercise price of outstanding stock options only.
|
|
(2)
|
In addition, pursuant to the terms of our 2015 Equity Incentive Plan, an additional 3,966,000 common shares were added to the
number of available shares effective April 1, 2017.
|
The Board of Directors Recommends
A Vote
In Favor
of Proposal 2.
PROPOSAL
3
Ratification
of Selection of Independent Registered Public Accounting Firm, Appointment of Auditor for Statutory Purposes and Authorization
for the Board to Set Auditor Remuneration
On June 1, 2017, the Audit Committee of the
Board selected Ernst & Young LLP to serve as our independent registered public accounting firm for our fiscal year ending March
31, 2018. The Audit Committee is submitting the selection of our independent registered public accounting firm for ratification
by the shareholders at the Annual Meeting. In addition, under Bermuda law, our shareholders have the right to appoint our auditor.
Therefore, we are also submitting for approval at the Annual Meeting the appointment of Ernst & Young LLP as our auditor for
statutory purposes under the Companies Act until the close of the next Annual Meeting, and authorization for the Board, acting
through the Audit Committee, to determine the remuneration of Ernst & Young LLP in that capacity.
Change in Independent Registered Public Accounting Firm
In June 2016, the Audit Committee approved
the engagement of Ernst & Young LLP as our independent registered public accounting firm for our fiscal year ended March 31,
2017, and approved the dismissal of PricewaterhouseCoopers LLP as our independent registered public accounting firm. PricewaterhouseCoopers
LLP had served as our independent registered public accounting firm since our inception. On July 6, 2016, we filed a Current Report
on Form 8-K disclosing this change.
PricewaterhouseCoopers LLP’s report on
our consolidated financial statements as of and for the fiscal year ended March 31, 2016 did not contain any adverse opinion or
a disclaimer of opinion and was not qualified or modified as to uncertainty, audit scope or accounting principles. During our fiscal
year ended March 31, 2016, and the subsequent interim period through June 30, 2016, there were: (1) no disagreements (as defined
in Item 304(a)(1)(iv) of Regulation S-K and the related instructions) between us and PricewaterhouseCoopers LLP on any matter of
accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not
resolved to the satisfaction of PricewaterhouseCoopers LLP, would have caused PricewaterhouseCoopers LLP to make reference to the
subject matter of such disagreements in their report for such period; (2) no reportable events (as defined in Item 304(a)(1)(v)
of Regulation S-K); and (3) neither we nor anyone on our behalf, consulted Ernst & Young LLP regarding either: (A) the application
of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered
on our financial statements, and neither a written report was provided to us nor oral advice was provided that Ernst & Young
LLP concluded was an important factor considered by the us in reaching a decision as to any accounting, auditing or financial reporting
issue; or (B) any matter that was either the subject of a disagreement (within the meaning of Item 304(a)(1)(iv) of Regulation
S-K and the related instructions) or a reportable event (within the meaning of Item 304(a)(1)(v) of Regulation S-K).
Independent Registered Public Accounting Firm Fees and Services
The following tables present aggregate fees
billed by Ernst & Young LLP and by PricewaterhouseCoopers LLP to us for our fiscal years ended March 31, 2017 and 2016.
Ernst & Young LLP
|
|
Fiscal Year
Ended
March 31, 2017
|
|
|
Fiscal Year
Ended
March 31, 2016
|
|
Audit Fees
(1)
|
|
$
|
456,500
|
|
|
$
|
—
|
|
Audit Related Fees
|
|
|
—
|
|
|
|
—
|
|
Tax Fees
(2)
|
|
|
—
|
|
|
|
—
|
|
All Other Fees
|
|
|
2,000
|
|
|
|
—
|
|
Total Fees
|
|
$
|
458,500
|
|
|
$
|
—
|
|
|
(1)
|
Includes fees for the audit of our annual consolidated financial statements, including audited
consolidated financial statements presented included in our Annual Report on Form 10-K, review of the unaudited consolidated financial
statements included in our Quarterly Reports on Form 10-Q, and for services that are normally provided by Ernst & Young LLP
in connection with statutory and regulatory filings or engagements, including issuance of consents.
|
|
(2)
|
Includes fees for professional services for international tax compliance, supporting other tax-related
regulatory requirements primarily in the transfer pricing area, and international tax consulting and planning services.
|
PricewaterhouseCoopers LLP
|
|
Fiscal Year
Ended
March 31, 2017
|
|
|
Fiscal Year
Ended
March 31, 2016
|
|
Audit Fees
(1)
|
|
$
|
—
|
|
|
$
|
560,000
|
|
Audit Related Fees
|
|
|
—
|
|
|
|
—
|
|
Tax Fees
(2)
|
|
|
—
|
|
|
|
273,550
|
|
All Other Fees
|
|
|
—
|
|
|
|
—
|
|
Total Fees
|
|
$
|
—
|
|
|
$
|
833,550
|
|
|
(1)
|
Includes fees for the audit of our annual consolidated financial statements, including audited
consolidated financial statements presented included in our Annual Report on Form 10-K, review of the unaudited consolidated financial
statements included in our Quarterly Reports on Form 10-Q, and for services that are normally provided by PricewaterhouseCoopers
LLP in connection with statutory and regulatory filings or engagements, including issuance of consents. For our fiscal year ended
March 31, 2016, “Audit Fees” includes $100,000 for services rendered by PricewaterhouseCoopers LLP in connection with
our Form S-1 related to our initial public offering.
|
|
(2)
|
Includes fees for professional services for international tax compliance, supporting other tax-related
regulatory requirements primarily in the transfer pricing area, and international tax consulting and planning services.
|
All fees described above were pre-approved
by the Audit Committee.
Pre-Approval Policies and Procedures
The Audit Committee has adopted a policy and
procedures for the pre-approval of audit and non-audit services rendered by our independent registered public accounting firm.
The policy generally pre-approves specified services in the defined categories of audit services, audit-related services and tax
services up to specified amounts. Pre-approval may also be given as part of the Audit Committee’s approval of the scope of
the engagement of the independent registered public accounting firm or on an individual, explicit, case-by-case basis before the
independent registered public accounting firm is engaged to provide each service. The pre-approval of services may be delegated
to one or more of the Audit Committee’s members, but the decision must be reported to the full Audit Committee at its next
scheduled meeting.
Vote Required
The affirmative vote of the holders of a majority
of our common shares present in person or represented by proxy and voting on the matter at the Annual Meeting will be required
to ratify the selection of Ernst & Young LLP as our independent registered public accounting firm, appoint Ernst & Young
LLP as our auditor for statutory purposes for our fiscal year ending March 31, 2018 and authorize the Board, through the Audit
Committee, to set the remuneration for Ernst & Young LLP. Abstentions will not affect the outcome of the vote on this proposal.
If the shareholders do not approve the appointment
of Ernst & Young LLP and the Audit Committee’s authority to set Ernst & Young LLP’s remuneration, the Audit
Committee will consider the appointment of another auditor to be approved by the shareholders.
We expect that representatives of Ernst &
Young LLP will be present by telephone at the Annual Meeting. They will have an opportunity to make a statement if so desired and
will be available to respond to appropriate questions.
The Board of Directors Recommends
A Vote
In Favor
of Proposal 3.
Executive Officers
The following table sets forth information
concerning our executive officers, including their ages, as of June 30, 2017:
Name
|
|
Age
|
|
Position
(1)
|
David T. Hung, M.D.
|
|
60
|
|
Principal Executive Officer; Chief Executive Officer of Axovant Sciences, Inc.
|
Gregory M. Weinhoff, M.D.
|
|
46
|
|
Principal Financial Officer; Chief Financial Officer of Axovant Sciences, Inc.
|
Marion McCourt
|
|
57
|
|
Principal Operating Officer; Chief Operating Officer and President of Axovant Sciences, Inc.
|
Lawrence T. Friedhoff, M.D., Ph.D.
|
|
68
|
|
Chief Development Officer of Axovant Sciences, Inc.
|
Mark Altmeyer
(2)
|
|
56
|
|
Chief Commercial Officer and President of Axovant Sciences GmbH
|
Stephen Mohr
|
|
57
|
|
General Counsel of Axovant Sciences, Inc.
|
|
(1)
|
Unless otherwise indicated, all executive officers are
employees of Axovant Sciences, Inc., our wholly owned subsidiary.
|
|
(2)
|
Employee of Axovant Sciences GmbH, our wholly owned subsidiary
and principal operating company.
|
Following is a brief biography of each of our
executive officers who are not also directors. A biography of Dr. Hung is set forth above under “Proposal 1, Election of
Directors.”
Gregory M. Weinhoff, M.D.
Dr. Weinhoff has served as our Principal Financial
Officer and the Chief Financial Officer of Axovant Sciences, Inc. since August 2015. Dr. Weinhoff was employed by Collinson Howe
Venture Partners, an investment advisory firm, from 2001 until August 2015 and during that time served as a Member of the General
Partners of various CHL Medical Partners affiliated venture capital funds. From 2000 to 2001, he was a senior associate at J. H.
Whitney & Co., a private equity firm, where he concentrated on private equity investments in healthcare technology and services
companies. Prior to his graduate training, Dr. Weinhoff was a financial analyst in the Healthcare Corporate Finance Group
at Morgan Stanley & Co., an investment bank. Dr. Weinhoff received his A.B. in economics from Harvard College, his M.D.
from Harvard Medical School and his M.B.A. from Harvard Business School.
Marion McCourt
Ms. McCourt has served as our Principal Operating
Officer and the Chief Operating Officer and President of Axovant Sciences, Inc. since April 2017. Ms. McCourt previously served
as chief operating officer of Medivation, Inc. from February 2016 until its acquisition by Pfizer Inc. in September 2016. Previously,
Ms. McCourt worked at Amgen Inc., a biotechnology company, where she most recently served as a Vice President in U.S. Commercial
Operations from February 2014 to January 2016. From May 2013 to January 2014, Ms. McCourt served as Vice President and General
Manager at Amgen where she was responsible for the bone health and primary care business unit. From 2012 to 2013, she was Chief
Operating Officer for AstraZeneca U.S., a division of AstraZeneca plc, a biotechnology company. Her responsibilities included oversight
and leadership of all U.S. commercial functions, including medical affairs, business development, finance, human resources, legal,
operations, and corporate affairs. During her 12-year tenure at AstraZeneca plc, Ms. McCourt was President and Chief Executive
Officer of AstraZeneca Canada Inc. from 2011 to 2012 and also held the following roles at AstraZeneca Pharmaceuticals LP, a subsidiary
of AstraZenaca plc: Vice President U.S. Business Development, Strategy & Launch; Vice President of Business Units; and Vice
President Managed Markets, Government & Policy. She is currently a member of the boards of CytomX Therapeutics, Inc., a biopharmaceutical
company, and SCYNEXIS, Inc. Ms. McCourt’s non-profit board memberships include Girls on the Run International and MicroClinic2020.
Ms. McCourt received her B.S. in Biology from Lafayette College.
Lawrence T. Friedhoff, M.D., Ph.D.
Dr. Friedhoff has served as the Chief Development
Officer of Axovant Sciences, Inc. since March 2015. Since May 2014, Dr. Friedhoff has served as Senior Vice President, Research
and Development of Roivant Sciences, Inc. From 2003 to 2014,
Dr. Friedhoff served as Chief Executive
Officer and President of Pharmaceutical Special Projects Group, LLC, a drug development consulting company where he provided drug
development consulting services to international pharmaceutical companies. As part of his work for the Pharmaceutical Special Projects
Group, Dr. Friedhoff served as Chief Clinical Officer of Mitotech S.A., a Pharmaceutical Special Projects Group client, from March
2014 to February 2015. From 2007 to 2014, Dr. Friedhoff served as Chief Executive Officer of Senex Biotechnology, Inc., a drug
discovery and development company and continues to serve as a member of the board of directors. From 1998 to 2003, Dr. Friedhoff
served as Executive Vice President, Research and Development of Andrx Corporation, a brand and generic pharmaceutical company,
leading its Branded Drug Development efforts. From 1988 to 1998, Dr. Friedhoff worked for subsidiaries of Eisai, Co. Ltd., ultimately
serving as Executive Vice President, Research and Development of Eisai, Inc., a subsidiary of Eisai Co. Ltd., where he led the
drug development team for Aricept, a branded drug used to treat Alzheimer’s disease. Prior to Eisai, Dr. Friedhoff worked
for ER Squibb, Inc. (eventually Bristol-Myers Squibb Company), a biopharmaceutical company, including as a Clinical Pharmacology
Director. Dr. Friedhoff received his B.S. in Chemistry from New York University, his M.D. from the New York University School of
Medicine and his Ph.D. in Chemistry from Columbia University Graduate School.
Mark Altmeyer
Mr. Altmeyer has served as the President and
Chief Commercial Officer of Axovant Sciences GmbH since October 2016 and he previously served as the President and Chief Commercial
Officer of Axovant Sciences, Inc. from March 2015 to October 2016. From February 2009 to December 2014, Mr. Altmeyer served
as Chief Executive Officer and President of Otsuka America Pharmaceutical, Inc., a pharmaceutical company. Prior to his time at
Otsuka, Mr. Altmeyer served in a number of executive leadership roles at Bristol-Myers Squibb Company, including Senior Vice President,
Global Commercialization from 2006 to 2008 and Senior Vice President, Neuroscience Business Unit from 2002 to 2005 during the approval
and launch of Abilify, a branded drug used to treat multiple psychiatric conditions, including schizophrenia, depression and bipolar
disorder. Mr. Altmeyer currently serves as a member of the board of directors of Myovant Sciences Ltd. He also serves on the non-profit
board of Contact of Mercer County. Mr. Altmeyer received his B.A. in economics from Middlebury College and his M.B.A. from Harvard
Business School.
Stephen Mohr
Mr. Mohr has served as the General Counsel
of Axovant Sciences, Inc. since May 2017. From August 2016 to May 2017, he worked as a consultant specializing in legal and compliance
matters affecting the pharmaceutical industry. From July 2004 to July 2016, he served in a number of senior roles at AstraZeneca
U.S., including U.S. General Counsel and Deputy General Counsel, North America and Global Compliance Officer. Prior to that, he
held roles of increasing responsibility during a 14-year career at Bristol-Myers Squibb Company, including Vice President and Senior
Counsel, U.S. Medicines. Earlier in his career, he specialized in litigation matters at the law firms Weiss Dawid Fross Zelnick
& Lehrman, PC (now Fross Zelnick Lehrman & Zissu) and Rivkin Leff Sherman & Radler (now Rivkin Radler LLP). Mr. Mohr
received his B.A. in music from Yale University and his J.D. from the University of Virginia School of Law.
Security Ownership of
Certain Beneficial Owners and Management
The following table sets forth certain information
regarding the ownership of our common shares as of June 30, 2017 by:
|
·
|
all those known by us to be beneficial owners of more than five percent of our common shares;
|
|
·
|
each of the executive officers named in the Summary Compensation Table;
|
|
·
|
each of our directors; and
|
|
·
|
all of our executive officers and directors of as a group.
|
This table is based upon information supplied
by officers, directors and principal shareholders and filings with the SEC. Unless otherwise indicated in the footnotes to this
table and subject to community property laws where applicable, we believe that each of the shareholders named in this table has
sole voting and dispositive power with respect to the shares indicated as beneficially owned. Applicable percentages are based
on 107,473,925 shares outstanding on June 30, 2017, adjusted as required by rules promulgated by the SEC. Except as set forth below,
the principal business address of each such person or entity is c/o Axovant Sciences Ltd., Suite 1, 3rd Floor, 11-12 St. James’s
Square, London, SW1Y 4LB, United Kingdom.
Beneficial
Owner
|
|
Number
of Shares
Beneficially Owned
|
|
|
Percent
of Shares
Beneficially Owned
|
|
5% Shareholders:
|
|
|
|
|
|
|
|
|
Roivant Sciences Ltd.
(1)
|
|
|
75,000,000
|
|
|
|
69.8
|
%
|
Named Executive Officers and Directors:
|
|
|
|
|
|
|
|
|
Vivek Ramaswamy
(2)
|
|
|
357,000
|
|
|
|
*
|
|
Gregory M. Weinhoff, M.D.
(2)
|
|
|
829,096
|
|
|
|
*
|
|
Lawrence T. Friedhoff, M.D., Ph.D.
(2)
|
|
|
600,000
|
|
|
|
*
|
|
David T. Hung, M.D.
(3)
|
|
|
4,539,375
|
|
|
|
4.1
|
|
Kathryn E. Falberg
(4)
|
|
|
123,937
|
|
|
|
*
|
|
Patrick Machado
(1)(5)
|
|
|
75,000,000
|
|
|
|
69.8
|
|
Berndt Modig
(2)
|
|
|
159,000
|
|
|
|
*
|
|
Ilan Oren
|
|
|
—
|
|
|
|
—
|
|
Atul Pande, M.D.
(2)
|
|
|
149,000
|
|
|
|
*
|
|
W. Anthony Vernon
(4)
|
|
|
123,937
|
|
|
|
*
|
|
All executive officers and directors as a group (13 persons)
(6)
|
|
|
83,836,045
|
|
|
|
72.5
|
%
|
|
*
|
Represents beneficial ownership of less than one percent.
|
|
(1)
|
As reported in Schedules 13D filed with the SEC on October 19, 2016 and June 14, 2017, Roivant
Sciences Ltd. (“RSL”) directly owns and has voting and dispositive power over 75,000,000 common shares. Dispositive
decisions of RSL require approval by a majority of the directors of RSL, including (a) at least two independent directors (as defined
in RSL’s internal governance documents) or (b) if there is only one independent director, that sole independent director.
Patrick Machado and Andrew Lo are each currently serving as independent directors of RSL and therefore may each be deemed to share
dispositive power over, and to be an indirect beneficial owner of, our common shares directly beneficially owned by RSL. Vivek
Ramaswamy, a member of the Board, is also a director of RSL but does not have voting or dispositive power over the shares held
of record by RSL. In addition, RSL’s internal governance documents provide that three principal shareholders of RSL, Dexxon,
Viking and QVT (each as defined below), voting unanimously, have the right to override certain decisions of the board of directors
of RSL, including with respect to dispositions of our common shares. Accordingly, Dexxon Holdings Limited (“Dexxon”),
Viking Global Investors LP, Viking Global Performance LLC, Viking Global Equities LP, Viking Global Equities II LP, VGE III Portfolio
Ltd., Viking Long Fund GP LLC, Viking Long Fund Master Ltd., Viking Global Opportunities GP LLC, Viking Global Opportunities Portfolio
GP LLC, Viking Global Opportunities Illiquid Investments Sub-Master LP, O. Andreas Halvorsen, Rose S. Shabet and David C. Ott (collectively,
“Viking”) and QVT Financial LP, QVT Financial GP LLC, QVT Associates GP LLC and QVT Fund V LP (collectively, “QVT”)
may each be deemed to have shared dispositive power, and therefore, beneficial ownership, over our common shares owned directly
by RSL. The principal business address of RSL is Suite 1, 3rd Floor, 11-12 St. James’s Square, London, SW1Y 4LB, United Kingdom.
|
|
(2)
|
Represents common shares issuable pursuant to immediately exercisable option(s).
|
|
(3)
|
Includes 539,375 common shares and 4,000,000 common shares issuable pursuant to an immediately exercisable option.
|
|
(4)
|
Includes 53,937 common shares and 70,000 common shares issuable pursuant to an immediately exercisable option.
|
|
(5)
|
Mr. Machado was appointed as a member of the Board, effective June 15, 2017, and was granted an option to purchase 70,000 common
shares on July 17, 2017, in accordance with our option grant policy. This option is immediately exercisable.
|
|
(6)
|
Includes 75,649,549 common shares and 8,186,496 common shares issuable pursuant to immediately exercisable options.
|
Section 16(a) Beneficial Ownership Reporting
Compliance
Section 16(a) of the Exchange Act requires
our directors and executive officers, and persons who own more than ten percent of a registered class of our equity securities,
to file with the SEC initial reports of ownership and reports of changes in ownership of common shares and other equity securities
of Axovant. Officers, directors and greater than ten percent shareholders are required by SEC regulation to furnish us with copies
of all Section 16(a) forms they file.
To our knowledge, based solely on a review
of the copies of such reports furnished to us and written representations that no other reports were required, during our fiscal
year ended March 31, 2017, all Section 16(a) filing requirements applicable to our officers, directors and greater than ten percent
beneficial owners were complied with.
Executive Compensation
Summary Compensation Table for Fiscal Year Ended March 31,
2017
The following table sets forth, for our fiscal
years ended March 31, 2017 and 2016, which we refer to as our 2016 and 2015 fiscal year, respectively, compensation awarded or
paid to, or earned by, our Principal Executive Officer and our two other most highly compensated executive officers as of March
31, 2017, who are referred to herein as our named executive officers.
Name and Principal Position
|
|
Fiscal
Year
|
|
Salary
|
|
|
Option Awards
(1)
|
|
|
Non-Equity Incentive
Plan Compensation
|
|
|
Other
(2)
|
|
|
Total
|
|
Vivek Ramaswamy
|
|
2016
|
|
$
|
360,500
|
|
|
$
|
3,228,308
|
|
|
$
|
200,528
|
|
|
$
|
41,312
|
|
|
$
|
3,830,648
|
|
Principal Executive Officer
(3)
|
|
2015
|
|
|
350,000
|
|
|
|
—
|
|
|
|
175,000
|
|
|
|
37,698,156
|
|
|
|
38,223,156
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gregory M. Weinhoff, M.D.
|
|
2016
|
|
|
360,500
|
|
|
|
1,808,576
|
|
|
|
200,528
|
|
|
|
—
|
|
|
|
2,369,604
|
|
Principal Financial Officer
|
|
2015
|
|
|
225,481
|
|
|
|
5,000,000
|
|
|
|
112,740
|
|
|
|
—
|
|
|
|
5,338,221
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lawrence T. Friedhoff, M.D., Ph.D.
|
|
2016
|
|
|
360,500
|
|
|
|
1,582,504
|
|
|
|
200,528
|
|
|
|
7,712,301
|
|
|
|
9,855,833
|
|
Chief Development Officer of Axovant Sciences, Inc.
|
|
2015
|
|
|
297,917
|
|
|
|
—
|
|
|
|
148,958
|
|
|
|
12,216,100
|
|
|
|
12,662,975
|
|
|
(1)
|
Amounts reported in this column do not reflect the amounts
actually received by our named executive officers. Instead, these amounts reflect the aggregate grant date fair value of each
stock option granted to the named executive officers during the indicated fiscal year, as computed in accordance with FASB ASC
718. Assumptions used in the calculation of these amounts are included in the notes to our consolidated financial statements included
in our Annual Report on Form 10-K for our fiscal year ended March 31, 2017. As required by SEC rules, the amounts shown exclude
the impact of estimated forfeitures related to service-based vesting conditions. Our named executive officers will only realize
compensation to the extent the trading price of our common shares is greater than the exercise price of such stock options.
|
|
(2)
|
Amounts in this column reflect expenses incurred related
to services provided to us by Mr. Ramaswamy and Dr. Friedhoff, each of whom was employed by Roivant Sciences, Inc. during the
periods presented. With respect to Mr. Ramaswamy, $36.7 million for our fiscal year 2016 was share-based compensation expense
and $41,312 and $1.0 million for our fiscal years 2016 and 2015, respectively, were incurred pursuant to a compensation arrangement
provided to Mr. Ramaswamy through Roivant Sciences Ltd. With respect to Dr. Friedhoff, $7.7 million and $12.1 million for our
fiscal years 2016 and 2015, respectively, were share-based compensation expense and $40,401 and $102,658 for our fiscal years
2016 and 2015, respectively, were incurred pursuant to the intercompany services agreement described below under “Transactions
with Related Persons—Certain Related-Person Transactions—Services Agreements with Roivant Sciences, Inc. and Roivant
Sciences GmbH.” In each case, the share-based compensation expense was incurred as a result of equity awards made to Mr.
Ramaswamy and Dr. Friedhoff, as applicable, by affiliates of Roivant Sciences Ltd. Roivant Sciences Ltd. allocated share-based
compensation expense to us based upon the relative percentage of time utilized by Roivant Sciences, Inc. employees on our matters.
|
|
(3)
|
In April 2017, in connection with the appointment of Dr.
Hung as our Principal Executive Officer and Chief Executive Officer of Axovant Sciences, Inc., Mr. Ramaswamy resigned as our Principal
Executive Officer and Chief Executive Officer of Axovant Sciences, Inc.
|
Narrative to Summary Compensation Table
We review compensation annually for all employees,
including our named executive officers. In setting executive base salaries and bonuses and granting equity incentive awards, we
consider compensation for comparable positions in the market, the historical compensation levels of our executives, individual
performance as compared to our expectations and objectives, our desire to motivate our employees to achieve short- and long-term
results that are in the best interests of our stockholders and a long-term commitment to Axovant. We do not target a specific competitive
position or a specific mix of compensation among base salary, bonus or long-term incentives.
The Compensation Committee of the Board has
historically determined compensation for our named executive officers. The Compensation Committee typically reviews and discusses
management’s proposed compensation with the Principal Executive Officer for all named executive officers other than the Principal
Executive Officer. Based on those discussions and its discretion, the Compensation Committee then recommends the compensation for
each named executive officer. The Compensation Committee, without members of management present, discusses and ultimately approves
the compensation of our named executive officers. For our fiscal years ended March 31, 2017 and 2016, the Compensation Committee
retained Radford, a compensation consulting firm, to evaluate and make recommendations with respect to our executive compensation
program.
Annual Cash Bonus
We seek to motivate and reward our executives
for achievements relative to our corporate goals and expectations for each fiscal year. The target cash bonus is 50% of each named
executive officer’s base salary, subject to the achievement of individual performance criteria to be determined by the Board
or the Compensation Committee, as well as overall company performance criteria. These actual bonus amounts are reflected in the
“Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table above.
For our fiscal year ended March 31, 2017,
bonuses were awarded based on our achievement of specified corporate goals, including the clinical development of intepirdine and
nelotanserin, finance goals, as well as individual goals specific to each named executive officer. For each named executive officer,
the bonuses were weighted 75% based on the achievement of the corporate goals and 25% based on the achievement of individual objectives
established for each officer at the beginning of our fiscal year. In April 2017, the Compensation Committee awarded each named
executive officer 111.25% of his target bonus for the year ended March 31, 2017, based on each named executive officer’s
achievement of corporate goals at the 105% level and individual goals at the 130% level.
For the year ended March 31, 2016, bonuses
were awarded based on our achievement of specified corporate goals, including the clinical development of intepirdine and nelotanserin,
as well as personal goals specific to each named executive officer. For each named executive officer, the bonuses were weighted
75% based on the achievement of the corporate goals and 25% based on the achievement of individual objectives established for each
officer at the beginning of the fiscal year or, in the case of Dr. Weinhoff, at the commencement of his employment. Based
on the level of achievement, in April 2016 the Compensation Committee awarded each named executive officer 100% of his target bonus
for the year ended March 31, 2016.
Outstanding Equity Awards as of March 31, 2017
The following table shows certain information
regarding outstanding equity awards held by our named executive officers as of March 31, 2017. There were no stock awards outstanding
at March 31, 2017, and all awards were granted under our 2015 Equity Incentive Plan.
Name
|
|
Number of
Securities Underlying
Unexercised Options
Exercisable
(1)
|
|
|
Number of
Securities Underlying
Unexercised Options
Unexercisable
(2)(3)
|
|
|
Option
Exercise
Price
|
|
|
Option
Expiration
Date
|
|
|
|
|
|
|
|
|
|
|
|
|
Vivek Ramaswamy
|
|
|
—
|
|
|
|
357,000
|
|
|
$
|
13.00
|
|
|
4/28/2026
|
Gregory M. Weinhoff, M.D.
|
|
|
170,286
|
|
|
|
283,810
|
|
|
|
16.49
|
|
|
9/14/2025
|
|
|
|
—
|
|
|
|
200,000
|
|
|
|
13.00
|
|
|
4/28/2026
|
Lawrence T. Friedhoff, M.D., Ph.D.
|
|
|
112,502
|
|
|
|
112,498
|
|
|
|
0.90
|
|
|
3/17/2025
|
|
|
|
—
|
|
|
|
175,000
|
|
|
|
13.00
|
|
|
4/28/2026
|
|
(1)
|
Because all options granted to the named executive officers are exercisable immediately subject
to a repurchase right in our favor which lapses as the option vests, this column reflects the number of options held by the named
executive officers that were exercisable and vested as of March 31, 2017.
|
|
(2)
|
Because options granted to the named executive officers are exercisable immediately subject to
a repurchase right in our favor which lapses as the option vests, this column reflects the number of options held by the named
executive officers that were exercisable and unvested as of March 31, 2017.
|
|
(3)
|
Each of these options vests as to 25% of the underlying common shares one year from the date of
grant, with the remaining common shares vesting in 12 equal quarterly installments thereafter, provided the named executive officer
has provided continuous service to us through each such date. All common shares underlying each of these options will become fully
vested upon a change in control, as that term is defined in our 2015 Equity Incentive Plan.
|
Employment, Severance and Change in Control Arrangements
2016 Named Executive Officers
During our fiscal years ended March 31,
2017 and 2016, each of Mr. Ramaswamy and Drs. Weinhoff and Friedhoff was employed by our wholly owned subsidiary, Axovant Sciences,
Inc. The employment agreement or offer letter for each of our named executive officers sets forth the initial terms and conditions
of his employment. These agreements provide for at-will employment and set forth the officer’s annual base salary, performance
bonus target opportunity, initial equity incentive grant, terms of severance and eligibility for employee benefits. Each of them
provided services to us pursuant to the intercompany
services agreement described below under
“Transactions with Related Persons—Certain Related-Person Transactions—Services Agreements with Roivant Sciences,
Inc. and Roivant Sciences GmbH.” In April 2017, in connection with the appointment of Dr. Hung as our Principal Executive
Officer and Chief Executive Officer of Axovant Sciences, Inc., Mr. Ramaswamy resigned as our Principal Executive Officer and Chief
Executive Officer of Axovant Sciences, Inc. For the purposes of this discussion, references to “we,” “us”
and “our” will be deemed to refer to Axovant Sciences, Inc. as context requires.
Under each named executive officer’s
employment agreement or offer letter, such executive officer is eligible for the following severance and change in control benefits,
conditioned upon delivering a release of claims in our favor:
|
·
|
If we terminate the officer’s employment without cause or the officer resigns for good reason,
then we will pay to the officer a one-time cash payment equal to the sum of his annual base salary and annual bonus target opportunity.
We will also reimburse the officer for continued medical coverage for one year if he timely elects such continued coverage.
|
|
·
|
If the officer is employed by us immediately prior to a change in control, then all remaining common
shares underlying the officer’s outstanding options will vest and, in the case of Mr. Ramaswamy and Dr. Weinhoff, we will
pay to the executive officer a pro-rated portion of his annual target bonus based on the higher of target or actual achievement
of pro-rated performance targets as of the change in control.
|
|
·
|
If the officer is employed by us immediately prior to a change in control and, within one year
after the change in control, the officer’s employment is terminated without cause or the officer resigns for good reason,
then he will receive a one-time cash payment equal to 1.5 times the sum of (i) his current annual base salary and (ii) his annual
bonus target opportunity. We will also reimburse the officer for continued medical coverage for 18 months if he timely elects such
continued coverage.
|
The definitions of “cause,”
“good reason” and “change in control” are set forth in the individual employment agreements.
We consider the severance and change in
control benefits described above to be critical to attracting and retaining high caliber executives. We believe that appropriately
structured severance and change in control benefits, including accelerated vesting provisions, minimize the distractions and reduce
the risk that an executive voluntarily terminates his employment with us during times of uncertainty, such as before an acquisition
is completed. We believe that our existing arrangements allow each named executive officer to focus on continuing normal business
operations and, in the event of a change in control, on the success of a potential business combination, rather than on how business
decisions that may be in the best interest of our shareholders will impact his own financial security.
David T. Hung, M.D.
On April 7, 2017, the Board appointed Dr.
Hung as our Principal Executive Officer. Dr. Hung is the Chief Executive Officer of our wholly owned subsidiary, Axovant Sciences,
Inc. Pursuant to Dr. Hung’s employment agreement with Axovant Sciences, Inc., he will receive an annual base salary of $550,000.
He will also be eligible to receive an annual discretionary cash bonus, with a target amount equal to at least 60% of his then-current
annual base salary, subject to his achievement of individual performance criteria to be determined by the Board or the Compensation
Committee, as well as overall company performance criteria.
On April 7, 2017, the Compensation Committee
approved the grant to Dr. Hung of two options, each to purchase 2,000,000 common shares (or an aggregate of 4,000,000 common shares)
at an exercise price equal to $15.13, the closing price of the common shares on the NYSE on that date. Each option is fully exercisable
upon the grant date, subject to a repurchase right in our favor which lapses as the option vests. One of the options to purchase
2,000,000 common shares vests over a period of five years, with 20% of our common shares underlying the option vesting on April
7, 2018 and the remainder vesting in 16 equal quarterly installments thereafter. The other option to purchase 2,000,000 common
shares, or the Second Option, vests over a period of five years, with 20% of our common shares underlying the option vesting on
April 7, 2018 and the remainder vesting in 16 equal quarterly installments thereafter, but only if the 30-consecutive day volume-weighted
average closing price of our common shares equals or exceeds $100 per share at any point during the 10-year term of the option.
If, however, by December 31, 2017 our MINDSET Phase 3 trial (i) has not demonstrated statistical significance with respect
to primary outcome measures required for approval of intepirdine by the U.S. Food and Drug Administration, or the FDA, or (ii)
has demonstrated any safety factors that have a reasonable likelihood of impeding FDA approval then, on and following the date
of such determination, the $100 per share price in the previous sentence will be reduced to $15 per share. Pursuant to the terms
of
his employment agreement, Dr. Hung is also
entitled to receive an option to purchase 2,000,000 common shares, or the Third Option, on the earlier of December 29, 2017 or
his termination without cause or resignation for good reason (as those terms are defined in his employment agreement), at an exercise
price equal to the closing price of our common shares on the NYSE on that date. The Third Option will be fully exercisable upon
the grant date and will vest over a period of five years measured from April 7, 2017, with 20% of our common shares underlying
the option vesting on April 7, 2018 and the remainder vesting in 16 equal quarterly installments thereafter, but only if the 30-consecutive
day volume-weighted average closing price of our common shares equals or exceeds 150% of the Third Option’s exercise price
per share at any point during the 10-year term of the option. Dr. Hung will also be eligible to receive annual discretionary option
grants in accordance with our benchmarking policies. If a change in control of Axovant occurs, then 100% of any unvested common
shares underlying Dr. Hung’s outstanding options will vest in full upon the consummation of the change in control. Pursuant
to the terms of his employment agreement, Dr. Hung has agreed not to sell, dispose of, transfer, make any short sale of, grant
any option for the purchase of, or enter into any hedging or similar transaction with the same economic effect as a sale with respect
to any of our common shares or other securities, until April 7, 2019.
Dr. Hung’s employment is “at
will” and may be terminated at any time, with or without cause. Under his employment agreement, in the event that Dr. Hung
is terminated without cause or resigns for good reason, then we will be obligated to pay Dr. Hung an amount equal to two times
the sum of his then-current annual base salary and annual bonus target opportunity. This amount will be payable in pro rata installments
in our ordinary payroll cycle unless such termination or resignation occurs within 24 months following a change in control, in
which case, such amount will be payable in one lump sum within 60 days of such termination or resignation. In addition, he will
also be eligible to receive reimbursements for continued medical coverage for 18 months after any such termination or resignation.
If Dr. Hung is terminated or resigns due to death or disability, then we will be obligated to pay Dr. Hung (or his estate) an amount
equal to his annual bonus target opportunity for the year in which such termination or resignation occurs, pro-rated to the date
of such termination or resignation. Further, in the event that Dr. Hung is terminated without cause or resigns for good reason,
then 100% of any unvested common shares underlying his outstanding options will vest in full upon such termination or resignation,
provided that, if any such option is subject to performance-based vesting conditions or other criteria that are not based solely
on time, then the time-based conditions will be deemed satisfied as of the date of such termination or resignation, and the options
otherwise will remain outstanding and eligible to vest upon achievement of the applicable performance-based requirements, regardless
of the fact that Dr. Hung is no longer employed by Axovant Sciences, Inc., following the termination and until (i) with respect
to the Second Option, (x) if the vesting price threshold is $100, then the lesser of seven years from the termination date or the
remaining term of such option, and (y) if the vesting price threshold is $15, then the remaining term of the option, and (ii) with
respect to the Third Option, the lesser of seven years from the termination date or the remaining term of the option. If Dr. Hung
is subjected to excise tax pursuant to Sections 280G and 4999 of the Code, he will receive an additional payment so that he will
be put in the same economic position as if such excise tax had not applied.
Advisor Agreement with Roivant Sciences,
Inc.
On June 1, 2017, Dr. Hung, our Principal
Executive Officer, entered into an advisor agreement with Roivant Sciences, Inc. Under that agreement, Dr. Hung will notify Roivant
Sciences, Inc. in writing of any non-neurology biopharmaceutical or healthcare related development, licensing, or other business
opportunities identified by or offered to him that he has not elected to pursue without financial support, licensing or strategic
collaboration from any other third party. Following written notice, Roivant Sciences, Inc. will have a 90-day right of first negotiation
during which the parties would engage in good faith, exclusive negotiations regarding the terms by which Roivant Sciences, Inc.
could participate, license, or acquire such non-neurology opportunity. Business opportunities within the neurology field will continue
to be governed by Dr. Hung’s employment agreement with us, which will prevail in the event of any conflicts with the advisor
agreement. In exchange for the services under the advisor agreement, Dr. Hung will receive a restricted stock unit award of 100,000
common shares of Roivant Sciences Ltd. The advisor agreement will terminate upon Dr. Hung’s termination of employment with
us or resignation for good reason. In the event of a resignation without good reason, the advisor agreement would terminate after
any pending exclusivity period under the agreement.
Director Compensation
The following table shows, for our fiscal
year ended March 31, 2017, certain information with respect to the compensation of our non-employee directors. During our fiscal
year ended March 31, 2017, Vivek Ramaswamy and Marianne Romeo were also directors but did not receive any compensation for their
services as a director. Mr. Ramaswamy’s compensation is set forth above under “Executive Compensation—Summary
Compensation Table.” Ms. Romeo resigned as a director in April 2017 and Dr. Olanoff and Dr. Pisano resigned as directors
in June 2017.
Director Compensation for our Fiscal
Year Ended March 31, 2017
Name
|
|
Fees
Earned or
Paid in Cash
|
|
|
Option
Awards
(1)
|
|
|
All Other
Compensation
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Berndt Modig
|
|
$
|
69,000
|
|
|
$
|
405,863
|
(2)
|
|
$
|
—
|
|
|
$
|
474,863
|
|
Lawrence Olanoff, M.D., Ph.D.
|
|
|
42,886
|
|
|
|
405,863
|
(3)
|
|
|
9,900
|
(4)
|
|
|
458,649
|
|
Ilan Oren
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Atul Pande, M.D.
|
|
|
60,500
|
|
|
|
405,863
|
(5)
|
|
|
—
|
|
|
|
466,363
|
|
Gary Pisano, Ph.D.
|
|
|
42,019
|
|
|
|
834,096
|
(6)
|
|
|
—
|
|
|
|
876,115
|
|
|
(1)
|
Amounts reported in this column do not reflect the amounts actually received by the director. Instead,
these amounts reflect the aggregate grant date fair value of each stock option granted to the director during the year, as computed
in accordance with FASB ASC 718. Assumptions used in the calculation of these amounts are included in the notes to our consolidated
financial statements included in our Annual Report on Form 10-K for our fiscal year ended March 31, 2017. As required by SEC rules,
the amounts shown exclude the impact of estimated forfeitures related to service-based vesting conditions. Our directors will only
realize compensation to the extent the trading price of our common shares is greater than the exercise price of such stock options.
|
|
(2)
|
On April 29, 2016, pursuant to our non-employee director compensation policy, we granted an option
to purchase 47,000 common shares to Mr. Modig. This option has an exercise price of $13.00 per share and vested as to 100% of the
underlying common shares on April 29, 2017. As of March 31, 2017, Mr. Modig had options outstanding to purchase an aggregate of
132,000 common shares, which were fully exercisable and vested as to 56,666 common shares.
|
|
(3)
|
On April 29, 2016, pursuant to our non-employee director compensation policy, we granted an option
to purchase 47,000 common shares to Dr. Olanoff. This option has an exercise price of $13.00 per share and vested as to 100% of
the underlying common shares on April 29, 2017. As of March 31, 2017, Dr. Olanoff had options outstanding to purchase an aggregate
of 122,000 common shares, which were fully exercisable and vested as to 43,750 common shares. Dr. Olanoff resigned from the Board
effective as of June 1, 2017. In recognition for his service to the Board, the Board accelerated 25,000 common shares underlying
his options and, as a result, upon his resignation, 122,000 common shares underlying his options were fully exercisable and vested.
All remaining unvested common shares underlying options held by Dr. Olanoff, including the annual option grant made in April 2017
as described below, were forfeited in full.
|
|
(4)
|
Dr. Olanoff serves as a consultant to us pursuant to an arrangement under which he provides advice
and counsel in connection with the design and conduct of our clinical trials and the evaluation of potential product candidates.
During our fiscal year ended March 31, 2017, we paid Dr. Olanoff $9,900 pursuant to this arrangement.
|
|
(5)
|
On April 29, 2016, pursuant to our non-employee director compensation policy, we granted an option
to purchase 47,000 common shares to Dr. Pande. This option has an exercise price of $13.00 per share and vested as to 100% of the
underlying common shares on April 29, 2017. As of March 31, 2017, Dr. Pande had options outstanding to purchase an aggregate of
122,000 common shares, which were fully exercisable and vested as to 50,000 common shares.
|
|
(6)
|
On June 15, 2016, pursuant to our non-employee director compensation policy, we granted an option
to purchase 94,000 common shares to Dr. Pisano. This option has an exercise price of $12.99 per share and vested over a period
of three years from the date of grant in three equal annual installments. As of March 31, 2017, Dr. Pisano held only this option,
none of which had vested as of that date. Dr. Pisano resigned from the Board effective as of June 1, 2017. In recognition for his
service to the Board, the Board accelerated 31,333 common shares underlying his option and, as a result, upon his resignation,
62,667 common shares underlying his options were fully exercisable and vested. All remaining unvested common shares underlying
options held by Dr. Pisano, including the annual option grant made in April 2017 as described below, were forfeited in full.
|
S
ummary of Director
Compensation Program
Non-employee directors are compensated
for service on the Board through a combination of cash retainer and equity grants. We also reimburse directors for expenses incurred
in serving as a director. Directors who are also employed by us or our affiliates are not separately compensated for their service
on the Board.
As
of April 2017, we amended our Non-Employee Director Compensation Policy to provide that cash compensation and equity awards for
directors would be commensurate with the market 50
th
percentile as determined and recommended by our compensation consultant
for Board membership and committee roles. For our fiscal year ended March 31, 2018, each non-employee director is paid an annual
Board service retainer of $40,000. In addition, non-employee directors are compensated an additional $9,000 for serving on the
Audit Committee ($20,000 if serving as Chairperson of the Audit Committee); $6,000 for serving on the Compensation Committee ($12,000
if serving as Chairperson of the Compensation Committee); and $5,000 for serving on the Nominating and Corporate Governance Committee
(and $8,000 if serving as Chairperson of the Nominating and Corporate Governance Committee). Cash retainers are paid quarterly
in arrears.
For our fiscal year ended March 31, 2018,
and unless otherwise approved by the Board, each new non-employee director will receive an initial option grant to purchase 54,000
common shares of common stock. On or around April 30 of each year, each continuing non-employee director will receive an additional
option grant. For April 2017, this option grant was for 27,000 common shares. Option grants have an exercise price equal to the
closing price of our common stock on the NYSE on the grant date. Initial grants vest in three equal annual installments, and annual
grants vest in full on the first anniversary of the grant date, in each case subject to the non-employee director’s continuous
service through the vesting date. Option grants to non-employee directors expire on the ten-year anniversary of the grant date.
Mr. Ramaswamy, since he became eligible
to receive compensation as a non-employee director as a result of resigning as our Principal Executive Officer and Chief Executive
Officer of Axovant Sciences, Inc., and Mr. Oren, since his appointment to the Board, have declined to receive any cash or equity
compensation for their service as directors under the non-employee director program.
Transactions With Related Persons
Related-Person Transactions Policy and Procedures
In connection with our initial public offering
in June 2015, we adopted a written Related-Person Transactions Policy that sets forth our policies and procedures regarding the
identification, review, consideration and approval or ratification of “related-person transactions.” For purposes of
our policy only, a “related-person transaction” is a transaction, arrangement or relationship (or any series of similar
transactions, arrangements or relationships) in which we and any “related person” are participants involving an amount
that exceeds $120,000. Transactions involving compensation for services provided to us as an employee, director, consultant or
similar capacity by a related person are not covered by this policy. A related person is any executive officer, director, or more
than 5% shareholder of Axovant, including any of their immediate family members, and any entity owned or controlled by such persons.
Under the policy, where a transaction has
been identified as a related-person transaction, management must present information regarding the proposed related-person transaction
to the Audit Committee (or, where Audit Committee approval would be inappropriate, to another independent body of the Board) for
consideration and approval or ratification. The presentation must include a description of, among other things, the material facts,
the interests, direct and indirect, of the related persons, the benefits to us of the transaction and whether any alternative transactions
were available. To identify related-person transactions in advance, we rely on information supplied by our executive officers,
directors and certain significant shareholders. In considering related-person transactions, the Audit Committee takes into account
the relevant available facts and circumstances including, but not limited to
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the risks, costs and benefits to us;
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the impact on a director’s independence in the event the related person is a director, immediate
family member of a director or an entity with which a director is affiliated;
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the terms of the transaction;
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the availability of other sources for comparable services or products; and
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the terms available to or from, as the case may be, unrelated third parties or to or from employees
generally. In the event a director has an interest in the proposed transaction, the director must recuse himself or herself from
the deliberations and approval.
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The policy requires that, in determining
whether to approve, ratify or reject a related-person transaction, the Audit Committee considers, in light of known circumstances,
whether the transaction is in, or is not inconsistent with, the best interests of Axovant and its shareholders, as the Audit Committee
determines in the good faith exercise of its discretion.
Certain Related-Person Transactions
The following is a description of transactions
since April 1, 2016, or any currently proposed transaction, in which we were or are to be a participant and the amount involved
exceeded or will exceed $120,000, and in which any of our directors, executive officers or holders of more than 5% of our share
capital, or any members of their immediate family, had or will have a direct or indirect material interest.
Information Sharing and Cooperation Agreement
We have entered into an information sharing
and cooperation agreement, or the Cooperation Agreement, with Roivant Sciences Ltd. The Cooperation Agreement, among other things:
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grants us a right of first review on any potential dementia-related product or investment opportunity
that Roivant Sciences Ltd. may consider pursuing; and
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obligates us to deliver periodic financial statements and other financial information to Roivant
Sciences Ltd. and comply with other specified financial reporting requirements.
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Subject to specified exceptions, the Cooperation
Agreement will terminate upon the earlier of the mutual written consent of the parties or when Roivant Sciences Ltd. is no longer
required by U.S. GAAP to consolidate our results of operations and financial position or account for its investment in Axovant
under the equity method of accounting or by any SEC rule to include separate financial statements of Axovant in its filings with
the SEC.
Services Agreements with Roivant Sciences, Inc. and Roivant
Sciences GmbH
In October 2014, we and our wholly owned
subsidiary, Axovant Sciences, Inc., or ASI, entered into a services agreement with Roivant Sciences, Inc., or RSI, a wholly owned
subsidiary of Roivant Sciences Ltd., or RSL, pursuant to which RSI provides us with services in relation to the identification
of potential product candidates and project management of clinical trials, as well as other services related to our development,
administrative and financial functions. In February 2017, following the contribution and assignment of all of our intellectual
property rights to Axovant Sciences GmbH, or ASG, we amended and restated this services agreement effective as of December 13,
2016, as a result of which ASG was added as a recipient of services from RSI. In addition, ASG also entered into a separate services
agreement with Roivant Sciences GmbH, or RSG, a wholly owned subsidiary of RSL, effective as of December 13, 2016, for the provision
of services by RSG to ASG in relation to the identification of potential product candidates and project management of clinical
trials, as well as other services related to development, administrative and financial activities.
Under the terms of both services agreements,
we are obligated to pay or reimburse RSI and RSG for the costs they, or third parties acting on their behalf, incur in providing
services to us or ASG, including administrative and support services as well as research and development services. In addition,
we are obligated to pay to RSI and RSG an amount equal to 10% of the costs incurred in connection with any general and administrative
and research and development services provided directly by RSI and RSG. The parties to the services agreements may agree to adjust
this additional fee on an annual basis to between 8% and 12% of costs incurred in providing research and development services.
These services agreements will continue in perpetuity until terminated by either party upon 60 days’ written notice.
Administrative and support services include,
but are not limited to, payroll, general administrative, corporate and public relations, investor relations, financial marketing,
activities in connection with raising capital, accounting and auditing, tax, health, safety environmental and regulatory affairs,
staffing and recruiting, benefits, information and technology services, purchasing and legal services. Research and development
services include, but are not limited to, preparatory assistance in respect of the identification of product candidates, performance
and oversight of due diligence to evaluate potential product candidates, management and oversight of external consultants in connection
with potential product candidate investment opportunities, participation in meetings with regulatory authorities related to product
candidates, development of plans for potential clinical trials, selection of manufacturers of product candidates, management and
oversight of clinical trials and product manufacturing, analysis of clinical trial data and management of regulatory filings and
approval processes.
For any general and administrative and
research and development activities performed by employees of RSI, RSI will charge back the employee compensation expense to us
plus a pre-determined mark-up. Employee compensation expense, inclusive of base salary and fringe benefits, is determined based
upon the relative percentage of time utilized on our matters. All other costs will be billed back at cost.
Under both services agreements RSI and
RSG have agreed to indemnify us, ASI and ASG and each of their respective officers, employees and directors against all losses
arising out of, due to or in connection with the provision of services (or the failure to provide services) under the services
agreements, except to the extent such losses are the result of the gross negligence or willful misconduct of such indemnified parties.
Such indemnification obligations will not exceed the payments made by us and by ASI and ASG under the services agreements for the
specific service that allegedly caused or was related to the losses during the period in which such alleged losses were incurred.
During our fiscal year ended March 31,
2017, we incurred expenses of $7.9 million, inclusive of mark-up, under the services agreements.
Family Relationships
Geetha Ramaswamy, M.D., the Vice President
of Medical Affairs of Axovant Sciences, Inc. and a former consultant to Roivant Sciences, Inc., is the mother of Vivek Ramaswamy,
the former Chief Executive Officer of Axovant Sciences, Inc. and our former principal executive officer. During our fiscal year
ended March 31, 2017, Dr. Ramaswamy received total cash compensation, consisting of salary and bonus, of $398,125 and a stock option
with a grant date fair value, as computed in accordance with FASB ASC 718, of $388,844.
Shankar Ramaswamy, M.D., the Vice President
of Medical and Scientific Communications of Axovant Sciences, Inc. and a former employee of Roivant Sciences, Inc., is the brother
of Vivek Ramaswamy. During our fiscal year ended March 31, 2017, Dr. Ramaswamy has received total cash compensation, consisting
of salary and bonus, of $398,125 and a stock option with a grant date fair value, as computed in accordance with FASB ASC 718,
of $388,844.
Sarah Friedhoff, the daughter of Lawrence
Friedhoff, M.D., Ph.D., our Chief Development Officer, has been employed by Axovant Sciences, Inc. since August 2015 as Senior
Business Operations / R&D Specialist. During our fiscal year ended March 31, 2017, Ms. Friedhoff has received total cash
compensation, consisting of salary and bonus, of $91,875 and stock options with an aggregate grant date fair value, as computed
in accordance with FASB ASC 718, of $90,429.
Indemnification Agreements
We have entered into indemnity agreements
with our officers and directors which provide, among other things, that we will indemnify such officer or director, under the circumstances
and to the extent provided for therein, for expenses, damages, judgments, fines and settlements he or she may be required to pay
in actions or proceedings which he or she is or may be made a party by reason of his or her position as a director, officer or
other agent of ours. The contractual rights to indemnification and expense advancement are, in some cases, broader than the specific
indemnification provisions contained under Bermuda law.
Householding of Proxy Materials
The SEC has adopted rules that permit companies
and intermediaries (e.g., brokers) to satisfy the delivery requirements for Annual Meeting materials with respect to two or more
shareholders sharing the same address by delivering a single set of Annual Meeting materials addressed to those shareholders. This
process, which is commonly referred to as “householding,” potentially means extra convenience for shareholders and
cost savings for companies.
This year, a number of brokers with account
holders who are Axovant shareholders will be “householding” our proxy materials. A single set of Annual Meeting materials
will be delivered to multiple shareholders sharing an address unless contrary instructions have been received from the affected
shareholders. Once you have received notice from your broker that they will be “householding” communications to your
address, “householding” will continue until you are notified otherwise or until you revoke your consent. If, at any
time, you no longer wish to participate in “householding” and would prefer to receive a separate set of Annual Meeting
materials, please notify your broker or Axovant. Direct your written request to Axovant Sciences Ltd., Attn: Corporate Secretary,
at Clarendon House, 2 Church Street, Hamilton HM 11, Bermuda. Shareholders who currently receive multiple copies of the Annual
Meeting materials at their addresses and would like to request “householding” of their communications should contact
their brokers.
Other Matters
The Board knows of no other matters that
will be presented for consideration at the Annual Meeting. If any other matters are properly brought before the meeting, it is
the intention of the persons named in the accompanying proxy to vote on such matters in accordance with their best judgment.
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By Order of the Board of Directors
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David T. Hung, M.D.
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Principal Executive Officer
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July 21, 2017
APPENDIX
A
Axovant
Sciences Ltd.
2015
Equity Incentive Plan
Adopted
by the Board of Directors: March 18, 2015
Approved
by the Sole Member: March 18, 2015
Amended
by the Board of Directors: May 19, 2015
Approved
by the Shareholders: May 19, 2015
Amended
and Restated by the Board of Directors: June 1, 2017
Approved
by the Shareholders: _________, 2017
Termination
Date: March 17, 2025
1.
General.
(a) Eligible
Award Recipients.
Employees, Directors and Consultants are eligible to receive Awards.
(b) Available
Awards.
The Plan provides for the grant of the following types of Awards: (i) Incentive Stock Options, (ii) Nonstatutory
Stock Options, (iii) Stock Appreciation Rights, (iv) Restricted Stock Awards, (v) Restricted Stock Unit Awards, (vi) Performance
Stock Awards, (vii) Performance Cash Awards, and (viii) Other Stock Awards.
(c) Purpose.
The Plan, through the granting of Awards, is intended to help the Company secure and retain the services of eligible award recipients,
provide incentives for such persons to exert maximum efforts for the success of the Company and any Affiliate and provide a means
by which the eligible recipients may benefit from increases in value of the Common Stock.
2.
Administration.
(a) Administration
by Board.
The Board will administer the Plan. The Board may delegate administration of the Plan to a Committee or Committees,
as provided in Section 2(c).
(b) Powers
of Board.
The Board will have the power, subject to, and within the limitations of, the express provisions of the Plan:
(i)
To
determine (A) who will be granted Awards; (B) when and how each Award will be granted; (C) what type of Award will be granted;
(D) the provisions of each Award (which need not be identical), including when a person will be permitted to exercise or otherwise
receive cash or Common Stock under the Award; (E) the number of shares of Common Stock subject to, or the cash value of, an Award;
and (F) the Fair Market Value applicable to an Award.
(ii)
To
construe and interpret the Plan and Awards granted under it, and to establish, amend and revoke rules and regulations for administration
of the Plan and Awards. The Board, in the exercise of these powers, may correct any defect, omission or inconsistency in the Plan
or in any Award Agreement or in the written terms of a Performance Cash Award, in a manner and to the extent it will deem necessary
or expedient to make the Plan or Award fully effective.
(iii)
To
settle all controversies regarding the Plan and Awards granted under it.
(iv)
To
accelerate, in whole or in part, the time at which an Award may be exercised or vest (or at which cash or shares of Common Stock
may be issued).
(v)
To
suspend or terminate the Plan at any time. Except as otherwise provided in the Plan or an Award Agreement, suspension or termination
of the Plan will not impair a Participant’s rights under his or her then-outstanding Award without his or her written consent
except as provided in subsection (viii) below.
(vi)
To
amend the Plan in any respect the Board deems necessary or advisable, including, without limitation, by adopting amendments relating
to Incentive Stock Options and certain nonqualified deferred compensation under Section 409A of the Code and/or to make the Plan
or Awards granted under the Plan compliant with the requirements for Incentive Stock Options or exempt from or compliant with the
requirements for nonqualified deferred compensation under Section 409A of the Code, subject to the limitations, if any, of applicable
law. However, if required by applicable law, and except as provided in Section 9(a) relating to Capitalization Adjustments,
the Company will seek shareholder approval of any amendment of the Plan that (A) materially increases the number of shares
of Common Stock available for issuance under the Plan, (B) materially expands the class of individuals eligible to receive
Awards under the Plan, (C) materially increases the benefits accruing to Participants under the Plan, (D) materially reduces
the price at which shares of Common Stock may be issued or purchased under the Plan, (E) materially extends the term of the
Plan, or (F) materially expands the types of Awards available for issuance under the Plan. Except as otherwise provided in
the Plan or an Award Agreement, no amendment of the Plan will materially impair a Participant’s rights under an outstanding
Award unless (1) the Company requests the consent of the affected Participant, and (2) such Participant consents in writing.
(vii)
To
submit any amendment to the Plan for shareholder approval, including, but not limited to, amendments to the Plan intended to satisfy
the requirements of (A) Section 162(m) of the Code regarding the exclusion of performance-based compensation from the limit on
corporate deductibility of compensation paid to Covered Employees, (B) Section 422 of the Code regarding Incentive Stock Options,
or (C) Rule 16b-3.
(viii)
To
approve forms of Award Agreements for use under the Plan and to amend the terms of any one or more Awards, including, but not limited
to, amendments to provide terms more favorable to the Participant than previously provided in the Award Agreement, subject to any
specified limits in the Plan that are not subject to Board discretion;
provided however,
that a Participant’s rights
under any Award will not be impaired by any such amendment unless (A) the Company requests the consent of the affected Participant,
and (B) such Participant consents in writing. Notwithstanding the foregoing, (1) a Participant’s rights will not be
deemed to have been impaired by any such amendment if the Board, in its sole discretion, determines that the amendment, taken as
a whole, does not materially impair the Participant’s rights, and (2) subject to the limitations of applicable law, if any,
the Board may amend the terms of any one or more Awards without the affected Participant’s consent (A) to maintain the
qualified status of the Award as an Incentive Stock Option under Section 422 of the Code; (B) to change the terms of an Incentive
Stock Option, if such change results in impairment of the Stock Award solely because it impairs the qualified status of the Stock
Award as an Incentive Stock Option under Section 422 of the Code; (C) to clarify the manner of exemption from, or to bring the
Award into compliance with, Section 409A of the Code; or (D) to comply with other applicable laws or listing requirements.
(ix)
Generally,
to exercise such powers and to perform such acts as the Board deems necessary or expedient to promote the best interests of the
Company and that are not in conflict with the provisions of the Plan or Awards.
(x)
To
adopt such procedures and sub-plans as are necessary or appropriate to permit participation in the Plan by Employees, Directors
or Consultants who are foreign nationals or employed
outside the United States
(provided that Board approval will not be necessary for immaterial modifications to the Plan or any Award Agreement that are required
for compliance with the laws of the relevant foreign jurisdiction).
(xi)
To
effect, with the consent of any adversely affected Participant, (A) the reduction of the exercise, purchase or strike price of
any outstanding Award; (B) the cancellation of any outstanding Stock Award and the grant in substitution therefor of a new (1)
Option or SAR, (2) Restricted Stock Award, (3) Restricted Stock Unit Award, (4) Other Stock Award, (5) cash and/or (6) other valuable
consideration determined by the Board, in its sole discretion, with any such substituted award (x) covering the same or a different
number of shares of Common Stock as the cancelled Stock Award and (y) granted under the Plan or another equity or compensatory
plan of the Company; or (C) any other action that is treated as a repricing under generally accepted accounting principles.
(c) Delegation
to Committee.
(i) General
.
The Board may delegate some or all of the administration of the Plan to a Committee or Committees. If administration of the Plan
is delegated to a Committee, the Committee will have, in connection with the administration of the Plan, the powers theretofore
possessed by the Board that have been delegated to the Committee, including the power to delegate to a subcommittee of the Committee
any of the administrative powers the Committee is authorized to exercise (and references in this Plan to the Board will thereafter
be to the Committee or subcommittee, as applicable). Any delegation of administrative powers will be reflected in resolutions,
not inconsistent with the provisions of the Plan, adopted from time to time by the Board or Committee (as applicable). The Board
may retain the authority to concurrently administer the Plan with the Committee and may, at any time, revest in the Board some
or all of the powers previously delegated.
(ii) Section
162(m) and Rule 16b-3 Compliance.
The Committee may consist solely of two or more Outside Directors, in accordance with Section
162(m) of the Code, or solely of two or more Non-Employee Directors, in accordance with Rule 16b-3.
(d) Delegation
to an Officer.
The Board may delegate to one (1) or more Officers the authority to do one or both of the following: (i) designate
Employees who are not Officers to be recipients of Options and SARs (and, to the extent permitted by applicable law, other Stock
Awards) and, to the extent permitted by applicable law, the terms of such Stock Awards, and (ii) determine the number of shares
of Common Stock to be subject to such Stock Awards granted to such Employees; provided, however, that the Board resolutions regarding
such delegation will specify the total number of shares of Common Stock that may be subject to the Stock Awards granted by such
Officer and that such Officer may not grant a Stock Award to himself or herself. Any such Stock Awards will be granted on the form
of Stock Award Agreement most recently approved for use by the Committee or the Board, unless otherwise provided in the resolutions
approving the delegation authority. The Board may not delegate authority to an Officer who is acting solely in the capacity of
an Officer (and not also as a Director) to determine the Fair Market Value pursuant to Section 13(x)(iii) below.
(e) Effect
of Board’s Decision.
All determinations, interpretations and constructions made by the Board in good faith will not be
subject to review by any person and will be final, binding and conclusive on all persons.
3.
Shares
Subject to the Plan.
(a) Share
Reserve
.
(i)
Subject
to Section 9(a) relating to Capitalization Adjustments and the following sentence regarding the annual increase, the aggregate
number of shares of Common Stock that may be issued pursuant to Stock Awards from and after the Effective Date will not exceed
20,466,000 shares (the “
Share Reserve
”). In addition, the Share Reserve will automatically increase on
April 1st of each year, for the period commencing on (and including) April 1, 2018 and ending on (and including) April 1, 2025,
in an amount equal to four percent (4%) of the total number of shares of Capital Stock outstanding on March 31st of the preceding
fiscal year. Notwithstanding the foregoing, the Board may act prior to March 31st of a given fiscal year to provide that there
will be no April 1st increase in the Share Reserve for such year or that the increase in the Share Reserve for such year will be
a lesser number of shares of Common Stock than would otherwise occur pursuant to the preceding sentence.
(ii)
For
clarity, the Share Reserve in this Section 3(a) is a limitation on the number of shares of Common Stock that may be issued
pursuant to the Plan. Accordingly, this Section 3(a) does not limit the granting of Stock Awards except as provided in Section 7(a).
(iii)
Shares
may be issued in connection with a merger or acquisition as permitted by NASDAQ Listing Rule 5635(c) or, if applicable, NYSE Listed
Company Manual Section 303A.08, AMEX Company Guide Section 711 or other applicable rule, and such issuance will not reduce the
number of shares available for issuance under the Plan.
(b) Reversion
of Shares to the Share Reserve
. If a Stock Award or any portion thereof (i) expires or otherwise terminates without all
of the shares covered by such Stock Award having been issued or (ii) is settled in cash (
i.e.
, the Participant receives
cash rather than stock), such expiration, termination or settlement will not reduce (or otherwise offset) the number of shares
of Common Stock that may be available for issuance under the Plan. If any shares of Common Stock issued pursuant to a Stock Award
are forfeited back to or repurchased by the Company because of the failure to meet a contingency or condition required to vest
such shares in the Participant, then the shares that are forfeited or repurchased will revert to and again become available for
issuance under the Plan. Any shares reacquired by the Company in satisfaction of tax withholding obligations on a Stock Award or
as consideration for the exercise or purchase price of a Stock Award will again become available for issuance under the Plan.
(c) Incentive
Stock Option Limit.
Subject to the provisions of Section 9(a) relating to Capitalization Adjustments, the aggregate maximum
number of shares of Common Stock that may be issued pursuant to the exercise of Incentive Stock Options will be 47,500,000 shares
of Common Stock.
(d) Section
162(m) Limitations
. Subject to the provisions of Section 9(a) relating to Capitalization Adjustments, at such time as the Company
may be subject to the applicable provisions of Section 162(m) of the Code, the following limitations shall apply.
(i)
A
maximum of
7,000,000
shares of Common Stock subject to Options, SARs and Other Stock
Awards whose value is determined by reference to an increase over an exercise or strike price of at least 100% of the Fair Market
Value on the date the Stock Award is granted may be granted to any one Participant during any one fiscal year of the Company. Notwithstanding
the foregoing, if any additional Options, SARs or Other Stock Awards whose value is determined by reference to an increase over
an exercise or strike price of at least 100% of the Fair Market Value on the date the Stock Award are granted to any Participant
during any one fiscal year, compensation attributable to the exercise of such additional Stock Awards will not satisfy the requirements
to be considered “qualified performance-based
compensation” under
Section 162(m) of the Code unless such additional Stock Award is approved by the Company’s stockholders.
(ii)
A
maximum of
7,000,000
shares of Common Stock subject to Performance Stock Awards may
be granted to any one Participant during any one fiscal year of the Company (whether the grant, vesting or exercise is contingent
upon the attainment during the Performance Period of the Performance Goals).
(iii)
A
maximum of $
7,000,000
may be granted
as a Performance Cash Award to any one Participant during any one fiscal year of the Company.
(e) Source
of Shares.
The stock issuable under the Plan will be shares of authorized but unissued or reacquired Common Stock, including
shares repurchased by the Company on the open market or otherwise.
4.
Eligibility.
(a) Eligibility
for Specific Stock Awards
. Incentive Stock Options may be granted only to employees of the Company or a “parent corporation”
or “subsidiary corporation” thereof (as such terms are defined in Sections 424(e) and 424(f) of the Code). Stock
Awards other than Incentive Stock Options may be granted to Employees, Directors and Consultants;
provided, however
, that
Stock Awards may not be granted to Employees, Directors and Consultants who are providing Continuous Service only to any “parent”
of the Company, as such term is defined in Rule 405, unless (i) the stock underlying such Stock Awards is treated as “service
recipient stock” under Section 409A of the Code (for example, because the Stock Awards are granted pursuant to a corporate
transaction such as a spin off transaction), or (ii) the Company, in consultation with its legal counsel, has determined that such
Stock Awards are otherwise exempt from Section 409A of the Code, or (iii) the Company, in consultation with its legal counsel,
has determined that such Stock Awards comply with the distribution requirements of Section 409A of the Code.
(b) Ten
Percent Shareholders
. A Ten Percent Shareholder will not be granted an Incentive Stock Option unless the exercise price of
such Option is at least one hundred ten percent (110%) of the Fair Market Value on the date of grant and the Option is not
exercisable after the expiration of five (5) years from the date of grant.
5.
Provisions
Relating to Options and Stock Appreciation Rights.
Each Option or SAR
will be in such form and will contain such terms and conditions as the Board deems appropriate. All Options will be separately
designated Incentive Stock Options or Nonstatutory Stock Options at the time of grant, and, if certificates are issued, a separate
certificate or certificates will be issued for shares of Common Stock purchased on exercise of each type of Option. If an Option
is not specifically designated as an Incentive Stock Option, or if an Option is designated as an Incentive Stock Option but some
portion or all of the Option fails to qualify as an Incentive Stock Option under the applicable rules, then the Option (or portion
thereof) will be a Nonstatutory Stock Option. The provisions of separate Options or SARs need not be identical;
provided, however
,
that each Stock Award Agreement will conform to (through incorporation of provisions hereof by reference in the applicable Stock
Award Agreement or otherwise) the substance of each of the following provisions:
(a) Term.
Subject to the provisions of Section 4(b) regarding Ten Percent Shareholders, no Option or SAR will be exercisable after the
expiration of ten (10) years from the date of its grant or such shorter period specified in the Stock Award Agreement.
(b) Exercise
Price.
Subject to the provisions of Section 4(b) regarding Ten Percent Shareholders, the exercise or strike price of each
Option or SAR will be not less than one hundred percent (100%) of the Fair Market Value of the Common Stock subject to the
Option or SAR on the date the Stock Award is granted. Notwithstanding the foregoing, an Option or SAR may be granted with an exercise
or strike price lower than one hundred percent (100%) of the Fair Market Value of the Common Stock subject to the Stock Award
if such Stock Award is granted pursuant to an assumption of or substitution for another option or stock appreciation right pursuant
to a Corporate Transaction and in a manner consistent with the provisions of Section 409A of the Code and, if applicable, Section
424(a) of the Code. Each SAR will be denominated in shares of Common Stock equivalents.
(c) Purchase
Price for Options.
The purchase price of Common Stock acquired pursuant to the exercise of an Option may be paid, to the extent
permitted by applicable law and as determined by the Board in its sole discretion, by any combination of the methods of payment
set forth below. The Board will have the authority to grant Options that do not permit all of the following methods of payment
(or otherwise restrict the ability to use certain methods) and to grant Options that require the consent of the Company to use
a particular method of payment. The permitted methods of payment are as follows:
(i)
by
cash, check, bank draft or money order payable to the Company;
(ii)
pursuant
to a program developed under Regulation T as promulgated by the Federal Reserve Board that, prior to the issuance of the stock
subject to the Option, results in either the receipt of cash (or check) by the Company or the receipt of irrevocable instructions
to pay the aggregate exercise price to the Company from the sales proceeds;
(iii)
by
delivery to the Company (either by actual delivery or attestation) of shares of Common Stock;
(iv)
if
an Option is a Nonstatutory Stock Option, by a “net exercise” arrangement pursuant to which the Company will reduce
the number of shares of Common Stock issuable upon exercise by the largest whole number of shares with a Fair Market Value that
does not exceed the aggregate exercise price; provided, however, that the Company will accept a cash or other payment from the
Participant to the extent of any remaining balance of the aggregate exercise price not satisfied by such reduction in the number
of whole shares to be issued. Shares of Common Stock will no longer be subject to an Option and will not be exercisable thereafter
to the extent that (A) shares issuable upon exercise are used to pay the exercise price pursuant to the “net exercise,”
(B) shares are delivered to the Participant as a result of such exercise, and (C) shares are withheld to satisfy tax withholding
obligations; or
(v)
in
any other form of legal consideration that may be acceptable to the Board and specified in the applicable Stock Award Agreement.
(d) Exercise
and Payment of a SAR.
To exercise any outstanding SAR, the Participant must provide written notice of exercise to the Company
in compliance with the provisions of the Stock Appreciation Right Agreement evidencing such SAR. The appreciation distribution
payable on the exercise of a SAR will be not greater than an amount equal to the excess of (A) the aggregate Fair Market Value
(on the date of the exercise of the SAR) of a number of shares of Common Stock equal to the number of Common Stock equivalents
in which the Participant is vested under such SAR, and with
respect to which the
Participant is exercising the SAR on such date, over (B) the aggregate strike price of the number of Common Stock equivalents with
respect to which the Participant is exercising the SAR on such date. The appreciation distribution may be paid in Common Stock,
in cash, in any combination of the two or in any other form of consideration, as determined by the Board and contained in the Stock
Award Agreement evidencing such SAR.
(e) Transferability
of Options and SARs.
The Board may, in its sole discretion, impose such limitations on the transferability of Options and SARs
as the Board will determine. In the absence of such a determination by the Board to the contrary, the following restrictions on
the transferability of Options and SARs will apply:
(i) Restrictions
on Transfer
. An Option or SAR will not be transferable except by will or by the laws of descent and distribution (or pursuant
to subsections (ii) and (iii) below), and will be exercisable during the lifetime of the Participant only by the Participant. The
Board may permit transfer of the Option or SAR in a manner that is not prohibited by applicable tax and securities laws. Except
as explicitly provided herein, neither an Option nor a SAR may be transferred for consideration.
(ii) Domestic
Relations Orders
. Subject to the approval of the Board or a duly authorized Officer, an Option or SAR may be transferred pursuant
to the terms of a domestic relations order, official marital settlement agreement or other divorce or separation instrument as
permitted by Treasury Regulation 1.421-1(b)(2). If an Option is an Incentive Stock Option, such Option may be deemed to be a Nonstatutory
Stock Option as a result of such transfer.
(iii) Beneficiary
Designation
. Subject to the approval of the Board or a duly authorized Officer, a Participant may, by delivering written notice
to the Company, in a form approved by the Company (or the designated broker), designate a third party who, upon the death of the
Participant, will thereafter be entitled to exercise the Option or SAR and receive the Common Stock or other consideration resulting
from such exercise. In the absence of such a designation, upon the death of the Participant, the executor or administrator of the
Participant’s estate will be entitled to exercise the Option or SAR and receive the Common Stock or other consideration resulting
from such exercise. However, the Company may prohibit designation of a beneficiary at any time, including due to any conclusion
by the Company that such designation would be inconsistent with the provisions of applicable laws.
(f) Vesting
Generally.
The total number of shares of Common Stock subject to an Option or SAR may vest and become exercisable in periodic
installments that may or may not be equal. The Option or SAR may be subject to such other terms and conditions on the time or times
when it may or may not be exercised (which may be based on the satisfaction of Performance Goals or other criteria) as the Board
may deem appropriate. The vesting provisions of individual Options or SARs may vary. The provisions of this Section 5(f) are
subject to any Option or SAR provisions governing the minimum number of shares of Common Stock as to which an Option or SAR may
be exercised.
(g) Termination
of Continuous Service.
Except as otherwise provided in the applicable Stock Award Agreement or other agreement between the
Participant and the Company, if a Participant’s Continuous Service terminates (other than for Cause and other than upon the
Participant’s death or Disability), the Participant may exercise his or her Option or SAR (to the extent that the Participant
was entitled to exercise such Stock Award as of the date of termination of Continuous Service) within the period of time ending
on the earlier of (i) the date three (3) months following the termination of the Participant’s Continuous
Service (or such longer or shorter period specified in the applicable Stock Award Agreement, and (ii) the expiration of the
term of the Option or SAR as set forth in the Stock Award
Agreement. If, after
termination of Continuous Service, the Participant does not exercise his or her Option or SAR within the applicable time frame,
the Option or SAR (as applicable) will terminate.
(h) Extension
of Termination Date.
If the exercise of an Option or SAR following the termination of the Participant’s Continuous Service
(other than for Cause and other than upon the Participant’s death or Disability) would be prohibited at any time solely because
the issuance of shares of Common Stock would violate the registration requirements under the Securities Act, then the Option or
SAR will terminate on the earlier of (i) the expiration of a total period of time (that need not be consecutive) equal to
the applicable post termination exercise period after the termination of the Participant’s Continuous Service during which
the exercise of the Option or SAR would not be in violation of such registration requirements, or (ii) the expiration of the
term of the Option or SAR as set forth in the applicable Stock Award Agreement. In addition, unless otherwise provided in a Participant’s
Stock Award Agreement, if the sale of any Common Stock received upon exercise of an Option or SAR following the termination of
the Participant’s Continuous Service (other than for Cause) would violate the Company’s insider trading policy, then
the Option or SAR will terminate on the earlier of (i) the expiration of a period of time (that need not be consecutive) equal
to the applicable post-termination exercise period after the termination of the Participant’s Continuous Service during which
the sale of the Common Stock received upon exercise of the Option or SAR would not be in violation of the Company’s insider
trading policy, or (ii) the expiration of the term of the Option or SAR as set forth in the applicable Stock Award Agreement.
(i) Disability
of Participant.
Except as otherwise provided in the applicable Stock Award Agreement or other agreement between the Participant
and the Company, if a Participant’s Continuous Service terminates as a result of the Participant’s Disability, the
Participant may exercise his or her Option or SAR (to the extent that the Participant was entitled to exercise such Option or SAR
as of the date of termination of Continuous Service), but only within such period of time ending on the earlier of (i) the
date twelve (12) months following such termination of Continuous Service (or such longer or shorter period specified
in the Stock Award Agreement), and (ii) the expiration of the term of the Option or SAR as set forth in the Stock Award Agreement.
If, after termination of Continuous Service, the Participant does not exercise his or her Option or SAR within the applicable time
frame, the Option or SAR (as applicable) will terminate.
(j) Death
of Participant.
Except as otherwise provided in the applicable Stock Award Agreement or other agreement between the Participant
and the Company, if (i) a Participant’s Continuous Service terminates as a result of the Participant’s death, or (ii)
the Participant dies within the period (if any) specified in the Stock Award Agreement for exercisability after the termination
of the Participant’s Continuous Service (for a reason other than death), then the Option or SAR may be exercised (to the
extent the Participant was entitled to exercise such Option or SAR as of the date of death) by the Participant’s estate,
by a person who acquired the right to exercise the Option or SAR by bequest or inheritance or by a person designated to exercise
the Option or SAR upon the Participant’s death, but only within the period ending on the earlier of (i) the date
eighteen (18)
months following the date of death (or such longer or shorter period specified
in the Stock Award Agreement), and (ii) the expiration of the term of such Option or SAR as set forth in the Stock Award Agreement.
If, after the Participant’s death, the Option or SAR is not exercised within the applicable time frame, the Option or SAR
(as applicable) will terminate.
(k) Termination
for Cause.
Except as explicitly provided otherwise in a Participant’s Stock Award Agreement or other individual written
agreement between the Company or any Affiliate and the Participant, if a Participant’s Continuous Service is terminated for
Cause, the Option or SAR will terminate immediately upon such Participant’s termination of Continuous Service, and the Participant
will
be prohibited from exercising
his or her Option or SAR from and after the time of such termination of Continuous Service.
(l) Non-Exempt
Employees
. If an Option or SAR is granted to an Employee who is a non-exempt employee for purposes of the Fair Labor Standards
Act of 1938, as amended, the Option or SAR will not be first exercisable for any shares of Common Stock until at least six (6)
months following the date of grant of the Option or SAR (although the Stock Award may vest prior to such date). Consistent with
the provisions of the Worker Economic Opportunity Act, (i) if such non-exempt Employee dies or suffers a Disability, (ii) upon
a Corporate Transaction in which such Option or SAR is not assumed, continued, or substituted, (iii) upon a Change in Control,
or (iv) upon the Participant’s retirement (as such term may be defined in the Participant’s Stock Award Agreement,
in another agreement between the Participant and the Company, or, if no such definition, in accordance with the Company's then
current employment policies and guidelines), the vested portion of any Options and SARs may be exercised earlier than six (6) months
following the date of grant. The foregoing provision is intended to operate so that any income derived by a non-exempt employee
in connection with the exercise or vesting of an Option or SAR will be exempt from his or her regular rate of pay. To the extent
permitted and/or required for compliance with the Worker Economic Opportunity Act to ensure that any income derived by a non-exempt
employee in connection with the exercise, vesting or issuance of any shares under any other Stock Award will be exempt from the
employee’s regular rate of pay, the provisions of this Section 5(l) will apply to all Stock Awards and are hereby incorporated
by reference into such Stock Award Agreements.
6.
Provisions
of Stock Awards Other than Options and SARs.
(a) Restricted
Stock Awards.
Each Restricted Stock Award Agreement will be in such form and will contain such terms and conditions as the
Board deems appropriate. To the extent consistent with the Company’s bylaws, at the Board’s election, shares of Common
Stock underlying a Restricted Stock Award may be (i) held in book entry form subject to the Company’s instructions until
any restrictions relating to the Restricted Stock Award lapse; or (ii) evidenced by a certificate, which certificate will
be held in such form and manner as determined by the Board. The terms and conditions of Restricted Stock Award Agreements may change
from time to time, and the terms and conditions of separate Restricted Stock Award Agreements need not be identical. Each Restricted
Stock Award Agreement will conform to (through incorporation of the provisions hereof by reference in the agreement or otherwise)
the substance of each of the following provisions:
(i) Consideration
.
A Restricted Stock Award may be awarded in consideration for (A) cash, check, bank draft or money order payable to the Company,
(B) past services to the Company or an Affiliate, or (C) any other form of legal consideration that may be acceptable to the
Board, in its sole discretion, and permissible under applicable law.
(ii) Vesting
.
Shares of Common Stock awarded under the Restricted Stock Award Agreement may be subject to forfeiture to the Company in accordance
with a vesting schedule to be determined by the Board.
(iii) Termination
of Participant’s Continuous Service
. If a Participant’s Continuous Service terminates, the Company may receive
through a forfeiture condition or a repurchase right, any or all of the shares of Common Stock held by the Participant as of the
date of termination of Continuous Service under the terms of the Restricted Stock Award Agreement.
(iv) Transferability
.
Rights to acquire shares of Common Stock under the Restricted Stock Award Agreement will be transferable by the Participant only
upon such terms and conditions as are set forth in the Restricted Stock Award Agreement, as the Board will determine in its sole
discretion, so long as Common Stock awarded under the Restricted Stock Award Agreement remains subject to the terms of the Restricted
Stock Award Agreement.
(v) Dividends.
A Restricted Stock Award Agreement may provide that any dividends paid on Restricted Stock will be subject to the same vesting
and forfeiture restrictions as apply to the shares subject to the Restricted Stock Award to which they relate.
(b) Restricted
Stock Unit Awards.
Each Restricted Stock Unit Award Agreement will be in such form and will contain such terms and conditions
as the Board deems appropriate. The terms and conditions of Restricted Stock Unit Award Agreements may change from time to time,
and the terms and conditions of separate Restricted Stock Unit Award Agreements need not be identical. Each Restricted Stock Unit
Award Agreement will conform to (through incorporation of the provisions hereof by reference in the Agreement or otherwise) the
substance of each of the following provisions:
(i) Consideration.
At the time of grant of a Restricted Stock Unit Award, the Board will determine the consideration, if any, to be paid by the Participant
upon delivery of each share of Common Stock subject to the Restricted Stock Unit Award. The consideration to be paid (if any) by
the Participant for each share of Common Stock subject to a Restricted Stock Unit Award may be paid in any form of legal consideration
that may be acceptable to the Board, in its sole discretion, and permissible under applicable law.
(ii) Vesting.
At the time of the grant of a Restricted Stock Unit Award, the Board may impose such restrictions on or conditions to the vesting
of the Restricted Stock Unit Award as it, in its sole discretion, deems appropriate.
(iii) Payment
.
A Restricted Stock Unit Award may be settled by the delivery of shares of Common Stock, their cash equivalent, any combination
thereof or in any other form of consideration, as determined by the Board and contained in the Restricted Stock Unit Award Agreement.
(iv) Additional
Restrictions.
At the time of the grant of a Restricted Stock Unit Award, the Board, as it deems appropriate, may impose such
restrictions or conditions that delay the delivery of the shares of Common Stock (or their cash equivalent) subject to a Restricted
Stock Unit Award to a time after the vesting of such Restricted Stock Unit Award.
(v) Dividend
Equivalents.
Dividend equivalents may be credited in respect of shares of Common Stock covered by a Restricted Stock Unit Award,
as determined by the Board and contained in the Restricted Stock Unit Award Agreement. At the sole discretion of the Board, such
dividend equivalents may be converted into additional shares of Common Stock covered by the Restricted Stock Unit Award in such
manner as determined by the Board. Any additional shares covered by the Restricted Stock Unit Award credited by reason of such
dividend equivalents will be subject to all of the same terms and conditions of the underlying Restricted Stock Unit Award Agreement
to which they relate.
(vi) Termination
of Participant’s Continuous Service.
Except as otherwise provided in the applicable Restricted Stock Unit Award Agreement,
such portion of the Restricted Stock Unit Award that has not vested will be forfeited upon the Participant’s termination
of Continuous Service.
(c) Performance
Awards
.
(i) Performance
Stock Awards
. A Performance Stock Award is a Stock Award (covering a number of shares not in excess of that set forth in Section
3(d) above) that is payable or that may be granted, may vest or may be exercised, contingent upon the attainment during a Performance
Period of certain Performance Goals. A Performance Stock Award may, but need not, require the Participant’s completion of
a specified period of Continuous Service. The length of any Performance Period, the Performance Goals to be achieved during the
Performance Period, and the measure of whether and to what degree such Performance Goals have been attained will be conclusively
determined by the Committee (or, if not required for compliance with Section 162(m) of the Code, the Board), in its sole discretion.
In addition, to the extent permitted by applicable law and the applicable Award Agreement, the Board may determine that cash may
be used in payment of Performance Stock Awards.
(ii) Performance
Cash Awards
. A Performance Cash Award is a cash award (for a dollar value not in excess of that set forth in Section 3(d) above)
that is payable contingent upon the attainment during a Performance Period of certain Performance Goals. A Performance Cash Award
may also require the completion of a specified period of Continuous Service. At the time of grant of a Performance Cash Award,
the length of any Performance Period, the Performance Goals to be achieved during the Performance Period, and the measure of whether
and to what degree such Performance Goals have been attained will be conclusively determined by the Committee (or, if not required
for compliance with Section 162(m) of the Code, the Board), in its sole discretion. The Board may specify the form of payment of
Performance Cash Awards, which may be cash or other property, or may provide for a Participant to have the option for his or her
Performance Cash Award, or such portion thereof as the Board may specify, to be paid in whole or in part in cash or other property.
(iii) Board
Discretion
. The Board retains the discretion to reduce or eliminate the compensation or economic benefit due upon attainment
of Performance Goals and to define the manner of calculating the Performance Criteria it selects to use for a Performance Period.
Partial achievement of the specified criteria may result in the payment or vesting corresponding to the degree of achievement as
specified in the Stock Award Agreement or the written terms of a Performance Cash Award.
(iv) Section
162(m) Compliance
. Unless otherwise permitted in compliance with the requirements of Section 162(m) of the Code with respect
to an Award intended to qualify as “performance-based compensation” thereunder, the Committee will establish the Performance
Goals applicable to, and the formula for calculating the amount payable under, the Award no later than the earlier of (a) the date
90 days after the commencement of the applicable Performance Period, and (b) the date on which 25% of the Performance Period has
elapsed, and in any event at a time when the achievement of the applicable Performance Goals remains substantially uncertain. Prior
to the payment of any compensation under an Award intended to qualify as “performance-based compensation” under Section 162(m)
of the Code, the Committee will certify the extent to which any Performance Goals and any other material terms under such Award
have been satisfied (other than in cases where such Performance Goals relate solely to the increase in the value of the Common
Stock). Notwithstanding satisfaction of, or completion of any Performance Goals, the number of shares of Common Stock, Options,
cash or other benefits granted, issued, retainable and/or vested under an Award on account of satisfaction of such Performance
Goals may be reduced by the Committee on the basis of such further considerations as the Committee, in its sole discretion, will
determine.
(d) Other
Stock Awards
. Other forms of Stock Awards valued in whole or in part by reference to, or otherwise based on, Common Stock,
including the appreciation in value thereof (e.g., options or stock rights with an exercise price or strike price less than one
hundred percent (100%) of the
Fair Market Value of
the Common Stock at the time of grant) may be granted either alone or in addition to Stock Awards provided for under Section 5
and the preceding provisions of this Section 6. Subject to the provisions of the Plan, the Board will have sole and complete authority
to determine the persons to whom and the time or times at which such Other Stock Awards will be granted, the number of shares of
Common Stock (or the cash equivalent thereof) to be granted pursuant to such Other Stock Awards and all other terms and conditions
of such Other Stock Awards.
7.
Covenants
of the Company.
(a) Availability
of Shares.
The Company will keep available at all times the number of shares of Common Stock reasonably required to satisfy
then-outstanding Stock Awards.
(b) Securities
Law Compliance.
The Company will seek to obtain from each regulatory commission or agency having jurisdiction over the Plan
such authority as may be required to grant Stock Awards and to issue and sell shares of Common Stock upon exercise of the Stock
Awards;
provided, however,
that this undertaking will not require the Company to register under the Securities Act the Plan,
any Stock Award or any Common Stock issued or issuable pursuant to any such Stock Award. If, after reasonable efforts and at a
reasonable cost, the Company is unable to obtain from any such regulatory commission or agency the authority that counsel for the
Company deems necessary for the lawful issuance and sale of Common Stock under the Plan, the Company will be relieved from any
liability for failure to issue and sell Common Stock upon exercise of such Stock Awards unless and until such authority is obtained.
A Participant will not be eligible for the grant of an Award or the subsequent issuance of cash or Common Stock pursuant to the
Award if such grant or issuance would be in violation of any applicable securities law.
(c) No
Obligation to Notify or Minimize Taxes.
The Company will have no duty or obligation to any Participant to advise such holder
as to the time or manner of exercising such Stock Award. Furthermore, the Company will have no duty or obligation to warn or otherwise
advise such holder of a pending termination or expiration of an Award or a possible period in which the Award may not be exercised.
The Company has no duty or obligation to minimize the tax consequences of an Award to the holder of such Award.
8.
Miscellaneous.
(a) Use
of Proceeds from Sales of Common Stock.
Proceeds from the sale of shares of Common Stock pursuant to Stock Awards will constitute
general funds of the Company.
(b) Corporate
Action Constituting Grant of Awards.
Corporate action constituting a grant by the Company of an Award to any Participant will
be deemed completed as of the date of such corporate action, unless otherwise determined by the Board, regardless of when the instrument,
certificate, or letter evidencing the Award is communicated to, or actually received or accepted by, the Participant. In the event
that the corporate records (e.g., Board consents, resolutions or minutes) documenting the corporate action constituting the grant
contain terms (e.g., exercise price, vesting schedule or number of shares) that are inconsistent with those in the Award Agreement
as a result of a clerical error in the papering of the Award Agreement, the corporate records will control and the Participant
will have no legally binding right to the incorrect term in the Award Agreement.
(c) Shareholder
Rights.
No Participant will be deemed to be the holder of, or to have any of the rights of a holder with respect to, any shares
of Common Stock subject to an Award unless and until (i) such Participant has satisfied all requirements for exercise of,
or the issuance of shares of Common
Stock under, the Award
pursuant to its terms, and (ii) the issuance of the Common Stock subject to the Award has been entered into the books and
records of the Company.
(d) No
Employment or Other Service Rights.
Nothing in the Plan, any Award Agreement or any other instrument executed thereunder or
in connection with any Stock Award granted pursuant thereto will confer upon any Participant any right to continue to serve the
Company or an Affiliate in the capacity in effect at the time the Award was granted or will affect the right of the Company or
an Affiliate to terminate (i) the employment of an Employee with or without notice and with or without cause, (ii) the
service of a Consultant pursuant to the terms of such Consultant’s agreement with the Company or an Affiliate, or (iii) the
service of a Director pursuant to the bylaws of the Company or an Affiliate, and any applicable provisions of the corporate law
of the state in which the Company or the Affiliate is incorporated, as the case may be.
(e) Change
in Time Commitment
. In the event a Participant’s regular level of time commitment in the performance of his or her services
for the Company and any Affiliates is reduced (for example, and without limitation, if the Participant is an Employee of the Company
and the Employee has a change in status from a full-time Employee to a part-time Employee) after the date of grant of any Award
to the Participant, the Board has the right in its sole discretion to (x) make a corresponding reduction in the number of shares
subject to any portion of such Award that is scheduled to vest or become payable after the date of such change in time commitment,
and (y) in lieu of or in combination with such a reduction, extend the vesting or payment schedule applicable to such Award. In
the event of any such reduction, the Participant will have no right with respect to any portion of the Award that is so reduced
or extended.
(f) Incentive
Stock Option Limitations.
To the extent that the aggregate Fair Market Value (determined at the time of grant) of Common Stock
with respect to which Incentive Stock Options are exercisable for the first time by any Optionholder during any calendar year (under
all plans of the Company and any Affiliates) exceeds one hundred thousand dollars ($100,000) (or such other limit established
in the Code) or otherwise does not comply with the rules governing Incentive Stock Options, the Options or portions thereof that
exceed such limit (according to the order in which they were granted) or otherwise do not comply with such rules will be treated
as Nonstatutory Stock Options, notwithstanding any contrary provision of the applicable Option Agreement(s).
(g) Investment
Assurances.
The Company may require a Participant, as a condition of exercising or acquiring Common Stock under any Award,
(i) to give written assurances satisfactory to the Company as to the Participant’s knowledge and experience in financial
and business matters and/or to employ a purchaser representative reasonably satisfactory to the Company who is knowledgeable and
experienced in financial and business matters and that he or she is capable of evaluating, alone or together with the purchaser
representative, the merits and risks of exercising the Award; and (ii) to give written assurances satisfactory to the Company
stating that the Participant is acquiring Common Stock subject to the Award for the Participant’s own account and not with
any present intention of selling or otherwise distributing the Common Stock. The foregoing requirements, and any assurances given
pursuant to such requirements, will be inoperative if (A) the issuance of the shares upon the exercise or acquisition of Common
Stock under the Award has been registered under a then currently effective registration statement under the Securities Act, or
(B) as to any particular requirement, a determination is made by counsel for the Company that such requirement need not be
met in the circumstances under the then applicable securities laws. The Company may, upon advice of counsel to the Company, place
legends on stock certificates issued under the Plan as such counsel deems necessary or appropriate in order to comply with applicable
securities laws, including, but not limited to, legends restricting the transfer of the Common Stock.
(h) Withholding
Obligations.
Unless prohibited by the terms of an Award Agreement, the Company may, in its sole discretion, satisfy any federal,
state or local tax withholding obligation relating to an Award by any of the following means or by a combination of such means:
(i) causing the Participant to tender a cash payment; (ii) withholding shares of Common Stock from the shares of Common
Stock issued or otherwise issuable to the Participant in connection with the Award;
provided, however
, that no shares of
Common Stock are withheld with a value exceeding the minimum amount of tax required to be withheld by law (or such lesser amount
as may be necessary to avoid classification of the Award as a liability for financial accounting purposes); (iii) withholding
cash from an Award settled in cash; (iv) withholding payment from any amounts otherwise payable to the Participant; or (v) by
such other method as may be set forth in the Award Agreement.
(i) Electronic
Delivery
. Any reference herein to a “written” agreement or document will include any agreement or document delivered
electronically, filed publicly at www.sec.gov (or any successor website thereto) or posted on the Company’s intranet (or
other shared electronic medium controlled by the Company to which the Participant has access).
(j) Deferrals.
To the extent permitted by applicable law, the Board, in its sole discretion, may determine that the delivery of Common Stock or
the payment of cash, upon the exercise, vesting or settlement of all or a portion of any Stock Award may be deferred and may establish
programs and procedures for deferral elections to be made by Participants. Deferrals by Participants will be made in accordance
with Section 409A of the Code. Consistent with Section 409A of the Code, the Board may provide for distributions while a Participant
is still an employee or otherwise providing services to the Company. The Board is authorized to make deferrals of Stock Awards
and determine when, and in what annual percentages, Participants may receive payments, including lump sum payments, following the
Participant’s termination of Continuous Service, and implement such other terms and conditions consistent with the provisions
of the Plan and in accordance with applicable law.
(k) Compliance
with Section 409A of the Code.
Unless otherwise expressly provided for in an Award Agreement, the Plan and Award Agreements
will be interpreted to the greatest extent possible in a manner that makes the Plan and the Awards granted hereunder exempt from
Section 409A of the Code, and, to the extent not so exempt, in compliance with Section 409A of the Code. If the Board determines
that any Award granted hereunder is not exempt from and is therefore subject to Section 409A of the Code, the Award Agreement evidencing
such Award will incorporate the terms and conditions necessary to avoid the consequences specified in Section 409A(a)(1) of the
Code, and to the extent an Award Agreement is silent on terms necessary for compliance, such terms are hereby incorporated by reference
into the Award Agreement. Notwithstanding anything to the contrary in this Plan (and unless the Award Agreement specifically provides
otherwise), if the shares of Common Stock are publicly traded, and if a Participant holding an Award that constitutes “deferred
compensation” under Section 409A of the Code is a “specified employee” for purposes of Section 409A of the Code,
no distribution or payment of any amount that is due because of a “separation from service” (as defined in Section
409A of the Code without regard to alternative definitions thereunder) will be issued or paid before the date that is six (6) months
following the date of such Participant’s “separation from service” or, if earlier, the date of the Participant’s
death, unless such distribution or payment can be made in a manner that complies with Section 409A of the Code, and any amounts
so deferred will be paid in a lump sum on the day after such six (6) month period elapses, with the balance paid thereafter on
the original schedule.
(l) Clawback/Recovery
.
All Awards granted under the Plan will be subject to recoupment in accordance with any clawback policy that the Company is required
to adopt pursuant to the listing standards of any national securities exchange or association on which the Company’s securities
are listed or as is otherwise required by the Dodd-Frank Wall Street Reform and Consumer Protection Act or other
applicable law. In addition,
the Board may impose such other clawback, recovery or recoupment provisions in an Award Agreement as the Board determines necessary
or appropriate, including but not limited to a reacquisition right in respect of previously acquired shares of Common Stock or
other cash or property upon the occurrence of an event constituting Cause. No recovery of compensation under such a clawback policy
will be an event giving rise to a right to resign for “good reason” or “constructive termination” (or similar
term) under any agreement with the Company or an Affiliate.
9.
Adjustments
upon Changes in Common Stock; Other Corporate Events.
(a) Capitalization
Adjustments
. In the event of a Capitalization Adjustment, the Board will appropriately and proportionately adjust: (i) the
class(es) and maximum number of securities subject to the Plan pursuant to Section 3(a), (ii) the class(es) and maximum
number of securities that may be issued pursuant to the exercise of Incentive Stock Options pursuant to Section 3(c), (iii)
the class(es) and maximum number of securities that may be awarded to any person pursuant to Sections 3(d), and (iv) the class(es)
and number of securities and price per share of stock subject to outstanding Stock Awards. The Board will make such adjustments,
and its determination will be final, binding and conclusive.
(b) Dissolution
.
Except as otherwise provided in the Stock Award Agreement, in the event of a Dissolution of the Company, all outstanding Stock
Awards (other than Stock Awards consisting of vested and outstanding shares of Common Stock not subject to a forfeiture condition
or the Company’s right of repurchase) will terminate immediately prior to the completion of such Dissolution, and the shares
of Common Stock subject to the Company’s repurchase rights or subject to a forfeiture condition may be repurchased or reacquired
by the Company notwithstanding the fact that the holder of such Stock Award is providing Continuous Service,
provided, however,
that the Board may, in its sole discretion, cause some or all Stock Awards to become fully vested, exercisable and/or no longer
subject to repurchase or forfeiture (to the extent such Stock Awards have not previously expired or terminated) before the Dissolution
is completed but contingent on its completion.
(c) Corporate
Transactions.
The following provisions will apply to Stock Awards in the event of a Transaction unless otherwise provided
in the Stock Award Agreement or any other written agreement between the Company or any Affiliate and the Participant or unless
otherwise expressly provided by the Board at the time of grant of a Stock Award. In the event of a Transaction, then, notwithstanding
any other provision of the Plan, the Board may take one or more of the following actions with respect to Stock Awards, contingent
upon the closing or completion of the Transaction:
(i)
arrange
for the surviving corporation or acquiring corporation (or the surviving or acquiring corporation’s parent company) to assume
or continue the Stock Award or to substitute a similar stock award for the Stock Award (including, but not limited to, an award
to acquire the same consideration paid to the shareholders of the Company pursuant to the Transaction);
(ii)
arrange
for the assignment of any reacquisition or repurchase rights held by the Company in respect of Common Stock issued pursuant to
the Stock Award to the surviving corporation or acquiring corporation (or the surviving or acquiring corporation’s parent
company);
(iii)
accelerate
the vesting, in whole or in part, of the Stock Award (and, if applicable, the time at which the Stock Award may be exercised) to
a date prior to the effective time of such Transaction as the Board determines (or, if the Board does not determine such a date,
to the date that is five (5) days prior to the effective date of the Transaction), with such Stock Award terminating
if not exercised (if applicable) at or prior to the effective time of the Transaction; provided, however, that the
Board may require Participants
to complete and deliver to the Company a notice of exercise before the effective date of a Transaction, which exercise is contingent
upon the effectiveness of such Transaction;
(iv)
arrange
for the lapse, in whole or in part, of any reacquisition or repurchase rights held by the Company with respect to the Stock Award;
(v)
cancel
or arrange for the cancellation of the Stock Award, to the extent not vested or not exercised prior to the effective time of the
Transaction, in exchange for such cash consideration, if any, as the Board, in its sole discretion, may consider appropriate; and
(vi)
make
a payment, in such form as may be determined by the Board equal to the excess, if any, of (A) the value of the property the
Participant would have received upon the exercise of the Stock Award immediately prior to the effective time of the Transaction,
over (B) any exercise price payable by such holder in connection with such exercise. For clarity, this payment may be zero
($0) if the value of the property is equal to or less than the exercise price. Payments under this provision may be delayed to
the same extent that payment of consideration to the holders of the Company’s Common Stock in connection with the Transaction
is delayed as a result of escrows, earn outs, holdbacks or any other contingencies.
The Board need not take
the same action or actions with respect to all Stock Awards or portions thereof or with respect to all Participants. The Board
may take different actions with respect to the vested and unvested portions of a Stock Award.
(d) Change
in Control.
A Stock Award may be subject to additional acceleration of vesting and exercisability upon or after a Change in
Control as may be provided in the Stock Award Agreement for such Stock Award or as may be provided in any other written agreement
between the Company or any Affiliate and the Participant, but in the absence of such provision, no such acceleration will occur.
10.
Plan
Term; Earlier Termination or Suspension of the Plan.
(a) Plan
Term.
The Board may suspend or terminate the Plan at any time. Unless terminated sooner by the Board, the Plan will automatically
terminate on the day before the tenth (10th) anniversary of the earlier of (i) the date the Plan is adopted by the Board,
or (ii) the date the Plan is approved by the shareholders of the Company. No Stock Awards may be granted under the Plan while
the Plan is suspended or after it is terminated.
11.
Effective
Date of Plan.
This Plan will become
effective on the Effective Date.
12.
Choice
of Law.
To the extent that
United States federal laws do not otherwise control, this Plan and all determinations made and actions taken pursuant to this Plan
shall be governed by the internal laws of the State of New York, and construed accordingly, except for those matters subject to
The Companies Act, 1981 of Bermuda (as amended), which shall be governed by Bermuda law, without giving effect to principles of
conflicts of laws, and construed accordingly.
13.
Definitions.
As used in the Plan, the following definitions will apply to the capitalized terms indicated below:
(a)
“
Affiliate
”
means, at the time of determination, each of the following: (i) any “parent” of the Company, as such term is defined
in Rule 405; (ii) any “subsidiary” of the Company, as such term is defined in Rule 405; and (iii) any other
entity in which the Company or any of its Affiliates has a material equity interest or control relationship unless otherwise designated
by the Board. An entity will be deemed an Affiliate of the Company for purposes of this definition only for such periods as the
requisite ownership or control relationship is maintained. The Board will have the authority to determine the time or times at
which “parent” or “majority-owned subsidiary” status is determined within the definitions set forth in
Rule 405.
(b)
“
Award
”
means a Stock Award or a Performance Cash Award.
(c)
“
Award
Agreement
” means a written agreement between the Company and a Participant evidencing the terms and conditions of
an Award.
(d)
“
Board
”
means the Board of Directors of the Company.
(e)
“
Capitalization
Adjustment
” means any change that is made in, or other events that occur with respect to, the Common Stock subject
to the Plan or subject to any Stock Award after the Effective Date without the receipt of consideration by the Company through
merger, consolidation, reorganization, recapitalization, reincorporation, stock dividend, dividend in property other than cash,
large nonrecurring cash dividend, stock split, reverse stock split, liquidating dividend, combination of shares, exchange of shares,
change in corporate structure, or any similar equity restructuring transaction, as that term is used in Statement of Financial
Accounting Standards Board Accounting Standards Codification Topic 718 (or any successor thereto). Notwithstanding the foregoing,
the conversion of any convertible securities of the Company will not be treated as a Capitalization Adjustment.
(f)
“
Cause
”
will have the meaning ascribed to such term in any written agreement between the Participant and the Company defining such
term and, in the absence of such agreement, such term means, with respect to a Participant, the occurrence of any of the following
events: (i) such Participant’s willful failure substantially to perform his or her duties and responsibilities to the
Company or deliberate violation of a Company policy; (ii) such Participant’s commission of any act of fraud, embezzlement,
dishonesty or any other willful misconduct that has caused or is reasonably expected to result in material injury to the Company;
(iii) unauthorized use or disclosure by such Participant of any proprietary information or trade secrets of the Company or any
other party to whom the Participant owes an obligation of nondisclosure as a result of his or her relationship with the Company;
or (iv) such Participant’s willful breach of any of his or her obligations under any written agreement or covenant with the
Company. The determination that a termination of the Participant’s Continuous Service is either for Cause or without Cause
will be made by the Company, in its sole discretion. Any determination by the Company that the Continuous Service of a Participant
was terminated with or without Cause for the purposes of outstanding Stock Awards held by such Participant will have no effect
upon any determination of the rights or obligations of the Company or such Participant for any other purpose.
(g)
“
Change
in Control
” means the occurrence, in a single transaction or in a series of related transactions, of any one or more
of the following events:
(i)
any
Exchange Act Person becomes the Owner, directly or indirectly, of securities of the Company representing more than fifty percent (50%)
of the combined voting power of the Company’s then outstanding securities other than by virtue of a merger, consolidation
or similar transaction. Notwithstanding the foregoing, a Change in Control will not be deemed to occur (A) on account of the
acquisition of securities of the Company directly from the Company, (B) on account of the
acquisition of securities
of the Company by an investor, any affiliate thereof or any other Exchange Act Person that acquires the Company’s securities
in a transaction or series of related transactions the primary purpose of which is to obtain financing for the Company through
the issuance of equity securities, (C) on account of the acquisition of securities of the Company by any individual who is, on
the IPO Date, either an executive officer or a Director (either, an “
IPO Investor
”) and/or any entity
in which an IPO Investor has a direct or indirect interest (whether in the form of voting rights or participation in profits or
capital contributions) of more than 50% (collectively, the “
IPO Entities
”) or on account of the IPO Entities
continuing to hold shares that come to represent more than 50% of the combined voting power of the Company’s then outstanding
securities as a result of the conversion of any class of the Company’s securities into another class of the Company’s
securities having a different number of votes per share pursuant to the conversion provisions set forth in the Company’s
Amended and Restated Certificate of Incorporation; or (D) solely because the level of Ownership held by any Exchange Act Person
(the “
Subject Person
”) exceeds the designated percentage threshold of the outstanding voting securities
as a result of a repurchase or other acquisition of voting securities by the Company reducing the number of shares outstanding,
provided
that if a Change in Control would occur (but for the operation of this sentence) as a result of the acquisition
of voting securities by the Company, and after such share acquisition, the Subject Person becomes the Owner of any additional voting
securities that, assuming the repurchase or other acquisition had not occurred, increases the percentage of the then outstanding
voting securities Owned by the Subject Person over the designated percentage threshold, then a Change in Control will be deemed
to occur;
(ii)
there
is consummated a merger, consolidation or similar transaction involving (directly or indirectly) the Company and, immediately after
the consummation of such merger, consolidation or similar transaction, the shareholders of the Company immediately prior thereto
do not Own, directly or indirectly, either (A) outstanding voting securities representing more than fifty percent (50%)
of the combined outstanding voting power of the surviving Entity in such merger, consolidation or similar transaction or (B) more
than fifty percent (50%) of the combined outstanding voting power of the parent of the surviving Entity in such merger,
consolidation or similar transaction, in each case in substantially the same proportions as their Ownership of the outstanding
voting securities of the Company immediately prior to such transaction;
provided, however
, that a merger, consolidation
or similar transaction will not constitute a Change in Control under this prong of the definition if the outstanding voting securities
representing more than 50% of the combined voting power of the surviving Entity or its parent are owned by the IPO Entities;
(iii)
there
is consummated a sale, lease, exclusive license or other disposition of all or substantially all of the consolidated assets of
the Company and its Subsidiaries, other than a sale, lease, license or other disposition of all or substantially all of the consolidated
assets of the Company and its Subsidiaries to an Entity, more than fifty percent (50%) of the combined voting power of
the voting securities of which are Owned by shareholders of the Company in substantially the same proportions as their Ownership
of the outstanding voting securities of the Company immediately prior to such sale, lease, license or other disposition;
provided,
however
, that a sale, lease, exclusive license or other disposition of all or substantially all of the consolidated assets
of the Company and its Subsidiaries will not constitute a Change in Control under this prong of the definition if the outstanding
voting securities representing more than 50% of the combined voting power of the acquiring Entity or its parent are owned by the
IPO Entities; or
(iv)
individuals
who, on the date the Plan is adopted by the Board, are members of the Board (the “
Incumbent Board
”) cease
for any reason to constitute at least a majority of the members of the Board;
provided, however
, that if the appointment
or election (or nomination for election) of any new
Board member was approved
or recommended by a majority vote of the members of the Incumbent Board then still in office, such new member will, for purposes
of this Plan, be considered as a member of the Incumbent Board.
Notwithstanding the
foregoing definition or any other provision of the Plan, (A) the term Change in Control will not include a sale of assets,
merger or other transaction effected exclusively for the purpose of changing the domicile of the Company, and (B) the definition
of Change in Control (or any analogous term) in an individual written agreement between the Company or any Affiliate and the Participant
will supersede the foregoing definition with respect to Awards subject to such agreement;
provided, however,
that if no
definition of Change in Control or any analogous term is set forth in such an individual written agreement, the foregoing definition
will apply.
(h)
“
Code
”
means the Internal Revenue Code of 1986, as amended, including any applicable regulations and guidance thereunder.
(i)
“
Committee
”
means a committee of two (2) or more Directors to whom authority has been delegated by the Board in accordance with Section 2(c).
(j)
“
Common
Stock
” means the common shares of the Company.
(k)
“
Company
”
means Axovant Sciences Ltd., an exempted limited company incorporated under the laws of Bermuda, with its registered office at
Clarendon House, 2 Church Street, Hamilton HM11, Bermuda, or any successor to all or substantially all of its businesses by merger,
amalgamation, consolidation, purchase of assets, or otherwise.
(l)
“
Consultant
”
means any person, including an advisor, who is (i) engaged by the Company or an Affiliate to render consulting or advisory
services and is compensated for such services, or (ii) serving as a member of the board of directors of an Affiliate and is
compensated for such services. However, service solely as a Director, or payment of a fee for such service, will not cause a Director
to be considered a “Consultant” for purposes of the Plan. Notwithstanding the foregoing, a person is treated as a Consultant
under this Plan only if a Form S-8 Registration Statement under the Securities Act is available to register either the offer or
the sale of the Company’s securities to such person.
(m)
“
Continuous
Service
” means that the Participant’s service with the Company or an Affiliate, whether as an Employee, Director
or Consultant, is not interrupted or terminated. A change in the capacity in which the Participant renders service to the Company
or an Affiliate as an Employee, Director or Consultant or a change in the Entity for which the Participant renders such service,
provided that there is no interruption or termination of the Participant’s service with the Company or an Affiliate, will
not terminate a Participant’s Continuous Service;
provided, however
, that if the Entity for which a Participant is
rendering services ceases to qualify as an Affiliate, as determined by the Board in its sole discretion, such Participant’s
Continuous Service will be considered to have terminated on the date such Entity ceases to qualify as an Affiliate. For example,
a change in status from an Employee of the Company to a Consultant of an Affiliate or to a Director will not constitute an interruption
of Continuous Service. To the extent permitted by law, the Board or the chief executive officer of the Company, in that party’s
sole discretion, may determine whether Continuous Service will be considered interrupted in the case of (i) any leave of absence
approved by the Board or chief executive officer, including sick leave, military leave or any other personal leave, or (ii) transfers
between the Company, an Affiliate, or their successors. Notwithstanding the foregoing, a leave of absence will be treated as Continuous
Service for purposes of vesting in an Award only to such extent as may be provided in the Company’s leave of
absence policy, in the
written terms of any leave of absence agreement or policy applicable to the Participant, or as otherwise required by law.
(n)
“
Corporate
Transaction
” means a sale of all or substantially all of the Company’s assets, or a merger, consolidation or
other capital reorganization or business combination transaction of the Company with or into another corporation, entity or person,
or the direct or indirect acquisition (including by way of a tender or exchange offer) by any person, or persons acting as a group,
of beneficial ownership or a right to acquire beneficial ownership of shares representing a majority
of the voting power
of the then outstanding shares of capital stock of the Company.
(o)
“
Covered
Employee
” will have the meaning provided in Section 162(m)(3) of the Code.
(p)
“
Director
”
means a member of the Board.
(q)
“
Disability
”
means, with respect to a Participant, the inability of such Participant to engage in any substantial gainful activity by reason
of any medically determinable physical or mental impairment that can be expected to result in death or that has lasted or can be
expected to last for a continuous period of not less than twelve (12) months as provided in Sections 22(e)(3) and
409A(a)(2)(c)(i) of the Code, and will be determined by the Board on the basis of such medical evidence as the Board deems warranted
under the circumstances.
(r) “
Dissolution
”
means when the Company has completely wound up its affairs and dissolved in accordance with the Companies Act 1981 of Bermuda.
(s)
“
Effective
Date
” means the effective date of this Plan, which is the earlier of (i) the date that this Plan is first approved
by the Company’s shareholders, and (ii) the date this Plan is adopted by the Board.
(t)
“
Employee
”
means any person employed by the Company or an Affiliate. However, service solely as a Director, or payment of a fee for such services,
will not cause a Director to be considered an “Employee” for purposes of the Plan.
(u)
“
Entity
”
means a corporation, partnership, limited liability company or other entity.
(v)
“
Exchange
Act
” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
(w)
“
Exchange
Act Person
”
means any natural person, Entity or “group” (within the meaning of Section 13(d)
or 14(d) of the Exchange Act), except that “Exchange Act Person” will not include (i) the Company or
any Subsidiary of the Company, (ii) any employee benefit plan of the Company or any Subsidiary of the Company or any trustee
or other fiduciary holding securities under an employee benefit plan of the Company or any Subsidiary of the Company, (iii) an
underwriter temporarily holding securities pursuant to an offering of such securities, (iv) an Entity Owned, directly or indirectly,
by the shareholders of the Company in substantially the same proportions as their Ownership of stock of the Company; or (v) any
natural person, Entity or “group” (within the meaning of Section 13(d) or 14(d) of the Exchange Act) that, as
of the Effective Date, is the Owner, directly or indirectly, of securities of the Company representing more than fifty percent (50%)
of the combined voting power of the Company’s then outstanding securities.
(x)
“
Fair
Market Value
” means, as of any date, the value of the Common Stock determined as follows:
(i)
If
the Common Stock is listed on any established stock exchange or traded on any established market, the Fair Market Value of a share
of Common Stock will be, unless otherwise determined by the Board, the closing sales price for such stock as quoted on such exchange
or market (or the exchange or market with the greatest volume of trading in the Common Stock) on the date of determination, as
reported in a source the Board deems reliable.
(ii)
Unless
otherwise provided by the Board, if there is no closing sales price for the Common Stock on the date of determination, then the
Fair Market Value will be the closing selling price on the last preceding date for which such quotation exists.
(iii)
In
the absence of such markets for the Common Stock, the Fair Market Value will be determined by the Board in good faith and in a
manner that complies with Sections 409A and 422 of the Code.
(y)
“
Incentive
Stock Option
” means an option granted pursuant to Section 5 of the Plan that is intended to be, and that qualifies
as, an “incentive stock option” within the meaning of Section 422 of the Code.
(z)
“
IPO
Date
” means the date and time of execution of the underwriting agreement between the Company and the underwriter(s)
managing the initial public offering of the Common Stock, pursuant to which the Common Stock is priced for the initial public offering.
(aa)
“
Non-Employee
Director
”
means a Director who either (i) is not a current employee or officer of the Company or an Affiliate,
does not receive compensation, either directly or indirectly, from the Company or an Affiliate for services rendered as a consultant
or in any capacity other than as a Director (except for an amount as to which disclosure would not be required under Item 404(a)
of Regulation S-K promulgated pursuant to the Securities Act (“
Regulation S-K
”)), does not possess an
interest in any other transaction for which disclosure would be required under Item 404(a) of Regulation S-K, and is not engaged
in a business relationship for which disclosure would be required pursuant to Item 404(b) of Regulation S-K; or (ii) is otherwise
considered a “non-employee director” for purposes of Rule 16b-3.
(bb)
“
Nonstatutory
Stock Option
” means any option granted pursuant to Section 5 of the Plan that does not qualify as an Incentive Stock
Option.
(cc)
“
Officer
”
means a person who is an officer within the meaning of Section 16 of the Exchange Act.
(dd)
“
Option
”
means an Incentive Stock Option or a Nonstatutory Stock Option to purchase shares of Common Stock granted pursuant to the Plan.
(ee)
“
Option
Agreement
” means a written agreement between the Company and an Optionholder evidencing the terms and conditions
of an Option grant. Each Option Agreement will be subject to the terms and conditions of the Plan.
(ff)
“
Optionholder
”
means a person to whom an Option is granted pursuant to the Plan or, if applicable, such other person who holds an outstanding
Option.
(gg)
“
Other
Stock Award
” means an award based in whole or in part by reference to the Common Stock which is granted pursuant
to the terms and conditions of Section 6(c).
(hh)
“
Other
Stock Award Agreement
” means a written agreement between the Company and a holder of an Other Stock Award evidencing
the terms and conditions of an Other Stock Award grant. Each Other Stock Award Agreement will be subject to the terms and conditions
of the Plan.
(ii)
“
Outside
Director
” means a Director who either (i) is not a current employee of the Company or an “affiliated corporation”
(within the meaning of Treasury Regulations promulgated under Section 162(m) of the Code), is not a former employee of the Company
or an “affiliated corporation” who receives compensation for prior services (other than benefits under a tax-qualified
retirement plan) during the taxable year, has not been an officer of the Company or an “affiliated corporation,” and
does not receive remuneration from the Company or an “affiliated corporation,” either directly or indirectly, in any
capacity other than as a Director, or (ii) is otherwise considered an “outside director” for purposes of Section 162(m)
of the Code.
(jj)
“
Own
,”
“
Owned
,” “
Owner
,” “
Ownership
”
A
person or
Entity will be deemed to “Own,” to have “Owned,” to be the “Owner” of, or to have acquired
“Ownership” of securities if such person or Entity, directly or indirectly, through any contract, arrangement, understanding,
relationship or otherwise, has or shares voting power, which includes the power to vote or to direct the voting, with respect to
such securities.
(kk)
“
Participant
”
means a person to whom an Award is granted pursuant to the Plan or, if applicable, such other person who holds an outstanding Award.
(ll)
“
Performance
Cash Award
” means an award of cash granted pursuant to the terms and conditions of Section 6(c)(ii).
(mm)
“
Performance
Criteria
” means the one or more criteria that the Board will select for purposes of establishing the Performance
Goals for a Performance Period. The Performance Criteria that will be used to establish such Performance Goals may be based on
any one of, or combination of, the following as determined by the Board: (i) earnings (including earnings per share and net earnings);
(ii) earnings before interest, taxes and depreciation; (iii) earnings before interest, taxes, depreciation and amortization; (iv)
earnings before interest, taxes, depreciation, amortization and legal settlements; (v) earnings before interest, taxes, depreciation,
amortization, legal settlements and other income (expense); (vi) earnings before interest, taxes, depreciation, amortization, legal
settlements, other income (expense) and stock-based compensation; (vii) earnings before interest, taxes, depreciation, amortization,
legal settlements, other income (expense), stock-based compensation and changes in deferred revenue; (viii) total stockholder return;
(ix) return on equity or average stockholder’s equity; (x) return on assets, investment, or capital employed; (xi) stock
price; (xii) margin (including gross margin); (xiii) income (before or after taxes); (xiv) operating income; (xv) operating income
after taxes; (xvi) pre-tax profit; (xvii) operating cash flow; (xviii) sales or revenue targets; (xix) increases in revenue or
product revenue; (xx) expenses and cost reduction goals; (xxi) improvement in or attainment of working capital levels; (xxii) economic
value added (or an equivalent metric); (xxiii) market share; (xxiv) cash flow; (xxv) cash flow per share; (xxvi) share price performance;
(xxvii) debt reduction; (xxviii) implementation or completion of projects or processes; (xxix) employee retention; (xxx) stockholders’
equity; (xxxi) capital expenditures; (xxxii) debt levels; (xxxiii) operating profit or net operating profit; (xxxiv) workforce
diversity; (xxxv) growth of net income or operating income; (xxxvi) billings; (xxxvii) bookings; (xxxviii) initiation or completion
of phases of clinical trials and/or studies by specified dates; (xxxix) patient enrollment rates, (xxxx) budget management; (xxxxi)
regulatory body and/or pricing approval with respect to products, studies and/or trials; (xxxxii) commercial launch of products;
(xxxxiii) progress of partnered programs; (xxxxix) strategic partnerships or transactions; and (xxxxx) to the extent that an
Award is not intended
to comply with Section 162(m) of the Code, other measures of performance selected by the Board.
(nn)
“
Performance
Goals
” means, for a Performance Period, the one or more goals established by the Board for the Performance Period
based upon the Performance Criteria. Performance Goals may be based on a Company-wide basis, with respect to one or more business
units, divisions, Affiliates, or business segments, and in either absolute terms or relative to the performance of one or more
comparable companies or the performance of one or more relevant indices. Unless specified otherwise by the Board (i) in the Award
Agreement at the time the Award is granted or (ii) in such other document setting forth the Performance Goals at the time the Performance
Goals are established, the Board will appropriately make adjustments in the method of calculating the attainment of Performance
Goals for a Performance Period as follows: (1) to exclude restructuring and/or other nonrecurring charges; (2) to exclude exchange
rate effects; (3) to exclude the effects of changes to generally accepted accounting principles; (4) to exclude the effects of
any statutory adjustments to corporate tax rates; (5) to exclude the effects of any “extraordinary items” as determined
under generally accepted accounting principles; (6) to exclude the dilutive effects of acquisitions or joint ventures; (7) to assume
that any business divested by the Company achieved performance objectives at targeted levels during the balance of a Performance
Period following such divestiture; (8) to exclude the effect of any change in the outstanding shares of common stock of the Company
by reason of any stock dividend or split, stock repurchase, reorganization, recapitalization, merger, consolidation, spin-off,
combination or exchange of shares or other similar corporate change, or any distributions to common stockholders other than regular
cash dividends; (9) to exclude the effects of stock based compensation and the award of bonuses under the Company’s bonus
plans; (10) to exclude costs incurred in connection with potential acquisitions or divestitures that are required to expensed under
generally accepted accounting principles; (11) to exclude the goodwill and intangible asset impairment charges that are required
to be recorded under generally accepted accounting principles; (12) to exclude the effect of any other unusual, non-recurring gain
or loss or other extraordinary item; (13) to exclude the effects of the timing of acceptance for review and/or approval of submissions
to the Food and Drug Administration or any other regulatory body and (14) to exclude the effects of entering into or achieving
milestones involved in licensing, collaboration, or other business development transactions. In addition, the Board retains the
discretion to reduce or eliminate the compensation or economic benefit due upon attainment of Performance Goals and to define the
manner of calculating the Performance Criteria it selects to use for such Performance Period. Partial achievement of the specified
criteria may result in the payment or vesting corresponding to the degree of achievement as specified in the Stock Award Agreement
or the written terms of a Performance Cash Award.
(oo)
“
Performance
Period
” means the period of time selected by the Board over which the attainment of one or more Performance Goals
will be measured for the purpose of determining a Participant’s right to and the payment of a Stock Award or a Performance
Cash Award. Performance Periods may be of varying and overlapping duration, at the sole discretion of the Board.
(pp)
“
Performance
Stock Award
” means a Stock Award granted under the terms and conditions of Section 6(c)(i).
(qq)
“
Plan
”
means this Axovant Sciences Ltd. 2015 Equity Incentive Plan.
(rr)
“
Restricted
Stock Award
” means an award of shares of Common Stock which is granted pursuant to the terms and conditions of Section 6(a).
(ss)
“
Restricted
Stock Award Agreement
” means a written agreement between the Company and a holder of a Restricted Stock Award evidencing
the terms and conditions of a Restricted Stock Award grant. Each Restricted Stock Award Agreement will be subject to the terms
and conditions of the Plan.
(tt)
“
Restricted
Stock Unit Award
”
means a right to receive shares of Common Stock which is granted pursuant to the
terms and conditions of Section 6(b).
(uu)
“
Restricted
Stock Unit Award Agreement
”
means a written agreement between the Company and a holder of a Restricted
Stock Unit Award evidencing the terms and conditions of a Restricted Stock Unit Award grant. Each Restricted Stock Unit Award Agreement
will be subject to the terms and conditions of the Plan.
(vv)
“
Rule
16b-3
” means Rule 16b-3 promulgated under the Exchange Act or any successor to Rule 16b-3, as in effect from time
to time.
(ww)
“
Rule
405
” means Rule 405 promulgated under the Securities Act.
(xx)
“
Securities
Act
” means the Securities Act of 1933, as amended.
(yy)
“
Stock
Appreciation Right
” or “
SAR
” means a right to receive the appreciation on Common Stock
that is granted pursuant to the terms and conditions of Section 5.
(zz)
“
Stock
Appreciation Right Agreement
” means a written agreement between the Company and a holder of a Stock Appreciation
Right evidencing the terms and conditions of a Stock Appreciation Right grant. Each Stock Appreciation Right Agreement will be
subject to the terms and conditions of the Plan.
(aaa)
“
Stock
Award
” means any right to receive Common Stock granted under the Plan, including an Incentive Stock Option, a Nonstatutory
Stock Option, a Restricted Stock Award, a Restricted Stock Unit Award, a Stock Appreciation Right, a Performance Stock Award, or
any Other Stock Award.
(bbb)
“
Stock
Award Agreement
” means a written agreement between the Company and a Participant evidencing the terms and conditions
of a Stock Award grant. Each Stock Award Agreement will be subject to the terms and conditions of the Plan.
(ccc)
“
Subsidiary
”
means, with respect to the Company, (i) any corporation of which more than fifty percent (50%) of the outstanding
capital stock having ordinary voting power to elect a majority of the board of directors of such corporation (irrespective of whether,
at the time, stock of any other class or classes of such corporation will have or might have voting power by reason of the happening
of any contingency) is at the time, directly or indirectly, Owned by the Company, and (ii) any partnership, limited liability
company or other entity in which the Company has a direct or indirect interest (whether in the form of voting or participation
in profits or capital contribution) of more than fifty percent (50%) .
(ddd)
“
Ten
Percent Shareholder
” means a person who Owns (or is deemed to Own pursuant to Section 424(d) of the Code) shares
possessing more than ten percent (10%) of the total combined voting power of all classes of shares of the Company or
any Affiliate.
(eee)
“
Transaction
”
means a Corporate Transaction or a Change in Control.
Axon Enterprise (NASDAQ:AXON)
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From Mar 2024 to Apr 2024
Axon Enterprise (NASDAQ:AXON)
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From Apr 2023 to Apr 2024