Participants receiving shares of restricted stock may make an election under Section 83(b) of the Code with respect to the shares. By making a Section 83(b) election, the participant elects to realize compensation income with respect to the shares when the shares are received rather than at the time the forfeiture restrictions lapse. The amount of such compensation income will be equal to the fair market value of the shares when the participant receives them (valued without taking the restrictions into account). By making a Section 83(b) election, the participant will realize no additional compensation income with respect to the shares when the forfeiture restrictions lapse, and will instead recognize gain or loss with respect to the shares when they are sold. The participant’s tax basis in the shares with respect to which a Section 83(b) election is made will be equal to their fair market value when received by the participant, and the participant’s holding period for such shares begins at that time. If, however, the shares are subsequently forfeited to the Company, the participant will not be entitled to claim a loss with respect to the shares to the extent of the income realized by the Participant upon the making of the Section 83(b) election. To make a Section 83(b) election, a participant must file an appropriate form of election with the Internal Revenue Service and with his or her employer, each within 30 days after shares of restricted stock are received.
Stock Appreciation Rights, RSUs, and Cash or Other Stock-Based Awards |
BOARD OF DIRECTORS (continued) Generally, a participant will realize no taxable income upon the grant of a stock appreciation right, RSU, or a cash or other stock based award. Generally, upon delivery of cash or shares in respect of the award, a participant will realize ordinary income equal to the amount of cash or the fair market value of shares received. A Participant’s tax basis in shares of common stock received will be equal to the fair market value of such shares when the participant receives them. Upon sale of those shares, the participant will realize short-term or long-term capital gain or loss, depending upon whether the shares have been held for more than one year at the time of sale. Such gain or loss will be equal to the difference between the amount realized upon the sale of the shares and the tax basis of the shares in the participant’s hands.
Miscellaneous
Generally, awards granted under the 2020 Plan shall be nontransferable except by will or by the laws of descent and distribution. The awards will be subject to our recoupment and stock ownership policies, as may be in effect from time to time. Awards will be subject to applicable tax withholding requirements and the Compensation Committee may authorize the withholding of shares subject to the award to satisfy required tax withholding. The 2020 Plan will expire on July 16, 2030, which is ten (10) years after the Board approved the 2020 Plan.
Equity Compensation Plan Information
The table below sets forth information with respect to compensation plans under which our equity securities are authorized for issuance as of December 31, 2019.
| | | | | | | | | | | | | | | | | | | | Plan Category | | Number of Securities to be issued upon exercise of outstanding options, warrants and rights (a) | | Weighted-average exercise price of outstanding options, warrants and rights (b) | | Number of securities available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c) | Equity Compensation Plans approved by stockholders | | | | 234,520 | | | | $ | 87.07 | | | | | 16,598 | | Equity Compensation Plans not approved by stockholders (1) (2) | | | | 187,499 | | | | $ | 43.45 | | | | | — | | | | | | Total | | | | 422,019 | | | | $ | 67.69 | | | | | 16,598 | |
(1) | Prior to the Merger, Jeffery S. Hatfield, our former Chief Executive Officer, was granted as an inducement material to his decision to accept employment with the Company, an award of stock options to purchase (i) 48,833 shares of common stock (the “Hatfield Inducement Grant”) and (ii) 91,666 shares of common stock, subject to certain performance-based vesting conditions (the “Performance Option”), as an employment inducement award pursuant to Nasdaq Listing Rule 5635(c)(4). In accordance with Mr. Hatfield’s severance and change in control agreement, the Hatfield Inducement Grant became fully vested and exercisable upon the consummation of the Merger and will remain outstanding and exercisable for two (2) years following the date of the Merger, or May 28, 2020, and the Performance Option will continue to remain outstanding and eligible to vest according to its terms and, to the extent it meets the performance criteria on or prior to October 9, 2020, shall remain outstanding and exercisable for two (2) years after the date of the Merger. For a more detailed discussion of the Hatfield Inducement Grant and Performance Option, see “Executive Compensation—Zafgen Outstanding Equity Awards at Fiscal Year-End—2019.”
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(2) | Prior to the Merger, as an inducement material to the decision of each of Priya Singhal, our former Head of Research and Development, and Brian P. McVeigh, our former Chief Business Officer, to accept employment with the Company, we awarded stock options to purchase shares of common stock to each as newly-hired employees, as employment inducement awards pursuant to Nasdaq Listing Rule 5635(c)(4) (“Inducement Grants”). The Inducement Grants consist of (i) 31,250 shares of common stock subject to an inducement grant award to Ms. Singhal, and (iii) 18,750 shares of common stock subject to an inducement grant award to Mr. McVeigh. In accordance with each of Mr. McVeigh’s and Ms. Singhal’s severance and change in control agreement, the Inducement Grants became fully vested and exercisable upon the consummation of the Merger and will remain outstanding and exercisable for two (2) years after January 31, 2020 or the date of the Merger for Ms. Singhal and Mr. McVeigh, respectively. For a more detailed discussion of the Inducement Grants, see “Executive Compensation—Zafgen Outstanding Equity Awards at Fiscal Year-End—2019.”
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New Plan Benefits
If our stockholders approve this Proposal, shares of our common stock reserved for issuance under our 2020 Plan would become available for issuance in respect of equity awards to eligible plan participants. In addition, and as further described below, the Board has approved option awards to certain of our employees, including two of our executive officers, and each of our six non-employee directors (collectively referred to herein as the Conditional Grants), contingent on stockholder approval.DIRECTOR NOMINEES
Conditional Grants to EmployeesCLASS I DIRECTORS—PRESENT TERMS EXPIRING AT THE ANNUAL MEETING AND PROPOSED TERMS TO EXPIRE IN 2024. For Conditional Grants made to employees, one quarter of these options will vest on July 16, 2021 (the first anniversary of the date of grant), and the remainder will vest in 36 equal monthly installments thereafter, subject to the grantee’s continued service through each vesting date. The size of Conditional Grants to executive officers are identified in the table below on a person-by-person basis. The Conditional Grants to other employees are aggregated below on the line labeled “Non-Executive Officer Employee Group.” This group includes awards to 12 employees and the number of shares subject to those awards ranges from 2,000 to 72,500 shares.
Conditional Grants to Non-Employee Directors. The Conditional Grants made to our six non-employee directors, each apply to 16,600 shares of our common stock and vest in 36 equal monthly installments, subject in each case to the grantee’s continued service through the applicable vesting date. The Conditional Grants to non-employee directors are aggregated below on the line labeled “Non-Executive Director Group.”
Each of these options has a ten (10) year term and an exercise price equal to $11.90, the fair market value of our common stock on July 16, 2020, the date of grant. The Conditional Grants may not be exercised prior to stockholder approval, and will automatically expire if they are not approved by stockholders prior to July 16, 2021.
The Conditional Grants were sized based on the recommendations of Radford. Radford based its analysis on industry-specific data of companies of a comparable size and at a comparable stage of development. The recommendations were designed to achieve, on a position by position basis, a level of award size that approximates the fiftieth percentile of Radford’s market data. In recommending the appropriate sizing of these awards, Radford subtracted any outstanding equity awards already held by the grantees.
Except as noted above, any further awards under the 2020 Plan will be determined by the Compensation Committee in its discretion and are therefore not determinable at this time.
| | | | | | Name and Position JONATHAN LEFF
| Age: 52
Director Since: 2020 | | Number ofCommittee Memberships
Shares
Subject to
Option
Awards (1) | | Carole Ben-Maimon, M.D.:
President and Chief Executive OfficerCompensation, NCGC (Chair)
| | Other Public Directorships: None. |
Jonathan Leff has served as a member of the Board since May 2020. Mr. Leff served as a member of the Chondrial Board from December 2016 until May 2020. Mr. Leff is a partner at Deerfield Management Company, L.P. and Chairman of the Deerfield Institute. He joined Deerfield in 2013, and focuses on venture capital and structured investments in biotechnology and pharmaceuticals. Prior thereto, Mr. Leff served as Managing Director at Warburg Pincus LLC from 2000 to 2012, where he led the firm’s investment efforts in biotechnology and pharmaceuticals. Mr. Leff also previously served as a member of the Executive Committee of the Board of the National Venture Capital Association (“NVCA”), and led NVCA’s life sciences industry efforts as Chair of NVCA’s Medical Innovation and Competitiveness Coalition. He also served on the Emerging Companies Section Board of the Biotechnology Industry Organization. Mr. Leff is a board member of several not-for-profit organizations, including the Spinal Muscular Atrophy Foundation, Friends of Cancer Research, Reagan-Udall Foundation and the Columbia University Medical Center Board of Advisors. He also previously served on the boards of several other publicly-traded biotechnology and pharmaceutical companies, including Proteon Therapeutics, Inc. from 2017 to 2019, AveXis, Inc. from 2014 to 2017 and Nivalis Therapeutics, Inc. from 2014 to 2016. Mr. Leff currently also serves on the boards of several private biopharmaceutical companies and has previously served on the boards of other privately held biopharmaceutical companies. Mr. Leff received his A.B. from Harvard University, and earned his M.B.A. from the Stanford University Graduate School of Business. Skills & Qualifications: Mr. Leff’s qualifications to sit on the Board include his extensive leadership, executive, managerial and business experience with life sciences companies, including experience in the investment, development and sale of multiple companies in the life sciences sector. | 411,400 | | | | | Michael Celano PETER BARRETT, PH.D.
| Age: 68
Chief Financial Officer Director Since: 2006
| | | 84,100 | | | | Executive Group (Dr. Ben-Maimon and Mr. Celano)Committee Memberships:
Compensation, NCGC | | | 495,500 | | | | Non-Executive Director GroupOther Public Directorships:
| | | 99,600 | | | | Non-Executive Officer Employee GroupPerkinElmer, Inc., Synlogic, Inc.
| | | 140,000 | |
Peter Barrett, Ph.D. has served as a member of the Board since August 2006 and served as the Chairman of the Board from August 2006 until May 2018. Dr. Barrett joined Atlas Venture, an early-stage venture capital fund, in 2002, and currently serves as a Partner in the Life Sciences Group. Previously, from 1998 to 2002, he was Required Votea Co-Founder, Executive Vice President and Chief Business Officer of Celera Genomics (“Celera”). Prior to Celera, from 1979 to 1998, Dr. Barrett held senior management positions at PerkinElmer, Inc., most recently serving as Vice President, Corporate Planning and Business Development. Dr. Barrett currently serves on the board of directors of the PerkinElmer, Inc. and Synlogic, Inc., and several other privately held companies. Dr. Barrett is a Senior Fellow at Harvard Business School and is the Faculty Chair of the Key Advisory Board of the Blavatnik Fellowship Program. Dr. Barrett holds a B.S. in chemistry from Lowell Technological Institute (now known as the University of Massachusetts, Lowell) and a Ph.D. in analytical chemistry from Northeastern University. He also completed Harvard Business School’s Management Development Program. Skills & Qualifications: Dr. Barrett’s qualifications to sit on the Board include his extensive leadership, executive, managerial and business experience with life sciences companies, including experience in the formation, development and business strategy of multiple start-up companies in the life sciences sector. Notice of Annual Meeting of Stockholders The affirmative vote of the majority of votes properly cast at the Special Meeting by holders of common stock is required to approve this Proposal.
Recommendation of our Board
OUR BOARD RECOMMENDS THAT OUR STOCKHOLDERS VOTE “FOR” THE APPROVAL OF THE LARIMAR THERAPEUTICS, INC. 2020 PLAN AND CERTAIN CONDITIONAL GRANTS THEREUNDER, AS DESCRIBED IN THIS PROPOSAL. and 2021 Proxy Statement | 6
| EXECUTIVE COMPENSATIONBOARD OF DIRECTORS (continued)
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INTRODUCTORY NOTE REGARDING PRESENTATION
CONTINUING DIRECTORS CLASS II DIRECTORS—TERMS EXPIRING AT THE 2022 ANNUAL MEETING OF INFORMATIONSTOCKHOLDERS On May 28, 2020, Zafgen completed the Merger of Merger Sub with Chondrial. At the effective time of the Merger, the management of Zafgen was replaced with the management of Chondrial. Accordingly, we have included compensation information with respect to Zafgen’s “named executive officers” under SEC rules for 2018 and 2019 and with respect to the executive officers of Chondrial that would have been “named executive officers” of Chondrial for 2019 (such executive officers are referred to as Chondrial’s named executive officers).
ZAFGEN EXECUTIVE COMPENSATION
Zafgen Summary Compensation Table
The table sets forth information regarding the total compensation awarded to, earned by, and paid during the fiscal years ended December 31, 2019 and 2018 to each individual who served as Zafgen’s Chief Executive Officer and the two most highly-compensated executive officers who were serving as executive officers as of December 31, 2019. These individuals are Zafgen’s named executive officers for 2019.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | Name and Principal Position | | Year | | | Salary ($) | | | Bonus ($) | | | Option Awards (1) ($) | | | Non-Equity Incentive Plan Compensation ($) | | | All Other Compensation ($) | | | Total ($) | | Jeffrey S. Hatfield (5) | | | 2019 | | | | 536,130 | | | | 804,195 | (2) | | | 1,913,835 | | | | — | | | | 8,400 | (3) | | | 3,236,560 | | Former Chief Executive Officer | | | 2018 | | | | 518,000 | | | | — | | | | 1,720,290 | | | | 155,400 | | | | 75,165 | | | | 2,468,855 | | | | | | | | | | Priya Singhal (6) | | | 2019 | | | | 360,852 | | | | 174,000 | (4) | | | 855,413 | | | | — | | | | 8,400 | (3) | | | 1,398,665 | | Former Head of Research & Development | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | Brian P. McVeigh (5) | | | 2019 | | | | 408,167 | | | | 219,267 | (5) | | | 455,675 | | | | — | | | | 8,400 | (3) | | | 1,091,509 | | Former Chief Business Officer | | | 2018 | | | | 237,500 | | | | — | | | | 1,162,305 | | | | 56,000 | | | | 7,125 | | | | 1,462,930 | |
(1) | | | | | | THOMAS O. DANIEL, M.D. | Age: 67 Director Since: 2016 | | Amounts represent the aggregate grant-date fair value of option awards granted to Zafgen’s named executive officers in 2019 and 2018 computed in accordance with FASB ASC Topic 718. The assumptions used in the valuation of these awards are consistent with the valuation methodologies specified in the notes to Zafgen’s consolidated financial statements and discussions in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in Zafgen’s Annual Report on Form 10-K for 2019. The amounts above reflect Zafgen’s aggregate accounting expense for these awards and do not necessarily correspond to the actual value that will be recognized by the named executive officers.Committee Memberships:
NCGC |
(2) | Represents (i) Mr. Hatfield’s 2019 annual performance bonus, which was guaranteed at 100% of target and was paid in December 2019 and (ii) a retention bonus of $536,130, which was paid within 10 days of signing the Merger Agreement.Other Public Directorships:
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(3) | Consists of employer match contribution to the 401(k) plan in 2019.Magenta Therapeutics, Inc.,
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(4) | Consists of payment of Dr. Singhal’s and Mr. McVeigh’s 2019 annual bonuses, which were guaranteed at 100% of target and in December 2019.
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(5) | Messrs. Hatfield and McVeigh resigned as Chief Executive Officer and Chief Business Officer, respectively, of Zafgen on May 28, 2020 in connection with the Merger.
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(6) | Dr. Singhal’s employment was terminated by Zafgen on January 31, 2020.Gossamer Bio, Inc.
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Zafgen Employment Agreements with Named Executive Officers
Zafgen had entered into an offer letter and severance and change in control agreements with each of Zafgen’s named executive officers in connection with their employment with Zafgen. These offer letters and severance and change in control agreements provide for “at will” employment andThomas O. Daniel, M.D. has served as a double trigger for change of control.
Jeffrey S. Hatfield. On October 9, 2017, Zafgen entered into an offer letter and a severance and change in control agreement with Mr. Hatfield, Zafgen’s Chief Executive Officer, and amended the severance and change in control agreement on September 12, 2019. In accordance with the Merger Agreement, on May 28, 2020, immediately prior to the effective timemember of the Merger, Mr. Hatfield resigned as Chief Executive OfficerBoard since March 2016. Dr. Daniel has more than 20 years of Zafgen. Pursuant to the severanceexperience in biopharmaceutical discovery and change in control agreement, as amended, Mr. Hatfield has received ordevelopment. He is receiving the following severance benefits (i) 18 months of base salary plus his target annual incentive compensation, (ii) 18 months of COBRA continuation medical benefits subsidized by us, and (iii) all options and other stock-based awards with solely time-based vesting held by him shall immediately accelerate and become fully exercisable or non-forfeitable ascurrently chairman of the dateboard of terminationdirectors of Locana Bio, Inc., and all vested options shall be exercisable for a period of two (2) years from the date of termination, May 28, 2020 (or until the option’s original 10-year expiration date, if earlier). Mr. Hatfield executed a release of claims against Zafgen and its affiliatesserves as a conditiondirector of receiving these severance benefits.
For 2019, Mr. Hatfield receivedVividion Therapeutics, Gossamer Bio, Inc., Aspen Therapeutics and Magenta Therapeutics, Inc. Dr. Daniel has served as a base salary of $536,130, and was eligible for an annual merit bonus with a target bonus opportunity of 50% of his base salary for 2019, payableVenture Partner at the discretion of the Zafgen Board; provided that, on September 12, 2019, Zafgen guaranteed Mr. Hatfield that his annual bonus would be paid at 100% of target, subject to his continued employment with Zafgen through the date of payment or his termination by Zafgen without cause, which Zafgen paid to Mr. Hatfield on December 24, 2019. Additionally, on September 12, 2019, Zafgen granted Mr. Hatfield the opportunity to earn a retention bonus equal to 2.0 times his target annual bonus for 2019, whichARCH Venture Partners since October 2016. Previously, he received in the amount of $536,130 within ten (10) days of signing the Merger Agreement. Mr. Hatfield was also eligible to participate in Zafgen’s employee benefit plans generally available to Zafgen’s executive employees, subject to the terms of those plans.
Priya Singhal, M.D., M.P.H. On February 26, 2019, Zafgen entered into an offer letter with Dr. Singhal and on March 4, 2019, Zafgen entered into a severance and change in control agreement with Dr. Singhal, Zafgen’s Headserved as President of Research and Early Development of Celgene Corporation from 2006 until 2012, as Executive Vice President and amendedPresident of Research and Early Development until 2015 and as Chairman of Research until mid-2016. Prior to Celgene, he served as Chief Scientific Officer and Director at Ambrx Inc., from 2003 to 2006. Dr. Daniel also served as Vice President of Research at Amgen from 2002 to 2003, where he was Research Site Head of Amgen Washington and Therapeutic Area Head of Inflammation. Prior to Amgen’s acquisition of Immunex Corporation (“Immunex”), Dr. Daniel served as Senior Vice President of Discovery Research at Immunex from 2000 to 2002. Dr. Daniel advises Equillium, Inc. and privately-held biotechnology companies Brii Bio, Inc. and Epirium Bio, Inc. Dr. Daniel previously served as a member of the severanceboard of directors of Juno Therapeutics, a publicly-traded biotechnology company, from July 2015 to March 2018, prior to its acquisition by Celgene Corporation. He chairs the board of overseers of The Scripps Research Institute, serves as director of Lupus Research Alliance, as a member of the Biomedical Science Advisory Board of Vanderbilt University Medical Center and changeis a trustee of Reed College. A nephrologist and former academic investigator, Dr. Daniel was previously the C.M. Hakim Professor of Medicine and Cell Biology at Vanderbilt University, and Director of the Vanderbilt Center for Vascular Biology. He formerly conducted research in control agreementthe Howard Hughes Medical Institute at UC San Francisco. Dr. Daniel holds a B.A. in chemistry from Southern Methodist University, earned an M.D. from the University of Texas, Southwestern Medical School, and completed medical residency at Massachusetts General Hospital.
Skills & Qualifications: Dr. Daniel’s qualifications to sit on September 12, 2019. Dr. Singhal’s employment was terminated by Zafgen on January 31,the Board include his biotechnology and pharmaceutical experience, including senior leadership roles at global biopharmaceutical companies Celgene Corporation and Amgen. | | | | | | THOMAS EDWARD HAMILTON | Age: 53 Director Since: 2020 | | Committee Memberships: Audit | | Other Public Directorships: Annaly Capital Management Inc. |
Thomas Edward Hamilton has served as a member of the Board since May 2020. In connection with her termination of employment, the Zafgen Board agreed to provide Dr. Singhal with the following benefits so longMr. Hamilton served as the Merger closed on or prior to September 1, 2020 whether or not her termination occurred within three (3) months prior to or 12 months after the Merger (i) 12 months of base salary plus her target annual incentive compensation, (ii) 12 months of COBRA continuation medical benefits subsidized by us, and (iii) all options and other stock-based awards with solely time-based vesting held by her shall immediately accelerate and become fully exercisable or non-forfeitable asChairman of the dateboard of terminationdirectors of Chondrial (the “Chondrial Board”) from Chondrial’s founding in 2013 until May 2020. Since 2013, Mr. Hamilton has served as the president, chief executive officer and all vested options shall be exercisable forowner of Construction Forms, Inc., an industrial manufacturing company based in Port Washington, Wisconsin. In addition, Mr. Hamilton is also the managing member of Friedreich’s Ataxia Life Sciences, an early stage biotech investment company focused on bridging the gap to cure Friedreich’s Ataxia. Prior to founding Construction Forms, Mr. Hamilton spent 25 years in a periodnumber of two (2) yearsleadership positions in the financial industry. Most recently, Mr. Hamilton served as a Managing Director and Strategic Advisor to the Head of Fixed Income, Currencies and Commodities at Barclays Capital in New York, New York. Prior to Barclays, Mr. Hamilton held various managing director roles at Citigroup, Inc. and Salomon Brothers, Inc., where he began his career. He also serves as a director and executive committee member of the Friedreich’s Ataxia Research Alliance and is the co-founder of his own charitable scientific effort, the CureFA Foundation. Since March 2019, Mr. Hamilton has served as a Director and as a member of the audit committee, risk committee and compensation committee of Notice of Annual Meeting of Stockholders and 2021 Proxy Statement | 7
| BOARD OF DIRECTORS (continued) |
the board of Annaly Capital Management, Inc., a leading diversified capital manager that invests in and finances residential and commercial assets. Mr. Hamilton holds a B.S. in finance from the dateUniversity of termination, May 28, 2020 (or untilDayton. Skills & Qualifications: Mr. Hamilton’s qualifications to sit on the option’s original 10-year expiration date, if earlier), provided she executedBoard include his extensive experience in the financial industry and does not revokeleadership in developing a separation agreement and releasecure for Friedreich’s Ataxia, including leadership roles in organizations focused on the development of Zafgen and Zafgen’s affiliates, in connection with the Merger. Such benefits were triggereda cure for Friedreich’s Ataxia. CLASS III DIRECTORS—TERMS EXPIRING AT THE 2023 ANNUAL MEETING OF STOCKHOLDERS | | | | | | FRANK E. THOMAS | Age: 51 Director Since: 2014 | | Committee Memberships: Audit (Chair) | | Other Public Directorships: Spero Therapeutics, Inc. |
Frank E. Thomas has served as a resultmember of the closingBoard since June 2014. Mr. Thomas has been the President and Chief Operating Officer of Orchard Therapeutics PLC (“Orchard”), a biotechnology company dedicated to transforming the Merger on May 28,lives of patients with rare disorders through innovative gene therapies, since March 2020. For 2019, Dr. Singhal received a base salary of $435,000, which was pro-rated based on the date that she commenced employment with Zafgen, and was eligible for an annual merit bonus with a target bonus opportunity of 40% of her base salary for 2019, payable at the discretion of the Zafgen Board; provided that, on September 12, 2019, Zafgen guaranteed Dr. Singhal that her annual bonus would be paid at 100% of target, subject to her continued employment with Zafgen through the date of payment or her termination by Zafgen without cause, which Zafgen paid to Dr. Singhal on December 24, 2019. Additionally, on September 12, 2019, Zafgen granted Dr. Singhal the opportunity to earn a retention bonus equal to 1.5 times her target annual bonus for 2019, subject to her continued employment with Zafgen through the closing of the Merger or her termination without “cause” prior to such date, which she received in the amount of $261,000 within ten (10) days of the closing of the Merger. Dr. Singhal was also eligible to participate in Zafgen’s employee benefit plans generally available to Zafgen’s executive employees, subject to the terms of those plans.
Brian P. McVeigh. On May 29, 2018, Zafgen entered into an offer letter and severance and change in control agreement with Mr. McVeigh, Zafgen’sThomas served as Chief BusinessOperating Officer and amendedChief Financial Officer of Orchard from January 2020 to March 2020 and the severanceChief Financial Officer and change
in control agreement on September 12, 2019. In accordance with the Merger Agreement, on May 28, 2020, immediately prior to the effective time of the Merger, Mr. McVeigh resigned as Chief Business Officer of Zafgen. PursuantOrchard from January 2018 to the severance and change in control agreement,December 2019. Prior to joining Orchard, Mr. Thomas served as amended, Mr. McVeigh has received or is receiving the following severance benefits: (i) 12 months of base salary plus his target annual incentive compensation, (ii) 12 months of COBRA continuation medical benefits subsidized by us, and (iii) all options and other stock-based awards with solely time-based vesting held by him shall immediately accelerate and become fully exercisable or non-forfeitable as of the date of termination and all vested options shall be exercisable for a period of two (2) years from the date of termination, May 28, 2020 (or until the option’s original 10-year expiration date, if earlier). Mr. McVeigh executed a release of claims against Zafgen and its affiliates as a condition of receiving these severance benefits.
For 2019, Mr. McVeigh received a base salary of $400,000, and was eligible for an annual merit bonus with a target bonus opportunity of 40% of his base salary for 2019, payable at the discretion of the Zafgen Board; provided that, on September 12, 2019, Zafgen guaranteed Mr. McVeigh that his annual bonus would be paid at 100% of target, subject to his continued employment with Zafgen through the date of payment or his termination by Zafgen without cause, which Zafgen paid to Mr. McVeigh on December 24, 2019. Additionally, on September 12, 2019, Zafgen granted Mr. McVeigh the opportunity to earn a retention bonus equal to 1.5 times his target annual bonus for 2019, subject to his continued employment with Zafgen through the closing of the Merger or his termination without “cause” prior to such date, which he received in the amount of $244,901 within ten (10) days of the closing of the Merger. Mr. McVeigh was also eligible to participate in Zafgen’s employee benefit plans generally available to Zafgen’s executive employees, subject to the terms of those plans.
Zafgen Employee Confidentiality, Non-Competition, Non-Solicitation and Assignment Agreements
Each of Zafgen’s named executive officers has entered into a standard form agreement with respect to confidential information and assignment of inventions. Among other things, this agreement obligates each of Zafgen’s named executive officer to refrain from disclosing any of Zafgen’s proprietary information received during the course of employment and to assign to Zafgen any inventions conceived or developed during the course of employment. Such agreement also provides that during the period of the Zafgen named executive officer’s employment and for 12 months thereafter, the Zafgen named executive officer will not compete with Zafgen and will not solicit Zafgen’s employees, consultants, customers or suppliers.
Zafgen Outstanding Equity Awards at Fiscal Year-End—2019
The following table summarizes, for each of the Zafgen named executive officers, the number of shares of Zafgen common stock underlying outstanding Zafgen options held as of December 31, 2019 (after giving effect to the Reverse Stock Split).
| | | | | | | | | | | | | | | | | | | | | | | | | | Name | | Zafgen Option Awards Number of Securities Underlying Unexercised Zafgen Options (#) Exercisable | | Number of Securities Underlying Unexercised Zafgen Options (#) Unexercisable (10) | | Number Of Securities Underlying Unexercised Zafgen Options (#) Unearned | | Zafgen Option Exercise Price ($) | | Zafgen Option Expiration Date (10) | Jeffrey S. Hatfield (8) | | | | 24,826 | | | | | 21,007 | (1) | | | | — | | | | | 40.80 | | | | | 05/28/2022 | | | | | | — | | | | | — | | | | | 91,666 | (2) | | | | 40.80 | | | | | 05/28/2022 | | | | | | 10,503 | | | | | 12,413 | (3) | | | | — | | | | | 93.24 | | | | | 05/28/2022 | | | | | | — | | | | | 43,750 | (4) | | | | — | | | | | 55.56 | | | | | 05/28/2022 | | Brian P. McVeigh (8) | | | | 7,421 | | | | | 11,328 | (5) | | | | — | | | | | 77.52 | | | | | 05/28/2022 | | | | | | — | | | | | 10,416 | (6) | | | | — | | | | | 55.56 | | | | | 05/28/2022 | | Priya Singhal (9) | | | | — | | | | | 31,250 | (7) | | | | — | | | | | 34.68 | | | | | 01/31/2022 | |
(1) | Under the terms of Mr. Hatfield’s option agreement, 25% of the shares vested on October 9, 2018 and the remaining shares were to vest in 36 equal monthly installments through October 9, 2021. Pursuant to Mr. Hatfield’s severance and change in control agreement, as amended, the options became fully vested and exercisable upon his resignation in connection with the consummation of the Merger.
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(2) | Under the terms of Mr. Hatfield’s option agreement, these options vest and become exercisable based on the Zafgen common stock price on or prior to October 9, 2020 as follows: 25% of shares subject to the option are earned after the stock price is equal to or greater than $120.00 per share for 20 consecutive trading days; and an additional 6.25% of the shares subject to the Zafgen option are earned for every additional $30 in stock price above $120.00 per share for 20 consecutive trading days (the “Performance Option”). On March 3, 2020, Zafgen and Mr. Hatfield executed an amendment to this performance-based option to provide that, in the event Mr. Hatfield’s employment terminates prior to achievement of the performance vesting conditions, the Performance Option will continue to remain outstanding and eligible to vest according to its terms and, to the extent it meets the performance criteria on or prior to October 9, 2020, shall remain outstanding and exercisable for two (2) years after the termination of Mr. Hatfield’s employment with Zafgen, which occurred on May 28, 2020.
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(3) | Under the terms of Mr. Hatfield’s option agreement, 25% of the shares vested on February 22, 2019 and the remaining shares were to vest in 36 equal monthly installments and become fully vested on February 22, 2022. Pursuant to Mr. Hatfield’s severance and change in control agreement, as amended, the options became fully vested and exercisable upon his resignation in connection with the consummation of the Merger.
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(4) | Under the terms of Mr. Hatfield’s option agreement, 25% of the shares vested on January 22, 2020 and the remaining shares were to vest in 36 equal monthly installments and become fully vested on January 22, 2023. Pursuant to Mr. Hatfield’s severance and change in control agreement, as amended, the options became fully vested and exercisable upon his resignation in connection with the consummation of the Merger.
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(5) | Under the terms of Mr. McVeigh’s option agreement, 25% of the shares vested on May 29, 2019 and the remaining shares were to vest in 36 equal monthly installments through May 29, 2022. Pursuant to Mr. McVeigh’s severance and change in control agreement, as amended, the options became fully vested and exercisable upon his resignation in connection with the consummation of the Merger.
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(6) | Under the terms of Mr. McVeigh’s option agreement, 25% of the shares vested on January 22, 2020 and the remaining shares were to vest in 36 equal monthly installments through January 22, 2023. Pursuant to Mr. McVeigh’s severance and change in control agreement, as amended, the options became fully vested and exercisable upon his resignation in connection with the consummation of the Merger.
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(7) | Under the terms of Dr. Singhal’s option agreement, 25% of the shares were to vest on April 2, 2020 and the remaining shares were to vest in 36 equal monthly installments through April 2, 2023. In connection with her termination of employment, the Zafgen Board approved her options to become fully vested and exercisable, in accordance with Dr. Singhal’s severance and change in control agreement, as amended, so long as the Merger closed on or prior to September 1, 2020 whether or not her termination occurred within three (3) months prior to or 12 months after the Merger. Upon the consummation of the Merger, these options became fully vested and exercisable.
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(8) | Messrs. Hatfield and McVeigh resigned as Chief Executive Officer and Chief Business Officer, respectively, of Zafgen on May 28, 2020 in connection with the Merger.
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(9) | Dr. Singhal’s employment was terminated by Zafgen on January 31, 2020.
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(10) | Pursuant to each Zafgen named executive officer’s severance and change in control agreement, as amended, each Zafgen option that was subject solely to time-based vesting became fully vested and exercisable upon each Zafgen named executive officer’s termination of employment upon the consummation of the Merger. For a more detailed discussion see “Zafgen Employment Agreements with Named Executive Officers” above.
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Our Employment Agreements with our Current Executive Officers
We have entered into employment agreements with each of our current executive officers. The material terms of the agreements that are in effect for our current executive officer are summarized below. Each of these agreements also contains severance and change of control provisions discussed under the heading “Potential Payments Upon Termination or Change in Control” beginning on page 20 of this Proxy Statement.
Employment Agreement with Carole Ben-Maimon, M.D. We entered into an employment agreement with Dr. Ben-Maimon, as our President and Chief Operating Officer of AMAG Pharmaceuticals, Inc. (“AMAG”), a publicly traded, specialty pharmaceutical company, from April 2015 to April 2017, and previously served as AMAG’s Executive Vice President and Chief Operating Officer on July 31, 2020from May 2012 through April 2015, and as Executive Vice President, Chief Financial Officer and Treasurer from August 2011 through May 2012. Prior to supersede her employment agreement with Chondrial, dated December 1, 2016,joining AMAG, he served as Senior Vice President, Chief Operating Officer and Chief Financial Officer for Molecular Biometrics, Inc., a commercial stage medical diagnostics company, from 2008 to otherwise establish the terms and conditions of Dr. Ben-Maimon’s employment by Larimar. Dr. Ben-Maimon’s period of employment with Larimar commenced on May 28, 2020 and she previously2011. Prior to Molecular Biometrics, Mr. Thomas spent four years at Critical Therapeutics, Inc. (“Critical Therapeutics”), a public biopharmaceutical company, from 2004 to 2008, where he served as President and Chief Executive Officer of Chondrial. Pursuantfrom 2006 to 2008 and the terms of this agreement, Dr. Ben-Maimon’s initial annual base salary is $470,000Senior Vice President and is eligible for annual discretionary raises subject to review by the Compensation Committee. Dr. Ben-Maimon is eligible to receive annual discretionary bonuses of an amount not less than 50% of her annual base salary.
Employment Agreement with Michael Celano. We entered into an employment agreement with Mr. Celano, as our Chief Financial Officer on June 1, 2020. Mr. Celano’s period of employment with Larimar commenced on May 28, 2020. Pursuantfrom 2004 to the terms of this agreement, Mr. Celano’s initial annual base salary is $350,000 and is eligible for annual discretionary raises subject to review by the Compensation Committee. Mr. Celano is eligible to receive annual discretionary bonuses of an amount not less than 35% of his annual base salary. In connection with his hiring, on May 28, 2020, Mr. Celano received a stock option grant in respect of 60,479 shares of our common stock (the “Initial Award”) at an exercise price of $11.88, the closing price of our common stock2006. He also served on the dateboard of directors of Critical Therapeutics from 2006 to 2008. Prior to 2004, Mr. Thomas served as the Chief Financial Officer and Vice President of Finance and Investor Relations at Esperion Therapeutics, Inc., a publicly traded biopharmaceutical company. Since July 2017, Mr. Thomas has served on the board of directors of Spero Therapeutics, Inc., a publicly traded biopharmaceutical company. Mr. Thomas was a member of the grant. The Initial Award will vest as follows:board of directors of the Massachusetts Biotechnology Council from 2007 to 2015. Mr. Thomas holds a B.B.A. from the University of Michigan, Ann Arbor.
Skills & Qualifications: Mr. Thomas’ qualifications to sit on the Board include his extensive management experience at biopharmaceutical companies and with financial matters, including senior leadership roles at various biopharmaceutical companies. | | | | | | CAROLE S. BEN-MAIMON, M.D. | Age: 62 Director Since: 2020 | | Committee Memberships: None | | Other Public Directorships: Teligent, Inc. |
25%Carole S. Ben-Maimon, M.D. has served as a member of the Initial Award will vest onBoard since May 2020. Dr. Ben-Maimon has served as the first anniversaryPresident and Chief Executive Officer of the grant date;Company since May 2020. Dr. Ben-Maimon served as Chondrial’s President, Chief Executive Officer and
the remaining 75% member of the Initial Award will in equal monthly installments (on the last day of each of the 36 calendar months commencing on or after the first anniversary of the grant date), subject in each caseChondrial Board from December 2016 until May 2020. Prior thereto and from 2014 to Mr. Celano’s continued service to Larimar through the applicable vesting date.
If Mr. Celano is terminated without cause or resigns from his position for good reason (as defined2016, she served as an independent consultant at CSGB Consulting, LLC, where she participated in the employment agreement) within one year following a change in control (as definedevaluation of investment opportunities in the employment agreement)brand and generic industry on behalf of investment firms. Prior thereto, from September 2011 to November 2014, Dr. Ben-Maimon was the President of Global Pharmaceuticals, a subsidiary of Impax Laboratories (“Impax”), then any outstanding, unvested portion of the Initial Award will vest and become immediately exercisable subjectwhich was responsible for Impax’s generic business. Prior to Mr. Celano’s timely fulfillment of certain release requirementsGlobal Pharmaceuticals, she served as described in the employment agreement.Senior Vice President, Corporate Strategy at Qualitest Pharmaceuticals, Inc. (“Qualitest”) from July 2009 to July 2010. Prior to her role at
Confidential Information and Invention Agreement
As a conditionNotice of eachAnnual Meeting of our current executive officer’s employment with Larimar, they have also entered into a standard form agreement with respect to confidentiality of Larimar’s proprietary information and assignment of inventions. Among other things, this agreement obligates each current executive officer to refrain from disclosing any of Larimar’s proprietary information received during the course of employment and to assign to Larimar any inventions conceived or developed during the course of employment. Such agreement also provides that during the period of such executive officer’s employment and for one year thereafter, they will not compete with Larimar and will not solicit Larimar’s employees, contractors, lenders, partners or suppliers.
Potential Payments Upon Termination or Change in Control
Each of Dr. Ben-Maimon’sStockholders and Mr. Celano’s employment agreement provides that in the event their employment with Larimar ceases for any reason, then their rights in respect of outstanding equity awards will be determined in accordance with the applicable award agreements and they will be entitled to receive any accrued, unpaid base salary and reimbursement for expenses incurred by such executive officer, but not yet reimbursed, prior to the date of termination, in accordance with our expense reimbursement policies (the “Accrued Rights”).2021 Proxy Statement | 8
If the executive officer’s employment is terminated without cause or they resign with good reason, then in addition to the Accrued Rights, such executive officer is entitled to receive:
payment of any earned, unpaid bonus for the immediately preceding calendar year (the “Prior Year Bonus”) ;
monthly severance payments for a period of twelve (12) months, in the case of Dr. Ben-Maimon, and nine (9) months, in the case of Mr. Celano, with each payment equal to one-twelfth of their then in effect base salary; and
waiver or reimbursement of the premiums paid for such executive officer’s group health coverage under the Consolidated Omnibus Budget Reconciliation Act (“COBRA”) for twelve (12) months, in the case of Dr. Ben-Maimon, and nine (9), months, in the case of Mr. Celano.
Notwithstanding the foregoing, if each current executive officer’s employment is terminated without cause or they resign with good reason within one year following a change in control, then they will be entitled to receive:
monthly severance payments for eighteen (18) months, in the case of Dr. Ben-Maimon, and twelve (12) months, in the case of Mr. Celano, with each payment equal to one-twelfth the sum of their then in effect base salary and their then in effect target bonus; and
waiver or reimbursement of their group health coverage under COBRA for eighteen (18) months, in the case of Dr. Ben-Maimon, and twelve (12) months, in the case of Mr. Celano.
The severance payments are conditioned on such executive officer’s execution and delivery of a general release of claims against Larimar and its affiliates in a form prescribed by Larimar and on such release becoming irrevocable within 30 days following their cessation of employment.
| BOARD OF DIRECTORS (continued) |
Qualitest, she served as Founder, President and Chief Executive Officer and director of Alita Pharmaceuticals, Inc., an early stage, privately held specialty pharmaceutical company, from September 2006 to June 2009. Dr. Ben-Maimon also held executive positions with and served as a member of the board with Barr Pharmaceuticals Inc. (“Barr”) from 2001 to 2006, including as President and Chief Operating Officer of Duramed Research, Inc., a wholly-owned subsidiary of Barr, where she led Barr’s branded female healthcare business and also served as a member of its board of directors. Prior thereto and from 1993 to 2001, Dr. Ben-Maimon was at Teva Pharmaceutical Industries in various roles, including being responsible for research and development and public policy in North America from 2000 to 2001. Since 2016, Dr. Ben-Maimon has also served as a member of the board of directors and the audit and nominating and corporate governance committees of the board of a publicly-traded pharmaceutical company, Teligent, Inc. Dr. Ben-Maimon also serves on the board of directors of a privately-held pharmaceutical company and on the board of a not-for-profit hospital in Philadelphia, Pennsylvania. Dr. Ben-Maimon received her B.S. from the University of Pennsylvania and her M.D. from Jefferson Medical College. She completed clinical and research training in internal medicine and nephrology at Thomas Jefferson University. Skills & Qualifications: Dr. Ben-Maimon’s qualifications to sit on the Board include her knowledge of Chondrial’s business, as well as her extensive leadership and biopharmaceutical industry experience, including senior leadership roles at publicly-traded life sciences companies. | | | | | | JOSEPH TRUITT | Age: 56 Director Since: 2020 | | Committee Memberships: Audit, Compensation (Chair) | | Other Public Directorships: None |
Joseph Truitt has served as a member of the Board since May 2020. Mr. Truitt currently serves as the Chief Executive Officer of Iecure Inc., a gene editing company, and is on the Board of CodeBio, a gene therapy development company. From May 2020 through December 2020, Mr. Truitt served as Chief Executive Officer of BioSpecifics Technologies Corp. (“BioSpecifics”), a biopharmaceutical company that develops collagenase-based therapies, which was acquired by Endo International plc in December 2020. From May 2018 until April 2020, Mr. Truitt served as President, Chief Executive Officer and member of the board of directors of Achillion Pharmaceuticals, Inc. (“Achillion”), a publicly-traded clinical-stage biopharmaceutical company developing small molecule drug therapies for immune system disorders, which was acquired by Alexion Pharmaceuticals, a global biopharmaceutical company, in January 2020. Prior to his appointment to the offices or President and Chief Executive Officer in 2018, Mr. Truitt served in a number of various positions at Achillion, including: Executive Vice President, Chief Operations Officer, from September 2017 until May 2018; Executive Vice President, Chief Commercial Officer, from March 2014 until September 2017; and Senior Vice President, Business Development and Chief Commercial Officer, from January 2009 until March 2014. Before joining Achillion, from July 2006 to December 2008, Mr. Truitt served as Vice President, Business Development and Product Strategy of Lev Pharmaceuticals, Inc. and, from 2000 to 2006, he served as Vice President, Sales and Operations of Johnson & Johnson—OraPharma, Inc. Prior to this, be spent nine years at TAP Pharmaceuticals Inc. in a variety of sales and marketing roles before a two-year role as a consultant at IMS Health. Mr. Truitt received his B.S. in Marketing from LaSalle University and his M.B.A. from St. Joseph’s University in Pharmaceutical Marketing. Mr. Truitt previously was a Captain in the United States Marine Corps. Skills & Qualifications: Mr. Truitt’s qualifications to sit on the Board include extensive management experience, his prior experience as a public company director and his deep knowledge of the biopharmaceutical business. Notice of Annual Meeting of Stockholders and 2021 Proxy Statement | 9
| CORPORATE GOVERNANCE AND RISK MANAGEMENT |
We are committed to good corporate governance and integrity in our business dealings. We believe that strong corporate governance practices that provide meaningful rights to our stockholders and ensure Board and management accountability are key to our relationship with our stockholders. We strive to have regular, constructive conversations with our stockholders to better understand our stockholders’ priorities and perspectives. Our governance practices are documented in our Ninth Amended and Restated Certificate of Incorporation, as amended (the “Certificate”), our Bylaws, our Code of Business Conduct and Ethics (the “Code of Conduct”), our Corporate Governance Guidelines and the charters of the committees of the Board (the “Committees”). Aspects of our governance documents are summarized below. You can find our charters for each Committee and our Code of Conduct on our website at www.larimartx.com under “Investors—Corporate Governance.” BOARD INDEPENDENCE Our Board has determined that each of our directors, with the exception of Dr. Ben-Maimon, are “independent” directors, as defined under the rules of Nasdaq. In making such determination, the Board considered the relationships that each such non-employee director has with the Company and all other facts and circumstances that the Board deemed relevant in determining their independence, including the beneficial ownership of our common stock by each non-employee director. In considering the independence of the directors listed above, the Board also considered the association of each non-employee director with the holders of more than 5% of our common stock. Our independent directors generally meet in executive session at each regularly scheduled Board meeting. The Zafgen Board of Directors determined, prior to the completion of the Merger, that the following directors who served during 2020 were “independent” directors, as defined under the rules of Nasdaq: John L. LaMattina, Ph.D, Frank E. Thomas, Thomas O. Daniel, M.D., Cameron Geoffrey McDonough, M.D., Robert J. Perez, Peter Barret, Ph.D. and Wendy Everett, Sc.D. Jeffrey Hatfield, Zafgen’s former Chief Executive Officer, served on the Zafgen Board of Directors and was deemed not “independent” by virtue of being an employee of Zafgen. BOARD LEADERSHIP STRUCTURE Currently, our leadership structure separates the offices of Chief Executive Officer (“CEO”) and Chairperson of the Board with Dr. Ben-Maimon serving as our CEO and Mr. Truitt serving as Chairperson of the Board. Separating these positions allows the CEO to focus on day-to-day business, while allowing the Chairperson of the Board to lead the Board in its fundamental role of providing advice to and independent oversight of management. The Board recognizes the time, effort and energy that the CEO must devote to her position in the current business environment, as well as the commitment required to serve as Chairperson of the Board, particularly as the Board’s oversight responsibilities continue to grow. The Board believes it is important to retain its flexibility to allocate the responsibilities of the officers of Chairperson of the Board and CEO in any way that is in the best interest of the Company at a given point in time. Our Board believes that the separation of the positions of CEO and Chairperson of the Board reinforces the independence of the Board from management, creates an environment that encourages objective oversight of management’s performance and enhances the effectiveness of our Board as a whole. Although our by-laws do not require the Chairperson of the Board and CEO positions to be separate, the Board believes that having separate positions is the appropriate leadership structure for the Company at this time. BOARD COMMITTEES Our Board has established various Committees to assist in discharging its duties: the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee. Each member of our Notice of Annual Meeting of Stockholders and 2021 Proxy Statement | 10
| CORPORATE GOVERNANCE AND RISK MANAGEMENT (continued) |
Committees is an independent director as that term is defined by the Securities and Exchange Commission (the “SEC”) and Nasdaq. The primary responsibilities of each of the Committees and the Committee memberships are provided below under the section entitled “Board Attendance, Committee Meetings and Committee Membership.” Each of the Committees has the authority, as its members deem appropriate, to engage legal counsel or other experts or consultants in order to assist the Committee in carrying out its responsibilities. RISK MANAGEMENT While the Board has the ultimate oversight responsibility for the risk management process, including monitoring and assessing strategic risk exposure, its Committees oversee risk in certain specified areas. Pursuant to its charter, the Audit Committee oversees management of financial reporting, compliance and litigation risks, including risks related to our insurance, information technology, cybersecurity, human resources and regulatory matters, as well as the steps management has taken to monitor and control such exposures. The Compensation Committee is responsible for overseeing the management of risks relating to our executive compensation policies, plans and arrangements and the extent to which those policies or practices increase or decrease risk for the Company, while the Nominating and Corporate Governance Committee manages risks associated with the independence of the Board, potential conflicts of interest and the effectiveness of the Board. EVALUATING BOARD EFFECTIVENESS The Board, led by the Nominating and Corporate Governance Committee, is committed to continuous improvement and annual self-evaluations are an important tool for evaluating effectiveness. It conducts an annual self-evaluation of the Board, which is presented to the Board for discussion. In addition, each committee conducts an annual self-assessment in a review process similar to that used by the Board. CODE OF CONDUCT We have a written Code of Conduct that applies to our directors, officers and employees, including our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. The Code of Conduct covers fundamental ethical and compliance-related principles and practices such as accurate accounting records and financial reporting, avoiding conflicts of interest, the protection and use of our property and information and compliance with legal and regulatory requirements. The Code of Conduct and any amendments thereto, or any waivers of its requirements, is disclosed on our website at www.larimartx.com under “Investors–Corporate Governance.” DIRECTOR ORIENTATION AND CONTINUING EDUCATION Our director orientation and continuing education programs familiarize new directors with the Company’s businesses, strategies, and policies, and assists new directors in developing the skills and knowledge required for their service on the Board. From time to time, management advises, or invites outside experts to attend Board meetings to advise the Board on its responsibilities, management’s responsibilities, developments relevant to corporate governance and best corporate practices. Additionally, Board members may attend, and are encouraged to attend, accredited director education programs at the Company’s expense. CORPORATE GOVERNANCE GUIDELINES We have a written set of corporate governance guidelines that are designed to help ensure effective corporate governance of our Company. Our corporate governance guidelines cover topics including, but not limited to, the size and composition of the Board, Board membership criteria, director qualifications and duties, Board committees, director compensation and director communications with third parties. Succession planning Notice of Annual Meeting of Stockholders and 2021 Proxy Statement | 11
| CORPORATE GOVERNANCE AND RISK MANAGEMENT (continued) |
for the Board is critical to our success. Our goal is to achieve a Board that provides effective oversight of the Company through the appropriate balance of diversity of perspectives, experience, expertise and skills. Our corporate governance guidelines are reviewed at least annually by the Nominating and Corporate Governance Committee and amended by our Board when appropriate. BOARD ATTENDANCE, COMMITTEE MEETINGS AND COMMITTEE MEMBERSHIP | | | | | | | | | | | | | | | | | DIRECTOR | | INDEPENDENCE | | BOARD | | AC | | CC | | NCGC | Peter Barrett, Ph.D. | | Yes | | M | | | | M | | M | Carole S. Ben-Maimon, M.D. | | No | | M | | | | | | | Thomas O. Daniel, M.D. | | Yes | | M | | | | | | M | Thomas E. Hamilton | | Yes | | M | | M | | | | | Jonathan Leff | | Yes | | M | | | | M | | C | Frank E. Thomas | | Yes | | M | | C | | | | | Joseph Truitt | | Yes | | C | | M | | C | | |
| | | AC = Audit Committee | | M = Member | CC = Compensation Committee | | C = Chair | NCGC = Nominating and Corporate Governance Committee | | |
During 2020, our post-Merger Board held 4 meetings, our Compensation Committee held 2 meetings, our Audit Committee held 3 meetings and our Nominating and Corporate Governance Committee did not hold any meetings. In 2020, the pre-Merger Zafgen Board of Directors held 1 meeting and its audit committee held 2 meetings. Its compensation and nominating and corporate governance committees did not hold any meetings in 2020. Each director of the Company attended at least 75% of the meetings of the Board and meetings of each Committee on which he or she served during the portion of the last fiscal year for which he or she was a director or committee member. Each of our current directors, with the exception of Mr. Thomas and Drs. Daniel and Barrett, was appointed to the Board in May 2020 or later and therefore did not attend any meetings prior to May 2020. Directors are encouraged, but not required, to attend our annual stockholder meetings. All of the Zafgen Board of Directors attended the 2020 Zafgen Annual Meeting. Audit Committee The Audit Committee assists the Board by providing oversight of our financial management, independent auditor and financial reporting procedures, as well as such other matters as directed by the Board or the Audit Committee Charter. Among other things, the Audit Committee’s responsibilities include: selecting a firm to serve as the independent registered accounting firm to audit our consolidated financial statements; ensuring the independence of the independent registered public accounting firm; discussing the scope and results of the audit with the independent registered public accounting firm and reviewing, with management and that firm, our interim and year-end operating results; establishing procedures for employees to anonymously submit concerns about questionable accounting or audit matters; Notice of Annual Meeting of Stockholders and 2021 Proxy Statement | 12
| CORPORATE GOVERNANCE AND RISK MANAGEMENT (continued) |
considering the adequacy of our internal controls and internal audit function; monitoring compliance with the code of business and conduct and ethics for financial management; reviewing material related party transactions or those that require disclosure; and approving or, as permitted, pre-approving all audit and non-audit services to be performed by the independent registered public accounting firm. The members of our Audit Committee are Mr. Thomas (chair), Mr. Hamilton and Mr. Truitt. All members of our Audit Committee are deemed “independent” and financially literate under the applicable rules and regulations of the SEC and Nasdaq. Our Board has determined that each of Messrs. Thomas, Hamilton and Truitt also qualify as an “audit committee financial expert” within the meaning of SEC regulations. This designation does not impose any duties, obligations or liabilities that are greater than are generally imposed on members of our Audit Committee and our Board. Nominating and Corporate Governance Committee The Nominating and Corporate Governance Committee identifies qualified individuals for membership on the Board, recommends to the Board the director nominees to fill vacancies on the Board and to stand for election at the next annual meeting of stockholders, develops and recommends to the Board a set of corporate governance guidelines for the Board and provides oversight of the corporate governance affairs of the Board, as well as such other matters as directed by the Board or the Nominating and Corporate Governance Charter. Among other things, our Nominating and Corporate Governance Committee’s responsibilities include: identifying and recommending candidates for membership on our Board; reviewing and recommending out corporate governance guidelines and policies; reviewing proposed waivers of the code of conduct for directors and executive officers; overseeing the process of evaluating the performance of our Board; and assisting our Board on corporate governance matters. The Nominating and Corporate Governance Committee is responsible for identifying individuals that the Nominating and Corporate Governance Committee believes are qualified to become Board members, as described above in the section entitled “Board Structure and Composition.” The members of our Nominating and Corporate Governance Committee are Mr. Leff (chair), Dr. Barrett and Dr. Daniel. The Board has determined that all Nominating and Corporate Governance Committee members are independent under the listing standards of Nasdaq. Compensation Committee The Compensation Committee reviews the performance and development of our management in achieving corporate goals and objectives and assures that our executive officers (including our CEO) are compensated effectively in a manner consistent with our strategy, competitive practice and stockholder interests, as well as such other matters as directed by the Board or the Compensation Committee Charter. Among other things, the Compensation Committee’s responsibilities include: reviewing and approving, or recommending that our Board approve, the compensation of our executive officers; reviewing and recommending to our Board the compensation of our directors; administering our stock and equity incentive plans; Notice of Annual Meeting of Stockholders and 2021 Proxy Statement | 13
| CORPORATE GOVERNANCE AND RISK MANAGEMENT (continued) |
reviewing and approving, or making recommendations to our Board with respect to, incentive compensation and equity plans; and reviewing our overall compensation philosophy. Our Compensation Committee has delegated authority to our CEO to grant options or other stock awards to our non-executive officers. Our Compensation Committee also has the authority to form and delegate authority to one or more subcommittees as it deems appropriate from time to time under the circumstances. The Compensation Committee annually reviews the performance of each of the executive officers, including the CEO. It then determines and approves the compensation of each executive officer, other than the CEO, and determines and makes recommendations regarding the CEO’s compensation level to the Board for approval. Radford (an Aon Company) is our executive compensation consultant. Radford reports directly to the Compensation Committee and provides various executive compensation services to the Compensation Committee, including advising the Compensation Committee on the principal aspects of our executive compensation program and evolving industry practices and providing market information and analysis regarding the competitiveness of our program design and our award values in relation to performance. Radford does not provide services to us other than its advice to the Compensation Committee on executive and director compensation matters. The members of our Compensation Committee are Mr. Truitt (Chair), Dr. Barrett and Mr. Leff. The Board has determined that all Compensation Committee members are independent under the listing standards of Nasdaq, and that they are “non-employee directors” for purposes of Rule 16b-3 under the Securities Exchange Act of 1934 (the “Exchange Act”). FAMILY RELATIONSHIPS There are no family relationships among any of our directors or executive officers. COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION During the fiscal year ended December 31, 2020 and as of the date of this Proxy Statement, none of the members of the Compensation Committee was or is one of our officers or employees, and none of our executive officers has served or serves on the compensation committee or board of any company that employed or employs any member of our Compensation Committee or Board. STOCKHOLDER ENGAGEMENT Connect Engaging with investors is fundamental to our commitment to good corporate governance and essential to maintaining strong corporate governance practices. Throughout the year, we seek opportunities to connect with our investors to gain and share valuable insights into current and emerging global governance trends. Collaborate We strive for a collaborative approach to stockholder engagement and value the variety of investors’ perspectives received, which helps deepen our understanding of their interests and motivations. Notice of Annual Meeting of Stockholders and 2021 Proxy Statement | 14
| CORPORATE GOVERNANCE AND RISK MANAGEMENT (continued) |
Communicate Our goal is to communicate with our stockholders through various platforms, including via our website at www.larimartx.com, in print and in person at investor presentations or stockholder meetings. We view communication between our stockholders and the Board as a dialogue. | | | How to Communicate with our Directors | | By mail: Secretary, Larimar Therapeutics, Inc. Three Bala Plaza East, Suite 506 Bala Cynwyd, PA 19004 | |
Notice of Annual Meeting of Stockholders and 2021 Proxy Statement | 15
We have designed and implemented our compensation program for our non-employee directors to attract, motivate and retain individuals who are committed to our values and goals and who have the expertise and experience that we need to achieve those goals. INTRODUCTORY NOTE REGARDING PRESENTATION OF INFORMATION On May 28, 2020, Zafgen completed the Merger of Merger Sub with Chondrial. At the effective time of the Merger, a majority of the Zafgen directors resigned, with the exception of Peter Barrett, Ph.D., Thomas O. Daniel, M.D. and Frank E. Thomas, and the remaining director vacancies were replaced by new directors designated by Chondrial. Accordingly, we have provided the compensation disclosure with respect to all directors of Zafgen that served during 2019 only (after giving effect2020 and for those directors of the Company that were appointed to our Board in connection with the Reverse Stock Split).Merger. NON-EMPLOYEE DIRECTOR COMPENSATION PROGRAMPOLICY OurIn July 2020, our Board, in consultation with Radford (an operating unit of Aon plc and a widely recognized leader in gathering and analyzing industry compensation trends), reviewed our cash and equity non-employee director compensation policy and compared them with peer companies. As a result of the review, the Board maintained our current cash compensation policy for non-employee directors directors and adopted an equity compensation policy for non-employee directors as set forth below.
The table below depicts our compensation program for our non-employee directors: | | | | | Cash | | | | | Annual Cash Retainer | | | $35,000 | | Chairperson of the Board of Directors | | | $30,000 | | Annual Committee Chair Retainer | | | | | Audit | | | $15,000 | | Compensation | | | $10,000 | | Nominating and Corporate Governance | | | $ 7,500 | | Annual Committee Member Retainer | | | | | Audit | | | $ 7,500 | | Compensation | | | $ 5,000 | | Nominating and Corporate Governance | | | $ 3,750 | | | | Equity | | | | | Initial Equity Grant | |
| Option to purchase 16,600 shares of common stock, vesting monthly over a three year period |
| Annual Equity Retainer | |
| Option to purchase 8,300 shares of common stock, vesting upon the earlier of the first anniversary of the date of grant or the date of the following annual meeting of stockholders after the grant date |
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Notice of Annual Meeting of Stockholders and 2021 Proxy Statement | 16
| DIRECTOR COMPENSATION (continued) |
DIRECTOR COMPENSATION TABLE The following table below sets forth summary information regarding the compensation of our non-employee directors comprisedfor the fiscal year ended December 31, 2020. For information regarding compensation to Dr. Ben-Maimon and Mr. Hatfield, see the “Summary Compensation Table” on page 21 herein. | | | | | | | | | | | | | | | | | NAME | | FEES EARNED OR PAIDIN CASH ($) | | | OPTION AWARDS ($) (1)(2) | | | TOTAL ($) | | Current Non-Employee Directors | | | | | | | | | | | | | Peter Barrett, Ph.D. | | $ | 55,729 | | | $ | 187,477 | | | $ | 243,206 | | Thomas O. Daniel, M.D. | | $ | 41,354 | | | $ | 187,477 | | | $ | 228,831 | | Thomas Hamilton | | $ | 24,792 | | | $ | 187,477 | | | $ | 212,269 | | Jonathan Leff | | $ | 27,708 | | | $ | 187,477 | | | $ | 215,185 | | Frank E. Thomas | | $ | 62,500 | | | $ | 187,477 | | | $ | 249,977 | | Joseph Truitt | | $ | 48,125 | | | $ | 187,477 | | | $ | 235,602 | | | | | | Former Non-Employee Directors | | | | | | | | | | | | | John L. LaMattina, Ph.D. (3) | | $ | 19,792 | | | $ | — | | | $ | 19,792 | | Cameron Geoffrey McDonough, M.D. (3) | | $ | 16,667 | | | $ | — | | | $ | 16,667 | | Wendy Everett, Sc.D. (3) | | $ | 28,333 | | | $ | — | | | $ | 28,333 | | Robert J. Perez (3) | | $ | 16,146 | | | $ | — | | | $ | 16,146 | |
(1) | Reflects the aggregate grant date fair value of each stock option granted in 2020 determined in accordance with the provisions of Financial Accounting Standards Board Accounting Standards, Codification Topic 718, Compensation—Stock Compensation (“FASB ASC Topic 718”). The assumptions made in the calculation of these amounts are included in Note 8 of the Notes to the Consolidated Financial Statements included in our Annual Report on Form 10-K. |
(2) | As of December 31, 2020, Drs. Barrett and Daniel and Messrs. Truitt, Hamilton, Leff and Thomas held options to purchase 29,047, 26,150, 16,600, 16,600, 16,600 and 24,834 shares of our common stock, respectively. |
(3) | Drs. LaMattina and McDonough, Ms. Everett and Mr. Perez resigned from the Board in connection with the Merger on May 28, 2020. Prior to the closing of the Merger, the vesting of each unexpired and unexercised option to purchase Zafgen common stock was accelerated in full, which became effective immediately prior to the effective time of the Merger. Each such option shall remain exercisable for a period of two (2) years from the date of resignation, May 28, 2020 (or until the option’s original 10-year expiration date, if earlier). |
Notice of (i) an initial appointment grantAnnual Meeting of an optionStockholders and 2021 Proxy Statement | 17
| INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM |
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FEES The Audit Committee works with our management in order to purchase 16,600 sharesnegotiate appropriate fees with PwC for the Company and is ultimately responsible for approving those fees. The following is a summary and description of fees for services provided by PwC in 2020 and 2019: | | | | | | | | | | | | SERVICE | | 2020 | | | 2019 | | Audit Fees | | $ | 1,364,000 | | | $ | 556,000 | | Audit-Related Fees | | $ | 730,000 | | | | — | | Tax Fees | | $ | 40,000 | | | $ | 44,352 | | All Other Fees | | $ | 956 | | | $ | 956 | | Total | | $ | 2,134,956 | | | $ | 610,308 | |
“Audit fees” represents the aggregate fees for professional services rendered for the audit of our common stock, which vest monthly overfinancial statements on Form 10-K, consents for the use of audit reports and reference to the auditor as an expert in our registration statements and professional services rendered for the review of our quarterly financial statements on Form 10-Q that are customary under the standards of the Public Company Accounting Oversight Board (United States). Also included are the fees related to our Registration Statements on Form S-3 and Form S-8. “Audit Related Fees” represents the aggregate fees for professional services in support of the Merger, the completion of the audit of Chondrial’s financial statements for the 2019 and 2018 fiscal years and other attestation services related to financial reporting that are not required by statute or regulation. “Tax fees” consists of fees related to tax compliance, tax planning and tax advice. “All other fees” represents payment for access to PwC’s on-line software tools. These fees were approved by the Audit Committee. AUDIT COMMITTEE PRE-APPROVAL POLICIES AND PROCEDURES The Audit Committee is responsible for appointing, retaining, setting compensation for, and evaluating and overseeing the work of the independent registered public accounting firm. The Audit Committee’s charter establishes a three-year period,policy that all audit and (ii)permissible non-audit services provided by the independent registered public accounting firm will be pre-approved by the Audit Committee. All such audit and permissible non-audit services were pre-approved in accordance with this policy during the fiscal year ended December 31, 2020. These services may include audit services, audit-related services, tax services and other services. The Audit Committee considers whether the provision of each non-audit service is compatible with maintaining the independence of our independent registered public accounting firm. The responsibility to pre-approve audit and non-audit services may be delegated by the Audit Committee to one or more members of the Audit Committee; provided that any decisions made by such member or members must be presented to the full Audit Committee at its next scheduled meeting. Notice of Annual Meeting of Stockholders and 2021 Proxy Statement | 18
The primary purpose of the Audit Committee is to assist the Board in its general oversight of the Company’s financial reporting process. Management is primarily responsible for the preparation, presentation, and integrity of the Company’s consolidated financial statements, accounting and financial reporting principles, internal controls and procedures designed to ensure compliance with accounting standards, applicable laws and regulations. The Company’s independent registered public accounting firm for the fiscal year 2020, PwC, is responsible for performing an annual grantindependent audit of the consolidated financial statements and expressing an opinion on the dateconformity of those consolidated financial statements with generally accepted accounting principles. The Audit Committee has reviewed and discussed the audited consolidated financial statements contained in the Company’s 2020 Annual Report with management and PwC. The Audit Committee has discussed with PwC the matters required to be discussed by the applicable auditing standards as periodically amended. In addition, PwC has provided the Audit Committee with the written disclosures and the letter required by the applicable requirements of the annual meetingPublic Company Accounting Oversight Board regarding PwC’s communications with the Audit Committee concerning independence, and the Audit Committee has discussed with PwC its independence. The Audit Committee also considered whether the independent registered public accounting firm’s provision of stockholders of an optionnon-audit services to purchase 8,300 shares of our common stock, which would vest in full upon the earlier ofCompany is compatible with the first anniversary ofauditor’s independence. The Audit Committee has concluded that the date of grant orindependent registered public accounting firm is independent from the date of the following annual meeting of stockholders. All of the foregoing options would be granted at fair market valueCompany and its management. Based on the date of grantconsiderations and willdiscussions referred to above, the Audit Committee recommended to the Board that the audited consolidated financial statements be issued underincluded in the Company’s 2020 Plan, subject to stockholder approval.Annual Report. In addition, all non-employee directors would be paid compensation as follows:Audit Committee
Frank E. Thomas (Chair) Thomas E. Hamilton Joseph Truitt | | | | | | | Annual Retainer | | Board of Directors: | | | | | All nonemployee members (including Chairman of the Board of Directors) | | $ | 35,000 | | Chairman of the Board of Directors | | $ | 30,000 | | Audit Committee: | | | | | Chairman | | $ | 15,000 | | Non-Chairman members | | $ | 7,500 | | Compensation Committee: | | | | | Chairman | | $ | 10,000 | | Non-Chairman members | | $ | 5,000 | | Nominating and Corporate Governance Committee: | | | | | Chairman | | $ | 7,500 | | Non-Chairman members | | $ | 3,750 | |
Notice of Annual Meeting of Stockholders and 2021 Proxy Statement | 19
ZAFGEN DIRECTOR COMPENSATION
The following table sets forth a summarythe name, age and position of each of our executive officers as of the date of this Proxy Statement: | | | | | | | | | | NAME | | POSITION | | AGE | | Carole S. Ben-Maimon, M.D. | | President, Chief Executive Officer | | | 62 | | Michael Celano | | Chief Financial Officer | | | 62 | |
Carole S. Ben-Maimon, M.D.—For biographical information for Carole S. Ben-Maimon, M.D., see “Board of Directors—Continuing Directors.” Michael Celano has served as our Chief Financial Officer since May 2020. Prior to joining the Company, Mr. Celano served as the Chief Financial Officer of The Columbus Organization, a provider of case management services for individuals with intellectual and developmental disabilities, since January 2020. From May 2019 to January 2020, Mr. Celano performed consulting work. Mr. Celano has also served as the Chairman of the Board of Directors of OraSure Technologies, Inc. (“OraSure”), a publicly-traded medical device company specializing in diagnostic testing kits, since April 2018. Before his appointment as Chairman of the Board of OraSure, Mr. Celano served as a director for OraSure since October 2006. From January 2018 to May 2019, Mr. Celano served as the Chief Operating Officer of Recro Pharma, Inc. (“Recro”), and from July 2016 to January 2018, Mr. Celano served as Chief Financial Officer of Recro. Between 2015 and June 2016 Mr. Celano was self-employed providing consulting services to healthcare companies. From 2013 to 2015, Mr. Celano served as Chief Financial Officer of DrugScan, Inc., a clinical laboratory services company. Prior to that, Mr. Celano served as the Chief Financial Officer of Kensey Nash Corporation, a biomaterials company, from 2009 to 2012. From 2007 to 2008, Mr. Celano also served as Chief Financial Officer for BioRexis Pharmaceutical Corporation (“BioRexis”), a biopharmaceutical company. Before joining BioRexis, Mr. Celano served as a partner with KPMG LLP (“KPMG”) where he was co-leader of its National Life Science Practice. Mr. Celano also was co-leader of the Life Science Practice for Arthur Andersen LLP before he joined KPMG. Mr. Celano previously served on the board of directors of Performance Health, a consumer health care product manufacturing company from 2015 to 2016. Mr. Celano holds a B.S. in Accounting from St. Joseph’s University. Notice of Annual Meeting of Stockholders and 2021 Proxy Statement | 20
This section discusses the material components of the executive compensation Zafgen paid to its nonemployee directorsprogram for our named executive officers, which consists of any person who served as our principal executive officer during 2019.any part of 2020 and our two other most highly compensated executive officers. In December 2019, Zafgen’s serving directors waived their right to receive their 2020, annual cash retainer fees in the form of equity under the nonemployee director compensation policy. Mr.our named executive officers were: Carole S. Ben-Maimon, our President and Chief Executive Officer; Jeffrey S. Hatfield, Zafgen’s former Chief Executive Officer, received no compensation for his service as director,Officer; Michael Celano, our Chief Financial Officer; and consequently, is not included Patricia Allen, Zafgen’s former Chief Financial Officer. INTRODUCTORY NOTE REGARDING PRESENTATION OF INFORMATION On May 28, 2020, Zafgen completed the Merger of Merger Sub with Chondrial. At the effective time of the Merger, the management of Zafgen was replaced with the management of Chondrial. Unless otherwise indicated, the disclosures in this table. The compensation received by Mr. Hatfieldsection regarding Zafgen’s common stock or securities convertible into common stock for periods or as an employee during 2019 is presented inof a date that precedes the “Summary Compensation Table—2019 and 2018 Fiscal Years.” Eachclosing of the directors listed below resignedMerger have been adjusted to give effect to the Reverse Split, and the disclosures in connection withthis section regarding Chondrial’s common stock or securities convertible into common stock of Chondrial for periods or as of a date that precedes the closing of the Merger except for Mr. Barrett, Mr. Danielhave been adjusted to give effect to the Exchange Ratio and Mr. Thomas, who continue to serve onthe Reverse Split. SUMMARY COMPENSATION TABLE The following table sets forth information concerning the compensation of our Board.named executive officers during the fiscal year ended December 31, 2020: | | | | | | | | | | | | | | | | | | | | | Name | | Fees earned or paid in cash($) | | Stock awards($) (1) | | Option awards($) (1)(2) | | Total($) | Peter Barrett, Ph.D. | | | | — | | | | | — | | | | | 98,300 | (3) | | | | 98,300 | | Thomas O. Daniel, M.D. | | | | — | | | | | — | | | | | 70,800 | (4) | | | | 70,800 | | Wendy Everett, Sc.D. | | | | 42,500 | | | | | — | | | | | 25,800 | | | | | 68,300 | | John L. LaMattina, Ph.D. | | | | — | | | | | 47,500 | (5) | | | | 25,800 | | | | | 73,300 | | Cameron Geoffrey McDonough, M.D. | | | | — | | | | | — | | | | | 65,800 | (6) | | | | 65,800 | | Robert J. Perez | | | | — | | | | | 19,375 | (7) | | | | 45,175 | (7) | | | | 64,550 | | Frank E. Thomas | | | | 50,000 | | | | | — | | | | | 25,800 | | | | | 75,800 | |
| | | | | | | | | | | | | | | | | | | | | | | | | NAMEAND PRINCIPAL POSITION | | YEAR | | | SALARY ($) | | | BONUS ($) | | | OPTION AWARDS ($) (1) | | | ALL OTHER COMPENSATION ($) | | | TOTAL ($) | | Carole S. Ben-Maimon | | | 2020 | (2) | | $ | 267,626 | | | $ | 272,600 | (3) | | $ | 4,718,552 | | | | — | | | $ | 5,270,178 | | President and Chief Executive Officer | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Jeffrey S. Hatfield | | | 2020 | (4) | | $ | 221,154 | | | | — | | | | — | | | $ | 1,130,484 | (5) | | $ | 1,351,638 | | Former Chief Executive Officer | | | 2019 | | | $ | 536,130 | | | $ | 804,195 | | | $ | 1,913,835 | | | $ | 8,400 | | | $ | 3,236,560 | | | | | | | | | Michael Celano | | | 2020 | (6) | | $ | 205,513 | | | $ | 83,438 | (3) | | $ | 1,497,121 | | | $ | 4,667 | | | $ | 1,790,739 | | Chief Financial Officer | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Patricia Allen | | | 2020 | (4) | | $ | 157,967 | | | $ | 229,770 | (7) | | | — | | | $ | 743,242 | (8) | | $ | 1,130,979 | | Former Chief Financial Officer | | | | | | | | | | | | | | | | | | | | | | | | |
(1) | Amounts representReflects the aggregate grant-dategrant date fair value of option or stock awards granted to Zafgen’s directors in 2019 computeddetermined in accordance with the FASB ASC Topic 718. The assumptions usedmade in the valuation of these awardsvaluations are consistent with the valuation methodologies specified in the notes to Zafgen’s consolidated financial statements and discussions in “Management’s Discussion and Analysis of Financial Condition and Result of Operations,” included in Zafgen’snote 8 to the Annual Financial Statements included in our Annual Report on Form 10-K, for the year ended December 31, 2019. The amounts above reflect Zafgen’s aggregate accounting expense for these awards and do not necessarily correspond to the actual value that will be recognized by the directors.filed on March 4, 2021.
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(2) | Each nonemployee director was granted an annual stock option grantDr. Ben-Maimon has served as our Chief Executive Officer since May 28, 2020. Compensation reported in accordance with the non-employee directorthis table for her does not include compensation policy for 2,250 shares on June 26, 2019, which vested in full on the date of the 2020 annual meeting of stockholders. As of December 31, 2019, the aggregate number of outstanding vested and unvested Larimar options heldpaid by each nonemployee director was: Dr. Barrett, 12,448 shares; Dr. Daniel, 9,551 shares; Ms. Everett, 7,250 shares; Dr. LaMattina 8,683 shares; Dr. McDonough, 11,671 shares; Mr. Perez, 10,493 shares; and Mr. Thomas, 8,235 shares.Chondrial prior to that date.
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(3) | Dr. Barrett was granted an option for 1,783 sharesRepresents bonus paid in February 2021 based upon 2020 performance, as approved by our Board of our common stock in lieu of his $72,500 of cash fees, which vested on a quarterly basis over 2019.Directors.
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(4) | Dr. Daniel was granted an option for 1,106 sharesEach of Mr. Hatfield and Ms. Allen ceased employment with us on May 28, 2020, upon completion of our common stockmerger with Chondrial. However, in lieu of his $45,000 of cash fees, which vested on a quarterly basis over 2019.Ms. Allen’s case, she continued to perform consulting services for us until August 31, 2020 to assist with the merger integration process.
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(5) | Dr. LaMattina was granted RSUsOther Compensation for 903 sharesMr. Hatfield includes severance benefits of our common stock in lieu$1,072,260 (18 months salary of $804,195 and $268,065 representing his $47,500guaranteed 2020 bonus) and COBRA reimbursement of cash fees, which vested on a quarterly basis over 2019.$58,224.
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(6) | Dr. McDonough was granted an option for 983 shares of our common stock in lieu of his $40,000 in cash fees, which vestedMr. Celano commenced employment with us on a quarterly basis over 2019.May 28, 2020.
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(7) | Represents a retention bonus paid in 2020 upon closing of the Merger. |
Notice of Annual Meeting of Stockholders and 2021 Proxy Statement | 21
| EXECUTIVE COMPENSATION (continued) |
(8) | Other Compensation for Ms. Allen includes a one-time severance payment of $536,130, consulting fees of $150,000, COBRA reimbursement of $37,514, payment for accrued but unused vacation of $15,179 and 401(k) matching of $4,419. |
Elements of Compensation The compensation of our named executive officers generally consists of base salary, annual cash bonus opportunities, long term incentive compensation in the form of equity awards and other benefits, as described below. Base Salary The base salary payable to each named executive officer is intended to provide a fixed component of compensation reflecting the executive’s skill set, experience, role, responsibilities, and contributions. For 2020, Dr. Ben-Maimon’s annual base salary rate was $470,000 and Mr. Celano’s annual base salary rate was $350,000. In January 2021, the Compensation Committee increased Dr. Ben-Maimon’s annual base salary rate to $510,000 and Mr. Celano’s annual base salary rate to $366,000. Annual Cash and Equity Bonus Opportunities Each of our named executive officers’ performance-based cash bonus opportunity is expressed as a percentage of base salary that can be achieved by meeting predetermined corporate and individual performance objectives. Our Compensation Committee annually sets each executive’s target bonus for the year. The 2020 annual bonus for Dr. Ben-Maimon and Mr. Celano were targeted at 50% and 35% of their respective base salaries. For 2020, they were eligible to earn their annual bonuses pursuant to the achievement of corporate and/or individual performance goals. These goals primarily included closing the Merger, continuing manufacturing process optimization and clinical inventory build, preparing for the initiation of off label extension and pediatric studies in the first half of 2021 and for the delivery of topline results by the first half of 2021. Following a review of the corporate goals attained in 2020, our Compensation Committee approved, and, in the case of Dr. Ben-Maimon, our Compensation Committee recommended and our Board approved, 2020 annual cash bonus payments to each of Dr. Ben-Maimon and Mr. Celano in an amount equal to 116% of their respective target bonus amounts, totaling $272,600 and $83,438, respectively. Mr. Celano’s bonus for 2020 was pro-rated from the date he commenced employment, May 28, 2020. Equity Incentives Our equity-based incentive awards are designed to align our interests and the interests of our stockholders with those of our named executive officers. Our Board or Compensation Committee approves equity grants. Stock option awards to our named executive officers generally vest 25% on the first anniversary of the grant date, with the remaining 75% vesting in equal monthly installments on the last day of each of the 36 calendar months immediately following the first anniversary of the grant date, subject to the employee’s, consultant’s or named executive officer’s continuous service through the relevant vesting dates. Other Benefits We currently provide broad-based welfare benefits that are available to all of our employees, including our named executive officers, including health, dental, life, vision and disability insurance. We do not maintain any defined benefit pension plans or nonqualified deferred compensation plans. We do maintain a 401(k) plan and our named executive officers are eligible to participate in that plan on the same terms as our other employees generally. Notice of Annual Meeting of Stockholders and 2021 Proxy Statement | 22
| EXECUTIVE COMPENSATION (continued) |
PLEDGING AND HEDGING POLICIES Under the terms of our Insider Trading Policy, our executive officers and directors are prohibited from: trading in call or put options involving our securities and other derivative securities; engaging in short sales of our securities; holding our securities in a margin account, all forms of hedging or monetizing our transactions, such as zero-cost collars and forward sale contracts and pledging company securities to secure margin or other loans. OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END The following table sets forth information regarding the number of shares of common stock underlying outstanding plan awards held by each of our named executive officers as of December 31, 2020: | | | | | | | | | | | | | | | | | | | | | | | OPTION AWARD | | NAME | | GRANT DATE | | | NUMBEROF SECURITIES UNDERLYING UNEXERCISED OPTIONS (#) EXERCISABLE | | | NUMBER OF SECURITIES UNDERLYING UNEXERCISED OPTIONS (#) UNEXERCISABLE (2) | | | OPTION EXERCISE PRICE ($) | | | OPTION EXPIRATION DATE | | Carole S. Ben-Maimon | | | 04/10/2017 | | | | 133,140 | | | | — | | | $ | 11.73 | | | | 04/10/2027 | | | | | 05/28/2019 | | | | 24,311 | | | | 37,108 | | | $ | 11.73 | | | | 5/27/2029 | | | | | 09/29/2020 | | | | — | | | | 411,400 | | | $ | 11.90 | | | | 7/16/2030 | | Jeffrey S. Hatfield (1) | | | 10/09/2017 | | | | 45,833 | | | | — | | | $ | 40.80 | | | | 5/28/2022 | | | | | 02/22/2018 | | | | 22,916 | | | | — | | | $ | 93.24 | | | | 5/28/2022 | | | | | 01/22/2019 | | | | 43,749 | | | | — | | | $ | 55.56 | | | | 5/28/2022 | | Michael Celano | | | 05/28/2020 | | | | — | | | | 60,479 | | | $ | 11.88 | | | | 5/27/2030 | | | | | 09/29/2020 | | | | — | | | | 84,100 | | | $ | 11.90 | | | | 7/16/2030 | | Patricia Allen (1) | | | 03/07/2013 | | | | 10,615 | | | | — | | | $ | 29.40 | | | | 5/28/2022 | | | | | 02/27/2015 | | | | 4,999 | | | | — | | | $ | 463.80 | | | | 5/28/2022 | | | | | 03/31/2016 | | | | 5,999 | | | | — | | | $ | 80.16 | | | | 5/28/2022 | | | | | 03/31/2016 | | | | 3,000 | | | | — | | | $ | 80.16 | | | | 5/28/2022 | | | | | 01/27/2017 | | | | 7,333 | | | | — | | | $ | 48.60 | | | | 5/28/2022 | | | | | 02/22/2018 | | | | 10,415 | | | | — | | | $ | 93.24 | | | | 5/28/2022 | | | | | 01/22/2019 | | | | 10,416 | | | | — | | | $ | 55.56 | | | | 5/28/2022 | |
(1) | Each of Mr. Perez was granted RSUs for 368 sharesHatfield and Ms. Allen ceased employment with us on May 28, 2020, upon completion of our common stockmerger with Chondrial Therapeutics. Their options will remain exercisable until May 28, 2022, the second anniversary of the cessation of their employment. |
(2) | These options each generally vest as follows: 25% on the first anniversary of the grant date, with the remaining 75% vesting in lieuequal monthly installments over the following 36 calendar months, subject to the optionee’s continued service through the relevant vesting date (and in the case of $19,375 of cash fees, and an option for 476 shares of our common stock in lieu of $19,375 in cash fees, each of which vested on a quarterly basis over 2019.Mr. Celano’s May 28, 2020 award, subject to accelerated vesting upon certain termination events). |
PriorEMPLOYMENT AGREEMENTS
Employment Agreement with Carole S. Ben-Maimon, M.D. We entered into an employment agreement with Dr. Ben-Maimon, as our President and Chief Executive Officer, on July 31, 2020 to supersede her employment agreement with Chondrial, dated December 1, 2016, and to otherwise establish the terms and conditions of Dr. Ben-Maimon’s employment by the Company. Pursuant to the closingterms of this agreement, Dr. Ben-Maimon’s initial annual base salary was $470,000 and her target annual bonus opportunity is not less than 50% of her base salary. Employment Agreement with Michael Celano. We entered into an employment agreement with Mr. Celano, as our Chief Financial Officer, on June 1, 2020. Mr. Celano’s period of employment with the Notice of Annual Meeting of Stockholders and 2021 Proxy Statement | 23
| EXECUTIVE COMPENSATION (continued) |
Company commenced on May 28, 2020. Pursuant to the terms of this agreement, Mr. Celano’s initial annual base salary was $350,000 and his target annual bonus opportunity is not less than 35% of his base salary. In connection with his hiring, on May 28, 2020, Mr. Celano received a stock option grant in respect of 60,479 shares of our common stock (the “Initial Award”), as further described in the table above entitled “Outstanding Equity Awards at Fiscal Year-End.” Confidential Information and Invention Agreement Each of Dr. Ben-Maimon and Mr. Celano have also entered into a standard form agreement with respect to confidentiality of the Merger,Company’s proprietary information and assignment of inventions. Among other things, this agreement obligates each of them to refrain from disclosing any of the Company’s proprietary information and to assign to the Company any inventions conceived or developed during the course of employment. Such agreement also provides that during the period of such executive officer’s employment and for one year thereafter, they will not compete with the Company and will not solicit the Company’s employees, contractors, lenders, partners or suppliers. Ben-Maimon and Celano Severance Rights Each of Dr. Ben-Maimon’s and Mr. Celano’s employment agreement provides that in the event their employment with the Company ceases for any reason, they will be entitled to receive any accrued, unpaid base salary and reimbursement for expenses incurred by such executive officer, but not yet reimbursed, prior to the date of termination, in accordance with our expense reimbursement policies (the “Accrued Rights”). If the executive officer’s employment is terminated without cause or they resign with good reason, then in addition to the Accrued Rights, such executive officer is entitled to receive: payment of any earned, unpaid bonus for the immediately preceding calendar year (the “Prior Year Bonus”); monthly severance payments for a period of twelve (12) months, in the case of Dr. Ben-Maimon, and nine (9) months, in the case of Mr. Celano, with each payment equal to one-twelfth of their then in effect base salary; waiver or reimbursement of the premiums for continuation of group health coverage under the Consolidated Omnibus Budget Reconciliation Act (“COBRA”) for twelve (12) months, in the case of Dr. Ben-Maimon, and nine (9), months, in the case of Mr. Celano; and in the case of Mr. Celano, accelerated vesting of any portion of his Initial Award which then remains outstanding and otherwise unvested. Notwithstanding the foregoing, if each unexpiredcurrent executive officer’s employment is terminated without cause or they resign with good reason within one year following a change in control, then they will be entitled to receive: monthly severance payments for eighteen (18) months, in the case of Dr. Ben-Maimon, and unexercised option twelve (12) months, in the case of Mr. Celano, with each payment equal to purchaseone-twelfth the sum of their then in effect base salary and their then in effect target bonus; waiver or reimbursement of the premiums for continuation of their group health coverage under COBRA for eighteen (18) months, in the case of Dr. Ben-Maimon, and twelve (12) months, in the case of Mr. Celano; and in the case of Mr. Celano, accelerated vesting of any portion of his Initial Award which then remains outstanding and otherwise unvested. Notice of Annual Meeting of Stockholders and 2021 Proxy Statement | 24
| EXECUTIVE COMPENSATION (continued) |
The severance payments are conditioned on such executive officer’s execution and delivery of a general release of claims against the Company and its affiliates in a form prescribed by the Company and on such release becoming irrevocable within 30 days following their cessation of employment. Severance and Other Payments to Former Zafgen common stock was accelerated in full effective as ofExecutives In accordance with the Merger Agreement, on May 28, 2020, immediately prior to the effective time of the Merger.Merger, each of Mr. Hatfield and Ms. Allen resigned from employment with Zafgen and became entitled to certain severance benefits pursuant to their pre-existing severance and change in control agreements, as further described below. Each unexpired, unexercisedformer Zafgen option remains outstanding afterexecutive signed a release of claims as a condition of receiving these severance benefits. Mr. Hatfield has received or is receiving the Merger. Each Zafgen option shall befollowing severance benefits: (i) 18 months of base salary plus his target annual incentive compensation, (ii) 18 months of COBRA continuation medical benefits subsidized by us, and (iii) all options and other stock-based awards with solely time-based vesting held by him became fully exercisable or non-forfeitable as of the date of termination and all vested options remain exercisable for a period of two (2) years from the date of resignation,termination, May 28, 2020. Ms. Allen has received or is receiving the following severance benefits: (i) 12 months of base salary plus her target annual incentive compensation, (ii) 12 months of COBRA continuation medical benefits subsidized by us, and (iii) all options and other stock-based awards with solely time-based vesting held by her become fully exercisable or non-forfeitable as of the date of termination and all vested options remain exercisable for a period of two (2) years from the date of termination, May 28, 2020. Retention Bonuses On September 12, 2019, Zafgen entered into a retention letter agreement with Ms. Allen and pursuant to this agreement, Ms. Allen received a cash retention bonus equal to 1.5 times her target annual bonus for 2020. Allen Consulting Fees From the closing of the merger until August 31, 2020, (or until the option’s original 10-year expiration date, if earlier) for each non-employee director that resignedMs. Patricia Allen served in connectiona consulting role to assist with the Merger.merger integration process. For such services, the Company paid Ms. Allen $150,000. Notice of Annual Meeting of Stockholders and 2021 Proxy Statement | 25
| CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS |
Since January 1, 2019, we have engaged in the following transactions with our directors, executive officers, holders of more than 5% of our voting securities, and affiliates or immediate 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. INDEMNIFICATION AGREEMENTS We have entered or intend to enter into indemnification agreements with each of our directors and officers. These indemnification agreements may require us, among other things, to indemnify our directors and officers for some expenses, including attorneys’ fees, judgments, fines and settlement amounts incurred by a director or officer in any action or proceeding arising out of his or her service as one of our directors or officers, or any of our subsidiaries or any other company or enterprise to which the person provides services at our request. OTHER TRANSACTIONS We have entered into various employment-related agreements with our executive officers that, among other things, provide for compensatory and certain change in control benefits. For a description of these agreements and arrangements with our named executives, see the section titled “Executive and Director Compensation — Executive Officer Employment Agreements.” We have also granted stock options to our executive officers and directors. For a description of these stock options, see the section titled “Executive and Director Compensation.” POLICIES AND PROCEDURES FOR RELATED PERSON TRANSACTIONS Our Board has adopted a written related party transaction policy that governs the review and approval of related party transactions. This policy covers any transaction, arrangement or relationship, or any series of similar transactions, arrangements or relationships, in which we were or are to be a participant, where the amount involved exceeds $120,000 and a related person had or will have a direct or indirect material interest. Pursuant to this policy, if we want to enter into a transaction with a related party or an affiliate of a related party, the Audit Committee will review the proposed transaction to determine, based on applicable rules of Nasdaq and the SEC, whether such transaction requires approval by the Audit Committee. If approval is required, the proposed transaction will be reviewed at the next regular meeting of the Audit Committee, and we may not enter into a related party transaction unless the Audit Committee has specifically confirmed in writing that either no further reviews are necessary or that all requisite corporate reviews have been obtained. In reviewing and approving any such transactions, our Audit Committee is tasked to consider all relevant facts and circumstances with respect to the transaction and shall evaluate all available options, including ratification, revision or termination of the transaction. The Audit Committee will not approve or ratify a transaction with a related party unless it has determined, upon consideration of all relevant information, that the transaction is in, or not inconsistent with, the best interests of the Company or its stockholders. All of the transactions described under “Certain Relationships and Related Party Transactions” in this Proxy Statement occurred prior to or concurrently with the adoption of this policy and as such, these transaction were not subject to the approval and review procedures set forth in the policy. However, these transactions were reviewed and approved by our Board. Notice of Annual Meeting of Stockholders and 2021 Proxy Statement | 26
| EQUITY COMPENSATION PLAN INFORMATION |
The following table is a summary of the shares available for grant under the Company’s equity incentive plans as of December 31, 2020: | | | | | | | | | | | | | | | | | | | | Plan Category | | Number of securities to be issued upon exercise of outstanding options and other rights | | Weighted-average exercise price of outstanding options and other rights | | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (1)) | Equity compensation plans approved by security holders | | | | 2,008,902 | | | | $ | 22.31 | | | | | 893,700 | | Equity compensation plans not approved by security holders | | | | — | | | | | — | | | | | — | | | | | | | | | | | | | | | | | | Total | | | | 2,008,902 | | | | | 22.31 | | | | | 893,700 | | | | | | | | | | | | | | | | | |
(1) | Effective January 1, 2021, the Company added 614,709 shares available for grant under the Company’s 2020 Equity Incentive Plan (the “2020 Plan”), increasing the maximum number of shares of the Company’s common stock that may be issued under the 2020 Plan to 2,314,709 shares. This increase is not reflected in the table above. |
Other information with respect to this item is set forth in this Proxy Statement under the headings “Security Ownership of Certain Beneficial Owners and Management,” “Executive Compensation,” and “Director Compensation,” and is incorporated herein by reference. Notice of Annual Meeting of Stockholders and 2021 Proxy Statement | 27
| SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT |
The following table sets forth certain information with respect toregarding the beneficial ownership of our common stock as of August 12, 2020 for: each of our named executive officers that are not directors;
all of our current directors and executive officers as a group; and
April 2, 2021 by (a) each person or group known by us to be the beneficial owner of more than 5% of ourthe outstanding shares of common stock. Information with respect to beneficial ownership has been furnished bystock, (b) each named executive officer identified in the “Summary Compensation Table” above, (c) each director and nominee for director, and (d) all executive officer or beneficial ownerofficers and directors as a group.
The percentage of more than 5%common stock outstanding is based on 15,367,730 shares of our Common Stock. We have determinedcommon stock outstanding as of April 2, 2021. For purposes of the beneficial ownership shown on this table below, and in accordance with the rules of the SEC. Except as otherwise provided by footnote, and subject to applicable community property laws, the persons and entities named in the table have sole voting and investment power with respect to allSEC, we deem shares that they beneficially own. We have deemed shares of our common stock subject to stock options that are currently exercisable or exercisable within 60sixty days of August 12, 2020,April 2, 2021 to be outstanding and to be beneficially owned by the person holding the stock optionoptions for the purpose of computing the percentage ownership of that person; however,person, but we havedo not deemed these sharestreat them as outstanding for the purpose of computing the percentage ownership of any other person. Percentage Except as otherwise noted, each of beneficial ownership is based on 15,356,206the persons or entities in this table has sole voting and investing power with respect to all of the shares of Larimar common stock outstandingbeneficially owned by them, subject to community property laws, where applicable. Except as otherwise noted below, the street address of August 12, 2020.each beneficial owner is c/o Larimar Therapeutics, Inc., Three Bala Plaza East, Suite 506, Bala Cynwyd, PA 19004.
| | | | | | | | | | | | Name and Address of Beneficial Owner | | Number of Shares Beneficially Owned | | | Percent of Shares Beneficially Owned | | Directors | | | | | | | | | | | | Carole Ben-Maimon, M.D. | | | 173,148 | | | | 1.1 | %(1) | | | | Joseph Truitt | | | 0 | | | | | * | | | | Peter Barrett | | | 304,629 | | | | 2.0 | %(2) | | | | Thomas O. Daniel | | | 9,550 | | | | | * | | | | Frank E. Thomas | | | 8,234 | | | | | * | | | | Jonathan Leff | | | 0 | | | | | * | | | | Thomas E. Hamilton | | | 292,853 | | | | 1.9 | %(3) | | | | Named Executive Officers (other than those who are also directors) | | | | | | | | | | | | Michael Celano | | | 0 | | | | | * | | | | All current directors and executive officers as a group (8 persons) | | | 790,918 | | | | 5.1 | % | | | | 5% Stockholders | | | | | | | | | | | | Entities affiliated with Deerfield Management Company | | | 5,144,539 | | | | 33.5 | %(4) | | | | Entities affiliated with CHI Advisors | | | 1,515,148 | | | | 9.9 | %(5) | | | | Entities affiliated with Vivo Capital | | | 799,662 | | | | 5.2 | %(6) | | | | RA Capital | | | 1,515,151 | | | | 9.9 | %(7) | | | | Entities affiliated with Acuta Capital | | | 811,324 | | | | 5.3 | %(8) | | | | Entities affiliated with OrbiMed | | | 841,750 | | | | 5.5 | %(9) |
| | | | | | | | | | | SHARES BENEFICIALLY OWNED | | NAMEOF BENEFICIAL OWNER | | NUMBER OF SHARES | | | PERCENTAGE | | 5% or Greater Stockholders | | | | | | | | | | | | Entities affiliated with Deerfield Management (1) | | | 5,149,150 | | | | 33.51 | % | | | | Entities affiliated with CHI Advisors (2) | | | 1,515,148 | | | | 9.86 | % | | | | Entities affiliated with Vivo Capital (3) | | | 799,662 | | | | 5.20 | % | | | | RA Capital (4) | | | 1,515,151 | | | | 9.86 | % | | | | Entities affiliated with Acuta Capital (5) | | | 811,324 | | | | 5.28 | % | | | | Entities affiliated with OrbiMed (6) | | | 933,960 | | | | 6.07 | % | | | | Named Executive Officers and Directors | | | | | | | | | | | | Carole S. Ben-Maimon, M.D. (7) | | | 188,932 | | | | 1.22 | % | | | | Michael Celano (8) | | | 15,120 | | | | * | | | | | Peter Barrett, Ph.D. (9) | | | 310,123 | | | | 2.02 | % | | | | Thomas O. Daniel (10) | | | 15,782 | | | | * | | | | | Frank E. Thomas (11) | | | 12,845 | | | | * | | | | | Jonathan Leff (12) | | | 0 | | | | * | | | | | Thomas E. Hamilton (13) | | | 297,464 | | | | 1.94 | % | | | | Joseph Truitt (14) | | | 4,611 | | | | * | | | | | Jeffrey Hatfield (15) | | | 112,498 | | | | * | | | | | Patricia Allen (16) | | | 52,819 | | | | * | | | | | All current executive officers and directors as a group (8 persons)(17) | | | 844,877 | | | | 5.42 | % |
Notice of Annual Meeting of Stockholders and 2021 Proxy Statement | 28
(1) | Includes 148,065 shares of common stock issuable upon exercise of an equal number of options that are currently exercisable or will be exercisable within 60 days of August 12, 2020. Carole
Ben-MaimonSECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT (continued) is our President and Chief Executive Officers and a member of our Board.
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(2) | Consists of (i) 883 shares directly beneficially owned by Dr. Barrett, (ii) 12,447 shares of common stock issuable upon the exercise of options exercisable within 60 days of August 12, 2020 and (iii) 292,182 shares of common stock directly held by Atlas Venture Fund VII, L.P. Dr. Barrett is a general partner of Atlas Venture Fund VII, L.P., and as such Dr. Barrett may be deemed to share voting and dispositive power with respect to all shares held by such entity. Dr. Barrett disclaims beneficial ownership of such shares except to the extent of any pecuniary interest therein. Dr. Barrett’s business address is 400 Technology Square, Cambridge, MA 02139.
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(3) | Consists of (a) 133,420 shares directly beneficially owned by Tom Hamilton and (b) 159,433 shares directly held by FA Life Sciences Inc. Tom Hamilton disclaims beneficial ownership of the shares held by Friedreich’s Ataxia Life Sciences except to the extent of his pecuniary interest therein.
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(4)1) | Based solely on a Schedule 13D/A jointly filed with the SEC on July 1, 2020 by Deerfield Private Design Fund III, L.P., Deerfield Healthcare Innovations Fund, L.P., Deerfield Private Design Fund IV, L.P., Deerfield Mgmt III, L.P., Deerfield Mgmt HIF, L.P., Deerfield Mgmt IV, L.P., Deerfield Management Company, L.P. and James E. Flynn reflecting information as of June 26, 2020 and a Form 4 filed by Deerfield Management Company, L.P. and James E. Flynn on September 29, 2020, consists of (a) 1,714,837 shares held by Deerfield Private Design Fund III, L.P., (b) 1,714,850 shares held by Deerfield Healthcare Innovations Fund, L.P., and (c) 1,714,852 shares held by Deerfield Private Design Fund IV, L.P. and (d) 4,611 shares of common stock issuable upon the exercise of options exercisable within 60 days of April 2, 2021 held by Jonathan Leff for the benefit, and the direction, of Deerfield Management Company L.P. Deerfield Mgmt IV, L.P is the general partner of Deerfield Private Design Fund IV, L.P. Deerfield Mgmt HIF, L.P is the general partner of Deerfield Healthcare Innovations Fund, L.P. Deerfield Mgmt III, L.P is the general partner of Deerfield Private Design Fund III, L.P. (collectively with Deerfield Healthcare Innovations Fund, L.P. and Deerfield Private Design Fund IV, L.P., the “Deerfield Funds”). Deerfield Management Company, L.P. is the investment manager of the Deerfield Funds. Mr. James E. Flynn is the sole member of the general partner of each of Deerfield Mgmt IV, L.P., Deerfield Mgmt HIF, L.P., Deerfield Mgmt III, L.P. and Deerfield Management Company, L.P. Deerfield Mgmt IV, L.P., Deerfield Management Company, L.P. and Mr. James E. Flynn may be deemed to beneficially own the securities held by Deerfield Private Design Fund IV, L.P. Deerfield Mgmt HIF, L.P., Deerfield Management Company, L.P. and Mr. James E. Flynn may be deemed to beneficially own the securities held by Deerfield Healthcare Innovations Fund, L.P. Deerfield Mgmt III, L.P., Deerfield Management Company, L.P. and Mr. James E. Flynn may be deemed to beneficially own the securities held by Deerfield Private Design Fund III, L.P. The address of each of Deerfield Private Design Fund IV, L.P, Deerfield Healthcare Innovations Fund, L.P. and Deerfield Private Design Fund III, L.P. is c/o Deerfield Management Company, L.P., 780 Third345 Park Avenue 37thSouth, 12th Floor, New York, NY 10017.New York 10010. |
(5)2) | Consists of (i) 563,391 shares held by Cowen Healthcare Investments II LP, (ii) 875,752 shares held by Cowen Healthcare Investments III LP, (iii) 42,482 shares held by CHI EF II LP, and (iv) 33,523 shares held by CHI EF III LP. CHI Advisors LLC is the investment manager of Cowen Healthcare Investments II LP, Cowen Healthcare Investments III LP, CHI EF, II LP and CHI EF III LP and has voting and investment power with respect to the securities held by each of the respective entities. Beneficial ownership reported does not include an aggregate of 628,403 shares of common stock that Cowen Healthcare Investments II LP, Cowen Healthcare Investments III, L.P., CHI EF II LP and CHI EF III LP (each, a “Warrant Holder”) have the right to acquire through Pre-Funded Warrants that were issued in the Private Placement, subject to the Ownership Cap (as defined below). Under the terms of the Pre-Funded Warrants, each Warrant Holder is prohibited from exercising such warrant if exercise would cause the number of shares then owned by the Warrant Holders and their affiliates to exceed 9.99% of the total number of shares of the Company’s common stock then outstanding (the “Ownership Cap”). Accordingly, the Warrant Holders and CHI Advisors LLC disclaim beneficial ownership of the shares of common stock issuable upon exercise of the Pre-Funded Warrant to the extent that upon such exercise the number of shares beneficially owned by the Warrant Holders and their affiliates, in the aggregate, would exceed the Ownership Cap. The business address for each of Cowen Healthcare Investments II LP, Cowen Healthcare Investments III LP, CHI EF II |
| LP and CHI EF III LP is c/o CHI Advisors LLC, 599 Lexington Avenue, 19th Floor, New York, New York 10022. |
(6)3) | Based solely on a Schedule 13G jointly filed with the SEC on June 11, 2020 by Vivo Capital IX, LLC and Vivo Opportunity, LLC reflecting information as of June 1, 2020, consists of (a) 653,779 shares held by Vivo Opportunity Fund, L.P. and (b) 145,883 shares held by Vivo Capital Fund IX, L.P. Vivo Opportunity, LLC is the general partner of Vivo Opportunity Fund, L.P. The voting members of Vivo Opportunity, LLC are Albert Cha, Gaurav Aggarwal, Shan Fu, Frank Kung and Michael Chang, none of whom has individual voting or investment power with respect to the shares of common stock of common stock held by Vivo Opportunity Fund, L.P. and each of whom disclaims beneficial ownership of such shares except to the extent of his pecuniary interests therein. Vivo Capital IX, LLC is the general partner of Vivo Capital Fund IX, L.P. The voting members of Vivo Capital IX, LLC are Frank Kung, Albert Cha, Edgar Engleman, Chen Yu and Shan Fu, none of whom has individual voting or investment power with respect to the shares of |
Notice of Annual Meeting of Stockholders and 2021 Proxy Statement | 29
| SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT (continued) |
| common stock held by Vivo Capital Fund IX, L.P. and each of whom disclaims beneficial ownership of such shares except to the extent of his pecuniary interests therein. The business address for each of Vivo Opportunity Fund, L.P. and Vivo Capital Fund IX, L.P. is c/o Vivo Capital LLC, 192 Lytton Avenue, Palo Alto, California 94301. |
(7)4) | RA Capital Management, L.P. (“RA Capital”), is the investment adviser of the RA Healthcare Fund, L.P. (“RA Healthcare Fund”). The general partner of RA Capital is RA Capital Management GP, LLC (“RA Capital GP”) of which Peter Kolchinsky, Ph.D. and Rajeev Shah are the managing members. RA Capital Healthcare Fund GP, LLC is the general partner of RA Healthcare Fund. RA Healthcare Fund has delegated to RA Capital voting and investment power over the shares held by RA Healthcare Fund. The business address for RA Healthcare Fund is c/o RA Capital Management, L.P., 200 Berkeley Street, 18th18th Floor, Boston, Massachusetts 02116. |
(8)5) | Consist of (a) 656,942 shares of common stock held by Acuta Capital Fund, LP and (b) 154,382 shares of common stock held by Acuta Opportunity Fund, LP. Acuta Capital Partners, LLC is the general partner of each of Acuta Capital Fund, LP and Acuta Opportunity Fund, LP. Anupam Dalal is the Chief Investment Officer and Manfred Yu is the Manager of Acuta Capital Partners, LLC. Both Mr. Dalal and Mr. Yu have voting and investment authority over all of the shares held by each of Actua Capital Fund, LP and Acuta Opportunity Fund, LP. Each of Acuta Capital Partners, LLC, Mr. Dalal and Mr. Yu disclaims beneficial ownership of the shares of common stock held by each of Acuta Capital Fund, LP and Acuta Opportunity Fund, LP except to the extent of their pecuniary interest therein. The business address for each of Acuta Capital Fund, LP and Acuta Opportunity Fund, LP is c/o Acuta Capital Partners, LLC, 1301 Shoreway Road, Suite 350, Belmont, California 94002. |
(9)6) | Consists of (a) 201,637 shares of common stock held by OrbiMed Genesis Master Fund, L.P. and (b) 732,323 shares of common stock held by OrbiMed Partners Master Fund Limited. OrbiMed Genesis GP LLC (“Genesis GP”) is the general partner of OrbiMed Genesis Master Fund, L.P. OrbiMed Advisors LLC (“OrbiMed Advisors”) is the managing member of Genesis GP. By virtue of such relationships, Genesis GP and OrbiMed Advisors may be deemed to have voting and investment power over the securities held by OrbiMed Genesis Master Fund, L.P. and as a result, may be deemed to have beneficial ownership over such securities. OrbiMed Advisors exercises voting and investment power through a management committee comprised of Carl L. Gordon, Sven H. Borho, and Jonathan T. Silverstein, each of whom disclaims beneficial ownership of the shares held by OrbiMed Genesis Master Fund, L.P. OrbiMed Capital LLC (“OrbiMed Capital”) is the investment advisor for OrbiMed Partners Master Fund Limited. OrbiMed Capital is a relying advisor of OrbiMed Advisors. OrbiMed Advisors and OrbiMed Capital exercise voting and investment power through a management committee comprised of Carl L. Gordon, Sven H. Borho, and Jonathan T. Silverstein, each of whom disclaims beneficial ownership of the shares held by OrbiMed Partners Master Fund Limited. The business address for each of OrbiMed Genesis Master Fund, L.P. and OrbiMed Partners Master Fund Limited is c/o OrbiMed Advisors LLC, 601 Lexington Avenue, 54th Floor, New York, NY 10022. |
7) | Consists of (i) 25,083 shares directly beneficially owned by Dr. Ben-Maimon and (ii) 163,849 shares of common stock issuable upon exercise of an equal number of options that are currently exercisable or will be exercisable within 60 days of April 2, 2021. |
8) | Consists of 15,120 shares of common stock issuable upon the exercise of options exercisable within 60 days of April 2, 2021. |
9) | Consists of (i) 883 shares directly beneficially owned by Dr. Barrett, (ii) 17,058 shares of common stock issuable upon the exercise of options exercisable within 60 days of April 2, 2021 and (iii) 292,182 shares of common stock directly held by Atlas Venture Fund VII, L.P. Dr. Barrett is a general partner of Atlas Venture Fund VII, L.P., and as such Dr. Barrett may be deemed to share voting and dispositive power with respect to all shares held by such entity. Dr. Barrett disclaims beneficial ownership of such shares except to the extent of any pecuniary interest therein. Dr. Barrett’s business address is 400 Technology Square, Cambridge, MA 02139. |
10) | Consists of (i) 1,621 shares directly beneficially owned by Dr. Daniel and (ii) 14,161 shares of common stock issuable upon exercise of an equal number of options that are currently exercisable or will be exercisable within 60 days of April 2, 2021. |
Notice of Annual Meeting of Stockholders and 2021 Proxy Statement | 30
| STOCKHOLDER PROPOSALS FOR 2021 ANNUAL MEETINGSECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT (continued)
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11) | Consists of 12,845 shares of common stock issuable upon exercise of an equal number of options that are currently exercisable or will be exercisable within 60 days of April 2, 2021. |
12) | Mr. Leff disclaims beneficial ownership of the shares referred to in footnote 1 above, including 4,611 shares of common stock issuable upon exercise of options within 60 days of April 2, 2021 that Mr. Leff, our director, holds for the benefit, and the direction, of Deerfield Management Company. |
13) | Consists of (i) 133,420 shares directly beneficially owned by Tom Hamilton, (ii) 4,611 shares of common stock issuable upon the exercise of options exercisable within 60 days of April 2, 2021 and (iii) 159,433 shares directly held by FA Life Sciences Inc. Tom Hamilton disclaims beneficial ownership of the shares held by Friedreich’s Ataxia Life Sciences except to the extent of his pecuniary interest therein. |
14) | Consists of 4,611 shares of common stock issuable upon exercise of an equal number of options that are currently exercisable or will be exercisable within 60 days of April 2, 2021. |
15) | Consists 112,498 shares of common stock issuable upon exercise of an equal number of options that are currently exercisable or will be exercisable within 60 days of April 2, 2021. |
16) | Consists of (i) 42 shares of common stock directly beneficially owned by Ms. Allen and (ii) 112,498 shares of common stock issuable upon exercise of an equal number of options that are currently exercisable or will be exercisable within 60 days of April 2, 2021. |
17) | Consists of (i) 612,572 shares of common stock and (ii) 232,255 shares of common stock issuable upon exercise of an equal number of options that are currently exercisable or will be exercisable within 60 days of April 2, 2021. |
DELINQUENT SECTION 16(A) REPORTS Section 16 of the Exchange Act requires the Company’s directors, certain officers, and beneficial owners of more than ten percent of the Common Stock to file reports with the SEC indicating their holdings of and transactions in the Company’s equity securities and to provide copies of such reports to the Company. Based solely on a review of such copies and written representations from the Company’s reporting persons, the Company believes that all Section 16 filing requirements were fulfilled on a timely basis except that Mr. Celano filed one late Form 4 reporting a grant of equity options. Notice of Annual Meeting of Stockholders and 2021 Proxy Statement | 31
ITEM 1: ELECTION OF CLASS I DIRECTORS FOR A THREE-YEAR TERM EXPIRING IN 2024 At the Annual Meeting, our stockholders will vote on the election of two Class I director nominees named in this Proxy Statement as directors, each to serve until our 2024 Annual Meeting of Stockholders and until their respective successors are elected and qualified. Our Board has unanimously nominated Jonathan Leff and Peter Barrett, Ph.D. for election to our Board at the Annual Meeting. Each of the nominees has agreed to be named and to serve, and we expect each nominee to be able to serve if elected. If any nominee is unable to serve, the Nominating and Corporate Governance Committee will recommend to our Board a replacement nominee. The Board may submit proposalsthen designate the other nominee to stand for consideration atelection. If you voted for the unavailable nominee, your vote will be cast for his or her replacement. | | | OUR BOARD UNANIMOUSLY RECOMMENDS STOCKHOLDERS VOTE FOR THE ELECTION OF JONATHAN LEFF AND PETER BARRETT, PH.D. | | |
ITEM 2: ADVISORY VOTE TO APPROVE THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS IN 2020 Pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and Section 14A of the Exchange Act, we are conducting a stockholder advisory vote on the compensation paid to our 2021 annual meetingnamed executive officers. This proposal, commonly known as “say-on-pay,” gives our stockholders the opportunity to express their views on our named executive officers’ compensation. The vote is advisory, and, therefore, it is not binding on the Board, the Compensation Committee, or the Company. Nevertheless, the Compensation Committee will take into account the outcome of the vote when considering future executive compensation decisions. We currently intend to conduct this advisory vote annually. Our executive compensation program is designed to attract, motivate and retain our named executive officers who are critical to our success. Our Board believes that our executive compensation program is well tailored to retain and motivate key executives while recognizing the need to align our executive compensation program with the interests of our stockholders (“2021 annual meeting”). Stockholder proposals and director nominationsour “pay-for-performance” philosophy. Our Compensation Committee continually reviews the compensation programs for our named executive officers to ensure they achieve the desired goals of aligning our executive compensation structure with our stockholders’ interests and current market practices. We encourage our stockholders to read the “Summary Compensation Table” table and other related compensation tables and narrative disclosures, which describe the 2020 compensation of our named executive officers. We are asking our stockholders to indicate their support for the compensation of our named executive officers as described herein. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our named executive officers and our executive compensation philosophy, programs, and practices as described in this Proxy Statement. | | | OUR BOARD UNANIMOUSLY RECOMMENDS STOCKHOLDERS VOTE FOR THE APPROVAL OF, ON AN ADVISORY BASIS, THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS IN 2020 AT THE ANNUAL MEETING | | |
Notice of Annual Meeting of Stockholders and 2021 Proxy Statement | 32
| ITEMS TO BE VOTED ON (continued) |
ITEM 3: RATIFICATION OF APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS OUR INDEPENDENT REGISTERED ACCOUNTING FIRM FOR THE 2021 FISCAL YEAR The Audit Committee of the Board has appointed and engaged PwC to serve as our independent registered public accounting firm to audit the consolidated financial statements of the Company and our subsidiary for the 2021 fiscal year, and to perform audit-related services. PwC has served as our independent registered public accounting firm since 2014. Stockholders are hereby asked to ratify the Audit Committee’s appointment of PwC as our independent registered public accounting firm for the 2021 fiscal year. The Audit Committee is solely responsible for selecting our independent auditors. Although stockholder ratification of the appointment of PwC to serve as our independent registered public accounting firm is not required by law or our organizational documents, the Board has determined that it is desirable to seek stockholders ratification as a matter of good corporate governance in view of the critical role played by independent registered public accounting firms in maintaining the integrity of financial controls and reporting. If the stockholders do not ratify the appointment of PwC, the Audit Committee will reconsider its selection and whether to engage an alternative independent registered public accounting firm. Representatives of PwC are expected to virtually attend the Annual Meeting where they will be presented at ouravailable to respond to appropriate questions and, if they desire, to make a statement. | | | THE BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR THE RATIFICATION OF PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE COMPANY FOR THE FISCAL YEAR ENDING DECEMBER 31, 2021. | | |
Notice of Annual Meeting of Stockholders and 2021 annual meeting must meetProxy Statement | 33
OTHER MATTERS The Annual Meeting is called for the requirementpurposes set forth in the advance notice provision under Larimar’s bylaws. ToNotice. Our Board does not know of any other matters to be timelyconsidered by the stockholders at the Annual Meeting other than the matters described in the Notice. However, the enclosed proxy confers discretionary authority on the persons named in the proxy card with respect to matters that may properly come before the Annual Meeting and that are not known to our Board at the date this Proxy Statement was printed. It is the intention of the persons named in the proxy card to vote in accordance with their best judgment on any such matter. REQUIREMENTS FOR SUBMISSION OF STOCKHOLDER PROPOSALS FOR NEXT YEAR’S ANNUAL MEETING Stockholders intending to present a proposal to be considered for inclusion in the proxy statement for our 2021 annual meeting, stockholder proposals and director nominations2022 Annual Meeting of Stockholders must be delivered in writing to our Corporate Secretary at our principal executive offices located at Three Bala Plaza East, Suite 506, Bala Cynwyd, PA 19004, Attention: Corporate Secretary, between the close of business on January 28, 2021 and February 27,submit a proposal that is received by us no later than December 15, 2021. If we change the date of our 2021 annual meeting is scheduled to take place before April 28, 2021, or after July 27, 2021, noticethe 2022 Annual Meeting of Stockholders by more than 30 days from the anniversary of this year’s Annual Meeting, stockholder proposals must be deliveredreceived no later than the close of business on the later of (1) the 90th day prior to such annual meeting or (2) the 10thtenth day following the day on which public announcement of the date of suchthe meeting iswas first made. Any nomination must include all information relating to the nominee that is requiredmade in order to be disclosedconsidered for inclusion in solicitations of proxies for election of directors in election contestsour proxy statement. Proposals must be sent via registered, certified, or is otherwiseexpress mail (or other means that allows the stockholder to determine when the proposal was received by the Secretary) to our Secretary at Larimar Therapeutics, Inc., Three Bala Plaza East, Suite 506, Bala Cynwyd, PA 19004. Proposals must contain the information required under Regulation 14Aour Bylaws, a copy of which is available upon request to our Corporate Secretary, and also must comply with the Exchange Act,SEC’s regulations regarding the person’s written consent to be named in the proxy statement and to serve as a director if elected and such information as Larimar might reasonably require to determine the eligibilityinclusion of the person to serve as a director. As to other business, the notice must include a brief description of the business desired to be brought before the meeting, the reasons for conducting such business at the meeting, and any material interest of such stockholder (and the beneficial owner) in the proposal. The proposal must be a proper subject for stockholder action. In addition, to make a nomination or proposal, the stockholder must be of record at the time the notice is made and must provide certain information regarding itself (and the beneficial owner), including the name and address, as they appear on Larimar’s books, of the stockholder proposing such business, the number of shares of Larimar’s capital stock which are, directly or indirectly, owned beneficially or of record by the stockholder proposing such business or its affiliates or associates (as defined in Rule 12b-2 promulgated under the Exchange Act) and certain additional information.
In addition, any stockholder proposal intended to be included in the proxy statement for our next annual stockholder meeting must also satisfy the SEC regulations under Rule 14a-8 of the Exchange Act, and have been received not later than December 30, 2020. Under Rule 14a-8, Larimar is not required to include stockholder proposals in Company-sponsored proxy materials.
Stockholders intending to present a proposal or nominate a director for election at our 2021 Annual Meeting of Stockholders without having the proxy materials unless this condition is satisfied.proposal or nomination included in our Proxy Statement must comply with the requirements set forth in our Bylaws. Our Bylaws require, among other things, that the Secretary of the Company receive the proposal or nomination no earlier than the close of business on the 120th day, and no later than the close of business on the 90th day, prior to the first anniversary of the preceding year’s Annual Meeting. Accordingly, any noticefor our 2022 Annual Meeting of stockholder proposals received after this date will be considered untimely. IfStockholders, our Secretary must receive the proposal or nomination no earlier than January 12, 2022 and no later than the close of business on February 11, 2022. However, if we change the date of the annual meeting is moved2022 Annual Meeting of Stockholders by more than 30 days frombefore or 60 days after the date contemplated at the timeanniversary of the previousthis year’s proxy statement, then noticeAnnual Meeting, stockholder proposals must be received withinno later than the close of business on the later of the 90th day prior to the scheduled date of the meeting and the tenth day following the day on which public notice of the meeting was first made. Proposals must contain the information required under our Bylaws, a reasonable time before we begincopy of which is available upon request to print and send proxy materials.our Secretary. If that happens, Larimar will publicly announce the deadline for submitting a proposal in a press release or in a document filed with the SEC. Nothing in this paragraph shall be deemed to require Larimar to include in its proxy statement and proxy card for such meeting any stockholder proposal which does not meet the applicable deadlines or comply with the requirements of SEC Rule 14a-4, we may exercise discretionary voting authority under proxies we solicit to vote, in accordance with our best judgment, on any such proposal. STOCKHOLDER COMMUNICATIONS TO THE BOARD Stockholders and other interested parties may communicate with the SEC in effectBoard by writing to the Secretary, Larimar Therapeutics, Inc., Three Bala Plaza East, Suite 506, Bala Cynwyd, PA 19004. Communications intended for a specific director or directors should be addressed to their attention to the Secretary at the time. Any such proposal will be subjectaddress provided above. Communications received from stockholders are forwarded directly to Rule 14a-8Board members as part of the Exchange Act.materials mailed in advance of the next scheduled Board meeting following receipt of the communications. The Board has authorized the Secretary, in his or her discretion, to forward communications on a more expedited basis if circumstances warrant or to exclude a communication if it is illegal, unduly hostile or threatening, or similarly inappropriate. Advertisements, solicitations for periodical or other subscriptions, and other similar communications generally will not be forwarded to the directors. Notice of Annual Meeting of Stockholders and 2021 Proxy Statement | 34
| OTHER MATTERS THAT MAY COME BEFORE THE SPECIAL MEETINGINFORMATION (continued) |
As
HOUSEHOLDING Stockholders who share a single address may receive only one copy of this proxy statement and Annual Report, unless we have received contrary instructions from any stockholder at that address. This practice, known as “householding,” is designed to reduce our printing and postage costs and the environmental impact of the dateAnnual Meeting. Stockholders who participate in householding will continue to receive separate proxy cards if they received a paper copy of this Proxy Statement, our Board is not aware of any matters, other than those described in this Proxy Statement, which may be presented for consideration at the Special Meeting. Should any other matters requiring a vote of the stockholders come before the Special Meeting, or any adjournment or postponement thereof, the persons namedproxy materials in the accompanyingmail. If your household received only a single set of our proxy card will have the discretionary authority to vote with respect to such matters in accordance with their best judgment. BY ORDER OF THE BOARD OF DIRECTORS
Carole Ben-Maimon
Presidentmaterials and Chief Executive Officer
Bala Cynwyd, Pennsylvania
August 19, 2020
Appendix A
LARIMAR THERAPEUTICS, INC.
2020 EQUITY INCENTIVE PLAN
Section 1.Purpose; Definitions. The purposes of the Larimar Therapeutics, Inc. 2020 Equity Incentive Plan (as amended from time to time, the “Plan”) are to: (a) enable Larimar Therapeutics, Inc. (the “Company”) and its affiliated companies to recruit and retain highly qualified employees, directors and consultants; (b) provide those employees, directors and consultants with an incentive for productivity; and (c) provide those employees, directors and consultants with an opportunity to share in the growth and value of the Company.
For purposes of the Plan, the following terms will have the meanings defined below, unless the context clearly requires a different meaning:
(a) “Affiliate” means, with respect to a Person, a Person that directly or indirectly controls, is controlled by, or is under common control with such Person.
(b) “Applicable Law” means the legal requirements relating to the administration of and issuance of securities under stock incentive plans, including, without limitation, the requirements of state corporations law, federal, state and foreign securities law, federal, state and foreign tax law, and the requirements of any stock exchange or quotation system upon which the Shares may then be listed or quoted.
(c) “Approval Date” has the meaning defined below in Section 18.
(d) “Award” means an award of Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units or Cash or Other Stock Based Awards made under this Plan.
(e) “Award Agreement” means, with respect to any particular Award, the written document that sets forth the terms of that particular Award.
(f) “Board” means the Board of Directors of the Company, as constituted from time to time.
(g) “Cash or Other Stock Based Award” means an award that is granted under Section 10.
(h) “Cause” means (i) Participant’s refusal to comply with any lawful directive or policy of the Company which refusal is not cured by the Participant within ten (10) days of such written notice from the Company; (ii) the Company’s determination that Participant has committed any act of dishonesty, embezzlement, unauthorized use or disclosure of confidential information or other intellectual property or trade secrets, common law fraud or other fraud against the Company or any Subsidiary or Affiliate; (iii) a material breach by the Participant of any written agreement with or any fiduciary duty owed to any Company or any Subsidiary or Affiliate; (iv) Participant’s conviction (or the entry of a plea of a nolo contendere or equivalent plea) of a felony or any misdemeanor involving material dishonesty or moral turpitude; or (v) Participant’s habitual or repeated misuse of, or habitual or repeated performance of Participant’s duties under the influence of, alcohol, illegally obtained prescription controlled substances or non-prescription controlled substances. Notwithstanding the foregoing, if a Participant and the Company (or any of its Affiliates) have entered into an employment agreement, consulting agreement or other similar agreement that specifically defines “cause,” then with respect to such Participant, “Cause” shall have the meaning defined in such other agreement.
(i) “Change in Control” shall mean the occurrence of any of the following events: (i) any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes a “beneficial owner” (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 50% or more of the total power to vote for the election of directors of the Company; (ii) during any twelve month period, individuals who at the beginning of such period constitute the Board and any new director (other than a director designated by a person who has entered into an agreement with the Company to effect a transaction described in Section 1(i)(i), Section 1(i)(iii), Section 1(i)(iv) or Section 1(i)(v) hereof) whose election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least a majority of the directors then still in office who either were directors at the beginning of the period of whose election or nomination for election was previously approved, cease for any reason to constitute a majority thereof; (iii) the merger or consolidation of the Company with another corporation where the stockholders of the Company, immediately prior to the merger or consolidation, will not beneficially own, immediately after the merger or consolidation, shares entitling such stockholders to 50% or more of all votes to which all stockholders of the surviving corporationyou would be entitled in the election of directors (without consideration of the rights of any class of stock to elect directors bylike a separate class vote); (iv) the sale or other disposition of all or substantially all of the assets of the Company; (v) a liquidation or dissolution of the Company; or (vi) such other event deemed to constitute a “Change in Control” by the Board.
Notwithstanding anything in the Plan or an Award Agreement to the contrary, to the extent necessary to comply with Section 409A of the Code, no event that, but for the application of this paragraph, would be a Change in Control as defined in the Plan or the Award Agreement, as applicable, shall be a Change in Control unless such event is also a “change in control event” as defined in Section 409A of the Code.
(j) “Code” means the Internal Revenue Code of 1986, as amended from time to time, and any successor thereto.
(k) “Committee” means the committee designated by the Board to administer the Plan under Section 2. To the extent required under Applicable Law, the Committee shall have at least two members and each member of the Committee shall be a Non-Employee Director.
(l) “Director” means a member of the Board.
(m) “Disability” means a condition rendering a Participant Disabled.
(n) “Disabled” will have the same meaning as set forth in Section 22(e)(3) of the Code.
(o) “Effective Date” has the meaning defined below in Section 18.
(p) “Exchange Act” means the Securities Exchange Act of 1934, as amended.
(q) “Fair Market Value” means, as of any date, the value of a Share determined as follows: (i) if the Shares are listed on any established stock exchange or a national market system, including, without limitation, the Nasdaq Global Market, the Fair Market Value of a Share will be the closing sales price for such stock as quoted on that system or exchange (or the system or exchange with the greatest volume of trading in Shares) at the close of regular hours trading on the day of determination; (ii) if the Shares are regularly quoted by recognized securities dealers but selling prices are not reported, the Fair Market Value will be the mean between the high bid and low asked prices for Shares at the close of regular hours trading on the day of determination; or (iii) if Shares are not traded as set forth above, the Fair Market Value will be determined in good faith by the Committee taking into consideration such factors as the Committee considers appropriate, such determination by the Committee to be final, conclusive and binding. Notwithstanding the foregoing, in connection with a Change in Control, Fair Market Value shall be determined in good faith by the Committee, such determination by the Committee to be final conclusive and binding.
(r) “Incentive Stock Option” means any Option intended to be an “Incentive Stock Option” within the meaning of Section 422 of the Code.
(s) “Non-Employee Director” will have the meaning set forth in Rule 16b-3(b)(3)(i) promulgated by the Securities and Exchange Commission under the Exchange Act, or any successor definition adopted by the Securities and Exchange Commission.
(t) “Non-Qualified Stock Option” means any Option that is not an Incentive Stock Option.
(u) “Option” means any option to purchase Shares (including an option to purchase Restricted Stock, if the Committee so determines) granted pursuant to Section 5 hereof.
(v) “Parent” means, in respect of the Company, a “parent corporation” as defined in Section 424(e) of the Code.
(w) “Participant” means an employee, consultant, Director, or other service provider of or to the Company or any of its respective Affiliates to whom an Award is granted.
(x) “Person” means an individual, partnership, corporation, limited liability company, trust, joint venture, unincorporated association, or other entity or association.
(y) “Restricted Stock” means Shares that are subject to restrictions pursuant to Section 8 hereof.
(z) “Restricted Stock Unit” means a right granted under and subject to restrictions pursuant to Section 9 hereof.
(aa) “Shares” means shares of the Company’s common stock, par value $.001, subject to substitution or adjustment as provided in Section 3(d) hereof.
(bb) “Stock Appreciation Right” means a right granted under and subject to Section 6 hereof.
(cc) “Subsidiary” means, in respect of the Company, a subsidiary company as defined in Sections 424(f) and (g) of the Code.
Section 2.Administration. The Plan shall be administered by the Committee; provided that, notwithstanding anything to the contrary herein, in its sole discretion, the Board may at any time and from time to time exercise any and all rights and duties of the Committee under the Plan except with respect to matters which under Applicable Law are required to be determined in the sole discretion of the Committee. Any action of the Committee in administering the Plan shall be final, conclusive and binding on all persons, including the Company, its Subsidiaries, Affiliates, their respective employees, the Participants, persons claiming rights from or through Participants and stockholders of the Company.
The Committee will have full authority to grant Awards under this Plan and determine the terms of such Awards. Such authority will include the right to:
(a) select the individuals to whom Awards are granted (consistent with the eligibility conditions set forth in Section 4);
(b) determine the type of Award to be granted;
(c) determine the number of Shares, if any, to be covered by each Award;
(d) establish the other terms and conditions of each Award;
(e) approve forms of agreements (including Award Agreements) for use under the Plan; and
(f) modify or amend each Award, subject to the Participant’s consent if such modification or amendment would materially impair such Participant’s rights.
The Committee will have the authority to adopt, alter and repeal such administrative rules, guidelines and practices governing the Plan as it, from time to time, deems advisable; to interpret the terms and provisions of the Plan and any Award issued under the Plan (and any Award Agreement); and to otherwise take any action that may be necessary or desirable to facilitate the administration of the Plan. The Committee may correct any defect, supply any omission or reconcile any inconsistency in the Plan or in any Award Agreement in the manner and to the extent it deems necessary to carry out the intent of the Plan.
To the extent permitted by Applicable Law, the Committee may delegate to one or more officers of the Company the authority to grant Awards to Participants who are not subject to the requirements of Section 16 of the Exchange Act and the rules and regulations thereunder. The Committee may revoke any such allocation or delegation at any time for any reason with or without prior notice.
No Director will be liable for any good faith determination, act or omission in connection with the Plan or any Award.
| Section | 3. Shares Subject to the Plan.
|
(a) Shares Subject to the Plan. Subject to adjustment as provided in Section 3(d) of the Plan, the maximum number of Shares that may be issued in respect of Awards under the Plan is the sum of: (i) 1,700,000 Shares and (ii) an annual increase on January 1, 2021 and each anniversary of such date thereafter prior to the termination of the Plan, equal to the lesser of (A) 4% of the Shares issued and outstanding on the last day of the immediately preceding fiscal year and (B) such smaller number of Shares as determined by the Board (collectively, the “Plan Limit”). Subject to adjustment as provided in Section 3(d) of the Plan, the maximum aggregate number of Shares that may be issued under the Plan in respect of Incentive Stock Options is 8,000,000. Any Shares issued hereunder may consist, in whole or in part, of authorized and unissued Shares or treasury shares. Any Shares issued by the Company through the assumption or substitution of outstanding grants in connection with the acquisition of another entity shall not reduce the maximum number of Shares available for delivery under the Plan.
(b) Effect of the Expiration or Termination of Awards. If and to the extent that an Option or a Stock Appreciation Right expires, terminates or is canceled or forfeited for any reason without having been exercised in full, the Shares associated with that Award will again become available for grant under the Plan. Similarly, if and to the extent an Award of Restricted Stock or Restricted Stock Units is canceled or forfeited for any reason, the Shares subject to that Award will again become available for grant under the Plan. In addition, if any award granted under the Zafgen Inc. 2014 Stock Option and Incentive Plan, as amended, or the Zafgen Inc. 2006 Stock Option Plan, as amended (the “Prior Plans”) expires, terminates, is canceled or is forfeited for any reason after the Approval Date, the Shares subject to that award will be added to the Plan Limit and become available for issuance hereunder.
(c) Shares Withheld in Satisfaction of Taxes or Exercise Price. Shares withheld in settlement of a tax withholding obligation associated with an Award , or in satisfaction of the exercise price payable upon exercise of an Option, will again become available for grant under the Plan. Similarly, Shares withheld following the Approval Date in settlement of a tax withholding obligation associated with an award granted under a Prior Plan or in satisfaction of the exercise price payable upon exercise of an option granted under a Prior Plan, will be added to the Plan Limit and become available for issuance hereunder.
(d) Other Adjustment. In the event of any corporate event or transaction such as a merger, consolidation, reorganization, recapitalization, stock split, reverse stock split, split up, spin-off, combination of shares, exchange of shares, stock dividend, dividend in kind, or other like change in capital structure (other than
ordinary cash dividends) to stockholders of the Company, or other similar corporate event or transaction affecting the Shares, the Committee, to prevent dilution or enlargement of Participants’ rights under the Plan, shall, in such manner as it deems equitable, substitute or adjust, in its sole discretion, the number and kind of shares that may be issued under the Plan or under any outstanding Awards, the number and kind of shares subject to outstanding Awards, the exercise price, grant price or purchase price applicable to outstanding Awards, and/or any other affected terms and conditions of this Plan or outstanding Awards.
(e) Change in Control. Notwithstanding anything to the contrary set forth in the Plan, upon or in anticipation of any Change in Control, the Committee may, in its sole and absolute discretion and without the need for the consent of any Participant, take one or more of the following actions contingent upon the occurrence of that Change in Control:
(i) cause any or all outstanding Awards to become vested and immediately exercisable (as applicable), in whole or in part;
(ii) cause any outstanding Option or Stock Appreciation Right to become fully vested and immediately exercisable for a reasonable period in advance of the Change in Control and, to the extent not exercised prior to that Change in Control, cancel that Option or Stock Appreciation Right upon closing of the Change in Control;
(iii) cancel any unvested Award or unvested portion thereof, with or without consideration;
(iv) cancel any Award in exchange for a substitute award;
(v) redeem any Restricted Stock or Restricted Stock Unit for cash and/or other substitute consideration with value equal to the Fair Market Value of an unrestricted Share on the date of the Change in Control;
(vi) cancel any Option or Stock Appreciation Right in exchange for cash and/or other substitute consideration with a value equal to: (A) the number of Shares subject to that Option or Stock Appreciation Right, multiplied by (B) the difference, if any, between the Fair Market Value on the date of the Change in Control and the exercise price of that Option or the base price of the Stock Appreciation Right; provided, that if the Fair Market Value on the date of the Change in Control does not exceed the exercise price of any such Option or the base price of any such Stock Appreciation Right, the Committee may cancel that Option or Stock Appreciation Right without any payment of consideration therefor; and/or
(vii) take such other action as the Committee determines to be appropriate under the circumstances.
In the discretion of the Committee, any cash or substitute consideration payable upon cancellation of an Award may be subjected to (i) vesting terms substantially identical to those that applied to the cancelled Award immediately prior to the Change in Control, or (ii) earn-out, escrow, holdback or similar arrangements, to the extent such arrangements are applicable to any consideration paid to stockholders in connection with the Change in Control.
Notwithstanding any provision of this Section 3(e), in the case of any Award subject to Section 409A of the Code, the Committee shall only be permitted to take actions under this Section 3(e) to the extent that such actions would be consistent with the intended treatment of such Award under Section 409A of the Code.
(f) Foreign Holders. Notwithstanding any provision of the Plan to the contrary, in order to comply with the laws in countries other than the United States in which the Company and its Subsidiaries operate or have employees, directors and consultants, or in order to comply with the requirements of any foreign securities exchange or other Applicable Law, the Committee, in its sole discretion, shall have the power and authority to: (i) modify the terms and conditions of any Award granted to employees, directors and consultants outside the
United States to comply with Applicable Law (including, without limitation, applicable foreign laws or listing requirements of any foreign securities exchange); (ii) establish subplans and modify exercise procedures and other terms and procedures, to the extent such actions may be necessary or advisable; provided, however, that no such subplans and/or modifications shall increase the share limitations contained in Section 3(a); and (iii) take any action, before or after an Award is made, that it deems advisable to obtain approval or comply with any necessary local governmental regulatory exemptions or approvals or listing requirements of any foreign securities exchange.
Section 4.Eligibility. Employees, Directors, consultants, and other individuals who provide services to the Company or its Affiliates are eligible to be granted Awards under the Plan; provided, however, that only employees of the Company, any Parent or a Subsidiary are eligible to be granted Incentive Stock Options.
Section 5.Options. Options granted under the Plan may be of two types: (i) Incentive Stock Options or (ii) Non-Qualified Stock Options. The Award Agreement shall state whether such grant is an Incentive Stock Option or a Non-Qualified Stock Option.
The Award Agreement evidencing any Option will incorporate the following terms and conditions and will contain such additional terms and conditions, not inconsistent with the terms of the Plan, as the Committee deems appropriate in its sole and absolute discretion:
(a) Option Price. The exercise price per Share under an Option will be determined by the Committee and will not be less than 100% of the Fair Market Value on the date of the grant. However, any Incentive Stock Option granted to any Participant who, at the time the Option is granted, owns, either directly and/or within the meaning of the attribution rules contained in Section 424(d) of the Code, stock possessing more than 10% of the total combined voting power of all classes of stock of the Company, will have an exercise price per Share of not less than 110% of Fair Market Value on the date of the grant.
(b) Option Term. The term of each Option will be fixed by the Committee, but no Option will be exercisable more than 10 years after the date the Option is granted. However, any Incentive Stock Option granted to any Participant who, at the time such Option is granted, owns, either directly and/or within the meaning of the attribution rules contained in Section 424(d) of the Code, stock possessing more than 10% of the total combined voting power of all classes of stock of the Company, may not have a term of more than 5 years. No Option may be exercised by any Person after expiration of the term of the Option.
(c) Exercisability. Options will vest and be exercisable at such time or times and subject to such terms and conditions as determined by the Committee. Such terms and conditions may include the continued employment or service of the Participant, the attainment of specified individual or corporate performance goals, or such other factors as the Committee may determine in its sole discretion (the “Vesting Conditions”). The Committee may provide in the terms of an Award Agreement that the Participant may exercise the unvested portion of an Option in whole or in part in exchange for shares of Restricted Stock subject to the same vesting terms as the portion of the Option so exercised. Restricted Stock acquired upon the exercise of an unvested Option shall be subject to such additional terms and conditions as determined by the Committee.
(d) Method of Exercise. Subject to the terms of the applicable Award Agreement, the exercisability provisions of Section 5(c) and the termination provisions of Section 7, Options may be exercised in whole or in part from time to time during their term by the delivery of written notice to the Company specifying the number of Shares to be purchased. Such notice will be accompanied by payment in full of the purchase price and any taxes required to be withheld in connection with such exercise, either by certified or bank check, or such other means as the Committee may accept. The Committee may, in its sole discretion, permit payment of the exercise price of an Option by means of a “net settlement,” whereby the Option exercise price will not be due in cash and where the number of Shares issued upon such exercise will be equal to: (A) the product of (i) the number of Shares as to which the Option is then being exercised, and (ii) the excess, if any, of (a) the then current Fair Market Value over (b) the Option exercise price, divided by (B) the then current Fair Market Value.
An Option will not confer upon the Participant any of the rights or privileges of a stockholder in the Company unless and until the Participant exercises the Option in accordance with the paragraph above and is issued Shares pursuant to such exercise.
(e) Incentive Stock Option Limitations. In the case of an Incentive Stock Option, the aggregate Fair Market Value (determined as of the time of grant) of the Shares with respect to which Incentive Stock Options are exercisable for the first time by the Participant during any calendar year under the Plan and/or any other plan of the Company, its Parent or any Subsidiary will not exceed $100,000. For purposes of applying the foregoing limitation, Incentive Stock Options will be taken into account in the order granted. To the extent any Option does not meet such limitation, that Option will be treated for all purposes as a Non-Qualified Stock Option.
(f) Termination of Service. Unless otherwise specified in the applicable Award Agreement or as otherwise provided by the Committee at or after the time of grant, Options will be subject to the terms of Section 7 with respect to exercise upon or following termination of employment or other service.
Section 6.Stock Appreciation Right.Subject to the other terms of the Plan, the Committee may grant Stock Appreciation Rights to eligible individuals. Each Stock Appreciation Right shall represent the right to receive, upon exercise, an amount equal to the number of Shares subject to the Award that is being exercised multiplied by the excess of (i) the Fair Market Value on the date the Award is exercised, over (ii) the base price specified in the applicable Award Agreement. Distributions may be made in cash, Shares, or a combination of both, at the discretion of the Committee. The Award Agreement evidencing each Stock Appreciation Right shall indicate the base price, the term and the Vesting Conditions for such Award. A Stock Appreciation Right base price may never be less than the Fair Market Value of the underlying common stock of the Company on the date of grant of such Stock Appreciation Right. The term of each Stock Appreciation Right will be fixed by the Committee, but no Stock Appreciation Right will be exercisable more than 10 years after the date the Stock Appreciation Right is granted. Subject to the terms and conditions of the applicable Award Agreement, Stock Appreciation Rights may be exercised in whole or in part from time to time during their term by the delivery of written notice to the Company specifying the portion of the Award to be exercised. Unless otherwise specified in the applicable Award Agreement or as otherwise provided by the Committee at or after the time of grant, Stock Appreciation Rights will be subject to the terms of Section 7 with respect to exercise upon or following termination of employment or other service.
Section 7.Terminationof Service. Unless otherwise specified with respect to a particular Option or Stock Appreciation Right in the applicable Award Agreement or otherwise determined by the Committee, any portion of an Option or Stock Appreciation Right that is not exercisable upon termination of service will expire immediately and automatically upon such termination and any portion of an Option or Stock Appreciation Right that is exercisable upon termination of service will expire on the date it ceases to be exercisable in accordance with this Section 7.
(a) Termination by Reason of Death. If a Participant’s service with the Company or any Affiliate terminates by reason of death, any Option or Stock Appreciation Right held by such Participant may thereafter be exercised, to the extent it was exercisable at the time of his or her death or on such accelerated basis as the Committee may determine at or after grant, by the legal representative of the estate or by the legatee of the Participant, for a period expiring (i) at such time as may be specified by the Committee at or after grant, or (ii) if not specified by the Committee, then 12 months from the date of death, or (iii) if sooner than the applicable period specified under (i) or (ii) above, upon the expiration of the stated term of such Option or Stock Appreciation Right.
(b) Termination by Reason of Disability. If a Participant’s service with the Company or any Affiliate terminates by reason of Disability, any Option or Stock Appreciation Right held by such Participant may thereafter be exercised by the Participant or his or her personal representative, to the extent it was exercisable at the time of termination, or on such accelerated basis as the Committee may determine at or after grant, for a
period expiring (i) at such time as may be specified by the Committee at or after grant, or (ii) if not specified by the Committee, then 12 months from the date of termination of service, or (iii) if sooner than the applicable period specified under (i) or (ii) above, upon the expiration of the stated term of such Option or Stock Appreciation Right.
(c) Cause. If a Participant’s service with the Company or any Affiliate is terminated for Causecopy, or if your household received multiple copies of our proxy materials and you want only a Participant resigns at a time that there was a Cause basis for such Participant’s termination: (i) any Option or Stock Appreciation Right, or portion thereof, not already exercised will be immediately and automatically forfeited as of the date of such termination, and (ii) any Shares for which the Company has not yet delivered share certificates will be immediately and automatically forfeited and the Company will refund to the Participant the Option exercise price paid for such Shares, if any.
(d) Other Termination. If a Participant’s service with the Company or any Affiliate terminates for any reason other than death, Disability or Cause, any Option or Stock Appreciation Right held by such Participant may thereafter be exercised by the Participant, to the extent it was exercisable at the time of such termination, or on such accelerated basis as the Committee may determine at or after grant, for a period expiring (i) at such time as may be specified by the Committee at or after grant, or (ii) if not specified by the Committee, then 90 days from the date of termination of service, or (iii) if sooner than the applicable period specified under (i) or (ii) above, upon the expiration of the stated term of such Option or Stock Appreciation Right.
| Section | 8. Restricted Stock.
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(a) Issuance. Restricted Stock may be issued either alone or in conjunction with other Awards. The Committee will determine the time or times within which Restricted Stock may be subject to forfeiture, and all other conditions of such Awards. The purchase price for Restricted Stock may, but need not, be zero.
(b) Certificates. Upon the Award of Restricted Stock, the Committee may direct that a certificate or certificates representing the number of Shares subject to such Award be issued to the Participant or placed in a restricted stock account (including an electronic account) with the transfer agent and in either case designating the Participant as the registered owner. The certificate(s), if any, representing such shares shall be physically or electronically legended, as applicable, as to sale, transfer, assignment, pledge or other encumbrances during the Restriction Period. If physical certificates are issued, they will be held in escrow by the Company or its designee during the Restriction Period. As a condition to any Award of Restricted Stock, the Participant may be required to deliver to the Company a share power, endorsed in blank, relating to the Shares covered by such Award.
(c) Restrictions and Conditions. The Award Agreement evidencing the grant of any Restricted Stock will incorporate the following terms and conditions and such additional terms and conditions, not inconsistent with the terms of the Plan, as the Committee deems appropriate in its sole and absolute discretion:
(i) During a period commencing with the date of an Award of Restricted Stock and ending at such time or times as specified by the Committee (the “Restriction Period”), the Participant will not be permitted to sell, transfer, pledge, assign or otherwise encumber Restricted Stock awarded under the Plan. The Committee may condition the lapse of restrictions on Restricted Stock upon one or more Vesting Conditions.
(ii) While any Share of Restricted Stock remains subject to restriction, the Participant will have, with respect to the Restricted Stock, the right to vote the Shares. If any cash distributions or dividends are payable with respect to the Restricted Stock, the Committee, in its sole discretion, may require the cash distributions or dividends to be subjected to the same Restriction Period as is applicable to the Restricted Stock with respect to which such amounts are paid, or, if the Committee so determines, reinvested in additional Restricted Stock to the extent Shares are available under Section 3(a) of the Plan. A Participant shall not be entitled to interest with respect to any dividends or distributions subjected to the Restriction Period. Any distributions or dividends paid in the form of securities with respect to Restricted Stock will be subject to the same terms and conditions as the Restricted Stock with respect to which they were paid, including, without limitation, the same Restriction Period.
(iii) Subject to the provisions of the applicable Award Agreement or as otherwise determined by the Committee, if a Participant’s service with the Company and its Affiliates terminates prior to the expiration of the applicable Restriction Period, the Participant’s Restricted Stock that then remains subject to forfeiture will then be forfeited automatically.
Section 9.Restricted Stock Units. Subject to the other terms of the Plan, the Committee may grant Restricted Stock Units to eligible individuals and may impose one or more Vesting Conditions on such units. Each Restricted Stock Unit will represent a right to receive from the Company, upon fulfillment of any applicable conditions, an amount equal to the Fair Market Value (at the time of the distribution). Distributions may be made in cash, Shares, or a combination of both, at the discretion of the Committee. The Award Agreement evidencing a Restricted Stock Unit shall set forth the Vesting Conditions and time and form of payment with respect to such Award. The Participant shall not have any stockholder rights with respect to the Shares subject to a Restricted Stock Unit Award until that Award vests and the Shares are actually issued thereunder; provided, however, that an Award Agreement may provide for the inclusion of dividend equivalent payments or unit credits with respect to the Award in the discretion of the Committee. Subject to the provisions of the applicable Award Agreement or as otherwise determined by the Committee, if a Participant’s service with the Company terminates prior to the Restricted Stock Unit Award vesting in full, any portion of the Participant’s Restricted Stock Units that then remain subject to forfeiture will then be forfeited automatically.
Section 10.Cash or Other Stock Based Awards. Subject to the other terms of the Plan, the Committee may grant Cash or Other Stock Based Awards (including Awards to receive unrestricted Shares or immediate cash payments) to eligible individuals. The Award Agreement evidencing a Cash or Other Stock Based Award shall set forth the terms and conditions of such Cash or Other Stock Based Award, including, as applicable, the term, any exercise or purchase price, performance goals, Vesting Conditions and other terms and conditions. Payment in respect of a Cash or Other Stock Based Award may be made in cash, Shares, or a combination of cash and Shares, as determined by the Committee.
Section 11.Amendments and Termination. Subject to any stockholder approval that may be required under Applicable Law, the Plan may be amended or terminated at any time or from time to time by the Board.
Section 12.Prohibition on Repricing Programs. Neither the Committee nor the Board shall (i) implement any cancellation/re-grant program pursuant to which outstanding Options or Stock Appreciation Rights under the Plan are cancelled and new Options or Stock Appreciation Rights are granted in replacement with a lower exercise or base price per share, (ii) cancel outstanding Options or Stock Appreciation Rights under the Plan with exercise prices or base prices per share in excess of the then current Fair Market Value for consideration payable in equity securities of the Company or (iii) otherwise directly reduce the exercise price or base price in effect for outstanding Options or Stock Appreciation Rights under the Plan, without in each such instance obtaining stockholder approval.
| Section | 13. Conditions Upon Grant of Awards and Issuance of Shares.
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(a) The implementation of the Plan, the grant of any Award and the issuance of Shares in connection with the issuance, exercise or vesting of any Award made under the Plan shall be subject to the Company’s procurement of all approvals and permits required by regulatory authorities having jurisdiction over the Plan, the Awards made under the Plan and the Shares issuable pursuant to those Awards.
(b) No Shares or other assets shall be issued or delivered under the Plan unless and until there shall have been compliance with all applicable requirements of Applicable Law.
Section 14.Limits on Transferability; Beneficiaries. No Award or other right or interest of a Participant under the Plan shall be pledged, encumbered, or hypothecated to, or in favor of, or subject to any lien, obligation, or liability of such Participant to, any party, other than the Company, any Subsidiary or Affiliate, or
assigned or transferred by such Participant other than by will or the laws of descent and distribution, and such Awards and rights shall be exercisable during the lifetime of the Participant only by the Participant or his or her guardian or legal representative. Notwithstanding the foregoing, the Committee may, in its discretion, provide that Awards or other rights or interests of a Participant granted pursuant to the Plan (other than an Incentive Stock Option) be transferable, without consideration, to immediate family members (i.e., children, grandchildren or spouse), to trusts for the benefit of such immediate family members and to partnerships in which such family members are the only partners. The Committee may attach to such transferability feature such terms and conditions as it deems advisable. In addition, a Participant may, in the manner established by the Committee, designate a beneficiary (which may be a person or a trust) to exercise the rights of the Participant, and to receive any distribution, with respect to any Award upon the death of the Participant. A beneficiary, guardian, legal representative or other person claiming any rights under the Plan from or through any Participant shall be subject to all terms and conditions of the Plan and any Award Agreement applicable to such Participant, except as otherwise determined by the Committee, and to any additional restrictions deemed necessary or appropriate by the Committee.
Section 15.Withholding of Taxes. No later than the date as of which an amount first becomes includible in the gross income of the Participant for federal income tax purposes with respect to any Award under the Plan, the Participant will pay to the Company, or make arrangements satisfactory to the Company regarding the payment of, any federal, state or local taxes of any kind required by law to be withheld with respect to such amount. To the extent authorized by the Committee, the required tax withholding may be satisfied by the withholding of Shares subject to the Award based on the Fair Market Value on the date of withholding, but in any case not in excess of the amount determined based on the maximum statutory tax rate in the applicable jurisdiction. The obligations of the Company under the Plan will be conditioned on such payment or arrangements and the Company will have the right to deduct any such taxes from any payment of any kind otherwise due to the Participant.
| Section | 16. Liability of Company.
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(a) Inability to Obtain Authority. If the Company cannot, by the exercise of commercially reasonable efforts, obtain authority from any regulatory body having jurisdiction for the sale of any Shares under this Plan, and such authority is deemed by the Company’s counsel to be necessary to the lawful issuance of those Shares, the Company will be relieved of any liability for failing to issue or sell those Shares.
(b) Rights of Participants and Beneficiaries. The Company will pay all amounts payable under this Plan only to the applicable Participant, or beneficiaries entitled thereto pursuant to this Plan. The Company will not be liable for the debts, contracts, or engagements of any Participant or his or her beneficiaries, and rights to cash payments under this Plan may not be taken in execution by attachment or garnishment, or by any other legal or equitable proceeding while in the hands of the Company.
| Section | 17. General Provisions.
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(a) The Committee may require each Participant to represent to and agree with the Company in writing that the Participant is acquiring securities of the Company for investment purposes and without a view to distribution thereof and as to such other matters as the Committee believes are appropriate.
(b) The Awards shall be subject to the Company’s stock ownership policies, as in effect from time to time.
(c) All certificates for Shares or other securities delivered under the Plan will be subject to such share-transfer orders and other restrictions as the Board may deem advisable under the rules, regulations and other requirements of the Securities Act of 1933, as amended, the Exchange Act, any stock exchange upon which the Shares are then listed, and any other Applicable Law, and the Board may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions.
(d) Nothing contained in the Plan will prevent the Company from adopting other or additional compensation arrangements, subject to stockholder approval if such approval is required.
(e) Neither the adoption of the Plan nor the execution of any document in connection with the Plan will: (i) confer upon any employee or other service provider of the Company or an Affiliate any right to continued employment or engagement with the Company or such Affiliate, or (ii) interfere in any way with the right of the Company or such Affiliate to terminate the employment or engagement of any of its employees or other service providers at any time.
(f) The Awards (whether vested or unvested) shall be subject to rescission, cancellation or recoupment, in whole or in part, under any current or future “clawback” or similar policy of the Company that is applicable to the Participant. Notwithstanding any other provisions in this Plan, any Award which is subject to recovery under any law, government regulation or stock exchange listing requirement, will be subject to such deductions and clawback as may be required to be made pursuant to such law, government regulation or stock exchange listing requirement.
Section 18.Effective Date of Plan. The Plan is effective on July ___, 2020 (the “Effective Date”), the date it was approved by the Board; provided however, that (a) no Shares will be issued hereunder until the date the Plan is approved by the holders of a majority of the voting power of the shares deemed present and entitled to vote at the meeting of stockholders of the Company (the “Approval Date”), and (b) any Award issued prior to such stockholder approval will be conditioned on such stockholder approval.
Section 19.Term of Plan. Unless the Plan shall theretofore have been terminated in accordance with Section 11, the Plan shall terminate on the 10-year anniversary of the Effective Date, and no Awards under the Plan shall thereafter be granted.
Section 20.Invalid Provisions. In the event that any provision of this Plan is found to be invalid or otherwise unenforceable under any Applicable Law, such invalidity or unenforceability will not be construed as rendering any other provisions contained herein as invalid or unenforceable, and all such other provisions will be given full force and effect to the same extent as though the invalid or unenforceable provision was not contained herein.
Section 21.Governing Law. The Plan and all Awards granted hereunder will be governed by and construed in accordance with the laws and judicial decisions of the State of Delaware, without regard to the application of the principles of conflicts of laws.
Section 22.Notices. Any notice to be given to the Company pursuant to the provisions of this Plan must be given in writing and addressed, if to the Company, to its principal executive office to the attention of itssingle copy next year, please notify our Chief Financial Officer (or such other Person as the Company may designate in writing from time to time), and, if to a Participant, toat the address containedprovided below. Stockholders who hold shares in street name may contact their brokerage firm, bank, or other nominee to request information about householding.
AVAILABILITY OF MATERIALS Our 2020 Annual Report, including the financial statements and financial statement schedules, has been filed with the SEC and provides additional information about us, which is incorporated by reference herein. It is available on the internet at www.larimartx.com and is available in paper form (other than exhibits thereto) by first class mail or other equally prompt means to beneficial owners of our common stock, without charge, upon written request to Chief Financial Officer, Larimar Therapeutics, Inc., Three Bala Plaza East, Suite 506, Bala Cynwyd, PA 19004 or at (844) 511-9056. In addition, it is available to beneficial and record holders of our common stock at www.proxyvote.com. Notice of Annual Meeting of Stockholders and 2021 Proxy Statement | 35
C123456789 000000000.000000 ext 000000000.000000 ext 000004 000000000.000000 ext 000000000.000000 ext ENDORSEMENT_LINE______________ SACKPACK_____________ 000000000.000000 ext 000000000.000000 ext MR A SAMPLE DESIGNATION (IF ANY) ADD 1 ADD 2 ADD 3 Your vote matters – here’s how to vote! ADD 4 ADD 5 You may vote online or by phone instead of mailing this card. ADD 6 Online Go to www.envisionreports.com/LRMR or scan the QR code — login details are located in the Company’s personnel files, orshaded bar below. Phone Call toll free 1-800-652-VOTE (8683) within the USA, US territories and Canada Save paper, time and money! Using a black ink pen, mark your votes with an X as shown in this example. Sign up for electronic delivery at such other address as that Participant may hereafter designate in writing toPlease do not write outside the Company. Any such notice will be deemed duly given: if delivered personally or via recognized overnight delivery service, on the date and at the time so delivered; if sent via telecopier or email, on the date and at the time telecopied or emailed with confirmation of delivery; or, if mailed, five (5) days after the date of mailing by registered or certified mail.
| | | | | | | | | | | designated areas. www.envisionreports.com/LRMR 2021 Annual Meeting Proxy Card 1234 5678 9012 345
Your vote matters – here’s how to vote!You may vote online or by phone instead of mailing this card.
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| | | | | 2020 Special Meeting Proxy Card | | |
▼IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE▼
ENVELOPE. A Proposals — The Board of Directors recommend a vote FOR all the nominees listed and FOR Proposals 2 and 3. 1. Election of Class I Directors for a Three-Year Term Expiring in 2024: + | | | | | | | | | | | | | | | | | | | For Against Abstain For Against Abstain 01 - Jonathan Leff 02 - Peter Barrett, Ph.D. For Against Abstain For Against Abstain 2. Advisory Vote to Approve, on an Advisory Basis, the 3. Ratification of Appointment of PricewaterhouseCoopers LLP as Compensation of our Named Executive Officers in 2020 our Independent Registered Public Accounting Firm for the 2021 Fiscal Year B Authorized Signatures — This section must be completed for your vote to count. Please date and sign below.
A Proposals – The Board of Directors recommend a vote FOR Proposal 1. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | For
| | Against
| | Abstain
| | | | | | | | | | | 1. Approve the Larimar Therapeutics, Inc. 2020 Equity Incentive Plan and certain conditional grants thereunder
| | ☐ | | ☐ | | ☐ | | | | | | | | | | |
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2020 Special
The 2021 Annual Meeting of Stockholders of Larimar Therapeutics, Inc. September 29, 2020, 9:00 am Eastern Time
Virtual
The 2020 Special Meeting of StockholdersShareholders of Larimar Therapeutics, Inc. will be held on
Tuesday, September 29, 2020 Wednesday, May 12, 2021 at 9:10:00 am EST,A.M. Eastern time, virtually via the internet at www.meetingcenter.io/202792612.
274820408. To access the virtual meeting, you must have the information that is printed in the shaded bar located on the reverse side of this form. The password for this meeting is – LRMR2020.
— LRMR2021. Important notice regarding the Internet availability of proxy materials for the SpecialAnnual Meeting of Stockholders. The material is available at: www.envisionreports.com/LRMR | | | | |
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| | | Larimar Therapeutics, Inc. | | |
Larimar Therapeutics, Inc. + Notice of 2020 Special2021 Annual Meeting of Stockholders
Proxy Solicited by Board of Directors for SpecialAnnual Meeting – September 29, 2020
— May 12, 2021 Carole Ben-Maimon, M.D. and Michael Celano or anyeither 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 SpecialAnnual Meeting of Stockholders of Larimar Therapeutics, Inc. to be held on September 29, 2020May 12, 2021 or at any postponement or adjournment thereof. Shares represented by this proxy will be voted as instructed by the undersigned. If no such directions are indicated, the Proxies will have authority to vote FOR item 1.
all the nominees listed and FOR Proposals 2 and 3. In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the meeting. (Items to be voted appear on reverse side) C Non-Voting Items Change of Address — Please print new address below. Comments — Please print your comments below.
| | | | | Change of Address – Please print new address below. | | | | Comments – Please print your comments below. | | | | | |
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