UNITED
STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE
14A
Proxy
Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant 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 under §240.14a-12
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ONCONOVA
THERAPEUTICS, INC.
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(Name of Registrant as Specified
In Its Charter)
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NOT APPLICABLE
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(Name of Person(s) Filing
Proxy Statement, if other than the Registrant)
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Payment of Filing Fee (Check the appropriate box):
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x
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No fee required.
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
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(1)
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Title of each class of securities to which transaction applies:
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Aggregate number of securities to which transaction applies:
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Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
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Proposed maximum aggregate value of transaction:
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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.
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(1)
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Amount Previously Paid:
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Form, Schedule or Registration Statement No.:
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PRELIMINARY
COPY—SUBJECT TO COMPLETION
Onconova
Therapeutics, Inc.
375 Pheasant Run
Newtown, PA 18940 USA
April
, 2020
Dear
Stockholder,
We
cordially invite you to attend our 2020 Annual Meeting of Stockholders to be held at 10:30 a.m. Eastern Daylight Time on Wednesday,
May 27, 2020. Due to COVID-19, and in keeping with the government and Center for Disease Control’s guidelines on such pandemic,
the 2020 Annual Meeting of Stockholders will be held virtually via the Internet at www.virtualshareholdermeeting.com/ONTX2020
(the “Annual Meeting”). This is the first time that our annual meeting will be a “virtual meeting” of
stockholders, which will be conducted exclusively via the internet at a virtual web conference. There will not be a physical meeting
location, and stockholders will not be able to attend the annual meeting in person. Instructions on how to participate in the
Annual Meeting and demonstrate proof of stock ownership are posted at www.virtualshareholdermeeting.com/ONTX2020 and your proxy card. This means
that you can attend the annual meeting online, vote your shares electronically and submit questions during the online meeting
by visiting the above-mentioned website. We believe that hosting a “virtual meeting” will enable greater stockholder
attendance and participation from any location around the world. The attached Notice of Annual Meeting and Proxy Statement describes
the business we will conduct at the meeting, provides information about Onconova Therapeutics, Inc. that you should consider
when you vote your shares.
Your
vote is very important, regardless of the number of shares you hold. Whether or not you plan to attend the meeting (via the virtual
meeting), please carefully review the enclosed Proxy Statement and then cast your vote.
We
hope that you will join us virtually on May 27, 2019.
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Sincerely,
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Steven M. Fruchtman, M.D.
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President and Chief Executive Officer
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PRELIMINARY
COPY—SUBJECT TO COMPLETION
Onconova
Therapeutics, Inc.
375
Pheasant Run
Newtown, PA 18940
Notice
of 2020 Annual Meeting of Stockholders
NOTICE
IS HEREBY GIVEN that the 2020 Annual Meeting (the "Annual Meeting") of Stockholders of Onconova Therapeutics, Inc.,
a Delaware corporation (the "Company"), will be held on:
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Date:
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May 27, 2020
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Time:
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10:30 a.m. Eastern Daylight Time
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Place:
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www.virtualshareholdermeeting.com/ONTX2020
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Purposes:
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1.
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To elect seven directors, each to hold office until the 2021 Annual
Meeting of Stockholders and until his or her successor is elected and qualified;
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2.
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To consider and vote upon an amendment to our Tenth Amended and Restated
Certificate of Incorporation, as amended, to combine outstanding shares of our common stock into a lesser number of outstanding
shares, or a "reverse stock split", by a ratio of not less than one-for-five and not more than one-for-twenty-five,
with the exact ratio to be set within this range by our Board of Directors in its sole discretion;
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3.
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To consider and vote upon the Amendment and Restatement of the 2018
Omnibus Incentive Compensation Plan;
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4.
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To approve, on an advisory basis, the compensation of our named executive
officers;.
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5.
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To consider and vote upon the ratification of the selection of Ernst &
Young LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2020;
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6.
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To consider and vote upon a proposal to adjourn the Annual Meeting,
if necessary, to solicit additional proxies in the event that there are not sufficient votes at the time of the Annual Meeting
to approve the reverse stock split; and
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7.
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To transact such other business as may properly come before the Annual
Meeting or any adjournments or postponements thereof.
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Record Date:
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The Board of Directors has fixed the close of business
on March 30, 2020 as the record date for determining stockholders entitled to notice of, and to vote at, the Annual Meeting or
any adjournment or postponement thereof.
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The
Company has enclosed a copy of the proxy statement, the proxy card and the Company's annual report to stockholders for the year
ended December 31, 2019 (the "Annual Report"). The proxy statement, the proxy card and the Annual Report are also
available on the Company's website at www.onconova.com.
Your
vote is important. Whether or not you plan to attend the meeting, we urge you to vote as soon as possible by submitting your
proxy. You may vote your proxy three different ways: by mail, via the internet, or by telephone. You may also be entitled to vote
in person (via the virtual meeting) at the meeting. Please refer to detailed instructions included in the accompanying proxy statement.
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FOR THE BOARD OF DIRECTORS
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Steven M. Fruchtman, M.D.
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President and
Chief Executive Officer
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Newtown,
PA
April , 2020
TABLE
OF CONTENTS
PRELIMINARY
COPY—SUBJECT TO COMPLETION
Onconova
Therapeutics, Inc.
375 Pheasant Run
Newtown, PA 18940
PROXY
STATEMENT
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD MAY 27, 2020
GENERAL
INFORMATION
This
Proxy Statement is furnished to stockholders of Onconova Therapeutics, Inc., a Delaware corporation ("we," "us,"
or the "Company"), in connection with the solicitation by our Board of Directors of proxies for use at our 2020 Annual
Meeting of Stockholders (the "Annual Meeting"). The Annual Meeting is scheduled to be held at 10:30 a.m. Eastern
Daylight Time on Wednesday, May 27, 2020, at a virtual location. We anticipate that this Proxy Statement and the enclosed form
of proxy will be mailed to stockholders on or about April , 2020.
At
the Annual Meeting, stockholders will be asked to consider and vote upon: (1) the election of seven directors, each to hold
office until the 2021 Annual Meeting of Stockholders and until his or her successor is elected and qualified; (2) a proposal
to amend our Tenth Amended and Restated Certificate of Incorporation, as amended (the "Certificate of Incorporation")
to combine outstanding shares of our common stock into a lesser number of outstanding shares, or a "reverse stock split",
by a ratio of not less than one-for-five and not more than one-for-twenty-five, with the exact ratio to be set within this range
by our Board of Directors in its sole discretion; (3) a proposal to adopt and approve the Amendment and Restatement of the
2018 Omnibus Incentive Compensation Plan; (4) a proposal to approve, on an advisory basis, of the compensation of our named
executive officers; (5) the ratification of the selection of Ernst & Young LLP as our independent registered public
accounting firm for the fiscal year ending December 31, 2020; (6) a proposal to adjourn the Annual Meeting, if necessary,
to solicit additional proxies in the event that there are not sufficient votes at the time of the Annual Meeting to approve the
reverse stock split; and (7) such other business as may properly come before the Annual Meeting or any adjournments or postponements
thereof.
Voting
Rights and Votes Required
The
close of business on March 30, 2020 has been fixed as the record date for the determination of stockholders entitled to
receive notice of and to vote at the Annual Meeting. As of the close of business on such date, we had outstanding and
entitled to vote 167,416,070 shares of our common stock, par value $0.01 per share. Holders of the Company's Series A
Convertible Preferred Stock or Series B Convertible Preferred Stock are not entitled to vote at the Annual Meeting. You
may vote your shares of common stock in person (all references to “present” or “in person” in this
proxy statement relate to the virtual presence at the Annual Meeting) or by proxy. You may submit your proxy by telephone,
via the Internet or by completing the enclosed proxy card and mailing it in the envelope provided. Stockholders who hold
shares in "street name" should refer to their proxy card or the information forwarded by their bank, broker or
other nominee for instructions on the voting options available to them. To vote in person at the virtual meeting, you may
attend the Annual Meeting and deliver your completed proxy card electronically or vote your shares electronically during the
virtual meeting.
The
presence at the Annual Meeting, whether in person or by valid proxy, of a majority of the shares of our common stock entitled
to vote will constitute a quorum, permitting us to conduct our business at the Annual Meeting. The record holder of each share
of common stock entitled to vote at the Annual Meeting will have one vote for each share so held. Abstentions and broker non-votes
will count for quorum purposes.
If
a broker that is a record holder of common stock does not return a signed proxy, the shares of common stock represented by such
proxy will not be considered present at the Annual Meeting and will not be counted toward establishing a quorum. If a broker that
is a record holder of common stock does return a signed proxy, but is not authorized to vote on one or more matters (with respect
to each such matter, a "broker non-vote"), the shares of common stock represented by such proxy will be considered present
at the Annual Meeting for purposes of determining the presence of a quorum. A broker that is a member of the New York Stock Exchange
is prohibited, unless the stockholder provides the broker with written instructions, from giving a proxy on non-routine matters.
Consequently, your brokerage firm or other nominee will have discretionary authority to vote your shares with respect to routine
matters but may not vote your shares with respect to non-routine matters.
Election
of Directors
Election
of directors is a non-routine matter and brokers do not have discretionary authority to vote on this matter. If you hold shares
in a brokerage account and wish to vote those shares on this proposal, then you should instruct on how to vote the shares using
the voting instructions provided.
Directors
are elected by a plurality of the votes cast when a quorum is present. Stockholders may not cumulate their votes. The seven candidates
receiving the highest number of votes will be elected. Because directors are elected by a plurality of the votes, votes withheld
from a director nominee and broker non-votes will have no effect on the outcome of the vote.
Reverse
Stock Split
The
affirmative vote of the holders of a majority of the outstanding shares of our common stock is required to approve the reverse
stock split proposal. Abstentions will have the same effect as "Against" votes. If you are a stockholder of record and
you fail to return your proxy card or to vote at all using the telephone or internet, it will have the same effect as an "Against"
vote. If you are a stockholder of record and return a signed and dated proxy card without providing specific voting instructions
on the reverse stock split proposal, or do not specify your vote on the reverse stock split proposal when voting using the telephone
or internet, your shares will be voted "For" the reverse stock split proposal in accordance with the recommendations
of the Board of Directors.
We
believe that the reverse stock split proposal is deemed to be a "routine" matter. Therefore, if you are a beneficial
owner of shares registered in the name of your broker or other nominee and you fail to provide instructions to your broker or
nominee as to how to vote your shares on the reverse stock split proposal, your broker or nominee will have the discretion to
vote your shares on the reverse stock split proposal. Accordingly, if you fail to provide voting instructions to your broker or
nominee, your broker or nominee can vote your shares on the reverse stock split proposal in a manner that is contrary to what
you intend. For example, if you are against the approval of the reverse stock split proposal but you do not provide any voting
instructions to your broker, your broker can nonetheless vote your shares "For" the reverse stock split proposal. While
we do not expect any broker non-votes on the reverse stock split proposal, if you do not provide voting instructions and your
broker or nominee fails to vote your shares, this will have the same effect as an "Against" vote. If you are a beneficial
owner of shares registered in the name of your broker or other nominee, we strongly encourage you to provide voting instructions
to the broker or nominee that holds your shares to ensure that your shares are voted in the manner in which you want them to be
voted.
Amendment
and Restatement of the 2018 Omnibus Incentive Compensation Plan
The
approval of the Amendment and Restatement of the 2018 Omnibus Incentive Compensation Plan requires the affirmative vote of a majority
of the votes cast at the Annual Meeting. With respect to this proposal, shareholders may (i) vote "For" the proposal,
(ii) vote "Against" the proposal, or (iii) abstain from voting. Abstentions are not considered to be votes
cast and will have no effect on the outcome of the vote. If you are a stockholder of record and you return your signed and dated
proxy card without providing specific voting instructions on the Amendment and Restatement of the 2018 Omnibus Incentive Compensation
Plan proposal, or do not specify your vote on the Amendment and Restatement of the 2018 Omnibus Incentive Compensation Plan proposal
when voting using the telephone or internet, your shares will be voted "For" the Amendment and Restatement of the 2018
Omnibus Incentive Compensation Plan proposal in accordance with the recommendations of the Board of Directors. If you are a stockholder
of record and you fail to return your proxy card, or to vote at all using the telephone or internet, it will have no effect.
Approval
of the Amendment and Restatement of the 2018 Omnibus Incentive Compensation Plan is a non-routine matter and brokers do not have
discretionary authority to vote on this matter. If you hold shares in a brokerage account and wish to vote those shares on this
proposal, then you should instruct on how to vote the shares using the voting instructions provided. Broker non-votes will have
no effect on the outcome of the proposal.
Advisory
Vote on Executive Compensation
The
approval, on an advisory basis, of the compensation of our named executive officers requires the affirmative vote of a majority
of the votes cast at the Annual Meeting. With respect to this proposal, shareholders may (i) vote "For" the proposal,
(ii) vote "Against" the proposal, or (iii) abstain from voting. Abstentions are not considered to be votes cast and
will have no effect on the outcome of the vote. If you are a stockholder of record and you return your signed and dated proxy
card without providing specific voting instructions on the advisory vote on executive compensation proposal, or do not specify
your vote on the on the advisory vote on executive compensation proposal when voting using the telephone or internet, your shares
will be voted "For" the approval, on an advisory basis, of the compensation of our named executive officers proposal
in accordance with the recommendations of the Board of Directors. If you are a stockholder of record and you fail to return your
proxy card, or to vote at all using the telephone or internet, it will have no effect.
The
advisory vote on executive compensation is a non-routine matter and brokers do not have discretionary authority to vote on this
matter. If you hold shares in a brokerage account and wish to vote those shares on this proposal, then you should instruct on
how to vote the shares using the voting instructions provided. Broker non-votes will have no effect on the outcome of the proposal.
Ratification
of Independent Public Accounting Firm
The
affirmative vote of a majority of the votes cast is required to approve the proposal to ratify the selection of our independent
registered public accounting firm. Abstentions are not considered to be votes cast and will have no effect on the outcome of the
vote. If you are a stockholder of record and you return your signed and dated proxy card without providing specific voting instructions
on this proposal, or do not specify your vote on this proposal when voting using the telephone or internet, your shares will be
voted "For" the ratification of the selection of our independent registered public accounting firm in accordance with
the recommendations of the Board of Directors. If you are a stockholder of record and you fail to return your proxy card, or to
vote at all using the telephone or internet, it will have no effect.
We
believe that the proposal to ratify the selection of our independent registered public accounting firm is deemed to be a "routine"
matter. Therefore, if you are a beneficial owner of shares registered in the name of your broker or other nominee and you fail
to provide instructions to your broker or nominee as to how to vote your shares on this proposal, your broker or nominee will
have the discretion to vote your shares on this proposal.
Adjournment
Proposal
The
affirmative vote of a majority of the votes cast is required to approve the proposal to adjourn the Annual Meeting, if necessary,
to solicit additional proxies in the event that there are not sufficient votes at the time of the Annual Meeting to approve the
reverse stock split. Abstentions are not considered to be votes cast and will have no effect on the outcome of the vote. If you
are a stockholder of record and you return your signed and dated proxy card without providing specific voting instructions on
the adjournment proposal, or do not specify your vote on the adjournment proposal when voting using the telephone or internet,
your shares will be voted "For" the adjournment proposal in accordance with the recommendations of the Board of Directors.
If you are a stockholder of record and you fail to return your proxy card, or to vote at all using the telephone or internet,
it will have no effect.
We
believe that the adjournment proposal is deemed to be a "routine" matter. Therefore, if you are a beneficial owner of
shares registered in the name of your broker or other nominee and you fail to provide instructions to your broker or nominee as
to how to vote your shares on the adjournment proposal, your broker or nominee will have the discretion to vote your shares on
the adjournment proposal.
Voting
of Proxies
Most
stockholders have three ways to submit a proxy: by telephone, via the Internet or by completing the enclosed proxy card and mailing
it in the envelope provided. To submit a proxy by telephone or via the Internet, follow the instructions set forth on each proxy
card you receive. To submit a proxy by mail, sign and date each proxy card you receive, mark the boxes indicating how you wish
to vote and return the proxy card in the postage-paid envelope provided. Do not return the proxy card if you submit your proxy
via the Internet or by telephone.
Our
Board of Directors recommends a vote FOR the election of each director nominee, FOR the proposal to amend our Certificate
of Incorporation to combine outstanding shares of our common stock into a lesser number of outstanding shares, or a "reverse
stock split", by a ratio of not less than one-for-five and not more than one-for-twenty-five, with the exact ratio to be
set within this range by our Board of Directors in its sole discretion, FOR the proposal to adopt and approve the Amendment
and Restatement of the 2018 Omnibus Incentive Compensation Plan, FOR the approval, on an advisory basis, of the compensation
of our named executive officers, FOR the ratification of the selection of Ernst & Young LLP as our independent
registered public accounting firm for the fiscal year ending December 31, 2020, and FOR the proposal to adjourn the
Annual Meeting, if necessary, to solicit additional proxies in the event there are not sufficient votes at the time of the Annual
Meeting to approve the reverse stock split.
Revocation
of Proxies
Any
proxy given pursuant to this solicitation may be revoked by a stockholder at any time before it is exercised by providing written
notice to our Secretary at Onconova Therapeutics, Inc., 375 Pheasant Run, Newtown, PA 18940, by delivery to us of a properly
executed proxy bearing a later date, or by virtually attending the meeting and voting in person electronically at the Annual Meeting.
Solicitation
of Proxies
We
will bear the cost of this solicitation, including amounts paid to banks, brokers and other nominees to reimburse them for their
expenses in forwarding solicitation materials regarding the Annual Meeting to beneficial owners of our common stock. The solicitation
will be by mail, with the materials being forwarded to stockholders of record and certain other beneficial owners of our common
stock, and by our officers and other regular employees (at no additional compensation). We have engaged MacKenzie Partners, Inc.
to serve as our proxy solicitor to distribute our proxy materials and solicit proxies, and the estimated fee for these services
is $20,000. Our officers and employees may also solicit proxies from stockholders by personal contact, by telephone, or by other
means if necessary in order to assure sufficient representation at the Annual Meeting.
Broadridge
Financial Solutions (“Broadridge”) has been retained to act as inspector of elections at the Annual Meeting. We will
pay Broadridge $9,000 for these services.
PROPOSAL
ONE
ELECTION
OF DIRECTORS
Pursuant
to our bylaws, our directors are elected at each annual meeting of stockholders, and serve until their successors are elected
and qualified at the next annual meeting of stockholders, or until their prior death, resignation, retirement, disqualification
or other removal.
Our
Board of Directors currently consists of seven directors. Our Board of Directors has nominated the seven persons listed in the
table below for election as directors with terms expiring at the 2021 Annual Meeting of Stockholders. Accordingly, our stockholders
may not vote their shares for a greater number of persons than the nominees named below. Unless a contrary direction is indicated,
it is intended that proxies received will be voted for the election as directors of the seven nominees, each to hold office until
the 2021 Annual Meeting of Stockholders and until his or her successor is elected and qualified. Each of the nominees has consented
to being named in this Proxy Statement and to serve as a director if elected. In the event any nominee for director declines or
is unable to serve, the proxies may be voted for a substitute nominee selected by the Board of Directors.
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" ALL NOMINEES.
All
of our directors bring to our Board of Directors executive leadership experience from their service as executives and/or directors
of our Company and/or other entities. The biography of each of the nominees below contains information regarding the person's
business experience, director positions held currently or at any time during the last five years, and the experiences, qualifications,
attributes and skills that caused the Nominating and Corporate Governance Committee and our Board of Directors to determine that
the person should serve as a director, given our business and structure.
Name
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Age
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Position(s)
with Onconova Therapeutics, Inc.
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Served
as
Director
From
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Jerome
E. Groopman, M.D.
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68
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Director
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2013
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Steven
M. Fruchtman
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69
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Director,
President and Chief Executive Officer
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2019
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Michael
B. Hoffman
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69
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Chairman
of the Board of Director
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2002
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Viren
Mehta
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70
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Director
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2004
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James
J. Marino
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70
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Director
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2015
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E.
Premkumar Reddy, Ph.D.
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76
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Director
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1999
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Jack
E. Stover
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67
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Director
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2016
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Jerome
E. Groopman, M.D. Dr. Groopman has served as a member of our Board of Directors since July
2013. Dr. Groopman has served as the Dina and Raphael Recanati Professor of Medicine at Harvard Medical School since January
1992. He has also served as Attending Hematologist/Oncologist at Beth Israel Deaconess Medical Center since July 1996. Dr. Groopman
received an M.D. from Columbia University College of Physicians and Surgeons, and a B.A. in Political Philosophy from Columbia
College.
Our
Board of Directors believes Dr. Groopman's perspective and experience in the healthcare industry, as well as his educational
background, provide him with the qualifications and skills to serve as a director.
Steven
M. Fruchtman, M.D. Dr. Fruchtman was appointed as a member of our Board of Directors and as our
Chief Executive Officer on January 15, 2019. He was appointed President in June 2018 and continues to serve as President. Dr.
Fruchtman served as our Chief Medical Officer and Senior Vice President, Research and Development from January 2015 to November
2018. Dr. Fruchtman is a board certified hematologist with extensive industry experience in clinical research for myelodysplastic
syndromes, hematologic malignancies and solid tumors.
From
June 2014 to January 2015, Dr. Fruchtman was a hematology oncology drug development consultant. From September 2013 to June 2014,
Dr. Fruchtman served as Chief Medical Officer at Syndax Pharmaceuticals, Inc., a biopharmaceutical company. From July 2011 to
July 2013, Dr. Fruchtman was the Chief Medical Officer and Senior Vice President of Research and Regulatory Affairs at Spectrum
Pharmaceuticals. From February 2011 to June 2011, he was Vice President of Research at Spectrum Pharmaceuticals, Inc., a biopharmaceutical
company. From February 2009 to January 2011, Dr. Fruchtman was Vice President, Clinical Research at Allos Therapeutics, Inc.,
a biopharmaceutical company. Prior to this, Dr. Fruchtman held senior positions at Novartis and Ortho Biotech Products. Dr. Fruchtman
was on the faculty of the Mount Sinai School of Medicine and was the Director of the Stem Cell Transplantation and Myeloproliferative
Disorder Programs at Mount Sinai Hospital in New York City. Dr. Fruchtman received his medical degree from New York Medical College
and his B.A. from Cornell University.
Our
Board of Directors believes Dr. Fruchtman's perspective and experience as our Chief Medical Officer, President and Chief Executive
Officer, as well as his depth of experience in the healthcare industry and his educational background, provide him with the qualifications
and skills to serve as a director.
Michael
B. Hoffman. Mr. Hoffman has served as Chairman of the Board of Directors since 2006 and as
a member of our Board of Directors since 2002. Since 2018, he has been the founder and partner at Stone Capital Partners, a private
equity firm focused on power and renewable energy. From 2003 to 2018, Mr. Hoffman was a partner of Riverstone Holdings LLC,
or Riverstone, where he was principally responsible for investments in power and renewable energy. Before joining Riverstone,
Mr. Hoffman was senior managing director and head of the mergers and acquisitions advisory business of The Blackstone Group L.P.,
or Blackstone, where he also served on the firm's principal group investment committee as well as its executive committee. Prior
to joining Blackstone, Mr. Hoffman was managing director and co-head of the mergers and acquisitions department at Smith
Barney, Harris Upham & Co. Mr. Hoffman currently serves as Chairman of the Board of Directors of Annovis Bio,
Inc. (formerly QR Pharma, Inc.) a specialty pharmaceutical company founded to develop novel treatments for Alzheimer's Disease,
Parkinson's disease and other neurodegenerative disorders. His non-profit board affiliations include Rockefeller University, where
he also serves on the Technology Transfer Committee. Mr. Hoffman received his Bachelor's and Master's Degrees from Northwestern
University and his M.B.A. from the Harvard Business School.
Our
Board of Directors believes Mr. Hoffman's perspective and experience as an investor, as well as his educational background,
provide him with the qualifications and skills to serve as a director.
James
J. Marino. Mr. Marino has served as a member of our Board of Directors since July 2015. Prior
to July 2015, Mr. Marino was a Partner at the global law firm of Dechert LLP for 28 years, where he served as Managing
Partner of the Princeton Office. Mr. Marino served as the outside counsel for Onconova from its inception through and including
its initial public offering. On March 8, 2017, Mr. Marino was appointed to the Board of Directors and as chairperson
of the compensation committee of Celldex Therapeutics, Inc., a public company which is developing targeted therapeutics to
address devastating diseases for which available treatments are inadequate. Previously, he served on the Board of Directors of
Pharmacopeia Drug Discovery, Inc. from 2000 to 2006 and has worked in advisory capacities and on the boards of multiple non-profit
organizations. He currently serves on the Board of Trustees of Wake Forest
University and Wake Forest University Baptist Medical Center. Mr. Marino received his B.A., J.D. and MBA from Rutgers University.
Our
Board of Directors believes that Mr. Marino's perspective and experience advising Onconova and numerous other leading life
science companies in connection with financings, acquisitions and strategic alliances, provide him with the qualifications and
skills to serve as a director.
Viren
Mehta. Dr. Mehta has served as a member of our Board of Directors since February 2004. Dr. Mehta
has been a managing member of Mehta Partners since 1997. Mehta Partners provides strategic advisory services to the biotechnology
and pharmaceutical companies worldwide. Prior to founding Mehta Partners, Dr. Mehta co-founded Mehta and Isaly in 1989, and
prior to that was a part of the strategic planning team of the International Division at Merck & Co. Dr. Mehta
earned a Doctor of Pharmacy at the University of Southern California, and an M.B.A. from the Anderson School of Business at the
University of California, Los Angeles. His board affiliations include BlinkBio, Yisheng Biopharma, Project Hope and the Venice
Family Clinic.
Our
Board of Directors believes Dr. Mehta's perspective and experience in the life sciences industry as a biopharma fund manager,
fund consultant and a strategic advisor to senior managers in the biopharma industry, as well as his educational background, provide
him with the qualifications and skills to serve as a director.
E.
Premkumar Reddy, Ph.D. Dr. Reddy is one of our scientific founders and has served as a member
of our Board of Directors since February 1999. Since March 2010, Dr. Reddy has served as a Professor at the Icahn School
of Medicine at Mount Sinai and as the Director of the Experimental Cancer Therapeutics Program at the Tisch Cancer Institute at
Mount Sinai. From 1992 to February 2010, Dr. Reddy served as a Professor and Director of the Fels Institute for Cancer Research
of Temple University. He was the founder and co-editor of the international journal of cancer research, Oncogene, published by
the Nature Publishing Group. Dr. Reddy received his B.Sc., M.Sc. and Ph.D. degrees from Osmania University.
Our
Board of Directors believes Dr. Reddy's perspective and experience as our co-founder, his educational background, as well
as his experience in research and product development, provide him with the qualifications and skills to serve as a director.
Jack
E. Stover. From December 2015 until June 2016, Mr. Stover served as Interim President and
CEO of Interpace Diagnostics Group, Inc., formerly known as "PDI, Inc.", and has served on the Board of Directors
of PDI since August 2005 and was chairman of PDI's audit committee from August 2005 until December 2015. In June 2016 Mr. Stover
was named President, CEO and Director of Interpace Diagnostics Group, Inc. which in 2019 changed its name to Interpace Bisciences,
Inc. From June 2016 to December 2016, Mr. Stover was chairman of the audit committee and a member of the Board of Directors
of Viatar CTC Solutions, Inc. From 2004 to 2008, he served as chief executive officer, president and director of Antares
Pharma, Inc., a publicly held specialty pharmaceutical company then listed on the American Stock Exchange. In addition to
other relevant experience, Mr. Stover was also formerly a partner with PricewaterhouseCoopers (then Coopers and Lybrand),
working in the bioscience industry division in New Jersey. Mr. Stover received his B.A. in Accounting from Lehigh University
and is a Certified Public Accountant.
Our
Board of Directors believes that Mr. Stover's experience holding senior leadership positions in the life sciences industry,
his specific experience and skills in the areas of general operations, and financial operations and administration, and his extensive
experience in accounting and as an audit committee member and chair of various public companies in the life sciences industry,
provide him with the qualifications and skills to serve as a director.
Executive
Officers
The
following table sets forth certain information regarding our executive officers who are not also directors.
Name
|
Age
|
|
Position(s)
with Onconova Therapeutics, Inc.
|
Richard C. Woodman,
M.D.
|
65
|
|
Chief
Medical Officer and Senior Vice President, Research and Development
|
Manoj Maniar, Ph.D.
|
56
|
|
Senior
Vice President, Product Development
|
Mark P. Guerin
|
51
|
|
Chief
Financial Officer
|
Abraham N. Oler,
J.D.
|
44
|
|
Senior
Vice
President, Corporate Development and General Counsel
|
Richard
C. Woodman, M.D. Dr. Woodman has served as our Chief Medical Officer and Senior Vice President,
Research and Development since November 2018. Prior to joining us, Dr. Woodman was employed at Novartis, Inc. from 2006 to
2018. He was Senior Vice President and Head of US Oncology Clinical Development and Medical Affairs from September 2015 to March
2018. He was Vice President, Global Medical Affairs from 2012 to 2015 and held various Medical Director positions from 2006 to
2012. Prior to Novartis, Inc., Dr. Woodman was a Senior Medical Director at Johnson and Johnson, Ortho Biotech from
2002 to 2006. Prior to Ortho Biotech, Dr. Woodman held academic appointments as Professor in the Departments of Medicine
and Oncology at the University of Calgary in Canada where he joined the faculty in 1990. Dr. Woodman received his medical
degree from the University of Calgary and his B.P.E. from the University of British Columbia.
Mark
P. Guerin Mr. Guerin has served as our Chief Financial Officer since September 1, 2016. Previously he served
as Vice President—Financial Planning & Accounting, and Chief Accounting Officer since May 2014, and as Vice President—Financial
Planning & Accounting from September 2013 to May 2014. He has also served as our principal financial officer since February 12,
2016. Between January 2012 and September 2013, Mr. Guerin was self-employed as a financial and accounting consultant. For
more than six years, through December 2011, Mr. Guerin was employed by CardioKine, Inc. and served as Chief Financial
Officer from mid-2009 through December 2011. Mr. Guerin received his B.A. in Accounting from DeSales University.
Manoj
Maniar, Ph.D. Dr. Maniar has served as our Senior Vice President, Product Development since
August 2005. Prior to joining us, Dr. Maniar was with SRI International, Inc., a nonprofit research institute, where
he served as Senior Director, Formulations and Drug Delivery. Dr. Maniar received his B.S. in Pharmacy from Bombay College
of Pharmacy and his Ph.D. in Pharmaceutics from the University of Connecticut.
Abraham
N. Oler, J.D. Mr. Oler has served as our Senior Vice President, Corporate Development and
General Counsel since January 2020. Previously he served as Vice President, Corporate Development and General Counsel since
December 2018. Prior to joining us, from 2010 to 2018, Mr. Oler was Vice President of Operations at Spectrum
Pharmaceuticals, Inc., where he headed the legal function and worked in corporate development. Additionally, he served
as Chief of Staff to the CEO and corporate secretary. He was also an officer and director for several Spectrum
Pharmaceuticals Inc. subsidiary companies. From 2007 to 2010, Mr. Oler was a corporate attorney at the
international law firm of Kirkland & Ellis LLP. Mr. Oler received his J.D. and an M.B.A. from Northwestern
University. He received an M.Sc. in Politics of the World Economy from the London School of Economics and a B.S.in Economics
and a B.A. in International Relations from the University of Pennsylvania.
Director
Compensation
The
following table summarizes compensation paid to our non-employee directors in fiscal 2019.
Name
|
|
Fees
Earned or
Paid in Cash ($)
|
|
|
Stock
Option
Awards ($)(1)
|
|
|
All
Other
Compensation ($)
|
|
|
Total
($)
|
|
Jerome
E. Groopman, M.D.
|
|
|
34,000
|
|
|
|
13,474
|
|
|
|
—
|
|
|
|
47,474
|
|
Michael
B. Hoffman
|
|
|
79,000
|
|
|
|
13,474
|
|
|
|
—
|
|
|
|
92,474
|
|
James
J. Marino
|
|
|
52,500
|
|
|
|
13,474
|
|
|
|
—
|
|
|
|
65,974
|
|
Viren
Mehta
|
|
|
49,500
|
|
|
|
13,474
|
|
|
|
—
|
|
|
|
62,974
|
|
E.
Premkumar Reddy, Ph.D.
|
|
|
30,000
|
|
|
|
13,474
|
|
|
|
132,000
|
(2)
|
|
|
175,474
|
|
Jack
E. Stover
|
|
|
57,500
|
|
|
|
13,474
|
|
|
|
—
|
|
|
|
70,974
|
|
|
(1)
|
Represents
the fair value of the shares and options on the date of grant, calculated in accordance with Accounting Standards Codification
(ASC) No. 718, Compensation—Stock Compensation (ASC 718).
|
|
(2)
|
Represents
consulting fees paid to Dr. Reddy. See "Certain Relationships and Related Person Transactions."
|
|
(3)
|
At
December 31, 2019, the aggregate number of outstanding stock option awards held by each non-employee director was: Dr. Groopman—12,352;
Mr. Hoffman—12,643; Mr. Marino—12,032; Dr. Mehta—12,030; Dr. Reddy—12,030; and Mr. Stover—11,965.
|
In
June 2013, our Board of Directors approved a non-employee director compensation policy, which became effective for all non-employee
directors in July 2013. In June 2018, the Board of Directors revised the policy to change the retainer amounts and the number
of options members of our Board of Directors would receive, based on a benchmarking study comparing our director compensation
to a group of comparable peer companies. In accordance with this policy, each non-employee director receives an annual base retainer
of $30,000. In addition, our non-employee directors receive the following cash compensation for board services, as applicable:
•
the chairman of our Board of Directors receives an additional annual retainer of $40,000;
•
each member of our audit, compensation and nominating and corporate governance committees receives an additional retainer of $7,500,
$5,000 and $4,000, respectively; and
•
each chairperson of our audit, compensation and nominating and corporate governance committees receives an additional annual retainer
of $15,000, $10,000 and $8,000, respectively, in addition to the retainer received for service as a member of such committee.
All
amounts are paid in quarterly installments.
In
addition, newly appointed non-employee directors receive a one-time initial award of options to purchase 11,666 shares of our
common stock, which vests annually over a three-year period subject to the director's continued service on the Board of Directors.
Thereafter, each non-employee director receives an annual award of options to purchase 5,833 shares of our common stock, which
vests on the first anniversary of the grant, subject to the director's continued service on the Board of Directors.
All
of our directors are eligible to receive additional discretionary awards under our 2018 Omnibus Incentive Compensation Plan, as previously amended (the “2018 Plan”), subject to the annual limit set
forth in the 2018 Plan.
We
reimburse each non-employee director for out-of-pocket expenses incurred in connection with attending our Board of Directors and
committee meetings. Compensation for our directors, including cash and equity compensation, is determined, and remains subject
to adjustment, by our Board of Directors.
Corporate
Governance
Board
Composition
Our
Board of Directors currently consists of eight members. Our Board of Directors has undertaken a review of the independence of
our directors and has determined that all directors except Steven M. Fruchtman, M.D. and E. Premkumar Reddy, Ph.D. are independent
within the meaning of Section 5605(a)(2) of the NASDAQ Stock Market listing rules and Rule 10A-3 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). Our Tenth Amended and Restated Certificate of Incorporation,
as amended, provides that our Board of Directors will consist of not less than three nor more than 11 directors, as such number
of directors may from time to time be fixed by our Board of Directors. Each director shall be elected to the Board of Directors
to hold office until the next annual meeting of stockholders and until his or her successor is elected and qualified.
Board
Leadership Structure and Role in Risk Oversight
Our
Board of Directors recognizes the time, effort and energy that the chief executive officer is required to devote to his position
in the current business environment, as well as the commitment required to serve as our chairman, particularly as the Board of
Directors' oversight responsibilities continue to grow. We believe that, at present, separating these positions allows our chief
executive officer to focus on our day-to-day business, while allowing our chairman to lead the Board of Directors in its fundamental
role of providing advice to, and independent oversight of, management. Our Board of Directors also believes that this structure
ensures a greater role for the independent directors in the oversight of our company and active participation of the independent
directors in setting agendas and establishing priorities and procedures for the work of our Board of Directors.
While
our bylaws do not require that our chairman and chief executive officer positions be separate, our Board of Directors believes
that having separate positions is the appropriate leadership structure for us at this time and demonstrates our commitment to
good corporate governance.
Risk
is inherent with every business, and how well a business manages risk can ultimately determine its success. We face a number of
risks, including but not limited to risks relating to limited cash resources, need to raise additional funds, product candidate
development, technological uncertainty, dependence on collaborative partners and other third parties, uncertainty regarding patents
and proprietary rights, comprehensive government regulations, having no commercial manufacturing experience, marketing or sales
capability or experience and dependence on key personnel. Management is responsible for the day-to-day management of risks we
face, while our Board of Directors, as a whole and through its committees, has responsibility for the oversight of risk management.
In its risk oversight role, our Board of Directors has the responsibility to satisfy itself that the risk management processes
designed and implemented by management are adequate and functioning as designed. The Board of Directors periodically consults
with management regarding the Company's risks.
Our
Board of Directors is actively involved in oversight of risks that could affect us. This oversight is conducted primarily through
the audit committee of our Board of Directors, but the full Board of Directors has retained responsibility for general oversight
of risks.
Board
Committees
Our
Board of Directors has established three standing committees: the audit committee, the compensation committee and the nominating
and corporate governance committee. The current members of our audit committee are James J. Marino, Viren Mehta and Jack
E. Stover, with Jack E. Stover serving as chairperson. The current members of our compensation committee are Michael B. Hoffman,
James J. Marino and Jack E. Stover with Michael B. Hoffman serving as chairperson. The current members of our nominating
and corporate governance committee are Michael B. Hoffman, Viren Mehta and Jerome E. Groopman, M.D., with Viren Mehta serving
as chairperson.
Our
Board of Directors has determined that James J. Marino, Viren Mehta and Jack E. Stover meet the additional test for independence
for audit committee members imposed by Securities and Exchange Commission ("SEC") regulations and Section 5605(c)(2)(A)
of the NASDAQ Stock Market listing rules and that Michael B. Hoffman, James J. Marino and Jack E. Stover meet the additional test
for independence for compensation committee members imposed by Section 5605(d)(2)(A) of the NASDAQ Stock Market listing rules.
Audit
Committee
The
primary purpose of our audit committee is to assist the Board of Directors in the oversight of the integrity of our accounting
and financial reporting process, the audits of our consolidated financial statements, and our compliance with legal and regulatory
requirements. Our audit committee met four times during fiscal year 2019. The functions of our audit committee include, among
other things:
•
hiring the independent registered public accounting firm to conduct the annual audit of our consolidated financial statements
and monitoring its independence and performance;
•
reviewing and approving the planned scope of the annual audit and the results of the annual audit;
•
pre-approving all audit services and permissible non-audit services provided by our independent registered public accounting firm;
•
reviewing the significant accounting and reporting principles to understand their impact on our consolidated financial statements;
•
reviewing our internal financial, operating and accounting controls with management, our independent registered public accounting
firm and our internal audit provider;
•
reviewing with management and our independent registered public accounting firm, as appropriate, our financial reports, earnings
announcements and our compliance with legal and regulatory requirements;
•
periodically reviewing and discussing with management the effectiveness and adequacy of our system of internal controls;
•
in consultation with management and the independent auditors, reviewing the integrity of our financial reporting process and adequacy
of disclosure controls;
•
reviewing potential conflicts of interest under and violations of our code of conduct;
•establishing
procedures for the treatment of complaints received by us regarding accounting, internal accounting controls or auditing matters
and confidential submissions by our employees of concerns regarding questionable accounting or auditing matters;
•
reviewing and approving related-party transactions; and
•
reviewing and evaluating, at least annually, our audit committee's charter.
With
respect to reviewing and approving related-party transactions, our audit committee reviews related-party transactions for potential
conflicts of interests or other improprieties. Under SEC rules, as a smaller reporting company, related-party transactions are
those transactions to which we are or may be a party in which the amount involved exceeds the lesser of $120,000 or 1% of the
average of our total assets at year end for the last two completed fiscal years, and in which any of our directors or executive
officers or any other related person had or will have a direct or indirect material interest, excluding, among other things, compensation
arrangements with respect to employment and Board of Directors membership. Our audit committee could approve a related-party transaction
if it determines that the transaction is in our best interests. Our directors are required to disclose to this committee or the
full Board of Directors any potential conflict of interest, or personal interest in a transaction that our Board of Directors
is considering. Our executive officers are required to disclose any related-party transaction to the audit committee. We also
poll our directors on an annual basis with respect to related-party transactions and their service as an officer or director of
other entities. Any director involved in a related-party transaction that is being reviewed or approved must recuse himself or
herself from participation in any related deliberation or decision. Whenever possible, the transaction should be approved in advance
and if not approved in advance, must be submitted for ratification as promptly as practical.
The
financial literacy requirements of the SEC require that each member of our audit committee be able to read and understand fundamental
financial statements. In addition, at least one member of our audit committee must qualify as an audit committee financial expert,
as defined in Item 407(d)(5) of Regulation S-K promulgated under the Securities Act, and have financial sophistication
in accordance with the NASDAQ Stock Market listing rules. Our Board of Directors has determined that Jack E. Stover qualifies
as an audit committee financial expert.
Both
our independent registered public accounting firm and management periodically will meet privately with our audit committee.
The
Board of Directors has adopted a charter for the audit committee, which is available in the corporate governance section of our
website at http://www.onconova.com.
Compensation
Committee
The
primary purpose of our compensation committee is to assist our Board of Directors in exercising its responsibilities relating
to compensation of our executive officers and employees and to administer our equity compensation and other benefit plans. In
carrying out these responsibilities, this committee reviews all components of executive officer and employee compensation for
consistency with its compensation philosophy, as in effect from time to time. Our compensation committee met six times during
fiscal 2019. The functions of our compensation committee include, among other things:
•
designing and implementing competitive compensation, retention and severance policies to attract and retain key personnel;
•
reviewing and formulating policy and determining the compensation of our Chief Executive Officer, our other executive officers
and employees;
•
reviewing and recommending to our Board of Directors the compensation of our non-employee directors;
•
reviewing and evaluating our compensation risk policies and procedures;
•
administering our equity incentive plans and granting equity awards to our employees, consultants and directors under these plans;
•
administering our performance bonus plans and granting bonus opportunities to our employees, consultants and non-employee directors
under these plans;
•
if required from time to time, preparing the analysis or reports on executive officer compensation required to be included in
our annual proxy statement;
•
engaging compensation consultants or other advisors it deems appropriate to assist with its duties; and
•
reviewing and evaluating, at least annually, our compensation committee's charter.
The
Board of Directors has adopted a charter for the compensation committee, which is available in the corporate governance section
of our website at http://www.onconova.com.
The
compensation committee has utilized Radford ("Radford"), an Aon Hewitt company, as its executive compensation consultant.
Radford reports directly to the compensation committee. The compensation committee may replace Radford or hire additional consultants
at any time. Upon request by the compensation committee or its chair, a representative of Radford attends meetings of the compensation
committee and is available to discuss compensation issues in between meetings.
In
connection with its work for the compensation committee, Radford provided various executive compensation services to the compensation
committee pursuant to a written consulting agreement. Generally, these services included advising the compensation committee on
the principal aspects of our executive compensation program and evolving industry practices and providing market information and
analysis regarding the competitiveness of our program design and our award values in relation to performance.
The
compensation committee retains sole authority to hire any compensation consultant, approve such consultant's compensation, determine
the nature and scope of its services, evaluate its performance, and terminate its engagement. We assessed the independence of
Radford pursuant to SEC rules and determined that no known conflict of interest existed that would prevent Radford from serving
as an independent consultant to the compensation committee.
The
compensation committee has reviewed our compensation policies and practices for all employees, including our named executive officers,
as they relate to risk management practices and risk-taking incentives, and has determined that there are no risks arising from
these policies and practices that are reasonably likely to have a material adverse effect on us.
Nominating
and Corporate Governance Committee
The
primary purpose of our nominating and corporate governance committee is to assist our Board of Directors in promoting the best
interest of our company and our stockholders through the implementation of sound corporate governance principles and practices.
Our nominating and corporate governance committee met two times during fiscal 2019. The functions of our nominating and corporate
governance committee include, among other things:
•
identifying, reviewing and evaluating candidates to serve on our Board of Directors;
•
determining the minimum qualifications for service on our Board of Directors;
•
developing and recommending to our Board of Directors an annual self-evaluation process for our Board of Directors and overseeing
the annual self-evaluation process;
•
developing, as appropriate, a set of corporate governance principles, and reviewing and recommending to our Board of Directors
any changes to such principles; and
•
periodically reviewing and evaluating our nominating and corporate governance committee\'s charter.
The
Board of Directors has adopted a charter for the nominating and corporate governance committee, which is available in the corporate
governance section of our website at http://www.onconova.com.
Code
of Conduct for Employees, Executive Officers and Directors
We
have adopted a code of conduct applicable to all of our employees, executive officers and directors. The code of conduct is available
in the corporate governance section of our website at http://www.onconova.com.
The
audit committee of our Board of Directors is responsible for overseeing the code of conduct and must approve any waivers of the
code of conduct for employees, executive officers or directors.
Meetings
of the Board of Directors
The
Board of Directors held nine meetings during fiscal 2019. During fiscal 2019, each director attended at least 75 percent
of the aggregate of the total number of meetings of the Board of Directors and the committees on which such director served.
Directors
are encouraged, but not required, to attend the annual meeting of stockholders. All of our directors attended the 2019 Annual
Meeting of Stockholders.
Director
Nomination Process
The
process followed by our nominating and corporate governance committee to identify and evaluate director candidates includes requests
to members of our Board of Directors and others for recommendations, meetings from time to time to evaluate biographical information
and background material relating to potential candidates and interviews of selected candidates by members of the nominating and
corporate governance committee and the Board of Directors.
In
determining whether to recommend any particular candidate for inclusion in the Board of Directors' slate of recommended director
nominees, our nominating and corporate governance committee considers the composition of the Board of Directors with respect to
depth of experience, balance of professional interests, required expertise and other factors. The nominating and corporate governance
committee considers the value of diversity when recommending candidates. The committee views diversity broadly to include diversity
of experience, skills and viewpoint. The nominating and corporate governance committee does not assign specific weights to particular
criteria and no particular criterion is a prerequisite for each prospective nominee. Our Board of Directors believe that the backgrounds
and qualifications of its directors, considered as a group, should provide a composite mix of experience, knowledge and abilities
that will allow it to fulfill its responsibilities.
Stockholders
may recommend individuals to our nominating and corporate governance committee for consideration as potential director candidates.
The nominating and corporate governance committee will evaluate stockholder-recommended candidates by following the same process
and applying the same criteria as it follows for candidates submitted by others.
Stockholders
may directly nominate a person for election to our Board of Directors by complying with the procedures set forth in Section 2.2(A)
of our bylaws, and with the rules and regulations of the SEC. Under our bylaws, only persons nominated in accordance with the
procedures set forth in the bylaws will be eligible to serve as directors. In order to nominate a candidate for service as a director,
you must be a stockholder at the time you give the Board of Directors notice of your nomination, and you must be entitled to vote
for the election of directors at the meeting at which your nominee will be considered. In addition, the stockholder must have
given timely notice in writing to our Secretary. To be timely, a stockholder's notice must be delivered to the Secretary at our
principal executive offices not later than the 90th day, nor earlier than the 120th day, prior to the first anniversary
of the prior year's annual meeting of stockholders (provided, however, that in the event that the date of the annual meeting is
more than 30 days before or 60 days after such anniversary date, notice by the stockholder must be delivered no earlier
than the 120th day prior to the annual meeting and no later than the later of the 90th day prior to such annual meeting
or the 10th day following the day on which public announcement of the date of such annual meeting is first made by us). Your
notice must set forth (i) the name, age, business address and, if known, residence address of the nominee, (ii) the
principal occupation or employment of the nominee, (iii) the class and number of shares of stock of the Company directly
or indirectly, owned beneficially or of record by the nominee, (iv) a description of all arrangements or understandings between
you and the nominee and any other person or persons (naming such person or persons) pursuant to which the nomination is to be
made by you, and (v) all other information relating to the nominee that is required to be disclosed in solicitations of proxies
for the election of directors in an election contest, or is otherwise required, in each case, pursuant to Section 14 of the
Exchange Act and the rules and regulations promulgated thereunder. Nominations for director must be accompanied by the nominee's
written consent to being named in the proxy statement as a nominee and to serving as a director if elected.
Stockholder
Communications with the Board
You
can contact our Board of Directors to provide comments, to report concerns, or to ask a question, at the following address.
President
Onconova Therapeutics, Inc.
375 Pheasant Run
Newtown, PA 18940
United States
You
may submit your concern anonymously or confidentially by postal mail. You may also indicate whether you are a stockholder, customer,
supplier or other interested party.
Communications
are distributed to our Board of Directors, or to any individual directors, as appropriate, depending on the facts and circumstances
outlined in the communication.
PROPOSAL
TWO
APPROVAL
OF AN AMENDMENT TO OUR CERTIFICATE OF INCORPORATION TO COMBINE OUTSTANDING SHARES OF OUR COMMON STOCK INTO A LESSER NUMBER OF
OUTSTANDING SHARES, OR A "REVERSE STOCK SPLIT," BY A RATIO OF NOT LESS THAN ONE-FOR-FIVE AND NOT MORE THAN ONE-FOR-TWENTY-FIVE,
WITH THE EXACT RATIO TO BE SET WITHIN THIS RANGE BY OUR BOARD OF DIRECTORS IN ITS SOLE DISCRETION
Introduction
The
Board of Directors has approved an amendment to our Tenth Amended and Restated Certificate of Incorporation, as amended, to combine
the outstanding shares of our common stock into a lesser number of outstanding shares, a so-called "reverse stock split."
If approved by the stockholders as proposed, the Board of Directors would have the sole discretion to effect the amendment and
combination at any within 90 days after our Annual Meeting and to fix the specific ratio for the combination, provided that
the ratio would be not less than one-for-five and not more than one-for-twenty-five. The Board of Directors would also have the
discretion to abandon the amendment prior to its effectiveness. The Board of Directors is hereby soliciting stockholder approval
for the reverse stock split proposal.
If
approved by our stockholders, the reverse stock split proposal would permit (but not require) the Board of Directors to effect
a reverse stock split of the outstanding shares of our common stock at any time by a ratio of not less than one-for-five and not
more than one-for-twenty-five, with the specific ratio to be fixed within this range by the Board of Directors in its sole discretion
without further stockholder approval. We believe that enabling the Board of Directors to fix the specific ratio of the reverse
stock split within the stated range will provide us with the flexibility to implement it in a manner designed to maximize the
anticipated benefits for our stockholders. In fixing the ratio, the Board of Directors may consider, among other things, factors
such as: the historical trading price and trading volume of our common stock; the number of shares of our common stock outstanding;
the then-prevailing trading price and trading volume of our common stock; the anticipated impact of the reverse stock split on
the trading market for our common stock; potential financing opportunities; and prevailing general market and economic conditions.
The
reverse stock split, if approved by our stockholders, would become effective upon the filing of the amendment to our Certificate
of Incorporation with the Secretary of State of the State of Delaware, or at the later time set forth in the amendment. The exact
timing of the amendment will be determined by the Board of Directors based on its evaluation as to when such action will be the
most advantageous to our Company and our stockholders. In addition, the Board of Directors reserves the right, notwithstanding
stockholder approval and without further action by the stockholders, to abandon the amendment and the reverse stock split if,
at any time prior to the effectiveness of the filing of the amendment with the Secretary of State, the Board of Directors, in
its sole discretion, determines that it is no longer in our best interest and the best interests of our stockholders to proceed.
The
proposed form of amendment to our Certificate of Incorporation to effect the reverse stock split is attached as Appendix A
to this proxy statement. Any amendment to our Certificate of Incorporation to effect the reverse stock split will include the
reverse stock split ratio fixed by the Board of Directors, within the range approved by our stockholders.
Reasons
for the Reverse Stock Split
Our
common stock is listed on the Nasdaq Capital Market, which has as one of its continued listing requirements a minimum bid price
of at least $1.00 per share. Recently our common stock has traded significantly below $1.00 per share. On December 4, 2019, we
received a letter from The Nasdaq Stock Market LLC indicating that we failed to comply with the minimum bid price requirement,
and that we have been provided with a 180-day grace period (which expires on June 1, 2020) to regain compliance. If we are not
in compliance by June 1, 2020, we may be afforded a second 180-day period to regain compliance. We will regain compliance if the
bid price of our common stock closes at $1.00 per share or more for a minimum of ten consecutive trading days. The reverse stock
split proposal is intended primarily to increase our per share bid price and satisfy the Nasdaq Capital Market continued listing
requirement. Reducing the number of outstanding shares of our common stock should, absent other factors, increase the per share
market price of our common stock, although we cannot provide any assurance that we will be able to meet or maintain a bid price
over the minimum bid price requirement for continued listing on the Nasdaq Capital Market or any other exchange.
The
delisting of our common stock from the Nasdaq Capital Market may result in decreased liquidity, increased volatility in our common
stock, a loss of current or future coverage by certain sell-side analysts and/or a diminution of institutional investor interest.
Delisting could also cause a loss of confidence of our collaborators, vendors and employees, which could harm our business and
future prospects. If our common stock were delisted from the Nasdaq Capital Market, it may qualify for quotation on the OTC Bulletin
Board or other over-the-counter marketplace.
In
evaluating the reverse stock split proposal, in addition to the considerations described above, the Board of Directors also took
into account various negative factors associated with reverse stock splits generally. These factors include: the negative perception
of reverse stock splits held by some investors, analysts, and other stock market participants; the fact that the stock price of
some companies that have effected reverse stock splits has subsequently declined in share price and corresponding market capitalization;
the adverse effect on liquidity that might be caused by a reduced number of shares outstanding; and the costs associated with
implementing a reverse stock split.
We
also believe that the low market price of our common stock impairs its acceptability to important segments of the institutional
investor community and the investing public. Many investors look upon low-priced stock as speculative in nature and, as a matter
of policy, avoid investment in such stocks. Moreover, the low market price of our common stock may have reduced the effective
marketability of our shares because of the reluctance of many brokerage firms to recommend low-priced stock to their clients.
Further, a variety of brokerage house policies and practices tend to discourage individual brokers within those firms from dealing
in low-priced stocks. Some of those policies and practices pertain to the payment of brokers' commissions and to time-consuming
procedures that function to make the handling of low-priced stocks unattractive to brokers from an economic standpoint. In addition,
the structure of trading commissions also tends to have an adverse impact upon holders of low-priced stock because the brokerage
commission on a sale of low-priced stock generally represents a higher percentage of the sales price than the commission on a
relatively higher-priced issue.
In
order to provide flexibility, the Board of Directors is seeking stockholder approval for a range of reverse split ratios of not
less than one-for-five and not more than one-for-twenty-five. The need for the range is due to the volatility of our stock price,
which ranged from a high of $4.45 per share to a low of $0.10 per share between April 8, 2019 and April 8, 2020.
We
believe that enabling the Board of Directors to set the exact reverse split ratio within the stated range will provide us with
the flexibility to implement the reverse stock split in a manner designed to maximize the anticipated benefits for our stockholders.
In determining whether to implement the reverse stock split and selecting the exchange ratio, the Board of Directors will consider
factors such as:
•
The total number of shares of common stock outstanding;
•
The Nasdaq Capital Market requirements for the continued listing of our common stock;
•
The historical trading price and trading volume of our common stock;
•
The then prevailing trading price and trading volume for our common stock;
•
The anticipated impact of the reverse stock split on the trading price of and market for our common stock;
•
Potential financing opportunities; and
•
Prevailing general market and economic conditions.
Reducing
the number of outstanding shares of our common stock through a reverse stock split is intended, absent other factors, to increase
the per share market price of our common stock. However, other factors, such as our financial results, market conditions and the
market perception of our business may adversely affect the market price of our common stock. As a result, there can be no assurance
that the reverse stock split, if completed, will result in the intended benefits described above, that the market price of our
common stock will increase following the reverse stock split or that the market price of our common stock will not decrease in
the future. Additionally, we cannot assure you that the market price per share of our common stock after a reverse stock split
will increase in proportion to the reduction in the number of shares of our common stock outstanding before the reverse stock
split. Accordingly, the total market capitalization of our common stock after the reverse stock split may be lower than the total
market capitalization before the reverse stock split.
The
Board of Directors will have sole discretion as to any implementation of, and the exact timing and actual ratio of, the reverse
stock split within the range of ratios specified in this Proposal Two and within 90 days after the date of the Annual Meeting.
The Board of Directors may also determine that the reverse stock split is no longer in the best interests of our Company and our
stockholders and decide to abandon the reverse stock split at any time before, during or after the Annual Meeting and prior to
its effectiveness, without further action by the stockholders.
The
reverse stock split alone would have no effect on our authorized capital stock, and the total number of authorized shares would
remain the same as before the reverse stock split. This would have the effect of increasing the number of shares of common stock
available for issuance. As of the record date, the number of authorized shares of our common stock was 250,000,000 shares, which
will not be affected by the reverse stock split.
The
additional available shares would be available for issuance from time to time at the discretion of the Board of Directors when
opportunities arise, without further stockholder action or the related delays and expenses, except as may be required for a particular
transaction by law, the rules of any exchange on which our securities may then be listed, or other agreements or restrictions.
There are no preemptive rights relating to the common stock. As such, any issuance of additional shares of common stock would
increase the number of outstanding shares of common stock and (unless such issuance was pro-rata among existing stockholders)
the percentage ownership of existing stockholders would be diluted accordingly.
We
are exploring various sources of financing, including through potential future sales of common stock or other securities. There
can be no assurance, however, even if the reverse stock split is approved and implemented, that any financing transaction would
be undertaken or completed. If we are unable to successfully raise sufficient additional capital, through future sales of common
stock or other securities or through strategic and collaborative arrangements, we will not have sufficient cash to fund our planned
business operations and or may not be able to continue as a going concern.
As
of the record date, we had 167,416,070 shares of common stock issued and outstanding, 1,037,393 shares of common stock reserved
for issuance upon the exercise of outstanding options, 27,401,444 shares of common stock reserved for issuance upon the exercise
of outstanding warrants, and 16,791 shares of common stock reserved for future issuances under our 2018 Equity Compensation Plan.
As of the record date, we had no shares of Series A Preferred Stock issued and outstanding, and 1,044,488 shares of Series A
Preferred Stock reserved for issuance upon the exercise of outstanding preferred stock warrants. Each 0.1 share of Series A
Preferred Stock is convertible into one share of common stock. As of the record date, we had no shares of Series B Preferred
Stock issued and outstanding, and 1,796,875 reserved for issuance upon the exercise of outstanding preferred stock warrants. Each
0.025 share of Series B Preferred Stock is convertible into one share of common stock, subject to certain conditions. Except
as disclosed above, the Company does not presently have any definitive plans, arrangements or understandings with respect to the
issuance of any of the remaining newly authorized shares of common stock.
Potential
Effects of Proposed Amendment
If
our stockholders approve the reverse stock split and the Board of Directors effects it, the number of shares of common stock issued
and outstanding will be reduced, depending upon the ratio determined by the Board of Directors. The reverse stock split will affect
all holders of our common stock uniformly and will not affect any stockholder's percentage ownership interest in the Company,
except that as described below in "Fractional Shares," record holders of common stock otherwise entitled to a fractional
share as a result of the reverse stock split because they hold a number of shares not evenly divisible by the reverse stock split
ratio will automatically be entitled to receive an additional fraction of a share of common stock to round up to the next whole
share. In addition, the reverse stock split will not affect any stockholder's proportionate voting power (subject to the treatment
of fractional shares).
The
reverse stock split will not change the terms of the common stock. After the reverse stock split, the shares of common stock will
have the same voting rights and rights to dividends and distributions and will be identical in all other respects to the common
stock now authorized. The common stock will remain fully paid and non-assessable.
The
reverse stock split may result in some stockholders owning "odd-lots" of less than 100 shares of our common stock. Brokerage
commissions and other costs of transactions in odd-lots are generally higher than the costs of transactions in "round-lots"
of even multiples of 100 shares.
After
the effective time of the reverse stock split, we will continue to be subject to the periodic reporting and other requirements
of the Exchange Act. Subject to our compliance with applicable continued listing requirements, our common stock will continue
to be listed on the Nasdaq Capital Market and traded under the symbol "ONTX," although the exchange will add the letter
"D" to the end of the trading symbol for a period of 20 trading days after the effective time to indicate that a reverse
stock split has occurred. The reverse stock split is not intended as, and will not have the effect of, a "going private transaction"
as described by Rule 13e-3 under the Exchange Act.
After
the effective time of a reverse stock split, the post-split market price of our common stock may be less than the pre-split price
multiplied by the reverse stock split ratio. In addition, a reduction in number of shares outstanding may impair the liquidity
for our common stock, which may reduce the value of our common stock.
Beneficial
Holders of Common Stock
Upon
the implementation of the reverse stock split, we intend to treat shares held by stockholders through a bank, broker or other
nominee in the same manner as registered stockholders whose shares are registered in their names. Banks, brokers or other nominees
will be instructed to effect the reverse stock split for their beneficial holders holding our common stock in street name. However,
these banks, brokers or other nominees may have different procedures than registered stockholders for processing the reverse stock
split. Stockholders who hold shares of our common stock with a bank, broker or other nominee and who have any questions in this
regard are encouraged to contact their banks, brokers or other nominees.
Registered
"Book-Entry" Holders of Common Stock
Certain
of our registered holders of common stock may hold some or all of their shares electronically in book-entry form with the transfer
agent. These stockholders do not have stock certificates evidencing their ownership of the common stock. They are, however, provided
with statements reflecting the number of shares registered in their accounts.
Stockholders
who hold shares electronically in book-entry form with the transfer agent will not need to take action to receive evidence of
their shares of post-reverse stock split common stock.
Holders
of Certificated Shares of Common Stock
Stockholders
holding shares of our common stock in certificated form will be sent a transmittal letter by the transfer agent after the effective
time of the reverse stock split. The letter of transmittal will contain instructions on how a stockholder should surrender his,
her or its certificate(s) representing shares of our common stock (the "Old Certificates") to the transfer agent. Unless
a stockholder specifically requests a new paper certificate or holds restricted shares, upon the stockholder's surrender of all
of the stockholder's Old Certificates to the transfer agent, together with a properly completed and executed letter of transmittal,
the transfer agent will register the appropriate number of shares of post-reverse stock split common stock electronically in book-entry
form and provide the stockholder with a statement reflecting the number of shares registered in the stockholder's account. No
stockholder will be required to pay a transfer or other fee to exchange his, her or its Old Certificates. Until surrendered, we
will deem outstanding Old Certificates held by stockholders to be cancelled and only to represent the number of shares of post-reverse
stock split common stock to which these stockholders are entitled. Any Old Certificates submitted for exchange, whether because
of a sale, transfer or other disposition of stock, will automatically be exchanged for appropriate number of shares of post-reverse
stock split common stock. If an Old Certificate has a restrictive legend on its reverse side, a new certificate will be issued
with the same restrictive legend on its reverse side.
STOCKHOLDERS
SHOULD NOT DESTROY ANY STOCK CERTIFICATE(S) AND SHOULD NOT SUBMIT ANY STOCK CERTIFICATE(S) UNTIL REQUESTED TO DO SO.
Fractional
Shares
We
will not issue fractional shares in connection with the reverse stock split. Instead, stockholders who otherwise would be entitled
to receive fractional shares because they hold a number of shares not evenly divisible by the reverse stock split ratio will automatically
be entitled to receive an additional fraction of a share of common stock to round up to the next whole share.
Effect
of the Reverse Stock Split on Outstanding Stock Options, Warrants, Convertible Preferred Stock and Employee Plans
Based
upon the reverse stock split ratio, proportionate adjustments are generally required to be made to the per share exercise price
and the number of shares issuable upon the exercise of all outstanding options, warrants and convertible preferred stock entitling
the holders to purchase shares of common stock. This would result in approximately the same aggregate price being required to
be paid under such options, warrants or convertible preferred stock upon exercise, and approximately the same value of shares
of common stock being delivered upon such exercise immediately following the reverse stock split as was the case immediately preceding
the reverse stock split. The number of shares reserved for issuance pursuant to these securities will be reduced proportionately
based upon the reverse stock split ratio.
Accounting
Matters
The
proposed amendment to our Certificate of Incorporation will not affect the par value of our common stock. As a result, at the
effective time of the reverse stock split, the stated capital on our balance sheet attributable to the common stock will be reduced
in the same proportion as the reverse stock split ratio, and the additional paid-in capital account will be credited with the
amount by which the stated capital is reduced. The per share net income or loss and net book value of the common stock will be
reclassified for prior periods to conform to the post-reverse stock split presentation.
Certain
Federal Income Tax Consequences of the Reverse Stock Split
The
following summary describes certain U.S. federal income tax consequences of the reverse stock split to holders of our common stock.
This summary addresses the tax consequences only to a U.S. holder, which is a beneficial owner of our common stock that is either:
•
an individual citizen or resident of the United States;
•
a corporation, or other entity taxable as a corporation for U.S. federal income tax purposes, created or organized in or under
the laws of the United States or any state thereof or the District of Columbia;
•
an estate, the income of which is subject to U.S. federal income taxation regardless of its source; or
•
a trust, if: (i) a court within the United States is able to exercise primary jurisdiction over its administration and one
or more U.S. persons has the authority to control all of its substantial decisions or (ii) it was in existence before August 20,
1996 and a valid election is in place under applicable Treasury regulations to treat such trust as a U.S. person for U.S. federal
income tax purposes.
This
summary is based on the provisions of the Internal Revenue Code of 1986, as amended (the "Code"), U.S. Treasury regulations,
administrative rulings and judicial authority, all as in effect as of the date of this proxy statement. Subsequent developments
in U.S. federal income tax law, including changes in law or differing interpretations, which may be applied retroactively, could
have a material effect on the U.S. federal income tax consequences of the reverse stock split.
This
summary does not address all of the tax consequences that may be relevant to any particular investor, including tax considerations
that arise from rules of general application to all taxpayers or to certain classes of taxpayers or that are generally assumed
to be known by investors. This summary also does not address the tax consequences to (i) persons that may be subject to special
treatment under U.S. federal income tax law, such as banks, insurance companies, thrift institutions, regulated investment companies,
real estate investment trusts, tax-exempt organizations, U.S. expatriates, persons subject to the alternative minimum tax, persons
whose functional currency is not the U.S. dollar, partnerships or other pass-through entities, traders in securities that elect
to mark to market and dealers in securities or currencies, (ii) persons that hold our common stock as part of a position
in a "straddle" or as part of a "hedging transaction," "conversion transaction" or other integrated
investment transaction for federal income tax purposes or (iii) persons that do not hold our common stock as "capital
assets" (generally, property held for investment). This summary does not address backup withholding and information reporting.
This summary does not address U.S. holders who beneficially own common stock through a "foreign financial institution"
(as defined in Code Section 1471(d)(4)) or certain other non-U.S. entities specified in Code Section 1472. This summary
does not address tax considerations arising under any state, local or foreign laws, or under federal estate or gift tax laws.
If
a partnership (or other entity classified as a partnership for U.S. federal income tax purposes) is the beneficial owner of our
common stock, the U.S. federal income tax treatment of a partner in the partnership will generally depend on the status of the
partner and the activities of the partnership. Partnerships that hold our common stock, and partners in such partnerships, should
consult their own tax advisors regarding the U.S. federal income tax consequences of the reverse stock split.
General
Tax Treatment of the Reverse Stock Split
The
reverse stock split is intended to qualify as a "reorganization" under Section 368 of the Code that should constitute
a "recapitalization" for U.S. federal income tax purposes. Assuming the reverse stock split qualifies as a reorganization,
a U.S. holder generally will not recognize gain or loss upon the exchange of our ordinary shares for a lesser number of ordinary
shares, based upon the reverse stock split ratio. A U.S. holder's aggregate tax basis in the lesser number of ordinary shares
received in the reverse stock split will be the same such U.S. holder's aggregate tax basis in the shares of our common stock
that such U.S. holder owned prior to the reverse stock split. The holding period for the ordinary shares received in the reverse
stock split will include the period during which a U.S. holder held the shares of our common stock that were surrendered in the
reverse stock split. The United States Treasury regulations provide detailed rules for allocating the tax basis and holding period
of the shares of our common stock surrendered to the shares of our common stock received pursuant to the reverse stock split.
U.S. holders of shares of our common stock acquired on different dates and at different prices should consult their tax advisors
regarding the allocation of the tax basis and holding period of such shares.
THE
FOREGOING IS A SUMMARY OF CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE REVERSE STOCK SPLIT, AND DOES NOT CONSTITUTE A TAX OPINION.
EACH HOLDER OF OUR COMMON SHARES SHOULD CONSULT ITS OWN TAX ADVISOR REGARDING THE TAX CONSEQUENCES OF THE REVERSE STOCK SPLIT
AND FOR REFERENCE TO APPLICABLE PROVISIONS OF THE CODE.
Dissenters'
Rights
No
dissenters' rights are available under the General Corporation Law of the State of Delaware or under the Certificate of Incorporation
or the Bylaws to any stockholder who dissents from this Proposal Two.
Interests
of Directors and Executive Officers
Our
directors and executive officers do not have substantial interest, directly or indirectly, in the matters set forth in this proposal
except to the extent of their ownership of shares of common stock or any other of our securities.
Vote
Required
The
affirmative vote of the holders of a majority of the outstanding shares of our common stock is required to approve this Proposal
Two.
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
A VOTE "FOR" THE PROPOSAL TO AMEND OUR CERTIFICATE OF INCORPORATION TO COMBINE OUTSTANDING SHARES OF OUR COMMON STOCK
INTO A LESSER NUMBER OF OUTSTANDING SHARES, OR A "REVERSE STOCK SPLIT," BY A RATIO OF NOT LESS THAN ONE-FOR-FIVE AND
NOT MORE THAN ONE-FOR-TWENTY-FIVE, WITH THE EXACT RATIO TO BE SET WITHIN THIS RANGE BY OUR BOARD OF DIRECTORS IN ITS SOLE DISCRETION.
PROPOSAL
THREE
AMENDMENT
AND RESTATEMENT OF THE 2018 OMNIBUS INCENTIVE COMPENSATION PLAN
The
Board of Directors is asking stockholders to approve the Onconova Therapeutics, Inc. 2018 Omnibus Incentive Compensation
Plan, as amended and restated (the “Amended Plan”). On April 7, 2020, acting on the recommendation of our Compensation
Committee (the “Compensation Committee”), the Board of Directors unanimously approved the Amended Plan, subject to
stockholder approval and, accordingly, the Board of Directors directed that the Amended Plan be submitted to the Company’s
stockholders for approval at the Annual Meeting.
The
Amended Plan is an amendment and restatement of the 2018 Plan, which was previously amended and restated effective June 17, 2019.
The 2018 Plan replaced the Onconova Therapeutics, Inc. 2013 Equity Incentive Plan (the “2013 Plan”). No further
awards have been or will be made under the 2013 Plan after the original effective date of the 2018 Plan (June 27, 2018).
Awards granted under the 2013 Plan will continue in effect in accordance with the terms of the applicable award agreement and
the terms of the 2013 Plan in effect when the awards were granted.
Stockholder
approval of the Amended Plan is being sought in order to (i) meet NASDAQ listing requirements, (ii) extend the term
of the Amended Plan and (ii) allow for incentive stock options to meet the requirements of the Internal Revenue Code of 1986,
as amended (the “Code”).
The
principal changes made to the Amended Plan are to:
|
·
|
Increase
the number of shares of common stock reserved for issuance by an additional 25,000,000
shares.
|
|
·
|
Extend
the term of the Amended Plan until May 27, 2030.
|
The
Amended Plan will enable the Company to continue its compensation program that is intended to attract, motivate and retain experienced,
highly-qualified directors, employees, consultants and advisors of the Company who will contribute to the Company’s success,
and will align the interests of the directors, employees, consultants and advisors of the Company with those of its stockholders
through the ability to grant a variety of stock-based awards. If the stockholders approve the Amended Plan, awards granted under
the Amended Plan will be governed by the terms of the Amended Plan.
Determination
of the Number of Shares Available for Awards under the Amended Plan
As
of April 7, 2020, 16,791 shares remain available for grant under the 2018 Plan. The Board of Directors and the Compensation
Committee believe that attracting and retaining employees, non-employee directors, and consultants and advisors of high quality
has been and will continue to be essential to the Company’s growth and success. Consistent with this view, the Board of
Directors and its Compensation Committee believe that the number of shares currently available for issuance under the 2018 Plan
is not sufficient for future grants in light of our compensation structure and strategy.
If
this Proposal Two is approved by our stockholders at the Annual Meeting, subject to adjustments as described in the Amended Plan,
the maximum aggregate number of shares of our common stock that may be issued under the Amended Plan with respect to awards made
on and after May 27, 2020 will be 25,016,790, which is equal to the sum of (i) 25,000,000 shares of our common stock,
plus (ii) 16,791 shares, which is the number of shares of our common stock reserved for issuance under the 2018 Plan that
remained available as of April 7, 2020. In addition, subject to adjustments as described in the Amended Plan, shares of common
stock subject to outstanding awards under the 2013 Plan and shares of common stock subject to outstanding awards under the 2018
Plan that terminate, expire, or are cancelled, forfeited, exchanged, or surrendered without having been exercised, vested, or
paid in shares after April 7, 2020 will be available for issuance under the Amended Plan. The number in clause (ii)
above will be reduced by any awards granted under the 2018 Plan between April 7, 2020 and the effective date of the Amended
Plan.
In
determining the number of shares to be authorized for issuance under the Amended Plan, the Board of Directors considered a number
of factors, including the number of shares available under the 2018 Plan, our past share usage (burn rate), the number of shares
needed for future awards, a dilution analysis, competitive data from relevant peer companies, the current and future accounting
expenses associated with our equity award practices, and input from our stockholders.
Dilution
Analysis
As
of April 7, 2020, the Company’s capital structure consisted of 167,416,070 shares of common stock outstanding. As described
above, 16,791 shares remain available for grant of awards under the 2018 Plan as of April 7, 2020. The proposed share authorization
is a request for 25 million new shares to be available for awards under the Amended Plan. The table below shows our potential
dilution (referred to as “overhang”) levels based on our fully diluted shares of common stock and our request for
25,016,791 shares to be available for awards under the Amended Plan. The 25 million new shares represent 13% of fully diluted
shares of our common stock, including all shares that will be authorized under the Amended Plan, as described in the table below.
The Board of Directors believes that this number of shares of common stock under the Amended Plan represents a reasonable amount
of potential equity dilution, which will allow the Company to continue awarding equity awards, and that equity awards are an important
component of the Company’s equity compensation program.
Potential
Overhang with 25,000,000 Additional Shares
Stock
Options Outstanding as of April 7, 2020(1)
|
|
|
1,037,393
|
|
Weighted
Average Exercise Price of Stock Options Outstanding as of April 7, 2020
|
|
|
$24.74
|
|
Weighted
Average Remaining Term of Stock Options Outstanding as of April 7, 2020
|
|
|
9.1
years
|
|
Total
Equity Awards Outstanding as of April 7, 2020(1)
|
|
|
1,037,393
|
|
Shares
Available for Grant under the 2018 Plan as of April 7, 2020
|
|
|
16,791
|
|
New
Shares Requested under the Amended Plan
|
|
|
25,000,000
|
|
Total
Shares Requested under the Amended Plan(2)
|
|
|
25,000,000
|
|
Total
Potential Overhang under the Amended Plan (and the 2013 Plan)
|
|
|
25,016,791
|
|
Shares
of Common Stock Outstanding as of April 7, 2020
|
|
|
167,416,070
|
|
Fully
Diluted Shares of Common Stock(3)
|
|
|
192,432,861
|
|
Potential
Dilution of 25 million shares as a Percentage of Fully Diluted Shares of Common Stock
|
|
|
13%
|
|
(1) Represents
the number of outstanding stock options under the 2013 Plan and the 2018 Plan, which are the only type of awards outstanding under
the 2013 Plan and 2018 Plan. No additional awards have been or will be made under the 2013 Plan after June 27, 2018. The
number of shares subject to outstanding awards under the 2013 Plan and the 2018 Plan that could again become available under the
Amended Plan is 1,037,393 shares, subject to adjustments as described in the Amended Plan. There are no awards outstanding under
any plan, arrangement or agreement, other than the 2013 Plan and the 2018 Plan.
(2) Total
shares to be available under the Amended Plan will be reduced by the number of shares subject to any awards granted after April 7,
2020 under the 2018 Plan and prior to the effective date of the Amended Plan.
(3) The
Fully Diluted Shares of Common Stock in the foregoing table consist of the Shares of Common Stock Outstanding as of April 7,
2020, plus the Total Potential Overhang under the Amended Plan (and the 2013 Plan).
Based
on our historic and projected future usage patterns, the Board of Directors estimates that the shares reserved under the Amended
Pan will be sufficient to provide awards under the Amended Plan for approximately two to three years, although the number of awards
granted for any year could vary as our Compensation Committee deems appropriate. This is only an estimate, and circumstances could
cause the share reserve to be used more quickly or more slowly. These circumstances include, but are not limited to, the future
price of our common stock, the mix of cash, options and full value awards provided as long-term incentive compensation, award
amounts provided by our competitors, hiring activity, and promotions during the next few years.
Burn
Rate
The
table below sets forth the following information regarding the awards granted under the 2013 Plan and the 2018 Plan: (i) the
burn rate for each of the last three calendar years and (ii) the average burn rate over the last three calendar years. The
burn rate for a year has been calculated as follows:
(i)
all stock options granted in the applicable year, divided by
(ii)the
weighted average number of shares of common stock outstanding for the applicable year.
Burn
Rate
Element
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
Stock
Options Granted
|
|
|
669,998
|
|
|
|
335,383
|
|
|
|
198,811
|
|
Weighted
Average Shares of Common Stock Outstanding as of December 31
|
|
|
14,384,746
|
|
|
|
4,124,073
|
|
|
|
9,000,326
|
|
Burn
Rate
|
|
|
4.66
|
%
|
|
|
8.13
|
%
|
|
|
2.21
|
%
|
The
burn rate means that the Company used an annual average of 5.00% of the weighted average shares outstanding for awards granted
over the past three years under the 2013 Plan and the 2018 Plan.
The
Board of Directors believes that the current number of shares that may be issued under the 2018 Plan is not sufficient in light
of our compensation structure and strategy. Equity incentives form an integral part of the compensation paid to many of our employees,
particularly those in positions of key importance. Equity incentives also are a major part of our non-employee director annual
retainer compensation. The Board of Directors has concluded that our ability to attract, retain and motivate top quality employees,
non-employee directors, and consultants and advisors is critical to our success and growth, and would be enhanced by our continued
ability to grant awards under the Amended Plan. In addition, the Board of Directors believes that our interests and the interests
of our stockholders will be advanced if the Company can continue to offer employees, non-employee directors and consultants and
advisors the opportunity to acquire or increase their proprietary interests in the Company. The Board of Directors believes that
adopting the Amended Plan will ensure that the Company continues to have a sufficient number of shares with which to achieve our
compensation strategy and to allow for growth.
Summary
of the Amended Plan
The
material terms of the Amended Plan are summarized below. A copy of the full text of the Amended Plan is attached to this Proxy
Statement as Appendix A. This summary of the Amended Plan is not intended to be a complete description of the Amended Plan
and is qualified in its entirety by the actual text of the Amended Plan to which reference is made.
Purpose
and Types of Awards
The
purpose of the Amended Plan is to attract and retain employees, non-employee directors and consultants, and advisors. The Amended
Plan provides for the issuance of incentive stock options, non-qualified stock options, stock awards, stock units, stock appreciation
rights and other stock-based awards. The Amended Plan is intended to provide an incentive to participants to contribute to our
economic success by aligning the economic interests of participants with those of our stockholders.
Administration
The
Amended Plan will be administered by our Compensation Committee, and our Compensation Committee will determine all of the terms
and conditions applicable to awards under the Amended Plan. Our Compensation Committee will also determine who will receive awards
under the Amended Plan and the number of shares of common stock that will be subject to awards. Our Compensation Committee may
delegate authority under the Amended Plan to one or more subcommittees as it deems appropriate. Our Compensation Committee will
consist of “non-employee directors” as defined under Rule 16b-3 promulgated under the Exchange Act and “independent
directors,” as determined in accordance with the independence standards established by the stock exchange on which our common
stock is at the time primarily traded. Subject to compliance with applicable law and the applicable stock exchange rules, our
Board of Directors, in its discretion, may perform any action of our Compensation Committee under the Amended Plan. Subject to
compliance with applicable law and applicable stock exchange requirements, the Compensation Committee (or our Board of Directors
or a subcommittee, as applicable) may delegate all or part of its authority to our Chief Executive Officer, as it deems appropriate,
with respect to awards to employees or consultants or advisors who are not executive officers or directors under Section 16
of the Exchange Act. Our Compensation Committee, our Board of Directors, any subcommittee or the Chief Executive Officer, as applicable,
that has authority with respect to a specific award will be referred to as “the committee” in this description of
the Amended Plan.
Shares
Subject to the Amended Plan
Subject
to adjustment, the maximum aggregate number of shares of common stock that may be issued or transferred under the Amended Plan
with respect to awards made on and after the effective date of the Amended Plan is 25,016,791 shares, which is equal to the sum
of (i) 25,000,000 shares of our common stock, plus (ii) 16,791 shares, which is the number of shares of our common stock
reserved for issuance under the 2018 Plan that remain available as of April 7, 2020. In addition, the number of shares of
common stock subject to outstanding awards under the 2013 Plan and the 2018 Plan that terminate, expire, or are cancelled, forfeited,
exchanged, or surrendered without having been exercised, vested, or paid in shares under the 2013 Plan or the 2018 Plan, as applicable,
after April 7, 2020 will be available for issuance under the Amended Plan. The number in clause (ii) above will be reduced
by any awards granted under the 2018 Plan between April 7, 2020 and the effective date of the Amended Plan.
If
any options or stock appreciation rights, including outstanding options granted under our 2013 Plan or 2018 Plan, terminate, expire,
or are canceled, forfeited, exchanged, or surrendered without having been exercised, or if any stock awards, stock units or other
stock-based awards are forfeited, terminated, or otherwise not paid in full, the shares of our common stock subject to such awards
will again be available for purposes of the Amended Plan. Shares of our common stock that are surrendered in payment of the exercise
price of an option (including an option granted under the 2013 Plan) or a stock appreciation right will not be available for issuance
under the Amended Plan. Shares of our common stock that are withheld in satisfaction of the withholding taxes, or surrendered
for the payment of taxes, incurred in connection with the issuance, vesting or exercise of any award (including an option granted
under the 2013 Plan), or the issuance of our common stock will not be available for issuance under the Amended Plan. When stock
appreciation rights are granted, the full number of shares subject to the stock appreciation rights will be considered issued
under the Amended Plan regardless of the number of shares issued upon exercise of the stock appreciation rights. If we repurchase
shares of our common stock on the open market with the proceeds from the exercise price we receive from options (including options
granted under the 2013 Plan), the repurchased shares will not be available for issuance under the Amended Plan. If any awards
are paid in cash, and not in shares of our common stock, any shares of our common stock subject to such awards will also be available
for future awards. In addition, shares of our common stock issued under awards made pursuant to assumption, substitution, or exchange
of previously granted awards of a company that we acquire will not reduce the number of shares of our common stock available under
the Amended Plan. Available shares under a stockholder approved plan of an acquired company may be used for awards under the Amended
Plan and will not reduce the share reserve, subject to compliance with the applicable stock exchange requirements and the Code.
The
maximum number of shares of our common stock that may be subject to option, stock appreciation right, stock award, stock unit
and other stock-based awards made to any employee, consultant or advisor under the Amended Plan in any calendar year will not
exceed 2,500,000 shares of our common stock in the aggregate, subject to adjustments as described below. For awards that are made
to newly hired employees on around the date of hire, the limit applicable to employees as described in the preceding sentence
is doubled such that the maximum number of shares of our common stock that may be subject to awards to a newly hired employee
is 5,000,000 shares in the aggregate, subject to adjustments as described below. The maximum aggregate grant date value of shares
of common stock subject to awards made to any non-employee member of our Board of Directors during any calendar year for services
rendered as a non-employee director, including any cash fees earned for services rendered as a non-employee director during the
calendar year, will not exceed $300,000 in total value. In determining this dollar limit, the value of awards will be calculated
based on the grant date fair value of the awards for financial reporting purposes.
Adjustments
In
connection with stock splits (reverse stock splits), stock dividends, recapitalizations, and certain other events affecting our
common stock, the committee will make adjustments as it deems appropriate in the maximum number of shares of common stock reserved
for issuance as awards or for which individuals may receive awards in any year; the number and kind of shares covered by outstanding
awards; the kind of shares that may be issued or transferred under the Amended Plan; the price per share or market value of any
outstanding awards; the exercise price of options; the base amount of stock appreciation rights; and the performance goals or
other terms; and conditions as the committee deems appropriate.
Eligibility
All
of our employees are eligible to receive awards under the Amended Plan. In addition, our non-employee directors and consultants
or advisors who perform services for us may receive awards under the Amended Plan. Incentive stock options may be granted only
to our employees.
As
of April 7, 2020, approximately 20 employees, 5 non-employee directors and 30 consultants and/or
advisors (other than our non-employee directors) would be eligible to participate in the Amended Plan. The committee,
in its discretion, selects the persons to whom awards may be granted, determines the type of awards, determines the times at which
awards will be made, determines the number of shares subject to each such award (or the dollar value of certain performance awards),
and determines the other terms and conditions relating to the awards. For this reason, it is not possible to determine the benefits
or amounts that will be received by any particular person in the future. Because our executives and non-employee directors are
eligible to receive awards under the Amended Plan, they may be deemed to have a personal interest in the approval of this Proposal
Two.
Vesting
The
committee determines the vesting and exercisability terms of awards granted under the Amended Plan. Awards granted under the Amended
Plan shall include vesting schedules that provide that no portion of an award will vest earlier than one year from the date of
grant. However, up to 5% of the shares reserved under the Amended Plan as of the effective date of the Amended Plan (subject to
adjustment as set forth in the Amended Plan) may be granted without regard to this minimum vesting requirement. Except in connection
with a change in control (in which case, awards will be treated as described below),
the committee may accelerate vesting of any award in its discretion. Dividends and dividend equivalents granted in connection
with any awards made under the Amended Plan will vest and be paid only if and to the extent the underlying awards vest and are
paid.
At
the committee’s discretion, performance objectives for awards may be based on the attainment of specified levels of one
or more performance goals established by the committee. If the committee so determines, the vesting of any such award subject
to performance objectives may be described in terms of company-wide objectives or objectives that are related to the performance
of the individual participant or the subsidiary, division, department or function within the company or subsidiary in which the
participant is employed. Performance objectives may be measured on an absolute or relative basis. Relative performance may be
measured by a group of peer companies or by a financial market index. Performance objectives may include: specified levels of
or increases in, a division’s or a subsidiary’s return on capital, equity or assets; earnings measures/ratios (on
a gross, net, pre-tax or post-tax basis), including basic earnings per share, diluted earnings per share, total earnings, operating
earnings, earnings growth, earnings before interest and taxes and earnings before interest, taxes, depreciation and amortization;
net economic profit (which is operating earnings minus a charge to capital); net income; operating income; sales; sales growth;
gross margin; direct margin; costs; share price (including but not limited to growth measures and total stockholder return); operating
profit; per period or cumulative cash flow (including but not limited to operating cash flow and free cash flow) or cash flow
return on investment (which equals net cash flow divided by total capital); inventory turns; financial return ratios; market share;
balance sheet measurements such as receivable turnover; improvement in or attainment of expense levels; improvement in or attainment
of working capital levels; debt reduction; strategic innovation; customer or employee satisfaction; the consummation of one or
more acquisitions of a certain size as measured by one or more of the financial criteria listed above; individual objectives;
regulatory body approval for commercialization of a product; implementation or completion of critical projects (including, but
not limited to, milestones such as clinical trial enrollment targets, commencement of phases of clinical trials and completion
of phases of clinical trials); and any combination of the foregoing.
Options
Under
the Amended Plan, the committee will determine the exercise price of the options granted and may grant options to purchase
shares of common stock in such amounts as it determines. The committee may grant options that are intended to qualify as
incentive stock options under Section 422 of the Code, or non-qualified stock options, which are not intended to so
qualify. Incentive stock options may only be granted to our employees. Anyone eligible to participate in the Amended Plan may
receive a grant of non-qualified stock options. The exercise price of a stock option granted under the Amended Plan cannot be
less than the fair market value of a share of our common stock on the date the option is granted. If an incentive stock
option is granted to a 10% stockholder, the exercise price cannot be less than 110% of the fair market value of a share of
our common stock on the date the option is granted. The aggregate number of shares of common stock that may be issued or
transferred under the Amended Plan pursuant to incentive stock options under Section 422 of the Code granted on and
after May 27, 2020 may not exceed 25,016,791 shares of common stock. The fair market value of our common stock
is generally equal to the closing price for the common stock on the date the option is granted (or if there was no closing
price on that date, on the last preceding date on which a closing price was reported).
The
exercise price for any option is generally payable in cash. In certain circumstances as permitted by the committee, the exercise
price may be paid by the surrender of shares of our common stock with an aggregate fair market value on the date the option is
exercised equal to the exercise price; by payment through a broker in accordance with procedures established by the Federal Reserve
Board; by withholding shares of common stock subject to the exercisable option which have a fair market value on the date of exercise
equal to the aggregate exercise price; or by such other method as the committee approves.
The
term of an option cannot exceed ten years from the date of grant, except that if an incentive stock option is granted to a 10%
stockholder, the term cannot exceed five years from the date of grant. In the event that on the last day of the term of a non-qualified
stock option, the exercise is prohibited by applicable law, including a prohibition on purchases or sales of our common stock
under our insider trading policy, the term of the non-qualified option will be extended for a period of 30 days following
the end of the legal prohibition, unless the committee determines otherwise.
Except
as provided in the award agreement, an option may only be exercised while a participant is employed by or providing service to
us. The committee will determine in the award agreement under what circumstances and during what time periods a participant may
exercise an option after termination of employment.
Stock
Appreciation Rights
Under
the Amended Plan, the committee may grant stock appreciation rights, which may be granted separately or in tandem with any option.
Stock appreciation rights granted with a non-qualified stock option may be granted either at the time the non-qualified stock
option is granted or any time thereafter while the option remains outstanding. Stock appreciation rights granted with an incentive
stock option may be granted only at the time the grant of the incentive stock option is made. The committee will establish the
base amount of the stock appreciation right at the time the stock appreciation right is granted, which will be equal to or greater
than the fair market value of a share of our common stock as of the date of grant.
If
a stock appreciation right is granted in tandem with an option, the number of stock appreciation rights that are exercisable during
a specified period will not exceed the number of shares of our common stock that the participant may purchase upon exercising
the related option during such period. Upon exercising the related option, the related stock appreciation rights will terminate,
and upon the exercise of a stock appreciation right, the related option will terminate, to the extent of an equal number of shares
of our common stock. Generally, stock appreciation rights may only be exercised while the participant is employed by, or providing
services to, us. When a participant exercises a stock appreciation right, the participant will receive the excess of the fair
market value of the underlying common stock over the base amount of the stock appreciation right. The appreciation of a stock
appreciation right will be paid in shares of our common stock, cash or both.
The
term of a stock appreciation right cannot exceed ten years from the date of grant. In the event that on the last day of the term
of a stock appreciation right, the exercise is prohibited by applicable law, including a prohibition on purchases or sales of
our common stock under our insider trading policy, the term of the stock appreciation right will be extended for a period of 30 days
following the end of the legal prohibition, unless the committee determines otherwise.
Stock
Awards
Under
the Amended Plan, the committee may grant stock awards. A stock award is an award of our common stock that may be subject to restrictions
as the committee determines. The restrictions, if any, may lapse over a specified period of employment or based on the satisfaction
of pre-established criteria, in installments or otherwise, as the committee may determine. Except to the extent restricted under
the award agreement relating to the stock award, a participant will have all of the rights of a stockholder as to those shares,
including the right to vote and the right to receive dividends or distributions on the shares; provided, however, that dividends
with respect to stock awards shall vest and be paid if and to the extent that the underlying stock award vests and is paid. All
unvested stock awards are forfeited if the participant’s employment or service is terminated for any reason, unless the
committee determines otherwise.
Stock
Units
Under
the Amended Plan, the committee may grant restricted stock units to anyone eligible to participate in the Amended Plan. Restricted
stock units are phantom units that represent shares of our common stock. Restricted stock units become payable on terms and conditions
determined by the committee and will be payable in cash or shares of our stock as determined by the committee. All unvested restricted
stock units are forfeited if the participant’s employment or service is terminated for any reason, unless the committee
determines otherwise.
Other
Stock-Based Awards
Under
the Amended Plan, the committee may grant other types of awards that are based on, measured by, or payable to, anyone eligible
to participate in the Amended Plan in shares of our common stock. The committee will determine the terms and conditions of such
awards. Other stock-based awards may be payable in cash, shares of our common stock, or a combination of the two.
Dividend
Equivalents
Under
the Amended Plan, the committee may grant dividend equivalents in connection with awards of stock units or other stock-based awards
made under the Amended Plan. Dividend equivalents entitle the participant to receive amounts equal to ordinary dividends that
are paid on the shares underlying an award while the award is outstanding. Dividend equivalents may be paid in cash, in shares
of our common stock, or in a combination of the two. The committee will determine the terms and conditions of the dividend equivalent
awards, including whether the awards are payable upon the achievement of specific performance goals; provided, however, that dividend
equivalents shall vest and be paid only if and to the extent that the underlying stock units or other stock-based awards vest
and are paid. For the avoidance of doubt, no dividends or dividend equivalents will be granted with respect to stock options or
stock appreciation rights.
Change
in Control
If
we experience a change in control where we are not the surviving corporation (or survive only as a subsidiary of another corporation),
all outstanding awards that are not exercised or paid at the time of the change in control will be assumed by, or replaced with
awards that have comparable terms by, the surviving corporation (or a parent or subsidiary of the surviving corporation). In the
event that the surviving corporation (or a parent or subsidiary of the surviving corporation) does not assume or replace awards
with grants that have comparable terms, outstanding options and stock appreciation rights will accelerate and become fully exercisable
and the restrictions and conditions on outstanding stock awards, stock units, other stock-based awards and dividend equivalents
immediately lapse, provided that if the vesting of any such awards is based, in whole or in part, on performance, such awards
shall vest based on the greater of (i) actual performance as of the change in control or (ii) target performance, pro-rated
based on the period elapsed between the beginning of the applicable performance period and the date of the change in control.
At the committee’s discretion, if a participant incurs an involuntary termination of employment or service on or after a
change in control, the participant’s outstanding awards may become vested, in whole or in part, as of the date of termination;
provided that if the vesting of any such award is based, in whole or in part, on performance, such awards shall vest only based
on the greater of (i) actual performance as of the change in control or (ii) target performance, pro-rated based on
the period elapsed between the beginning of the applicable performance period and the date of the termination.
If
there is a change in control and all outstanding awards are not assumed by, or replaced with awards that have comparable terms
by, the surviving corporation, the committee may take any of the following action without the consent of any participant:
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pay
participants, in an amount and form determined by the committee, in settlement of outstanding
stock units, other stock-based awards or dividend equivalents;
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require
that participants surrender their outstanding stock options, stock appreciation rights
or any other exercisable award, in exchange for a payment by us, in cash or shares of
our common stock, equal to the difference between the exercise price and the fair market
value of the underlying shares of common stock; provided, however, if the per share fair
market value of the common stock does not exceed the per share stock option exercise
price or stock appreciation right base amount, as applicable, we will not be required
to make any payment to the participant upon surrender of the stock option or stock appreciation
right; or
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after
giving participants an opportunity to exercise all of their outstanding stock options
and stock appreciation rights, terminate any unexercised stock options and stock appreciation
rights on the date determined by the committee.
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In
general terms, a change in control under the Amended Plan includes:
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the
acquisition, directly or indirectly, by a person of more than 50% of the combined voting
power of our voting securities entitled to vote generally in the election of directors;
provided, however, that the following acquisitions of voting securities shall not constitute
a change in control: (a) any acquisition by or from us or any of our subsidiaries,
or by any employee benefit plan (or related trust) sponsored or maintained by us or any
of our subsidiaries, (b) any acquisition by any underwriter in any firm commitment
underwriting of securities to be issued by us, or (c) any acquisition by any corporation
(or other entity) if, immediately following such acquisition, 50% or more of the then
outstanding shares of common stock (or other equity unit) of such corporation (or other
entity) and the combined voting power of the then outstanding voting securities of such
corporation (or other entity), are beneficially owned, directly or indirectly, by all
or substantially all of the individuals or entities who, immediately prior to such acquisition,
were the beneficial owners of our then outstanding shares of common stock and the voting
securities in substantially the same proportions, respectively, as their ownership immediately
prior to the acquisition of our stock and voting securities;
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the
consummation of the sale or other disposition of all or substantially all of our assets,
other than to a wholly-owned subsidiary or to a holding company of which we are a direct
or indirect wholly owned subsidiary prior to such transaction;
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the
consummation of a reorganization, merger or consolidation of our company, other than
a reorganization, merger or consolidation which would result in our voting securities
outstanding immediately prior to the transaction continuing to represent (whether by
remaining outstanding or by being converted to voting securities of the surviving entity)
65% or more of the voting securities or the voting power of the voting securities of
such surviving entity outstanding immediately after such transaction;
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the
consummation of a plan for our complete liquidation; or
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the
following individuals cease for any reason to constitute a majority of our Board of Directors:
individuals who, as of the effective date of the Amended Plan, constitute our Board of
Directors and any new director (other than a director whose initial assumption of office
is in connection with an actual or threatened election contest, including, but not limited
to, a consent solicitation relating to the election of our directors) whose appointment
or election by the Board of Directors or nomination for election by our stockholders
was approved and recommended by a vote of at least two-thirds of the directors then still
in office who either were directors on the effective date of the Amended Plan or whose
appointment, election or nomination for election was previously so approved or recommended.
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Notwithstanding
the above, in the case of a distribution under the Amended Plan of an amount which is subject to Section 409A of the Code,
only an event which constitutes a “change in control event” as defined under Section 409A of the Code shall constitute
a “change in control” for purposes of the payment provisions under the Amended Plan.
Deferrals
The
committee may permit or require participants to defer receipt of the payment of cash or the delivery of shares of common stock
that would otherwise be due to the participant in connection with an award under the Amended Plan. The committee will establish
the rules and procedures applicable to any such deferrals, consistent with the requirements of Section 409A of the Code.
Withholding
All
awards under the Amended Plan are subject to applicable U.S. federal (including FICA), state and local, foreign, or other tax
withholding requirements. We may require participants or other persons receiving awards or exercising awards to pay an amount
sufficient to satisfy such tax withholding requirements with respect to such awards, or we may deduct from other wages and compensation
paid by us the amount of any withholding taxes due with respect to such award.
The
committee may permit or require that our tax withholding obligation with respect to awards paid in our common stock will paid
by having shares withheld up to an amount that does not exceed the participant’s applicable withholding tax rate for U.S.
federal (including FICA), state and local, foreign, or other tax liabilities. In addition, the committee may, in its discretion,
and subject to such rules as the committee may adopt, allow participants to elect to have such share withholding applied to all
or a portion of the tax withholding obligation arising in connection with any particular award.
Transferability
Except
as permitted by the committee with respect to non-qualified stock options, only a participant may exercise rights under an award
during the participant’s lifetime. Upon death, the personal representative or other person entitled to succeed to the rights
of the participant may exercise such rights. A participant cannot transfer those rights except by will or by the laws of descent
and distribution or, with respect to awards other than incentive stock options, pursuant to a domestic relations order. The committee
may provide in an award agreement that a participant may transfer non-qualified stock options to family members, or one or more
trusts or other entities for the benefit of or owned by family members, consistent with applicable securities laws.
Amendment;
Termination
Our
Board of Directors may amend or terminate the Amended Plan at any time, except that our stockholders must approve an amendment
if such approval is required in order to comply with the Code, applicable laws, or applicable stock exchange requirements. Unless
terminated sooner by our Board of Directors or extended with stockholder approval, the Amended Plan will terminate on the day
immediately preceding the tenth anniversary of the effective date of the Amended Plan.
Stockholder
approval is required to amend the terms of outstanding options or stock appreciation rights to reduce the exercise price or base
price of options or stock appreciation rights, respectively, cancel outstanding options or stock appreciation rights in exchange
for options or stock appreciation rights with an exercise price or base price, as applicable, that is (1) less than the exercise
price or base price of the original options or stock appreciation rights or (2) above the current stock price in exchange
for cash or other securities. However, such stockholder approval is not required in connection with certain corporate transactions
or other actions with respect to our securities, such as a stock split, extraordinary cash dividend, recapitalization, change
in control, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase or exchange of shares of our common
stock.
Establishment
of Sub-Plans
Our
Board of Directors may, from time to time, establish one or more sub-plans under the Amended Plan to satisfy applicable blue sky,
securities, or tax laws of various jurisdictions. Our Board of Directors may establish such sub-plans by adopting supplements
to the Amended Plan setting forth limitations on the committee’s discretion and such additional terms and conditions not
otherwise inconsistent with the Amended Plan as our Board of Directors will deem necessary or desirable. All such supplements
will be deemed part of the Amended Plan, but each supplement will only apply to participants within the affected jurisdiction.
Clawback
Subject
to applicable law, the committee may provide in any award agreement that if a participant breaches any restrictive covenant agreement
between the participant and us, or otherwise engages in activities that constitute cause either while employed by, or providing
services to, us or within the applicable period of time thereafter, all awards held by the participant will terminate, and we
may rescind any exercise of an option or stock appreciation right and the vesting of any other award and delivery of shares upon
such exercise or vesting, as applicable on such terms as the committee will determine, including the right to require that in
the event of any rescission:
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the
participant must return the shares received upon the exercise of any option or stock
appreciation right or the vesting and payment of any other awards; or
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if
the participant no longer owns the shares, the participant must pay to us the amount
of any gain realized or payment received as a result of any sale or other disposition
of the shares (if the participant transferred the shares by gift or without consideration,
then the fair market value of the shares on the date of the breach of the restrictive
covenant agreement or activity constituting cause), net of the price originally paid
by the participant for the shares.
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The
committee may also provide for clawbacks pursuant to a clawback policy, which our Board of Directors may in the future adopt and
amend from time to time. Payment by the participant will be made in such manner and on such terms and conditions as may be required
by the committee. We will be entitled to set off against the amount of any such payment any amounts that we otherwise owe to the
participant.
Federal
Income Tax Consequences
The
following discussion summarizes certain federal income tax considerations of awards under the Amended Plan. However, it does not
purport to be complete and does not describe the state, local or foreign tax considerations or the consequences for any particular
individual.
Stock
Options. A participant does not realize ordinary income on the grant of a stock option. Upon exercise
of a non-qualified stock option, the participant will realize ordinary income equal to the excess of the fair market value of
the shares of common stock over the option exercise price. The cost basis of the shares acquired for capital gain treatment is
their fair market value at the time of exercise. Upon exercise of an incentive stock option, the excess of the fair market value
of the shares of common stock acquired over the option exercise price will be an item of tax preference to the participant, which
may be subject to an alternative minimum tax for the year of exercise. If no disposition of the shares is made within two years
from the date of granting of the incentive stock option or within one year after the transfer of the shares to the participant,
the participant does not realize taxable income as a result of exercising the incentive stock option; the tax basis of the shares
received for capital gain treatment is the option exercise price; any gain or loss realized on the sale of the shares is long-term
capital gain or loss. If the participant disposes of the shares within the two-year or one-year periods referred to above, the
participant will realize ordinary income at that time in an amount equal to the excess of the fair market value of the shares
at the time of exercise (or the net proceeds of disposition, if less) over the option exercise price. For capital gain treatment
on such a disposition, the tax basis of the shares will be their fair market value at the time of exercise.
Stock
Appreciation Rights. No ordinary income will be realized by a participant in connection with the grant
of a SAR. When the SAR is exercised, the participant will realize ordinary income in an amount equal to the sum of the amount
of any cash received and the fair market value of the shares of common stock or other property received upon the exercise.
Restricted
Stock, Performance and Restricted Stock Unit Awards. The participant will not realize ordinary income
on the grant of a restricted stock award (or a performance award if the shares of common stock are issued on grant), but will
realize ordinary income when the shares subject to the award become vested in an amount equal to the excess of (i) the fair
market value of the shares on the vesting date over (ii) the purchase price, if any, paid for the shares. The participant
may, however, elect under Section 83(b) of the Code to include as ordinary income in the year the shares are granted an amount
equal to the excess of (i) the fair market value of the shares on the date of issuance, over (ii) the purchase price,
if any, paid for the shares. If the Section 83(b) election is made, the participant will not realize any additional taxable
income when the shares become vested.
The
participant will not realize ordinary income on the grant of a restricted stock unit award (or a performance award under which
shares of common stock are not issued on grant), but will realize ordinary income when the shares subject to the award are issued
to the participant after they become vested. The amount of ordinary income will be equal to the excess of (i) the fair market
value of the shares on the date they are issued over (ii) the purchase price, if any, paid for the award.
Upon
disposition of shares of common stock acquired under a restricted stock award, performance award or restricted stock unit award,
the participant will realize a capital gain or loss equal to the difference between the selling price and the sum of the amount
paid for the shares plus any amount realized as ordinary income upon grant (or vesting) of the shares.
Company
Tax Deduction
Prior
to 2018, Section 162(m) of the Code imposed a $1 million limit on the amount a public company may deduct for compensation
paid to a company’s chief executive officer or any of the company’s three other most highly compensated executive
officers (other than the chief financial officer) who are employed as of the end of the year. This limitation did not apply to
compensation that meets the tax code requirements for “qualified performance-based” compensation (i.e., compensation
paid only if the individual’s performance meets pre-established objective goals based on performance criteria approved by
stockholders, including stock options).
The
performance-based compensation exemption and the exemption of the chief financial officer from Section 162(m)’s deduction
limit have been repealed, among other changes, effective for taxable years beginning after December 31, 2017, such that awards
paid to our covered executive officers (including our chief executive officer) in excess of $1 million will not be deductible
in future years, unless it qualifies for transition relief applicable to certain arrangements that were in effect as of November 2,
2017 and are not materially modified thereafter.
While
deductibility of executive compensation for federal income tax purposes is among the factors the committee considers when structuring
our executive compensation arrangements, it is not the sole or primary factor considered. We retain the flexibility to authorize
compensation that may not be deductible if we believe it is in the best interests of the Company.
New
Plan Benefits under the Amended Plan
Future
benefits under the Amended Plan generally will be granted at the discretion of the Compensation Committee and are therefore not
currently determinable. As of April 8, 2020, the closing price of the common stock as reported on NASDAQ was $0.29
per share.
Vote
Required for Approval
The
affirmative vote of a majority of the votes cast by stockholders present, in person or by proxy, and entitled to vote at the Annual
Meeting, will be required to approve the Company’s 2018 Omnibus Incentive Compensation Plan, as amended and restated.
Recommendation
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE PROPOSAL TO
APPROVE
THE AMENDMENT AND RESTATEMENT OF THE 2018 OMNIBUS INCENTIVE
COMPENSATION
PLAN, AS AMENDED AND RESTATED.
PROPOSAL
FOUR
ADVISORY
VOTE ON EXECUTIVE COMPENSATION
Pursuant
to the proxy rules under the Exchange Act and as required by Section 951 of the Dodd-Frank Wall Street Reform and Consumer Protection
Act (the "Dodd-Frank Act"), we are presenting to our stockholders with a non-binding, advisory vote to approve the compensation
of our named executive officers as described in this proxy statement (sometimes referred to as "say-on-pay").
Accordingly,
the following resolution is being presented by our Board of Directors at the Annual Meeting:
“RESOLVED,
that the compensation paid to the Company's named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, including
the compensation tables and narrative discussion, is hereby APPROVED.”
Our
executive compensation program is designed to attract, motivate and retain our executive officers, who are critical to our success.
As described in the "Executive Compensation" section in this proxy statement, our executive compensation program contains
elements of cash and equity-based compensation. Our Board of Directors and our compensation committee believe that our compensation
programs directly and substantially link rewards to measurable corporate performance and are designed to align the interests of
our named executive officers with those of our stockholders and to reward our named executive officers for the achievement of
our near-term and longer-term financial and strategic goals. The process for determining compensation packages requires that our
Board of Directors and our compensation committee use judgment and experience to determine the optimal components and amounts
of compensation for each named executive officer.
We
strongly encourage our stockholders to review this proxy statement, and in particular the information contained in the "Executive
Compensation" section, including the compensation tables and narrative discussion, for a more detailed discussion of our
compensation philosophy, objectives and programs.
The
say-on-pay vote gives you as a stockholder the opportunity to express your views regarding the compensation of our named executive
officers by voting to approve or not approve such compensation as described in this proxy statement. This vote is advisory and
will not be binding upon our Board of Directors or our compensation committee. However, our Board of Directors and our compensation
committee value the opinion of our stockholders and will take into account the outcome of the vote when considering future executive
compensation arrangements. The vote on this resolution is not intended to address any specific element of compensation, but rather
relates to the overall compensation of our named executive officers, as described in this proxy statement in accordance with the
compensation disclosure rules of the SEC.
Our
Board of Directors has determined that, based on the vote results of the “say-on-frequency” proposal at the 2019 Annual
Meeting of Stockholders, we will hold an advisory vote on executive compensation every year, until our Board of Directors otherwise
determines a different frequency for such votes. The next say-on-pay vote will occur at our 2021 Annual Meeting of Stockholders.
Vote
Required; Recommendation of the Board of Directors
The
affirmative vote of a majority of the votes cast by stockholders present, in person or by proxy, and entitled to vote at the Annual
Meeting, will be required to approve the advisory resolution on executive compensation.
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE APPROVAL, ON A NON-BINDING ADVISORY BASIS, OF THE FOLLOWING RESOLUTION:
“RESOLVED,
THAT THE COMPENSATION PAID TO THE COMPANY'S NAMED EXECUTIVE OFFICERS, AS DISCLOSED PURSUANT TO ITEM 402 OF REGULATION S-K, INCLUDING
THE COMPENSATION TABLES AND NARRATIVE DISCUSSION, IS HEREBY APPROVED.”
PROPOSAL
FIVE
RATIFICATION
OF THE SELECTION OF ERNST & YOUNG LLP AS OUR INDEPENDENT
REGISTERED
PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING
DECEMBER 31, 2020
Our
Board of Directors, acting upon the recommendation of the audit committee, has selected Ernst & Young LLP to audit
our consolidated financial statements for the fiscal year ending December 31, 2020. Ernst & Young LLP has audited
our consolidated financial statements since fiscal 2012.
Although
stockholder approval of the selection of Ernst & Young LLP is not required by law, our Board of Directors and the
audit committee believe it is advisable to give stockholders an opportunity to ratify this selection. If this proposal is not
approved at the Annual Meeting, the audit committee may reconsider its selection of Ernst & Young LLP. Additionally,
we are considering various actions to reduce our operating expenses. Even if this proposal is approved, the audit committee may
reconsider its selection of Ernst & Young LLP as part of our expense reduction efforts.
We
expect representatives of Ernst & Young LLP to attend the annual meeting, to be available to respond to appropriate
questions from stockholders, and to have the opportunity to make a statement if so desired.
Fees
of Independent Registered Public Accounting Firm
The
following table summarizes the fees of Ernst & Young LLP, our independent registered public accounting firm, billed
to us for each of the last two fiscal years.
Fee
Category
|
|
Fiscal
2019
|
|
|
Fiscal
2018
|
|
Audit
Fees(1)
|
|
$
|
242,000
|
|
|
$
|
244,000
|
|
Audit-Related Fees(2)
|
|
|
117,000
|
|
|
|
68,000
|
|
Tax Fees(3)
|
|
|
—
|
|
|
|
—
|
|
Total
Fees
|
|
$
|
359,000
|
|
|
$
|
312,000
|
|
(1)
|
Audit
fees consist of fees for the audits of fiscal 2019 and 2018 and quarterly reviews of our consolidated financial statements
and other professional services provided in connection with statutory and regulatory filings or engagements.
|
|
|
(2)
|
Audit-related
fees consist of fees for assurance and related services that are reasonably related to the performance of the audit and the
review of our consolidated financial statements and which are not reported under "Audit Fees."
|
|
|
(3)
|
Tax
fees for fiscal 2019 and fiscal 2018 include fees for tax advice, tax return preparation assistance and review.
|
Pre-Approval
Policies and Procedures
Our
audit committee's policy is that all audit services and all non-audit services to be provided to us by our independent registered
public accounting firm must be approved in advance by the audit committee. The audit committee's approval procedures include the
review and approval of engagement letters from our independent registered public accounting firm that document the fees for all
audit services and non-audit services, primarily tax advice and tax return preparation and review.
All
audit services and all non-audit services in fiscal 2019 were pre-approved by our audit committee. Our audit committee has determined
that the provision of the non-audit services for which these fees were rendered is compatible with maintaining the independent
auditor's independence.
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE PROPOSAL TO RATIFY THE SELECTION OF ERNST & YOUNG LLP
AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31, 2020.
PROPOSAL
SIX
TO
ADJOURN THE ANNUAL MEETING, IF NECESSARY, TO SOLICIT
ADDITIONAL PROXIES IN THE EVENT THAT THERE ARE NOT SUFFICIENT VOTES AT THE
TIME OF THE ANNUAL MEETING TO APPROVE THE REVERSE STOCK SPLIT
If,
at the time scheduled for the Annual Meeting, there are not sufficient votes to approve the reverse stock split, such proposal
could not be approved unless the Annual Meeting was adjourned to a later date in order to permit further solicitation of proxies.
In order to allow those proxies that have been received by us at the time scheduled for the Annual Meeting to be voted for adjournment,
you are being asked to consider a proposal to approve the adjournment of the Annual Meeting, if necessary, to permit further solicitation
of proxies "FOR" the approval of the reverse stock split.
If
a quorum is present at the Annual Meeting and it appears there are sufficient votes "FOR" the approval of the reverse
stock split, the chairman of the Annual Meeting may determine that no action will be taken on the proposal to adjourn. The chairman
of the Annual Meeting may also determine that no action will be taken on the proposal to adjourn if the Board of Directors has
determined at the time of the Annual Meeting that no further solicitation of proxies would be undertaken.
Recommendation
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR APPROVAL OF THE
PROPOSAL TO ADJOURN THE ANNUAL MEETING, IF NECESSARY, TO SOLICIT ADDITIONAL
PROXIES IN THE EVENT THAT THERE ARE NOT SUFFICIENT VOTES AT THE TIME OF THE
ANNUAL MEETING TO APPROVE THE REVERSE STOCK SPLIT.
REPORT
OF AUDIT COMMITTEE
The
Audit Committee has reviewed the Company's audited consolidated financial statements for the fiscal year ended December 31,
2019 and discussed them with the Company's management and the Company's independent registered public accounting firm.
The
Audit Committee has also received from, and discussed with, the Company's independent registered public accounting firm various
communications that the Company's independent registered public accounting firm is required to provide to the Audit Committee,
including the matters required to be discussed by Auditing Standard No. 1301, Communications with Audit Committees,
as adopted by the Public Company Accounting Oversight Board.
The
Audit Committee has received the written disclosures and the letter from the Company's independent registered public accounting
firm required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant's
communications with the Audit Committee concerning independence, and has discussed with the Company's independent registered public
accounting firm their independence.
Based
on the review and discussions referred to above, the Audit Committee recommended to the Company's Board of Directors that the
audited consolidated financial statements be included in the Company's Annual Report on Form 10-K for the year ended December 31,
2019.
By
the Audit Committee of the Board of Directors of Onconova Therapeutics, Inc.
|
|
Jack E. Stover, Chairperson
|
|
|
James J. Marino
|
|
|
Viren Mehta
|
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
following table sets forth certain information regarding the beneficial ownership of our common stock as of the record date by
(a) each person known by us to be the beneficial owner of more than 5% of the outstanding shares of our common stock, (b) each
named executive officer identified on page 48 of this Proxy Statement under the heading, "2019 Summary Compensation Table,"
(c) each of our directors, and (d) all of our executive officers and directors as a group.
The
percentage of common stock outstanding is based on 167,416,070 shares of our common stock outstanding on the record date. For
purposes of the table below, and in accordance with the rules of the SEC, we deem shares of common stock subject to warrants and
options that are currently exercisable or exercisable within sixty days of the record date to be outstanding and to be beneficially
owned by the person holding the warrants and options for the purpose of computing the percentage ownership of that person, but
we do not treat them as outstanding for the purpose of computing the percentage ownership of any other person. Except as otherwise
noted, each of the persons or entities in this table has sole voting and investing power with respect to all of the shares of
common stock beneficially owned by him, her or it, subject to community property laws, where applicable. Except as otherwise noted
below, the street address of each beneficial owner is c/o Onconova Therapeutics, Inc., 375 Pheasant Run, Newtown, PA 18940.
Name
and Address of Beneficial Owner
|
|
Number
of
Shares
Beneficially
Owned
|
|
|
Percentage
of
Shares
Beneficially
Owned
|
|
5%
or greater stockholders:
|
|
|
|
|
|
|
|
|
Sabby
Volatility Warrant Master Fund, Ltd., Sabby Management, LLC and Hal Mintz(1)
|
|
|
8,741,243
|
|
|
|
6.30
|
%
|
Sabby
Healthcare Master Fund, Ltd.
|
|
|
|
|
|
|
|
|
c/o
Ogier Fiduciary Services (Cayman) Limited
|
|
|
|
|
|
|
|
|
89
Nexus Way, Camana Bay
|
|
|
|
|
|
|
|
|
Grand
Cayman KY1-9007
|
|
|
|
|
|
|
|
|
Cayman
Islands
|
|
|
|
|
|
|
|
|
Sabby
Volatility Warrant Master Fund, Ltd.
|
|
|
|
|
|
|
|
|
c/o
Ogier Fiduciary Services (Cayman) Limited
|
|
|
|
|
|
|
|
|
89
Nexus Way, Camana Bay
|
|
|
|
|
|
|
|
|
Grand
Cayman KY1-9007
|
|
|
|
|
|
|
|
|
Cayman
Islands
|
|
|
|
|
|
|
|
|
Sabby
Management, LLC
|
|
|
|
|
|
|
|
|
10
Mountainview Road, Suite 205
|
|
|
|
|
|
|
|
|
Upper
Saddle River, New Jersey 07458
|
|
|
|
|
|
|
|
|
Hal
Mintz
|
|
|
|
|
|
|
|
|
c/o
Sabby Management, LLC
|
|
|
|
|
|
|
|
|
10
Mountainview Road, Suite 205
|
|
|
|
|
|
|
|
|
Upper
Saddle River, New Jersey 07458
|
|
|
|
|
|
|
|
|
Directors,
Director Nominees and Named Executive Officers:
|
|
|
|
|
|
|
|
|
Jerome
E. Groopman, M.D.(2)
|
|
|
6,520
|
|
|
|
|
*
|
Michael
B. Hoffman (3)
|
|
|
387,555
|
|
|
|
|
*
|
Ramesh
Kumar, Ph.D.(4)
|
|
|
103,513
|
|
|
|
|
|
Manoj
Maniar, Ph.D.(5)
|
|
|
23,824
|
|
|
|
|
*
|
James
J. Marino (6)
|
|
|
331,621
|
|
|
|
|
*
|
Steven
M. Fruchtman, M.D. (7)
|
|
|
323,351
|
|
|
|
|
*
|
Viren
Mehta (8)
|
|
|
507,152
|
|
|
|
|
*
|
E.
Premkumar Reddy, Ph.D. (9)
|
|
|
1,076,216
|
|
|
|
|
*
|
Jack
E. Stover (10)
|
|
|
12,413
|
|
|
|
|
*
|
All
current executive officers, directors and director nominees as a group (11 persons) (11)
|
|
|
3,029,810
|
|
|
|
1.8
|
%
|
*
Represents
a beneficial ownership of less than one percent of our outstanding common stock.
(1)
Based solely on a Schedule 13G/A filed with the SEC on January 13, 2020. The Schedule 13G/A was filed by Sabby Healthcare
Master Fund, Ltd., Sabby Volatility Warrant Master Fund, Ltd., Sabby Management, LLC and Hal Mintz. According to
the Schedule 13G/A, as of December 31, 2019: (i) Sabby Healthcare Master Fund, Ltd. and Sabby Volatility Warrant
Master Fund, Ltd. beneficially own 206,730 and 8,741,243, representing approximately 0.15% and 6.30% of the Common Stock, respectively,
and (ii) Sabby Management, LLC and Hal Mintz each beneficially own 8,741,243 shares of Common Stock, representing approximately
6.30% of Common Stock. Sabby Management, LLC and Hal Mintz do not directly own any shares of Common Stock, but each indirectly
owns 8,741,243 shares of Common Stock. Sabby Management, LLC, a Delaware limited liability company, indirectly owns 8,741,243
shares of Common Stock because it serves as the investment manager of Sabby Healthcare Master Fund, Ltd. and Sabby Volatility
Warrant Master Fund, Ltd., Cayman Islands companies. Mr. Mintz indirectly owns 8,741,243 shares of Common Stock in his
capacity as manager of Sabby Management, LLC.
(2)
Includes 6,519 shares of common stock issuable upon the exercise of options that are currently
exercisable or exercisable within sixty days of the record date.
(3)
Includes (i) 380,056 shares of common stock beneficially owned by the Michael and Jane Hoffman 2018 Descendants Trust of which
Mr. Hoffman is donor, (ii) 564 shares of common stock held by the Michael and Jane Hoffman 2013 Descendants Trust (Non-GST Exempt
Trust) of which Mr. Hoffman is donor and (iii) 6,810 shares of common stock subject to outstanding options that are exercisable
within 60 days of the record date. Also includes 173,893 shares of common stock issuable upon the exercise of warrants. Mr. Hoffman
has no voting or dispositive power with regard to any of the shares held by the Michael and Jane Hoffman 2018 Descendants Trust
and the Michael and Jane Hoffman 2013 Descendants Trust (Non-GST Exempt Trust). A.J. Agarwal and Jane Hoffman, Mr. Hoffman's spouse,
as trustees, have voting and dispositive power with regard to the shares held by the Michael and Jane Hoffman 2018 Descendants
Trust and the Michael and Jane Hoffman 2013 Descendants Trust (Non-GST Exempt Trust).
(4)
Dr. Kumar resigned as our President, Chief Executive Officer and a director on January 15,
2019. His ownership is based on his ownership on his date of resignation. Includes (i) 2,501 shares of common stock held
by the Ramesh Kumar 2012 Trust and (ii) 96,697 shares of common stock subject to outstanding warrants and options that are
exercisable within 60 days of the record date. Dr. Kumar has voting and dispositive power with regard to the shares
held by the Ramesh Kumar 2012 Trust.
(5)
Includes 23,820 shares of common stock issuable upon the exercise of options that are currently
exercisable or exercisable within sixty days of the record date.
(6)
Includes 164,679 shares of common stock issuable upon the exercise of warrants and options
that are currently exercisable or exercisable within sixty days of the record date.
(7)
Includes 173,925 shares of common stock issuable upon the exercise of warrants and options
that are currently exercisable or exercisable within sixty days of the record date.
(8)
Includes (i) 54 shares of common stock held by Mehta Partners, LLC, (ii) 56
shares of common stock held by Viram Foundation and (iv) 256,197 shares of common stock issuable upon the exercise of warrants
and options that are currently exercisable or exercisable within sixty days of the record date. Dr. Mehta, as managing member,
has voting and dispositive power with regard to the shares held by Mehta Partners, LLC. Dr. Mehta, as trustee has voting
and dispositive power with regard to the shares held by Viram Foundation.
(9)
Includes 531,670 shares of common stock issuable upon the exercise of warrants and options
that are currently exercisable or exercisable within sixty days of the record date.
(10)
Includes 9,272 shares of common stock issuable upon the exercise of warrants and options
that are currently exercisable or exercisable within sixty days of the record date.
(11)
Includes 1,545,099 shares of common stock issuable upon the exercise of warrants and options
that are currently exercisable or exercisable within sixty days of the record date.
CERTAIN
RELATIONSHIPS AND RELATED PERSON TRANSACTIONS
Review
and Approval of Related Person Transactions
The
audit committee of our Board of Directors is charged with the responsibility of reviewing and approving all related person transactions
(as defined in SEC regulations), and periodically reassessing any related person transaction that we enter to ensure continued
appropriateness. This responsibility is set forth in our audit committee charter. A related party transaction will only be approved
if the audit committee determines that the transaction is in the best interests of the Company. If a director is involved in the
transaction, he or she will recuse himself or herself from all decisions regarding the transaction.
The
following is a description of transactions during fiscal 2019, to which we have been a party, in which the amount involved in
the transaction exceeds the lesser of $120,000 or 1% of total assets, and in which any of our current directors, executive officers
or to our knowledge, beneficial owners of more than 5% of our capital stock or an affiliate or immediate family member thereof,
had or will have a direct or indirect material interest, other than the employment relationships with our executive officers and
the related compensation solely resulting from those employment relationships.
On
May 3, 2010, as subsequently amended, we entered into a research agreement with the Mount Sinai School of Medicine ("Mount
Sinai"), with which E. Premkumar Reddy, Ph.D., a member of our Board of Directors, is associated. The research is undertaken
by Mount Sinai on our behalf. Mount Sinai, in connection with us, will prepare applications for patents generated from the research.
Results from all projects will belong exclusively to Mount Sinai, but we will have an exclusive option to license any inventions.
The initial term of the research agreement was one year with options to extend by mutual agreement. The term of the agreement
has been extended through July 4, 2020. Payments to Mount Sinai for the year ended December 31, 2019 were $325,000.
We
entered into a consulting agreement with E. Premkumar Reddy, Ph.D., a member of our Board of Directors, effective as of January
1, 2012 for consulting services rendered in addition to his membership on our Board of Directors. The consulting agreement provided
for a term of one year, unless renewed by mutual agreement of the parties. The current term has been extended through December
31, 2020, unless sooner terminated in accordance with the terms of the agreement. The board member provides consulting services
to the Company on the terms set forth in the agreement. Payments to this board member for the year ended December 31, 2019 were
$132,00.
EXECUTIVE
COMPENSATION
Overview
of Executive Compensation
The
compensation committee of our Board of Directors is responsible for overseeing the compensation of all of our executive officers.
In this capacity, our compensation committee annually reviews and approves the compensation of our chief executive officer and
other executive officers, including such goals and objectives relevant to the executive officers' compensation that the committee,
in its discretion, determines are appropriate, evaluates their performance in light of those goals and objectives, and sets their
compensation based on this evaluation.
2019
Summary Compensation Table
The
following table sets forth information for the fiscal years ended December 31, 2019 and 2018 concerning compensation of our
principal executive officer and the two most highly compensated executive officers during 2019. We refer to these four executive
officers as our "named executive officers."
Name
and Principal Position
|
|
Year
|
|
|
Salary
($)
|
|
|
Bonus
($)(1)
|
|
|
Option
Awards
($)(2)
|
|
|
All
Other
Compensation
($)(3)
|
|
|
Total
($)
|
|
Steven
M. Fruchtman, M.D. (4)
|
|
|
2019
|
|
|
$
|
509,215
|
|
|
$
|
191,452
|
|
|
$
|
50,000
|
|
|
$
|
21,846
|
|
|
$
|
772,513
|
|
President
and Chief Executive Officer
|
|
|
2018
|
|
|
|
460,840
|
|
|
|
322,304
|
|
|
|
164,361
|
|
|
|
22,580
|
|
|
|
691,046
|
|
Manoj
Maniar, Ph.D.
|
|
|
2019
|
|
|
$
|
416,795
|
|
|
$
|
133,580
|
|
|
$
|
10,750
|
|
|
$
|
14,933
|
|
|
$
|
576,058
|
|
Senior
Vice President, Product Development
|
|
|
2018
|
|
|
|
410,290
|
|
|
|
109,114
|
|
|
|
131,349
|
|
|
|
25,438
|
|
|
|
676,191
|
|
Richard
C. Woodman, M.D.
Chief
Medical Officer and Senior Vice President, Research and Development
|
|
|
2019
|
|
|
$
|
375,000
|
|
|
$
|
18,740
|
|
|
$
|
20,000
|
|
|
$
|
11,572
|
|
|
$
|
425,312
|
|
Ramesh
Kumar, Ph.D. (5)
Former
President and Chief Executive Officer
|
|
|
2019
|
|
|
$
|
32,353
|
|
|
|
--
|
|
|
|
--
|
|
|
$
|
987,498
|
|
|
$
|
1,019,851
|
|
|
|
|
2018
|
|
|
|
569,448
|
|
|
|
135,980
|
|
|
|
441,854
|
|
|
|
27,253
|
|
|
|
1,174,535
|
|
(1)
Represents discretionary annual bonus amounts paid. For Steven M. Fruchtman also includes a $200,000 signing bonus related to
his promotion to president in June 2018.
(2)
The entries in the option awards column reflect the grant date fair value of the awards, as calculated for financial statement
reporting purposes in accordance with Accounting Standards Codification (ASC) No. 718, Compensation—Stock Compensation.
The option values were calculated using the Black-Scholes option pricing model. These amounts do not represent the actual value
realized by the named executive officers. See Note 10 of the Notes to Consolidated Financial Statements for the fiscal year ended
December 31, 2019 for a discussion of the relevant assumptions used to determine the valuation of our stock options for accounting
purposes.
(3)
Includes amounts paid for insurance premiums on behalf of the named executive officer and matching funds paid pursuant to our
401(k) Plan. For Dr. Kumar also includes $744,128 of severance and $50,000 for consulting fees.
(4)
Dr. Fruchtman was appointed as our Chief Executive Officer and a director on January 15, 2019. Dr. Fruchtman has served as our
President since June 2018. From January 2015 to January 2019, Dr. Fruchtman served as our Chief Medical Officer and Senior Vice
President, Research and Development.
(5)
Dr. Kumar resigned as our President, Chief Executive Officer and a director on January 15, 2019.
Employment
Agreements
We
have entered into employment agreements with each of our named executive officers, and the compensation of our named executive
officers is determined, in large part, by the terms of those employment agreements. Following are descriptions of the material
terms of each named executive officer's employment agreement.
Steven
Fruchtman, M.D.
We
entered into an employment agreement with Dr. Fruchtman on June 19, 2018, which supersedes any prior employment agreements.
The employment agreement continues indefinitely, unless terminated in accordance with the terms of the agreement.
The
employment agreement provides for an initial base salary of $510,000, subject to adjustment upon annual review, and subject to
the compensation committee's sole discretion, an annual bonus, based on the performance of Dr. Fruchtman and the Company,
of up to 50% of such base salary. The bonus may be paid in the form of cash, stock options, shares of our common stock, or a combination
thereof, at our compensation committee's discretion.
Dr. Fruchtman
is entitled to participate in all of our employee benefit plans and programs that are made generally available from time to time
to our executive officers and is entitled to vacation benefits. Dr. Fruchtman's employment agreement contains non-solicitation,
non-competition, confidentiality and inventions assignment provisions that, among other things, prevent him from competing with
us during the term of his employment and for a specified time thereafter. The Company will reimburse Dr. Fruchtman for reasonable
expenses including certain commuting costs to the Company's offices.
If
Dr. Fruchtman's employment is terminated due to his death, disability, by us for "cause" or by Dr. Fruchtman
without "good reason" during the term of his employment agreement, we will pay to Dr. Fruchtman or his spouse or
estate the balance of his accrued and unpaid salary, unreimbursed expenses, and unused accrued vacation time through the termination
date.
If
Dr. Fruchtman's employment is terminated by us without "cause" or by Dr. Fruchtman for "good reason,"
other than during a change in control protection period, Dr. Fruchtman will be entitled to receive severance equal to the
sum of his current base salary and target bonus for the fiscal year during which his employment ceases. If the termination is
during a change in control protection period, Dr. Fruchtman will be entitled to receive severance equal to the sum of his
current base salary and target bonus for the fiscal year during which his employment ceases. A change in control protection period
is the twelve months following a change in control. The Company will also reimburse Dr. Fruchtman for a portion of his medical
insurance costs and all of Dr. Fruchtman's stock options that are unvested as of the date of such termination would fully
vest as of the date of termination. Any severance payments or benefits provided to Dr. Fruchtman are subject to execution by Dr.
Fruchtman of a release of claims.
Manoj
Maniar, Ph.D.
We
entered into an employment agreement with Dr. Maniar on July 1, 2015, which supersedes any prior employment agreements.
The employment agreement continues indefinitely, unless terminated in accordance with the terms of the agreement.
The
employment agreement provides for an initial base salary of $371,135, subject to adjustment upon annual review by our Board of
Directors, and subject to the compensation committee's sole discretion, an annual bonus, based on the performance of Dr. Maniar
and the Company, of up to 40% of such base salary. The bonus may be paid in the form of cash, stock options, shares of our common
stock, or a combination thereof, at our compensation committee's discretion.
Dr. Maniar
is entitled to participate in all of our employee benefit plans and programs that are made generally available from time to time
to our executive officers and is entitled to vacation benefits. Dr. Maniar's employment agreement contains non-solicitation,
non-competition, confidentiality and inventions assignment provisions that, among other things, prevent him from competing with
us during the term of his employment and for a specified time thereafter.
If
Dr. Maniar's employment is terminated due to his death, disability, by us for "cause" or by Dr. Maniar without
"good reason" during the term of his employment agreement, we will pay to Dr. Maniar or his spouse or estate the
balance of his accrued and unpaid salary, unreimbursed expenses, and unused accrued vacation time through the termination date.
If
Dr. Maniar's employment is terminated by us without "cause" or by Dr. Maniar for "good reason,"
other than during a change in control protection period, Dr. Maniar will be entitled to receive severance equal to nine-twelfths
of the sum of his current base salary and target bonus for the fiscal year during which his employment ceases. If the termination
is during a change in control protection period, Dr. Maniar will be entitled to receive severance equal to the sum of his
current base salary and target bonus for the fiscal year during which his employment ceases. A change in control protection period
is the twelve months following a change in control. The Company will also reimburse Dr. Maniar for a portion of his medical
insurance costs and all of Dr. Maniar's incentive stock options that are unvested as of the date of such termination would
fully vest as of the date of termination.
Richard
C. Woodman, M.D.
We
entered into an employment agreement with Dr. Woodman on November 5, 2018. Unless earlier terminated by either party, the
employment agreement has an initial two-year term. At the expiration of the initial term, the term automatically renews for successive
one-year periods, unless either party provides written notice of non-renewal.
The
employment agreement provides for an initial base salary of $375,000, which is subject to adjustment upon annual review, and subject
to the compensation committee's sole discretion, an annual bonus, based on the performance of Dr. Woodman and the Company,
of up to 40% of such base salary. The bonus may be paid in the form of cash, stock options, shares of our common stock, or a combination
thereof, at our compensation committee's discretion.
Dr. Woodman
is entitled to participate in all of our employee benefit plans and programs that are made generally available from time to time
to our executive officers and is entitled to vacation benefits. Dr. Woodman's employment agreement contains non-solicitation,
non-competition, confidentiality and inventions assignment provisions that, among other things, prevent him from competing with
us during the term of his employment and for a specified time thereafter.
If
Dr. Woodman's employment is terminated due to his death, disability, by us for "cause" or by Dr. Woodman without
"good reason" during the term of his employment agreement, we will pay to Dr. Woodman or his spouse or estate the
balance of his accrued and unpaid salary, unreimbursed expenses, and unused accrued vacation time through the termination date.
If
Dr. Woodman's employment is terminated by us without "cause" or by Dr. Woodman for "good reason,"
then Dr. Woodman will be entitled to continued payments of base salary for the six-month period following termination and
a pro-rated annual bonus for the fiscal year during which his employment terminates, based on achievement of the applicable performance
goals. If termination occurs on or after the first anniversary of the date of grant of the stock options to purchase 20,000 shares
of our common stock granted to Dr. Woodman in connection with the execution of his employment agreement, any portion of the stock
options that are unvested as of the date of such termination will fully vest as of the date of termination. If we do not renew
the term of Dr. Woodman’s employment agreement and he is willing to execute a new employment agreement on substantially
similar terms, he may terminate his employment for "good reason." Any severance payments or benefits provided to Dr.
Woodman are subject to execution by Dr. Woodman of a release of claims.
Ramesh
Kumar, Ph.D.
We
entered into an employment agreement with Dr. Kumar on July 1, 2015, which supersedes any prior employment agreements.
The employment agreement continues indefinitely, unless terminated in accordance with the terms of the agreement.
The
employment agreement provided for an initial base salary of $543,375, subject to adjustment upon annual review by our Board of
Directors, and an annual bonus of up to 55% of such base salary, payable upon our achievement of revenue or profit objectives,
specific business plan goals or other performance milestones mutually agreed to by Dr. Kumar and our Board of Directors,
provided that Dr. Kumar remain employed by us throughout the performance year. The bonus may be paid in the form of cash,
stock options, shares of our common stock, or a combination thereof, at our compensation committee's discretion. Dr. Kumar
may also be entitled to additional compensation in recognition of extraordinary contributions, at the sole discretion of our compensation
committee. On February 12, 2016, we entered into a letter agreement with Dr. Kumar pursuant to which Dr. Kumar
agreed to a voluntary reduction in his base salary from $543,375 to $407,531, effective as of January 1, 2016. For purposes
of severance and other benefits calculated based upon base salary, however, Dr. Kumar's base salary was deemed to remain
at $543,375. On December 9, 2016, our Board of Directors approved the termination of the voluntary salary reduction effective
January 1, 2017. Pursuant to this approval, on March 27, 2017, we entered into a letter agreement with Dr. Kumar
under which the voluntary salary reduction was terminated effective January 1, 2017.
Dr. Kumar
is entitled to participate in all of our employee benefit plans and programs that are made generally available from time to time
to our executive officers and is entitled to vacation benefits. Pursuant to his employment agreement, Dr. Kumar is entitled
to term life insurance coverage in a face amount that is not less than his base salary, a reasonable transportation allowance
if we relocate our research facility more than 40 miles from its present location, and up to $10,000 annually for educational
programs related to the performance of his duties. If Dr. Kumar dies during his employment, we will be entitled to a $1 million
death benefit under a "key man" life insurance policy. Dr. Kumar's employment agreement contains non-solicitation,
non-competition, confidentiality and inventions assignment provisions that, among other things, prevent him from competing with
us during the term of his employment and for a specified time thereafter.
If
Dr. Kumar's employment is terminated due to his death, disability, by us for "cause" or by Dr. Kumar without
"good reason" during the term of his employment agreement, we will pay to Dr. Kumar or his spouse or estate the
balance of his accrued and unpaid salary, unreimbursed expenses, and unused accrued vacation time through the termination date.
If
Dr. Kumar's employment is terminated by us without "cause" or by Dr. Kumar for "good reason," other
than during a change in control protection period, Dr. Kumar will be entitled to receive severance equal to his current base
salary and target bonus for the fiscal year during which his employment ceases. If the termination is during a change in control
protection period, Dr. Kumar will be entitled to receive severance equal to two times the sum of his current base salary
and target bonus for the fiscal year during which his employment ceases, less any severance previously paid. A change in control
protection period commences three months prior to and ends twelve months following a change in control. The Company will also
reimburse Dr. Kumar for a portion of his medical insurance costs and all of Dr. Kumar's incentive stock options that
are unvested as of the date of such termination would fully vest as of the date of termination.
Resignation
of Ramesh Kumar, Ph.D.
On
January 15, 2019, Ramesh Kumar, Ph.D., resigned as the Chief Executive Officer of the Company and as a member of the Board
of Directors. Dr. Kumar's last day of employment with the Company was February 17, 2019 (the "Termination Date"),
after which Dr. Kumar is serving as a consultant to the Company pursuant to a Consulting Agreement between the Company and
Dr. Kumar.
In
connection with Dr. Kumar's resignation, the Company entered into a Separation and Release Agreement (the "Separation
Agreement") with Dr. Kumar, dated as of January 15, 2019. Under the Separation Agreement,
Dr. Kumar
is entitled to the severance payments and benefits as set forth in the Separation Agreement, which supersede severance payments
and benefits under Dr. Kumar's employment agreement with the Company, effective as of July 1, 2015.
The
severance payments and benefits under the Separation Agreement include, without limitation, the following:
•
Severance Payments. Under severance payments provisions, which remain the same as those in the employment agreement, the Company
paid Dr. Kumar a severance amount equal to $933,774, which is the sum of (x) $602,435, 12 months of base salary
at the rate in effect immediately prior to January 15, 2019 and (y) $331,339, 55% of the base salary amount referred
to in the preceding sentence. The severance amount was paid in installments in accordance with the Company's normal payroll practices
over the 12-month period following the Termination Date.
•
Stock Option Acceleration and Extension. The stock option acceleration provision remains the same as that under the employment
agreement, and under this provision, all stock options (the "Outstanding Options") held by Dr. Kumar vested on
the Termination Date. Dr. Kumar is also entitled to a stock option extension provision, under which the Company will amend
the post-termination exercise periods set forth in the agreements reflecting the Outstanding Options such that Dr. Kumar
will have until the earlier of (i) January 15, 2022 and (ii) the last day of the applicable ten-year term of the
applicable Outstanding Option to exercise the Outstanding Options.
•
Change in Control Protection Period. The definition of "Change in Control Protection Period" as defined in the employment
agreement, will be amended to read as follows: "Change in Control Protection Period' shall mean the period that commences
six (6) months prior to and ends twelve (12) months following a Change in Control." The commencement date of the
six-month period prior to a Change in Control was January 15, 2019, the date on which Dr. Kumar ceased to be the Chief
Executive Officer of the Company.
•
Other Benefits. Dr. Kumar also received accrued benefits and certain health benefits; and the enhanced benefits include,
among other things, a COBRA (Consolidated Omnibus Budget Reconciliation Act) reimbursement extension, under which if Dr. Kumar
remains on COBRA coverage for the entire 12-month period following the Termination Date, the Company will continue to pay Dr. Kumar
COBRA reimbursements for an additional six-month period following the expiration of the 12-month period, subject to certain terms
and conditions.
Under
the Separation Agreement, Dr. Kumar has agreed that the non-compete covenant in the employment agreement will apply for 24 months
instead of 12 months.
Stock
Option and Other Compensation Plans
We
maintain the 2018 Plan for the purpose of attracting key employees, directors and consultants, inducing them to remain with us
and encouraging them to increase their efforts to make our business more successful. The plan provides for awards of stock options,
stock appreciation rights, restricted stock, restricted stock units, deferred shares and other equity-based awards.
The
following table contains certain information regarding equity awards held by the named executive officers as of December 31,
2019:
Outstanding
Equity Awards at 2019 Fiscal Year-End
Name
|
|
Number
of
Securities
Underlying
Unexercised
Options (#)
Exercisable
|
|
|
Number
of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
|
|
|
Option
Exercise
Price
($)
|
|
|
Option
Expiration
Date
|
Steven
Fruchtman
|
|
|
800
|
(1)
|
|
|
—
|
|
|
|
655.50
|
|
|
1/12/2025
|
|
|
|
233
|
(1)
|
|
|
—
|
|
|
|
372.00
|
|
|
4/20/2025
|
|
|
|
266
|
(1)
|
|
|
—
|
|
|
|
222.00
|
|
|
9/25/2025
|
|
|
|
827
|
|
|
|
—
|
|
|
|
97.50
|
|
|
1/26/2026
|
|
|
|
1,666
|
(2)
|
|
|
—
|
|
|
|
48.60
|
|
|
9/1/2026
|
|
|
|
506
|
(2)
|
|
|
—
|
|
|
|
39.75
|
|
|
12/15/2026
|
|
|
|
1,711
|
(2)
|
|
|
49
|
|
|
|
40.50
|
|
|
1/17/2027
|
|
|
|
1,858
|
(3)
|
|
|
1,050
|
|
|
|
22.50
|
|
|
1/3/2028
|
|
|
|
12,585
|
(4)
|
|
|
14,081
|
|
|
|
6.90
|
|
|
7/26/2028
|
|
|
|
—
|
(4)
|
|
|
200,000
|
|
|
|
0.31
|
|
|
12/20/2029
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Manoj
Maniar
|
|
|
375
|
|
|
|
—
|
|
|
|
864.00
|
|
|
3/17/2020
|
|
|
|
175
|
|
|
|
—
|
|
|
|
919.50
|
|
|
12/10/2020
|
|
|
|
25
|
|
|
|
—
|
|
|
|
919.50
|
|
|
12/5/2021
|
|
|
|
200
|
|
|
|
—
|
|
|
|
1,992.00
|
|
|
12/18/2022
|
|
|
|
33
|
|
|
|
—
|
|
|
|
2,250.00
|
|
|
7/25/2023
|
|
|
|
266
|
|
|
|
—
|
|
|
|
2,022.00
|
|
|
12/20/2023
|
|
|
|
400
|
|
|
|
—
|
|
|
|
597.00
|
|
|
12/18/2024
|
|
|
|
266
|
(1)
|
|
|
22
|
|
|
|
348.00
|
|
|
4/16/2025
|
|
|
|
266
|
(1)
|
|
|
50
|
|
|
|
222.00
|
|
|
9/25/2025
|
|
|
|
689
|
|
|
|
—
|
|
|
|
97.50
|
|
|
1/26/2026
|
|
|
|
1,133
|
(2)
|
|
|
283
|
|
|
|
48.60
|
|
|
9/1/2026
|
|
|
|
372
|
(2)
|
|
|
124
|
|
|
|
39.75
|
|
|
12/15/2026
|
|
|
|
1,258
|
(2)
|
|
|
468
|
|
|
|
40.50
|
|
|
1/17/2027
|
|
|
|
1,218
|
(3)
|
|
|
1,325
|
|
|
|
22.50
|
|
|
1/3/2028
|
|
|
|
9,439
|
(4)
|
|
|
20,000
|
|
|
|
6.90
|
|
|
7/26/2028
|
|
|
|
5,000
|
(5)
|
|
|
5,000
|
|
|
|
3.41
|
|
|
12/12/2028
|
|
|
|
—
|
(4)
|
|
|
43,000
|
|
|
|
0.31
|
|
|
12/20/2029
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Richard
C. Woodman, M.D.
|
|
|
5,416
|
(4)
|
|
|
14,584
|
|
|
|
5.85
|
|
|
11/5/2028
|
|
|
|
—
|
(4)
|
|
|
80,000
|
|
|
|
0.31
|
|
|
12/20/2029
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ramesh
Kumar, Ph.D.
|
|
|
625
|
|
|
|
—
|
|
|
|
864.00
|
|
|
3/17/2020
|
|
|
|
350
|
|
|
|
—
|
|
|
|
919.50
|
|
|
12/10/2020
|
|
|
|
68
|
|
|
|
—
|
|
|
|
919.50
|
|
|
12/5/2021
|
|
|
|
1,250
|
|
|
|
—
|
|
|
|
1,992.00
|
|
|
12/18/2022
|
|
|
|
699
|
|
|
|
—
|
|
|
|
2,250.00
|
|
|
7/25/2023
|
|
|
|
900
|
|
|
|
—
|
|
|
|
2,022.00
|
|
|
12/20/2023
|
|
|
|
1,166
|
|
|
|
—
|
|
|
|
597.00
|
|
|
12/18/2024
|
|
|
|
583
|
(1)
|
|
|
49
|
|
|
|
348.00
|
|
|
4/16/2025
|
|
|
|
583
|
(1)
|
|
|
110
|
|
|
|
222.00
|
|
|
9/25/2025
|
|
|
|
976
|
|
|
|
—
|
|
|
|
97.50
|
|
|
1/26/2026
|
|
|
|
2,933
|
(2)
|
|
|
733
|
|
|
|
48.60
|
|
|
9/1/2026
|
|
|
|
844
|
(2)
|
|
|
281
|
|
|
|
39.75
|
|
|
12/15/2026
|
|
|
|
2,935
|
(2)
|
|
|
1,060
|
|
|
|
40.50
|
|
|
1/17/2027
|
|
|
|
4,325
|
(3)
|
|
|
3,004
|
|
|
|
22.50
|
|
|
1/3/2028
|
|
|
|
4,881
|
|
|
|
—
|
|
|
|
16.35
|
|
|
2/23/2028
|
|
|
|
71,040
|
(4)
|
|
|
71,040
|
|
|
|
6.90
|
|
|
7/26/2028
|
(1) 25%
of the total shares underlying this option vested on July 25, 2014. The remaining shares vest 1/36th monthly over
36 months thereafter, subject to continued service to us through each vesting date.
(2) Shares
vest in equal monthly installments over four years, 1/48th per month. The first shares vest one month after the date
of grant.
(3) Shares
vest in equal monthly installments over three years, 1/36th per month. The first shares vest one month after the date
of grant.
(4) Shares
vest over three years, one-third on the first anniversary of the date of grant and thereafter in 24 equal monthly installments
over the following two years.
(5) Shares
vest 100% on the first anniversary of the date of grant.
Potential
Payments Upon Termination of Employment or Change in Control
As
discussed under the caption "—Employment Agreements" above, we have agreements with our named executive officers
pursuant to which they will receive severance payments upon certain termination events. The information below describes certain
compensation that would be available under our existing plans and arrangements if (i) the named executive officer was terminated
as of December 31, 2019 or (ii) if a Change in Control, as defined in the applicable employment agreement or plan, occurred
on December 31, 2019 and the named executive officer's employment had been subsequently terminated on the same date.
Acceleration
of Equity Awards in connection with a Change in Control
Pursuant
to the terms of each named executive officer's option agreements reflecting options granted under the 2013 Plan, in the event
of a "Change in Control" that occurs during any time prior to such named executive officer's Termination of Service
(as such terms are defined in our 2013 Plan) with us, all stock options granted pursuant to such option agreement shall fully
vest and become exercisable. Pursuant to the terms of each named executive officer's option agreements reflecting options granted
under the 2018 Plan, in the event of a "Change in Control" in which the Company is not the surviving corporation (or
survives only as a subsidiary of another corporation) and the options are assumed by, or replaced with awards with comparable
terms by, the surviving corporation (or parent or subsidiary of the surviving corporation) and the named executive officer's employment
or service is terminated without "Cause" or the named executive officer terminates his employment for "Good Reason"
(as such terms are defined in the applicable option grant agreement), all such stock options granted pursuant to such option agreement
shall fully vest and become exercisable upon termination of employment or service. In the event that the surviving corporation
(or a parent or subsidiary of the surviving corporation) does not assume or replace the options with grants that have comparable
terms, and named executive officer is employed by, or providing services to, the Company and its subsidiaries on the date of the
Change in Control, all stock options granted pursuant to such option agreement shall fully vest and become exercisable.
Termination
Other than for Cause, Death or Disability; Resignation for Good Reason
The
payments and benefits to which each named executive officer would be entitled in the event the named executive officer's employment
is terminated for any reason other than for cause, death, or disability, or if the named executive officer resigns for good reason,
whether or not following a "change in control" is described under the caption "—Employment Agreements"
above.
Equity
Compensation Plan Information
The
following table summarizes the total number of outstanding options and shares available for other future issuances of options
under all of our equity compensation plans as of December 31, 2019. All of the outstanding awards listed below were granted
under our 2013 Equity Compensation Plan and 2018 Plan. See "Stock Option and Other Compensation Plans" above for a summary
of the 2018 Plan.
|
|
|
|
|
|
|
|
|
|
Plan
Category
|
|
Number
of Shares to
be Issued Upon
Exercise of
Outstanding
Options,
Warrants and Rights
|
|
|
Weighted-Average
Exercise Price of
Outstanding
Options,
Warrants and Rights
|
|
|
Number
of Shares
Remaining Available
for Future Issuance
Under the Equity
Compensation Plan
(Excluding Shares
in
First Column)
|
|
Equity
compensation plans approved by stockholders
|
|
|
994,453
|
|
|
$
|
27.37
|
|
|
|
59,731
|
|
Equity
compensation plans not approved by stockholders
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
OTHER
MATTERS
Other
Business
As
of the date of this Proxy Statement, our Board of Directors knows of no business to be presented at the Annual Meeting other than
as set forth herein. If other matters properly come before the Meeting, the persons named as proxies will vote on such matters
in their discretion.
Stockholder
Proposals for 2021 Annual Meeting of Stockholders
In
order for a stockholder proposal, including a director nomination, to be considered for inclusion in our proxy statement for the
2021 Annual Meeting of Stockholders, the written proposal must be received at our principal executive offices on or before . The proposal should be addressed to Secretary, Onconova Therapeutics, Inc., 375 Pheasant Run, Newtown PA 18940.
The proposal must comply with SEC regulations regarding the inclusion of stockholder proposals in company-sponsored proxy materials.
In
accordance with Section 2.2 of our bylaws, a stockholder who wishes to present a proposal for consideration at the 2021 Annual
Meeting of Stockholders must deliver a notice of the matter the stockholder wishes to present to our principal executive offices
in Newtown, PA, at the address identified in the preceding paragraph, not less than 90 nor more than 120 days prior to the
first anniversary of the date of the Annual Meeting. Accordingly, any notice given by or on behalf of a stockholder pursuant to
these provisions of our bylaws (and not pursuant to Rule 14a-8 of the SEC) must be received no earlier than January 27, 2021
and no later than February 26, 2021 (except that in the event that the date of the 2021 Annual Meeting of Stockholders is advanced
by more than 30 days, or delayed by more than 60 days, from the first anniversary of the meeting of stockholders, a
stockholder's notice must be so received no earlier than the 120th day prior to the 2021 Annual Meeting of Stockholders and
not later than the close of business on the later of (A) the 90th day prior to the 2021 Annual Meeting of Stockholders
or (B) the tenth day following the day on which public disclosure of the date of the 2021 Annual Meeting of Stockholders
was made.
The
notice should include a brief description of the business desired to be brought before the 2021 Annual Meeting of Stockholders,
the text of the proposal or business (including the text of any resolutions proposed for consideration and in the event that such
business includes a proposal to amend these bylaws, the language of the proposed amendment), the reasons for conducting such business
at the meeting and any material interest in such business of such stockholder and the beneficial owner, if any, on whose behalf
the proposal is made, and any other information concerning such matter that must be disclosed in proxy solicitations pursuant
to Regulation 14A under the Exchange Act, as if the matter had been proposed, or intended to be proposed, by the Board of
Directors. As to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination or proposal
is made, the notice should include the information required by Section 2.2(A)(3)(c) of our bylaws.
Annual
Report
Our
2019 Annual Report on Form 10-K is concurrently being mailed to stockholders. The Annual Report contains our consolidated
financial statements and the report thereon of Ernst & Young LLP, independent registered public accounting firm.
Stockholders may obtain an additional copy of our Annual Report on Form 10-K filed with the Securities and Exchange Commission
for the year ended December 31, 2019, without charge, by writing to Onconova Therapeutics, Inc., 375 Pheasant Run, Newtown,
PA 18940.
Householding
of Annual Meeting Materials
Certain
banks, brokers, broker-dealers and other similar organizations acting as nominee record holders may be participating in the practice
of "householding" proxy statements and annual reports. This means that only one copy of this Proxy Statement and our
Annual Report on Form 10-K may have been sent to multiple stockholders in your household. If you would prefer to receive
separate copies of a proxy statement or Annual Report on Form 10-K for other stockholders in your household, either now or
in the future, please contact your bank, broker, broker-dealer or other similar organization serving as your nominee. Upon written
or oral request to our Secretary at Onconova Therapeutics, Inc., 375 Pheasant Run, Newtown PA 18940, or via telephone to
our Corporate Secretary at 267-759-3680, we will promptly provide separate copies of our Annual Report on Form 10-K and/or
this Proxy Statement. Stockholders sharing an address who are receiving multiple copies of this Proxy Statement and/or Annual
Report on Form 10-K and who wish to receive a single copy of these materials in the future will need to contact their bank,
broker, broker-dealer or other similar organization serving as their nominee to request that only a single copy of each document
be mailed to all stockholders at the shared address in the future.
|
BY ORDER OF THE BOARD OF
DIRECTORS
|
|
|
|
|
|
Steven M. Fruchtman, M.D.
|
|
President and Chief Executive Officer
|
Dated:
April , 2020
IT
IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE, STOCKHOLDERS ARE URGED TO COMPLETE, SIGN, DATE AND RETURN THE ACCOMPANYING
FORM OF PROXY IN THE ENCLOSED ENVELOPE.
Appendix A
CERTIFICATE
OF AMENDMENT
TO
TENTH AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
ONCONOVA THERAPEUTICS, INC.
ONCONOVA
THERAPEUTICS, INC., a corporation organized and existing under the General Corporation Law of the State of Delaware (the
“Corporation”), does hereby certify as follows:
FIRST:
The name of the Corporation is Onconova Therapeutics, Inc. The Tenth Amended and Restated Certificate of Incorporation
was originally filed with the Secretary of State of the State of Delaware (the “Secretary of State”) on July 30,
2013, and has been amended by a Certificate of Amendment to the Tenth Amended and Restated Certificate of Incorporation filed
with the Secretary of State on May 31, 2016, a Certificate of Designation of Preference, Rights and Limitations of Series A
Convertible Preferred Stock filed with the Secretary of State on February 8, 2018, a Certificate of Amendment to the Tenth
Amended and Restated Certificate of Incorporation, as amended, filed with the Secretary of State on March 21, 2018, a Certificate
of Amendment to the Tenth Amended and Restated Certificate of Incorporation, as amended, filed with the Secretary of State on
June 7, 2018, a Certificate of Designation of Preference, Rights and Limitations of Series B Convertible Preferred Stock
filed with the Secretary of State on April 27, 2018 and a Certificate of Amendment to the Tenth Amended and Restated
Certificate of Incorporation, as amended, filed with the Secretary of State on September 25, 2018 (the Tenth Amended and
Restated Certificate of Incorporation, as so amended, the “Certificate of Incorporation”).
SECOND:
Article IV, Section A, of the Certificate of Incorporation is hereby amended and restated in its entirety as follows:
“A.
Classes of Stock. The Corporation is authorized to issue two classes of capital stock to be designated, respectively, “Common
Stock” and “Preferred Stock”, each of which shall have a par value of $0.01 per share. The total
number of shares which the Corporation is authorized to issue is 255,000,000 shares, of which (i) 250,000,000 shares shall
be designated as Common Stock and (ii) 5,000,000 shares shall be designated as Preferred Stock. Such stock may be issued
from time to time by the Corporation for such consideration as may be fixed by the board of directors of the Corporation (the
“Board of Directors”).
Reverse
Stock Split. Upon the filing (the “Effective Time”) of this Certificate of Amendment pursuant to the Section 242
of the General Corporation Law of the State of Delaware, each ( )
shares of the Corporation’s common stock, par value of $0.01 per share, issued and outstanding immediately prior to the
Effective Time (the “Old Common Stock”) shall automatically without further action on the part of the Corporation
or any holder of Old Common Stock, be reclassified, combined, converted and changed into one (1) fully paid and nonassessable
share of common stock, par value of $0.01 per share (the “New Common Stock”), subject to the treatment of fractional
share interests as described below (the “reverse stock split”). The conversion of the Old Common Stock into
New Common Stock will be deemed to occur at the Effective Time. From and after the Effective Time, certificates representing the
Old Common Stock shall represent the number of shares of New Common Stock into which such Old Common Stock shall have been converted
pursuant to this Certificate of Amendment. Holders who otherwise would be entitled to receive fractional share interests of New
Common Stock upon the effectiveness of the reverse stock split shall be entitled to receive a whole share of New Common Stock
in lieu of any fractional share created as a result of such reverse stock split.”
THIRD:
The stockholders of the Corporation have duly approved the foregoing amendment in accordance with the provisions of Section 242
of the General Corporation Law of the State of Delaware.
IN
WITNESS WHEREOF, the Corporation has caused this Certificate of Amendment to be duly adopted and executed in its corporate name
and on its behalf by its duly authorized officer as of the day of
, 2020.
|
ONCONOVA THERAPEUTICS, INC.
|
|
|
|
By:
|
|
|
|
Name:
|
Steven M. Fruchtman, M.D.
|
|
|
Title:
|
President and Chief Executive Officer
|
Appendix B
ONCONOVA THERAPEUTICS, INC.
2018 OMNIBUS INCENTIVE COMPENSATION PLAN
(As
amended and restated, effective May 27, 2020)
The
purpose of the Onconova Therapeutics, Inc. 2018 Omnibus Incentive Compensation Plan (the “Plan”) is to provide
employees of Onconova Therapeutics, Inc. (the “Company”) and its subsidiaries, certain consultants and advisors
who perform services for the Company or its subsidiaries, and non-employee members of the Board of Directors of the Company
with the opportunity to receive grants of incentive stock options, nonqualified stock options, stock appreciation rights, stock
awards, stock units and other stock-based awards. The Plan was originally effective as of the Original Effective Date and was
subsequently amended and restated effective as of June 17, 2019. The Plan is hereby further amended and restated effective as
of the Restatement Effective Date.
The
Plan is a successor to the Onconova Therapeutics, Inc. 2013 Equity Incentive Plan (the “Prior Plan”). No additional
grants have been or will be made under the Prior Plan on and after the Original Effective Date. Outstanding grants under the Prior
Plan shall continue in effect according to their terms, and the shares with respect to outstanding grants under the Prior Plan
shall be issued or transferred under the Prior Plan.
The
Company believes that the Plan will encourage the participants to contribute materially to the growth of the Company, thereby
benefitting the Company’s stockholders, and will align the economic interests of the participants with those of the stockholders.
Definitions
The
following terms shall have the meanings set forth below for purposes of the Plan:
“Award”
shall mean an Option, SAR, Stock Award, Stock Unit or Other Stock-Based Award granted under the Plan.
“Award
Agreement” shall mean the written agreement that sets forth the terms and conditions of an Award, including all amendments
thereto.
“Board”
shall mean the Board of Directors of the Company.
“Cause”
shall have the meaning given to that term in any written employment agreement, offer letter, consulting agreement or severance
agreement between the Employer and the Participant, or if no such agreement exists or if such term is not defined therein, and
unless otherwise defined in the Award Agreement, “Cause” shall mean a finding by the Committee of conduct involving
one or more of the following: (i) the substantial and continuing failure of the Participant, after notice thereof, to render services
to the Company or its subsidiaries in accordance with the terms or requirements of his or her employment, engagement as a Non-Employee
Director or a Key Advisor; (ii) disloyalty, gross negligence, willful misconduct, dishonesty or breach of fiduciary duty to the
Company or a Subsidiary; (iii) the commission of an act of embezzlement or fraud; (iv) deliberate disregard of the rules or policies
of the Company or a Subsidiary which results in direct or indirect loss, damage or injury to the Company or a Subsidiary; (v)
the unauthorized disclosure of any trade secret or confidential information of the Company or a Subsidiary; or (vi) the Participant’s
breach of any written non-competition, non-solicitation, invention assignment or confidentiality agreement between the Participant
and the Company or any of its subsidiaries.
“CEO”
shall mean the Chief Executive Officer of the Company.
A
“Change in Control” shall be deemed to have occurred if:
the acquisition, directly or indirectly, by a “person” (within the meaning of Section 13(d)(3) of the Exchange Act)
(a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act)
of more than 50% of the combined voting power of the voting securities of the Company entitled to vote generally in the election
of directors (the “Voting Securities”); provided, however, that the following acquisitions of Voting Securities
shall not constitute a Change in Control: (A) any acquisition by or from the Company or any of its subsidiaries, or by any
employee benefit plan (or related trust) sponsored or maintained by the Company or any of its subsidiaries, (B) any acquisition
by any underwriter in any firm commitment underwriting of securities to be issued by the Company, or (C) any acquisition by any
corporation (or other entity) if, immediately following such acquisition, 50% or more of the then outstanding shares of common
stock (or other equity unit) of such corporation (or other entity) and the combined voting power of the then outstanding voting
securities of such corporation (or other entity), are beneficially owned, directly or indirectly, by all or substantially all
of the individuals or entities who, immediately prior to such acquisition, were the beneficial owners of the then outstanding
shares of Common Stock and the Voting Securities in substantially the same proportions, respectively, as their ownership immediately
prior to the acquisition of the shares of Common Stock and Voting Securities; or
the
consummation of the sale or other disposition of all or substantially all of the assets of the Company, other than to a wholly-owned
subsidiary of the Company or to a holding company of which the Company is a direct or indirect wholly owned subsidiary prior to
such transaction; or
the consummation of a reorganization, merger or consolidation of the Company, other than a reorganization, merger or consolidation,
which would result in the Voting Securities outstanding immediately prior to the transaction continuing to represent (whether
by remaining outstanding or by being converted to voting securities of the surviving entity) 65% or more of the Voting Securities
or the voting power of the voting securities of such surviving entity outstanding immediately after such transaction; or
the
consummation of a plan of complete liquidation of the Company; or
the
following individuals cease for any reason to constitute a majority of the Board: individuals who, as of the Restatement
Effective Date, constitute the Board and any new director (other than a director whose initial assumption of office is in connection
with an actual or threatened election contest, including, but not limited to, a consent solicitation relating to the election
of directors of the Company) whose appointment or election by the Board or nomination for election by the Company’s stockholders
was approved and recommended by a vote of at least two-thirds of the directors then still in office who either were directors
on the Restatement Effective Date or whose appointment, election or nomination for election was previously so approved or recommended.
Notwithstanding
the foregoing, if an Award constitutes deferred compensation subject to section 409A of the Code and the Award provides for payment
upon a Change in Control, then, for purposes of such payment provisions, no Change in Control shall be deemed to have occurred
upon an event described in items (i) – (v) above unless the event would also constitute a change in ownership or
effective control of, or a change in the ownership of a substantial portion of the assets of, the Company under section 409A of
the Code.
“Code”
shall mean the Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder.
“Committee”
shall mean the Compensation Committee of the Board or another committee appointed by the Board to administer the Plan. The Committee
shall also consist of directors who are “non-employee directors” as defined under Rule 16b-3 promulgated under the
Exchange Act and “independent directors,” as determined in accordance with the independence standards established
by the stock exchange on which the Common Stock is at the time primarily traded.
“Common
Stock” shall mean common stock of the Company.
“Company”
shall mean Onconova Therapeutics, Inc. and shall include its successors.
“Disability”
or “Disabled” shall mean, unless otherwise set forth in the Award Agreement, a Participant’s becoming
disabled within the meaning of the Employer’s long-term disability plan applicable to the Participant, or, if there is no
such plan, a physical or mental condition that prevents the Participant from performing the essential functions of the Participant’s
position (with or without reasonable accommodation) for a period of six consecutive months.
“Dividend
Equivalent” shall mean an amount determined by multiplying the number of shares of Common Stock subject to a Stock Unit
or Other Stock-Based Award by the per-share cash dividend paid by the Company on its outstanding Common Stock, or the per-share
Fair Market Value of any dividend paid on its outstanding Common Stock in consideration other than cash. If interest is credited
on accumulated divided equivalents, the term “Dividend Equivalent” shall include the accrued interest.
“Employee”
shall mean an employee of the Employer (including an officer or director who is also an employee), but excluding any person who
is classified by the Employer as a “contractor” or “consultant,” no matter how characterized by the Internal
Revenue Service, other governmental agency or a court. Any change of characterization of an individual by the Internal Revenue
Service or any court or government agency shall have no effect upon the classification of an individual as an Employee for purposes
of this Plan, unless the Committee determines otherwise.
“Employed
by, or providing service to, the Employer” shall mean employment or service as an Employee, Key Advisor or member of
the Board (so that, for purposes of exercising Options and SARs and satisfying conditions with respect to Stock Awards, Stock
Units and Other Stock-Based Awards, a Participant shall not be considered to have terminated employment or service until the Participant
ceases to be an Employee, Key Advisor and member of the Board), unless the Committee determines otherwise. If a Participant’s
relationship is with a subsidiary of the Company and that entity ceases to be a subsidiary of the Company, the Participant will
be deemed to cease employment or service when the entity ceases to be a subsidiary of the Company, unless the Participant transfers
employment or service to an Employer.
“Employer”
shall mean the Company and its subsidiaries.
“Exchange
Act” shall mean the Securities Exchange Act of 1934, as amended.
“Exercise
Price” shall mean the per share price at which shares of Common Stock may be purchased under an Option, as designated
by the Committee.
“Fair
Market Value” shall mean:
If
the Common Stock is publicly traded, the Fair Market Value per share shall be determined as follows: (A) if the principal trading
market for the Common Stock is a national securities exchange, the closing sales price during regular trading hours on the relevant
date or, if there were no trades on that date, the latest preceding date upon which a sale was reported, or (B) if the Common
Stock is not principally traded on any such exchange, the last reported sale price of a share of Common Stock during regular trading
hours on the relevant date, as reported by the OTC Bulletin Board.
If
the Common Stock is not publicly traded or, if publicly traded, is not subject to reported transactions as set forth above, the
Fair Market Value per share shall be determined by the Committee through any reasonable valuation method authorized under the
Code.
“Incentive
Stock Option” shall mean an Option that is intended to meet the requirements of an incentive stock option under section
422 of the Code.
“Key
Advisor” shall mean a consultant or advisor of the Employer.
“Non-Employee
Director” shall mean a member of the Board who is not an Employee.
“Nonqualified
Stock Option” shall mean an Option that is not intended to be taxed as an incentive stock option under section 422 of
the Code.
“Option”
shall mean an option to purchase shares of Common Stock, as described in Section 6.
“Original
Effective Date” shall mean June 27, 2018.
“Other
Stock-Based Award” shall mean any Award based on, measured by or payable in Common Stock (other than an Option, Stock
Unit, Stock Award, or SAR), as described in Section 10.
“Participant”
shall mean an Employee, Key Advisor or Non-Employee Director designated by the Committee to participate in the Plan.
“Performance
Objectives” shall mean the performance objectives established in the sole discretion of the Committee for Participants
who are eligible to receive Awards under the Plan. Performance Objectives may be described in terms of Company-wide objectives
or objectives that are related to the performance of the individual Participant or the subsidiary, division, department or function
within the Company or one of its subsidiaries in which the Participant is employed. Performance Objectives may be measured on
an absolute or relative basis. Relative performance may be measured by a group of peer companies or by a financial market index.
Any Performance Objectives may include: specified levels of or increases in the Company’s, a division’s or a subsidiary’s
return on capital, equity or assets; earnings measures/ratios (on a gross, net, pre-tax or post-tax basis), including basic earnings
per share, diluted earnings per share, total earnings, operating earnings, earnings growth, earnings before interest and taxes
and earnings before interest, taxes, depreciation and amortization; net economic profit (which is operating earnings minus a charge
to capital); net income; operating income; sales; sales growth; gross margin; direct margin; costs; stock price (including but
not limited to growth measures and total stockholder return); operating profit; per period or cumulative cash flow (including
but not limited to operating cash flow and free cash flow) or cash flow return on investment (which equals net cash flow divided
by total capital); inventory turns; financial return ratios; market share; balance sheet measurements such as receivable turnover;
improvement in or attainment of expense levels; improvement in or attainment of working capital levels; debt reduction; strategic
innovation; customer or employee satisfaction; the consummation of one or more acquisitions of a certain size as measured by one
or more of the financial criteria listed above; individual objectives; regulatory body approval for commercialization of a product;
implementation or completion of critical projects (including, but not limited to, milestones such as clinical trial enrollment
targets, commencement of phases of clinical trials and completion of phases of clinical trials); and any combination of the foregoing.
“Plan”
shall mean this Onconova Therapeutics, Inc. Amended and Restated 2018 Omnibus Incentive Compensation Plan, as in effect from time
to time.
“Prior
Plan” shall mean Onconova Therapeutics, Inc. 2013 Equity Incentive Plan.
“Restatement
Effective Date” shall mean May 27, 2020, provided stockholder approval of the Plan as herein amended and restated
is received on or around such date
“Restriction
Period” shall have the meaning given that term in Section 7(a).
“SAR”
shall mean a stock appreciation right, as described in Section 9.
“Stock
Award” shall mean an award of Common Stock, as described in Section 7.
“Stock
Unit” shall mean an award of a phantom unit representing a share of Common Stock, as described in Section 8.
“Substitute
Awards” shall have the meaning given that term in Section 4(c).
Administration
Committee.
The Plan shall be administered and interpreted by the Committee. The Committee may delegate authority to one or more subcommittees,
as it deems appropriate. Subject to compliance with applicable law and the applicable stock exchange rules, the Board, in its
discretion, may perform any action of the Committee hereunder. To the extent that the Board, the Committee, a subcommittee or
the CEO, as described below, administers the Plan, references in the Plan to the “Committee” shall be deemed
to refer to the Board, the Committee or such subcommittee or the CEO.
Delegation
to CEO. Subject to compliance with applicable law and applicable stock exchange requirements, the Committee may delegate all
or part of its authority and power to the CEO, as it deems appropriate, with respect to Awards to Employees or Key Advisors who
are not executive officers or directors under section 16 of the Exchange Act.
Committee
Authority. The Committee shall have the sole authority to (i) determine the individuals to whom Awards shall be made under
the Plan, (ii) determine the type, size, terms and conditions of the Awards to be made to each such individual, (iii) determine
the time when the Awards will be made and the duration of any applicable exercise or restriction period, including the criteria
for exercisability and the acceleration of exercisability, (v) amend the terms of any previously issued Award, subject to the
provisions of Section 17 below, and (vi) deal with any other matters arising under the Plan.
Committee
Determinations. The Committee shall have full power and express discretionary authority to administer and interpret the Plan,
to make factual determinations and to adopt or amend such rules, regulations, agreements and instruments for implementing the
Plan and for the conduct of its business as it deems necessary or advisable, in its sole discretion. The Committee’s interpretations
of the Plan and all determinations made by the Committee pursuant to the powers vested in it hereunder shall be conclusive and
binding on all persons having any interest in the Plan or in any awards granted hereunder. All powers of the Committee shall be
executed in its sole discretion, in the best interest of the Company, not as a fiduciary, and in keeping with the objectives of
the Plan and need not be uniform as to similarly situated individuals.
Indemnification.
No member of the Committee or the Board, and no employee of the Company shall be liable for any act or failure to act with respect
to the Plan, except in circumstances involving his or her bad faith or willful misconduct, or for any act or failure to act hereunder
by any other member of the Committee or employee or by any agent to whom duties in connection with the administration of this
Plan have been delegated. The Company shall indemnify members of the Committee and the Board and any agent of the Committee or
the Board who is an employee of the Company or a subsidiary against any and all liabilities or expenses to which they may be subjected
by reason of any act or failure to act with respect to their duties on behalf of the Plan, except in circumstances involving such
person’s bad faith or willful misconduct.
Awards
General.
Awards under the Plan may consist of Options as described in Section 6, Stock Awards as described in Section 7, Stock Units as
described in Section 8, SARs as described in Section 9 and Other Stock-Based Awards as described in Section 10. All Awards shall
be subject to the terms and conditions set forth herein and to such other terms and conditions consistent with this Plan as the
Committee deems appropriate and as are specified in writing by the Committee to the individual in the Award Agreement. All Awards
shall be made conditional upon the Participant’s acknowledgement, in writing or by acceptance of the Award, that all decisions
and determinations of the Committee shall be final and binding on the Participant, his or her beneficiaries and any other person
having or claiming an interest under such Award. Awards under a particular Section of the Plan need not be uniform as among the
Participants. Notwithstanding anything to the contrary herein, any dividends or Dividend Equivalents granted in connection with
Awards under the Plan shall vest and be paid only if and to the extent the underlying Awards vest and are paid.
Minimum
Vesting. Awards granted under the Plan shall include vesting schedules that provide that no portion of an Award will vest
earlier than one year from the date of grant. However, subject to adjustments made in accordance with Section 4(e) below, up to
five percent (5%) of the shares of Common Stock subject to the share reserve set forth in Section 4(a) as of the Restatement Effective
Date may be granted without regard to the minimum vesting requirement.
Shares
Subject to the Plan
Shares
Authorized. Subject to adjustment as described below in Sections 4(b) and 4(e), the maximum aggregate number of shares of
Common Stock that may be issued or transferred under the Plan with respect to Awards made on and after the Restatement
Effective Date shall be 25,016,791 shares, which is equal to the sum of the following: (i) 25,000,000 shares of Common Stock,
plus (ii) 16,791 shares, which is the number of shares of Common Stock reserved for issuance under the Plan that remain
available for grant under the Plan as of April 7, 2020. In addition, and subject to adjustment as described below in
Sections 4(b) and 4(e), shares of Common Stock subject to outstanding Awards granted under the Plan prior to April 7, 2020
and shares of Common Stock subject to outstanding grants under the Prior Plan that terminate, expire or are cancelled,
forfeited, exchanged or surrendered without having been exercised, vested or paid in shares after April 7, 2020 shall be
added to the share reserve under the Plan. The number of shares set forth in clause (ii) above will be reduced by the number
of shares subject to Awards made under the Plan after April 7, 2020 and before the Restatement Effective Date. The
aggregate number of shares of Common Stock that may be issued or transferred under the Plan pursuant to Incentive Stock
Options granted on and after the Restatement Effective Date shall not exceed 25,016,791 shares of Common Stock.
Source
of Shares; Share Counting. Shares issued or transferred under the Plan may be authorized but unissued shares of Common Stock
or reacquired shares of Common Stock, including shares purchased by the Company on the open market for purposes of the Plan. If
and to the extent Options or SARs granted under the Plan or options granted under the Prior Plan terminate, expire or are canceled,
forfeited, exchanged or surrendered without having been exercised, or if any Stock Awards, Stock Units, or Other Stock-Based Awards
are forfeited, terminated or otherwise not paid in full, the shares subject to such Awards shall again be available for purposes
of the Plan. Shares surrendered in payment of the Exercise Price of an Option (including an option granted under the Prior Plan
that is exercised on or after the Original Effective Date) shall not be available for re-issuance under the Plan. Shares of Common
Stock withheld or surrendered for payment of taxes with respect to Awards (including options granted under the Prior Plan) shall
not be available for re-issuance under the Plan. If SARs are granted, the full number of shares subject to the SARs shall be considered
issued under the Plan, without regard to the number of shares issued upon exercise of the SARs. To the extent any Awards are paid
in cash, and not in shares of Common Stock, any shares previously subject to such Awards shall again be available for issuance
or transfer under the Plan. For the avoidance of doubt, if shares are repurchased by the Company on the open market with the proceeds
of the Exercise Price of Options (including options granted under the Prior Plan), such shares may not again be made available
for issuance under the Plan
Substitute
Awards. Shares issued or transferred under Awards made pursuant to an assumption, substitution or exchange for previously
granted awards of a company acquired by the Company in a transaction (“Substitute Awards”) shall not reduce
the number of shares of Common Stock available under the Plan and available shares under a stockholder approved plan of an acquired
company (as appropriately adjusted to reflect the transaction) may be used for Awards under the Plan and shall not reduce the
Plan’s share reserve (subject to applicable stock exchange listing and Code requirements).
Individual
Limits. Subject to adjustment as described below in Section 4(e), the following Award limitations shall apply:
For
Options, SARs, Stock Awards, Stock Units and Other Stock-Based Awards (whether payable in Common Stock, cash or a combination
of the two), the maximum number of shares of Common Stock for which such Awards may be made to any Employee or Key Advisor in
any calendar year shall not exceed 2,500,000 shares of Common Stock in the aggregate.
The
maximum aggregate grant date value of shares of Common Stock subject to Awards granted to any Non-Employee Director during any
calendar year for services rendered as a Non-Employee Director, taken together with any cash fees earned by such Non-Employee
Director for services rendered as a Non-Employee Director during the calendar year, shall not exceed $300,000 in total value.
For purposes of this limit, the value of such Awards shall be calculated based on the grant date fair value of such Awards for
financial reporting purposes.
Notwithstanding
the foregoing, the individual limit described in subsection (i) shall be increased to two times the otherwise applicable limit
with respect to Awards that are made on or around the date of hire to a newly hired Employee.
Adjustments.
If there is any change in the number or kind of shares of Common Stock outstanding by reason of (i) a stock dividend, spinoff,
recapitalization, stock split, reverse stock split or combination or exchange of shares, (ii) a merger, reorganization or consolidation,
(iii) a reclassification or change in par value, or (iv) any other extraordinary or unusual event affecting the outstanding Common
Stock as a class without the Company’s receipt of consideration, or if the value of outstanding shares of Common Stock is
substantially reduced as a result of a spinoff or the Company’s payment of an extraordinary dividend or distribution, the
maximum number and kind of shares of Common Stock available for issuance under the Plan, the maximum number and kind of shares
of Common Stock for which any individual may receive Awards in any year, the kind and number of shares covered by outstanding
Awards, the kind and number of shares issued and to be issued under the Plan, and the price per share or the applicable market
value of such Awards shall be equitably adjusted by the Committee to reflect any increase or decrease in the number of, or change
in the kind or value of, the issued shares of Common Stock to preclude, to the extent practicable, the enlargement or dilution
of rights and benefits under the Plan and such outstanding Awards; provided, however, that any fractional shares resulting from
such adjustment shall be eliminated. In addition, in the event of a Change in Control, the provisions of Section 12 of the Plan
shall apply. Any adjustments to outstanding Awards shall be consistent with section 409A or 424 of the Code, to the extent applicable.
Subject to Section 17(b) below, the adjustments of Awards under this Section 4(e) shall include adjustment of shares, Exercise
Price of Stock Options, base amount of SARs, Performance Objectives or other terms and conditions, as the Committee deems appropriate.
The Committee shall have the sole discretion and authority to determine what appropriate adjustments shall be made and any adjustments
determined by the Committee shall be final, binding and conclusive.
Eligibility
for Participation
Eligible
Persons. All Employees and Non-Employee Directors shall be eligible to participate in the Plan. Key Advisors shall be eligible
to participate in the Plan if the Key Advisors render bona fide services to the Employer, the services are not in connection with
the offer and sale of securities in a capital-raising transaction and the Key Advisors do not directly or indirectly promote or
maintain a market for the Company’s securities.
Selection
of Participants. The Committee shall select the Employees, Non-Employee Directors and Key Advisors to receive Awards and shall
determine the number of shares of Common Stock subject to a particular Award in such manner as the Committee determines.
Options
The
Committee may grant Options to an Employee, Non-Employee Director or Key Advisor upon such terms as the Committee deems appropriate.
The following provisions are applicable to Options:
Number
of Shares. The Committee shall determine the number of shares of Common Stock that will be subject to each Award of Options
to Employees, Non-Employee Directors and Key Advisors.
Type
of Option and Exercise Price.
The
Committee may grant Incentive Stock Options or Nonqualified Stock Options or any combination of the two, all in accordance with
the terms and conditions set forth herein. Incentive Stock Options may be granted only to employees of the Company or its parent
or subsidiary corporations, as defined in section 424 of the Code. Nonqualified Stock Options may be granted to Employees, Non-Employee
Directors and Key Advisors.
The
Exercise Price of Common Stock subject to an Option shall be determined by the Committee and shall be equal to or greater than
the Fair Market Value of a share of Common Stock on the date the Option is granted. However, an Incentive Stock Option may not
be granted to an Employee who, at the time of grant, owns stock possessing more than 10% of the total combined voting power of
all classes of stock of the Company, or any parent or subsidiary corporation of the Company, as defined in section 424 of the
Code, unless the Exercise Price per share is not less than 110% of the Fair Market Value of a share of Common Stock on the date
of grant.
Option
Term. The Committee shall determine the term of each Option. The term of any Option shall not exceed ten years from the date
of grant. However, an Incentive Stock Option that is granted to an Employee who, at the time of grant, owns stock possessing more
than 10% of the total combined voting power of all classes of stock of the Company, or any parent or subsidiary corporation of
the Company, as defined in section 424 of the Code, may not have a term that exceeds five years from the date of grant. Notwithstanding
the foregoing, in the event that on the last business day of the term of an Option (other than an Incentive Stock Option), the
exercise of the Option is prohibited by applicable law, including a prohibition on purchases or sales of Common Stock under the
Company’s insider trading policy, the term of the Option shall be extended for a period of 30 days following the end of
the legal prohibition, unless the Committee determines otherwise.
Exercisability
of Options. Subject to Section 3(b), Options shall become exercisable in accordance with such terms and conditions, consistent
with the Plan, as may be determined by the Committee and specified in the Award Agreement. Subject to the limitations set forth
in Section 12, the Committee may accelerate the exercisability of any or all outstanding Options at any time for
any reason.
Awards
to Non-Exempt Employees. Notwithstanding the foregoing, Options granted to persons who are non-exempt employees under
the Fair Labor Standards Act of 1938, as amended, may not be exercisable for at least six months after the date of grant (except
that such Options may become exercisable, as determined by the Committee, upon the Participant’s death, Disability or retirement,
or upon a Change in Control or other circumstances permitted by applicable regulations).
Termination
of Employment or Service. Except as provided in the Award Agreement, an Option may only be exercised while the Participant
is employed by, or providing services to, the Employer. The Committee shall determine in the Award Agreement under what circumstances
and during what time periods a Participant may exercise an Option after termination of employment or service.
Exercise
of Options. A Participant may exercise an Option that has become exercisable, in whole or in part, by delivering a notice
of exercise to the Company. The Participant shall pay the Exercise Price for an Option as specified by the Committee (i) in cash
or by check, (ii) unless the Committee determines otherwise, by delivering shares of Common Stock owned by the Participant and
having a Fair Market Value on the date of exercise at least equal to the Exercise Price or by attestation (on a form prescribed
by the Committee) to ownership of shares of Common Stock having a Fair Market Value on the date of exercise at least equal to
the Exercise Price, (iii) by payment through a broker in accordance with procedures permitted by Regulation T of the Federal Reserve
Board, (iv) if permitted by the Committee, by withholding shares of Common Stock subject to the exercisable Option, which have
a Fair Market Value on the date of exercise equal to the Exercise Price, or (v) by such other method as the Committee may approve.
Shares of Common Stock used to exercise an Option shall have been held by the Participant for the requisite period of time necessary
to avoid adverse accounting consequences to the Company with respect to the Option. Payment for the shares to be issued or transferred
pursuant to the Option, and any required withholding taxes, must be received by the Company by the time specified by the Committee
depending on the type of payment being made, but in all cases prior to the issuance or transfer of such shares.
Limits
on Incentive Stock Options. Each Incentive Stock Option shall provide that, if the aggregate Fair Market Value of the Common
Stock on the date of the grant with respect to which Incentive Stock Options are exercisable for the first time by a Participant
during any calendar year, under the Plan or any other stock option plan of the Company or a parent or subsidiary, exceeds $100,000,
then the Option, as to the excess, shall be treated as a Nonqualified Stock Option.
Stock
Awards
The
Committee may issue or transfer shares of Common Stock to an Employee, Non-Employee Director or Key Advisor under a Stock
Award, upon such terms as the Committee deems appropriate. The following provisions are applicable to Stock Awards:
General
Requirements. Shares of Common Stock issued pursuant to Stock Awards may be issued for consideration or for no consideration,
and subject to restrictions or no restrictions, as determined by the Committee. Subject to Section 3(b), the Committee may, but
shall not be required to, establish conditions under which restrictions on Stock Awards shall lapse over a period of time or according
to such other criteria as the Committee deems appropriate, including, without limitation, restrictions based upon the achievement
of specific Performance Objectives. The period of time during which the Stock Awards will remain subject to restrictions will
be designated in the Award Agreement as the “Restriction Period.”
Number
of Shares. The Committee shall determine the number of shares of Common Stock to be issued or transferred pursuant to a Stock
Award and the restrictions applicable to such shares.
Requirement
of Employment or Service. If the Participant ceases to be employed by, or provide service to, the Employer during a period
designated in the Award Agreement as the Restriction Period, or if other specified conditions are not met, the Stock Award shall
terminate as to all shares covered by the Award as to which the restrictions have not lapsed, and those shares of Common Stock
must be immediately returned to the Company. Subject to the limitations set forth in Section 12, the Committee may, however, provide
for complete or partial exceptions to this requirement as it deems appropriate.
Restrictions
on Transfer and Legend on Stock Certificate. During the Restriction Period, a Participant may not sell, assign, transfer,
pledge or otherwise dispose of the shares of a Stock Award except under Section 15 below. Unless otherwise determined by the Committee,
the Company will retain possession of certificates for shares of Stock Awards until all restrictions on such shares have lapsed.
Each certificate for a Stock Award, unless held by the Company, shall contain a legend giving appropriate notice of the restrictions
in the Award. The Participant shall be entitled to have the legend removed from the stock certificate covering the shares subject
to restrictions when all restrictions on such shares have lapsed. The Committee may determine that the Company will not issue
certificates for Stock Awards until all restrictions on such shares have lapsed.
Right
to Vote and to Receive Dividends. Unless the Committee determines otherwise, during the Restriction Period, the Participant
shall have the right to vote shares of Stock Awards and to receive any dividends or other distributions paid on such shares, subject
to any restrictions deemed appropriate by the Committee, including, without limitation, the achievement of specific Performance
Objectives; provided, however, that dividends shall vest and be paid only if and to the extent that the underlying Stock Award
vests and is paid.
Lapse
of Restrictions. All restrictions imposed on Stock Awards shall lapse upon the expiration of the applicable Restriction Period
and the satisfaction of all conditions, if any, imposed by the Committee. The Committee may determine, as to any or all Stock
Awards, that the restrictions shall lapse without regard to any Restriction Period.
Stock
Units
The
Committee may grant Stock Units, each of which shall represent one hypothetical share of Common Stock, to an Employee, Non-Employee
Director or Key Advisor upon such terms and conditions as the Committee deems appropriate. The following provisions are applicable
to Stock Units:
Crediting
of Units. Each Stock Unit shall represent the right of the Participant to receive a share of Common Stock or an amount of
cash based on the value of a share of Common Stock, if and when specified conditions are met. All Stock Units shall be credited
to bookkeeping accounts established on the Company’s records for purposes of the Plan.
Terms
of Stock Units. Subject to Section 3(b), the Committee may grant Stock Units that vest and are payable if specified Performance
Objectives or other conditions are met, or under other circumstances. Stock Units may be paid at the end of a specified performance
period or other period, or payment may be deferred to a date authorized by the Committee. Subject to the limitations set forth
in Section 12, the Committee may accelerate vesting or payment, as to any or all Stock Units at any time for any reason, provided
such acceleration complies with section 409A of the Code. The Committee shall determine the number of Stock Units to be granted
and the requirements applicable to such Stock Units.
Requirement
of Employment or Service. If the Participant ceases to be employed by, or provide service to, the Employer prior to the vesting
of Stock Units, or if other conditions established by the Committee are not met, the Participant’s Stock Units shall be
forfeited. The Committee may, however, provide for complete or partial exceptions to this requirement as it deems appropriate.
Payment
With Respect to Stock Units. Payments with respect to Stock Units shall be made in cash, Common Stock or any combination of
the foregoing, as the Committee shall determine.
Stock
Appreciation Rights
The
Committee may grant SARs to an Employee, Non-Employee Director or Key Advisor separately or in tandem with any Option. The
following provisions are applicable to SARs:
General
Requirements. The Committee may grant SARs to an Employee, Non-Employee Director or Key Advisor separately or in tandem
with any Option (for all or a portion of the applicable Option). Tandem SARs may be granted either at the time the Option is granted
or at any time thereafter while the Option remains outstanding; provided, however, that, in the case of an Incentive Stock Option,
SARs may be granted only at the time of the grant of the Incentive Stock Option. The Committee shall establish the base amount
of the SAR at the time the SAR is granted. The base amount of each SAR shall be equal to or greater than the Fair Market Value
of a share of Common Stock as of the date of grant of the SAR. The term of any SAR shall not exceed ten years from the date of
grant. Notwithstanding the foregoing, in the event that on the last business day of the term of a SAR, the exercise of the SAR
is prohibited by applicable law, including a prohibition on purchases or sales of Common Stock under the Company’s insider
trading policy, the term shall be extended for a period of 30 days following the end of the legal prohibition, unless the Committee
determines otherwise.
Tandem
SARs. In the case of tandem SARs, the number of SARs granted to a Participant that shall be exercisable during a specified
period shall not exceed the number of shares of Common Stock that the Participant may purchase upon the exercise of the related
Option during such period. Upon the exercise of an Option, the SARs relating to the Common Stock covered by such Option shall
terminate. Upon the exercise of SARs, the related Option shall terminate to the extent of an equal number of shares of Common
Stock.
Exercisability.
Subject to Section 3(b), an SAR shall be exercisable during the period specified by the Committee in the Award Agreement and shall
be subject to such vesting and other restrictions as may be specified in the Award Agreement. Subject to the limitations set forth
in Section 12, the Committee may accelerate the exercisability of any or all outstanding SARs at any time for any reason. SARs
may only be exercised while the Participant is employed by, or providing service to, the Employer or during the applicable period
after termination of employment or service as specified by the Committee. A tandem SAR shall be exercisable only during the period
when the Option to which it is related is also exercisable.
Grants
to Non-Exempt Employees. Notwithstanding the foregoing, SARs granted to persons who are non-exempt employees under
the Fair Labor Standards Act of 1938, as amended, may not be exercisable for at least six months after the date of grant (except
that such SARs may become exercisable, as determined by the Committee, upon the Participant’s death, Disability or retirement,
or upon a Change in Control or other circumstances permitted by applicable regulations).
Value
of SARs. When a Participant exercises SARs, the Participant shall receive in settlement of such SARs an amount equal to the
value of the stock appreciation for the number of SARs exercised. The stock appreciation for an SAR is the amount by which the
Fair Market Value of the underlying Common Stock on the date of exercise of the SAR exceeds the base amount of the SAR as described
in subsection (a).
Form
of Payment. The appreciation in an SAR shall be paid in shares of Common Stock, cash or any combination of the foregoing,
as the Committee shall determine. For purposes of calculating the number of shares of Common Stock to be received, shares of Common
Stock shall be valued at their Fair Market Value on the date of exercise of the SAR.
Other
Stock-Based Awards
The
Committee may grant Other Stock-Based Awards, which are awards (other than those described in Sections 6, 7, 8 and 9 of the Plan)
that are based on or measured by Common Stock, to any Employee, Non-Employee Director or Key Advisor, on such terms and conditions
as the Committee shall determine. Subject to Section 3(b), Other Stock-Based Awards may be awarded subject to the achievement
of Performance Objectives or other criteria or other conditions and may be payable in cash, Common Stock or any combination of
the foregoing, as the Committee shall determine.
Dividend
Equivalents
The
Committee may grant Dividend Equivalents in connection with Stock Units or Other Stock-Based Awards. Subject to Section 3(b),
Dividend Equivalents may be payable in cash or shares of Common Stock, and upon such terms and conditions as the Committee shall
determine; provided that Dividend Equivalents shall vest and be paid only if and to the extent the underlying Stock Units or Other
Stock-Based Awards vest and are paid. For the avoidance of doubt, no dividends or Dividend Equivalents will be granted in connection
with Stock Options or SARs.
Consequences
of a Change in Control
(a)
Assumption of Outstanding Awards. Upon a Change in Control where the Company is not the surviving corporation (or survives
only as a subsidiary of another corporation), all outstanding Awards that are not exercised or paid at the time of the Change
in Control shall be assumed by, or replaced with grants that have comparable terms by, the surviving corporation (or a parent
or subsidiary of the surviving corporation). In the event that the surviving corporation (or a parent or subsidiary of the surviving
corporation) does not assume or replace Awards with grants that have comparable terms, outstanding Stock Options and SARs shall
automatically accelerate and become fully exercisable and the restrictions and conditions on outstanding Stock Awards, Stock Units,
Other Stock-Based Awards and Dividend Equivalents shall immediately lapse, provided that if the vesting of any such Awards is
based, in whole or in part, on performance, such Awards shall vest based on the greater of (i) actual performance as of the Change
in Control or (ii) target performance, pro-rated based on the period elapsed between the beginning of the applicable performance
period and the date of the Change in Control. After a Change in Control, references to the “Company” as they relate
to employment matters shall include the successor employer in the transaction, subject to applicable law.
Vesting
Upon Certain Terminations of Employment. At the Committee’s discretion, if Awards are assumed by, or replaced with grants
that have comparable terms by, the surviving corporation (or a parent or subsidiary of the surviving corporation) and if a Participant
incurs an involuntary termination of employment or service on or after a Change in Control, the Participant’s outstanding
Awards may become vested, in whole or in part, as of the date of such termination; provided that if the vesting of any such Awards
is based, in whole or in part, on performance, such Awards shall vest only based on the greater of (i) actual performance as of
the date of Change in Control or (ii) target performance, pro-rated based on the period elapsed between the beginning of the applicable
performance period and the date of the termination.
Other
Alternatives. In the event of a Change in Control, if any outstanding Awards are not assumed by, or replaced with grants that
have comparable terms by, the surviving corporation (or a parent or subsidiary of the surviving corporation), the Committee may
take any of the following actions with respect to any or all outstanding Awards, without the consent of any Participant: (i) the
Committee may determine that Participants shall receive a payment in settlement of outstanding Stock Units, Other Stock-Based
Awards or Dividend Equivalents, in such amount and form as may be determined by the Committee; (ii) the Committee may require
that Participants surrender their outstanding Stock Options and SARs in exchange for a payment by the Company, in cash or Common
Stock as determined by the Committee, in an amount equal to the amount, if any, by which the then Fair Market Value of the shares
of Common Stock subject to the Participant’s unexercised Stock Options and SARs exceeds the Stock Option Exercise Price
or SAR base amount, and (iii) after giving Participants an opportunity to exercise all of their outstanding Stock Options and
SARs, the Committee may terminate any or all unexercised Stock Options and SARs at such time as the Committee deems appropriate.
Such surrender, termination or payment shall take place as of the date of the Change in Control or such other date as the Committee
may specify. Without limiting the foregoing, if the per share Fair Market Value of the Common Stock does not exceed the per share
Stock Option Exercise Price or SAR base amount, as applicable, the Company shall not be required to make any payment to the Participant
upon surrender of the Stock Option or SAR.
Deferrals
The
Committee may permit or require a Participant to defer receipt of the payment of cash or the delivery of shares that would otherwise
be due to such Participant in connection with any Award. If any such deferral election is permitted or required, the Committee
shall establish rules and procedures for such deferrals and may provide for interest or other earnings to be paid on such deferrals.
The rules and procedures for any such deferrals shall be consistent with applicable requirements of section 409A of the Code.
Withholding
of Taxes
Required
Withholding. All Awards under the Plan shall be subject to applicable United States federal (including FICA), state and local,
foreign country or other tax withholding requirements. The Employer may require that the Participant or other person receiving
Awards or exercising Awards pay to the Employer an amount sufficient to satisfy such tax withholding requirements with respect
to such Awards, or the Employer may deduct from other wages and compensation paid by the Employer the amount of any withholding
taxes due with respect to such Awards.
Share
Withholding. The Committee may permit or require the Employer’s tax withholding obligation with respect to Awards paid
in Common Stock to be satisfied by having shares withheld up to an amount that does not exceed the Participant’s applicable
withholding tax rate for United States federal (including FICA), state and local, foreign country or other tax liabilities. The
Committee may, in its discretion, and subject to such rules as the Committee may adopt, allow Participants to elect to have such
share withholding applied to all or a portion of the tax withholding obligation arising in connection with any particular Award.
Unless the Committee determines otherwise, share withholding for taxes shall not exceed the Participant’s minimum applicable
tax withholding amount.
Transferability
of Awards
Nontransferability
of Awards. Except as described in subsection (b) below, only the Participant may exercise rights under an Award during the
Participant’s lifetime. A Participant may not transfer those rights except (i) by will or by the laws of descent and distribution
or (ii) with respect to Awards other than Incentive Stock Options, pursuant to a domestic relations order. When a Participant
dies, the personal representative or other person entitled to succeed to the rights of the Participant may exercise such rights.
Any such successor must furnish proof satisfactory to the Company of his or her right to receive the Award under the Participant’s
will or under the applicable laws of descent and distribution.
Transfer
of Nonqualified Stock Options. Notwithstanding the foregoing, the Committee may provide, in an Award Agreement, that a Participant
may transfer Nonqualified Stock Options to family members, or one or more trusts or other entities for the benefit of or owned
by family members, consistent with the applicable securities laws, according to such terms as the Committee may determine; provided
that the Participant receives no consideration for the transfer of an Option and the transferred Option shall continue to be subject
to the same terms and conditions as were applicable to the Option immediately before the transfer.
Requirements
for Issuance or Transfer of Shares
No
Common Stock shall be issued or transferred in connection with any Award hereunder unless and until all legal requirements applicable
to the issuance or transfer of such Common Stock have been complied with to the satisfaction of the Committee. The Committee shall
have the right to condition any Award on the Participant’s undertaking in writing to comply with such restrictions on his
or her subsequent disposition of the shares of Common Stock as the Committee shall deem necessary or advisable, and certificates
representing such shares may be legended to reflect any such restrictions. Certificates representing shares of Common Stock issued
or transferred under the Plan may be subject to such stop-transfer orders and other restrictions as the Committee deems appropriate
to comply with applicable laws, regulations and interpretations, including any requirement that a legend be placed thereon.
Amendment
and Termination of the Plan
Amendment.
The Board may amend or terminate the Plan at any time; provided, however, that the Board shall not amend the Plan without stockholder
approval if such approval is required in order to comply with the Code or other applicable law, or to comply with applicable stock
exchange requirements.
No
Repricing of Options or SARs. Except in connection with a corporate transaction involving the Company (including, without
limitation, any stock dividend, distribution (whether in the form of cash, Common Stock, other securities or property), stock
split, extraordinary cash dividend, recapitalization, change in control, reorganization, merger, consolidation, split-up, spin-off,
combination, repurchase or exchange of shares of Common Stock or other securities, or similar transactions), the Company may not,
without obtaining stockholder approval, (i) amend the terms of outstanding Stock Options or SARs to reduce the Exercise Price
of such outstanding Stock Options or base price of such SARs, (ii) cancel outstanding Stock Options or SARs in exchange for Stock
Options or SARs with an Exercise Price or base price, as applicable, that is less than the Exercise Price or base price of the
original Stock Options or SARs or (iii) cancel outstanding Stock Options or SARs with an Exercise Price or base price, as applicable,
above the current stock price in exchange for cash or other securities.
Termination
of Plan. The Plan shall terminate on the day immediately preceding the tenth anniversary of its Restatement Effective Date,
unless the Plan is terminated earlier by the Board or is extended by the Board with the approval of the stockholders.
Termination
and Amendment of Outstanding Awards. A termination or amendment of the Plan that occurs after an Award is made shall not materially
impair the rights of a Participant unless the Participant consents or unless the Committee acts under Section 18(f) below. The
termination of the Plan shall not impair the power and authority of the Committee with respect to an outstanding Award. Whether
or not the Plan has terminated, an outstanding Award may be terminated or amended under Section 18(f) below or may be amended
by agreement of the Company and the Participant consistent with the Plan, provided that the Participant’s consent is not
required if any termination or amendment to the Participant’s outstanding Award does not materially impair the rights or
materially increase the obligations of the Participant.
Miscellaneous
Awards
in Connection with Corporate Transactions and Otherwise. Nothing contained in the Plan shall be construed to (i) limit the
right of the Committee to make Awards under the Plan in connection with the acquisition, by purchase, lease, merger, consolidation
or otherwise, of the business or assets of any corporation, firm or association, including Awards to employees thereof who become
Employees, or (ii) limit the right of the Company to grant stock options or make other awards outside of the Plan. The Committee
may make an Award to an employee of another corporation who becomes an Employee by reason of a corporate merger, consolidation,
acquisition of stock or property, reorganization or liquidation involving the Company, in substitution for a stock option or stock
award granted by such corporation. Notwithstanding anything in the Plan to the contrary, the Committee may establish such terms
and conditions of the new Awards as it deems appropriate, including setting the Exercise Price of Options or the base price of
SARs at a price necessary to retain for the Participant the same economic value as the prior options or rights.
Governing
Document. The Plan shall be the controlling document. No other statements, representations, explanatory materials or examples,
oral or written, may amend the Plan in any manner. The Plan shall be binding upon and enforceable against the Company and its
successors and assigns.
Funding
of the Plan. The Plan shall be unfunded. The Company shall not be required to establish any special or separate fund or to
make any other segregation of assets to assure the payment of any Awards under the Plan.
Rights
of Participants. Nothing in the Plan shall entitle any Employee, Non-Employee Director, Key Advisor or other person to
any claim or right to receive an Award under the Plan. Neither the Plan nor any action taken hereunder shall be construed as giving
any individual any rights to be retained by or in the employ of the Employer or any other employment rights.
No
Fractional Shares. No fractional shares of Common Stock shall be issued or delivered pursuant to the Plan or any Award. Except
as otherwise provided under the Plan, the Committee shall determine whether cash, other awards or other property shall be issued
or paid in lieu of such fractional shares or whether such fractional shares or any rights thereto shall be forfeited or otherwise
eliminated.
Compliance
with Law.
The
Plan, the exercise of Options and SARs and the obligations of the Company to issue or transfer shares of Common Stock under Awards
shall be subject to all applicable laws and regulations, and to approvals by any governmental or regulatory agency as may be required.
With respect to persons subject to section 16 of the Exchange Act, it is the intent of the Company that the Plan and all transactions
under the Plan comply with all applicable provisions of Rule 16b-3 or its successors under the Exchange Act. In addition, it is
the intent of the Company that Incentive Stock Options comply with the applicable provisions of section 422 of the Code, and that,
to the extent applicable, Awards comply with the requirements of section 409A of the Code. To the extent that any legal requirement
of section 16 of the Exchange Act or section 422, or 409A of the Code as set forth in the Plan ceases to be required under section
16 of the Exchange Act or section 422 or 409A of the Code, that Plan provision shall cease to apply. The Committee may revoke
any Award if it is contrary to law or modify an Award to bring it into compliance with any valid and mandatory government regulation.
The Committee may also adopt rules regarding the withholding of taxes on payments to Participants. The Committee may, in its sole
discretion, agree to limit its authority under this Section.
The
Plan is intended to comply with the requirements of section 409A of the Code, to the extent applicable. Each Award shall be construed
and administered such that the Award either (A) qualifies for an exemption from the requirements of section 409A of the Code or
(B) satisfies the requirements of section 409A of the Code. If an Award is subject to section 409A of the Code, (I) distributions
shall only be made in a manner and upon an event permitted under section 409A of the Code, (II) payments to be made upon a termination
of employment or service shall only be made upon a “separation from service” under section 409A of the Code, (III)
unless the Award specifies otherwise, each installment payment shall be treated as a separate payment for purposes of section
409A of the Code, and (IV) in no event shall a Participant, directly or indirectly, designate the calendar year in which a distribution
is made except in accordance with section 409A of the Code.
Any
Award that is subject to section 409A of the Code and that is to be distributed to a Key Employee (as defined below) upon separation
from service shall be administered so that any distribution with respect to such Award shall be postponed for six months following
the date of the Participant’s separation from service, if required by section 409A of the Code. If a distribution is delayed
pursuant to section 409A of the Code, the distribution shall be paid within 15 days after the end of the six-month period. If
the Participant dies during such six-month period, any postponed amounts shall be paid within 90 days of the Participant’s
death. The determination of Key Employees, including the number and identity of persons considered Key Employees and the identification
date, shall be made by the Committee or its delegate each year in accordance with section 416(i) of the Code and the “specified
employee” requirements of section 409A of the Code.
Notwithstanding
anything in the Plan or any Award agreement to the contrary, each Participant shall be solely responsible for the tax consequences
of Awards under the Plan, and in no event shall the Company or any subsidiary or affiliate of the Company have any responsibility
or liability if an Award does not meet any applicable requirements of section 409A of the Code. Although the Company intends to
administer the Plan to prevent taxation under section 409A of the Code, the Company does not represent or warrant that the Plan
or any Award complies with any provision of federal, state, local or other tax law.
Establishment
of Subplans. The Board may from time to time establish one or more sub-plans under the Plan for purposes of satisfying applicable
blue sky, securities or tax laws of various jurisdictions. The Board shall establish such sub-plans by adopting supplements to
the Plan setting forth (i) such limitations on the Committee’s discretion under the Plan as the Board deems necessary or
desirable and (ii) such additional terms and conditions not otherwise inconsistent with the Plan as the Board shall deem necessary
or desirable. All supplements adopted by the Board shall be deemed to be part of the Plan, but each supplement shall apply only
to Participants within the affected jurisdiction and the Employer shall not be required to provide copies of any supplement to
Participants in any jurisdiction that is not affected.
Clawback
Rights. Subject to the requirements of applicable law, the Committee may provide in any Award Agreement that, if a Participant
breaches any restrictive covenant agreement between the Participant and the Employer (which may be set forth in any Award Agreement)
or otherwise engages in activities that constitute Cause either while employed by, or providing service to, the Employer or within
the applicable period of time thereafter, all Awards held by the Participant shall terminate, and the Company may rescind any
exercise of an Option or SAR and the vesting of any other Award and delivery of shares upon such exercise or vesting (including
pursuant to dividends and Dividend Equivalents), as applicable on such terms as the Committee shall determine, including the right
to require that in the event of any such rescission, (i) the Participant shall return to the Company the shares received upon
the exercise of any Option or SAR and/or the vesting and payment of any other Award (including pursuant to dividends and Dividend
Equivalents) or, (ii) if the Participant no longer owns the shares, the Participant shall pay to the Company the amount of any
gain realized or payment received as a result of any sale or other disposition of the shares (or, in the event the Participant
transfers the shares by gift or otherwise without consideration, the Fair Market Value of the shares on the date of the breach
of the restrictive covenant agreement or activity constituting Cause), net of the price originally paid by the Participant for
the shares. Payment by the Participant shall be made in such manner and on such terms and conditions as may be required by the
Committee. The Employer shall be entitled to set off against the amount of any such payment any amounts otherwise owed to the
Participant by the Employer. In addition, all Awards under the Plan shall be subject to any applicable clawback or recoupment
policies, share trading policies and other policies that may be implemented by the Board from time to time.
Governing
Law. The validity, construction, interpretation and effect of the Plan and Award Agreements issued under the Plan shall be
governed and construed by and determined in accordance with the laws of the State of Delaware, without giving effect to the conflict
of laws provisions thereof.
Use any touch-tone telephone to transmit your voting
instructions. Vote by 11:59 P.M. ET Mark, sign and date your proxy card and return it in the postage-paid envelope we have John
Sample 234567 1234567 NY 11717. 123,456,789,012.12345 TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: KEEP THIS PORTION
FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLY THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. For All Withhold All
For All Except To withhold authority to vote for any individual nominee(s), mark “For All Except” and write the number(s)
of the The Board of Directors recommends you vote FOR the election of all director nominees. nominee(s) on the line below. 0 0
0 1. Election of Directors Nominees 01 Jerome E. Groopman 06 E. Premkumar Reddy 02 Michael B. Hoffman 07 Jack E. Stover 03 Steven
M. Fruchtman 04 James J. Marino 05 Viren Mehta The Board of Directors recommends you vote FOR proposals 2, 3, 4, 5 and 6. For 0
Against 0 Abstain 0 ForAgainst Abstain 0 0 0 2. Proposal to amend our Certificate of Incorporation to combine outstanding shares
of our common stock into a lesser number of outstanding shares, or a "reverse stock split", by a ratio of not less than
one-for-five and not more than one-for-twenty-five, with the exact ratio to be set within this range by the Board of Directors
in its sole discretion. Proposal to amend and restate the 2018 Omnibus Incentive Compensation Plan. To approve, on an advisory
basis, the compensation of our named executive officers. Ratification of the selection of Ernst & Young LLP as our independent
registered public accounting firm for the fiscal year ending 6. Proposal to adjourn the Annual Meeting. If necessary, to solicit
additional proxies in the event there are not sufficient votes at the time of the Annual Meeting to approve the reverse stock split.
NOTE: Such other business as may properly come before the meeting or any adjournment thereof. 0 0 0 0 0 0 0 0 0 3. 4. 5. John Sample
attorney, executor, administrator, or other fiduciary, please give full ANY CITY, ON A1A 1A1 partnership name, by authorized officer.
Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date 02 0000000000 1 OF 1 1 2 0000458604_1 R1.0.1.18 December
31, 2020. Please sign exactly as your name(s) appear(s) hereon. When signing as title as such. Joint owners should each sign personally.
All holders must sign. If a corporation or partnership, please sign in full corporate or Investor Address Line 1 Investor Address
Line 2 Investor Address Line 3 Investor Address Line 4 Investor Address Line 5 1234 ANYWHERE STREET SHARES CUSIP # JOB #SEQUENCE
# VOTE BY INTERNET - www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information.
Vote by 11:59 P.M. ET on 05/26/2020. Have your proxy card in hand when you access the web site and follow the instructions to obtain
your records and to create an electronic voting instruction form. During The Meeting - Go to www.virtualshareholdermeeting.com/ONTX2020
You may attend the meeting via the Internet and vote during the meeting. Have the information that is printed in the box marked
by the arrow available and follow the instructions. VOTE BY PHONE - 1-800-690-6903 on 05/26/2020. Have your proxy card in hand
when you call and then follow the instructions. VOTE BY MAIL provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes
Way, Edgewood, 1234567 NAME THE COMPANY NAME INC. - COMMON THE COMPANY NAME INC. - CLASS A THE COMPANY NAME INC. - CLASS B THE
COMPANY NAME INC. - CLASS C THE COMPANY NAME INC. - CLASS D THE COMPANY NAME INC. - CLASS E THE COMPANY NAME INC. - CLASS F THE
COMPA N Y NAME INC. - 401 K CONTROL # → SHARES123,456,789,012.12345 123,456,789,012.12345 123,456,789,012.12345 123,456,789,012.12345
123,456,789,012.12345 123,456,789,012.12345 123,456,789,012.12345 x PAGE1 OF 2 ONCONOVA THERAPEUTICS, INC. 375 PHEASANT RUN NEWTOWN,
PA 18940 Investor Address Line 1 Investor Address Line 2 Investor Address Line 3 Investor Address Line 4 Investor Address Line
5 8 8 8 1 1234 ANYWHERE STREET ANY CITY, ON A1A 1A1 234567 234567 234567 234567
Important Notice Regarding the Availability of
Proxy Materials for the Annual Meeting: The Proxy Statement, Form 10-K is/are available at www.proxyvote.com ONCONOVA THERAPEUTICS,
INC. Annual Meeting of Stockholders Wednesday, May 27, 2020 10:30 AM ET This proxy is solicited by the Board of Directors The stockholder(s)
hereby appoint(s) Mark Guerin and Steven M. Fruchtman, or either of them, as proxies, each with the power to appoint his substitute,
and hereby authorize(s) them to represent and to vote, as designated on the reverse side of this ballot, all of the shares of common
stock of ONCONOVA THERAPEUTICS, INC. that the stockholder(s) is/are entitled to vote at the Annual Meeting of Stockholders to be
held at 10:30 AM, EST on Wednesday, May 27, 2020, via a live webcast at www.virtualshareholdermeeting.com/ONTX2020, and any adjournment
or postponement thereof. This proxy, when properly executed, will be voted in the manner directed herein. If no such direction
is made, this proxy will be voted in accordance with the Board of Directors' recommendations. Continued and to be signed on reverse
side 0000458604_2 R1.0.1.18
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