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SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No.
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Soliciting Material Pursuant to §240.14a-12
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Northwest Biotherapeutics, Inc.
(Name of Registrant as Specified in its Charter)
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NORTHWEST
BIOTHERAPEUTICS, INC.
Notice
of Annual Meeting of Stockholders
To Be
Held on June 13, 2008
Dear Stockholder:
You are hereby cordially invited to attend the 2008 Annual
Meeting of Stockholders of Northwest Biotherapeutics, Inc.,
which will be held on Friday, June 13, 2008 at
10:00 a.m. (local time) at 7600 Wisconsin Avenue,
Suite 700, Bethesda, Maryland 20814, and any adjournments
or postponements of the annual meeting.
We are holding the annual meeting for the following purposes:
1. To elect one member to our Board of Directors to serve
as Class I director for a term of three years.
2. To approve the Northwest Biotherapeutics, Inc. 2007
Stock Option Plan.
3. To transact such other business as may properly come
before the annual meeting or any adjournments or postponements
of the annual meeting.
These matters are more fully described in the attached proxy
statement, which is made a part of this notice. At this point,
we are not aware of any other business to be transacted at the
annual meting.
Only stockholders of record on our books at the close of
business on Monday, April 21, 2008 will be entitled to vote
at the annual meeting and any adjournments or postponements of
the annual meeting. For 10 days prior to the annual
meeting, a list of stockholders entitled to vote will be
available for inspection at our principal executive offices
located at 7600 Wisconsin Avenue, Suite 750, Bethesda,
Maryland 20814. This list also will be available for inspection
at the annual meeting. If you would like to view the stockholder
list, please call our executive offices at
(240) 497-9024
to schedule an appointment.
A copy of our 2007 Annual Report to Stockholders, which contains
our consolidated financial statements for the fiscal year ended
December 31, 2007, and other information of interest to
stockholders, accompanies this notice and the attached proxy
statement.
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By
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Order of the Board of Directors,
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Linda F. Powers
Chairperson of the Board of Directors
May 13, 2008
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE
PROMPTLY COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD
IN THE ACCOMPANYING ENVELOPE. NO POSTAGE NEED BE AFFIXED IF THE
PROXY CARD IS MAILED IN THE UNITED STATES.
TABLE OF CONTENTS
NORTHWEST
BIOTHERAPEUTICS, INC.
7600 Wisconsin Avenue
Suite 750
Bethesda, Maryland 20814
PROXY
STATEMENT
For
the Annual Meeting of Stockholders
To Be Held on June 13, 2008
This proxy statement is being furnished in connection with the
solicitation of proxies by the Board of Directors of Northwest
Biotherapeutics, Inc. (we, us,
our or the Company), for use at the 2008
Annual Meeting of Stockholders to be held on Friday,
June 13, 2008 at 10:00 a.m. (local time) at 7600
Wisconsin Avenue, Suite 700, Bethesda, Maryland 20814, and
any adjournments or postponements of the annual meeting. The
Board of Directors (the Board) is soliciting proxies
for the purposes set forth in the accompanying Notice of Annual
Meeting of Stockholders.
Record
Date and Share Ownership
Only stockholders of record on our books at the close of
business on Monday, April 21, 2008 will be entitled to vote
at the annual meeting and any adjournments or postponements of
the annual meeting. As of the close of business on
April 21, 2008, we had 42,346,085 shares of common
stock outstanding. Each share of common stock entitles the
record holder to one vote on each matter to be voted upon at the
annual meeting. Copies of the Notice of Annual Meeting of
Stockholders, this proxy statement, the enclosed proxy card and
our Annual Report to Stockholders for the fiscal year ended
December 31, 2007, will be mailed to stockholders of record
on or about May 13, 2008. Exhibits to the Annual Report
will be provided to any stockholder at no charge upon written or
oral request to our corporate secretary at the address set forth
under
Communication with the Board of
Directors
below.
Voting in
Person
If you plan to attend the meeting and vote in person, we will
provide a ballot to you when you arrive. However, if you hold
your shares in the name of a broker, bank or other nominee, you
must bring an account statement or letter from the nominee
indicating that you were the beneficial owner of the shares on
April 21, 2008, the record date for voting.
Voting by
Proxy
Shares represented by a properly executed proxy in the form that
accompanies this proxy statement will be voted at the annual
meeting and, if you provide instructions on the proxy, will be
voted in accordance with those instructions. If you do not
provide instructions as to how your shares should be voted, your
shares will be voted according to the recommendations of our
Board as follows:
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FOR
the election of R. Steve Harris as Class I
director; and
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FOR
the approval of the Northwest Biotherapeutics, Inc.
2007 Stock Option Plan (the 2007 Plan).
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If other matters come before the annual meeting, the person
named as proxy will vote on such matters in accordance with his
or her best judgment. We have not received any notice of other
matters that may properly be presented at the annual meeting.
Revoking
a Proxy
You may revoke your proxy at any time prior to the start of the
annual meeting by delivering written instructions to our
corporate secretary at the address set forth under
Communication with the Board of Directors
below. Attendance at the annual meeting will not itself be
deemed to revoke your proxy unless you give notice at the annual
meeting that you intend to revoke your proxy and vote in person.
Quorum
Required
A quorum of stockholders is necessary to hold a valid meeting. A
majority of shares entitled to vote on the election of directors
at the annual meeting present in person or represented by proxy
represents a quorum. Shares which abstain from voting on a
particular matter and broker non-votes, or shares
held in street name by brokers, banks or other
nominees who indicate on their proxies that they do not have
discretionary authority to vote such shares on a particular
matter, are counted for purposes of determining whether a quorum
exists.
Votes
Required
Proposal 1:
Election of R. Steve Harris as Class I
Director
Under our bylaws, the election of directors requires the
affirmative vote of a plurality of the votes cast, and votes may
be cast in favor of the nominee or withheld. A
plurality means that the nominee receiving the most
votes for election to a director position is elected to that
position. You may withhold votes from a nominee by notation on
your proxy card. Abstentions and broker non-votes will have no
effect on the outcome of voting on the election of directors.
Proposal 2:
Approval of the 2007 Plan
The affirmative vote of a majority of the votes cast at the
meeting is required to approve the 2007 Plan. You may vote
for or against approval of the 2007 Plan
or you may abstain from voting on the plan.
Abstentions and broker non-votes will have no effect on the
outcome of voting on the approval of the 2007 Plan.
Dissenters
Rights
Stockholders will not be entitled to dissenters rights
with respect to any matter to be considered at the annual
meeting.
Householding
Stockholders of record who reside at the same address will
receive a single copy of our annual report, proxy statement and
notice of annual meeting. Each stockholder in the household,
however, will receive a separate proxy card. This process, known
as householding, reduces the volume of duplicate
information received at your household and helps to reduce our
expenses. If you would like to receive a separate copy of any of
these materials, please call or write us at the address set
forth under
Communication with the Board of
Directors
below, and we will promptly deliver the
requested materials to you.
If you receive multiple copies of our annual report, proxy
statement and notice of annual meeting and wish to receive a
single copy in the future, please contact us at the address set
forth under
Communication with the Board of
Directors
below. If you hold your shares in street
name, you should contact your broker or nominee regarding
combining mailings.
2
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table presents information regarding the
beneficial ownership of our common stock as of April 21,
2008 by:
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each person, or group of affiliated persons, who is known by us
to own beneficially 5% or more of any class of our equity
securities;
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our directors;
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each of our named executive officers, as defined in
Item 402(a)(3) of
Regulation S-K; and
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our directors and executive officers as a group.
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The applicable percentages of ownership are based on an
aggregate of 42,346,085 shares of common stock issued and
outstanding on April 21, 2008. In computing the number of
shares of common stock beneficially owned by a person and the
percentage ownership of that person, we deemed shares of common
stock subject to options, warrants, convertible preferred stock
or convertible notes held by that person that are currently
exercisable or exercisable within 60 days of April 21,
2008.
We have determined beneficial ownership in accordance with the
rules of the Securities and Exchange Commission (the
SEC). Except as indicated by the footnotes below, we
believe, based on the information furnished to us, that the
persons and the entities named in the table have sole voting and
investment power with respect to all shares of common stock that
they beneficially own, subject to applicable community property
laws.
Except as otherwise noted, the address of the individuals in the
following table below is
c/o Northwest
Biotherapeutics, Inc., 7600 Wisconsin Avenue, Suite 750,
Bethesda, Maryland 20814.
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Number of Shares
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Name of Beneficial Owner
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Beneficially Owned
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Percentage(1)
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Officers and Directors
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Alton L. Boynton, Ph.D.(2)
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1,007,835
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2.3
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Anthony P. Deasey
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James D. Johnston
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1,667
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Marnix L. Bosch, Ph.D., M.B.A.(3)
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265,284
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0.6
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Linda F. Powers(4)
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52,739,826
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72.0
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R. Steve Harris
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All executive officers and directors as a group
(4 persons)(5)
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1,274,786
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2.9
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5% Security Holders
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Toucan Capital Fund II, L.P.(6)
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41,334,575
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64.2
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7600 Wisconsin Avenue, Suite 700, Bethesda, MD 20814
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Toucan Partners, LLC(7)
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11,405,251
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22.3
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7600 Wisconsin Avenue, Suite 700, Bethesda, MD 20814
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Al Rajhi Holdings
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4,500,000
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10.6
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Rue Maurice 3 1204
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Geneve Switzerland
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IS Partners Investment Solutions AG
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Helium Special Situations Fund
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2,302,632
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5.4
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Limmatquai 2 8001 Zurich
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PO Box 463 8024 Zurich Switzerland
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(1)
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Percentage represents beneficial ownership percentage of common
stock calculated in accordance with SEC rules and does not
equate to voting percentages.
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(2)
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Includes 827,736 shares of common stock issuable upon
exercise of options that are exercisable within 60 days of
April 21, 2008.
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(3)
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Includes 199,857 shares of common stock issuable upon
exercise of options that are exercisable within 60 days of
April 21, 2008.
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3
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(4)
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Includes (i) 19,299,486 shares of common stock held by
Toucan Capital Fund II, L.P. (Toucan Capital);
(ii) 22,035,089 shares of common stock currently
issuable upon exercise of warrants that are exercisable within
60 days of April 21, 2008 held by Toucan Capital;
(iii) 8,832,541 shares of common stock currently
issuable upon exercise of warrants that are exercisable within
60 days of April 21, 2008 held by Toucan Partners, LLC
(Toucan Partners), and
(iv) 2,572,710 shares of common stock held by Toucan
Partners. Ms. Powers is a managing member of Toucan
Management, LLC, which is the manager of Toucan Capital, and is
a managing member of Toucan Partners. Ms. Powers disclaims
beneficial ownership as to all such shares of common stock.
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(5)
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Includes 1,027,593 shares issuable to officers and
directors upon exercise of options that are exercisable within
60 days of April 21, 2008. Excludes
52,739,826 shares of common stock as to which
Ms. Powers disclaims beneficial ownership. See Note 4
above.
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(6)
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Includes 22,035,089 shares of common stock currently
issuable upon exercise of warrants that are exercisable within
60 days of April 21, 2008 held by Toucan Capital.
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(7)
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Includes 8,832,541 shares of common stock currently
issuable upon exercise of warrants that are exercisable within
60 days of April 21, 2008 held by Toucan Partners.
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PROPOSAL 1
ELECTION OF DIRECTORS
Directors
and Nominees for Director
We have a classified Board currently consisting of one
Class I director (R. Steve Harris), one Class II
director (Linda F. Powers), and two Class III directors
(Alton L. Boynton and Anthony P. Deasey). At each annual meeting
of stockholders, directors are elected for a full term of three
years to succeed those whose terms are expiring. This year, one
Class I director will be presented to the stockholders for
election to a three-year term that expires at the 2011 annual
meeting and until his successor is elected and qualified. The
Class II director has a term that expires at the 2009
annual meeting and the Class III directors have terms that
expire at the 2010 annual meeting.
The persons named in the enclosed proxy will vote to elect R.
Steve Harris as a Class I director, unless your proxy is
marked otherwise. Mr. Harris has indicated his willingness
to serve, if elected. If he should be unable to serve, the
person acting under the proxy may vote the proxy for a
substitute nominee. We have no reason to believe that
Mr. Harris will be unable to serve if elected.
Set forth below are the name and age of each member of our Board
(including R. Steve Harris, the nominee for election as
Class I director), and the positions and offices held by
him or her, his or her principal occupation and business
experience during the past five years, the names of other
publicly held companies of which he or she serves as a director
and the year of the commencement of his or her term as a member
of our Board.
Information with respect to the number of shares of common stock
beneficially owned by each director, directly or indirectly, as
of April 21, 2008 appears above under the heading
Security Ownership of Certain Beneficial Owners and
Management.
We recommend that you vote
FOR
R. Steve Harris as
Class I director.
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Class/Name of Director
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Age
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Position
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Class I:
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R. Steve Harris
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64
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Director
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Class II:
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Linda F. Powers
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52
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Director,
Chairperson
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Class III:
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Alton L. Boynton, Ph.D
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63
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President,
Chief Executive Officer, Secretary and Director
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Anthony P. Deasey
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58
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Senior
Vice President of Finance, Chief Financial Officer and Director
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4
R. Steve Harris.
Mr. Harris has
served as our director since June 2007. Mr. Harris is
currently the non-executive Chairman of Proteome Sciences plc,
and Sinclair Pharma plc. He is also a non-executive director of
SkyePharma plc, Advanced Medical Solutions plc and Premier
Research plc. Mr. Harris holds a Bachelor of Pharmacy
Degree (University of London) and was elected a Fellow of the
Royal Pharmaceutical Society in 2000. Mr. Harris is also a
member of the Audit Committee, Compensation Committee and
Nominations Committee.
Linda F. Powers.
Ms. Powers has served as
the Chairperson of our Board of Directors since her appointment
on May 17, 2007. Ms. Powers has served as managing
director of Toucan Capital Corporation, a provider of venture
capital since 2001. She has over 15 years experience
in corporate finance and restructurings, mergers and
acquisitions joint ventures and intellectual property licensing.
Ms. Powers is a board member of Moffitt Technology
Corporation, a for-profit arm of Moffitt Cancer Center (the
third largest cancer center in U.S.), a board member of the
Trudeau Institute, well known for its specialization in
immunology, and the Chair of the Maryland Stem Cell Research
Commission, administering the states stem cell funding
program. Ms. Powers has been appointed to three
Governors commissions created to determine how to build
the respective states biotech and other high-tech
industries. She served as the Deputy Assistant Secretary of
Commerce in the George H. W. Bush, Sr. administration. She
was co-lead negotiator for the U.S. on the North American
Free Trade Agreement financial sector agreement, which opened
banking, securities, insurance, pension fund and related
opportunities in Canada and Mexico. Ms. Powers serves on
the steering committee of the National Academy of Sciences
evaluating Federal grant programs, and on the Advisory Board of
the US Department of Commerce NIST Advanced Technology Program.
Ms. Powers also serves on the boards of directors of six
private biotechnology companies. Ms. Powers holds a B.A.
from Princeton University, where she graduated magna cum laude
and Phi Beta Kappa. She also earned a JD, magna cum laude, from
Harvard Law School. Ms. Powers is also a member of the
Audit Committee, Compensation Committee and Nominations
Committee.
Alton L. Boynton, Ph.D.
Dr. Boynton
co-founded the Company, has served as Secretary since August
2001, has served as our Chief Scientific Officer and a director
since our inception in 1998, was appointed our Chief Operating
Officer in August 2001, was appointed President in May 2003 and
was appointed Chief Executive Officer in June 2007.
Dr. Boynton has also served as Director of the Department
of Molecular Medicine of Northwest Hospital from
1995-2003
where he coordinated the establishment of a program centered on
carcinogenesis. Prior to joining Northwest Hospital,
Dr. Boynton was Associate Director of the Cancer Research
Center of Hawaii, The University of Hawaii, where he also held
the positions of Director of Molecular Oncology of the Cancer
Research Center and Professor of Genetics and Molecular Biology.
Dr. Boynton received his Ph.D. in Radiation Biology from
the University of Iowa in 1972.
Anthony P. Deasey.
Mr. Deasey was elected
to the Board on September 28, 2007. Mr. Deasey was
appointed Senior Vice President of Finance and Chief Financial
Officer of the Company on October 2, 2007. Prior to joining
the Company, from November 2000 to September 2007,
Mr. Deasey served as Executive Vice President, Chief
Financial Officer of Celsion Corporation, an oncology drug
development company. From 1998 to 2000, he was Senior Vice
President and Chief Financial Officer of World Kitchen Inc. From
1996 to 1998 he served as Senior Vice President and Chief
Financial Officer of Rollerblade Inc. and from 1988 to 1995 he
served as Vice President Finance and Chief Financial Officer of
Church and Dwight Co. Inc. Mr. Deasey is a Chartered
Accountant who gained his early experience in the international
operations of Chesebrough Ponds and Price Waterhouse.
PROPOSAL 2
APPROVAL OF 2007 STOCK OPTION PLAN
On June 15, 2007, the Board of Directors approved the
Northwest Biotherapeutics, Inc. 2007 Stock Option Plan (the
2007 Plan), subject to approval of the
Companys stockholders. The 2007 Plan is a stock option
plan intended to motivate and reward our employees, directors
and consultants for their contributions to the Company and its
affiliates. Accordingly, all of our employees, directors and
consultants are eligible to participate in the 2007 Plan.
We recommend that you vote
FOR
the approval of the 2007
Plan.
Below is a summary of the significant terms of the 2007 Plan
which has been approved by the Board of Directors and is being
submitted for stockholder approval. This summary does not
purport to be complete and is
5
qualified in its entirety by reference to the full text of the
2007 Plan, a copy of which is attached to this proxy statement
as
Appendix D
. Capitalized terms used in this
summary have the meanings set forth in the 2007 Plan
Summary
of the 2007 Plan
General.
The 2007 Plan authorizes the grant to
eligible individuals of two types of stock option
awards (1) Incentive Stock Options, within the
meaning of Section 422 of the Internal Revenue Code of
1986, as amended (the Code); and
(2) Nonstatutory Stock Options.
Stock Subject to the 2007 Plan.
An aggregate
of 6,000,000 shares of the Companys common stock are
available for issuance under the 2007 Plan. If stock options
granted under the 2007 Plan expire or otherwise terminate
without being exercised, such shares will revert to and again
become available for issuance under the 2007 Plan.
Eligibility.
Employees of, and consultants to,
the Company or its affiliates, and members of the Board are
eligible to receive stock options under the 2007 Plan. Only
employees of the Company are eligible to receive Incentive Stock
Options. Employees, directors (including non-employee directors)
and consultants of the Company and its affiliates are eligible
to receive Nonstatutory Stock Options.
Purpose.
The 2007 Plan is designed to:
(1) encourage our employees, directors and consultants to
exert maximum efforts for the Companys success; and
(2) provide such individuals with an opportunity to benefit
from increases in the value of the Companys common stock.
Administration.
The Board may delegate to the
Compensation Committee administration authority over the 2007
Plan, but has not done so to date. Subject to the provisions of
the 2007 Plan, the Board
and/or
Compensation Committee has the power to construe and interpret
the 2007 Plan and to determine the persons to whom and the dates
on which stock options will be granted, the number of shares of
common stock to be subject to each option, the time or times
during the term of each option within which all or a portion of
such option may be exercised, the exercise price, the type of
consideration and other terms of the option.
Term.
The Board may suspend or terminate the
2007 Plan without stockholder approval or ratification at any
time or from time to time. Unless sooner terminated, the 2007
Plan will terminate on June 14, 2017. The Board may also
amend the 2007 Plan at any time or from time to time. However,
except in the case of a Capitalization Adjustment, no amendment
will be effective unless approved by the stockholders of the
Company within twelve months before or after its adoption by the
Board if the amendment would (i) materially increase the
number of shares of common stock available for issuance under
the 2007 Plan, (ii) materially expand the class of
individuals eligible to receive options under the 2007 Plan,
(iii) materially increase the benefits accruing to
participants under the 2007 Plan or materially reduce the price
at which shares of common stock may be issued or purchased under
the 2007 Plan, (iv) materially extend the term of the 2007
Plan, (v) expand the types of stock awards available for
issuance under the 2007 Plan, or (vi) change any other
provision of the 2007 Plan in any other way if such modification
requires stockholder approval in order to comply with
Rule 16b-3
of the Securities Exchange Act of 1934, as amended (the
Exchange Act) or satisfy the requirements of
Section 422 of the Code or any securities exchange listing
requirements. The Board may submit any other amendment to the
2007 Plan for stockholder approval, including, but not limited
to, amendments intended to satisfy the requirements of
Section 162(m) of the Code regarding the exclusion of
performance-based compensation from the limitation on the
deductibility of compensation paid to certain employees.
U.S.
Federal Income Tax Considerations
Incentive
Stock Options
Incentive stock options under the 2007 Plan are intended to be
eligible for the favorable federal income tax treatment accorded
incentive stock options under Section 422 of
the Code. There generally are no federal income tax consequences
to the option holder or the Company by reason of the grant or
exercise of an incentive stock option. However, the exercise of
an incentive stock option may increase the option holders
alternative minimum tax liability, if any.
6
If an option holder holds stock acquired through exercise of an
incentive stock option for more than two years from the date on
which the option is granted and more than one year from the date
on which the shares are transferred to the option holder upon
exercise of the option, any gain or loss on a disposition of
such stock will be a long-term capital gain or loss if the
option holder held the stock for more than one year.
Generally, if the option holder disposes of the stock before the
expiration of either of these holding periods (a
disqualifying disposition), then at the time of
disposition the option holder will realize taxable ordinary
income equal to the lesser of (i) the excess of the
stocks fair market value on the date of exercise over the
exercise price, or (ii) the option holders actual
gain, if any, on the purchase and sale. The option holders
additional gain or any loss upon the disqualifying disposition
will be a capital gain or loss, which will be long-term or
short-term depending on whether the stock was held for more than
one year.
To the extent the option holder recognizes ordinary income by
reason of a disqualifying disposition, the Company will
generally be entitled (subject to the requirement of
reasonableness, the provisions of Section 162(m) of the
Code and the satisfaction of a tax reporting obligation) to a
corresponding business expense deduction in the tax year in
which the disqualifying disposition occurs.
Nonstatutory
Stock Options
Nonstatutory stock options granted under the 2007 Plan generally
have the following federal income tax consequences. There are no
tax consequences to the option holder or the Company by reason
of the grant of a nonstatutory stock option. Upon exercise of a
nonstatutory stock option, the option holder normally will
recognize taxable ordinary income equal to the excess, if any,
of the stocks fair market value on the date of exercise
over the option exercise price. With respect to employees, the
Company is generally required to withhold income tax and the
employees share of FICA tax from the employees
regular wages or supplemental wage payments, and to pay the
Companys share of FICA tax. Subject to the requirement of
reasonableness, the provisions of Section 162(m) of the
Code and the satisfaction of a tax reporting obligation, the
Company will generally be entitled to a business expense
deduction equal to the taxable ordinary income realized by the
option holder.
Upon disposition of the stock, the option holder will recognize
a capital gain or loss equal to the difference between the
selling price and the sum of the amount paid for such stock plus
any amount recognized as ordinary income upon exercise of the
option. Such gain or loss will be long-term or short-term
depending on whether the stock was held for more than one year.
Slightly different rules may apply to option holders who acquire
stock subject to certain repurchase options or who are subject
to Section 16(b) of the Exchange Act.
Potential
Limitation on Company Deductions
Section 162(m) of the Code denies a deduction to any
publicly held corporation for compensation paid to certain
covered employees in a taxable year to the extent
that compensation to such covered employee exceeds
$1 million. It is possible that compensation attributable
to stock options, when combined with all other types of
compensation received by a covered employee from the Company,
may cause this limitation to be exceeded in any particular year.
Certain kinds of compensation, including qualified
performance-based compensation, are disregarded for
purposes of the deduction limitation. In accordance with
Treasury regulations issued under Section 162(m),
compensation attributable to stock options will qualify as
performance-based compensation if the option is granted by a
compensation committee comprised solely of two or more
outside directors and either (i) the plan
contains a per-employee limitation on the number of shares for
which options may be granted during a specified period, the
per-employee limitation is approved by the stockholders, and the
exercise price of the option is no less than the fair market
value of the stock on the date of grant, or (ii) the option
is granted (or exercisable) only upon the achievement (as
certified in writing by the compensation committee) of an
objective performance goal established in writing by the
compensation committee while the outcome is substantially
uncertain, and the option is approved by stockholders.
New Plan
Benefits
As described more fully under Grants of Plan-Based Awards
in 2007 in this proxy statement, the Company has granted
stock options to Alton L. Boynton, Anthony P. Deasey and Marnix
L. Bosch under the 2007 Plan. In
7
addition, the Company has granted stock options to a former
employee and to certain recently-hired employees of the Company
under the 2007 Plan. The future benefits or amounts that would
be received under the Plan by employees, directors or
consultants are discretionary and are therefore not determinable
at this time. As of April 21, 2008, net of forfeitures, a
total of 556,205 shares remain available for issuance under
this plan.
CORPORATE
GOVERNANCE MATTERS
Director
Independence
In making director independence determinations, the Board
utilizes the independence criteria included in the listing
standards of the NASDAQ Stock Market (NASDAQ) and,
with respect to independence determinations for members of our
Audit Committee, the requirements of
Rule 10A-3
under the Exchange Act. For a director to be considered
independent under NASDAQ listing standards, the Board must
affirmatively determine that the director has no relationship
that would interfere with the exercise of independent judgment
in carrying out his or her responsibilities as a director. Our
Board has determined that one of our directors, R. Steve Harris,
is an independent director for purposes of both
NASDAQ listing standards and
Rule 10A-3
under the Exchange Act. Linda F. Powers, who is a member of each
of our three standing committees (described below), does not
qualify as an independent director under NASDAQ
listing standards or
Rule 10A-3.
We are considered a controlled company under NASDAQ
listing standards because a group holds more than 50% of the
voting power. As such, NASDAQ listing standards do not require a
majority of our Board to consist of independent directors.
Committees
of the Board of Directors
Our Board of Directors consists of two non-employee
directors R. Steve Harris and Linda F.
Powers and two employee directors Alton
L. Boynton and Anthony P. Deasey. In addition, James D.
Johnston, our former Chief Financial Officer and General
Counsel, served as a director from March 1, 2007 to
August 28, 2007.
The Board has established three standing committees: the Audit
Committee, the Compensation Committee and the Nominations
Committee. It is the Boards intention to appoint
additional independent non-employee directors to these
committees in due course.
Audit
Committee
The Audit Committees primary responsibilities are to
assist the Board in overseeing (a) our accounting and
financial principles and policies and our internal controls and
procedures, (b) the preparation of our financial statements
and the financial information we provide to our stockholders and
(c) the independence, qualifications and performance of our
independent public accountants and our annual audit. Within
these general areas of responsibility, the Audit Committee is
solely responsible for the selection, compensation and oversight
of our independent public accountants and our annual audit
process. The committee also is responsible for reviewing our
audited and interim financial statements and overseeing our
internal control, disclosure controls and procedures and matters
related to our code of conduct. The Board has adopted a written
charter for the Audit Committee, a copy of which is attached to
this proxy statement as
Appendix A
. The Audit
Committees current members, R. Steve Harris (Chairperson)
and Linda F. Powers, are non-employee directors. The Board has
determined that Linda F. Powers is not an independent
director under NASADQ listing standards or
Rule 10A-3
under the Exchange Act because of her affiliation with Toucan
Capital and Toucan Partners, which, collectively, hold
approximately 51.7% of our outstanding common stock and loaned
significant amounts of capital to us. See
Transactions
with Related Persons
for more information on our
relationship with Toucan Capital and Toucan Partners.
Compensation
Committee
The Compensation Committees primary responsibilities are
to determine the overall compensation levels of our executive
officers, assist the Board in determining compensation levels
for our non-employee directors and administer our equity
compensation plans. The Board has adopted a written charter for
the Compensation
8
Committee, a copy of which is attached to this proxy statement
as
Appendix B
. The Compensation Committees
current members, R. Steve Harris (Chairperson) and Linda F.
Powers, are non-employee directors.
Nominations
Committee
The Nominations Committees primary responsibilities are to
identify and nominate members of the Board, recommend directors
to be appointed to Board committees and the chairs of such
committees, and oversee the annual evaluation of the Board. The
Board has adopted a written charter for the Nominations
Committee, a copy of which is attached to this proxy statement
as
Appendix C
. The Nominations Committees
current members, R. Steve Harris and Linda F. Powers
(Chairperson), are non-employee directors. The Nominations
Committee will consider nominees recommended by stockholders
pursuant to the procedures outlined in the Companys bylaws
and as set forth below.
Board and
Committee Meetings
The Board of Directors met five times during the fiscal year
ended December 31, 2007 and 1 times during the period from
January 1, 2008 through April 21, 2008. All directors
attended at least 75% of the meetings of the Board and of the
committees on which they served. The Audit Committee met two
times during the fiscal year ended December 31, 2007 and
one time during the period from January 1, 2008 through
April 21, 2008. The Compensation Committee met one time
during the fiscal year ended December 31, 2007 and has not
during the period from January 1, 2008 through
April 21, 2008. The Nominations Committee held no meetings
during the fiscal year ended December 31, 2007 and the
period from January 1, 2008 through March 21, 2008.
The Company did not hold an annual meeting of stockholders in
2007.
Nomination
of Directors
The Nominations Committee is responsible for annually reviewing
with the Board the requisite skills and criteria for prospective
directors and the structure, size and composition of the Board
as a whole. Although there are no set criteria considered by the
Nominations Committee in evaluating potential director nominees,
the committee does consider the skills and expertise that will
be needed to be represented on the Board, succession planning
and the time commitments required of directors.
For a stockholder to submit a candidate for the consideration of
the Nominations Committee, the stockholder must timely notify
our corporate secretary at the address set forth under
Communication with the Board of Directors
below. To make such a nomination in advance of the next
years annual meeting, a stockholder must provide written
notification to our secretary not less than 120 days nor
more than 150 days in advance of the first anniversary of
the date on which the proxy statement in connection with the
previous years annual meeting was first mailed. However,
if we do not hold an annual meeting or the date of such annual
meeting of has been changed by more than 30 days from the
date first contemplated by the previous years proxy
statement, we must receive the stockholders notice at
least 80 days prior to the date on which we distribute the
proxy statement with respect to the upcoming meeting.
The notice must include the information specified in our bylaws,
including the following: (a) as to each proposed nominee
(i) such persons exact name, (ii) such
persons age, principal occupation, business address and
telephone number, and residence address and telephone number,
(iii) the number of shares (if any) of each class of our
capital stock beneficially owned by each such nominee, and
(iv) any other information concerning the nominee that must
be disclosed as to nominees in proxy solicitations pursuant to
Regulation 14A under the Exchange Act (including such
persons notarized written acceptance of such nomination,
consent to being named in the proxy statement as a nominee and
statement of intention to serve as a director if elected); and
(b) as to the stockholder giving the notice (i) the
name and address, as they appear in our records, of such
stockholder; (ii) the class and number of our shares which
are beneficially owned by such stockholder; and (iii) the
dates upon which such stockholder acquired such shares of stock
and documentary support for any claims of beneficial ownership.
In addition, notices must include a description of all
arrangements or understandings between the stockholder giving
9
the notice and each nominee and any other person or persons
(naming such person or persons) pursuant to which the nomination
or nominations are to be made by such stockholder.
Code of
Ethics
We have adopted a code of ethics, as defined by Item 406 of
Regulation S-K.
Our code of ethics is applicable to the chief executive officer,
the chief financial officer, the principal accounting officer or
persons performing similar functions. We have posted the code of
ethics on our website and it may be accessed at
www.nwbio.com/about_code.php. In addition, we will post on our
website any amendments to our code of ethics and any waivers
under the code granted to any of our directors or executive
officers.
Communication
with the Board of Directors
We have established a procedure by which our stockholders may
communicate directly with our Board. All communications should
be in written form and directed to our corporate secretary at
the following address:
Northwest Biotherapeutics, Inc.
7600 Wisconsin Avenue, Suite 750
Bethesda, Maryland 20814
Attention: Secretary
NON-EMPLOYEE
DIRECTOR COMPENSATION
The following table sets forth certain information concerning
compensation paid or accrued to the Companys directors
during the year ended December 31, 2007. Only our
non-employee directors receive director fees.
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Fees Earned
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or Paid in
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All Other
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Name and Principal Position
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Year
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Cash
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Compensation
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Total
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Linda F. Powers
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2007
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$
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60,970
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$
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$
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60,970
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Chairperson of the Board of Directors
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R. Steve Harris
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2007
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$
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35,707
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$
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$
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35,707
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Director
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Effective June 22, 2007, we are required to pay Linda F.
Powers, as Chairperson and a non-executive member of the Board,
£50,000 (approximately $100,000) per annum for her
services. Also effective June 22, 2007, the Company is
required to pay R. Steve Harris, as a non-executive member of
the Board, £30,000 (approximately $60,000) per annum for
his services.
EXECUTIVE
COMPENSATION
Report of
the Compensation Committee
We, the Compensation Committee of the Board of Directors, have
reviewed and discussed the Compensation Discussion and Analysis
(CD&A) within the Executive Compensation
section of this proxy statement with the Companys
management. Based on such review and discussion, we have
recommended to the Board that the CD&A be included in this
proxy statement and the Companys Annual Report on
Form 10-K
for the year ending December 31, 2007.
The material in this report of the Compensation Committee is not
soliciting material, is not deemed filed
with the SEC, and is not to be incorporated by reference into
any of our filings under the Securities Act or the Exchange Act,
whether made before or after the date hereof and irrespective of
any general incorporation language contained in such filing.
Linda F. Powers
R. Steve Harris (Chairperson)
10
Compensation
Discussion and Analysis
Our
Process
Typically, our executive compensation is comprehensively
assessed and analyzed annually; however, given our limited
funding since 2002, our executives have received infrequent
increases in their compensation. During 2006, our executives did
not receive an increase in their base salaries. During 2007, our
Chief Technical Officer received an increase in base salary
based on performance and in order to take steps to be more
competitive in the market. During 2007, our executives also
received equity based incentives. Normally, the review process
includes, but is not limited to, the following steps:
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The Compensation Committee reviews the performance of the Chief
Executive Officer and other senior executives;
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The current annual compensation of senior management and
long-term compensation grants made over the past few years are
reviewed;
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The appropriate performance metrics and attributes of annual and
long-term programs for the next year are considered and
discussed;
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The entirety of our compensation program is considered;
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For our top officers, if peer group compensation is available
for their position, we use a blend of survey and peer
compensation for comparison, as we compete not only in our own
market, but nationally and across industries, for talent;
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The compensation practices of our peer companies are reviewed,
including their practices with respect to equity and other
grants, benefits and perquisites;
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The compensation of our management team from the standpoint of
internal equity, complexity of the job, scope of responsibility
and other factors is assessed; and
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Managements stock ownership is reviewed.
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Management has the following involvement with the executive
compensation process:
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The Chief Executive Officer reviews recommendations from the
Chief Financial Officer regarding salaries, annual and long-term
incentive targets, and plan amendments and design before
recommendations are submitted to the Compensation Committee for
approval; and
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The Chief Executive Officer and Chief Financial Officer are both
involved in establishing and recommending to the Compensation
Committee financial goals for the incentive programs based on
managements operational goals and strategic plans.
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Compensation
Goals
Our philosophy regarding executive compensation is to attract
and retain highly qualified people by paying competitive
salaries, and to link the financial interests of our senior
management to those of our stockholders by tying compensation to
the achievement of operational and financial objectives. Our
compensation package for our officers includes both short-term
and long-term features in the forms of base salary and
equity-based incentives in the form of stock options, which are
granted periodically at the discretion of the Compensation
Committee.
Elements
of Executive Compensation
Base
Salaries
Base salaries for all executive officers are reviewed annually.
The Compensation Committee reviews the compensation of the
President and Chief Executive Officer. The President and Chief
Executive Officer reviews the compensation of the other
executive officers. The Compensation Committee also consults
with the President and Chief Executive Officer with respect to
the compensation package for all other executive officers. In
evaluating salaries, each officers individual performance
during the prior year, as well as salary levels in the
biotechnology
11
industry for comparable positions are considered. In determining
how the respective officer contributes to the Company, current
corporate performance, as well as the potential for future
performance gains, is considered. No specific weight is
attributed to the foregoing for purposes of determining base
salaries.
Equity-Based
Incentives
We provide our executive officers with long-term incentives
through our 1998 Plan, 1999 Plan, 2001 Plan, Employee Plan and
beginning in 2007, our 2007 Stock Option Plan (each, as defined
under
Equity Plans
below), all described in
more detail below. On June 22, 2007, we amended the 1998
Plan, 1999 Plan, 2001 Plan and Employee Plan such that no
further stock option grants may be made under any of such plans.
The primary objective of these plans is to provide an incentive
for employees, including our executive officers, to make
decisions and take actions that maximize long-term stockholder
value. The plans are designed to promote this long-term focus by
using discretionary grants and long-term vesting periods.
Subject to the terms of the plans, the Compensation Committee
determines the terms and conditions of options granted under the
plans, including the exercise price, which is based on fair
value of our stock on the date of grant. For various motivation
and retention considerations, option awards granted subsequent
to our initial public offering in December 2001 generally vest
over four years. The Compensation Committee believes that stock
options provide an incentive for employees, allowing us to
attract and retain high quality management and staff. Although,
we did not issue any stock options to our executives during the
year ended December 31, 2006, we did issue stock options to
our executives in 2007.
Employee
and Executive Benefits
Our executives participate in many of the same employee benefit
programs as our other employees. The core employee benefit
programs include a tax-qualified retirement plan, medical
coverage, dental coverage, life insurance, disability coverage,
and vacation. The tax qualified retirement plan is a 401(k)
plan. We made matching contributions to each employees
401(k) plan account of $0.50 for each dollar contributed on the
first $3,000 of compensation contributed to the plan. Our
matching contribution policy was terminated effective March
2006. All of these matching contribution amounts to our Named
Executive Officers are shown in the
All Other Compensation
footnote to the Summary Compensation Table following this
section.
Perquisites
Historically, we have offered only a very limited number of
perquisites to our executives as an incremental benefit to
recognize their position within the Company. No perquisites of
any kind were offered to executives in 2007.
Compensation
of the President and Chief Executive Officer
In assembling the compensation package for our President and
Chief Executive Officer, the Compensation Committee considers
our annual and long-term performance, the performance of the
President and Chief Executive Officer, and our cash resources
and needs. Although the Committees overall goal is to set
the President and Chief Executive Officers salary at the
median level for competitors that are similar in industry size
and performance, the actual level approved by the Committee may
be higher or lower based upon the Committees subjective
evaluation of the foregoing. Consistent with the foregoing, the
Compensation Committee set the base salary for the President and
Chief Executive Officer at $331,250 for fiscal 2007. The
President and Chief Executive Officer did not receive a bonus
for 2007. In connection with our initial public offering on the
Alternative Investment Market of the London Stock Exchange
(AIM), the Board of Directors committed to award the
President and Chief Executive Officer an option to purchase
shares of our common stock. This stock option award, which is
shown in the Grants of Plan-Based Awards table
below, was granted in December 2007.
Accounting
for Stock-based Compensation
Effective January 1, 2006, we measure and recognize
compensation expense in accordance with SFAS 123(R), which
requires that compensations expense relating to share-based
payment transactions be recognized in the financial statements
based on the fair value of the equity or liability instruments
issued.
12
Prior to January 1, 2006, we accounted for our stock-based
compensation plans under the measurement and recognition
provision of APB 25, and related interpretations. Under this
method, stock option awards generally did not result in
compensation expense, since their exercise price was typically
equal to the market price of our common stock on the date of
grant.
The Compensation Committee considers the accounting treatment of
equity and performance based compensation when approving awards.
Summary
Compensation
We did not issue any option or stock awards to our executives in
the year ended December 31, 2006. The Company granted
options to its newly appointed Chief Financial Officer in
October 2007, and granted options to its executive officers and
management in December 2007.
Summary
Compensation Table
The following table sets forth certain information concerning
compensation paid or accrued to the Companys named
executive officers, as determined in accordance with
Item 402(a) of
Regulation S-K
(the Named Executive Officers), during the years
ended December 31, 2007 and 2006.
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Option
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All Other
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Name and Principal Position
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Year
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Salary
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Bonus
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Awards(3)
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Compensation(1)
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Total
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Alton L. Boynton, Ph.D.
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2007
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$
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331,250
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$
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2,011,680
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$
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1,828
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$
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2,344,758
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President, Chief Executive
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2006
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$
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330,802
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$
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2,993
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$
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333,795
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Officer, Chief Scientific Officer and Secretary(2)
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Anthony P. Deasey
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2007
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$
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63,462
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$
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115,268
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$
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178,730
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Senior Vice President and
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2006
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Chief Financial Officer(4)
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James D. Johnston(5)
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2007
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$
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96,718
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$
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96,718
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Chief Financial Officer and
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2006
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General Counsel
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Marnix L. Bosch, Ph.D., M.B.A.
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2007
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$
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224,980
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$
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471,661
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$
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482
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$
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697,123
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Chief Technical Officer
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2006
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$
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167,021
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$
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1,344
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$
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982
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$
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169,347
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(1)
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All Other Compensation for the years ended December 31,
2007 and 2006 consisted of Company-paid premiums on term life
insurance coverage up to 1.5 times the employees annual
salary and earned but unpaid accrued vacation payments.
Additionally in 2006, we provided matching contributions to the
employees 401(k) plan accounts up to a maximum of $3,000.
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(2)
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Dr. Boynton was appointed as our Chief Executive Officer in
June 2007. Dr. Boynton served as our Chief Operating
Officer and our principal executive officer during 2006.
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(3)
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Represents the amount recognized for financial statement
reporting purposes for 2007 and 2006 in respect of outstanding
option awards in accordance with SFAS 123(R), excluding any
impact of assumed forfeiture rates. The assumptions made in
valuing option awards reported in this column are discussed in
Note 3, Stock-Based Compensation Plans to our consolidated
financial statements for the year ended December 31, 2006,
included elsewhere in this Annual Report on
Form 10-K.
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(4)
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Effective October 1, 2007, we named Anthony P. Deasey as
our Chief Financial Officer.
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(5)
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Effective March 1, 2007, we named James D. Johnston as our
Chief Financial Officer and General Counsel. Mr. Johnston
resigned from these positions effective August 28, 2007.
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Given our financial status, there are no regularly scheduled
increases in compensation.
13
Grants of
Plan-Based Awards in 2007
The following table provides information about equity awards
granted to the Named Executive Officers during the year ended
December 31, 2007. We did not grant any stock appreciation
rights or restricted stock to Named Executive Officers during
the fiscal year ended December 31, 2007. Grants of stock
options were made under the 2007 Plan.
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All Other
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Option Awards:
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Number of
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Exercise or
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Grant Date
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Grant Date
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Securities
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Base Price
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Closing
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Value
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Underlying
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of Option
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Price of
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of Option
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Name
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Grant Date
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Options
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Awards(5)
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Common Stock
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Awards(6)
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Dr. Alton Boynton
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12/31/2007
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2,807,048
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(1)
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$
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0.60
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$
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2.54
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$
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7,016,782
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Anthony P. Deasey
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10/1/2007
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769,208
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(2)
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$
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2.40
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$
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2.40
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$
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1,884,285
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James D. Johnston
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(3)
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Dr. Marnix L. Bosch
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12/31/2007
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1,081,539
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(4)
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$
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0.60
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$
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2.54
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$
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2,703,524
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(1)
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This option was granted under the 2007 Stock Option Plan. This
option grant vests over a three and one-half year period.
Approximately 29% the option grant was vested immediately upon
grant with respect to prior service performed. Approximately 17%
vests on the first anniversary of the AIM offering
(June 22, 2008) and the remaining portion vests in
equal monthly installments over the remaining three year vesting
period.
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(2)
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Mr. Deaseys options were granted under the 2007 Stock
Option Plan. Mr. Deaseys option grant vests over a
four year period. One-fourth of the option grant vests on the
first anniversary of the grant date and the remaining
three-fourths of the grant vests in equal monthly installments
over the remaining three year vesting period.
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(3)
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Mr. Johnstons stock option award for 2007 has not yet
been determined and is subject to continuing discussion and
consideration from the Compensation Committee of the Board of
Directors.
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(4)
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This option was granted under the 2007 Stock Option Plan. This
option grant vests over a three and one-half year period.
Approximately 19% of the option grant was vested immediately
upon grant with respect to prior service performed.
Approximately 21% vests on the first anniversary of the AIM
offering (June 22, 2008) and the remaining portion
vests in equal monthly installments over the remaining three
year vesting period.
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(5)
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This column shows the exercise price of stock option awards. The
exercise price of the options granted to Mr. Deasey is
equal to the closing price of the Companys common stock on
the grant date. The exercise prices of the options granted to
Messrs. Boynton and Bosch are equal to the conversion price
of warrants issued to Toucan Partners under the Conversion
Agreement.
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(6)
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This column shows the full grant date fair value of stock
options under SFAS No. 123(R) granted to the Named
Executive Officers in 2007. Generally, the grant date fair value
is the amount that the Company would record as compensation
expense in its financial statements over the awards
vesting schedule, excluding the impact of forfeiture assumptions.
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14
Outstanding
Equity Awards at Fiscal Year-End
The following table shows outstanding stock option awards
classified as exercisable and unexercisable as of
December 31, 2007.
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(a)
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(b)
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(c)
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(d)
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(e)
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Number of Securities
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Number of Securities
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Option
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Underlying Unexercised
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Underlying Unexercised
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Exercise
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Option
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Options (#)
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Options (#)
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Price
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Expiration
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Name
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Exercisable
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Unexercisable
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($)
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Date
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Alton L. Boynton
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11,014
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(1)
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0
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$
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12.85
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11/16/09
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5,286
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(1)
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0
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18.75
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04/18/11
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6,666
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(1)
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0
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1.35
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2/18/13
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804,768
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(2)
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2,002,280
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0.60
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12/31/11
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Anthony P. Deasey(3)
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769,208
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2.40
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10/1/17
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James D. Johnston(6)
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1,667
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0
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3.15
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3/18/15
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Marnix L. Bosch
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1,000
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(4)
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0
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12.75
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5/16/10
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333
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(4)
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0
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18.75
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11/14/10
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333
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(4)
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0
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18.75
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09/20/11
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833
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(4)
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0
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75.00
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01/10/12
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3,194
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(4)
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139
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1.35
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2/18/13
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4,000
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(4)
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1,333
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1.80
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12/01/13
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188,687
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(5)
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892,852
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0.60
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12/31/11
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(1)
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These options were granted under the 1999 Plan, the 2001 Plan
and under Dr. Boyntons previous employment agreement.
Each of these option grants vests over a four year period.
One-fourth of each option grant vests on the first anniversary
of the grant date and the remaining three-fourths of each grant
vests in equal monthly installments over the remaining three
year vesting period.
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(2)
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This option was granted under the 2007 Stock Option Plan. This
option grant vests over a three and one-half year period.
Approximately 29% the option grant was vested immediately upon
grant with respect to prior service performed. Approximately 17%
vests on the first anniversary of the AIM offering
(June 22, 2008) and the remaining portion vests in
equal monthly installments over the remaining three year vesting
period. These options were granted in recognition of past
service to the Company and have an exercise price of $0.60 per
share, which is equal to the conversion price of warrants issued
to Toucan Partners under the Conversion Agreement.
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(3)
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Mr. Deaseys options were granted under the 2007 Stock
Option Plan, at the closing price on the date of grant.
Mr. Deaseys option grant vests over a four year
period. One-fourth of the option grant vests on the first
anniversary of the grant date and the remaining three-fourths of
the grant vests in equal monthly installments over the remaining
three year vesting period.
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(4)
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These options were granted under the 1999 Plan and the 2001
Plan. Each of these option grants vests over a four year period.
One-fourth of each option grant vests on the first anniversary
of the grant date and the remaining three-fourths of each grant
vests in equal monthly installments over the remaining three
year vesting period.
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(5)
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This option was granted under the 2007 Stock Option Plan. This
option grant vests over a three and one-half year period.
Approximately 19% of the option grant was vested immediately
upon grant with respect to prior service performed.
Approximately 21% vests on the first anniversary of the AIM
offering (June 22, 2008) and the remaining portion
vests in equal monthly installments over the remaining three
year vesting period. These options were granted in recognition
of past service to the Company and have an exercise price of
$0.60 per share, which is equal to the conversion price of
warrants issued to Toucan Partners under the Conversion
Agreement.
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(6)
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These options were granted prior to Mr. Johnstons
employment with us and are fully vested.
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Option
Exercises and Stock Vested
No options were exercised by and no stock awards vested for the
Named Executive Officers during 2007.
15
Pension
Plans, Deferred Compensation and Severance Agreements
We do not currently offer any such plans or compensation or have
any such agreements in place.
Employment
Agreements, Termination and
Change-in-Control
Arrangements
On October 1, 2007, an employment agreement between the
Company and Anthony P. Deasey became effective. Under the terms
of the agreement, Mr. Deasey is employed as the Chief
Financial Officer and Senior Vice President of Finance of the
Company for four years of service. Pursuant to the terms of the
agreement, Mr. Deasey is paid annual compensation of
$275,000 for his services. The agreement provides for standard
benefits, including coverage under our medical, dental, vision,
life and disability polices. Mr. Deasey is eligible to
participate in our 401(k) plan and to receive a bonus at the
discretion of the Board. In connection with his employment with
us, Mr. Deasey is subject to a noncompetition obligation
for one year following the termination of his employment with us.
Except as relates to the vesting of Mr. Deaseys stock
options, Mr. Deasey is not entitled to any benefits upon
the termination of his employment or a
change-in-control
of the Company under his employment agreement. With respect to
Mr. Deaseys stock options,
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if his employment with us is terminated for Cause (as defined
below), Mr. Deaseys unvested stock options as of the
date of termination will be forfeited, and
Mr. Deaseys stock options that have vested as of the
date of termination will expire 24 hours after such
termination date. Cause is defined under
Mr. Deaseys employment agreement as, but is not
limited to, malfeasance, material non-performance or materially
inadequate performance by Mr. Deasey of his duties to the
Company following written notice or other communication from the
Board of such inadequate performance and a one-time reasonable
cure period.
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if his employment with us is terminated without Cause,
Mr. Deaseys unvested stock options will continue to
vest in accordance with their respective vesting schedules until
the last day of employment and will be exercisable for up to
120 days following termination.
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if Mr. Deasey resigns from his employment with us for any
reason, Mr. Deaseys unvested stock options as of the
last date of employment will be forfeited. If Mr. Deasey
resigns upon (i) at least 60 days advance notice if
his resignation is prior to October 1, 2009 and
(ii) at least 30 days advance notice if his
resignation is subsequent to October 1, 2009, and during
the period between the giving of his resignation notice and the
effective date of his resignation, devotes his best efforts, in
good faith, to our business and any personnel transition, then
his stock options which have vested as of the effective date of
his resignation will be exercisable for 60 days following
the last day of his employment with us. If
Mr. Deaseys resignation does not comply with the
notice, best efforts and good faith requirements described
above, then his stock options which have vested as of the
effective date of his resignation will be exercisable for one
business day following the last day of his employment with us.
|
On June 22, 2007, an employment agreement between the
Company and Alton L. Boynton, Ph.D. became effective. Under
the terms of the agreement, Dr. Boynton is employed as
President and Chief Executive Officer of the Company. Pursuant
to the terms of the agreement, Dr. Boynton is paid annual
compensation of $331,250 for his services. The agreement
provides for standard benefits, including coverage under our
medical, dental, vision, life and disability polices.
Dr. Boynton is eligible to participate in our 401(k) plan
and to receive a bonus at the discretion of the Board. In
connection with his employment with us, Dr. Boynton is
subject to a noncompetition obligation for one year following
the termination of his employment with us.
Except as relates to the vesting of Dr. Boyntons
stock options, Dr. Boynton is not entitled to any benefits
upon the termination of his employment or a
change-in-control
of the Company under his employment agreement. With respect to
Dr. Boyntons stock options,
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if his employment with us is terminated for Cause (as defined
below), Dr. Boyntons unvested stock options as of the
date of termination will be forfeited, and
Dr. Boyntons stock options that have vested as of the
date of termination will expire 24 hours after such
termination date. Cause is defined under
Dr. Boyntons employment agreement as, but is not
limited to, malfeasance, material non-performance or materially
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16
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inadequate performance by Dr. Boynton of his duties to us
following written notice or other communication from the Board
of such inadequate performance and a one-time reasonable cure
period.
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if his employment with us is terminated without Cause,
Dr. Boyntons unvested stock options will continue to
vest in accordance with their respective vesting schedules and
will be exercisable during their full exercise period, if
Dr. Boynton (a) executes a separation and release
agreement reasonably acceptable to the Company and
(b) agrees not to do not work for or with a company that is
developing immunotherapies for cancer in any capacity (including
as an employee, director, adviser or collaborator) while any
vesting period is continuing.
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if Dr. Boynton resigns from his employment with us for any
reason, Dr. Boyntons unvested stock options as of the
date of resignation will be forfeited. If Dr. Boynton
resigns upon at least 90 days advance notice, and during
the period between the giving of his resignation notice and the
effective date of his resignation, devotes his best efforts, in
good faith, to our business and any personnel transition, then
his stock options which have vested as of the effective date of
his resignation will be exercisable for 90 days following
the last day of his employment with us. If
Dr. Boyntons resignation does not comply with the
notice, best efforts and good faith requirements described
above, and then his stock options which have vested as of the
effective date of his resignation will be exercisable for
15 days following the last day of his employment with us.
|
On June 22, 2007, an employment agreement between the
Company and James D. Johnston became effective. Under the terms
of the agreement, Mr. Johnston was employed as Chief
Financial Officer and General Counsel of the Company. Pursuant
to the terms of the agreement, Mr. Johnston was to be paid
annual compensation of $180,000 for his services.
Mr. Johnston was required to devote 60 percent of his
time to the Companys business. The agreement provided for
standard benefits, including coverage under our medical, dental,
vision, life and disability polices. Mr. Johnston was
eligible to participate in the our 401(k) plan and to receive a
bonus at the discretion of the Board. On August 23, 2007,
Mr. Johnston notified us of his resignation from his
positions of Chief Financial Officer and General Counsel of the
Company, and as a member of the Board and all committees
thereof, each effective on August 28, 2007.
Mr. Johnston is not subject to a noncompetition obligation
following the termination of his employment with us.
Equity
Plans
We maintain several plans under which our directors and
employees may be granted equity awards, generally in the form of
stock options. A brief description of these plans follows.
Effective June 22, 2007, we amended our then-existing
equity plans other than the 2007 Plan such that no further
option grants may be made under those plans. Currently, equity
grants may be made only under the 2007 Plan.
1998
Stock Plan
The 1998 Stock Plan (the 1998 Plan) was adopted by
our Board in July 1998 and approved by our stockholders in
February 1999. This plan provided for the grant to our
employees, including officers and employee directors, of
incentive stock options within the meaning of
Section 422 of the Code, and for the grant of non-statutory
stock options to our employees, officers, directors, including
non-employee directors, and consultants. To the extent an
optionee would have the right in any calendar year to exercise
for the first time one or more incentive stock options for
shares having an aggregate fair market value, under all of our
plans and determined as of the grant date, in excess of
$100,000, any such excess options will be treated as
non-statutory options. A total of 27,535 shares of our
common stock have been reserved for issuance under this plan
and, as of December 31, 2007, net of forfeitures, a total
of 23,783 of such shares remained available for additional
option grants.
The Compensation Committee serves as the administrator of our
1998 Stock Plan. Subject to the terms of this plan, the
administrator determines the terms of options granted, including
the number of shares subject to the option, exercise price, term
and exercisability. The exercise price of all incentive stock
options granted under this plan must be at least equal to the
fair market value of our common stock on the date of grant. The
exercise price of any incentive stock option granted to an
optionee who owns stock representing more than 10% of the total
combined voting power of our outstanding capital stock, or a 10%
Stockholder, must be at least equal to 110% of the fair market
value of our common stock on the date of grant. The exercise
price of all non- statutory stock options cannot
17
be less than 85% of the fair market value of our common stock on
the date of grant, and in the case of 10% Stockholders, the
exercise price cannot be less than 110% of the fair market value
of our common stock. The term of options granted under this plan
may not exceed 10 years, and the term of an incentive stock
option granted to a 10% Stockholder may not exceed five years.
An option may not be transferred by the optionee other than by
will or the laws of descent or distribution. Each option may be
exercised during the lifetime of the optionee only by such
optionee. Generally, each option granted under this plan becomes
exercisable as to 25% of the total number of shares subject to
the option after the first anniversary following the date of
grant, with subsequent equal monthly vesting over three years,
subject to the optionees continued relationship with us as
an employee, director or consultant, as the case may be.
Our Board has the authority to amend or terminate this plan, but
such action will not adversely affect any outstanding option
without the optionees consent. If not terminated earlier,
this plan will terminate in July 2008.
1999
Executive Stock Plan
The 1999 Executive Stock Plan (the 1999 Plan) was
adopted by our Board in November 1999. This plan provided for
the grant of non-statutory stock options to our employees,
officers, directors, including non-employee directors, and
consultants. A total of 39,078 shares of our common stock
have been reserved for issuance under this plan, and, as of
December 31, 2007, net of forfeitures, a total of
28,064 shares remained available for granting under this
plan.
The Compensation Committee serves as the administrator of this
plan. Subject to the terms of this plan, the administrator
determines the terms of options granted, including the number of
shares subject to the option, exercise price, term and
exercisability. The exercise price of options under this plan
cannot be less than 85% of the fair market value of our common
stock on the date of grant and, in the case of 10% Stockholders,
the exercise price cannot be less than 110% of the fair market
value of our common stock on the date of grant. The term of
options granted under this plan may not exceed 10 years. An
option may not be transferred by the optionee other than by will
or the laws of descent or distribution. Each option may be
exercised during the lifetime of the optionee only by such
optionee. Each option granted under this plan becomes
exercisable as to 25% of the total number of shares subject to
the option on the first anniversary following the date of grant,
with subsequent equal monthly vesting over three years, subject
to the optionees continued relationship with us as an
employee or consultant.
Our Board has the authority to amend or terminate this plan, but
such action will not adversely affect any outstanding option
without the optionees consent. If not terminated earlier,
this plan will terminate in November 2009.
2001
Stock Plan
The 2001 Stock Plan (the 2001 Plan) was both adopted
by our Board and approved by our stockholders in June 2001. A
total of 120,000 shares of our common stock were initially
reserved for issuance under this plan. This plan was intended to
provide for the grant to our employees, including officers and
employee directors, of incentive stock options
within the meaning of Section 422 of the Code and for the
grant of non-statutory stock options to our employees and
consultants. The number of shares available for grant under this
plan is subject to an automatic annual increase in an amount
equal to the lesser of (i) 15% of the aggregate number of
shares available for granting for the immediately preceding
year; or (ii) 20,000 shares. As of December 31,
2007, net of forfeitures, a total of 162,603 shares
remained available under this plan.
The Compensation Committee serves as the administrator of this
plan. Subject to the terms of this plan, the administrator
determines the terms of options granted, including the number of
shares subject to the option, exercise price, term and
exercisability. The exercise price of all incentive stock
options granted under this plan must be at least equal to the
fair market value of our common stock on the date of grant. The
term of incentive stock options granted under this plan
generally may not exceed 10 years.
Our Board has the authority to amend or terminate this plan, but
such action may not adversely affect any outstanding option
previously granted under the plan. If this plan is not
terminated earlier, no incentive stock options can be granted
under the plan on or after the later of June 2011 or the
10th anniversary of the date when our
18
Board adopted, subject to approval by our stockholders, the most
recent increase in the number of shares available for grant
under the plan.
2001
Non-employee Director Stock Incentive Plan
The 2001 Non-employee Director Stock Incentive Plan (the
Directors Plan) was adopted by our Board in June
2001. This plan provided for the automatic grant to each of our
non-employee directors of a nonstatutory stock option to
purchase 333 shares of our common stock on the third
business day following each annual meeting of our stockholders.
A total of 13,333 shares of common stock have been reserved
for issuance under this plan and, as of December 31, 2007,
net of forfeitures, a total of 10,500 shares remained
available under this plan.
This plan is administered by the Compensation Committee. The
exercise price of each option granted pursuant to this plan is
the fair market value of the underlying shares of our common
stock on the date of grant. Each option granted pursuant to this
plan generally becomes exercisable upon six months after the
date of grant, subject to certain limitations. Our Board has the
authority to amend or terminate this plan, but such action may
not adversely affect any outstanding option without the
optionees consent.
Employee
Stock Purchase Plan
Our Employee Stock Purchase Plan (the Employees
Plan) was adopted by our Board and approved by our
stockholders in June 2001. A total of 33,333 shares of
common stock have been reserved for issuance under this plan
and, as of December 31, 2007, 958 shares have been
issued under this plan.
This plan is administered by the Compensation Committee and
provides a mechanism for eligible employees to purchase shares
of our common stock. To facilitate these purchases, eligible
participants are assigned plan accounts, to which they may
contribute funds via payroll deduction. The purchases are
accomplished through the use of six-month offering periods.
Purchases pursuant to this plan are made at a price equal to the
lower of (i) 85% of the fair market value of our common
stock on the last trading day in the offering period; or
(ii) 85% of the fair market value of our common stock on
the last trading day before the commencement of such offering
period. No participant may purchase more than 67 shares of
our common stock during any offering period. Additionally,
purchases under the plan are limited such that no participant
may purchase under the plan, in any offering period that
commenced in that calendar year, shares with a fair market value
in excess of $25,000 minus the fair market value of any shares
that the participant previously purchased in that calendar year.
In the case of shares purchased during an offering period that
commenced in the preceding calendar year, the limitation is
$50,000 minus the fair market value of any shares that the
participant purchased during the calendar year of the purchase
and the calendar year immediately preceding such purchase.
Our Board has the authority to amend or terminate this plan at
any time. Amendments to the plan are subject to approval by our
stockholders to the extent required by applicable law.
2007
Plan
The 2007 Plan was adopted by our Board on June 15, 2007. We
have reserved a total of 6,000,000 shares of common stock
for issuance in respect of options granted under the plan. The
plan provides for the grant to employees of the Company, its
parents and subsidiaries, including officers and employee
directors, of incentive stock options within the
meaning of Section 422 of the Code and for the grant of
non-statutory stock options to the employees, officers,
directors, including non-employee directors, and consultants of
the Company, its parents and subsidiaries. To the extent an
optionee would have the right in any calendar year to exercise
for the first time one or more incentive stock options for
shares having an aggregate fair market value, under all of the
Companys plans and determined as of the grant date, in
excess of $100,000, any such excess options will be treated as
non-statutory options. As of December 31, 2007, net of
forfeitures, a total of 756,406 shares remained available
under this plan. We have submitted this plan for approval by our
stockholders at the 2008 annual meeting. For a further
description of the 2007 Plan, see
Proposal 2 Approval of 2007 Stock
Option Plan
above.
19
Equity
Compensation Plan Table
The following table sets out information regarding our common
stock that may be issued upon the exercise of options, warrants
and other rights granted to employees, consultants or directors
under all of our existing equity compensation plans, as of
December 31, 2007:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Shares
|
|
|
|
|
|
Number of Shares
|
|
|
|
to be Issued Upon
|
|
|
Weighted-Average
|
|
|
Remaining Available
|
|
|
|
Exercise of
|
|
|
Exercise Price of
|
|
|
for Future Issuance
|
|
|
|
Outstanding Options
|
|
|
Outstanding Options
|
|
|
Under Equity
|
|
Plan Category
|
|
and Warrants
|
|
|
and Warrants
|
|
|
Compensation Plans
|
|
|
Equity compensation plans approved by security holders
|
|
|
50,906
|
|
|
$
|
7.97
|
|
|
|
|
|
Equity compensation plans not approved by security holders
|
|
|
4,724,462
|
|
|
$
|
0.89
|
|
|
|
756,406
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
4,775,368
|
|
|
|
|
|
|
|
756,406
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation
Committee Interlocks and Insider Participation
From January 1, 2007 to June 22, 2007,
Dr. Boynton was the sole member of our Compensation
Committee and served as our President, Chief Operating Officer
and Chief Scientific Officer. In June 2007, Dr. Boynton was
replaced by Linda F. Powers and R. Steve Harris as members of
the Compensation Committee. As described further under
Transactions with Related Persons
below, we
are a party to a number of transactions (as such term is defined
in Item 404(a) of
Regulation S-K)
in which Ms. Powers has an interest required to be
disclosed in this proxy statement. During 2007, none of our
executive officers served as a member of the compensation
committee (or other committee serving an equivalent function) of
any other entity, one of whose executive officers served as a
director on our Board or as a member of our Compensation
Committee. None of our executive officers served during 2007 as
a director of any other entity, one of whose executive officers
served as a director on our Board or as a member of our
Compensation Committee.
Transactions
with Related Persons
Certain
Transactions with Related Persons
Conversion
of Preferred Stock and Related Matters
On June 1, 2007, we issued to Toucan Capital a warrant to
purchase shares of our
Series A-1
cumulative convertible preferred stock
(Series A-1
Preferred Stock and such warrant, the Toucan Capital
Series A-1
Warrant) in exchange for the cancellation of all
previously issued warrants to purchase
Series A-1
Preferred Stock (or, at the election of Toucan Capital, any
other equity or debt security of the Company) held by Toucan
Capital. The new Toucan Capital
Series A-1
Warrant is exercisable for 6,471,333 shares of
Series A-1
Preferred Stock plus shares of
Series A-1
Preferred Stock attributable to accrued dividends on the shares
of
Series A-1
Preferred Stock held by Toucan Capital (with each such
Series A-1
Preferred Share convertible into 2.67 shares of common
stock at $0.60 per share), compared to the 3,062,500 shares
of
Series A-1
Preferred Stock (with each such
Series A-1
Preferred Share convertible into 2.67 shares of common
stock at $0.60 per share) that were previously issuable to
Toucan Capital upon exercise of the warrants being cancelled.
Also on June 1, 2007, we and Toucan Capital amended Toucan
Capitals warrant to purchase shares of our Series A
cumulative convertible preferred stock (Series A
Preferred Stock and such warrant, the Toucan Capital
Series A Warrant) to increase the number of shares of
Series A Preferred Stock that are issuable upon exercise of
the warrant to 32,500,000 shares of Series A Preferred
Stock (plus shares of Series A Preferred Stock attributable
to accrued dividends on the shares of Series A Preferred
Stock held by Toucan Capital) from 13,000,000 shares of
Series A Preferred Stock.
In connection with the modifications of the Series A and
Series A-1
Preferred Stock warrants, we recognized reductions in earnings
applicable to common stockholders in June 2007 of
$2.3 million and $16.4 million, respectively. The fair
value of the warrant modifications was determined using the
Black-Scholes option pricing
20
model with the following assumptions: expected dividend yield of
0%, risk-free interest rate of 5.0% volatility of 398%, and a
contractual life of seven years.
On June 15, 2007, we, Toucan Capital, and Toucan Partners
entered into a conversion agreement (Conversion
Agreement) which became effective on June 22, 2007
upon the admission of the Companys common stock to trade
on AIM (Admission).
Pursuant to the terms of the Conversion Agreement
(i) Toucan Capital agreed to convert and has converted all
of its shares of the Companys Series A Preferred
Stock and
Series A-1
Preferred Stock (in each case, excluding any accrued and unpaid
dividends) into common stock and agreed to eliminate a number of
rights, preferences and protections associated with the
Series A Preferred Stock and
Series A-1
Preferred Stock, including the liquidation preference entitling
Toucan Capital to certain substantial cash payments and
(ii) Toucan Partners agreed to eliminate all of its
existing rights to receive
Series A-1
Preferred Stock under certain notes and warrants (and thereafter
to receive shares of common stock rather than shares of
Series A-1
Preferred Stock), and the rights, preferences and protections
associated with the
Series A-1
Preferred Stock, including the liquidation preference that would
entitle Toucan Partners to certain substantial cash payments. In
return for these agreements, the Company issued to Toucan
Capital and Toucan Partners 4,287,851 and 2,572,710 shares
of common stock, respectively. In connection with the issuance
of these shares, we recognized a further reduction of earnings
applicable to common stockholders of $12.3 million in June
2007.
Under the terms of the Conversion Agreement (i) the Toucan
Capital Series A Warrant is exercisable for
2,166,667 shares of common stock rather than shares of
Series A Preferred Stock (plus shares of common stock,
rather than shares of Series A Preferred Stock,
attributable to accrued dividends on the shares of Series A
Preferred Stock previously held by Toucan Capital that were
converted into common stock upon Admission, subject to the
further provisions of the Conversion Agreement as described
below) and (ii) the Toucan Capital
Series A-1
Warrant became exercisable for an aggregate of
17,256,888 shares of common stock rather than shares of
Series A-1
Preferred Stock (plus shares of common stock, rather than shares
of
Series A-1
Preferred Stock, attributable to accrued dividends on the shares
of
Series A-1
Preferred Stock previously held by Toucan Capital that were
converted into common stock upon Admission), subject to further
provisions of the Conversion Agreement as described below.
As noted above, the 32,500,000 shares of Series A
Preferred Stock held by Toucan Capital converted, in accordance
with their terms, into 2,166,667 shares of common stock and
the 4,816,863 shares of
Series A-1
Preferred Stock held by Toucan Capital converted, in accordance
with their terms, into 12,844,968 shares of common stock.
Under the terms of the Conversion Agreement, Toucan Capital also
agreed to temporarily defer receipt of the accrued and unpaid
dividends on its shares of Series A Preferred Stock and
Series A-1
Preferred Stock of an amount equal to $334,340 and $917,451,
respectively, until not later than September 30, 2007. In
September 2007, we paid these dividends in full to Toucan
Capital.
As a result of the financings described above, as of
April 21, 2008, Toucan Capital held:
|
|
|
|
|
an aggregate of 19,299,486 shares of common stock;
|
|
|
|
warrants to purchase 14,150,732 shares of common stock at
an exercise price of $0.60 per share; and
|
|
|
|
warrants to purchase 7,884,357 shares of common stock at an
exercise price of $0.15 per share.
|
As a result of the financings described above, as of
April 21, 2008, Toucan Partners held:
|
|
|
|
|
an aggregate of 2,572,710 shares of common stock; and
|
|
|
|
warrants to purchase 8,832,541 shares of common stock at an
exercise price of $0.60 per share.
|
The investments made by Toucan Capital and Toucan Partners were
made pursuant to the terms and conditions of a Recapitalization
Agreement originally entered into on April 26, 2004 with
Toucan Capital. The Recapitalization Agreement, as amended,
originally contemplated the investment of up to $40 million
through the issuance of new securities to Toucan Capital and a
syndicate of other investors to be determined.
21
We and Toucan Capital amended the Recapitalization Agreement in
conjunction with each successive loan agreement. The amendments
generally (i) updated certain representations and
warranties of the parties made in the Recapitalization
Agreement, and (ii) made certain technical changes in the
Recapitalization Agreement in order to facilitate the bridge
loans described therein.
Through June 22, 2007, the Company accrued and paid certain
legal and other administrative costs on Toucan Capitals
behalf pursuant to the Recapitalization Agreement. Subsequent to
June 22, 2007, Toucan Capital has incurred further costs on
behalf of the Company, primarily related to travel expenses and
fees incurred in connection with efforts to investigate and
establish
DCVax
®
businesses in other locations overseas. In addition, effective
July 1, 2007, the Company commenced accruing rent expense
related to the sublease for its Bethesda, Maryland office space
from Toucan Capital Corporation. During the year ended
December 31, 2007, the Company recognized approximately
$1.0 million of general and administrative costs related to
the Recapitalization Agreement, rent expense and costs incurred
by Toucan Capital on the Companys behalf. Approximately
$175,000 of these costs relate to activities which took place
prior to 2007. During the year ended December 31, 2006, the
Company recognized approximately $1.3 million of general
and administrative costs related to the Recapitalization
Agreement. Pursuant to the terms of the Conversion Agreement,
the Recapitalization Agreement was terminated on June 22,
2007.
As of April 21, 2008, Toucan Capital, including the
holdings of Toucan Partners, beneficially owned of
21,872,196 shares of our capital stock, representing
approximately 51.7% of our outstanding common stock.
Cognate
On July 30, 2004, we entered into a service agreement with
Cognate, a contract manufacturing and services organization in
which Toucan Capital has a majority interest. In addition, two
of the principals of Toucan Capital are members of
Cognates board of directors and, on May 17, 2007, the
managing director of Toucan Capital, Linda F. Powers, was
appointed to serve as our director and to serve as the
non-executive Chairperson of our Board of Directors. Under the
service agreement, we agreed to utilize Cognates services
for an initial two-year period, related primarily to
manufacturing
DCVax
®
product candidates, regulatory advice, research and development
preclinical activities and managing clinical trials. The
agreement expired on July 30, 2006; however, we continued
to utilize Cognates services under the same terms as set
forth in the expired agreement. On May 17, 2007, we entered
into a new services agreement with Cognate pursuant to which
Cognate will provide certain consulting and, when needed,
manufacturing services to us for our
DCVax
®
-Brain
Phase II clinical trial. Under the terms of the new
contract, we paid a non-refundable contract initiation fee of
$250,000 and committed to pay budgeted monthly service fees of
$400,000, subject to quarterly
true-ups,
and monthly facility fees of $150,000. We may terminate this
agreement with 180 days notice and payment of all
reasonable
wind-up
costs and Cognate may terminate the contract in the event that
the brain cancer clinical trial fails to complete enrollment by
July 1, 2009. However, if such termination by us occurs at
any time prior to the earlier of the submission of an FDA
biological license application/new drug application on our brain
cancer clinical trial or July 1, 2010 or, such termination
by Cognate results from failure of the brain cancer clinical
trial to complete patient enrollment by July 1, 2009, we
are obligated to make an additional termination fee payment to
Cognate equal to $2 million.
During the years ending December 31, 2005, 2006 and 2007,
respectively, we recognized approximately $3.5 million,
$2.4 million and $5.8 million of research and
development costs related to this service agreement. As of
December 31, 2006 and 2007, we owed Cognate approximately
$2.2 million and $0, respectively.
Review,
Approval or Ratification of Transactions with Related
Persons
Our policy with respect to any transaction between the Company
and any related person requiring disclosure under
Item 404(a) of
Regulation S-K,
is that such transaction is consummated only if the Audit
Committee approves such transaction or if the transaction
involves compensation approved or ratified by the Compensation
Committee. The Board of Directors has not adopted a written
policy reflecting the policy and procedures described above; it
intends to do so, but may not.
22
Audit
Committee Report
The Audit Committee acts under a written charter, a copy of
which is attached as
Appendix A
to this proxy
statement. We are considered a controlled company, whereby a
group holds more than 50% of the voting power, and as such are
not required under NASDAQ listing standards to have a majority
of our Board of Directors be independent. The Board has
determined that one member of the Audit Committee, R. Steve
Harris, is an independent director as defined by
NASDAQ listing standards. It is our intention to recruit one or
more additional non-executive directors in due course, but we
may not be able to do so. The Audit Committee does not include
an audit committee financial expert, within the
meaning of SEC regulations. Although all the Audit Committee
members are financially literate, it is our intention to recruit
an audit committee financial expert in due course.
The Audit Committee has prepared the following report on its
activities with respect to the audited consolidated financial
statements of the Company for the fiscal year ended
December 31, 2007 (for purposes of this report, the
audited financial statements). The following report
of the Audit Committee does not constitute soliciting material
and should not be deemed filed or incorporated by reference into
any other of our filings under the Securities Act of 1933, as
amended (the Securities Act) or the Exchange Act,
except to the extent we specifically incorporate this report by
reference in the specified filing.
As part of its specific duties, the Audit Committee reviews the
Companys financial reporting process on behalf of the
Board; reviews the financial information issued to stockholders
and others, including a discussion of the quality, not only the
acceptability, of our accounting principles, the reasonableness
of significant judgments, and the clarity of discussions in the
financial statements; and monitors our systems of internal
control and the audit process. Management is responsible for the
preparation, presentation, and integrity of our financial
statements, accounting and financial reporting principles, and
disclosure controls and procedures designed to ensure compliance
with accounting standards and applicable laws and regulations.
Management also is responsible for objectively reviewing and
evaluating the adequacy, effectiveness, and quality of our own
system of internal control. Our independent registered public
accounting firm is responsible for performing an independent
audit of the consolidated financial statements and expressing an
opinion on the conformity of those financial statements with
generally accepted accounting principles.
The Audit Committee has met and held discussions with management
and Peterson Sullivan, PLLC (Peterson Sullivan), our
independent public accounting firm for the fiscal year ended
December 31, 2007. In our discussions, management has
represented to the Audit Committee that the Companys
consolidated financial statements were prepared in conformity
with accounting principles generally accepted in the United
States. The Audit Committee also has reviewed and discussed the
audited financial statements with management and Peterson
Sullivan. The Audit Committee meets with our internal auditors
and independent registered public accounting firm, with and
without management present, to discuss the results of their
examinations, the evaluations of the Companys internal
controls and the overall quality of the Companys financial
reporting.
The Audit Committee has discussed with representatives of
Peterson Sullivan the matters required to be discussed by
Statement of Auditing Standards No. 61 regulations
promulgated by the SEC and the Public Company Accounting
Oversight Board.
Peterson Sullivan also provided to the Committee the written
disclosures and the letter required by Independence Standards
Board Standard No. 1,
Independence Discussions with
Audit Committees
, and the Audit Committee has considered and
discussed with Peterson Sullivan the firms independence
and the compatibility of the non-audit services provided by the
firm with its independence.
Based on the Audit Committees review of the audited
financial statements and the review and discussions noted above,
the Audit Committee recommended that the Board include the
audited financial statements in the Companys Annual Report
on
Form 10-K
for the year ended December 31, 2007, for filing with the
SEC. The Board has approved this recommendation.
Linda F. Powers
R. Steve Harris (Chairperson)
23
Fees Paid
to Peterson Sullivan, PLLC
Peterson Sullivan served as our independent public accounting
firm for the fiscal year ending December 31, 2007. The
Audit Committee has extended Peterson Sullivans engagement
through the end of the first quarter of fiscal 2008, and plans
to retain another firm to serve as our independent public
accountants for the remainder of 2008. The Audit Committee plans
to retain a firm in the Washington, DC metro area in order to
eliminate inefficiencies in our financial review and audit
processes that resulted from the relocation of our executive
offices from Bothell, Washington to Bethesda, Maryland.
A representative of Peterson Sullivan is expected to attend the
annual meeting (either in person or by telephone) and will have
the opportunity to make a statement if he or she desires to do
so. The representative also will be available to respond to
appropriate questions from stockholders.
In addition to retaining Peterson Sullivan to audit our
financial statements for the fiscal year ended December 31,
2007, we engaged the firm from time to time during the year to
perform other services. The following table sets forth the
aggregate fees billed by Peterson Sullivan in connection with
services rendered during the last two fiscal years.
|
|
|
|
|
|
|
|
|
Fiscal Year Ended December 31:
|
|
2007
|
|
|
2006
|
|
|
Audit Fees
|
|
$
|
80,456
|
|
|
$
|
78,196
|
|
Audit-Related Fees
|
|
|
12,000
|
|
|
|
|
|
Tax Fees
|
|
|
3,225
|
|
|
|
5,000
|
|
All Other Fees
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
95,681
|
|
|
$
|
83,196
|
|
|
|
|
|
|
|
|
|
|
Audit fees primarily include services for auditing our financial
statements along with reviews of our interim financial
information included in our
Forms 10-K
and
10-Q.
Peterson Sullivans work on these two audits was performed
by full time, regular employees and partners of Peterson
Sullivan. Audit-related fees comprise professional services
rendered in connection with the filing of SEC registration
statements. Tax fees, which includes tax consulting and tax
compliance fees, in both the current year and prior year relate
to the preparation of our Federal income tax return. All fees
described above were approved by our Audit Committee, and the
Audit Committee considers the provision of the services rendered
in respect of those fees compatible with maintaining the
auditors independence.
Policy on
Audit Committee Pre-Approval of Audit and Permissible Non-Audit
Services
In accordance with its charter, the Audit Committees
policy is to pre-approve all audit and permissible non-audit
services provided by the Companys independent auditor,
other than certain de minimis non-audit services approved in
accordance with Section 10A(i) of the Exchange Act. During
the fiscal year ended December 31, 2007, all audit and
permissible non-audit services were pre-approved by the Audit
Committee in accordance with this policy.
OTHER
MATTERS
Section 16(a)
Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires our directors,
executive officers and holders of more than 10% of our common
stock (Reporting Persons) to file with the SEC
initial reports of ownership and reports of changes in ownership
of our common stock and other equity securities. Reporting
Persons are required by SEC rules to furnish the Company with
copies of all Section 16(a) forms they file. To the
Companys knowledge, based solely on review of copies of
such reports furnished to the Company during the fiscal year
ended December 31, 2007 and representations made by the
Reporting Persons regarding their filing obligations, all
Section 16(a) filing requirements applicable to the
Reporting Persons were satisfied during our fiscal year ended
December 31, 2007.
24
Proxy
Solicitation
The cost of the solicitation of proxies will be borne by us. In
addition to the solicitation of proxies by mail, certain of our
officers and employees, without extra remuneration, may solicit
proxies personally, by telephone, mail or facsimile. Brokers,
banks and other nominees will be requested to forward proxy
soliciting material to the owners of our common stock held in
their names, and we will reimburse them for their reasonable
out-of-pocket expenses incurred in connection with the
distribution of proxy materials.
Stockholder
Proposals for the 2009 Annual Meeting of Stockholders
We currently anticipate that the 2009 annual meeting of
stockholders will be held on June 12, 2009. Proposals of
stockholders intended to be presented at the 2009 annual meeting
pursuant to
Rule 14a-8
under the Exchange Act must be received by us no later than the
close of business on January 13, 2009 in order that they
may be included in the proxy statement and form of proxy
relating to that meeting. Proposals should be addressed to
Northwest Biotherapeutics, Inc., 7600 Wisconsin Avenue,
Suite 750, Bethesda, Maryland 20814, Attention: Secretary.
In addition, our bylaws require that we be given advanced notice
of stockholder nominations for election to our Board and of
other business that stockholders wish to present for action at
an annual meeting of stockholders (other than matters included
in our proxy statement in accordance with
Rule 14a-8).
Our secretary must receive such notice not less than
120 days nor more than 150 days prior to the first
anniversary of the date on which this proxy statement was first
mailed to our stockholders. If the date on which the 2009 annual
meeting will be held is changed by more than 30 calendar days
from the date indicated above, we must receive the notice at
least 80 days prior to the date on which we intend to
distribute the corresponding proxy statement. We will issue a
press release announcing the exact date of the 2009 annual
meeting.
The notice for any stockholder proposal must contain certain
information set forth in our bylaws. In addition, stockholder
proposals made under
Rule 14a-8
under the Exchange Act are required to contain certain
information. Therefore, we strongly encourage stockholders
interested in submitting a proposal to contact legal counsel
with regard to the detailed requirements of applicable
securities laws. Copies of our bylaws can be obtained without
charge from our corporate secretary.
Submitting a stockholder proposal does not guarantee that we
will include it in our proxy statement.
THE BOARD HOPES THAT STOCKHOLDERS WILL ATTEND THE MEETING IN
PERSON. WHETHER OR NOT YOU PLAN TO ATTEND, YOU ARE URGED TO
COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD IN THE
ACCOMPANYING ENVELOPE. PROMPT RESPONSES WILL GREATLY FACILITATE
ARRANGEMENTS FOR THE MEETING AND YOUR COOPERATION IS
APPRECIATED. STOCKHOLDERS WHO ATTEND THE MEETING MAY VOTE THEIR
STOCK PERSONALLY EVEN THOUGH THEY HAVE SENT IN THEIR PROXY
CARDS.
By Order of the Board of Directors,
Linda F. Powers
Chairperson of the Board of Directors
May 13, 2008
25
Appendix A
Northwest
Biotherapeutics, Inc.
Audit Committee
Charter
Purpose
The purpose of the Audit Committee of the Board of Directors is
to assist the Board of Directors in overseeing:
|
|
|
|
|
the Companys accounting and financial reporting principles
and policies and its internal controls and procedures;
|
|
|
|
the Companys financial statements and financial
information to be provided to stockholders; and
|
|
|
|
the independence, qualifications and performance of the
Companys independent auditors and the independent audit.
|
Structure
and Membership
Number
.
The Audit Committee shall
consist of two or more directors as the Board of Directors shall
from time to time determine.
Chair
.
The Board of Directors shall
appoint an Audit Committee Chairman. In the absence of the Audit
Committee Chairman, the remaining members of the Audit Committee
shall elect one such member to chair the meeting.
Compensation
.
The compensation of Audit
Committee members shall be as determined by the Board of
Directors. No member of the Audit Committee may receive any
consulting, advisory or other compensatory fee from the Company,
other than fees paid in his or her capacity as a member of the
Board of Directors or a committee of the Board of Directors.
Selection and Removal
.
Members of the
Audit Committee shall be appointed by the Board of Directors,
upon the recommendation of the Companys Nominations
Committee, and shall serve until the earliest of (i) their
death, (ii) the expiration of their term as a director,
(iii) their resignation as a member of the Audit Committee
or the Board of Directors and (iv) their removal as a
member of the Audit Committee or the Board of Directors. The
Board of Directors may remove members of the Audit Committee
from such committee, with or without cause.
Authority
and Responsibilities
General
.
The Audit Committee shall
discharge its responsibilities, and shall assess the information
provided by the Companys management and the independent
auditor, in accordance with its business judgment. The Audit
Committee shall further assist the Board of Directors in
overseeing the compliance by the Company with legal and
regulatory requirements relating to the foregoing. Management is
responsible for the preparation, presentation, and integrity of
the Companys financial statements and for the
appropriateness of the accounting principles and reporting
policies that are used by the Company. The independent auditors
are responsible for auditing the Companys financial
statements and for reviewing the Companys unaudited
interim financial statements. The authority and responsibilities
set forth in this Charter do not reflect or create any duty or
obligation of the Audit Committee to plan or conduct any audit,
to determine or certify that the Companys financial
statements are complete, accurate, fairly presented, or in
accordance with generally accepted accounting principles or
applicable law, or to guarantee the independent auditors
report.
Oversight
of Independent Auditors
Selection
.
The Audit Committee shall be
solely and directly responsible for appointing, evaluating and,
when necessary, terminating the independent auditor. The Audit
Committee may, in its discretion, seek stockholder ratification
of the independent auditor it appoints.
A-1
Independence
.
The Audit Committee shall
take, or recommend that the full Board of Directors take,
appropriate action to oversee the independence of the
independent auditor. In connection with this responsibility, the
Audit Committee shall obtain and review a formal written
statement from the independent auditor describing all
relationships between the independent auditor and the Company,
including the disclosures required by Independence Standards
Board Standard No. 1. The Audit Committee shall actively
engage in dialogue with the independent auditor concerning any
disclosed relationships or services that might impact the
objectivity and independence of the independent auditor.
Compensation
.
The Audit Committee shall
have sole and direct responsibility for setting the compensation
of the independent auditor.
Oversight
.
The independent auditor
shall report directly to the Audit Committee, and the Audit
Committee shall have direct responsibility for overseeing the
independent auditor, including resolution of disagreements
between Company management and the independent auditor regarding
financial reporting. In connection with its oversight role, the
Audit Committee shall, from time to time as appropriate but no
less frequently than annually, obtain and review the reports
required to be made by the independent auditor pursuant to
Section 10A(k) of the Exchange Act regarding:
(i) critical accounting policies and practices,
(ii) alternative treatments of financial information within
generally accepted accounting principles that have been
discussed with Company management, ramifications of the use of
such alternative disclosures and treatments, and the treatment
preferred by the independent auditor and (iii) other
material written communications between the independent auditor
and Company management, including without limitation any
management letters and responses thereto or a schedule of
unadjusted differences.
Preapproval of Services
.
The Audit
Committee shall preapprove all services (audit and non-audit) to
be provided to the Company by the independent auditor; provided,
however, that de minimis non-audit services may instead be
approved in accordance with Section 10A(i) of the Exchange
Act.
Review of
Audited Financial Statements
Discussion of Audited Financial
Statements
.
The Audit Committee shall review
and discuss with the Companys management and independent
auditor the Companys audited financial statements,
including the matters required to be discussed by the statement
on Auditing Standards No. 61, as amended (AICPA,
Professional Standards, Vol. 1, AU Section 380).
Recommendation to Board Regarding Financial
Statements
.
The Audit Committee shall
consider whether it will recommend to the Board of Directors
that the Companys audited financial statements be included
in the Companys Annual Report on
Form 10-K.
Audit Committee Report
.
The Audit
Committee shall prepare an annual committee report, in
accordance with Item 407(d) of
Regulation S-K
promulgated by the U.S. Securities and Exchange Commission,
for inclusion in the proxy statement of the Company relating to
its annual meeting of security holders.
Review of
Other Financial Statements and Financial Disclosures
Independent Auditor Review of Interim Financial
Statements
.
The Audit Committee shall direct
the independent auditor to perform all reviews of interim
financial information prior to disclosure by the Company of such
information and to discuss promptly with the Audit Committee and
the Chief Financial Officer any matters identified in connection
with the independent auditors review of interim financial
information which are required to be discussed by Statements on
Auditing Standards Nos. 61, 71 and 90. The Audit Committee shall
direct management to advise it in the event that the Company
proposes to disclose interim financial information prior to
completion of the independent auditors review of interim
financial information.
A-2
Controls
and Procedures
Oversight
.
The Audit Committee shall:
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coordinate the Board of Directors oversight of the
Companys internal accounting controls, the Companys
disclosure controls and procedures, and the Companys code
of conduct;
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review the significant accounting principles, policies and
practices followed by the Company in accounting for and
reporting its financial results of operations in accordance with
generally accepted accounting principles;
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review the financial, investment and risk management policies
followed by the Company in operating its business
activities; and
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receive and review the reports of the CEO and CFO required by
Section 302 of the Sarbanes-Oxley Act of 2002 and
Rule 13a-14
of the Exchange Act.
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Procedures for Complaints
.
The Audit
Committee shall establish procedures for (i) the receipt,
retention and treatment of complaints received by the Company
regarding accounting, internal accounting controls or auditing
matters and (ii) the confidential, anonymous submission by
employees of the Company of concerns regarding questionable
accounting or auditing matters.
Related-Party Transactions
.
The Audit
Committee shall review all related party transactions on an
ongoing basis, and all such transactions must be approved by the
Audit Committee. A related party transaction shall
be a transaction required to be disclosed pursuant to
Item 404 of
Regulation S-K.
Compliance with Legal Requirements
.
The
Audit Committee shall perform any other functions required to
carry out its responsibilities under this charter. The Audit
Committee also shall perform such other functions as are
delegated to it by the Board of Directors from time to time.
Procedures
and Administration
Meetings
.
The Audit Committee shall
meet at least four times each year. In addition, the Audit
Committee will meet at any time that the independent auditor
believes that communication to the Audit Committee is required.
The Audit Committee shall meet at least once annually separately
with (i) the independent auditor and (ii) the
Companys CEO, CFO, controller, and such other management
as the Audit Committee requests. The Audit Committee may
additionally meet with other employees of the Company as it
deems appropriate. The Audit Committee shall keep regular
minutes of its meetings and report them to the Board of
Directors when requested.
Reports to Board
.
The Audit Committee
shall report regularly to the Board of Directors.
Charter
.
The Audit Committee shall
periodically review and reassess the adequacy of this Charter
and recommend any proposed changes to the Board of Directors for
approval.
Independent Advisors
.
The Audit
Committee may, in its discretion, retain the services of legal
counsel and other advisors of its choosing to assist the Audit
Committee in the performance of its functions. The Company shall
provide for appropriate funding, as determined by the Audit
Committee, for payment of compensation to any consultant, legal
counsel, or other advisor retained by the Audit Committee.
Surveys, Studies and
Investigations
.
The Audit Committee shall
have the authority to commission surveys or studies as the need
arises or conduct or authorize investigations into any matters
within the scope of its responsibilities as it shall deem
appropriate, including the authority to request any officer,
employee or advisor of the Company to meet with the Audit
Committee or any advisors engaged by the Audit Committee.
Funding
.
The Company shall provide
appropriate funding, as determined by the Audit Committee, for
payment of: (i) compensation of the independent auditor as
established by the Audit Committee, (ii) compensation of
any independent legal, accounting and other advisors engaged by
the Audit Committee and (iii) ordinary administrative
expenses of the Audit Committee that are deemed necessary or
appropriate by the Audit Committee to carry out its duties.
Annual Performance Evaluation
.
The
Audit Committee shall conduct an annual evaluation of its
performance and shall present its finding and conclusions to the
Board of Director.
A-3
Appendix B
Northwest
Biotherapeutics, Inc.
Compensation Committee
Charter
Purpose
The purpose of the Compensation Committee of the Board of
Directors is to assist the Board of Directors in the discharge
of its responsibilities relating to:
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the compensation of the Companys executive officers;
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the administration of the Companys equity compensation
plans;
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participating in the preparation and review of the information
related to executive compensation that is disclosed in the
Companys proxy statement, information statement or annual
report;
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preparation of an annual Compensation Committee report to be
included in the Companys proxy statement, information
statement or annual report; and
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such other matters relating to compensation of executive
officers and employee benefit plans of the Company as shall be
delegated from time to time by the Board of Directors.
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Structure
and Membership
Number
.
The Compensation Committee
shall consist of two or more directors as the Board of Directors
shall from time to time determine.
Chair
.
The Board of Directors shall
appoint a Compensation Committee Chairman. In the absence of the
Compensation Committee Chairman, the remaining members of the
Compensation Committee shall elect one such member to chair the
meeting. The Chairman of the Board of Directors shall not be a
chairman of the Compensation Committee.
Compensation
.
The compensation of
Compensation Committee members shall be as determined by the
Board of Directors.
Selection and Removal
.
Members of the
Compensation Committee shall be appointed by the Board of
Directors, upon the recommendation of the Companys
Nominations Committee, and shall serve until the earliest of
(i) their death, (ii) the expiration of their term as
a director, (iii) their resignation as a member of the
Compensation Committee or the Board of Directors and
(iv) their removal as a member of the Compensation
Committee or the Board of Directors. The Board of Directors may
remove members of the Compensation Committee from such
committee, with or without cause.
Authority
and Responsibilities
General
.
The Compensation Committee
shall discharge its responsibilities, and shall assess the
information provided by the Companys management, in
accordance with its business judgment.
CEO Compensation
.
The Compensation
Committee shall annually review and approve the corporate goals
and objectives relevant to chief executive officer
(CEO) compensation and evaluate the CEOs
performance in light of those goals and objectives. Based on
this evaluation, the Compensation Committee shall make and
annually review decisions regarding (i) the CEOs
salary, (ii) the extent to which any performance-based
bonus award was earned, (iii) the CEOs bonus
opportunity for the next fiscal year and (iv) any other
matter relating to the CEOs compensation that the
Compensation Committee considers appropriate. In determining the
appropriateness of any element of the CEOs compensation,
the Compensation Committee shall determine the value of and take
into account the CEOs total compensation, including
realized and unrealized gains on prior equity awards, the size
of any prior equity awards, earnings on any deferred
compensation, the value of any perquisites, the actuarial value
of pension or retirement plans, and the value of any potential
severance or change in control payments. In determining
B-1
the appropriateness of any element of the long-term incentive
compensation awarded to the CEO, the Compensation Committee
shall consider similar compensation awarded to the CEO in prior
fiscal years, the Companys overall performance and the
relative return on the investment of the Companys
stockholders for the fiscal year, and the value of similar
awards made to the chief executive officers of comparable
companies in the industry.
Other Executive Officers
.
The
Compensation Committee shall annually review and approve the
corporate goals and objectives relevant to the compensation of
the Companys other executive officers, which need not be
the same for each executive officer. In light of these goals and
objectives, the Compensation Committee shall make and annually
review decisions regarding (i) salary paid to the executive
officers, (ii) the extent to which any performance-based
bonus awards were earned, (iii) the bonus opportunity for
executive officers for the following year, (iv) long-term
incentive opportunities for executive officers for upcoming
periods and (v) any other matter relating to the
compensation of executive officers that the Compensation
Committee considers appropriate. In determining such packages
and arrangements, the Compensation Committee shall give due
regard to any relevant legal requirements, the provisions and
recommendations in the UK QCA Guidelines and where appropriate
the UK Combined Code and associated guidance.
Oversight of Equity Compensation
Plans
.
The Compensation Committee shall
review at least annually all equity-based compensation plans and
arrangements and the number of shares remaining available for
issuance under those plans and arrangements. The Compensation
Committee shall make recommendations to the Board of Directors
regarding the need to amend existing plans or adopt new plans
for the purpose of implementing the Companys strategy
regarding long-term and equity-based compensation. The
Compensation Committee shall have the authority to approve
grants of stock, stock options, stock purchase rights and
similar awards to individuals eligible to receive such grants
under the Companys equity compensation plans, to approve
the forms of agreement evidencing such grants, and to interpret
and amend such agreements within the terms of the plans. The
Compensation Committee shall have all of the authority of the
Board of Directors to administer the Companys equity
compensation plans.
Director Compensation
.
The Compensation
Committee shall periodically review and make recommendations to
the Board of Directors with respect to director compensation.
The remuneration of any non-executive director shall be a matter
for the Chairman of the Compensation Committee (if an executive
director) and the executive members of the Board of Directors.
Compensation Discussion and Analysis; Compensation
Committee Report
.
The Compensation Committee
shall oversee the preparation of the Companys
compensation-related disclosures to be included in the
Companys annual report, information statement or proxy
statement under applicable rules of the U.S. Securities and
Exchange Commission (the
SEC).
The
Compensation Committee shall also review and discuss with the
Companys management the Compensation Discussion and
Analysis required by Item 402(b) of
Regulation S-K.
Based on such review and discussion, the Compensation Committee
shall determine whether to recommend to the Board of Directors
that the Compensation Discussion and Analysis be included in the
Companys annual report or proxy statement for the annual
meeting of stockholders. The Compensation Committee shall
provide, over the names of the members of the Compensation
Committee, the required Compensation Committee Report for the
Companys annual report or proxy statement for the annual
meeting of stockholders, which report shall contain the
statements required by the SECs rules applicable to such
reports.
Access to Management
.
The Compensation
Committee and its members shall have complete access to
management for the purpose of carrying out the Compensation
Committees functions. The Compensation Committee shall
establish policies with respect to the participation of the
Companys CEO, other executive officers and management in
the activities and processes of the Compensation Committee.
Compliance with Legal Requirements
.
The
Compensation Committee shall perform any other functions
required to carry out its responsibilities under this charter
including to ensure that all provisions regarding disclosure of
remuneration including pensions, as set out in the UK QCA
Guidelines and where appropriate those of the UK Combined Code
are fulfilled. The Compensation Committee also shall perform
such other functions as are delegated to it by the Board of
Directors from time to time.
B-2
Procedures
and Administration
Meetings
.
The Compensation Committee
shall meet as often as it deems necessary in order to perform
its responsibilities. The Compensation Committee shall keep
regular minutes of its meetings and report them to the Board of
Directors when requested.
Reports to Board
.
The Compensation
Committee shall report regularly to the Board of Directors.
Charter
.
The Compensation Committee
shall periodically review and reassess the adequacy of this
Charter and recommend any proposed changes to the Board of
Directors for approval.
Consulting Arrangements
.
The
Compensation Committee may, in its discretion, retain the
services of a compensation consultant to advise and assist the
Compensation Committee in the performance of its functions. The
Compensation Committee shall have sole authority to determine
the consultants fees and the other terms of retention and
to terminate its services to the Compensation Committee. The
Compensation Committee shall establish policies regarding the
retention of compensation consultants that may include, among
other considerations, the process for selection and
compensation, the scope of the role and functions to be
performed by the consultant, and communications between the
consultant and the Compensation Committee, the Companys
executive officers and management.
Independent Advisors
.
The Compensation
Committee may, in its discretion, retain the services of legal
counsel and other advisors of its choosing to assist the
Compensation Committee in the performance of its functions. The
Company shall provide for appropriate funding, as determined by
the Compensation Committee, for payment of compensation to any
consultant, legal counsel, or other advisor retained by the
Compensation Committee.
Surveys, Studies and
Investigations
.
The Compensation Committee
shall have the authority to commission compensation surveys or
studies as the need arises or conduct or authorize
investigations into any matters within the scope of its
responsibilities as it shall deem appropriate, including the
authority to request any officer, employee or advisor of the
Company to meet with the Compensation Committee or any advisors
engaged by the Compensation Committee.
Employment Agreements
.
The Compensation
Committee shall review and approve all employment agreements
proposed to be entered into between the Company and any
executive officer and any proposed renewals thereof. The
Compensation Committee shall review any existing employment
agreements with executive officers at least annually and
recommend to the Board of Directors any amendments thereto that
the Compensation Committee deems appropriate.
Employee Loans
.
The Compensation
Committee shall review at least annually the Companys
policies and procedures regarding loans to employees. Under no
circumstance may the Compensation Committee approve any
arrangement in which the Company extends or maintains credit, or
arranges for the extension of credit, in the form of a personal
loan to or for any executive officer of the Company.
Perquisites
.
The Compensation Committee
shall review at least annually the Companys policies and
practices regarding perquisites for executive officers and the
form and amount of any perquisites paid or made available to the
Companys executive officers. The Compensation Committee
shall determine the appropriateness of the nature and extent of
executive officers use of such perquisites.
Deferred Compensation
.
The Compensation
Committee shall review and approve the terms on which any
compensation earned by, or otherwise payable to, executive
officers may be deferred.
Annual Performance Evaluation
.
The
Compensation Committee shall conduct an annual evaluation of its
performance and shall present its finding and conclusions to the
Board of Directors.
B-3
Appendix C
Northwest
Biotherapeutics, Inc.
Nominations Committee
Charter
Purpose
The purpose of the Nominations Committee of the Board of
Directors is to:
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identify and nominate members of the Board of Directors;
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recommend directors to be appointed to each committee of the
Board of Directors and the Chair of such committee; and
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oversee the evaluation of the Board of Directors.
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Structure
and Membership
Number
.
The Nominations Committee shall
consist of two or more directors as the Board of Directors shall
from time to time determine.
Chair
.
The Board of Directors shall
appoint a Nominations Committee Chairman. In the absence of the
Nominations Committee Chairman, the remaining members of the
Nominations Committee shall elect one such member to chair the
meeting. The Chairman of the Board of Directors shall not chair
any meeting of the Nominations Committee if the Nominations
Committee is considering the issue of the succession to the
Chairmanship during such meeting.
Compensation
.
The compensation of
Nominations Committee members shall be as determined by the
Board of Directors.
Selection and Removal
.
Members of the
Nominations Committee shall be appointed by the Board of
Directors, upon the recommendation of the Companys
Nominations Committee, and shall serve until the earliest of
(i) their death, (ii) the expiration of their term as
a director, (iii) their resignation as a member of the
Nominations Committee or the Board of Directors and
(iv) their removal as a member of the Nominations Committee
or the Board of Directors. The Board of Directors may remove
members of the Nominations Committee from Nominations Committee,
with or without cause.
Authority
and Responsibilities Relating To Board of Directors and
Committee Membership
Selection of Director Nominees
.
Except
where the Company is legally required by contract or otherwise
to provide third parties with the ability to nominate directors,
the nomination of Company directors will be determined by the
Board of Directors following the recommendation of director
candidates by the Nominations Committee.
Criteria for Selecting Directors
.
The
Nominations Committee shall be responsible for reviewing with
the Board of Directors, on an annual basis, the requisite skills
and criteria for new Board of Directors members as well as the
structure, size and composition of the Board of Directors as a
whole. This includes (i) giving full consideration to
succession planning for directors and other senior executives in
the course of their work, taking into account the challenges and
opportunities facing the Company, and what skills and expertise
are therefore needed on the Board of Directors in the future,
(ii) reviewing annually the time required from
non-executive directors and (iii) ensuring that on
appointment to the Board of Directors, non-executive directors
receive a formal letter of appointment setting out clearly what
is expected of them in terms of time commitment, committee
service and involvement outside meetings of the Board of
Directors.
Search Firms
.
The Nominations Committee
shall have the sole authority to retain and terminate any search
firm to be used to identify director nominees, including sole
authority to approve the search firms fees and other
retention terms. The Nominations Committee is empowered to cause
the Company to pay the compensation of any search firm engaged
by the Nominations Committee.
C-1
Selection of Committee Members
.
The
Nominations Committee shall be responsible for recommending to
the Board of Directors the directors to be appointed to each
committee of the Board of Directors and the Chair of each such
committee.
Compliance with Legal Requirements
.
The
Nominations Committee shall perform any other functions required
to carry out its responsibilities under this charter. The
Nominations Committee also shall perform such other functions as
are delegated to it by the Board of Directors from time to time.
Authority
and Responsibilities Relating to Evaluation of the Board of
Directors
Evaluation of the Board of
Directors
.
The Nominations Committee shall be
responsible for overseeing an annual self-evaluation of the
Board of Directors to determine whether it and its committees
are functioning effectively. The Nominations Committee shall
determine the nature of the evaluation, supervise the conduct of
the evaluation and prepare an assessment of the Board of
Directors performance, to be discussed with the Board of
Directors.
Procedures
and Administration
Meetings
.
The Nominations Committee
shall meet as often as it deems necessary in order to perform
its responsibilities. The Nominations Committee shall keep
regular minutes of its meetings and report them to the Board of
Directors when requested.
Reports to Board
.
The Nominations
Committee shall report regularly to the Board of Directors.
Charter
.
The Nominations Committee
shall periodically review and reassess the adequacy of this
Charter and recommend any proposed changes to the Board of
Directors for approval.
Independent Advisors
.
The Nominations
Committee may, in its discretion, retain the services of legal
counsel and other advisors of its choosing to assist the
Nominations Committee in the performance of its functions. The
Company shall provide for appropriate funding, as determined by
the Nominations Committee, for payment of compensation to any
consultant, legal counsel, or other advisor retained by the
Nominations Committee.
Surveys, Studies and
Investigations
.
The Nominations Committee
shall have the authority to commission surveys or studies as the
need arises or conduct or authorize investigations into any
matters within the scope of its responsibilities as it shall
deem appropriate, including the authority to request any
officer, employee or advisor of the Company to meet with the
Nominations Committee or any advisors engaged by the Nominations
Committee.
Annual Performance Evaluation
.
The
Nominations Committee shall conduct an annual evaluation of its
performance and shall present its findings and conclusions to
the Board of Directors.
C-2
Appendix
D
Northwest
Biotherapeutics, Inc.
2007 Stock Option
Plan
Approved
By Board: June 15, 2007
Effective Date: June
22, 2007
Approved By
Stockholders: ,
2008
Termination Date: June
14, 2017
1.
General.
(a)
Eligible Option Recipients.
The
persons eligible to receive Options are Employees, Directors and
Consultants.
(b) Available Options. The Plan provides for the
grant of the following: (i) Incentive Stock Options and
(ii) Nonstatutory Stock Options.
(c)
General Purpose.
The Company, by
means of the Plan, seeks to secure and retain the services of
the group of persons eligible to receive Options as set forth in
Section 1(a), to provide incentives for such persons to
exert maximum efforts for the success of the Company and any
Affiliate and to provide a means by which such eligible
recipients may be given an opportunity to benefit from increases
in value of the Common Stock through the granting of Options.
2.
Administration.
(a)
Administration by Board.
The Board
shall administer the Plan unless and until the Board delegates
administration of the Plan to a Committee or Committees, as
provided in Section 2(c).
(b)
Powers of Board.
The Board shall have
the power, subject to, and within the limitations of, the
express provisions of the Plan:
(i) To determine from time to time (A) which of the
persons eligible under the Plan shall be granted Options;
(B) when and how each Option shall be granted;
(C) what type or combination of types of Option shall be
granted; (D) the provisions of each Option granted (which
need not be identical), including, without limitation, the
vesting schedule and terms, and the time or times when a person
shall be permitted to receive cash or Common Stock pursuant to
an Option; and (E) the number of shares of Common Stock
with respect to which an Option shall be granted to each such
person.
(ii) To construe and interpret the Plan and Options, and to
establish, amend and revoke rules and regulations for the
Plans administration. The Board, in the exercise of this
power, may correct any defect, omission or inconsistency in the
Plan or in any Option Agreement in a manner and to the extent it
shall deem necessary or expedient to make the Plan or Option
fully effective.
(iii) To settle all controversies regarding the Plan and
Options.
(iv) On an extraordinary basis, to determine case by case
whether to accelerate the time at which an Option may first be
exercised or the time during which an Option or any part thereof
will vest in accordance with the Plan, notwithstanding the
provisions in the Option stating the time at which it may first
be exercised or the time during which it will vest, to the
extent that such acceleration will not trigger taxation under
Section 409A of the Code.
(v) To suspend or terminate the Plan at any time.
Suspension or termination of the Plan shall not impair rights
and obligations under any Option granted while the Plan is in
effect except with the written consent of the affected
Participant.
(vi) To amend the Plan in any respect the Board deems
necessary or advisable, including, without limitation, relating
to Incentive Stock Options and certain nonqualified deferred
compensation under Section 409A of the Code and to bring
the Plan
and/or
Options into compliance therewith, subject to the
D-1
limitations, if any, of applicable law. However, except as
provided in Section 9(a) relating to Capitalization
Adjustments, stockholder approval shall be required, but only to
the extent required by applicable law or listing requirements,
for any amendment of the Plan that either (A) materially
increases the number of shares of Common Stock available for
issuance under the Plan, (B) materially expands the class
of individuals eligible to receive Options under the Plan,
(C) materially increases the benefits accruing to
Participants under the Plan or materially reduces the price at
which shares of Common Stock may be issued or purchased under
the Plan, (D) materially extends the term of the Plan, or
(E) expands the types of stock awards available for
issuance under the Plan, Except as provided above, rights under
any Option granted before amendment of the Plan shall not be
impaired by any amendment of the Plan unless (1) the
Company requests the consent of the affected Participant, and
(2) such Participant consents in writing.
(vii) To submit any amendment to the Plan for stockholder
approval, including, but not limited to, amendments to the Plan
intended to satisfy the requirements of
(A) Section 162(m) of the Code and the regulations
thereunder regarding the exclusion of performance-based
compensation from the limit on corporate deductibility of
compensation paid to Covered Employees,
(B) Section 422 of the Code regarding incentive
stock options or
(C) Rule 16b-3.
(viii) To approve forms of Option Agreements for use under
the Plan and to amend the terms of any one or more Options,
including, but not limited to, amendments to provide terms more
favorable to the Participant than previously provided in the
Option Agreement, subject to any specified limits in the Plan
that are not subject to Board discretion;
provided
however
, that the Participants rights under any Option
shall not be impaired by any such amendment unless (A) the
Company requests the consent of the affected Participant, and
(B) such Participant consents in writing. Notwithstanding
the foregoing, subject to the limitations of applicable law, if
any, and without the affected Participants consent, the
Board may amend the terms of any one or more Options if
necessary to maintain the qualified status of the Option as an
Incentive Stock Option or to bring the Option into compliance
with Section 409 A of the Code and Department of Treasury
regulations and other interpretive guidance issued thereunder,
including without limitation any such regulations or other
guidance that may be issued or amended after the Effective Date.
(ix) Generally, to exercise such powers and to perform such
acts as the Board deems necessary or expedient to promote the
best interests of the Company and that are not in conflict with
the provisions of the Plan or Options,
(x) To adopt such procedures and sub-plans as are necessary
or appropriate to permit participation in the Plan by Employees,
Directors or Consultants who are foreign nationals or employed
outside the United States.
(c)
Delegation to Committee.
(i)
General.
The Board may delegate some
or all of the administration of the Plan to a Committee or
Committees. If administration of the Plan is delegated to a
Committee, the Committee shall have, in connection with the
administration of the Plan, the powers theretofore possessed by
the Board that have been delegated to the Committee, including
the power to delegate to a subcommittee of the Committee any of
the administrative powers the Committee is authorized to
exercise (and references in this Plan to the Board shall
thereafter be to the Committee or subcommittee), subject,
however, to such resolutions, not inconsistent with the
provisions of the Plan, as may be adopted from time to time by
the Board. The Board may retain the authority to concurrently
administer the Plan with the Committee and may, at any time,
revest in the Board some or all of the powers previously
delegated to the Committee, Committees, subcommittee or
subcommittees.
(ii)
Section 162(m) and
Rule 16b-3
Compliance.
In the sole discretion of the Board,
the Committee may consist solely of two (2) or more Outside
Directors, in accordance with Section 162(m) of the Code,
or solely of two (2) or more Non-Employee Directors, in
accordance with
Rule 16b-3.
In addition, the Board or the Committee, in its sole discretion,
may (A) delegate to a Committee which need not consist of
Outside Directors the authority to grant Options to eligible
persons who are either (1) not then Covered Employees and
are not expected to be Covered Employees at the time of
recognition of income resulting from such Option, or
(2) not persons with respect to whom the Company wishes to
comply with Section 162 (m) of the Code, or
(B) delegate to a Committee which need not
D-2
consist of Non-Employee Directors the authority to grant Options
to eligible persons who are not then subject to Section 16
of the Exchange Act.
(d)
Effect of Boards Decision.
All
determinations, interpretations and constructions made by the
Board in good faith shall not be subject to review by any person
and shall be final, binding and conclusive on all persons.
3.
Shares
Subject to the Plan.
(a) Subject to the provisions of Section 9 relating to
adjustments upon changes in stock, the aggregate number of
shares of Common Stock of the Company that may be issued
pursuant to Options after the Effective Date shall not exceed
Five Million Four Hundred Eighty Thousand Eight Hundred
Sixty-Eight (5,480,868) shares (the foregoing number of shares
gives effect to the
1-for-15
reverse stock split of the Common Stock effected on
June 19, 2007). For clarity, the limitation in this
subsection 3(a) is a limitation in the number of shares of
Common Stock that may be issued pursuant to the Plan.
Accordingly, this subsection 3(a) does not limit the granting of
Options except as provided in subsection 7(a). Shares may be
issued in connection with a merger or acquisition as permitted
by NASD Rule 4350(i)(l)(A)(iii) or, if applicable, NYSE
Listed Company Manual Section 303A.08, or AMEX Company
Guide Section 711 and such issuance shall not reduce the
number of shares available for issuance under the Plan.
Furthermore, if an Option (i) expires or otherwise
terminates without having been exercised in full or (ii) is
settled in cash
(i.e.,
the holder of the Option receives
cash rather than stock), such expiration, termination or
settlement shall not reduce (or otherwise offset) the number of
shares Common Stock that may be issued pursuant to the Plan.
(b) If any shares of common stock issued pursuant to an
Option are forfeited back to the Company because of the failure
to meet a contingency or condition required to vest such shares
in the Participant, then the shares which are forfeited shall
revert to and again become available for issuance under the
Plan. Also, any shares reacquired by the Company pursuant to
subsection 8(g) or as consideration for the exercise of an
Option shall again become available for issuance under the Plan.
Notwithstanding the provisions of this subsection 3(b), any such
shares shall not be subsequently issued pursuant to the exercise
of Incentive Stock Options.
(c)
Incentive Stock Option
Limit.
Notwithstanding anything to the contrary
in this Section 3(c), subject to the provisions of
Section 9(a) relating to Capitalization Adjustments the
aggregate maximum number of shares of Common Stock that may be
issued pursuant to the exercise of Incentive Stock Options shall
be Five Million Four Hundred Eighty Thousand Eight Hundred
Sixty-Eight (5,480,868) shares of Common Stock (the foregoing
number of shares gives effect to the
l-for-15
reverse stock split of the Common Stock effected on
June 19, 2007).
(d)
Section 162(m) Limitation on Annual
Grants.
Subject to the provisions of
Section 9(a) relating to Capitalization Adjustments, at
such time as the Company may be subject to the applicable
provisions of Section 162(m) of the Code, no Employee shall
be eligible to be granted during any calendar year Options whose
value is determined by reference to an increase over an exercise
or strike price of at least one hundred percent (100%) of the
Fair Market Value on the date the Option is granted covering
more than Five Million (5,000,000) shares of Common Stock (the
foregoing number of shares gives effect to the
l-for-15
reverse stock split of the Common Stock effected on
June 19, 2007).
(e)
Source of Shares.
The stock issuable
under the Plan shall be shares of authorized but unissued or
reacquired Common Stock, including shares repurchased by the
Company on the market or otherwise.
4.
Eligibility.
(a)
Eligibility for Specific
Options.
Incentive Stock Options may be granted
only to employees of the Company or a parent corporation or
subsidiary corporation (as such terms are defined in
Sections 424(e) and (I) of the Code). Options other
than Incentive Stock Options may be granted to Employees,
Directors and Consultants.
(b)
Ten Percent Stockholders.
A Ten
Percent Stockholder shall not be granted an Incentive Stock
Option unless the exercise price of such Option is at least one
hundred ten percent (110%) of the Fair Market Value on the date
of grant, and the Option is not exercisable after the expiration
of five (5) years from the date of grant, provided however,
that Ten Percent Stockholders may be granted Non-qualified Stock
Options at any exercise price and exercise terms agreed by the
parties (subject to Section 5 hereof).
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(c)
Consultants.
A Consultant shall be
eligible for the grant of an Option only if, at the time of
grant, a
Form S-8
Registration Statement under the Securities Act
(Form S-8)
is available to register either the offer or the sale of
the Companys securities to such Consultant because of the
nature of the services that the Consultant is providing to the
Company, because the Consultant is a natural person, or because
of any other rule governing the use of
Form S-8.
5.
Option
Provisions.
Each Option shall be in such form and shall contain such terms
and conditions as the Board shall deem appropriate. All Options
shall be separately designated Incentive Stock Options or
Nonstatutory Stock Options at the time of grant, and, if
certificates are issued, a separate certificate or certificates
shall be issued for shares of Common Stock purchased on exercise
of each type of Option. If an Option is not specifically
designated as an Incentive Stock Option, then the Option shall
be a Nonstatutory Stock Option. The provisions of separate
Options need not be identical
; provided, however
, that
each Option Agreement shall include (through incorporation of
provisions hereof by reference in the Option Agreement or
otherwise) the substance of each of the following provisions:
(a)
Term.
Subject to the provisions of
Section 4(b) regarding Ten Percent Stockholders, the
term (which need not be the same for different option grants)
shall be determined by the Board and set forth in the Option
Grant Agreement. No Option shall be exercisable after the
expiration of ten (10) years from the date of its grant or
such shorter period specified in the Option Agreement.
(b)
Exercise Price.
Subject to the
provisions of Section 4(b) regarding Ten
Percent Stockholders, the exercise price of each Option
shall be not less than one hundred percent (100%) of the Fair
Market Value of the Common Stock subject to the Option on the
date the Option is granted. Notwithstanding the foregoing, an
Option may be granted with an exercise price at any level below
one hundred percent (100%) of the Fair Market Value of the
Common Stock subject to the Option if such Option is granted
pursuant to an assumption of or substitution for another option
in a manner consistent with the provisions of
Section 424(a) of the Code (whether or not such options are
Incentive Stock Options), or in the event the Board determines
such grant to be in the best interests of the Company to attract
or retain a specific Employee, Director or Consultant.
(c)
Consideration.
The purchase price of
Common Stock acquired pursuant to the exercise of an Option
shall be paid, to the extent permitted by applicable law and as
determined by the Board in its sole discretion, by any
combination of the methods of payment set forth below. The Board
shall have the authority to grant Options that do not permit all
of the following methods of payment (or otherwise restrict the
ability to use certain methods) and to grant Options that
require the consent of the Company to utilize a particular
method of payment. The methods of payment permitted by this
Section 5(c) are:
(i) by cash, check, bank draft or money order payable to
the Company;
(ii) pursuant to a program developed under
Regulation T as promulgated by the Federal Reserve Board
that, prior to the issuance of the stock subject to the Option,
results in either the receipt of cash (or check) by the Company
or the receipt of irrevocable instructions to pay the aggregate
exercise price to the Company from the sales proceeds; or
(iii) in any other form of legal consideration that may be
acceptable to the Board.
(d)
Transferability of Options.
The Board
may, in its sole discretion, impose such limitations on the
transferability of Options (or Shares issued pursuant to an
exercise of an Option) as the Board shall determine. In the
absence of such a determination by the Board to the contrary,
the following restrictions on the transferability of Options
shall apply:
(i)
Restrictions on Transfer.
An Option
shall not be transferable except by will or by the laws of
descent and distribution and shall be exercisable during the
lifetime of the Optionholder only by the Optionholder;
provided, however
, that the Board may, in its sole
discretion, permit transfer of the Option in a manner consistent
with applicable tax and securities laws upon the
Optionholders request.
D-4
(ii)
Domestic Relations
Orders.
Notwithstanding the foregoing, an Option
may be transferred pursuant to a domestic relations order,
provided, however
, that an Incentive Stock Option may be
deemed to be a Nonqualified Stock Option as a result of such
transfer.
(iii)
Beneficiary
Designation.
Notwithstanding the foregoing, the
Optionholder may, by delivering written notice to the Company,
in a form provided by or otherwise satisfactory to the Company,
designate a third party who, in the event of the death of the
Optionholder, shall thereafter be the beneficiary of an Option
with the right to exercise the Option and receive the Common
Stock or other consideration resulting from an Option exercise.
(e)
Vesting Generally.
The total number
of shares of Common Stock subject to an Option may vest and
therefore become exercisable in periodic installments that may
or may not be equal. The Option may be subject to such other
terms and conditions on the time or times when it may or may not
be exercised as the Board may deem appropriate. The vesting
provisions of individual Options may vary. The provisions of
this Section 5(e) are subject to any Option provisions
governing the minimum number of shares of Common Stock as to
which an Option may be exercised.
(f)
Termination of Continuous
Service.
Except as otherwise provided in the
applicable Option Agreement or other agreement between the
Optionholder and the Company, or as otherwise required to comply
with Section 409A of the Code, in the event that an
Optionholders Continuous Service terminates (other than
for Cause or upon the Optionholders death or Disability),
the Optionholder may exercise his or her Option (to the extent
that the Optionholder was entitled to exercise such Option as of
the date of termination of Continuous Service) but only within
such period of time as the Board may specify or, in the absence
of specification by the Board, ending on the earlier of
(i) the date thirty (30) days following the
termination of the Optionholders Continuous Service (or
such longer or shorter period specified in the Option
Agreement), or (ii) the expiration of the term of the
Option as set forth in the Option Agreement. If, after
termination of Continuous Service, the Optionholder does not
exercise his or her Option within the time specified herein or
in the Option Agreement (as applicable), the Option shall
terminate.
(g)
Extension of Termination Date.
An
Optionholders Option Agreement may provide that if the
exercise of the Option following the termination of the
Optionholders Continuous Service (other than for Cause or
upon the Optionholders death or Disability) would be
prohibited at any time solely because the issuance of shares of
Common Stock would violate the registration requirements under
the Securities Act, then the Option shall terminate on the
earlier of (i) the expiration of a period of thirty
(30) days after the termination of the Optionholders
Continuous Service during which the exercise of the Option would
not be in violation of such registration requirements, or
(ii) the expiration of the term of the Option as set forth
in the Option Agreement; provided, however, that such thirty
(30) day period described in (i) may be modified to
the extent required to comply with Section 409A of the Code.
(h)
Disability of Optionholder.
In the
event that an Optionholders Continuous Service terminates
as a result of the Optionholders Disability, the
Optionholder may exercise his or her Option (to the extent that
the Optionholder was entitled to exercise such Option as of the
date of termination of Continuous Service), but only within such
period of time ending on the earlier of (i) the date six
(6) months following such termination of Continuous Service
(or such longer or shorter period specified in the Option
Agreement), or (ii) the expiration of the term of the
Option as set forth in the Option Agreement. If, after
termination of Continuous Service, the Optionholder does not
exercise his or her Option within the time specified herein or
in the Option Agreement (as applicable), the Option shall
terminate.
(i)
Death of Optionholder.
In the event
that (i) an Optionholders Continuous Service
terminates as a result of the Optionholders death, or
(ii) the Optionholder dies within the period (if any)
specified in the Option Agreement after the termination of the
Optionholders Continuous Service for a reason other than
death, then the Option may be exercised (to the extent the
Optionholder was entitled to exercise such Option as of the date
of death) by the Optionholders estate, by a person who
acquired the right to exercise the Option by bequest or
inheritance or by a person designated as the beneficiary of the
Option upon the Optionholders death, but only within the
period ending on the earlier of (A) the date twelve
(12) months following the date of death (or such longer or
shorter period specified in the Option Agreement), or
(B) the expiration of the term of
D-5
such Option as set forth in the Option Agreement. If, after the
Optionholders death, the Option is not exercised within
the time specified herein or in the Option Agreement (as
applicable), the Option shall terminate. If the Optionholder
designates a third party beneficiary of the Option in accordance
with Section 5(d)(iii), then upon the death of the
Optionholder such designated beneficiary shall have the sole
right to exercise the Option and receive the Common Stock or
other consideration resulting from an Option exercise.
(j)
Termination for Cause.
Except as
explicitly provided otherwise in an Optionholders Option
Agreement, in the event that an Optionholders Continuous
Service is terminated for Cause, the Option shall terminate upon
the termination date of such Optionholders Continuous
Service, and the Optionholder shall be prohibited from
exercising his or her Option from and after the time of such
termination of Continuous Service.
(k)
Non-Exempt Employees.
No Option
granted to an Employee that is a non-exempt employee for
purposes of the Fair Labor Standards Act shall be first
exercisable for any shares of Common Stock until at least six
(6) months following the date of grant of the Option. The
foregoing provision is intended to operate so that any income
derived by a non-exempt employee in connection with the exercise
or vesting of an Option will be exempt from his or her regular
rate of pay.
6.
Reserved.
7.
Covenants
of the Company.
(a)
Availability of Shares.
During the
terms of the Options, the Company shall keep available at all
times the number of shares of Common Stock reasonably required
to satisfy such Options.
(b)
Securities Law Compliance.
The
Company shall seek to obtain from each regulatory commission or
agency having jurisdiction over the Plan such authority as may
be required to grant Options and to issue and sell shares of
Common Stock upon exercise of the Options;
provided,
however
, that this undertaking shall not require the Company
to register under the Securities Act the Plan, any Option or any
Common Stock issued or issuable pursuant to any such Option. If,
after reasonable efforts, the Company is unable to obtain from
any such regulatory commission or agency the authority that
counsel for the Company deems necessary for the lawful issuance
and sale of Common Stock under the Plan, the Company shall be
relieved from any liability for failure to issue and sell Common
Stock upon exercise of such Options unless and until such
authority is obtained.
(c)
No Obligation to Notify.
The Company
shall have no duty or obligation to any holder of an Option to
advise such holder as to the time or manner of exercising such
Option. Furthermore, the Company shall have no duty or
obligation to warn or otherwise advise such holder of a pending
termination or expiration of an Option or a possible period in
which the Option may not be exercised. The Company has no duty
or obligation to minimize the tax consequences of an Option to
the holder of such Option.
8.
Miscellaneous.
(a)
Use of Proceeds from Sales of Common
Stock.
Proceeds from the sale of shares of Common
Stock pursuant to Options shall constitute general funds of the
Company.
(b)
Corporate Action Constituting Grant of
Options.
Corporate action constituting a grant by
the Company of an Option to any Participant shall be deemed
completed as of the date of such corporate action, unless
otherwise determined by the Board, regardless of when the
instrument, certificate, or letter evidencing the Option is
communicated to, or actually received or accepted by, the
Participant.
(c)
Stockholder Rights.
No Participant
shall be deemed to be the holder of, or to have any of the
rights of a holder with respect to, any shares of Common Stock
subject to such Option unless and until such Participant has
exercised the Option pursuant to its terms and the Participant
shall not be deemed to be a stockholder of record until the
issuance of the Common Stock pursuant to such exercise has been
entered into the books and records of the Company.
(d)
No Employment or Other Service
Rights.
Nothing in the Plan, any Option Agreement
or other instrument executed thereunder or in connection with
any Option granted pursuant to the Plan shall confer upon any
Participant any right to continue to serve the Company or an
Affiliate in the capacity in effect at the time the Option was
granted
D-6
or shall affect the right of the Company or an Affiliate to
terminate (i) the employment of an Employee with or without
notice and with or without cause, (ii) the service of a
Consultant pursuant to the terms of such Consultants
agreement with the Company or an Affiliate, or (iii) the
service of a Director pursuant to the Bylaws of the Company or
an Affiliate, and any applicable provisions of the corporate law
of the state in which the Company or the Affiliate is
incorporated, as the case may be.
(e)
Incentive Stock Option $100,000
Limitation.
To the extent that the aggregate Fair
Market Value (determined at the time of grant) of Common Stock
with respect to which Incentive Stock Options are exercisable
for the first time by any Optionholder during any calendar year
(under all plans of the Company and any Affiliates) exceeds one
hundred thousand dollars ($100,000), the Options or portions
thereof that exceed such limit (according to the order in which
they were granted) shall be treated as Nonstatutory Stock
Options, notwithstanding any contrary provision of the
applicable Option Agreement(s).
(f)
Investment Assurances.
The Company
may require a Participant, as a condition of exercising or
acquiring Common Stock under any Option, (i) to give
written assurances satisfactory to the Company as to the
Participants knowledge and experience in financial and
business matters
and/or
to
employ a purchaser representative reasonably satisfactory to the
Company who is knowledgeable and experienced in financial and
business matters and that he or she is capable of evaluating,
alone or together with the purchaser representative, the merits
and risks of exercising the Option; and (ii) to give
written assurances satisfactory to the Company stating that the
Participant is acquiring Common Stock subject to the Option for
the Participants own account and not with any present
intention of selling or otherwise distributing the Common Stock.
The foregoing requirements, and any assurances given pursuant to
such requirements, shall be inoperative if (A) the issuance
of the shares upon the exercise or acquisition of Common Stock
under the Option has been registered under a then currently
effective registration statement under the Securities Act, or
(B) as to any particular requirement, a determination is
made by counsel for the Company that such requirement need not
be met in the circumstances under the then applicable securities
laws. The Company may, upon advice of counsel to the Company,
place legends on stock certificates issued under the Plan as
such counsel deems necessary or appropriate in order to comply
with applicable securities laws, including, but not limited to,
legends restricting the transfer of the Common Stock.
(g)
Withholding Obligations.
Unless
prohibited by the terms of an Option Agreement, the Company may,
in its sole discretion, satisfy any federal, state or local tax
withholding obligation relating to an Option by any of the
following means (in addition to the Companys right to
withhold from any compensation paid to the Participant by the
Company) or by a combination of such means: (i) causing the
Participant to tender a cash payment; (ii) withholding
shares of Common Stock from the shares of Common Stock issued or
otherwise issuable to the Participant in connection with the
Option; (iii) withholding cash from an Option settled in
cash; or (iv) by such other method as may be set forth in
the Option Agreement.
(h)
Electronic Delivery.
Any reference
herein to a written agreement or document shall
include any agreement or document delivered electronically or
posted on the Companys intranet.
(i)
Deferrals.
To the extent permitted by
applicable law, the Board, in its sole discretion, may determine
that the delivery of Common Stock or the payment of cash, upon
the exercise, vesting or settlement of all or a portion of any
Option may be deferred and may establish programs and procedures
for deferral elections to be made by Participants. Deferrals by
Participants will be made in accordance with Section 409A
of the Code. Consistent with Section 409A of the Code, the
Board may provide for distributions while a Participant is still
an employee. The Board is authorized to make deferrals of
Options and determine when, and in what annual percentages,
Participants may receive payments, including lump sum payments,
following the Participants termination of employment or
retirement, and implement such other terms and conditions
consistent with the provisions of the Plan and in accordance
with applicable law.
(j)
Compliance with Section 409A of the
Code.
To the extent that the Board determines
that any Option granted under the Plan is subject to
Section 409A of the Code, the Option Agreement evidencing
such Option shall incorporate the terms and conditions necessary
to avoid the consequences specified in Section 409A(a)(l)
of the Code. To the extent practicable and without adverse
effects on the Plan or on Optionholders, the Plan and Option
Agreements shall be interpreted in a manner that avoids taxation
under Section 409A of the Code and Department of Treasury
regulations and other interpretive guidance issued thereunder,
including without limitation any such
D-7
regulations or other guidance that may be issued or amended
after the Effective Date. Notwithstanding any provision of the
Plan to the contrary, in the event that following the Effective
Date the Board determines that any Option may be subject to
Section 409A of the Code and related Department of Treasury
guidance (including such Department of Treasury guidance as may
be issued after the Effective Date), the Board may adopt such
amendments to the Plan and the applicable Option Agreement or
adopt other policies and procedures (including amendments,
policies and procedures with retroactive effect), or take any
other actions, that the Board determines are necessary or
appropriate to (i) exempt the Option from Section 409A
of the Code
and/or
preserve the intended tax treatment of the benefits provided
with respect to the Option, or (ii) comply with the
requirements of Section 409A of the Code and Department of
Treasury regulations and other interpretive guidance issued
thereunder, including without limitation any such regulations or
other guidance that may be issued or amended after the Effective
Date.
9.
Adjustments
upon Changes in Common Stock; Other Corporate Events.
(a)
Capitalization Adjustments.
In the
event of a Capitalization Adjustment, the Board shall
appropriately adjust: (i) the class(es) and maximum number
of securities subject to the Plan pursuant to Section 3(a),
(ii) the class(es) and maximum number of securities that
may be issued pursuant to the exercise of Incentive Stock
Options pursuant to Section 3(c), (iii) the class(es)
and maximum number of securities that may be awarded to any
person pursuant to Section 3 (d) and (iv) the
class (es) and number of securities and price per share of stock
subject to outstanding Options. The Board shall make such
adjustments, and its determination shall be final, binding and
conclusive.
(b)
Dissolution or Liquidation.
Except as
otherwise provided in the Option Agreement, in the event of a
dissolution or liquidation of the Company, all outstanding
Options shall terminate immediately prior to the completion of
such dissolution or liquidation,
provided, however,
that
the Board may, on an extraordinary basis, in its sole
discretion, determine on a case by case basis whether to cause
some or all Options to become fully vested,
and/or
exercisable (to the extent such Options have not previously
expired or terminated) before the dissolution or liquidation is
completed but contingent on its completion.
(c)
Corporate Transaction.
The following
provisions may apply to Options in the event of a Corporate
Transaction unless otherwise provided in the instrument
evidencing the Option or any other written agreement between the
Company or any Affiliate and the Participant or unless otherwise
expressly provided by the Board at the time of grant of an
Option. If there is a Corporate Transaction, then the Board, or
the board of directors of any corporation or entity assuming the
obligations of the Company, may take any one or more of the
following actions as to outstanding Options in its sole and
absolute discretion:
(i)
Options May Be Continued, Assumed or
Substituted.
Any surviving corporation or
acquiring corporation (or the surviving or acquiring
corporations parent company) may assume or continue any or
all Options outstanding under the Plan or may substitute similar
stock awards for Options outstanding under the Plan (including
but not limited to, awards to acquire the same consideration
paid to the stockholders of the Company pursuant to the
Corporate Transaction) in connection with such Corporate
Transaction. A surviving corporation or acquiring corporation
(or its parent) may choose to assume or continue only a portion
of an Option or substitute a similar stock award for only a
portion of an Option, or may assume, continue or substitute some
Options and not others. The terms of any assumption,
continuation or substitution shall be set by the Board in
accordance with the provisions of Section 2.
(ii)
Accelerated Vesting of Options.
On
an extraordinary basis, the Board may, in its sole discretion,
determine case by case whether the vesting of any or all
Options, and the time at which such Options may be exercised,
may be accelerated in full or in part to a date on or prior to
the effective time of such Corporate Transaction (contingent
upon the effectiveness of the Corporate Transaction) as the
Board shall determine; provided, however, that for purposes of
this Section, the Agreement evidencing such option may provide
for acceleration of vesting without acceleration of
exercisability or may contain additional restrictions on the
holding period for such Shares as may be deemed advisable by the
Board and as may be necessary to comply with Section 409A
of the Code.
D-8
(iii)
Termination of Options.
The Board
may provide that all Options (including vested Options that are
not exercised) shall immediately terminate and be of no further
force or effect as of the effective time of the Corporate
Transaction.
(iv)
Payment for Options in Lieu of
Exercise.
The Board may provide that the holder
of an Option may not exercise such Option but will receive a
payment, in such form as may be determined by the Board, equal
in value to the excess, if any, of (A) the value of the
property the holder of the Option would have received upon the
exercise of the Option (including, at the discretion of the
Board, any unvested portion of such Option), over (B) any
exercise price payable by such holder in connection with such
exercise. To the extent permitted by Section 409A of the
Code, the Board may delay the payment under this provision to
take into account escrows, earn-outs or other holdbacks or
contingencies applicable to the Corporate Transaction.
(d)
Change in Control.
On an
extraordinary basis, the Board may, in its sole discretion,
determine case by case whether an Option may be subject to
additional acceleration of vesting and exercisability upon or
after a Change in Control as may be provided in the Option
Agreement for such Option or as may be provided in any other
written agreement between the Company or any Affiliate and the
Participant, but in the absence of such an express provision, no
such acceleration shall occur.
10.
Termination
or Suspension of the Plan.
(a)
Plan Term.
Unless sooner terminated
by the Board pursuant to Section 2, the Plan shall
automatically terminate on the day before the tenth (10th)
anniversary of the date the Plan is adopted by the Board or
approved by the stockholders of the Company, whichever is
earlier. No Options may be granted under the Plan while the Plan
is suspended or after it is terminated.
(b)
No Impairment of Rights.
Termination
of the Plan shall not impair rights and obligations under any
Option granted while the Plan is in effect except with the
written consent of the affected Participant.
11.
Effective
Date of Plan.
This Plan shall become effective on the Effective Date.
12.
Choice
of Law.
The law of the State of Delaware shall govern all questions
concerning the construction, validity and interpretation of this
Plan, without regard to such states conflict of laws rules.
13.
Definitions.
As
used in the Plan, the definitions contained in this
Section 13 shall apply to the capitalized terms indicated
below:
(a)
Affiliate
means, at the time of
determination, any parent or subsidiary
of the Company as such terms are defined in Rule 405 of the
Securities Act. The Board shall have the authority to determine
the time or times at which parent or
subsidiary status is determined within the foregoing
definition.
(b)
Board
means the Board of Directors
of the Company.
(c)
Capitalization Adjustment
means any
change that is made in, or other events that occur with respect
to, the Common Stock subject to the Plan or subject to any
Option after the Effective Date without the receipt of
consideration by the Company (through merger, consolidation,
reorganization, recapitalization, reincorporation, stock
dividend, dividend in property other than cash, stock split,
liquidating dividend, combination of shares, exchange of shares,
change in corporate structure or other transaction not involving
the receipt of consideration by the Company). Notwithstanding
the foregoing, the conversion of any convertible securities of
the Company shall not be treated as a transaction without
receipt of consideration by the Company. For the avoidance
of doubt, the
1-for-15
reverse stock split of the Common Stock effected on
June 19, 2007 shall not be considered to have occurred
after the Effective Date and therefore shall not be considered a
Capital Adjustment.
(d)
Cause
shall have the meaning set
forth in any employment agreement or offer letter between a
Participant and the Company or an Affiliate to the extent then
effective;
provided, however
, that if any such employment
agreement or offer letter does not contain a definition of
Cause, then the term shall mean with
D-9
respect to a Participant, the occurrence of any of the following
events: (i) such Participants commission of any
felony or any crime involving fraud, dishonesty or moral
turpitude under the laws of the United States or any state
thereof; (ii) such Participants attempted commission
of, or participation in, a fraud or act of dishonesty against
the Company; (iii) such Participants intentional,
material violation of any contract or agreement between the
Participant and the Company or of any statutory duty owed to the
Company; (iv) such Participants unauthorized use or
disclosure of the Companys confidential information or
trade secrets; or (v) such Participants gross
misconduct. The determination that a termination of the
Participants Continuous Service is either for Cause or
without Cause shall be made by the Company in its sole
discretion. Any determination by the Company that the Continuous
Service of a Participant was terminated by reason of dismissal
without Cause for the purposes of outstanding Options held by
such Participant shall have no effect upon any determination of
the rights or obligations of the Company or such Participant for
any other purpose.
(e)
Change in Control
means the
occurrence, in a single transaction or in a series of related
transactions, of any one or more of the following events:
(i) any Exchange Act Person becomes the Owner, directly or
indirectly, of securities of the Company representing more than
fifty percent (50%) of the combined voting power of the
Companys then outstanding securities other than by virtue
of a merger, consolidation or similar transaction.
Notwithstanding the foregoing, a Change in Control shall not be
deemed to occur (A) on account of the acquisition of
securities of the Company by an investor, any affiliate thereof
or any other Exchange Act Person from the Company in a
transaction or series of related transactions the primary
purpose of which is to obtain financing for the Company through
the issuance of equity securities, or (B) solely because
the level of Ownership held by any Exchange Act Person (the
Subject Person
) exceeds the designated
percentage threshold of the outstanding voting securities as a
result of a repurchase or other acquisition of voting securities
by the Company reducing the number of shares outstanding,
provided that if a Change in Control would occur (but for the
operation of this sentence) as a result of the acquisition of
voting securities by the Company, and after such share
acquisition, the Subject Person becomes the Owner of any
additional voting securities that, assuming the repurchase or
other acquisition had not occurred, increases the percentage of
the then outstanding voting securities Owned by the Subject
Person over the designated percentage threshold, then a Change
in Control shall be deemed to occur;
(ii) there is consummated a merger, consolidation or
similar transaction involving (directly or indirectly) the
Company and, immediately after the consummation of such merger,
consolidation or similar transaction, the stockholders of the
Company immediately prior thereto do not Own, directly or
indirectly, either (A) outstanding voting securities
representing more than fifty percent (50%) of the combined
outstanding voting power of the surviving Entity in such merger,
consolidation or similar transaction or (B) more than fifty
percent (50%) of the combined outstanding voting power of the
parent of the surviving Entity in such merger, consolidation or
similar transaction, in each case in substantially the same
proportions as their Ownership of the outstanding voting
securities of the Company immediately prior to such transaction;
(iii) the stockholders of the Company approve or the Board
approves a plan of complete dissolution or liquidation of the
Company, or a complete dissolution or liquidation of the Company
shall otherwise occur, except for a liquidation into a parent
corporation; or
(iv) there is consummated a sale, lease, exclusive license
or other disposition of all or substantially all of the
consolidated assets of the Company and its Subsidiaries, other
than a sale, lease, license or other disposition of all or
substantially all of the consolidated assets of the Company and
its Subsidiaries to an Entity, more than fifty percent (50%) of
the combined voting power of the voting securities of which are
Owned by stockholders of the Company in substantially the same
proportions as their Ownership of the outstanding voting
securities of the Company immediately prior to such sale, lease,
license or other disposition.
For the avoidance of doubt, the term Change in Control shall not
include a sale of assets, merger or other transaction effected
exclusively for the purpose of changing the domicile of the
Company.
D-10
Notwithstanding the foregoing or any other provision of this
Plan, the definition of Change in Control (or any analogous
term) in an individual written agreement between the Company or
any Affiliate and the Participant shall supersede the foregoing
definition with respect to Options subject to such agreement;
provided, however
, that if no definition of Change in
Control or any analogous term is set forth in such an individual
written agreement, the foregoing definition shall apply.
(f)
Code
means the Internal Revenue Code
of 1986, as amended.
(g)
Committee
means a committee of one
(1) or more Directors to whom authority has been delegated
by the Board in accordance with Section 2(c).
(h)
Common Stock
means the common stock
of the Company.
(i)
Company
means Northwest
Biotherapeutics, Inc., a Delaware corporation.
(j)
Consultant
means any person,
including an advisor, who is (i) engaged by the Company or
an Affiliate to render consulting or advisory services and is
compensated for such services, or (ii) serving as a member
of the board of directors of an Affiliate and is compensated for
such services. However, service solely as a Director, or payment
of a fee for such service, shall not cause a Director to be
considered a Consultant for purposes of the Plan.
(k)
Continuous Service
means that the
Participants service with the Company or an Affiliate,
whether as an Employee, Director or Consultant, is not
interrupted or terminated. A change in the capacity in which the
Participant renders service to the Company or an Affiliate as an
Employee, Consultant or Director or a change in the entity for
which the Participant renders such service, provided that there
is no interruption or termination of the Participants
service with the Company or an Affiliate, shall not terminate a
Participants Continuous Service. For example, a change in
status from an employee of the Company to a consultant to an
Affiliate or to a Director shall not constitute an interruption
of Continuous Service. To the extent permitted by law, the Board
or the chief executive officer of the Company, in that
partys sole discretion, may determine whether Continuous
Service shall be considered interrupted in the case of any leave
of absence approved by that party, including sick leave,
military leave or any other personal leave. Notwithstanding the
foregoing, a leave of absence shall be treated as Continuous
Service for purposes of vesting in an Option only to such extent
as may be provided in the Companys leave of absence
policy, in the written terms of any leave of absence agreement
or policy applicable to the Participant, or as otherwise
required by law.
(l)
Corporate Transaction
means the
occurrence, in a single transaction or in a series of related
transactions, of any one or more of the following events:
(i) a sale or other disposition of all or substantially
all, as determined by the Board in its sole discretion, of the
consolidated assets of the Company and its Subsidiaries;
(ii) a sale or other disposition of at least fifty percent
(50%) of the outstanding securities of the Company;
(iii) the consummation of a merger, consolidation or
similar transaction following which the Company is not the
surviving corporation; or
(iv) the consummation of a merger, consolidation or similar
transaction following which the Company is the surviving
corporation but the shares of Common Stock outstanding
immediately preceding the merger, consolidation or similar
transaction are converted or exchanged by virtue of the merger,
consolidation or similar transaction into other property,
whether in the form of securities, cash or otherwise.
(m)
Covered Employee
shall have the
meaning provided in Section 162(m)(3) of the Code and the
regulations promulgated thereunder.
(n)
Director
means a member of the Board.
(o)
Disability
means the permanent and
total disability of a person within the meaning of
Section 22(e)(3) of the Code.
D-11
(p)
Effective Date
means the later of
(i) the date of approval of this Plan by the Board, and
(ii) the date the Common Stock is admitted to the
Alternative Investments Market of the London Stock Exchange.
Notwithstanding the foregoing, no Common Stock shall be issued
pursuant to an Option unless and until the Plan has been
approved by the stockholders of the Company, which approval
shall be within twelve (12) months before or after the date
the Plan is adopted by the Board.
(q)
Employee
means any person employed
by the Company or an Affiliate. However, service solely as a
Director, or payment of a fee for such services, shall not cause
a Director to be considered an Employee for purposes
of the Plan.
(r)
Entity
means a corporation,
partnership, limited liability company or other entity.
(s)
Exchange Act
means the Securities
Exchange Act of 1934, as amended.
(t)
Exchange Act Person
means any
natural person, Entity or group (within the meaning
of Section 13(d) or 14(d) of the Exchange Act), except that
Exchange Act Person shall not include (i) the
Company or any Subsidiary of the Company, (ii) any employee
benefit plan of the Company or any Subsidiary of the Company or
any trustee or other fiduciary holding securities under an
employee benefit plan of the Company or any Subsidiary of the
Company, (iii) an underwriter temporarily holding
securities pursuant to an offering of such securities,
(iv) an Entity Owned, directly or indirectly, by the
stockholders of the Company in substantially the same
proportions as their Ownership of stock of the Company; or
(v) any natural person, Entity or group (within
the meaning of Section 13(d) or 14(d) of the Exchange
Act) that, as of the Effective Date of the Plan as set forth in
Section 11, is the Owner, directly or indirectly, of
securities of the Company representing more than fifty percent
(50%) of the combined voting power of the Companys then
outstanding securities.
(u)
Fair Market Value
means, as of any
date, the value of the Common Stock determined as follows:
(i) If the Common Stock is listed on any established stock
exchange or traded on any established market, the Fair Market
Value of a share of Common Stock shall be the closing sales
price for such stock (or the closing bid, if no sales were
reported) as quoted on such exchange or market (or the exchange
or market with the greatest volume of trading in the Common
Stock) for the last market trading day prior to the date of
determination, as reported in
The Wall Street Journal
or
such other source as the Board deems reliable.
(ii) In the absence of such markets for the Common Stock,
the Fair Market Value shall be determined by the Board in good
faith.
(v)
Incentive Stock Option
means an
option granted pursuant to Section 5 of the Plan that is
intended to be, and qualifies as, an incentive stock
option within the meaning of Section 422 of the Code
and the regulations promulgated thereunder.
(w)
Non-Employee Director
means a
Director who either (i) is not a current employee or
officer of the Company or an Affiliate, does not receive
compensation, either directly or indirectly, from the Company or
an Affiliate for services rendered as a consultant or in any
capacity other than as a Director (except for an amount as to
which disclosure would not be required under Item 404(a) of
Regulation S-K
promulgated pursuant to the Securities Act
(Regulation S-K)),
does not possess an interest in any other transaction
for which disclosure would be required under Item 404(a) of
Regulation S-K,
and is not engaged in a business relationship for which
disclosure would be required pursuant to Item 404(b) of
Regulation S-K;
or (ii) is otherwise considered a non-employee
director for purposes of
Rule 16b-3.
(x)
Nonstatutory Stock Option
means any
option granted pursuant to Section 5 of the Plan that does
not qualify as an Incentive Stock Option.
(y)
Officer
means a person who is an
officer of the Company within the meaning of Section 16 of
the Exchange Act and the rules and regulations promulgated
thereunder.
(z)
Option
means an Incentive Stock
Option or a Nonstatutory Stock Option to purchase shares of
Common Stock granted pursuant to the Plan.
D-12
(aa)
Option Agreement
means a written
agreement between the Company and an Optionholder evidencing the
terms and conditions of an Option grant. Each Option Agreement
shall be subject to the terms and conditions of the Plan.
(bb)
Optionholder
means a person to whom
an Option is granted pursuant to the Plan or, if permitted under
the terms of this Plan, such other person who holds an
outstanding Option.
(cc)
Outside Director
means a Director
who either (i) is not a current employee of the Company or
an affiliated corporation (within the meaning of
Treasury Regulations promulgated under Section 162(m) of
the Code), is not a former employee of the Company or an
affiliated corporation who receives compensation for
prior services (other than benefits under a tax-qualified
retirement plan) during the taxable year, has not been an
officer of the Company or an affiliated corporation,
and does not receive remuneration from the Company or an
affiliated corporation, either directly or
indirectly, in any capacity other than as a Director, or
(ii) is otherwise considered an outside
director for purposes of Section 162(m) of the Code.
(dd)
Own, Owned,
Owner, Ownership
A person or Entity
shall be deemed to Own, to have Owned,
to be the Owner of, or to have acquired
Ownership of securities if such person or Entity,
directly or indirectly, through any contract, arrangement,
understanding, relationship or otherwise, has or shares voting
power, which includes the power to vote or to direct the voting,
with respect to such securities.
(ee)
Participant
means a person to whom
an Option is granted pursuant to the Plan or, if applicable,
such other person who holds an outstanding Option.
(ff)
Plan
means this Northwest
Biotherapeutics, Inc. 2007 Stock Option Plan.
(gg)
Rule 16b-3
means
Rule 16b-3
promulgated under the Exchange Act or any successor to
Rule 16b-3,
as in effect from time to time.
(hh)
Securities Act
means the Securities
Act of 1933, as amended.
(ii)
Subsidiary
means, with respect to
the Company, (i) any corporation of which more than fifty
percent (50%) of the outstanding capital stock having ordinary
voting power to elect a majority of the board of directors of
such corporation (irrespective of whether, at the time, stock of
any other class or classes of such corporation shall have or
might have voting power by reason of the happening of any
contingency) is at the time, directly or indirectly, Owned by
the Company, and (ii) any partnership, limited liability
company or other entity in which the Company has a direct or
indirect interest (whether in the form of voting or
participation in profits or capital) of more than fifty percent
(50%).
(jj)
Ten Percent Stockholder
means
a person who Owns (or is deemed to Own pursuant to
Section 424(d) of the Code) stock possessing more than ten
percent (10%) of the total combined voting power of all classes
of stock of the Company or any Affiliate.
D-13
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
NORTHWEST BIOTHERAPEUTICS, INC.
The undersigned stockholder(s) of Northwest Biotherapeutics, Inc., a Delaware corporation (the
Company), hereby acknowledges receipt of the Notice of Annual Meeting of Stockholders and Proxy
Statement for the Companys 2008 Annual Meeting of Stockholders, and hereby appoints Alton L.
Boynton and Anthony P. Deasey, or either of them, proxies and attorneys-in-fact, with full power of
substitution, on behalf and in the name of the undersigned, to represent the undersigned at the
2008 Annual Meeting of Stockholders of the Company to be held at 10:00 a.m. (local time) on Friday,
June 13, 2008, at 7600 Wisconsin Avenue, Suite 700, Bethesda, Maryland 20814, or at any
adjournment(s) or postponement(s) thereof, and to vote all shares of the Companys common stock
which the undersigned would be entitled to vote if then and there personally present, on the
matters set forth on the reverse side of this proxy card.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. THE VOTES ENTITLED TO BE CAST BY THE
UNDERSIGNED WILL BE CAST IN ACCORDANCE WITH THE SPECIFICATIONS MADE. IF THIS PROXY IS EXECUTED BUT
NO SPECIFICATION IS MADE, THE VOTES ENTITLED TO BE CAST BY THE UNDERSIGNED WILL BE CAST FOR THE
FOREGOING PROPOSALS AND OTHERWISE IN THE DISCRETION OF THE PROXIES AT THE ANNUAL MEETING OR ANY
ADJOURNMENT(S) OR POSTPONEMENT(S) THEREOF.
Please date, sign and mail your proxy card back as soon as possible!
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE.)
Detach and return this portion only
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE MATTERS LISTED BELOW, TO COME BEFORE THE ANNUAL
MEETING.
1.
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ELECTION OF A CLASS I DIRECTOR FOR A THREE-YEAR TERM
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R. Steve Harris
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2.
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Approval of the Northwest Biotherapeutics, Inc. 2007 Stock Option Plan.
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o
FOR
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AGAINST
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ABSTAIN
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3.
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To transact such other business as may properly come before the Annual Meeting or any
adjournment(s) or postponement(s) thereof and as to which the undersigned hereby confers
discretionary authority.
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The proxies are authorized to vote, in their discretion, upon such other matter or matters that may
properly come before the meeting or any adjournment(s) or postponement(s) thereof.
PLEASE INDICATE IF YOU PLAN TO ATTEND THIS MEETING
o
PLEASE COMPLETE, DATE, SIGN AND RETURN THIS PROXY PROMPTLY.
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Signature:
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Signature if held jointly:
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Dated
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, 2008
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NOTE: Please sign exactly as your name appears hereon and date. If the shares are held jointly,
each holder should sign. When signing as an attorney, executor, administrator, trustee or guardian
or as an officer, signing for a corporation or other entity, please give full title under
signature.
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