SECURITIES AND EXCHANGE COMMISSION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
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o | | Soliciting Material Pursuant to§240.14a-12 |
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| ZOSANO PHARMA CORPORATION |
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ZOSANO PHARMA CORPORATION
34790 Ardentech Court
Fremont, California 94555
NOTICE OF 2020 ANNUAL MEETING OF STOCKHOLDERS
Dear Stockholder:
We invite you to attend Zosano Pharma Corporation’s 2020 Annual Meeting of Stockholders, which is being held as follows: | | | | |
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| Date: | Thursday, June 25, 2020 |
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ZOSANO PHARMA CORPORATION
34790 Ardentech Court
Fremont, California 94555
December 28, 2017
Dear Stockholder:
You are cordially invited to attend a special meeting of Stockholders of Zosano Pharma Corporation which is being held as follows:
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Date:
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Time: | | 8:30 a.m., Pacific time |
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Location:
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| Location: | Zosano Pharma Corporation
34790 Ardentech Court
Fremont, CA 9455594555* |
Your vote is very important, regardless
At the annual meeting, we will ask our stockholders to:
elect Joseph “Jay” P. Hagan, Steven Lo and Kleanthis G. Xanthopoulos, Ph.D., as our Class III directors, to serve for a three-year term ending at our 2023 annual meeting of stockholders;
ratify the numberappointment of shares ofDeloitte & Touche LLP as our voting securities that you own. I encourageindependent registered public accounting firm for our fiscal year ending December 31, 2020; and
consider any other business properly presented at the meeting.
The accompanying proxy statement describes these matters. We urge you to read this information carefully.
You may vote
on these matters in person, by
telephone, overproxy or via the internet or
by marking, signing, datingtelephone. Whether or not you plan to attend the annual meeting, we ask that you promptly complete and
returning yourreturn the enclosed proxy card
in the enclosed addressed, postage-paid envelope or vote via the internet or telephone, so that your shares will be represented and voted at the
special meeting
whether or not you plan to attend.in accordance with your wishes. If you attend the
specialannual meeting, you
will, of course, have the right to revoke themay withdraw your proxy
or internet or telephone vote and vote your shares in person.
If your shares are held in Only stockholders of record at the nameclose of a broker, trust, bank or other nominee, and you receive noticebusiness on May 11, 2020 may vote at the meeting.
By order of the special meeting through your brokerBoard of Directors
Steven Lo
President and Chief Executive Officer
May 29, 2020
* Due to the emerging public health impact of the coronavirus or through another intermediary, please vote or returnCOVID-19, we are planning for the materials in accordance with the instructions provided to you by such broker or other intermediary or contact your broker directly in order to obtain a proxy issued to you by your nominee holder to attendpossibility that the meeting and vote in person. Failuremay be held virtually over the internet. If we take this step, we will announce the decision to do so may result in advance, and details on how to participate will be set forth in a press release issued by us and available on our website at www.zosanopharma.com under “Investors-Press Releases.” As always, we encourage you to vote your shares not being eligibleprior to be voted by proxy at the annual meeting.On behalf
PROXY STATEMENT
ZOSANO PHARMA CORPORATION
2020 ANNUAL MEETING OF STOCKHOLDERS
Table of the board of directors, I urge you to submit your proxy as soon as possible, even if you currently plan to attend the meeting in person.Thank you for your support of our company. I look forward to seeing you at the special meeting.
Contents
PROXY STATEMENT
ZOSANO PHARMA CORPORATION
2020 ANNUAL MEETING OF STOCKHOLDERS
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John Walker | |
Chairman of the Board of Directors | Page |
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IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR
THE STOCKHOLDERANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON JANUARY 23, 2018:
Our official Notice of Special Meeting ofJUNE 25, 2020
This proxy statement and our 2019 Annual Report to Stockholders
and Proxy Statement are
also available for viewing, printing and downloading
at:www.edocumentview.com/ZSAN
at www.proxyvote.com and on at www.zosanopharma.com under "Investors-Financials & Filings-Annual Reports and Proxies."
Zosano Pharma Corporation
34790 Ardentech Court
Fremont, California 94555
Telephone: (510)745-1200
NOTICE OF SPECIALINFORMATION ABOUT THE MEETING OF STOCKHOLDERS
To Be Held January 23, 2018
The special meetingMeeting
The 2020 Annual Meeting of Stockholders of Zosano Pharma Corporation
a Delaware corporation,(the "Company," "we," "our" or
the Company,"us") will be held at 8:30 a.m., Pacific
Time,time, on
January 23, 2018,Thursday, June 25, 2020, at
34790 Ardentech Court, Fremont, CA 94555. We are holding the special meeting for the following purposes, which are described in more detail in the accompanying Proxy Statement: | (1) | To amend the Amended and Restated Certificate of Incorporation of the Company to increase the number of authorized shares of common stock from 100,000,000 to 250,000,000, or the Increase in Number of Authorized Shares of Common Stock Proposal. |
| (2) | To approve the proposal to authorize the Company’s board of directors, in its discretion but in no event later than November 23, 2018 (in advance of the expiration of the second 180 calendar day period the Company may be afforded by Nasdaq to regain compliance with the $1.00 minimum bid price continued listing requirement), to amend the Company’s Amended and Restated Certificate of Incorporation to effect a reverse stock split of the Company’s common stock, at a ratio in the range of1-for-5 to1-for-20, such ratio to be determined by the board of directors and included in a public announcement, or the Reverse Stock Split Proposal. |
| (3) | To approve an adjournment of the special meeting, if necessary, to solicit additional proxies if there are not sufficient votes in favor of any of the foregoing proposals, or the Adjournment Proposal. |
Stockholders are referred to the Proxy Statement accompanying this notice for more detailed information with respect to the matters to be considered at the special meeting. After careful consideration,the board of directors recommends a vote FOR the Increase in Number of Authorized Shares of Common Stock Proposal (Proposal 1); FOR the Reverse Stock Split Proposal (Proposal 2); and FOR the Adjournment Proposal (Proposal 3).
The board of directors has fixed the close of business on December 12, 2017 as the record date. Only holders of record of shares of our common stock on such date are entitled to vote at the special meeting or at any postponement(s) or adjournment(s) of the special meeting.
YOUR VOTE AND PARTICIPATION IN THE COMPANY’S AFFAIRS ARE IMPORTANT.
If your shares are registered in your name, even if you plan to attend the special meeting or any postponement or adjournment of the special meeting in person, we request that you vote by telephone, over the internet, or complete, sign and mail your proxy card to ensure that your shares will be represented at the special meeting.
If your shares are held in the name of a broker, trust, bank or other nominee, and you receive notice of the special meeting through your broker or through another intermediary, please vote or complete and return the materials in accordance with the instructions provided to you by such broker or other intermediary or contact your broker directly in order to obtain a proxy issued to you by your nominee holder to attend the special meeting and vote in person. Failure to do so may result in your shares not being eligible to be voted by proxy at the special meeting.
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By order of the Board of Directors, |
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John Walker |
Chairman of the Board of Directors |
December 28, 2017
Zosano Pharma Corporation
34790 Ardentech Court
Fremont, California 94555
Telephone: (510)745-1200
PROXY STATEMENT
FOR
SPECIAL MEETING OF STOCKHOLDERS
To Be Held January 23, 2018
Unless the context otherwise requires, references in this Proxy Statement to “we,” “us,” “our,” the “Company,” or “Zosano” refer to Zosano Pharma Corporation, a Delaware corporation. In addition, unless the context otherwise requires, references to “stockholders” are to the holders of our voting securities, which consist of our common stock, par value $0.0001 per share.
The accompanying proxy is solicited by the board of directors on behalf of Zosano Pharma Corporation, a Delaware corporation, to be voted at a special meeting of stockholders of the Company to be held on January 23, 2018, at the time and place and for the purposes set forth in the accompanying Notice of Special Meeting of Stockholders, or Notice, and at any adjournment(s) or postponement(s) of the special meeting. This Proxy Statement and accompanying form of proxy are expected to be first sent or given to stockholders on or about December 26, 2017.
The executive office of the Company isheadquarters located at and the mailing address of Zosano is, 34790 Ardentech Court, Fremont, California 94555.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR
THE STOCKHOLDER MEETING TO BE HELD ON January 23, 2018:
Our official Notice of Special Meeting of Stockholders and Proxy Statement are available for viewing, printing and downloading at:
www.edocumentview.com/ZSAN
ABOUT THE SPECIAL MEETING
What is a proxy?
A proxy is another person that you legally designate to vote your stock. If you designate someone as your proxy in a written document, that document is also called a “proxy” or a “proxy card.” If you are a street name holder, you must obtain a proxy from your broker or nominee in order to vote your shares in person at the special meeting.
What is a proxy statement?
A proxy statement is a document that regulations of the Securities and Exchange Commission, or the SEC, require that we give to you when we ask you to sign a proxy card to vote your stock at the special meeting.
What is the purpose of the special meeting?
At our special meeting, stockholders will act upon the matters outlined in the Notice, including the following:
| (1) | To amend the Amended and Restated Certificate of Incorporation of the Company to increase the number of authorized shares of common stock from 100,000,000 to 250,000,000. |
| (2) | To approve the proposal to authorize the Company’s board of directors, in its discretion but in no event later than November 23, 2018 (in advance of the expiration of the second 180 calendar day period the Company may be afforded by Nasdaq to regain compliance with the $1.00 minimum bid price continued listing requirement), to amend the Company’s Amended and Restated Certificate of Incorporation to effect a reverse stock split of the Company’s common stock, at a ratio in the range of1-for-5 to1-for-20, such ratio to be determined by the board of directors and included in a public announcement. |
| (3) | To approve an adjournment of the special meeting, if necessary, to solicit additional proxies if there are not sufficient votes in favor of any of the foregoing proposals. |
What is “householding” and how does it affect me?
With respect to eligible stockholders who share a single address, we may send only one Notice or Proxy Statement to that address unless we receive instructions to the contrary from any stockholder at that address. This practice, known as “householding,” is designed to reduce our printing and postage costs. However, if a stockholder of record residing at such address wishes to receive a separate Notice or Proxy Statement in the future, he or she may contact Zosano Pharma Corporation, 34790 Ardentech Court, Fremont, California 94555, Attention: Georgia Erbez, Chief Business Officer and Chief Financial Officer, telephone: (510)745-1200. Eligible94555. At the meeting, stockholders of record receiving multiple copies of our Notice or Proxy Statement can request householding by contacting us in the same manner. Stockholders who own shares through a bank, broker or other nominee can request householding by contacting the nominee.
We hereby undertake to deliver promptly, upon written or oral request, a copy of the Notice or Proxy Statement to a stockholder at a shared address to which a single copy of the document was delivered. Requests should be directed to us at the address or phone number set forth above.
What should I do if I receive more than one set of voting materials?
You may receive more than one set of voting materials, including multiple copies of the Notice or this Proxy Statement and multiple proxy cards or voting instruction cards. For example, if you hold your shares in more than one brokerage account, you will receive a separate voting instruction card for each brokerage account
in which you hold shares. Similarly, if you are a stockholder of record and hold shares in a brokerage account, you will receive a Notice for shares held in your name and a notice or voting instruction card for shares held in street name. Please follow the directions provided in the Notice and each additional notice or voting instruction card you receive to ensure that all your shares are voted.
What ison the record date for the meeting who are present or represented by proxy will have the opportunity to vote on the following matters:
to elect Joseph “Jay” P. Hagan, Steven Lo and
what does it mean?The record dateKleanthis G. Xanthopoulos, Ph.D., as our Class III directors, to determineserve for a three-year term ending at our 2023 annual meeting of stockholders;
to ratify the stockholders entitledappointment of Deloitte & Touche LLP as our independent registered public accounting firm for our fiscal year ending December 31, 2020; and
consider any other business properly presented at the meeting.
Due to noticethe emerging public health impact of the coronavirus or COVID-19, we are planning for the possibility that the meeting may be held virtually over the internet. If we take this step, we will announce the decision to do so in advance, and details on how to participate will be set forth in a press release issued by us and available on our websiteat www.zosanopharma.com under “Investors-Press Releases.”As always, we encourage you to vote your shares prior to the annual meeting.
This Proxy Solicitation
We have sent you this proxy statement and the enclosed proxy card because our Board of Directors is soliciting your proxy to vote at the special meeting (including any adjournment or postponement of the meeting).
This proxy statement summarizes information about the proposals to be considered at the meeting and other information you may find useful in determining how to vote.
The proxy card is the close of business on December 12, 2017. The record date was establishedmeans by the board of directors as required by Delaware law. On the record date, 39,460,931 shares of common stock were issued and outstanding.Who is entitledwhich you authorize another person to vote your shares at the special meeting?
meeting in accordance with your instructions.
We will pay the cost of soliciting proxies. Our directors, officers and employees may solicit proxies in person, by telephone or by other means. We will reimburse brokers and other nominee holders of shares for expenses they incur in forwarding proxy materials to the beneficial owners of those shares. We do not plan to retain the services of a proxy solicitation firm to assist us in this solicitation.
We will mail this proxy statement and the enclosed proxy card to stockholders for the first time on or about May 29, 2020. In this mailing, we will include a copy of our 2019 Annual Report to Stockholders, which includes our Annual Report on Form 10-K for the year ended December 31, 2019 (excluding exhibits), as filed with the Securities and Exchange Commission, or SEC.
Who May Vote
Holders of record of our common stock at the close of business on May 11, 2020 are entitled to one vote per share of common stock on each proposal properly brought before the record dateannual meeting.
A list of stockholders entitled to vote will be available at the annual meeting. In addition, you may contact our Chief Executive Officer, Steven Lo, at our principal executive offices located at 34790 Ardentech Court, Fremont, California 94555, to make arrangements to review a copy of the stockholder list at our offices, between the hours of 9:00 a.m. and 5:30 p.m., Pacific time, on any business day from June 15, 2020 to the time of the annual meeting.
How to Vote
You are entitled to one vote at the
special meeting.How many votes do I have?
On each matter to be voted upon, you have one votemeeting for each share of common stock you own as of the record date.
What is the quorum requirement?
Atregistered in your name at the close of business on December 12, 2017, 39,460,931May 11, 2020, the record date for the meeting. You may vote your shares of our common stock were outstanding. Our Amended and Restated Bylaws require that a majority of the outstanding shares of our common stock entitled to vote be represented, in person or by proxy, at the special meeting in order to constitute the quorum we need to transact business at the special meeting. We will count abstentions and brokernon-votes as shares represented at the meeting in determining whether a quorum exists.
What isperson, by proxy, via the difference between a stockholderinternet or via the toll-free number (for residents of the United States and Canada) listed on your proxy card.
To vote in person, you must attend the meeting, and then complete and submit the ballot provided at the meeting.
To vote by proxy, you must complete and return the enclosed proxy card. Your proxy card will be valid only if you sign, date and return it before the meeting. By completing and returning the proxy card, you will direct the persons named on the proxy card to vote your shares at the meeting in the manner you specify. If you complete all of the proxy card except the voting instructions, then the designated persons will vote your shares FOR the election of Mr. Hagan, Mr. Lo and Dr. Xanthopoulos as Class III directors and FOR the ratification of Deloitte and Touche LLP as our independent registered public accounting firm. If any other business properly comes before the meeting, then the designated persons will have the discretion to vote in any manner they deem appropriate.
To vote via the internet, you must access the website for internet voting at www.proxyvote.com. Please have the enclosed proxy card handy when you access the website, and then follow the on-screen instructions. Internet voting facilities for stockholders of record will be available 24 hours a day until 11:59 p.m. (Eastern time) on June 24, 2020. If you vote via the internet, you do not have to return your proxy card via mail.
To vote via telephone, use any touch-tone telephone and call 1 (800) 690-6903 to transmit your voting instructions up until 11:59 p.m. (Eastern time) on June 24, 2020. Please have the enclosed proxy card handy when you call, and then follow the instructions. If you vote via telephone, you do not have to return your proxy card via mail.
If you vote by proxy or via the internet or telephone, you may revoke your vote at any time before it is exercised by taking one of the following actions:
sending written notice to our Chief Executive Officer at our address set forth on the notice of meeting appearing on the cover of this proxy statement;
voting again by proxy or via the internet or telephone on a
“street name” holder?If your shares are registered directly in your name with Computershare,later date; or
attending the meeting, notifying our stock transfer agent,Chief Executive Officer that you are consideredpresent, and then voting in person.
Shares Held by Brokers or Nominees
If the
stockholder of record with respect to those shares. The Proxy Statement has been sent directly toshares you
by us.If your sharesown are held in a stock brokerage account or“street name” by a bank or other nominee, the nominee is consideredbrokerage firm, your brokerage firm, as the record holder of those shares. You are considered the beneficial owner of these shares, and your shares, are held in “street name.” A notice or Proxy Statement and voting instruction card have been forwarded to you by your nominee. As the beneficial owner, you have the right to direct your nominee concerning howis required to vote your shares by using the voting instructions they included in the mailing or by following their instructions for voting by telephone or the internet. To vote by proxy oraccording to instruct your broker howinstructions. In order to vote your shares, you shouldwill need to follow the directions your brokerage firm provides to you. Many brokers also offer the option of providing voting instructions to them over the internet or by telephone, directions for which would be provided with theby your brokerage firm on your voting instruction card.
What is a brokerform.
non-vote?Brokernon-votes occur when shares are held indirectly through a broker, bank or other intermediary on behalf of a beneficial owner (referred to as held in “street name”) and the broker submits a proxy but does not vote for a matter because the broker has not received voting instructions from the beneficial owner and (i) the broker does not have discretionary voting authority on the matter or (ii) the broker chooses not to vote on a matter for which it has discretionary voting authority. Under stock exchange rules applicable to most brokerage firms, if you do not give instructions to your broker, it is permitted to vote any shares it holds for your account in its discretion with respect to “routine” proposals, but it is not allowed to vote your shares with respect to certain non-routine proposals. non-routine proposals.
If I amProposal 1, regarding the election of directors is a beneficial owner of shares, can my brokerage firm vote my shares?
“non-routine” proposal. If you are a beneficial owner and do not vote via the internet or telephone or by returning a signed voting instruction card toinstruct your broker your shares may be voted onlyhow to vote with respect toso-called “routine” matters where Proposal 1, your broker has discretionary voting authority over your shares.
We encourage you to provide instructions to your brokerage firm via the internet or telephone or by returning your signed voting instruction card. This ensures thatwill not vote on this proposal and your shares will be voted atrecorded as “broker non-votes” and will not affect the special meetingoutcome of the vote on Proposal 1. “Broker non-votes” are shares that are held in “street name” by a bank or brokerage firm that indicates on its proxy that, while voting in its discretion on one matter, it does not have or did not exercise discretionary authority to vote on another matter.
Proposal 2, the ratification of the appointment of Deloitte & Touche LLP as our independent registered public accounting firm, is considered to be a “routine” item under the applicable rules and your broker will be able to vote on that item even if it does not receive instructions from you, so long as it holds your shares in its name.
If a broker or nominee holds shares of our common stock in “street name” for your account, then this proxy statement may have been forwarded to you with a voting instruction card, which allows you to instruct the broker or nominee how to vote your shares on the proposals described herein. To vote by proxy or to instruct your broker how to vote, you should follow the directions provided with the voting instruction card. In order to have your vote counted on Proposals 1 and 2, you must either provide timely voting instructions to your broker or obtain a properly executed proxy from the broker or other record holder of the shares that authorizes you to act on behalf of the record holder with respect to all of the proposals described in this Proxy Statement.How do I vote my shares?
You are entitledshares held for your account.
Quorum Required to one vote at the meeting for each share of common stock registered in your name atTransact Business
At the close of business on December 12, 2017,May 11, 2020, 54,361,635 shares of our common stock were outstanding. Our Bylaws require that a majority of the record date for the meeting. You may vote youroutstanding shares of our common stock be represented, in person, by remote communication, if applicable, or by proxy, at the meeting in order to constitute the quorum we need to transact business at the meeting. We will count abstentions and broker non-votes as shares represented at the meeting in determining whether a quorum exists.
Votes Required
Proposal 1 - Election of Directors. Directors will be elected by a plurality of the votes of the shares present in person, by remote communication, if applicable, or represented by proxy viaat the internetmeeting and entitled to vote. Stockholders will be given the choice to vote “for” or via“withhold” votes for each nominee. Thus, the toll-freenominees receiving the greatest number (for residentsof votes “FOR” their election will be elected. Broker non-votes are not considered votes entitled to vote and therefore will not affect the outcome of the United States and Canada) listed on your proxy card. | • | | To vote in person, you must attend the meeting, and then complete and submit the ballot provided at the meeting. |
| • | | To vote by proxy, you must complete and return the enclosed proxy card. Your proxy card will be valid only if you sign, date and return it before the meeting. By completing and returning the proxy card, you will direct the persons named on the proxy card to vote your shares at the meeting in the manner you specify. If you complete all of the proxy card except one or more of the voting instructions, then the designated proxies will vote your shares as to which you provide no voting instructions in the manner described under “What if I do not specify how I want my shares voted?” below. If any other business properly comes before the meeting, then the designated persons will have the discretion to vote in any manner they deem appropriate. |
| • | | To vote via the internet,you must access the website for internet voting at www.investorvote.com/ZSAN. Please have the enclosed proxy card handy when you access the website, and then follow theon-screen instructions. Internet voting facilities for stockholders of record will be available 24 hours a day until 1:00 a.m. (Central time) on January 23, 2018. If you vote via the internet, you do not have to return your proxy card via mail. |
| • | | To vote via telephone, use any touch-tone telephone and call1-800-652-VOTE (8683) to transmit your voting instructions up until 1:00 a.m. (Central time) on January 23, 2018. Please have the enclosed proxy card handy when you call, and then follow the instructions. If you vote via telephone, you do not have to return your proxy card via mail. |
Even if you currently plan to attend the special meeting, we recommend that you vote by telephone or internet or return your proxy card or voting instructions as described above so that your votes will be counted if you later decide not to attend the special meeting or are unable to attend.
Who counts the votes?
All votes will be tabulated by the inspectorvote.
Proposal 2 - Ratification of election appointed by the boardAppointment of directors for the special meeting. Each proposal will be tabulated separately.What are my choices when voting?
As to each of the Increase in Number of Authorized Shares of Common Stock Proposal, the Reverse Stock Split Proposal and the Adjournment Proposal, stockholders may vote for the proposal, against the proposal, or abstain from voting on the proposal.
What are the board of directors’ recommendations on how I should vote my shares?
Independent Registered Public Accounting Firm. The board of directors recommends that you vote your shares as follows:
Proposal 1—FOR the Increase in Number of Authorized Shares of Common Stock Proposal.
Proposal 2—FOR the Reverse Stock Split Proposal.
Proposal 3—FOR the Adjournment Proposal.
What if I do not specify how I want my shares voted?
If you are a record holder who returns a completed proxy card that does not specify how you want to vote your shares on one or more proposals, the designated proxies will vote your shares for each proposal as to which you provide no voting instructions, and such shares will be voted in the following manner:
Proposal 1—FOR the Increase in Number of Authorized Shares of Common Stock Proposal.
Proposal 2—FOR the Reverse Stock Split Proposal.
Proposal 3—FOR the Adjournment Proposal.
If you are a street name holder and do not provide voting instructions on one or more proposals, your bank, broker or other nominee may be able to vote those shares. See “What is a brokernon-vote?”
Can I change my vote?
Yes. If you are a record holder, you may revoke your proxy at any time by any of the following means:
Attending the special meeting and voting in person. Your attendance at the special meeting will not by itself revoke a proxy. You must vote your shares by ballot at the special meeting to revoke your proxy.
Voting again by telephone or over the internet (only your latest telephone or internet vote submitted prior to the special meeting will be counted).
If you requested and received written proxy materials, completing and submitting a new valid proxy bearing a later date.
Sending written notice to our Secretary at our address set forth on the notice of meeting appearing on the cover of this Proxy Statement.
If you are a street name holder, your bank, broker or other nominee should provide instructions explaining how you may change or revoke your voting instructions.
What percentage of the vote is required to approve each proposal?
Approval of each of the Increase in Number of Authorized Shares of Common Stock Proposal and the Reverse Stock Split Proposal will require the affirmative vote of thea majority of shares present in person, by remote communication, if applicable, or represented by proxy at the meeting and entitled to vote generallyis required for the ratification of the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2020. Abstentions will have the same effect as a vote against this proposal. Brokers have authority in the absence of timely instructions from their beneficial owners to vote on this proposal. As a result, there will be no broker non-votes for this proposal.
What Happens if a Change to the Annual Meeting is Necessary Due to Exigent Circumstances?
While we have every intention of holding the annual meeting as indicated in the “Notice of 2020 Annual Meeting of Stockholders,” if exigent and unexpected circumstances, such as a global health crisis like COVID-19, prevent us from holding the annual meeting as planned, we may determine to change the location of the annual meeting or to switch to an alternative method of holding the meeting, such as a virtual meeting. If we need to take such action on an exceptional basis, we plan on issuing a press release notifying our stockholders of such development, which will be available on our websiteat www.zosanopharma.com under “Investors-Press Releases.” Any such decision by us has no impact on a stockholder’s ability to provide their proxy by using the internet or telephone or by completing, signing, dating and mailing their proxy card, each as explained in this proxy statement.
Householding of Annual Meeting Materials
Some banks, brokers, and other nominee record holders may be “householding” our proxy statements and annual reports. This means that only one copy of our proxy statement and annual report to stockholders may have been sent to multiple stockholders in your household. We will promptly deliver a copy of either document to you if you write or call us at our principal executive offices, 34790 Ardentech Court, Fremont, California 94555, Attention: Steven Lo, President and Chief Executive Officer, telephone: (510) 745-1200. In the future, if you want to receive separate copies of the proxy statement or annual report to stockholders, or if you are receiving multiple copies and would like to receive only one copy per household, you should contact your bank, broker, or other nominee record holder, or you may contact us at the above address and telephone number.
Annual Report on Form 10-K
We will promptly deliver to you a copy of our Annual Report on Form 10-K for the year ended December 31, 2019 and additional copies of our proxy statement, without charge, if you write or call us at the following address or telephone number: Zosano Pharma Corporation, 34790 Ardentech Court, Fremont, California 94555, Attention: Steven Lo, President and Chief Executive Officer, telephone: (510) 745-1200.
PROPOSAL 1: ELECTION OF DIRECTORS
The first proposal on the subject matter. The approvalagenda for the annual meeting is the election of Joseph “Jay” P. Hagan, Steven Lo and Kleanthis G. Xanthopoulos, Ph.D. to serve as Class III directors.
Our Board of Directors is divided into three classes:
Linda Grais M.D., J.D. and John P. Walker are Class I directors whose terms end at our annual meeting of stockholders in 2021;
Steven A. Elms and Kenneth R. Greathouse are Class II directors whose terms end at our annual meeting of stockholders in 2022; and
Joseph “Jay” P. Hagan, Steven Lo and Kleanthis G. Xanthopoulos, Ph.D. are Class III directors whose terms end at this year’s annual meeting of stockholders.
At each annual meeting of stockholders, a Class of directors is elected for a three-year term to succeed the directors of the Adjournment Proposal requiressame Class whose terms are then expiring. The term of the affirmative voteClass III director elected at our 2020 annual meeting of stockholders will begin at the meeting and end at our 2023 annual meeting of stockholders, or, if later, when such director’s successor has been elected and has qualified.
The following table sets forth certain information as of May 11, 2020 regarding our Class III directors, who have been nominated for election, and each other director who will continue in office following the 2020 Annual Meeting of Stockholders.
|
| | | | | |
| Name | | Age | | Position(s) |
| Class III Director Nominees | | | | |
Joseph “Jay” P. Hagan (1) | | 51 |
| | Director, Audit Committee Chair |
| Steven Lo | | 53 |
| | President, Chief Executive Officer and Director |
Kleanthis G. Xanthopoulos, Ph.D. (2) | | 62 |
| | Director, Compensation Committee Chair |
| Continuing Directors | | | | |
| John P. Walker | | 71 |
| | Chairman of the Board of Directors |
Steven A. Elms (2) (3) | | 56 |
| | Director |
Linda Grais M.D., J.D. (1) (3) | | 63 |
| | Director, Nominating and Corporate Governance Committee Chair |
Kenneth R. Greathouse (1) (2) (3) | | 67 |
| | Director |
(1)Member of the Audit Committee
(2)Member of the Compensation Committee
(3)Member of the Nominating and Corporate Governance Committee
Class III Director Nominees
Joseph “Jay” P. Hagan has served as a member of our Board of Directors since May 2015. Mr. Hagan has served as Chief Executive Officer of Regulus Therapeutics Inc., a publicly-held clinical-stage biopharmaceutical company, since May 2017. Previously, he served as Regulus’s Chief Operating Officer, Principal Financial Officer and Principal Accounting Officer since January 2016. From 2011 to December 2015, Mr. Hagan served as Orexigen Therapeutics, Inc.’s Chief Business & Financial Officer. From May 2009 to June 2011, Mr. Hagan served as Orexigen’s Senior Vice President, Corporate Development, Strategy and Communications. Prior to Orexigen, Mr. Hagan worked at Amgen Inc., a publicly-held biopharmaceutical company, from September 1998 to April 2008, where he served in various senior business development roles, including founder and Managing Director of Amgen Ventures. Prior to starting the Amgen Ventures fund, Mr. Hagan was Head of Corporate Development at Amgen, leading such notable transactions as the acquisition of Immunex and Tularik and the spinouts of Novatrone and Relypsa, as well as numerous other business development efforts totaling over $15 billion in value. Before joining Amgen, Mr. Hagan spent five years in the bioengineering labs at Genzyme and Advance Tissue Sciences. He has served as a member of the Board of Directors of Aurinia Pharmaceuticals, Inc., a publicly-held clinical stage biopharmaceutical company, since February 2018, and a member of the Board of Directors of Regulus since June 2017. Mr. Hagan received a B.S. in Physiology and Neuroscience from the University of California, San Diego and a M.B.A from Northwestern University. We believe that Mr. Hagan’s education and professional background in science and business management, and his work as a senior executive in the biotechnology industry qualify him to serve as a member of our Board of Directors.
Steven Lo has served as our President and Chief Executive Officer and as a member of our Board of Directors since October 2019. Previously, from September 2015 to October 2019, Mr. Lo served as Chief Commercial Officer of Puma Biotechnology, Inc., a publicly-held biopharmaceutical company. Prior to joining Puma, Mr. Lo held a number of positions at Corcept Therapeutics Incorporated, a publicly-held pharmaceutical company, from September 2010 to September 2015, including Senior Vice President, Oncology, Senior Vice President & Chief Commercial Officer and Vice President & Head of Commercial Operations. Prior to Corcept, Mr. Lo was with Genentech, Inc. from December 1997 to September 2010. At Genentech, Mr. Lo held a number of positions, including Senior Director, Oncology Marketing, where he prepared and led the first U.S. launch of Herceptin® in adjuvant HER2-positive breast cancer. His other leadership roles at Genentech included Franchise Head, Endocrinology and Senior Director of Managed Care. Mr. Lo received a B.S. in Microbiology from the University of California, Davis and a Master of Health Administration from the University of Southern California. We believe that Mr. Lo’s perspective as our President and Chief Executive Officer qualifies him to serve as a member of our Board of Directors.
Kleanthis G. Xanthopoulos, Ph.D. has served as a member of our Board of Directors since April 2013. Dr. Xanthopoulos is a serial entrepreneur whose passion is building healthcare companies focused on innovation. Dr. Xanthopoulos has over two decades of experience in the biotechnology and pharmaceutical research industries as an executive, company founder, chief executive officer, investor and board member. He has founded three companies, has introduced two life science companies to Nasdaq and has financed and brokered numerous creative strategic alliance and partnership deals with large pharmaceutical partners. Dr. Xanthopoulos has served as the President and CEO of IRRAS AB, a commercial stage medical device and drug delivery company, since June 2015 and has served as Managing General Partner at Cerus DMCC since August 2015, which focuses on investing and building innovative biotechnology companies. Dr. Xanthopoulos served as President and Chief Executive Officer of Regulus Therapeutics Inc. (Nasdaq: RGLS) from the time of its formation in 2007 until June 2015. Prior to that, he was a managing director of Enterprise Partners Venture Capital. Dr. Xanthopoulos co-founded and served as President and Chief Executive Officer of Anadys Pharmaceuticals, Inc. (Nasdaq: ANDS) from its inception in 2000 to 2006 and remained a Director until its acquisition by Roche in 2011. He was Vice President at Aurora Biosciences (acquired by Vertex Pharmaceuticals, Inc.) from 1997 to 2000. Dr. Xanthopoulos participated in The Human Genome Project as a Section Head of the National Human Genome Research Institute from 1995 to 1997. Prior to this, Dr. Xanthopoulos was an Associate Professor at the Karolinska Institute, in Stockholm, Sweden, after completing a Postdoctoral Research Fellowship at The Rockefeller University, New York. An Onassis Foundation scholar, he was named the E&Y Entrepreneur of the year in 2006 in San Diego and the San Diego Business Journal’s Most Admired mid-size company CEO in 2013. Dr. Xanthopoulos received his B.Sc. in Biology with honors from Aristotle University of Thessaloniki, Greece, and received both his M.Sc. in Microbiology and Ph.D. in Molecular Biology from the University of Stockholm, Sweden. In addition to his roles at IRRAS AB, Dr. Xanthopoulos is a director of LDO S.p.a. (Milan, Italy), and is the co-founder and a member of the Board of Directors of privately held Sente Inc. We believe that Dr. Xanthopoulos’s senior executive experience managing and developing a major biotechnology company and his extensive industry knowledge and leadership experience in the biotechnology industry qualify him to serve as a member of our Board of Directors.
Continuing Directors
John P. Walker has served as a member of our Board of Directors since May 2016. From August 2017 to October 2019, Mr. Walker served as our President and Chief Executive Officer, and he served as our Interim Chief Executive Officer from May 2017 to August 2017. Mr. Walker has served as Chairman of Vizuri Health Sciences, LLC since March 2016 and Chairman of the Boards of Propella Therapeutics Inc. and Vizuri Health Sciences Consumer Health Inc. since May 2020. He also previously served as a Managing Director of Four Oaks Partners, a life sciences transaction advisory firm, which he co-founded in March 2012, until January 2015. As part of his activities with Four Oaks Partners, Mr. Walker served as the Chairman and Interim Chief Executive Officer of Neuraltus Pharmaceuticals, Inc., a privately held biopharmaceutical company, until October 2013. From February 2009 until July 2010, Mr. Walker was the Chief Executive Officer at iPierian Inc., a company focused on the use of inducible stem cells for drug discovery. From 2006 until 2009, Mr. Walker served as the Chairman and Chief Executive Officer of Novacea, Inc., a pharmaceutical company that merged with Trancept Pharmaceuticals, Inc. in 2009. Since 2001, Mr. Walker, acting as a consultant, was Chairman and Interim Chief Executive Officer at Kai Pharmaceuticals, Guava Technologies, Centaur Pharmaceuticals, Inc., and Chairman and Chief Executive Officer of Bayhill Therapeutics. From 1993 until 2001, Mr. Walker was the Chairman and Chief Executive Officer of Arris Pharmaceuticals Corporation and its successor, Axys Pharmaceuticals Inc. Mr. Walker previously served on the Board of Directors of Geron Corporation and Evotec AG. Mr. Walker currently serves on the Board of Directors of Lucile Packard Children's Hospital at Stanford University, is the Chairman of Packard Children's Health Alliance, and is a member of the Board of Trustees at the University of Puget Sound. Mr. Walker received a B.A. from the State University of New York at Buffalo and is a graduate of the Advance Executive Program at the Kellogg School of Management at Northwestern University. We believe Mr. Walker’s 40 years in the life sciences industry and his experience as Chairman and Chief Executive Officer of a majoritynumber of development and commercial stage companies, including his prior service as our President and Chief Executive Officer, qualify him to serve as a member of our Board of Directors.
Steven A. Elms has served as a member of our Board of Directors since May 2018. He currently serves as a Managing Partner of Aisling Capital LLC, a private equity firm. He joined Aisling Capital LLC in 2000 from the life sciences investment banking group of Chase H&Q (formerly Hambrecht and Quist Group Inc.) where he was a principal. Mr. Elms has served on the Board of Directors of ADMA Biologics, Inc., a publicly-held commercial biopharmaceutical company, since July 2007. Previously, Mr. Elms served on the Board of Directors of Loxo Oncology from 2013 to 2019, Ambit Biosciences Corp. from 2001 to 2014, MAP Pharmaceuticals, Inc. from 2004 to 2011 and has served on the boards of directors of a number of private companies. Mr. Elms received a B.A. in Human Biology from Stanford University and a M.B.A. from the Kellogg School of Management at Northwestern University. We believe that Mr. Elms's extensive financial services background and experience in the pharmaceutical and healthcare industries equip him to serve on our Board of Directors.
Linda Grais has served as a member of our Board of Directors since January 2019. She currently serves on the Board of Directors of Arca Biopharma and Corvus Pharmaceuticals, both publicly-held biopharmaceutical companies, and PRA Health Sciences, a publicly-held contract research organization. From 2012 to 2017, Dr. Grais was President, Chief Executive Officer, and a member of the Board of Directors of Ocera Therapeutics, Inc., a biopharmaceutical company, which was acquired by Mallinckrodt, a pharmaceutical company, in 2017. Prior to her employment by Ocera, Dr. Grais served as a Managing Member at InterWest Partners, a venture capital firm, from 2005 until 2011, investing in biotechnology and medical device companies. From July 1998 to July 2003, Dr. Grais was a founder and executive vice president of SGX Pharmaceuticals Inc., a drug discovery company, which was acquired by Eli Lilly & Co., a pharmaceutical company, in 2008. Prior to that, she worked as an attorney at Wilson Sonsini Goodrich & Rosati, where she represented Life Science companies. Before practicing law, Dr. Grais worked as an assistant clinical professor of Internal Medicine and Critical Care at the University of California, San Francisco. Dr. Grais received a B.A. from Yale University, an M.D. from Yale Medical School and a J.D. from Stanford Law School. We believe that Dr. Grais’s extensive experience in the biopharmaceutical industry and as an executive officer of pharmaceutical and biotechnology companies qualifies her to serve as a member of our Board of Directors.
Kenneth R. Greathouse has served as a member of our Board of Directors since October 2017. Mr. Greathouse co-founded and has served as President of Argent Development Group since 2004, co-founded and has served as Chief Executive Officer of Melbourne Laboratories since 2012, co-founded and has served as Chief Executive Officer of Valcrest Pharmaceuticals since 2015 and co-founded and has served as Chief Executive Officer of Hesperian BioPharma since 2015. Mr. Greathouse has served as a member of the Board of Directors of Grove Sleep Holdings since 2009 and as a member of the Board of Directors of Optime Care since 2020. Mr. Greathouse received a B.S. from the University of California, Berkeley. We believe that Mr. Greathouse’s extensive experience in the pharmaceutical industry and as an executive officer of pharmaceutical and biotechnology companies qualifies him to serve as a member of our Board of Directors.
If for any reason any of the nominees becomes unavailable for election, the persons designated in the proxy card may vote the shares represented by proxy for the election of a substitute nominated by the Board of Directors. Each of the nominees has consented to serve as a director if elected, and we currently have no reason to believe that a nominee will be unable to serve.
Directors will be elected by a plurality of the votes of the shares present in person, by remote communication, if applicable, or represented by proxy at the
meeting.How are abstentions and brokernon-votes treated?
Abstentions and brokernon-votes, are included in the determination of the number of shares present at the special meeting for determining a quorum at the meeting. Abstentions and brokernon-votes will have the same
effect as a voteAGAINST the Increase in Number of Authorized Shares of Common Stock Proposal and the Reverse Stock Split Proposal because such proposals require an affirmative vote by a majority of the shares outstanding and entitled to vote. A brokernon-vote or a failureThe nominees receiving the greatest number of votes “FOR” their election will be elected as Class III directors. Broker non-votes are not considered votes entitled to submit a proxy or vote at the special meetingand therefore will have no effect onnot affect the outcome of the Adjournment Proposal. An abstentionvote.
OUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF MR. HAGAN, MR. LO AND DR. XANTHOPOULOS.
PROPOSAL 2: RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
As a result of a review of various independent registered public accounting firms, on May 28, 2019, our Audit Committee appointed Deloitte & Touche LLP as our independent registered public accounting firm to audit our financial statements for the fiscal year ending December 31, 2019. Accordingly, we dismissed Marcum LLP (“Marcum”), which previously served as our independent registered public accounting firm and audited our financial statements for the fiscal years ended December 31, 2017 and 2018.
During the Company’s fiscal years ended December 31, 2017 and 2018, and any subsequent interim period through the date of Marcum’s dismissal, there were no: (1) disagreements with Marcum on any matters of accounting principles or practices, financial statement disclosure, or auditing scope and procedures which, if not resolved to the satisfaction of Marcum, would have caused Marcum to make reference to the subject matter of the disagreement in connection with their reports on the Company’s financial statements, or (2) there were no “reportable events” as that term is described in Item 304(a)(1)(v) of Regulation S-K of the rules and regulations of the SEC, during the Company’s years ended December 31, 2017 and 2018 or in any subsequent interim period through the date of Marcum’s dismissal. The audit reports of Marcum on the Company’s financial statements for the years ended December 31, 2017 and 2018, did not contain an adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope, or accounting principles, except that both of the reports included an explanatory paragraph with respect to the Company’s ability to continue as a going concern. The financial statements did not include any adjustments that might have resulted from the outcome of this uncertainty.
The Company provided Marcum with a copy of the disclosures made in a Current Report on Form 8-K (the “Report”) prior to the time the Report was filed with the SEC. The Company requested that Marcum furnish a letter addressed to the SEC stating whether or not it agrees with the statements made therein. A copy of Marcum’s letter dated May 31, 2019, was attached as Exhibit 16.1 to the Report.
Our Audit Committee is responsible for selecting and appointing our independent registered public accounting firm, and this appointment is not required to be ratified by our stockholders. However, our Audit Committee has selected Deloitte & Touche LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2020 and recommended that the Board of Directors submit this matter to the stockholders as a matter of good corporate practice. If the stockholders fail to ratify the appointment, then the Audit Committee will reconsider whether to retain Deloitte & Touche LLP and may retain Deloitte & Touche LLP or another without re-submitting the matter to our stockholders. Even if the appointment is ratified, the Audit Committee may, in its discretion, direct the appointment of a different independent registered public accounting firm at any time during the year if it determines that such a change would be in the best interests of the Company and our stockholders.
The affirmative vote of a majority of shares present in person, by remote communication, if applicable, or represented by proxy at the meeting and entitled to vote is required for the ratification of the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2020. Abstentions will have the same effect as a vote against
this proposal. Brokers have authority in the
Adjournment Proposal.Doabsence of timely instructions from their beneficial owners to vote on this proposal. As a result, there will be no broker non-votes for this proposal.
OUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE PROPOSAL TO RATIFY THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31, 2020.
INFORMATION ABOUT OUR BOARD OF DIRECTORS AND MANAGEMENT
Board Composition
Our Board of Directors currently consists of seven members, and there are no contractual obligations regarding the election of our directors. Each of our directors holds office until the director’s successor has been elected and qualified or until the director’s earlier death, resignation or removal.
Our Certificate of Incorporation and our Bylaws provide that the authorized number of directors may be changed only by resolution adopted by a majority of the authorized number of directors constituting the Board of Directors. Our Certificate of Incorporation and Bylaws also provide that a director may be removed only for cause by the affirmative vote of the holders of at least 66-2/3% of the voting power of all the then outstanding shares of capital stock of the Company entitled to vote generally at an election of directors, and that any vacancy on our Board of Directors, including a vacancy resulting from an increase in the authorized number of directors constituting the Board of Directors, may be filled only by vote of a majority of our directors then in office.
In accordance with the terms of our Certificate of Incorporation and Bylaws, our Board of Directors is divided into three classes, designated as Class I, Class II and Class III, with members of each Class serving staggered three-year terms, divided as follows:
the Class I directors are Dr. Grais and Mr. Walker whose terms will expire at our annual meeting of stockholders to be held in 2021;
the Class II directors are Mr. Elms and Mr. Greathouse, whose terms will expire at our annual meeting of stockholders to be held in 2022; and
the Class III directors are Mr. Hagan, Mr. Lo and Dr. Xanthopoulos, whose terms will expire at this year’s annual meeting of stockholders.
Upon the expiration of the term of a Class of directors, directors in that Class are eligible, if nominated, to be elected for a new three-year term at the annual meeting of stockholders in the year in which their term expires.
Our common stock is listed on the Nasdaq Capital Market tier of The Nasdaq Stock Market LLC (“Nasdaq”). Under the listing requirements and rules of Nasdaq, independent directors must comprise a majority of a listed company’s Board of Directors. In addition, Nasdaq rules require that, subject to specified exceptions, each member of a listed company’s audit, compensation and nominating and corporate governance committees be independent. Audit committee members must also satisfy the independence criteria set forth in Rule 10A-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and compensation committee members must satisfy heightened independence criteria set forth in the Nasdaq rules. Under the Nasdaq rules, a company’s Board of Directors must affirmatively determine whether or not each director qualifies as an “independent director.” A director will only qualify as an “independent director” if, in the opinion of the company’s Board of Directors, that person does not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.
In order to be considered to be independent for purposes of Rule 10A-3 under the Exchange Act, a member of an audit committee of a listed company may not, other than in his or her capacity as a member of the Audit Committee, the Board of Directors or any dissenters’other board committee: (1) accept, directly or appraisal rights with respect toindirectly, any consulting, advisory or other compensatory fee from the listed company or any of its subsidiaries or (2) be an affiliated person of the matterslisted company or any of its subsidiaries.
Based upon information requested from and provided by each director concerning his or her background, employment and affiliations, including family relationships, our Board of Directors has determined that each of Mr. Elms, Dr. Grais, Mr. Greathouse, Mr. Hagan and Dr. Xanthopoulos is, and prior to his resignation from our Board of Directors on October 5, 2019, Dr. Wilson was, an “independent director” as defined under Rule 5605(a)(2) of the Nasdaq Listing Rules, and that Mr. Lo, our President and Chief Executive Officer, and Mr. Walker, our former President and Chief Executive Officer, are not “independent directors.” In addition, the Board of Directors determined that each of Dr. Grais, Mr. Greathouse and Mr. Hagan is an “independent director” as defined under Rule 10A-3 under the Exchange Act. In making this determination, our Board of Directors considered the relationships that each non-employee director has with our company and all other facts and circumstances our Board of Directors deemed relevant in determining the independence of such directors, including the beneficial ownership of our capital stock by each non-employee director and by entities with which each non-employee director is associated.
As of January 1, 2019, our Board of Directors consisted of Mr. Elms, Mr. Greathouse, Mr. Hagan, Dr. Troy Wilson, Mr. Walker and Dr. Xanthopoulos. Dr. Grais was appointed to fill a vacancy on our Board of Directors as a Class I Director on January 14, 2019. Dr. Wilson resigned from our Board of Directors on October 5, 2019, and Mr. Lo was appointed to the Board of Directors to fill the vacancy on our Board of Directors as a Class III Director, effective as of October 21, 2019, the date he began his role as our President and Chief Executive Officer.
Board of Directors Role in Risk Oversight
One of the key functions of our Board of Directors is informed oversight of our risk management process. Our Chief Executive Officer is responsible for setting the strategic direction for our company and the day-to-day leadership and performance of the Company, while the Chairman of the Board provides guidance to the Chief Executive Officer and presides over meetings of the full Board of Directors. Our non-employee directors meet in executive session on a regular basis, without our Chief Executive Officer present. Our Board of Directors believes that the current separation of Chairman and Chief Executive Officer allows the Chief Executive Officer to focus his time and energy on operating and managing the Company and leverages the experience and perspectives of the Chairman. During 2019, Mr. Greathouse served as our lead independent director until December 10, 2019. In his role as lead independent director, Mr. Greathouse presided over the executive sessions of the independent directors and served as a liaison to management on behalf of the independent members of the Board of Directors. Periodically, our Board of Directors assesses these roles and the board leadership structure to ensure the interests of the Company and its stockholders are best served. In light of the leadership structure of the Board of Directors, our Board of Directors determined that both a Chairman and lead independent director were no longer necessary and determined that its current structure is in the best interests of the Company and its stockholders at this time because among other reasons, separating the Chairman and Chief Executive Officer roles allows us to effectively and efficiently develop and implement corporate strategy that is consistent with the oversight role of the Board of Directors, while facilitating strong day-to-day executive leadership.
Our Board of Directors does not have a standing risk management committee, but rather administers this oversight function directly through the Board of Directors as a whole, as well as through various standing committees of our Board of Directors that address risks inherent in their respective areas of oversight. In particular, our Board of Directors is responsible for monitoring and assessing strategic risk exposure and our Audit Committee has the responsibility to consider and discuss our major financial risk exposures and the steps our management has taken to monitor and control these exposures, including guidelines and policies to govern the process by which risk assessment and management is undertaken. The Audit Committee also monitors compliance with legal and regulatory requirements. Our Compensation Committee assesses and monitors whether any of our compensation policies and programs has the potential to encourage excessive risk-taking. Our Nominating and Corporate Governance Committee monitors the effectiveness of our corporate governance practices, including whether they are successful in preventing illegal or improper liability-creating conduct.
Board Committees
Our Board of Directors has established an Audit Committee, a Compensation Committee and a Nominating and Corporate Governance Committee. Each of these committees, which are the only standing committees of our Board of Directors, operates under a charter that has been approved by our Board of Directors. A current copy of the charter for each of the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee is available on our website, which is located at www.zosanopharma.com, under “Investors—Corporate Governance.”
Audit Committee. The current members of our Audit Committee are Dr. Grais, Mr. Greathouse and Mr. Hagan, with Mr. Hagan serving as the Chair of the Audit Committee. Previously in fiscal year 2019, our Audit Committee had consisted of Mr. Hagan, Mr. Greathouse and Dr. Wilson; Mr. Greathouse resigned as a member of the Audit Committee effective as of February 26, 2019 and was reinstated as a member of the Audit Committee on October 10, 2019, after the resignation of Dr. Wilson from our Board of Directors. Our Board of Directors has determined that each of Dr. Grais, Mr. Greathouse and Mr. Hagan meets, and prior to his resignation on October 5, 2019, that Dr. Wilson satisfied, the Nasdaq independence standards and the independence standards of Rule 10A-3(b)(1) under the Exchange Act. Each of the members of our Audit Committee meets, and prior to his resignation, Dr. Wilson met, the requirements for financial literacy under applicable rules and regulations of the SEC and Nasdaq. The Board of Directors has also determined that Mr. Hagan qualifies as an “audit committee financial expert,” as defined by applicable rules of Nasdaq and the SEC.
The Audit Committee assists our Board of Directors in its oversight of:
the integrity of our financial statements;
our compliance with legal and regulatory requirements;
the qualifications and independence of our independent registered public accounting firm; and
the performance of our independent registered public accounting firm.
The Audit Committee has direct responsibility for the appointment, compensation, retention and oversight of the work of our independent registered public accounting firm. The Audit Committee establishes and implements policies and procedures for the pre-approval of all audit services and all permissible non-audit services provided by our independent registered public accounting firm and reviews and approves any related person transactions entered into by us.
The Audit Committee met in person or by telephone five times during fiscal year 2019.
Compensation Committee. The current members of our Compensation Committee are Mr. Elms, Mr. Greathouse and Dr. Xanthopoulos, each of whom is an independent director. Dr. Xanthopoulos serves as the Chair of the Compensation Committee.
The Compensation Committee:
approves the compensation and benefits of our executive officers;
reviews and makes recommendations to the Board of Directors regarding benefit plans and programs for employee compensation; and
administers our equity compensation plans.
Pursuant to our Amended and Restated 2014 Stock Option and Incentive Plan, as amended (the “2014 Plan”), our Compensation Committee may delegate to our Chief Executive Officer all or part of its authority to approve certain grants of equity awards to certain individuals, subject to certain limitations including the amount of awards that can be granted pursuant to such delegated authority. Our Compensation Committee has delegated to our Chief Executive Officer the authority to approve certain grants of awards under the 2014 Plan to new employees below specified levels of responsibility.
Since July 2015, our Compensation Committee has retained Radford, a national executive compensation consulting firm. Radford was engaged to assist in developing an appropriate peer group for executive pay benchmarking, assist the Compensation Committee in developing appropriate incentive plans for our executives and non-executive level employees and to provide the Compensation Committee with advice and ongoing recommendations regarding material compensation decisions. In compliance with the disclosure requirements of the SEC regarding the independence of compensation consultants, Radford addressed each of the six independence factors established by the SEC with the Compensation Committee. Each of the responses affirmed the independence of Radford on executive compensation matters. Based on this assessment, the Compensation Committee determined that the engagement of Radford does not raise any conflicts of interest or similar concerns. The Compensation Committee also evaluated the independence of other outside advisors to the Compensation Committee, including outside legal counsel, considering the same independence factors and concluded their work for the Compensation Committee does not raise any conflicts of interest.
The Compensation Committee met in person or by telephone one time during fiscal year 2019.
Nominating and Corporate Governance Committee. The current members of our Nominating and Corporate Governance Committee are Mr. Elms, Dr. Grais and Mr. Greathouse. Dr. Grais is the Chair of the Nominating and Corporate Governance Committee. Previously in fiscal year 2019, our Nominating and Corporate Governance Committee consisted of Mr. Elms, Mr. Greathouse and Dr. Wilson; Dr. Wilson resigned as a member of the Nominating and Corporate Governance Committee on October 5, 2019. Each of Mr. Elms, Dr. Grais and Mr. Greathouse is, and prior to his resignation, Dr. Wilson was, an independent director.
The Nominating and Corporate Governance Committee:
identifies individuals qualified to become members of the Board of Directors;
recommends to the Board of Directors nominations of persons to be
voted on atelected to the
special meeting?No.Board of Directors; and
advises the Board of Directors regarding appropriate corporate governance policies and assists the Board of Directors in achieving them.
The Nominating and Corporate Governance Committee met in person or by telephone one time during fiscal year 2019.
Compensation Committee Interlocks and Insider Participation
During fiscal year 2019, our Compensation Committee consisted of Mr. Elms, Mr. Greathouse and Dr. Xanthopoulos. None of our stockholdersexecutive officers serves, or in the past has served, as a member of the board of directors or compensation committee, or other committee serving an equivalent function, of any entity that has one or more executive officers who serve as members of our Board of Directors or our Compensation Committee. None of the members of our Compensation Committee is an officer or employee of the Company, nor has any dissenters’of them ever been an officer or appraisal rights with respectemployee of the Company. Mr. Elms had related person transactions requiring disclosure under Item 404 of Regulation S-K. See “Certain Relationships and Related Person Transactions.”
Code of Business Conduct and Ethics; Corporate Governance Guidelines
We have adopted a written code of ethics that applies to
the matters to be voted on at the special meeting.What are the solicitation expenses and who pays the cost of this proxy solicitation?
We will pay the cost of soliciting proxies. Ourour directors, executive officers and employees, may solicit proxiesand we also have adopted corporate governance guidelines. A copy of our code of ethics is posted on our website, which is located at www.zosanopharma.com, under “Investors—Corporate Governance.” If we make any substantive amendments to, or grant any waivers from, a provision of our code of ethics for any officer or director, we will disclose the nature of such amendment or waiver on our website.
Meetings of the Board of Directors
Our Board of Directors met in person or by telephone 11 times during fiscal year 2019. No director attended fewer than 75% of the aggregate number of meetings of the Board of Directors and of any committee of the Board of Directors on which he or she served, in each case held during the period in which he or she served as a director, in fiscal year 2019.
Policy Regarding Board Attendance
Our directors are expected to attend meetings of the Board of Directors and meetings of committees of the Board of Directors on which they serve. Our directors are expected to spend the time needed at each meeting and to meet as frequently as necessary to properly discharge their responsibilities. We encourage members of our Board of Directors to attend our annual meeting of stockholders, but we do not have a formal policy requiring them to do so. Our last annual meeting of stockholders held on June 20, 2019 and the adjournment of the meeting held on July 18, 2019 were attended by one of the members of our Board of Directors.
Director Candidates and Selection Process
Our Nominating and Corporate Governance Committee, in consultation with our Board of Directors, is responsible for identifying and reviewing candidates to fill open positions on the Board of Directors, including positions arising as a result of the removal, resignation or retirement of any director, an increase in the size of the Board of Directors or otherwise, and recommending to our full Board of Directors candidates for nomination for election as directors. In evaluating the qualifications of candidates, the Nominating and Corporate Governance Committee will consider any requirements of applicable law and Nasdaq listing standards, a candidate’s strength of character, judgment, business experience and specific areas of expertise, familiarity with our industry, principles of diversity, factors relating to the composition of our Board of Directors (including its size and structure), and such other means. Wefactors as the Nominating and Corporate Governance Committee deems to be appropriate. The goal of the Nominating and Corporate Governance Committee is to assemble a Board of Directors that consists of individuals who bring a variety of complementary attributes and who, taken together, have the appropriate skills and experience to oversee our business. The Nominating and Corporate Governance Committee is responsible for reviewing from time to time the criteria it uses to evaluate the qualifications of candidates.
Our Nominating and Corporate Governance Committee has not adopted any formal policy, guidelines or procedures regarding the diversity of our Board of Directors. Our priority in selection of members of the Board of Directors is identification of members who will reimburse brokersfurther the interests of our stockholders through an established record of professional accomplishment, the ability to contribute positively to the collaborative culture among members of the Board of Directors, knowledge of our business and understanding of the competitive landscape.
Stockholders may recommend individuals to the Nominating and Corporate Governance Committee for consideration as potential director candidates by submitting their names, together with appropriate biographical information and background materials and a statement as to whether the stockholder or group of stockholders making the recommendation has beneficially owned more than five percent (5%) of our common stock for at least a year as of the date such recommendation is made, to the Nominating and Corporate Governance Committee, c/o Secretary, Zosano Pharma Corporation, 34790 Ardentech Court, Fremont, California 94555. Assuming that appropriate biographical and background material is provided on a timely basis, the Nominating and Corporate Governance Committee will evaluate stockholder-recommended candidates by following substantially the same process, and applying substantially the same criteria, as it follows for candidates that it recommends. If the Board of Directors resolves to nominate a stockholder-recommended candidate and recommends his or her election, then his or her name will be included in our proxy card for the next annual meeting of stockholders. Any recommendation of a potential director nominee should also include a statement signed by the proposed nominee expressing a willingness to serve as a director if elected. As part of this responsibility, the Nominating and Corporate Governance Committee will be responsible for conducting, subject to applicable law, any and all inquiries into the background and qualifications of any candidate for election as a director and such candidate’s compliance with the independence and other nominee holders of shares for expenses they incur in forwarding proxy materialsqualification requirements established by the Nominating and Corporate Governance Committee or imposed by applicable law or listing standards.
Mr. Lo was appointed to the
beneficial ownersBoard of
those shares. We may retainDirectors on October 21, 2019 to fill a vacancy on the
servicesBoard of
Directors, and therefore is standing for election as a
proxy solicitation firmdirector by stockholders for the first time. Mr. Lo was recommended to
assist us in this solicitation.Where can I find voting results?
The Company expects to publishour Board of Directors and its Nominating and Corporate Governance Committee upon the voting results in a current report on Form8-K, which it expects to file with the SEC within four business days following the special meeting.
Who can help answer my questions?
The information provided above in this “Question and Answer” format is for your convenience only and is merely a summaryrecommendation of the information contained in this Proxy Statement. We urge youChairman of our Board of Directors and our then Chief Executive Officer and certain non-management directors.
Communications with our Board of Directors
Stockholders wishing to carefully read this entire Proxy Statement, includingcommunicate with our Board of Directors should send correspondence to the documents we refer to in this Proxy Statement. If you have any questions, or need additional material, please feel free to contactattention of our Secretary, Zosano Pharma Corporation, 34790 Ardentech Court, Fremont, California 94555, Attention: Georgia Erbez,and should include with the correspondence evidence that the sender of the communication is one of our stockholders. Satisfactory evidence would include, for example, contemporaneous correspondence from a brokerage firm indicating the identity of the stockholder and the number of shares held. Our Secretary will review all correspondence confirmed to be from stockholders in conjunction with the Chairman of the Board of Directors, who will decide whether or not to forward the correspondence or a summary of the correspondence to the full Board of Directors or a committee thereof. The Secretary and the Chairman of the Board of Directors will review all stockholder correspondence, but the decision to relay that correspondence to the full Board of Directors or a committee thereof will rest entirely within the discretion of the Chairman. Our Board of Directors believes that this process will suffice to handle the relatively low volume of communications we have historically received from our stockholders. If the volume of communications increases such that this process becomes burdensome to our Chairman, our Board of Directors may elect to adopt more elaborate screening procedures.
Our Management
Our executive officers, their positions and their ages as of May 11, 2020 are set forth below:
|
| | | | | |
| Name | | Age | | Position(s) |
| Steven Lo | | 53 |
| | President, Chief Executive Officer and Director |
| Christine Matthews | | 52 |
| | Chief Financial Officer |
| Donald Kellerman, Pharm.D. | | 65 |
| | Vice President, Clinical Development and Medical Affairs |
| Hayley Lewis | | 44 |
| | Senior Vice President, Operations |
Steven Lo has served as our President and Chief BusinessExecutive Officer and as a member of our Board of Directors since October 2019. Previously, from September 2015 to October 2019, Mr. Lo served as Chief Commercial Officer of Puma Biotechnology, Inc., a publicly-held biopharmaceutical company. Prior to joining Puma, Mr. Lo held a number of positions at Corcept Therapeutics Incorporated, a publicly-held pharmaceutical company, from September 2010 to September 2015, including Senior Vice President, Oncology, Senior Vice President & Chief Commercial Officer and Vice President & Head of Commercial Operations. Prior to Corcept, Mr. Lo was with Genentech, Inc. from December 1997 to September 2010. At Genentech, Mr. Lo held a number of positions, including Senior Director, Oncology Marketing, where he prepared and led the first U.S. launch of Herceptin® in adjuvant HER2-positive breast cancer. His other leadership roles at Genentech included Franchise Head, Endocrinology and Senior Director of Managed Care. Mr. Lo received a B.S. in Microbiology from the University of California, Davis and a Master of Health Administration from the University of Southern California.
Christine Matthews has served as our Chief Financial Officer telephone: (510)745-1200.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This proxy statement includes “forward-looking statements”since May 2020, as our Interim Chief Financial Officer from February 2020 to May 2020 and as our Vice President, Corporate Controller from January 2019 to May 2020. From August 2015 to January 2019, Ms. Matthews served as an accounting and financial consultant with Resources Global Professionals (“RGP”), which are identifieda professional services company. Prior to joining RGP, from September 2013 to June 2015, Ms. Matthews served as Senior Director of Finance at Cepheid, Inc., a biotechnology company, supporting North America commercial operations. Prior to Cepheid, Ms. Matthews held positions of increasing responsibility, most recently as Group Director of Finance at Cadence Design Systems. Ms. Matthews began her career with Arthur Andersen, LLP and holds a B.S. in Business Administration with an Emphasis in Accounting from the University of Colorado at Boulder.
Donald Kellerman, Pharm.D. has served as our Vice President of Clinical Development and Medical Affairs since July 2015. Prior to joining us, Dr. Kellerman served as Senior Vice President of Clinical Development and Regulatory Affairs at Tonix Pharmaceuticals from April 2014 to April 2015. Previously, from 2008 to 2013, Dr. Kellerman served as Senior Vice President of Clinical Development and Medical Affairs at MAP Pharmaceuticals, Inc. (acquired by Allergan, Inc.). Dr. Kellerman also held the useposition of Senior Vice President of Development at Inspire Pharmaceuticals, Inc. from 1999 to 2008, where he was responsible for all aspects of drug development, including clinical research, regulatory affairs, project management and biostatistics. He also led groups responsible for running several clinical programs in the respiratory, ophthalmology and cardiovascular areas. In addition, Dr. Kellerman has served in various clinical and project leadership positions at Glaxo Wellcome, Sepracor, Inc., and E.R. Squibb and Sons, Inc. He has more than 25 years of experience in the development of prescription pharmaceuticals and has lead- or co-authored more than 80 publications. Dr. Kellerman holds Doctor of Pharmacy and Bachelor of Science degrees from the College of Pharmacy at the University of Minnesota.
Hayley Lewis has served as our Senior Vice President, Operations since July 2017 and Vice President of Regulatory Affairs and Quality from October 2015 until June 2017. Prior to joining the Company, Ms. Lewis was Vice President of Regulatory Affairs and Quality at Carbylan Therapeutics from May 2014 until May 2015. While at Carbylan, Ms. Lewis was part of the words “seek”executive team that took the company public in April 2015, as well as being responsible for all regulatory and quality activities, both internally and for Carbylan’s external development programs. From 2003 to 2014, Ms. Lewis held positions of increasing responsibility, most recently as the Senior Director of Regulatory Affairs at Depomed, Inc. During her tenure, she led the company in the approvals of three NDAs, Proquin ®, “propose”Glumetza ®, “expect”and Gralise ®, “may”as well as approvals of several supplemental NDAs for Gralise ®, “could”Cambia ®, “should”Zipsor ® and Lazanda ®, “plan”including a line extension for Glumetza ®, “project”, “anticipate”, “intend”, “estimate”, “will”, “contemplate”, “would”CMC, and similar expressions that contemplate future events. Such forward-looking statements are basedlabeling changes for the neurology and pain product lines for Depomed’s portfolio. Ms. Lewis received a B.S. in Pharmaceutical Sciences from the University of Greenwich and completed the Executive Program for Women Leaders at the Stanford Graduate School of Business.
Director Compensation
Pursuant to our non-employee director compensation program, in 2019, our non-employee directors receive compensation as follows:
for serving as a member of our Board of Directors, an annual cash retainer of $45,000 and an annual non-statutory stock option to purchase 1,500 shares of our common stock (at a per share exercise price equal to fair market value on management’s reasonable current assumptions and expectations. You should be aware that forward-looking statements involve a numberthe date of assumptions, risks and uncertainties that could causegrant) which vests on the actual results to differ materially from such forward-looking statements. These forward-looking statements speak only asfirst anniversary of the date of grant, subject to continued service; and
for serving as the chairperson of the Compensation Committee of the Board of Directors, an additional annual cash retainer of $7,000; for serving as the chairperson of the Nominating and Corporate Governance Committee of the Board of Directors, an additional annual cash retainer of $7,000; for serving as the chairperson of the Audit Committee of the Board of Directors, an additional annual cash retainer of $10,000, for serving as lead independent director, an additional annual cash retainer of $10,000, and for serving as the chairman of the Board of Directors, an additional annual cash retainer of $25,000.
The cash fees described above are paid in monthly installments. Non-employee directors are also reimbursed upon request for travel and other out-of-pocket expenses incurred in connection with their attendance at meetings of the Board of Directors and of committees on which they serve.
In 2019, the
statementsannual option grants to our non-employee directors were made
andon January 2, 2019. The annual option grants vest as described above, except that Mr. Elms's annual option grant vested in equal monthly installments over the one-year period following the grant date. In connection with her appointment to the Board of Directors effective January 14, 2019, we
undertake no obligationgranted to
update or revise any forward-looking statements made in this proxy statement or elsewhere as a resultDr. Grais an option to purchase 25,000 shares of
new information, future events or otherwise, except as required by law. In addition to other factors and matters contained in this document, we believe the following factors could cause actual results to differ materially from those discussed in the forward-looking statements:the market for our common stock, and our abilitywhich vests as to attract investors on terms that are acceptable to us or at all;
our expectations regarding our expenses and revenue, the sufficiency of our cash resources and needs for additional financing;
our ability to engage underwriters or placement agents to support our financing activities;
the anticipated timing, costs and conduct of our planned clinical trials and preclinical studies, as applicable, for our lead product candidate M207;
our expectations regarding the clinical effectiveness of M207 and any future product candidates; and
other risk factors as detailed from time to time in the Company’s reports filed with the SEC, including Zosano’s annual report on Form 10-K, periodic quarterly reports on Form 10-Q, periodic current reports on Form 8-K and other documents filed with the SEC.
Many25% of the factors that will determine our future results are beyond our abilityshares subject to control or predict. In light of the significant uncertainties inherent inoption on the forward-looking statements contained herein, readers of this proxy statement should not place undue reliance on forward-looking statements, which reflect management’s views only asfirst anniversary of the date hereof. We cannot guarantee any future results, financing activities, performance or achievements.
of grant and as to 1/48th of the shares subject to the option on each monthly anniversary thereafter, subject to her continued service. Dr. Grais did not receive an annual option grant for 2019. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding compensation awarded to, earned by or paid to each of our non-employee directors during fiscal year 2019. Mr. Walker, our Chairman of the Board of Directors also served as President and Chief Executive Officer until October 20, 2019. However, he did not receive additional compensation for his services as a director while he served as President and Chief Executive Officer of the Company, and his compensation for 2019 is set forth in the Summary Compensation Table below.
|
| | | | | | | | | |
| | | Fees Earned or Paid in Cash ($) | | Option Awards ($) (1) | | Total ($) |
| Steven Elms | | 45,002 |
| | 2,893 |
| | 47,895 |
|
| Linda Grais | | 43,429 |
| | 52,763 |
| | 96,192 |
|
| Kenneth R. Greathouse | | 55,002 |
| | 2,893 |
| | 57,895 |
|
| Joseph “Jay” P. Hagan | | 55,000 |
| | 2,893 |
| | 57,893 |
|
| Troy Wilson, Ph.D., J.D. | | 43,334 |
| | 2,893 |
| | 46,227 |
|
| Kleanthis G. Xanthopoulos, Ph.D. | | 52,000 |
| | 2,893 |
| | 54,893 |
|
(1) Represents the aggregate grant date fair value of stock options granted in fiscal year 2019, determined in accordance with ASC 718. See Note 9 to the consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019 for a description of the assumptions used in calculating the grant date fair value.
(2) Dr. Grais was appointed to the Board of Directors effective January 14, 2019.
(3) Mr. Wilson resigned as a member of the Board of Directors on October 5, 2019.
At the end of fiscal year 2019, our non-employee directors held outstanding stock options, as follows:
|
| | |
| Number of Shares Subject to Outstanding Options |
| Steven Elms | 26,500 |
|
| Linda Grais | 25,000 |
|
| Kenneth R. Greathouse | 31,000 |
|
| Joseph “Jay” P. Hagan | 30,400 |
|
| Kleanthis G. Xanthopoulos, Ph.D. | 30,415 |
|
EXECUTIVE COMPENSATION
Executive Summary
The following is a discussion and analysis of compensation arrangements of our named executive officers. As an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, we are not required to include a Compensation Discussion and Analysis section and have elected to comply with the scaled disclosure requirements applicable to emerging growth companies.
Our Compensation Committee, which is appointed by our Board of Directors, is responsible for establishing, implementing and monitoring our compensation philosophy and objectives. We seek to ensure that the total compensation paid to our executive officers is reasonable and competitive. We have structured the compensation programs for our executives around the achievement of individual performance and near-term corporate targets as well as long-term business objectives.
Our named executive officers for fiscal year 2019 and their positions with the Company were as follows:
Steven Lo, President and Chief Executive Officer from October 21, 2019;
John P. Walker, President and Chief Executive Officer until October 20, 2019;
Gregory Kitchener, Chief Financial Officer until February 1, 2020; and
Donald Kellerman, Pharm.D., Vice President, Clinical Development and Medical Affairs
2019 Summary Compensation Table
The following table sets forth information regarding compensation earned by our named executive officers for fiscal years 2019 and 2018.
|
| | | | | | | | | | | | | | | | |
| Name and Principal Position | Year | | Salary ($) | | Bonus ($)(1) | | Option Awards ($)(2) | | Other ($) | | Total ($) |
| John P. Walker | 2019 | | 486,329 |
| (3) | — |
| | — |
| | 9,722 |
| (4) | 496,051 |
|
President and Chief Executive Officer (3) | 2018 | | 446,962 |
| | 250,000 |
| | 1,274,020 |
| | — |
| | 1,970,982 |
|
| | | | | | | | | | | | |
| Steven Lo | 2019 | | 105,673 |
| | 50,000 |
| (6) | 718,965 |
| | — |
| | 874,638 |
|
President and Chief Executive Officer(5) | 2018 | | — |
| | — |
| | — |
| | — |
| | — |
|
| | | | | | | | | | | | |
| Gregory Kitchener | 2019 | | 358,333 |
| | — |
| | 200,249 |
| | — |
| | 558,582 |
|
Chief Financial Officer (7) | 2018 | | 74,263 |
| | 35,500 |
| | 295,470 |
| | — |
| | 405,233 |
|
| | | | | | | | | | | | |
| Donald Kellerman | 2019 | | 353,000 |
| | — |
| | 67,851 |
| | — |
| | 420,851 |
|
| Vice President, Clinical Development and Medical Affairs | 2018 | | 340,050 |
| | 137,200 |
| | 317,730 |
| | — |
| | 794,980 |
|
(1) Does not include the value of 2019 annual bonuses. In February 2020, the Board of Directors determined that the payment of bonuses would be subject to the Company’s completion of an additional significant financing or strategic transaction as determined by the Board of Directors.
(2) Represents the aggregate grant date fair value of option awards, as determined in accordance with ASC 718. See Note 9 to the consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019 for a description of the assumptions used in calculating the grant date fair value.
(3) Mr. Walker served as our President and Chief Executive Officer until October 20, 2019. Pursuant to the terms of his separation agreement, Mr. Walker was employed as a non-executive employee of the Company, providing transition services to the Company, and continued to receive his base salary during the transition period until his retirement date of November 10, 2019.
(4) Represents fees paid to Mr. Walker for his service as Chairman of the Board of Directors from November 11, 2019 through the end of fiscal 2019.
(5) Mr. Lo was appointed our President and Chief Executive Officer effective October 21, 2019.
(6) Represents Mr. Lo’s sign-on bonus of $50,000 paid in connection with his appointment as our President and Chief Executive Officer.
(7) Mr. Kitchener served as our Chief Financial Officer until his separation on February 1, 2020.
Narrative Disclosure to Summary Compensation Table
We review compensation annually for all of our employees, including our executives. In setting executive base salaries and bonuses and granting equity incentive awards, we consider compensation for comparable positions in the market, the historical compensation levels of our executives, individual performance as compared to our expectations and objectives, our desire to motivate our employees to achieve short- and long- term results that are in the best interests of our stockholders, and a long-term commitment to our Company. We do not target a specific competitive position or a specific mix of compensation among base salary, bonus or long-term incentives.
Our Compensation Committee is responsible for approving the compensation and benefits of our executive officers.
2019 Salaries
The annual base salary for each named executive officer for 2019 was as follows: Mr. Lo ($525,000); Mr. Walker ($517,000), Mr. Kitchener ($360,000), and Dr. Kellerman ($355,000). The base salaries for Mr. Walker, Mr. Kitchener and Dr. Kellerman were effective March 1, 2019 and reflected increases of 3.4%, 2.8% and 3.5% from their 2018 levels. Mr. Lo’s base salary was established in connection with his commencement of employment in October 2019. Pursuant to the terms of the transition letter entered into with Mr. Walker, Mr. Walker served as our President and Chief Executive Officer until October 20, 2019, following which he continued to serve as a non-executive employee providing transition services until his retirement on November 10, 2019. Mr. Walker continued to receive his base salary at the rate in effect as of the transition through his retirement date.
Terms and Conditions of 2019 Annual Bonuses
Annual performance-based bonuses are intended primarily to motivate our named executive officers to achieve annual operational and financial objectives set by the Board of Directors to promote achievement of our business strategies and increase shareholder value. Whether a named executive officer receives an annual bonus, and if so, the amount of that bonus, depends on the achievement of corporate goals and objectives and, for our named executive officers other than Messrs. Lo and Walker, individual goals and objectives.
Each named executive officer’s target annual cash bonus is expressed as a percentage of base salary, which is set annually by our Board of Directors. Our Board of Directors determines each bonus amount in its discretion based on the achievement of corporate and, as applicable, individual performance goals. The 2019 annual bonuses for Mr. Lo, Mr. Walker, Mr. Kitchener and Dr. Kellerman were targeted at 50%, 50%, 40% and 40% of their respective base salaries, which, for our named executive officers continuing from 2018, remained unchanged from 2018. Further, Mr. Lo’s 2019 annual bonus will be prorated for the length of his employment during 2019. Actual annual cash bonuses earned by each named executive officer for 2019 depend on:
the Company's performance relative to predetermined corporate objectives (weighted 100%, 100%, 90% and 90%, for Mr. Lo, Mr. Walker, Mr. Kitchener and Dr. Kellerman, respectively); and
in the case of named executive officers other than Mr. Lo and Mr. Walker, the named executive officer's individual performance (based on achievement of individual objectives related to his area of responsibility) as determined by the Compensation Committee based on input from Mr. Lo (weighted 10% for both Mr. Kitchener and Dr. Kellerman).
For the fiscal year 2019, the Compensation Committee established corporate objectives that it considered critical to the near- and long-term success of the Company. The corporate objectives primarily consisted of the following: filing an NDA for Qtrypta™ (M207); the completion of a $20 million financing; partnering Qtrypta™ (M207) for sales and marketing, the completion of our LTSS of Qtrypta™ (M207), the initiation of a clinical study in cluster headache; research and development efforts to identify a future product candidate and development of a biologics plan.
In February 2020, the Board of Directors determined that the corporate objectives for our 2019 annual bonuses were achieved at 75% and that Dr. Kellerman had achieved his individual objectives at 100% of target. Based on such determinations, the Board of Directors determined that Mr. Walker and Dr. Kellerman would be eligible to receive bonuses in the amounts of $177,719 and $110,050, respectively, subject to the Company’s completion of an additional significant financing or strategic transaction as determined by the Board of Directors, with a potential bonus to be paid to Mr. Lo at such time and in such amount as determined by the Board of Directors. Mr. Kitchener is not eligible to receive an annual bonus for 2019 performance as he will not be employed at the time of payment. Pursuant to the transition letter entered into with Mr. Walker, Mr. Walker is eligible to receive an annual bonus for 2019 performance, prorated to reflect the length of his employment in 2019.
2019 Equity Award Grants
We periodically make equity grants to our employees, including our named executive officers. The options awarded to our named executive officers were granted with an exercise price equal to the closing market price of our ordinary shares on the date of grant, and generally require continued employment for four years in order to vest fully. Options therefore compensate our executives only if our share price increases after the date of grant and the executive remains employed for the period required for the option to become fully exercisable. The Compensation Committee thus considers options a particularly effective incentive and retention tool because it motivates our executives to increase shareholder value and remain with the Company.
On June 11, 2019, pursuant to our Amended and Restated 2014 Equity and Incentive Plan, we granted to Mr. Kitchener and Dr. Kellerman an annual option award to purchase 45,000 and 30,000 shares of our common stock, respectively, which vests as to 1/48th of the shares subject to the option on each monthly anniversary of the grant date, subject to the named executive officer’s continued service. We did not grant an annual option award to Mr. Walker in 2019.
In addition, in connection with his appointment as our President and Chief Executive Officer, on October 21, 2019, we granted to Mr. Lo an option to purchase 450,000 shares of our common stock, which vests as to 25% of the shares subject to the option on October 21, 2020 and as to 1/48th of the shares subject to the option on each monthly anniversary thereafter, subject to Mr. Lo’s continued service. Mr. Lo’s option award was granted pursuant to an inducement award agreement under Nasdaq Listing Rule 5635(c)(4).
The Compensation Committee determined the size of each named executive officer's option award after considering comparative market data provided by the Compensation Committee's compensation consultant, as well as the named executive officer's position, responsibilities and performance.
Outstanding Equity Awards at 2019 Fiscal Year End
The following table sets forth information regarding outstanding equity awards held by our named executive officers as of December 31, 2019. |
| | | | | | | | | | | | | | |
| | | Option Awards (1) |
| | | Number of Securities Underlying Unexercised Options (#) exercisable | | Number of Securities Underlying Unexercised Options (#) unexercisable | | | Option Exercise Price ($) | | Option Expiration Date | | Vesting Start Date |
| John P. Walker | | 340 |
| | — |
| | | 42.20 |
| | 5/4/2026 | | |
| | | 1,500 |
| | — |
| | | 11.40 |
| | 11/2/2026 | | |
| | | 8,750 |
| (2) | 6,250 |
| (2) | | 19.80 |
| | 8/9/2027 | | 8/9/2017 |
| | | 125,000 |
| (3) | 175,000 |
| (3) | | 4.24 |
| | 4/16/2028 | | 4/16/2018 |
| | | 39,583 |
| (3) | 60,417 |
| (3) | | 4.27 |
| | 5/17/2028 | | 5/17/2018 |
| | | | | | | | | | | | |
| Steven Lo | | — |
| (2) | 450,000 |
| (2) | | 1.94 |
| | 10/21/2029 | | 10/21/2019 |
| | | | | | | | | | | | |
| Gregory Kitchener | | 29,166 |
| (2) | 70,834 |
| (2) | | 3.93 |
| | 10/15/2028 | | 10/15/2018 |
| | | — |
| (3) | 25,000 |
| (3) | | 4.78 |
| | 2/26/2029 | | 2/26/2019 |
| | | 5,625 |
| (3) | 39,375 |
| (3) | | 2.75 |
| | 6/11/2029 | | 6/11/2019 |
| | | | | | | | | | | | |
| Donald Kellerman | | 1,500 |
| | — |
| | | 45.20 |
| | 12/15/2025 | | |
| | | 562 |
| (2) | 38 |
| (2) | | 51.40 |
| | 3/29/2026 | | 3/29/2016 |
| | | 749 |
| | — |
| | | 51.40 |
| | 3/29/2026 | | |
| | | 6,937 |
| (4) | 2,063 |
| (4) | | 11.40 |
| | 11/2/2026 | | 11/1/2016 |
| | | 41,666 |
| (3) | 58,334 |
| (3) | | 4.24 |
| | 4/16/2028 | | 4/16/2018 |
| | | 3,749 |
| (3) | 26,251 |
| (3) | | 2.75 |
| | 6/11/2029 | | 6/11/2019 |
(1) The vesting of each option is subject to the holder's continued service with us through the applicable vesting date.
(2) This option vests and becomes exercisable as to 25% of the underlying shares on the first anniversary of the vesting start date, and as to the remaining underlying shares in equal monthly installments over three years, resulting in the option being fully vested on the fourth anniversary of the vesting start date.
(3) This option vests and becomes exercisable in substantially equal monthly installments over four years so that the option is fully vested on the fourth anniversary of the vesting start date.
(4) This option vests and becomes exercisable as to 25% of the underlying shares on the first anniversary of the vesting start date, and as to the remaining underlying shares in equal monthly installments over three years, resulting in the option being fully vested on the fourth anniversary of the vesting start date; provided that 100% of any then unvested option shares shall vest and become exercisable upon a change of control of the Company.
Employment Letters
As of December 31, 2019, we were a party to employment offer letters with Mr. Lo, Mr. Kitchener and Dr. Kellerman. These offer letters set forth the terms and conditions of employment of each named executive officer, including base salary, annual bonuses, initial equity award grants and standard employee benefit plan participation. The agreements also include certain change in control and severance provisions, described in greater detail further below. On October 7, 2019, we also entered into a transition letter with Mr. Walker, which set forth the terms and conditions of his transition as President and Chief Executive Officer.
Steven Lo Offer Letter. We entered into an offer letter with Steven Lo in connection with his commencement of employment as our President and Chief Executive Officer effective October 21, 2019. Mr. Lo’s offer letter provides for an annual base salary of $525,000, a target annual bonus of 50% of his base salary, and an initial option award covering 450,000 shares, which vests as to 25% of the shares subject to the option on October 21, 2020 and as to 1/48th of the shares subject to the option on each monthly anniversary thereafter, subject to Mr. Lo’s continued service. Pursuant to Mr. Lo’s offer letter, Mr. Lo also received a one-time sign-on bonus of $50,000, which Mr. Lo is obligated to repay in full in the event of his termination by the Company for “cause” or his resignation without “good reason” (each, as defined in the letter).
John Walker Transition Letter. Pursuant to Mr. Walker’s transition letter, Mr. Walker served as our President and Chief Executive Officer until October 20, 2019, following which he continued to serve as a non-executive employee providing transition services until his retirement on November 10, 2019. Following his retirement, Mr. Walker continues to serve as Chairman of the Board of Directors. The transition letter provides that Mr. Walker was eligible to receive his base salary in effect as of the transition until his retirement and that he will remain eligible to receive his 2019 annual bonus based on actual achievement, prorated to reflect the length of his employment during 2019. In addition, Mr. Walker’s outstanding equity awards continue to vest in accordance with their terms subject to his continued service to the Company, including his service on the Board of Directors. Upon Mr. Walker’s termination of board service, each of his then-vested and outstanding option awards will remain outstanding and exercisable until up to the second anniversary of such termination.
Severance and Change in Control Arrangements
Pursuant to the terms of Mr. Lo’s offer letter, if the Company terminates Mr. Lo other than for cause or his resignation for good reason, in either case, other than during the one-year period following a change in control of the Company, then, subject to his execution of a release of claims against the Company, Mr. Lo will receive continued payment of his base salary for 12 months following termination and payment or reimbursement of continued healthcare premiums for up to 12 months. In addition, the vesting of Mr. Lo’s equity awards will accelerate with respect to 25% of any then-unvested shares upon such termination. In the event of Mr. Lo’s termination of employment by the Company without cause or his resignation for good reason, in either case, during the one-year period following a change in control of the Company, then, subject to his execution of a release of claims against the Company, Mr. Lo will receive a lump sum severance payment equal to (i) 18 months of his then-current base salary plus (ii) an amount equal to any bonus earned for the prior fiscal year (provided, that, the termination occurs in 2020, the amount tied to his bonus shall not reflect any pro-ration based on his partial employment during 2019), and payment or reimbursement of continued healthcare premiums for up to 18 months. In addition, the vesting of Mr. Lo’s equity awards will accelerate in full upon such termination. Under the offer letter, in the event of Mr. Lo’s disability, the Company will also pay base salary and provide employee benefits to Mr. Lo, in each case, for up to 12 weeks during any period of 365 consecutive calendar days.
Pursuant to Mr. Kitchener’s offer letter and Dr. Kellerman’s amended offer letter, in the event of a termination of employment without cause or for good reason, subject to execution of an effective release, the officers will be entitled to receive his base salary for a period of six months and healthcare coverage for a period of up to six months. In addition, any stock options and other equity awards will accelerate as to 25% of any then unvested shares. In the event of a termination without cause or for good reason within twelve months following a change in control, subject to the execution of an effective release, the officers will be entitled to receive a lump sum severance payment equal to (i) 12 months of base salary plus (ii) an amount equal to their bonus, if any, earned for the immediately preceding fiscal year, and payment or reimbursement of continued healthcare premiums for up to 12 months. In addition, any stock options and other equity awards will accelerate as to 100% of any then unvested shares. In the event of disability, the Company has also agreed to pay base salary and provide benefits, in each case, for up to 12 weeks during any period of 365 consecutive calendar days.
Securities Authorized for Issuance under Equity Compensation Plans
We have two compensation plans under which equity securities are currently authorized for issuance: our Amended and Restated 2014 Equity and Incentive Plan and our 2012 Stock Incentive Plan. In connection with the consummation of our initial public offering of common stock in January 2015, our Board of Directors terminated the 2012 Stock Incentive Plan effective as of January 27, 2015 and no further awards may be issued under the 2012 Stock Incentive Plan, except that the awards outstanding under the 2012 Stock Incentive Plan at the time of its termination continue to be governed by the terms of the 2012 Stock Incentive Plan. Our 2014 Equity and Incentive Plan was approved by our stockholders in July 2014 and our 2012 Stock Incentive Plan was approved by our stockholders in April 2012. The following table provides certain information as of December 31, 2019, with respect to all of our equity compensation plans in effect on that date.
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| | | | | | | | | | |
| Plan category | | Number of securities to be issued upon exercise of outstanding options | | Weighted-average exercise price of outstanding options | | Number of securities available for future issuance under equity compensation plans (excluding securities reflected in column (a)) |
| | | (a) | | (b) | | (c) |
Equity compensation plans approved by security holders (1) (2) | | 1,706,193 |
| | $ | 5.00 |
| | 63,404 |
|
Equity compensation plans not approved by security holders (3) | | 554,114 |
| | $ | 2.08 |
| | — |
|
| Total | | 2,260,307 |
| | | | 63,404 |
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(1) Consists of the Amended and Restated 2014 Equity and Incentive Plan and the 2012 Stock Incentive Plan.
(2) The Amended and Restated 2014 Equity and Incentive Plan contains an "evergreen" provision, pursuant to which the number of shares of common stock reserved for issuance pursuant to awards under such plan automatically increased on the first day of each year beginning, effective January 1, 2016 thereafter, the number of shares of stock reserved and available for issuance under the Amended and Restated 2014 Equity and Incentive Plan increased by 3% of the number of shares of stock issued and outstanding on the immediately preceding January 1 or such lesser number of shares of stock as determined by the Compensation Committee. Beginning January 1, 2019 and continuing thereafter, the number of shares of common stock reserved and issuable under the Plan increases by (a) 3.5% of the number of shares of common stock issued and outstanding on the immediately preceding December 31 or (b) the number of shares of common stock as determined by the Compensation Committee.
(3) Represents inducement grants granted without the approval of our stockholders in reliance on Nasdaq Listing Rule 5635(c).
INFORMATION ABOUT COMMON STOCK OWNERSHIP
Stock Owned by Directors, Executive Officers and Greater-Than-5% Stockholders
The following table sets forth certain information with respect to beneficial ownership of our common stock, as of December 12, 2017May 11, 2020 by: each person or entity, or group of affiliated persons or entities, known by us to beneficially own more than 5% of our common stock;
each of our directors;
each of our named executive officers; and
all of our executive officers and directors as a group.
Beneficial ownership is determined in accordance with the rules of the SEC. In computing the number of shares beneficially owned by a person and the percentage ownership of that person, shares of common stock subject to options held by that person that are currently exercisable or exercisable within 60 days of
December 12, 2017May 11, 2020 are deemed outstanding, but are not deemed outstanding for computing the percentage ownership of any other person. To our knowledge, except as set forth in the footnotes to this table and subject to applicable community property laws, each person named in the table has sole voting and investment power with respect to the shares set forth opposite such person’s name. Except as otherwise indicated, the address of each of the persons in this table is c/o Zosano Pharma Corporation, 34790 Ardentech Court, Fremont, California, 94555.
Each stockholder’s percentage ownership is determined in accordance with Rule
13d-3 under the Exchange Act and is based on
39,460,93154,361,635 shares of our common stock outstanding as of
December 12, 2017. | | | | | | | | |
Name of Beneficial Owner (1) | | Total Shares
Beneficially Owned | | | Percentage | |
5%+ Stockholders | | | | | | | | |
Amzak Capital Management, LLC and affiliates (2)
980 North Federal Highway; Suite 315
Boca Raton, FL 33432 | | | 5,269,846 | | | | 13.35 | % |
BMV Direct SOTRS LP (3)
17190 Bernardo Center Drive
San Diego, CA 92128 | | | 2,442,429 | | | | 6.19 | % |
Directors and Named Executive Officers: | | | | | | | | |
John P. Walker (4) | | | 280,741 | | | | * | |
Georgia Erbez (5) | | | 252,750 | | | | * | |
Donald Kellerman, Ph.D. (6) | | | 124,215 | | | | * | |
Kenneth Greathouse (7) | | | 200,000 | | | | * | |
Joseph “Jay” P. Hagan (8) | | | 38,666 | | | | * | |
Bruce D. Steel | | | — | | | | * | |
Troy Wilson, Ph.D., J.D. (9) | | | 48,352 | | | | * | |
Kleanthis Xanthopoulos, Ph.D. (10) | | | 86,141 | | | | * | |
Konstantinos Alataris (11)(12) | | | 382,167 | | | | * | |
Current Directors and Executive Officers as a Group (9 persons) (13) | | | 1,134,040 | | | | 2.83 | % |
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Name of Beneficial Owner (1) | | Total Shares Beneficially Owned | | Percentage | | |
| 5%+ Stockholders | | | | | | |
Telemetry Investments, LLC (2) | | 2,912,468 |
| | 5.1 | % | | |
| 545 Fifth Ave, Suite 1108 | | | | | | |
| New York, NY 10017-3630 | | | | | | |
Aisling Capital IV, LP and affiliates (3) | | 2,718,226 |
| | 5.0 | % | | |
| 888 Seventh Avenue, 12th Floor | | | | | | |
| New York, NY 10106 | | | | | | |
| | | | | | | |
| Directors, Named Executive Officers and Executive Officers: | | | | | | |
Steven A. Elms (4) | | 2,732,746 |
| | 5.0 | % | | |
John P. Walker (5) | | 339,555 |
| | * |
| | |
Donald Kellerman, Ph.D. (6) | | 74,980 |
| | * |
| | |
Hayley Lewis (7) | | 73,864 |
| | * |
| | |
Kenneth Greathouse (8) | | 28,603 |
| | * |
| | |
Christine Matthews (9) | | 25,311 |
| | * |
| | |
Kleanthis Xanthopoulos, Ph.D. (10) | | 21,148 |
| | * |
| | |
Joseph “Jay” P. Hagan (11) | | 18,941 |
| | * |
| | |
Linda S. Grais (12) | | 8,854 |
| | * |
| | |
| Gregory Kitchener | | — |
| | * |
| | |
| Steven Lo | | — |
| | * |
| | |
Current Directors and Executive Officers as a Group (10 persons) (13) | | 3,324,002 |
| | 6.1 | % | | |
(1) | Except as otherwise indicated, we believe that the beneficial owners of the common stock listed above, based on information furnished by such owners, have sole investment and voting power with respect to such shares, subject to community property laws where applicable. Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. |
(2) | Based on information disclosed in the Schedule 13G/A filed with the SEC on March 28, 2017. Includes 5,151,813 shares of common Stock outstanding owned by the Amzak Capital Management, LLC and 118,033 shares of common Stock owned by Michael D Kazma. In addition to these shares, Amzak Capital Management, LLC owns 1,275,000 shares subject to warrants. These warrants provide the holder may not
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| exercise them to the extent doing so would result in it owning in excess of 9.99% of the outstanding shares of common Stock of Zosano. Given the current ownership percentage exceeds the limitation, Amzak Capital Management is prevented from exercising said warrants. Michael D. Kazma and Gerry Kazma may be deemed to share voting and investment power with respect to the securities held by Amzak. The address of the principal business office of each reporting person is 980 N. Federal Highway, Suite 315, Boca Raton, FL 33432. |
(3) | Based on information disclosed in the Schedule 13G filed by BioMed Realty Trust, Inc. with the SEC on January 19, 2016, BMV Direct SO LP holds 545,447 shares of common stock and BMV Direct SOTRS LP holds 1,896,982 shares of common stock. The sole general partner of BMV Direct SOTRS LP is BioMed Realty Holdings, Inc. The sole stockholder of BioMed Realty Holdings, Inc. and the sole general partner of BMV Direct SO LP is BioMed Realty, L.P. The sole general partner of BioMed Realty, L.P. is BioMed Realty Trust, Inc. BioMed Realty Trust, Inc. has sole voting and dispositive power with respect to the shares directly held by BMV Direct SOTRS LP and BMV Direct SO LP. Bruce D. Steel is a limited partner with a variable economic interest in each of BMV Direct SOTRS LP and BMV Direct SO LP. Mr. Steel disclaims beneficial ownership in the shares directly held by each of BMV Direct SOTRS LP and BMV Direct LP except to the extent of his pecuniary interest therein. The address of the principal business office of each reporting person is 17190 Bernardo Center Drive, San Diego, California 92128. |
(4) | Consists of: (i) 180,228 shares of common stock, (ii) 63,700 shares of common stock issuable upon exercise of outstanding warrants exercisable within the60-day period following December 12, 2017, and (iii) 36,813 shares of common stock issuable upon exercise of outstanding options exercisable within the60-day period following December 12, 2017. |
(5) | Consists of: (i) 115,750 shares of common stock, (ii) 47,750 shares of common stock issuable upon exercise of outstanding warrants exercisable within the60-day period following December 12, 2017 and (iii) 89,250 shares of common stock issuable upon exercise of outstanding options exercisable within the60-day period following December 12, 2017. |
(6) | Consists of: (i) 15,920 shares of common stock, (ii) 15,920 shares of common stock issuable upon exercise of outstanding warrants exercisable within the60-day period following December 12, 2017 and (iii) 92,375 shares of common stock issuable upon exercise of outstanding options exercisable within the60-day period following December 12, 2017. |
(7) | Consists of 200,000 shares of common stock. |
(8) | Consists of 38,666 shares of common stock issuable upon exercise of outstanding options exercisable within the60-day period following December 12, 2017. |
(9) | Consists of: (i) 3,000 shares of common stock and (ii) 45,352 shares of common stock issuable upon exercise of outstanding options exercisable within the60-day period following December 12, 2017. |
(10) | Consists of: (i) 21,920 shares of common stock, (ii) 15,920 shares of common stock issuable upon exercise of outstanding warrants exercisable within the60-day period following December 12, 2017 and (iii) 48,301 shares of common stock issuable upon exercise of outstanding options exercisable within the60-day period following December 12, 2017. A portion of the securities reported for Dr. Xanthopoulos are held by the Xanthopoulos Family Trust, for which Dr. Xanthopoulos may be deemed to exercise voting and investment control. |
(11) | Dr. Alataris’s employment with the Company terminated on May 8, 2017. He was succeeded as our President and Chief Executive Officer by Mr. Walker. |
(12) | Consists of: (i) 254,778 shares of common stock held by The Alataris Family Trust and (ii) 127,389 shares of common stock issuable upon exercise of outstanding warrants exercisable within the60-day period following December 12, 2017. Dr. Alataris, the trustee of The Alataris Family Trust, may be deemed to have investment discretion and voting power over the securities held by The Alataris Family Trust. |
(13) | Consists of: (i) 541,593 shares of common stock, (ii) 148,065 shares of common stock issuable upon exercise of outstanding warrants exercisable within the60-day period following December 12, 2017 and (iii) 444,382 shares of common stock issuable upon exercise of outstanding options exercisable within the60-day period following December 12, 2017. |
* Less than 1%PROPOSAL 1: APPROVAL OF THE INCREASE IN NUMBER OF AUTHORIZED SHARES OF COMMON STOCK PROPOSAL
The board of directors is seeking
(1) Except as otherwise indicated, we believe that the approval of our stockholders of an amendment to the Amended and Restated Certificate of Incorporationbeneficial owners of the Company,common stock listed above, based on information furnished by such owners, have sole investment and voting power with respect to shares, subject to community property laws where applicable. Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or the Amendment,investment power with respects to increase the number of authorizedsecurities.
(2) Based on information provided by Telemetry Investments, LLC (“Telemetry”). Consists of: (i) 334,301 shares of common stock from 100,000,000 to 250,000,000, which was approved by the board of directors on December 12, 2017, subject to stockholder approval. The Amendment will not change the number of authorized shares of preferred stock, which currently consists of 5,000,000 shares of preferred stock. While the Company’s issued and outstanding shares of common stock will decrease if the Reverse Stock Split contemplated by the Reverse Stock Split Proposal is approved, the Company is seeking stockholder approval to increase its authorized common stock to 250,000,000 even if a reverse stock split is approved and implemented.In addition to the 39,460,931 shares of common stock outstanding on December 12, 2017, our board of directors has authorized the Company to issue and sell an aggregate of up to $35,000,000 in shares of its common stock to Lincoln Park Capital Fund, or Lincoln Park, in accordance with a purchase agreement, or the Purchase Agreement, by and between the Company and Lincoln Park dated as of October 20, 2017 and has reserved 7,614,596 shares for potential issuance under the Purchase Agreement. The Company has also reserved 3,990,554 shares for issuance upon the exercise of outstanding warrants and 2,370,886 shares for issuance upon the exercise of outstanding stock options.
The full text of the proposed Amendment is attached to this Proxy Statement asAppendix A. However, the text of the proposed Amendment is subject to revision to include such changes as may be required by the Secretary of State of the State of Delaware and as our board of directors deems necessary and advisable to effect the proposed amendment of the Company’s Amended and Restated Certificate of Incorporation.
Provided the stockholders approve the Amendment, the increased number of shares would be authorized for issuance, but would remain unissued until such time as the board of directors approves a specific issuance of shares. The additional shares of common stock authorized for issuance by the Amendment would be a part of the existing class of common stock and, if and when issued, would have the same rights and privileges as the common stock presently issued and outstanding. Adoption of the proposed amendment would not affect the rights of the holders of currently outstanding common stock, except for effects incidental to increasing the number of shares of our common stock outstanding, such as dilution of the earnings per share and voting rights of current holders of common stock, to the extent that any additional shares of common stock are ultimately issued out of the increase proposed in the Amendment.
If the proposed Amendment is approved by the requisite vote of the stockholders, it will become effective upon the filing and recording of a Certificate of Amendment with the Secretary of State of the State of Delaware. Our board of directors reserves its right to elect not to proceed and abandon the Amendment if it determines, in its sole discretion, that this proposal is no longer in the best interests of our stockholders.
Purposes and Effects of the Amendment
The board of directors is recommending the proposed increase in the authorized number of shares of common stock primarily to provide the Company with appropriate flexibility to issue shares in the future on a timely basis if such need arises in connection with potential financings, business combinations or other corporate purposes. Approval of the proposed Amendment will also enable the Company to take advantage of market conditions, the availability of more favorable financing, and opportunities for business combinations and other strategic transactions, without the potential delay and expense associated with convening a special stockholders’ meeting. The Company is currently evaluating the possibility of seeking additional funding through an underwritten public offering and has filed a registration statement that seeks to register shares of its common stock with a proposed maximum aggregate offering price of $57.5 million. The Company does not currently have a binding commitment from any investment bank to participate in any such offering. The offering of the
Company’s common stock may only be made by means of a prospectus filed with the SEC. A copy of the preliminary prospectus relating to a proposed offering is available, for free, on the SEC’s website at http://sec.gov. A copy may also be obtained from the Company. The registration statement relating to these shares of common stock has been filed with the SEC, but has not yet become effective. The shares subject to the registration statement may not be sold unless and until the registration statement is declared effective by the SEC. Based on the current trading price of the Company’s common stock, which closed at $0.53 on December 27, 2017, and assuming that the Company does not effect the reverse stock split discussed in Proposal 2 below, the Company does not currently have sufficient shares of common stock available for issuance to proceed with the financing contemplated by the registration statement. The Company is also exploring other potential sources of funding, which could include private issuances of common stock or securities convertible into common stock or strategic transactions with an equity component. The Company has no current arrangements or understandings with respect to any private placements or strategic transactions. The Company’s management will need the flexibility to issue common stock, warrants, or preferred stock convertible into common stock to potential investors or strategic partners. The information in this proxy statement shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of, Company securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of such state or jurisdiction.
In addition, our success depends in part on our continued ability to attract, retain and motivate highly qualified management and key personnel, and if this proposal is not approved by our stockholders, the lack of unissued and unreserved authorized shares of common stock to provide future equity incentive opportunities could adversely impact our ability to achieve these goals. In short, if our stockholders do not approve this proposal, we may not be able to access the capital markets, complete corporate collaborations or partnerships, attract, retain and motivate employees, and pursue other business opportunities integral to our growth and success.
If the Amendment is approved, unless otherwise required by applicable law or stock exchange rules, the board of directors will be able to issue the additional shares of common stock from time to time in its discretion without further action or authorization by the stockholders. The newly authorized shares of common stock would be issuable for any proper corporate purpose, including capital raising transactions of equity or convertible debt securities, the establishment of collaborations or other strategic agreements, stock splits, stock dividends, issuance under current or future equity incentive plans, future acquisitions, investment opportunities, or for other corporate purposes.
The proposed increase in the number of authorized shares of common stock will not, by itself, have an immediate dilutive effect on our current stockholders. However, the future issuance of additional shares of common stock or securities convertible into our common stock may occur at times or under circumstances that could result in a dilutive effect on the earnings per share, book value per share, voting power and percentage interest of the present holders of our common stock, none of whom have preemptive rights to subscribe for additional shares that we may issue. The Company is currently exploring financing options and, if the Amendment is approved, the Company could issue a significant number of shares of its common stock in a financing transaction, which—if consummated—would likely result in an immediate dilutive effect on our current stockholders.
Potential Anti-Takeover Effect
An increase in the number of authorized shares of common stock may also, under certain circumstances, be construed as having an anti-takeover effect. Although not designed or intended for such purposes, the effect of the proposed increase might be to render more difficult or to discourage a merger, tender offer, proxy contest or change in control of us and the removal of management, which stockholders might otherwise deem favorable. For example, the authority of our board of directors to issue common stock might be used to create voting impediments or to frustrate an attempt by another person or entity to effect a takeover or otherwise gain control
of us because the issuance of additional common stock would dilute the voting power of the common stock and preferred stock then outstanding. Our common stock could also be issued to purchasers who would support our board of directors in opposing a takeover bid which our board determines not to be in our best interests and those of our stockholders.
In addition to the proposed Amendment, our Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws also include other provisions that may have an anti-takeover effect. These provisions, among other things, permit our board to issue preferred stock with rights senior to those of the common stock without any further vote or action by the stockholders, provide that special meetings of stockholders may only be called by our board of directors and some of our officers, and do not provide for cumulative voting rights, which could make it more difficult for stockholders to effect certain corporation actions and may delay or discourage a change in control.
The board of directors is not presently aware of any attempt, or contemplated attempt, to acquire control of the Company and the proposed Amendment to increase the number of authorized shares is not part of any plan by our board of directors to recommend or implement a series of anti-takeover measures.
Vote Required
The affirmative vote of the holders of a majority of the shares outstanding and entitled to vote on such proposal is required for the approval of the proposed Amendment.
THE BOARD OF DIRECTORS RECOMMENDS A VOTEFOR APPROVAL OF THE AMENDMENT TO THE AMENDED AND RESTATED CERTIFICATE OF INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED SHARES.
PROPOSAL 2: APPROVAL OF THE REVERSE STOCK SPLIT PROPOSAL
General
Our board of directors, on December 12, 2017, unanimously adopted resolutions approving, declaring advisable and recommending to our stockholders for their approval a second amendment to our Amended and Restated Certificate of Incorporation, or Second Amendment, to effect a reverse stock split, or the Reverse Stock Split, with a ratio in the range of1-for-5 and1-for-20, such ratio to be determined by the board of directors in its discretion but in no event later than November 23, 2018 (in advance of the expiration of the second 180 calendar day period the Company may be afforded by Nasdaq to regain compliance with the $1.00 minimum bid price continued listing requirement), with respect to the issued and outstanding common stock of the Company. The Reverse Stock Split will also affect outstanding options and warrants, as described in “—Effect on Equity Compensation Plans and Outstanding Options and Warrants” below. Approval of this proposal will grant the board of directors the authority, without further action by the stockholders, to carry out the Reverse Stock Split any time on or before November 23, 2018 (in advance of the expiration of the second 180 calendar day period the Company may be afforded by Nasdaq to regain compliance with the $1.00 minimum bid price continued listing requirement), with the exact exchange ratio and timing to be determined at the discretion of the board of directors and set forth in a public announcement. Even if our stockholders approve this proposal, our board of directors may determine in its discretion not to effect the Reverse Stock Split and to abandon the Second Amendment to implement the Reverse Stock Split prior to the time the Second Amendment is filed and becomes effective.
If approved, this proposal would approve the Second Amendment set forth inAppendix B solely to the extent such Second Amendment relates to the Reverse Stock Split. The text of the proposed Second Amendment to effect the Reverse Stock Split is subject to revision to include such changes as may be required by the Secretary of State of the State of Delaware and as our board of directors deems necessary and advisable to effect the proposed Second Amendment. Stockholders are urged to carefully readAppendix B.
Background
Our common stock is currently listed on the Nasdaq Capital Market under the symbol “ZSAN.” The continued listing requirements of the Nasdaq Capital Market provide, among other things, that our common stock must maintain a closing bid price in excess of $1.00 per share. On November 28, 2017, we received written notice from the Listing Qualifications Department of the Nasdaq Stock Market indicating that, based upon the closing bid price of our common stock for the last 30 consecutive days, we did not meet the continued listing requirement for minimum bid price. We have 180 calendar days, or until May 29, 2018, to cure the deficiency and regain compliance with the minimum bid price requirement. The letter further provided that if we do not regain compliance by May 29, 2018, an additional 180 days may be granted to regain compliance if we (i) meet the continued listing requirement for market value of publicly held shares and all other initial listing standards for the Nasdaq Capital Market (except for the bid price requirement) and (ii) provide written notice of our intention to cure the deficiency during the second180-day compliance period.
Our board of directors determined that the continued listing of our common stock on the Nasdaq Capital Market is beneficial for our stockholders. If our common stock is delisted from the Nasdaq Capital Market, our board of directors believes that the trading market for our common stock could become significantly less liquid, which could reduce the trading price of our common stock and increase the transaction costs of trading in shares of our common stock.
The purpose of the Reverse Stock Split is to decrease the total number of shares of common stock outstanding and proportionately increase the market price of the common stock above $1.00 per share in order to meet the continuing listing requirements of the Nasdaq Capital Market. Our board of directors intends to effect the Reverse Stock Split only if it believes that a decrease in the number of shares outstanding is in the best interests of the Company and our stockholders and is likely to improve the trading price of our common stock and improve the likelihood that we will be allowed to maintain our continued listing on the Nasdaq Capital
Market. Accordingly, our board of directors approved the Reverse Stock Split in order to help ensure that the share price of our common stock meets the continued listing requirements of the Nasdaq Capital Market.
In order to cure the deficiency, the closing bid price of our common stock would have to be $1.00 or higher for a minimum of 10 consecutive business days during the additional180-day compliance period. If we fail to achieve compliance during the additional180-day compliance period, our common stock may be delisted.
Our board of directors, on December 12, 2017, unanimously adopted resolutions approving, declaring advisable and recommending to our stockholders for their approval the Second Amendment to effect the Reverse Stock Split with a ratio in the range of1-for-5 and1-for-20, such ratio to be determined by the board of directors and included in a public announcement, with respect to the issued and outstanding common stock of the Company. The reverse stock split will also affect outstanding options and warrants, as described in “—Effect on Equity Compensation Plans and Outstanding Options and Warrants” below. Approval of this proposal will grant the board of directors the authority, without further action by the stockholders, to carry out the Reverse Stock Split any time on or before November 23, 2018 (in advance of the expiration of the second 180 calendar day period the Company may be afforded by Nasdaq to regain compliance with the $1.00 minimum bid price continued listing requirement), with the exact exchange ratio and timing to be determined at the discretion of the board of directors. Even if our stockholders approve this proposal, our board of directors may determine in its discretion not to effect the Reverse Stock Split and to abandon the Second Amendment to effect the Reverse Stock Split prior to the time the Second Amendment is filed and becomes effective.
Effective Time
If this proposal is approved and our board of directors determines to effect the Reverse Stock Split, we will file the proposed Second Amendment with the Secretary of State of the State of Delaware. The Reverse Stock Split will become effective at the time the Second Amendment is filed with the Secretary of State of Delaware and becomes effective, with the exact timing to be determined at the discretion of our board of directors.
If this proposal is approved, no further action on the part of stockholders would be required to either effect or abandon the Reverse Stock Split. If our board of directors does not implement the Reverse Stock Split on or before November 23, 2018 (in advance of the expiration of the second 180 calendar day period the Company may be afforded by Nasdaq to regain compliance with the $1.00 minimum bid price continued listing requirement), the authority granted in this proposal to implement the Reverse Stock Split will terminate and the Second Amendment to effect the Reverse Stock Split will be abandoned. Our board of directors reserves its right to elect not to proceed and abandon the Reverse Stock Split if it determines, in its sole discretion, that this proposal is no longer in the best interests of our stockholders.
Reasons for the Reverse Stock Split
The principal purpose of the Reverse Stock Split is to decrease the total number of shares of common stock outstanding and proportionately increase the market price of the common stock above $1.00 per share in order to meet the continuing listing requirements of the Nasdaq Capital Market. Our board of directors intends to effect the Reverse Stock Split only if it believes that a decrease in the number of shares outstanding is in the best interests of the Company and our stockholders and is likely to improve the trading price of our common stock and improve the likelihood that we will be allowed to maintain our continued listing on the Nasdaq Capital Market. Accordingly, our board of directors has approved the Reverse Stock Split in order to help ensure that the share price of our common stock meets the continued listing requirements of the Nasdaq Capital Market.
Board Discretion to Implement the Reverse Stock Split
Our board of directors believes that stockholder approval of a range of Reverse Stock Split ratios (rather than a single exchange ratio) is in the best interests of our stockholders because it provides the board of directors
with the flexibility to achieve the desired results of the Reverse Stock Split and because it is not possible to predict market conditions at the time the Reverse Stock Split would be implemented. If stockholders approve this proposal, the board of directors would carry out a reverse stock split only upon the board of directors’ determination that a reverse stock split would be in the best interests of our stockholders at that time. The board of directors would then set the ratio for the Reverse Stock Split within the range approved by stockholders and in an amount it determines is advisable and in the best interests of the stockholders considering relevant market conditions at the time the Reverse Stock Split is to be implemented. In determining the Reverse Stock Split ratio, following receipt of stockholder approval, the board of the directors may consider numerous factors including:
the historical and projected performance of our common stock;
general economic and other related conditions prevailing in our industry and in the marketplace;
the projected impact of the Reverse Stock Split ratio on trading liquidity in our common stock and our ability to maintain continued listing on the Nasdaq Capital Market;
our capitalization (including the number of shares of common stock issued and outstanding);
the then-prevailing trading price for our common stock and the volume level thereof; and
the potential devaluation of our market capitalization as a result of the Reverse Stock Split.
Our board of directors intends to select a reverse stock split ratio that it believes would be most likely to achieve the anticipated benefits of the Reverse Stock Split.
Certain Risks Associated with the Reverse Stock Split
Before voting on this proposal, stockholders should consider the following risks associated with effecting the Reverse Stock Split:
Although we expect that the Reverse Stock Split will result in an increase in the market price of our common stock, we cannot assure you that the Reverse Stock Split, if effected, will increase the market price of our common stock in proportion to the reduction in the number of shares of our common stock outstanding or result in a permanent increase in the market price. The effect that the Reverse Stock Split may have upon the market price of our common stock cannot be predicted with any certainty, and the history of similar reverse stock splits for companies in similar circumstances to ours is varied. The market price of our common stock is dependent on many factors, including our business and financial performance, general market conditions, prospects for future growth and other factors detailed from time to time in the reports we file with the SEC. Accordingly, the total market capitalization of our common stock after the proposed Reverse Stock Split may be lower than the total market capitalization before the proposed Reverse Stock Split and, in the future, the market price of our common stock following the Reverse Stock Split may not exceed or remain higher than the market price prior to the proposed Reverse Stock Split.
Even if our stockholders approve the Reverse Stock Split and the Reverse Stock Split is effected, there can be no assurance that we will continue to meet the continued listing requirements of the Nasdaq Capital Market.
The Reverse Stock Split may result in some stockholders owning “odd lots” of less than 100 shares of common stock on a post-split basis. These odd lots may be more difficult to sell, or require greater transaction costs per share to sell, than shares in “round lots” of even multiples of 100 shares.
Although our board of directors believes that the decrease in the number of shares of common stock outstanding as a consequence of the Reverse Stock Split and the anticipated increase in the market price of common stock could encourage interest in our common stock and possibly promote greater liquidity for stockholders, such liquidity could also be adversely affected by the reduced number of shares outstanding after the Reverse Stock Split.
Principal Effects of the Reverse Stock Split
If the Reverse Stock Split is approved and effected with respect to the issued and outstanding common stock, each holder of common stock outstanding immediately prior to the effectiveness of the Reverse Stock Split will own a reduced number of shares of common stock upon effectiveness of the Reverse Stock Split. The Reverse Stock Split would be effected simultaneously for all outstanding shares of common stock at the same exchange ratio. Except for adjustments that may result from the treatment of fractional shares (as described below), the Reverse Stock Split would affect all stockholders uniformly and would not change any stockholder’s percentage ownership interest in the Company. The relative voting rights and other rights and preferences that accompany the shares of common stock will not be affected by the Reverse Stock Split. Shares of common stock issued pursuant to the Reverse Stock Split will remain fully paid and nonassessable.
The Reverse Stock Split will not affect the number of authorized shares of common stock, which, assuming stockholder approval of the Increase in Number of Authorized Shares of Common Stock Proposal, will be 250,000,000 shares. Although the Reverse Stock Split will not, by itself, have any immediate dilutive effect on stockholders, the proportion of shares owned by stockholders relative to the number of shares authorized for issuance will decrease because the number of authorized shares of common stock would remain unchanged. As a result, additional authorized shares of common stock would become available for issuance at such times and for such purposes as the board of directors may deem advisable without further action by stockholders, except as required by applicable law or stock exchange rules. To the extent that additional authorized shares of common stock are issued in the future, such shares could be dilutive to existing stockholders of the Company by decreasing such stockholders’ percentage of equity ownership in the Company. See “—Potential Anti-Takeover Effect” below for more information on potential anti-takeover effects of the Reverse Stock Split.
The Reverse Stock Split will have no effect on the number of authorized shares of preferred stock or the par value of the preferred stock.
Effect on Equity Compensation Plans and Outstanding Options and Warrants
If the Reverse Stock Split is approved and effected, the total number of shares of common stock reserved for issuance under our Amended and Restated 2014 Equity and Incentive Plan and our 2012 Stock Incentive Plan or, collectively, the Plans, would be reduced in proportion to the ratio selected by our board of directors. As of December 12, 2017, there were a total of 1,983,886 shares of common stock reserved for issuance upon the exercise of stock options outstanding under the Plans, and 588,242 shares remained available for future awards under our Amended and Restated 2014 Equity and Incentive Plan, and following the Reverse Stock Split, if any, such reserve would be reduced to between approximately 99,194 and approximately 396,777 shares reserved for issuance upon the exercise of stock options outstanding under the Plans, and between approximately 29,412 and approximately 117,648 shares would be available for future awards under the Plans.
The total number of shares of common stock reserved for issuance pursuant to outstanding but unexercised warrants would be reduced in proportion to the ratio selected by our board of directors. As of December 12, 2017, there were a total of 3,990,554 shares of common stock reserved for issuance upon the exercise of warrants issued by the Company and following the Reverse Stock Split, if any, such reserve would be reduced to between approximately 199,528 and approximately 798,111 shares reserved for issuance upon the exercise of stock options outstanding under the warrants.
Additionally, the total number of shares of common stock reserved for issuance pursuant to outstanding but unexercisednon-statutory stock options, which were issued outside of the Plans, would be reduced in proportion to the ratio selected by our board of directors. As of December 12, 2017, there were a total of 387,000 shares of common stock reserved for issuance upon the exercise ofnon-statutory stock option grants issued by the Company and following the Reverse Stock Split, if any, such reserve would be reduced to between approximately 19,350 and approximately 77,400 shares reserved for issuance upon the exercise of stock options outstanding under thenon-statutory stock option grants.
Under the terms of our outstanding equity awards, options and warrants, the proposed Reverse Stock Split would adjust and proportionately reduce the number of2,578,167 shares of common stock issuable upon exercise or vesting of outstanding warrants. Telemetry is a registered investment advisor. Andrew J. Schorr and Daniel P. Schorr are each managers of Telemetry. As such, awards, optionsAndrew J. Schorr, and warrantsDaniel P. Schorr share voting and investment power over the securities held by Telemetry. The address of Telemetry is 545 Fifth Ave, Suite 1108, New York, NY 10017.
(3) Based on information disclosed in the same ratioSchedule 13F filed with the SEC on February 6, 2020. Aisling Capital IV, LP, Aisling Capital Partners IV, LP and Aisling Capital Partner IV LLC have sole voting and dispositive power over 2,718,226 shares and Steven Elms and Andrew Schiff have shared voting and dispositive power over 2,718,226 shares. The address of the Reverse Stock Split and, correspondingly, would proportionately increase the exercise or purchase price, if any,principal business office of all such awards, options and warrants. The number ofeach reporting person is 888 Seventh Avenue, 12th Floor, New York, New York 10106.
(4) Consists of: (i) 14,250 shares of common stock issuable upon exercise or vesting of outstanding equity awards, options exercisable within the 60-day period following May 11, 2020 and warrants and(ii) the exercise or purchase price related thereto, if any, would be equitably adjustedshares described in accordance with the termsfootnote (3) above.
(5) Consists of: (i) 109,011 shares of the Plans,non-statutory stock option grants or warrants, which may include rounding the number ofcommon stock; (ii) 3,185 shares of common stock issuable down to the nearest whole share.The following table contains approximate information relating to our common stock immediately following the Reverse Stock Split under certain possible exchange ratios, based on share information asupon exercise of December 12, 2017, without giving effect to the treatment of fractional shares. The table reflects 250,000,000 shares of authorized common stock, which gives pro forma effect to the increase in the number of authorizedoutstanding warrants; and (iii) 227,359 shares of common stock as proposed inissuable upon exercise of outstanding options exercisable within the Increase in Number60-day period following May 11, 2020.
(6) Consists of: (i) 796 shares of Authorized Shares of Common Stock Proposal, as if such increase had occurred as of December 12, 2017. | | | | | | | | | | | | | | | | |
| | | December 12, 2017 | | | 1-for-5 | | | 1-for-10 | | | 1-for-20 | |
Number of authorized shares of common stock (1) | | | 250,000,000 | | | | 250,000,000 | | | | 250,000,000 | | | | 250,000,000 | |
Number of outstanding shares of common stock | | | 39,460,931 | | | | 7,892,186 | | | | 3,946,093 | | | | 1,973,047 | |
Number of shares of common stock reserved for issuance upon exercise of outstanding stock options and warrants | | | 2,370,886 | | | | 474,177 | | | | 237,089 | | | | 118,544 | |
Number of shares of common stock reserved for issuance in connection with future awards under our equity compensation plans | | | 588,242 | | | | 117,648 | | | | 58,824 | | | | 29,412 | |
Number of authorized and unreserved shares of common stock not outstanding | | | 207,579,941 | | | | 241,515,989 | | | | 245,757,994 | | | | 247,878,997 | |
(1) | If the Increase in Number of Authorized Shares of Common Stock Proposal is approved and implemented, the number of authorized shares of common stock will be 250,000,000. If the proposal is not approved and/or is not implemented, the number of authorized shares of common stock will remain 100,000,000. |
Potential Anti-Takeover Effect
An additional effect of the Reverse Stock Split would be to increase the relative amount of authorized but unissuedcommon stock; (ii) 796 shares of common stock which may, under certain circumstances, be construed as having an anti-takeover effect. Although not designed or intended for such purposes,issuable upon exercise of outstanding warrants; and (iii) 73,388 shares of common stock issuable upon exercise of outstanding options exercisable within the effect60-day period following May 11, 2020.
(7) Consists of: (i) 238 shares of common stock; (ii) 238 shares of common stock issuable upon exercise of outstanding warrants; and (iii) 73,388 shares of common stock issuable upon exercise of outstanding options exercisable within the 60-day period following May 11, 2020.
(8) Consists of: (i) 10,000 shares of common stock and (ii) 18,603 shares of common stock issuable upon exercise of outstanding options exercisable within the 60-day period following May 11, 2020.
(9) Consists of 25,311 shares of common stock issuable upon exercise of outstanding options exercisable within the 60-day period following May 11, 2020.
(10) Consists of: (i) 1,096 shares of common stock; (ii) 796 shares of common stock issuable upon exercise of outstanding warrants; and (iii) 19,256 shares of common stock issuable upon exercise of outstanding options exercisable within the 60-day period following May 11, 2020. A portion of the increased availablesecurities reported for Dr. Xanthopoulos are held by the Xanthopoulos Family Trust, for which Dr. Xanthopoulos may be deemed to exercise voting and investment control.
(11) Consists of 18,941 shares might be to make more difficultof common stock issuable upon exercise of outstanding options exercisable within the 60-day period following May 11, 2020.
(12) Consists of 8,854 shares of common stock issuable upon exercise of outstanding options exercisable within the 60-day period following May 11, 2020.
(13) Consists of: (i) 2,839,367 shares of common stock; (ii) 5,015 shares of common stock issuable upon exercise of outstanding warrants; and (iii) 479,620 shares of common stock issuable upon exercise of outstanding options exercisable within the 60-day period following May 11, 2020.
Policy Regarding Hedging
We have adopted a policy that prohibits our officers, directors and employees from entering into any short sale of our securities, buying or to discourage an attempt to take overselling publicly traded options on our common stock or otherwise acquire controlhedging their positions in our securities, including through the use of instruments such as prepaid variable forwards, equity swaps, collars or exchange funds.
Delinquent Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Company (for example, by permitting issuances that would dilute the stockSecurities Exchange Act of 1934 requires our directors and executive officers, and persons who beneficially own more than ten percent of a registered class of our equity securities, to file reports of ownership of, and transactions in, our securities with the Securities and Exchange Commission. These directors, executive officers and ten-percent stockholders are also required to furnish us with copies of all Section 16(a) forms they file.
Based solely on a person or entity seekingreview of the copies of such forms filed electronically with the SEC, and on written representations from certain reporting persons, we believe that during fiscal year 2019 our directors, executive officers and ten-percent stockholders complied with all applicable Section 16(a) filing requirements, except for a Form 4 filing for Mr. Greathouse, Mr. Hagan, Mr. Walker, Mr. Wilson (a former member of our Board of Directors), Dr. Xanthopoulos and Aisling Capital IV, LP that were filed late due to effect a changean administrative delay.
CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS
Related Person Transactions
Since January 1, 2018, we have engaged in the compositionfollowing transactions in which the amount involved exceeded or will exceed the lesser of $120,000 or one percent of the boardaverage of our total assets at year-end for the last two completed fiscal years with our directors, executive officers, holders of more than 5% of our voting securities, and affiliates or contemplatingimmediate family members of our directors, executive officers, and holders of more than 5% of our voting securities. We believe that all of these transactions were on terms as favorable as could have been obtained from unrelated third-parties.
April 2019 Offering
On April 9, 2019, we entered into an underwriting agreement with Cantor Fitzgerald & Co. providing for the issuance and sale of an aggregate of 5,000,000 shares of common stock. Aisling Capital IV, LP, a tender offer greater than 5% stockholder and an affiliate of Steven A. Elms, one of our directors, purchased 428,571 shares at a price of $3.50 per share in the offering. John Walker, our Chief Executive Officer and President at the time of the offering, also purchased 100,000 shares at a price of $3.50 per share in the offering. Due to the timing of the transaction, while our Board of Directors and pricing committee of the Board of Directors approved the transaction, separate Audit Committee approval was not obtained.
December 2019 Registered Direct Offering
On November 27, 2019, we entered into a securities purchase agreement with several institutional investors providing for the issuance and sale of an aggregate of 2,181,034 shares of common stock at a price of $1.45 per share in a registered direct offering. Aisling Capital IV, LP, a greater than 5% stockholder and an affiliate of Steven A. Elms, one of our directors, purchased 689,655 shares at a price of $1.45 per share in the offering.
February 2020 Underwritten Offering
On February 14, 2020, we closed an underwritten offering with H.C. Wainwright & Co. for the issuance and sale of (i) 10,146,154 Class A Units, each consisting of one share of common stock and one Series C Warrant (“Series C Warrant”) to purchase one share of common stock, at a public offering price of $0.65 per Class A Unit, and (ii) 2,161,539 Class B Units, each consisting of one Series D Pre-Funded Warrant (“Series D Warrant”) to purchase one share of common stock and one Series C Warrant to purchase one share of common stock, at a public offering price of $0.6499 per Class B Unit. We granted the underwriter a 30-day option to purchase up to an additional 1,846,153 shares of common stock and/or other changeadditional Series C Warrants to purchase up to 1,846,153 shares of common stock. The underwriter fully exercised its option to purchase the additional shares and Series C Warrants.
Armistice Capital Master Fund, Ltd. (“Armistice”) purchased 3,500,000 shares of common stock, a Series C Warrant to purchase up to 4,615,385 shares of common stock and a Series D Warrant to purchase up to 1,115,385 shares of common stock in control transaction).the offering for approximately $3.0 million. As a result of this transaction, Armistice became a greater than 5% stockholder.
Sabby Volatility Warrant Master Fund, Ltd. (“Sabby”) purchased 2,800,000 shares of common stock, a Series C Warrant to purchase up to 3,846,154 shares of common stock and a Series D Warrant to purchase up to 1,046,154 shares of common stock in the offering for approximately $2.5 million. As a result of this transaction, Sabby became a greater than 5% stockholder.
Telemetry Investments, LLC (“Telemetry”) purchased 1,500,000 shares of common stock and a Series C Warrant to purchase up to 1,500,000 shares of common stock in the offering for approximately $975,000. As a result of this transaction, Telemetry became a greater than 5% stockholder.
The Series D Warrants had an exercise price of $0.0001 per share, and Armistice and Sabby fully exercised the Series D Warrants in connection with the closing of the offering. The Series C Warrants have an exercise price of $0.65 per share. As of the date of this Proxy Statement, Sabby has purchased 2,125,000 shares of common stock pursuant to the exercise of its Series C Warrants.
March 2020 Registered Direct Offering
On March 4, 2020, we entered into a securities purchase agreement with certain institutional investors for the issuance and sale of an aggregate of (i) 11,903,506 shares of common stock and (ii) warrants to purchase up to a total of 11,903,506 shares of common stock at an offering price of $0.9275 per share and accompanying warrant in a registered direct offering. In addition, our Amendedthe offering, Armistice purchased 2,695,418 shares of common stock and Restateda warrant to purchase up to 2,695,418 shares of common stock for approximately $2.5 million, Sabby purchased 2,695,418 shares of common stock and a warrant to purchase up to 2,695,418 shares of common stock for approximately $2.5 million and Telemetry purchased 1,078,167 shares of common stock and a warrant to purchase up to 1,078,167 shares of common stock for approximately $1.0 million.
Indemnification of Officers and Directors
Our Certificate of Incorporation and our AmendedBylaws provide that we will indemnify our directors and Restated Bylaws includeofficers to the fullest extent permitted by Delaware law. In addition, we have entered into indemnification agreements with each of our directors that are broader in scope than the specific indemnification provisions that may have an anti-takeover effect. These provisions, among things, permitcontained in the boardDelaware General Corporation Law.
Policies and Procedures for Related Person Transactions
Pursuant to the charter of
our Audit Committee, our Audit Committee is responsible for reviewing and approving in advance any related person transactions. For the purposes of this policy, a “related person transaction” is any transaction between us and any (a) of our directors
or executive officers, (b) nominee for election as a director, (c) person known to
issue preferred stock with rights seniorus to
thoseown more than five percent of any class of our voting securities, or (d) member of the
common stock without any further vote or action by the stockholders, provide that special meetings of stockholders may only be called by our board of directors and some of our officers, and do not provide for cumulative voting rights, which could make it more difficult for stockholders to effect certain corporate actions and may delay or discourage a change in control.Our board of directors is not presently awareimmediate family of any attempt, or contemplated attempt,such person, if the nature of such transaction is such that it would be required to acquire controlbe disclosed under Item 404 of Regulation S-K (or any similar successor provision).
In determining whether to approve a related person transaction, the Company andAudit Committee will consider, among other factors it deems appropriate, whether the Reverse Stock Split Proposalrelated person transaction is not part of any plan by our board of directorson terms no less favorable than terms generally available to recommend or implement a series of anti-takeover measures.
Accounting Matters
The Reverse Stock Split will not affect the par value per share of common stock, which will remain unchanged at $0.0001 per share. As a result of the Reverse Stock Split, at the effective time, the stated capital on our balance sheet attributable to the common stock, which consists of the par value per share of the common stock multiplied by the aggregate number of shares of the common stock issued and outstanding, will be reduced in proportion to the ratio of the Reverse Stock Split. Correspondingly, the additionalpaid-in capital account, which consists of the difference between the stated capital and the aggregate amount paid upon issuance of all currently outstanding shares of common stock, will be credited with the amount by which the stated capital is reduced. The stockholders’ equity, in the aggregate, will remain unchanged. In addition, the per share net income or loss of common stock, for all periods, will be restated because there will be fewer outstanding shares of common stock.
Mechanics of the Reverse Stock Split
Effect on Registered “Book-Entry” Holders of Common Stock
Holders of common stock may hold some or all of their common stock electronically in book-entry form (“street name”)an unaffiliated third person under the direct registration system for securities. These stockholders will not have stock certificates evidencing their ownership. They are, however, provided with a statement reflecting the number of shares of common stock registered in their accounts. If you hold registered common stock in book-entry form, you do not need to take any action to receive your post-split shares, if applicable.
Fractional Shares
We would not issue fractional shares in connection with the reverse stock split. Instead, any fractional share resulting from the reverse stock split because the stockholder owns a number of shares not evenly divisible by the ratio would instead receive cash. The cash amount to be paid to each stockholder would be equal to the resulting fractional interest in one share of our common stock to which the stockholder would otherwise be entitled, multiplied by the closing trading price of our common stock on the trading day immediately preceding the effective date of the reverse stock split. We do not anticipate that the aggregate cash amount paid by the Company for fractional interests will be material to the Company.
No Dissenters’same or Appraisal Rights
Under the DGCL, our stockholders are not entitled to any dissenters’ or appraisal rights with respect to the Reverse Stock Split,similar circumstances and we will not independently provide stockholders with any such right.
U.S. Federal Income Tax Considerations
The following is a summary of certain U.S. federal income tax consequences of the Reverse Stock Split to the Company and to stockholders that hold their common shares as capital assets for U.S. federal income tax purposes. This summary is based upon the provisions of the U.S. Internal Revenue Code, or the Code, Treasury regulations promulgated thereunder, administrative rulings and judicial decisions, all as in effect as of the date hereof, and all of which are subject to change and differing interpretations, possibly with retroactive effect. Changes in these authorities or their interpretation may result in the U.S. federal income tax consequences of the Reverse Stock Split differing substantially from the consequences summarized below.
This summary is for general information purposes only and does not address all aspects of U.S. federal income taxation that may be relevant to stockholders in light of their particular circumstances or to stockholders that may be subject to special tax rules, including, without limitation: (i) persons subject to the alternative minimum tax; (ii) banks, insurance companies, or other financial institutions;(iii) tax-exempt organizations; (iv) dealers in securities or commodities; (v) regulated investment companies or real estate investment trusts;
(vi) partnerships (including entities or arrangements treated as partnerships for U.S. federal income tax purposes and their partners or members); (vii) traders in securities that elect to use themark-to-market method of accounting; (viii) persons whose “functional currency” is not the U.S. dollar; (ix) persons holding our common stock in a hedging transaction, “straddle,” “conversion transaction” or other risk reduction transaction; (x) persons who acquired our common stock in connection with employment or the performance of services; (xii) retirement plans; (xiii) persons who are treated as non—U.S. persons for U.S. federal income tax purposes; or (xiv) certain former citizens or long-term residents of the United States.
In addition, this summary of certain U.S. federal income tax consequences does not address the tax consequences arising under the laws of any foreign, state or local jurisdiction or any U.S. federal tax consequences other than U.S. federal income taxation (such as U.S. federal estate and gift tax consequences). If a partnership (including any entity or arrangement treated as a partnership for U.S. federal income tax purposes) holds shares of our common stock, the tax treatment of a partner in the partnership generally will depend upon the status of the partner and the activities of the partnership. Partnerships holding our common stock and the partners therein should consult their tax advisors regarding the tax consequences to them of the Reverse Stock Split.
We have not sought, and will not seek, an opinion of counsel or a ruling from the Internal Revenue Service, or the IRS, regarding the U.S. federal income tax consequences of the Reverse Stock Split and there can be no assurance that the IRS will not challenge the statements and conclusions set forth below or that a court would not sustain any such challenge.
EACH STOCKHOLDER SHOULD CONSULT ITS TAX ADVISORS WITH RESPECT TO THE PARTICULAR TAX CONSEQUENCES OF THE REVERSE STOCK SPLIT TO SUCH STOCKHOLDER.
Taxation of Stockholders
The Reverse Stock Split should constitute a “recapitalization” for U.S. federal income tax purposes. As a recapitalization, except as described below with respect to cash received in lieu of fractional shares, a stockholder should not recognize gain or loss as a result of the Reverse Stock Split. A stockholder’s aggregate tax basis in the shares of the common stock received pursuant to the Reverse Stock Split should equal the stockholder’s aggregate tax basis in the shares of the common stock surrendered, and such stockholder’s holding period in the shares of the common stock received should include the holding period of the shares of the common stock surrendered. Treasury regulations promulgated under the Code provide detailed rules for allocating the tax basis and holding period of shares of common stock surrendered pursuant to the Reverse Stock Split to shares of common stock received pursuant to the Reverse Stock Split. Stockholders holding shares of common stock that were acquired on different dates and at different prices should consult their tax advisors regarding the allocation of the tax basis and holding period of such shares.
A stockholder who receives cash in lieu of a fractional share of common stock should be treated as first receiving such fractional share and then receiving cash in redemption of such fractional share. A stockholder who receives cash in lieu of a fractional share in the Reverse Stock Split should recognize capital gain or loss equal to the difference between the amount of the cash received in lieu of the fractional share and the portion of the stockholder’s adjusted tax basis allocable to the fractional share, unless the distribution of cash is treated as having the effect of a distribution of dividend to the stockholder, in which case the gain should be treated as dividend income to the extent of the related person’s interest in the transaction.
INFORMATION ABOUT OUR AUDIT COMMITTEE AND AUDITOR
Audit Committee Report
The material in this report is being furnished and shall not be deemed “filed” with the Securities and Exchange Commission (SEC) for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (Exchange Act), or otherwise subject to the liability of that section, nor shall the material in this section be deemed to be “soliciting material” or incorporated by reference in any registration statement or other document filed with the SEC under the Securities Act of 1933, as amended, or the Exchange Act, except as otherwise expressly stated in such filing.
The Audit Committee operates under a written charter adopted by the Board of Directors. The primary role of our Audit Committee is to assist our Board of Directors in fulfilling its oversight responsibilities by reviewing the financial information proposed to be provided to stockholders and others, the adequacy of the system of internal control over financial reporting and disclosure controls and procedures established by management and the Board of Directors, and the audit process and our independent auditor’s qualifications, independence and performance.
Management is responsible for establishing and maintaining the Company’s current accumulated earningssystem of internal controls and profits, as calculated for U.S. federal income tax purposes. Stockholders should consult their tax advisorspreparation of the Company’s financial statements. Our independent registered public accounting firm is responsible for performing an audit of our financial statements in accordance with generally accepted auditing standards and issuing an opinion on the financial statements. The Audit Committee has met and held discussions with management and our independent auditor, and has also met separately with our independent auditor, without management present, to review the adequacy of our internal controls, financial reporting practices and audit process.
The Audit Committee has reviewed and discussed our audited financial statements for the year ended December 31, 2019 with management and the independent auditor. As part of this review, the Audit Committee discussed with Deloitte & Touche LLP the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board and the SEC.
The Audit Committee has received the written disclosures and the letter from Deloitte & Touche LLP required by applicable requirements of the Public Company Accounting Oversight Board regarding the tax effects to them of receiving cash in lieu of fractional shares basedindependent accountant’s communications with the Audit Committee concerning independence, and has discussed with Deloitte & Touche LLP its independence.
Based on
their particular circumstances.A stockholder may be subject to information reportingthe above-mentioned reviews and discussions with respect to any cash received in exchange for a fractional share interest in a new share inmanagement and the Reverse Stock Split. Stockholders who are subject to information
reporting and who do not provide a correct taxpayer identification number and other required information (such as by submitting a properly completed Internal Revenue Service FormW-9) may also be subject to backup withholding, atindependent auditor, the applicable rate. Any amount withheld under such rules is not an additional tax and may be refunded or credited against the stockholder’s U.S. federal income tax liability, provided that the required information is properly furnished in a timely mannerAudit Committee recommended to the Internal Revenue Service.
TaxationBoard of Directors that Zosano Pharma Corporation’s audited financial statements be included in its Annual Report on Form 10-K for the Company
The Company should not recognize any gain or lossyear ended December 31, 2019 as a result offiled with the Reverse Stock Split.
Vote Required for Approval
Approval of the Reverse Stock Split Proposal requires the affirmative vote of the holders of a majority of the shares of our common stock outstanding and entitled to vote on such proposal at the special meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTEFOR THE REVERSE STOCK SPLIT PROPOSAL.
SEC.PROPOSAL 3: THE ADJOURNMENT PROPOSAL
The Company is asking its stockholders to approve an adjournment of the special meeting, if necessary, to solicit additional proxies if there are not sufficient votes in favor of any of the foregoing proposals.
Vote Required; RecommendationAudit Committee of the Board of Directors
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| Joseph "Jay" Hagan, Chair | |
| Linda Grais, M.D., J.D. | |
| Kenneth Greathouse | |
Our Auditor
On May 28, 2019, our Audit Committee dismissed Marcum LLP (“Marcum”) as our independent registered public accounting firm and appointed Deloitte & Touche LLP (“Deloitte”) as our independent registered public accounting firm to audit our financial statements for the fiscal year ending December 31, 2019. We expect that representatives of Deloitte will attend the annual meeting, will have an opportunity to make a statement if they desire to do so and will be available to respond to appropriate questions. We do not expect a representative from Marcum to be present at the annual meeting.
The approvalfollowing table represents aggregate fees billed to us:
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| | Year Ended December 31, 2019 | | Year Ended December 31, 2018 |
Audit fees (1) | $ | 462,580 |
| | $ | 360,733 |
|
Audit-related fees (2) | 5,150 |
| | — |
|
Tax fees (3) | 67,782 |
| | 5,000 |
|
All other fees (4) | — |
| | — |
|
| Total fees | $ | 535,512 |
| | $ | 365,733 |
|
(1) Represents fees for professional services primarily related to the audit of our annual financial statements, the review of our quarterly financial statements; comfort letters, consents and assistance with the review of documents filed with the SEC; and other accounting services necessary to comply with the standards of the Adjournment Proposal requiresPublic Company Accounting Oversight Board (United States).
(2) Represents fees for assurance and related services that are reasonably related to the affirmative vote of a majorityperformance of the votes cast onaudit or review of our financial statements and are not reported under “Audit Fees.”
(3) Represents fees for preparation of federal and state tax returns and for tax advice.
(4) Represents any other fees billed by our principal accountant and not reported under “Audit Fees,” “Audit-related fees,” and “Tax fees.”
Pre-Approval Policies and Procedures
Our Audit Committee’s pre-approval policies or procedures do not allow our management to engage our independent registered public accounting firm to provide any audit, review or attestation services or any permitted non-audit services without specific Audit Committee pre-approval of the
Adjournment Proposal.THE BOARD OF DIRECTORS RECOMMENDS A VOTEFOR THE ADJOURNMENT PROPOSAL.
engagement for those services. All of the services provided by Deloitte and Marcum during 2019 and 2018 were pre-approved. Whistleblower Procedures
Our Audit Committee has adopted procedures for the treatment of complaints regarding accounting, internal accounting controls or auditing matters, including procedures for the confidential and anonymous submission by our directors, officers and employees of concerns regarding questionable accounting, internal accounting controls or auditing matters. These procedures are set forth in our Code of Ethics. See “Information About Our Board of Directors and Management—Code of Business Conduct and Ethics; Corporate Governance Guidelines” in this proxy statement.
OTHER
BUSINESSThe boardMATTERS
Other Business
Neither we nor our Board of
directors does notDirectors intend to
presentpropose any
other itemsmatters of business
and is not awareat the annual meeting other than the proposals described in this proxy statement. Neither we nor our Board of Directors know of any matters
other than those set forth in this Proxy Statement that willto be
presented for actionproposed by others at the
specialannual meeting.
If, however, any other business should properly come before the special meeting, the persons named in the accompanying proxy will vote the proxy in accordance with applicable law and as they may deem appropriate in their discretion, unless directed by the proxy to do otherwise.
SUBMISSION OF FUTURE STOCKHOLDER PROPOSALSStockholder Proposals for 2021 Annual Meeting
Stockholders who wish to present proposals pursuant to Rule
14a-8 promulgated under the Exchange Act for consideration at our
20182021 annual meeting of stockholders must submit the proposals in proper form to us at the address set forth on the first page of this proxy statement not later than
DecemberJanuary 29,
20172021 in order for the proposals to be considered for inclusion in our proxy statement and form of proxy relating to the
20182021 annual meeting.
Stockholder proposals intended to be presented at our
20182021 annual meeting submitted outside the processes of Rule
14a-8 must be received in writing by us no later than the close of business on March
2, 2018,27, 2021, nor earlier than
January 31, 2018,February 25, 2021, together with all supporting documentation and information required by our
Amended and Restated Bylaws. Proxies solicited by us will confer discretionary voting authority with respect to these proposals, subject to SEC rules governing the exercise of this authority.
In order to have a director candidate considered by the Nominating and Corporate Governance Committee of our boardBoard of directors,Directors, the recommendation must be submitted to our Secretary at the address set forth on the first page of this proxy statement no later than the close of business on March 2, 2018,27, 2021, nor earlier than January 31, 2018,February 25, 2021, and must include all supporting documentation and information required by our Amended and Restated Bylaws.
Appendix A
CERTIFICATE OF AMENDMENT
TO
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
ZOSANO PHARMA CORPORATION.
Zosano Pharma Corporation (the “Corporation”), a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware (the “DGCL”), does hereby certify that:
FIRST: The name of this corporation is Zosano Pharma Corporation and the date on which the Amended and Restated Certificate of Incorporation of this corporation was originally filed with the Secretary of State of the State of Delaware was January 29, 2015 (the “Amended and Restated Certificate of Incorporation”).
SECOND: The Board of Directors of the Corporation has duly adopted resolutions proposing and declaring advisable that the Amended and Restated Certificate of Incorporation be amended as set forth herein and calling for the consideration and approval thereof at a meeting of the stockholders of the Corporation.
THIRD: The Amended and Restated Certificate of Incorporation is hereby amended by deleting the first paragraph of ARTICLE IV in its entirety and inserting the following in lieu thereof:
A. This corporation is authorized to issue two classes of stock to be designated, respectively, “Common Stock” and “Preferred Stock.” The total number of shares which the corporation is authorized to issue is two hundred fifty five million (255,000,000) shares. Two hundred fifty million (250,000,000) shares shall be Common Stock, each having a par value ofone-hundredth of one cent ($0.0001). Five million (5,000,000) shares shall be Preferred Stock, each having a par value ofone-hundredth of one cent ($0.0001).
FOURTH: Pursuant to a resolution of the Board, this Certificate of Amendment was submitted to the stockholders of the Company for their approval, and was duly adopted in accordance with the provisions of Sections 228 and 242 of the DGCL.
FIFTH: This Certificate of Amendment to the Amended and Restated Certificate of Incorporation shall be effective on and as of the date of filing of this Certificate of Amendment with the Secretary of State of the State of Delaware.
[SIGNATURE PAGE FOLLOWS]
* * *
IN WITNESS WHEREOF, Zosano Pharma Corporation has caused this Certificate of Amendment to be executed by its duly authorized officer on this day of , 2018.
| | |
ZOSANO PHARMA CORPORATION |
| | |
| | John Walker |
| | President and CEO |
Appendix B
CERTIFICATE OF AMENDMENT
TO
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
ZOSANO PHARMA CORPORATION.
Zosano Pharma Corporation (the “Corporation”), a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware (the “DGCL”), does hereby certify that:
FIRST: The name of this corporation is Zosano Pharma Corporation and the date on which the Amended and Restated Certificate of Incorporation of this corporation was originally filed with the Secretary of State of the State of Delaware was January 29, 2015 (the “Amended and Restated Certificate of Incorporation”).
SECOND: The Board of Directors of the Corporation has duly adopted resolutions proposing and declaring advisable that the Amended and Restated Certificate of Incorporation be amended as set forth herein and calling for the consideration and approval thereof at a meeting of the stockholders of the Corporation.
THIRD: The Amended and Restated Certificate of Incorporation is hereby amended to add the following as paragraph D of ARTICLE IV in the form below:
“D. Upon the effectiveness of the filing of this Certificate of Amendment (the “Effective Time”) each share of the Corporation’s common stock, $0.0001 par value per share (the “Old Common Stock”), either issued or outstanding or held by the Corporation as treasury stock, immediately prior to the Effective Time, will be automatically reclassified as (without any further act) into a smaller number of shares such that each five (5) to twenty (20) shares of Old Common Stock issued and outstanding or held by the Company as treasury stock immediately prior to the Effective Time is reclassified into one share of Common Stock, $0.0001 par value per share, of the Corporation (the “New Common Stock”), the exact ratio within such range to be determined by the board of directors of the Corporation prior to the Effective Time and publicly announced by the Corporation (the “Reverse Stock Split”). No fractional shares shall be issued as a result of such reclassification. In lieu of any fractional shares to which the stockholder would otherwise be entitled, the Corporation shall pay cash equal to such fraction multiplied by the then fair value of the Common Stock as determined in good faith by the Board of Directors of the Corporation. As soon as practicable following the Effective Time, the Corporation will cause the Corporation’s exchange agent and registrar to issue new book entries representing the number of shares of the New Common Stock into which such shares of Old Common Stock shall have been reclassified.
[SIGNATURE PAGE FOLLOWS]
* * *
IN WITNESS WHEREOF, Zosano Pharma Corporation has caused this Certificate of Amendment to be executed by its duly authorized officer on this day of , 2018.
| | |
ZOSANO PHARMA CORPORATION |
| | |
| | John Walker |
| | President and CEO |
| | | | | | | | | | | | |
| | 
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| | | | | Electronic Voting Instructions
Available 24 hours a day, 7 days a week!
Instead of mailing your proxy, you may choose one of the voting methods outlined below to vote your proxy.
VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE BAR.
Proxies submitted by the Internet or telephone must be received by 1:00 a.m., Central Time, on January 23, 2018.
| | |
| | | | | 
| | Vote by Internet
| | |
| | | | | | • Go towww.investorvote.com/ZSAN
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| | | | | | • Or scan the QR code with your smartphone
| | |
| | | | | | • Follow the steps outlined on the secure website
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| | | | | | | | |
| | | | | Vote by telephone | | |
| | | | | • Call toll free1-800-652-VOTE (8683) within the USA, US
territories & Canada on a touch tone telephone
| | |
| | | | | | | | • Follow the instructions provided by the recorded message
| | |
| | | | | | | | | | | | |
| | Using a black inkpen, mark your votes with an X as shown in
this example. Please do not write outside the designated areas.
| | ☒ | | | | | | | | |
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| | q IF YOU HAVE NOT VOTED VIA THE INTERNETOR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q
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| | A | | Proposals — The Board of Directors recommends a voteFOR Proposals 1, 2 and 3. | | |
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| | | | | | | | | |
| | | | For | | Against | | Abstain | | | | | | For | | Against | | Abstain |
| | 1. Approval of amendment to the Amended and Restated Certificate of Incorporation of the Company to increase the number of authorized shares of common stock from 100,000,000 to 250,000,000.
| | ☐ | | ☐ | | ☐ | | | | 2. Approval of authorization of the Company’s board of directors, in its discretion but in no event later than November 23, 2018 (in advance of the expiration of the second 180 calendar day period the Company may be afforded by Nasdaq to regain compliance with the $1.00 minimum bid price continued listing requirement), to amend the Company’s Amended and Restated Certificate of Incorporation to effect a reverse stock split of the Company’s common stock, at a ratio in the range of 1-for-5 to 1-for-20, such ratio to be determined by the board of directors and included in a public announcement
| | ☐ | | ☐ | | ☐ |
| | 3. Approval of adjournment of the special meeting, if necessary, to solicit additional proxies if there are not sufficient votes in favor of any of the foregoing proposals.
| | ☐ | | ☐ | | ☐ | | | | | | |
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| | Change of Address— Please print your new address below.
| | Comments— Please print your comments below. | | Meeting Attendance
| | |
| | | | | | | | | | | | |
| | | | | | | | | | Mark the box to the right if you plan to attend the Special Meeting. | | ☐ |
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s | | C | | Authorized Signatures — This section must be completed for your vote to be counted. — Date and Sign Below | | |
| | | | | | | | | | | | | | | | | | | | |
| | Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give full title. | | |
| | | | | | | | |
| | Date (mm/dd/yyyy) — Please print date below.
| | Signature 1 — Please keep signature within the box.
| | Signature 2 — Please keep signature within the box.
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q IF YOU HAVE NOT VOTED VIA THE INTERNETOR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.q
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Proxy — Zosano Pharma Corporation
|
Proxy Solicited by Board of Directors for Special Meeting —
John Walker and Georgia Erbez, or any of them, each with the power of substitution, are hereby authorized to represent and vote the shares of the undersigned, with all the powers which the undersigned would possess if personally present, at the Special Meeting of Stockholders of Zosano Pharma Corporation to be held on January 23, 2018 at 8:30 a.m., Pacific time at the Company’s headquarters located at 34790 Ardentech Court, Fremont, CA 94555 or at any postponement or adjournment thereof.
Shares represented by this proxy will be voted as directed by the stockholder. If no such directions are indicated, the Proxies will vote FOR the increase in number of authorized shares of common stock, FOR the approval of the reverse stock split and FOR the adjournment proposal.
The Proxies are authorized to vote in their discretion upon such other business as may properly come before the meeting.
(Items to be voted appear on reverse side.)
