PROPOSAL NO. 2
APPROVAL OF AMENDMENTS TO THE 2015 OMNIBUS EQUITY INCENTIVE PLAN
On November 7, 2019, the Board adopted, subject to the receipt of stockholder approval, the Amendments to the 2015 Plan to (i) increase the number of shares authorized for issuance thereunder from 1,666,667 to 15,000,000 (prior to the Reverse Split, if any) and (ii) increase the number of shares of common stock that can be granted as awards to any one individual in a single calendar year from 83,334 to 1,500,000 (prior to the Reverse Split, if any). The purpose of the Amendments is to assist us in attracting and retaining the key personnel we believe we need to continue to implement our sales and marketing strategy for Probuphine® while maintaining cost-cutting measures necessary to fund our operations with limited available capital. The Amendments will only become effective upon our receipt of stockholder approval of this Proposal No. 2.
General Description of the 2015 Plan
The following is a summary of the material provisions of the 2015 Plan and is qualified in its entirety by reference to the complete text of the 2015 Plan, a copy of which is attached to this proxy statement as Annex A.
Administration. The 2015 Plan is administered by the compensation committee of the Board, which consists of three members of the Board, each of whom is a “non-employee director” within the meaning of Rule 16b-3 promulgated under the Exchange Act and an “outside director” within the meaning of Code Section 162(m). Among other things, the compensation committee has complete discretion, subject to the express limits of the 2015 Plan, to determine the directors, employees and nonemployee consultants to be granted an award, the type of award to be granted the terms and conditions of the award, the form of payment to be made and/or the number of shares of common stock subject to each award, the exercise price of each option and base price of each stock appreciation right (“SAR”), the term of each award, the vesting schedule for an award, whether to accelerate vesting, the value of the common stock underlying the award, and the required withholding, if any. The compensation committee may amend, modify or terminate any outstanding award, provided that the participant’s consent to such action is required if the action would impair the participant’s rights or entitlements with respect to that award. The compensation committee is also authorized to construe the award agreements, and may prescribe rules relating to the 2015 Plan.
Grant of Awards; Shares Available for Awards. The 2015 Plan provides for the grant of stock options, SARs, performance share awards, performance unit awards, distribution equivalent right awards, restricted stock awards, restricted stock unit awards and unrestricted stock awards to non-employee directors, officers, employees and nonemployee consultants of Titan or its affiliates. We have reserved a total of 1,666,667 shares of common stock for issuance as or under awards to be made under the 2015 Plan. As of the Record Date, awards covering an aggregate of 1,142,530 shares of common stock were outstanding under the 2015 Plan. If any award expires, is cancelled, or terminates unexercised or is forfeited, the number of shares subject thereto is again available for grant under the 2015 Plan. The number of shares of common stock for which awards may be granted under the 2015 Plan to a participant who is an employee in any calendar year is currently limited to 83,334 shares.
The Amendments, if approved by our stockholders, will increase the number of shares authorized for issuance under the 2015 Plan to 15,000,000 and will increase the number of shares that may be granted to a participant who is an employee in any calendar year to 1,500,000, in each case subject to downward adjustment if the stockholders approve and the Board implements the Reverse Split. On April 1, 2019, in connection with our entry into new employment agreements with Dr. Rubin and Mr. Bhonsle, the executives each received a 10-year option grant under the 2015 Plan to purchase 200,000 shares of common stock at an exercise price of $1.75 per share, the closing price on such date. The options vested as to 83,334 shares on the grant date with the balance to vest only upon stockholder approval of the Amendments. Accordingly, these executives will benefit from approval and adoption of the Amendments.
Currently, there are 28 employees and directors entitled to receive stock options and/or shares of restricted stock under the 2015 Plan. Future new hires and additional non-employee directors and/or consultants would be eligible to participate in the 2015 Plan as well. The number of stock options and/or