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ITUS CORPORATION Anixa Biosciences, Inc.
3150 Almaden Expressway, Suite 250
San Jose, CA 95118
NOTICE OF SPECIALANNUAL MEETING OF STOCKHOLDERS
To be held on March 29, 20189, 2023
This proxy statement is furnished in connection with the solicitation of proxies by the Board of Directors (the “Board”) of ITUS CorporationAnixa Biosciences, Inc. (the “Company”) for use at the Special2023 Annual Meeting of Stockholders of the Company and at all adjournments and postponements thereof (the “Virtual Meeting”). The Virtual Meeting will be held at 10:00 a.m. Pacific time on Thursday, March, 29, 2018, at the Company’s corporate offices at 3150 Almaden Expressway, Suite 250, San Jose, California 95118,9, 2023 on a virtual basis for the following purposes:
1. To consider and vote upon an amendment to Article FOURTH of the Company’s Certificate of Incorporation, as amended (the “Certificate of Incorporation”), to increase the number of authorized shares of common stock, par value $0.01 per share (the “Common Stock”), from 24,000,000 to 48,000,000 (the “Amendment Proposal”);
| 1. | To elect Dr. Amit Kumar, Dr. Arnold Baskies, Emily Gottschalk, and Lewis H. Titterton, Jr. as directors (the “Director Nominees”) to serve on the Company’s Board for a one-year term that expires at the 2024 Annual Meeting of Stockholders, or until their successors are elected and qualified; | |
| 2. | To approve on a non-binding, advisory basis the compensation of our named executive officers; | |
| 3. | To ratify the appointment by the Board of Haskell & White LLP (the “Auditor”) as the Company’s independent registered public accounting firm for the fiscal year ending October 31, 2023; and | |
| 4. | To transact such other business as may properly come before the Virtual Meeting or any adjournment thereof. |
2. To consider and vote upon an amendment to Article FIRST of the Certificate of Incorporation to change the name of the Company from “ITUS Corporation” to “Anixa Biosciences, Inc.,” such name change to occur at such time and date as determined by the Board in its sole discretion (the “Name Change Proposal”);
3. To consider and vote upon the adoption of the “ITUS Corporation 2018 Share Incentive Plan” (the “Incentive Plan Proposal”); and
4. To transact such other business as may properly come before the Meeting or any adjournment thereof.
The Board unanimously recommends a vote “FOR” the approval of each of the Amendment Proposal, Name Change ProposalDirector Nominees, a vote “FOR” the approval on a non-binding, advisory basis of the compensation of our named executive officers, and Incentive Plan Proposal.a vote “FOR” the ratification of the appointment of the Auditor as the Company’s independent registered public accounting firm for the fiscal year ending October 31, 2023.
Stockholders of record of our common stock at the close of business on February 1, 2018January 17, 2023 (the “Record Date”) will be entitled to notice of, and are cordially invited to, attend this Virtual Meeting and to attend any adjournment or postponement thereof. However, to assure your representation at the Virtual Meeting, please vote your proxy via the internet, by telephone, or, if you received a printed form of proxy in the mail, by completing, dating, signing and returning the enclosed proxy. Even if you have previously submitted your proxy, you may choose to vote in person at the Meeting. Whether or not you expect to attend the Virtual Meeting, please read the Proxy Statement and then promptly vote your proxy in order to ensure your representation at the Virtual Meeting.
You may cast your vote by visiting http://www.proxyvote.com. You may also have access to the materials for the Virtual Meeting by visiting the website: http://www.ituscorp.com/www.anixa.com..
Each share of common stock entitles the holder thereof to one vote. A complete list of stockholders of record entitled to vote at this Virtual Meeting will be available for ten days before this Virtual Meeting at the principal executive office of the Company for inspection by stockholders during ordinary business hours for any purpose germane to this Virtual Meeting.
You are urged to review carefully the information contained in the enclosed proxy statement prior to deciding how to vote your shares.
This notice and the attached proxy statement are first being disseminated to stockholders on or about February 12, 2018.January 27, 2023.
| BY ORDER OF THE BOARD OF DIRECTORS, | |
| /s/ Michael J. Catelani |
| Michael J. Catelani | |
| President, Secretary, Chief Operating Officer & | |
| Chief Financial Officer | |
| Anixa Biosciences, Inc. |
IF YOU RETURN YOUR PROXY CARD WITHOUT AN INDICATION OF HOW YOU WISH TO VOTE, YOUR SHARES WILL BE VOTED IN FAVOR OF EACH OF THE PROPOSALS SUBMITTED ATDIRECTOR NOMINEES, THE MEETING.APPROVAL ON A NON-BINDING, ADVISORY BASIS OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS, AND THE RATIFICATION OF THE APPOINTMENT OF THE AUDITOR as the Company’s independent registered public accounting firm FOR THE FISCAL YEAR ENDING OCTOBER 31, 2023.
Important Notice Regarding the Availability of Proxy Materials for the Virtual Meeting to be Held on March 29, 20189, 2023: This Proxy Statement, along with our Annual Report on Form 10-K for the year ended October 31, 2022, is available at: http://www.ituscorp.com/www.anixa.com/.
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TABLE OF CONTENTS
TABLE OF CONTENTS
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| ELECTION OF DIRECTORS |
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| APPROVAL ON AN ADVISORY BASIS OF THE COMPENSATION OF NAMED EXECUTIVE OFFICERS |
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| RATIFICATION OF THE APPOINTMENT OF THE COMPANY’S INDEPENDENT AUDITORS FOR FISCAL 2023 |
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PROXY STATEMENT
ITUS CORPORATIONPROXY STATEMENT
SPECIALAnixa Biosciences, Inc.
ANNUAL MEETING OF STOCKHOLDERS
to be held virtually at 10:00 a.m. Pacific time on Thursday, March 29, 20189, 2023
at 3150 Almaden Expressway, Suite 250, San Jose, California 95118
QUESTIONS AND ANSWERS ABOUT THESE PROXY MATERIALS
Why am I receiving this Proxy Statement?
The Company has made these materials available to you on the Internet or, upon your request, has delivered printed versions of these materials to you by mail, in connection with the Company’s solicitation of proxies for use at the Special2023 Annual Meeting of Stockholders of the Company (the “Virtual Meeting”) to be held on a virtual basis on Thursday, March 9, 2023 at 10:00 a.m. on Thursday, March 29, 2018, at the Company’s corporate offices at 3150 Almaden Expressway, Suite 250, San Jose, California 95118,Pacific time, and at any postponement(s) or adjournment(s) thereof. These materials were first sent or given to stockholders on or about February 12, 2018.January 27, 2023. This proxy statement gives you information on these proposals so that you can make an informed decision.
In this proxy statement, we refer to ITUS CorporationAnixa Biosciences, Inc. as the “Company”, “we”, “us” or “our” or similar terminology.
What is included in these materials?
These materials include this Proxy Statement for the Meeting. include:
| ● | This Proxy Statement for the Virtual Meeting; and | |
| ● | The Company’s Annual Report on Form 10-K for the year ended October 31, 2022. |
If you requested printed versions of these materials by mail, these materials also include the proxy card or voting instruction form for the Virtual Meeting.
Why did I receive a one-page notice in the mail regarding the Internet availability of proxy materials instead of a full set of proxy materials?
Pursuant to rules adopted by the Securities and Exchange Commission (“SEC”), the Company has elected to provide access to its proxy materials via the Internet instead of mailing printed copies. Accordingly, the Company is sending a Notice of Internet Availability of Proxy Materials (the “Internet Availability Notice”) to the Company’s stockholders. Most stockholders will not receive printed copies of the proxy materials unless they request them. Instead, instructions on how to access the proxy materials over the Internet or to request a printed copy may be found with the Internet Availability Notice. All stockholders will have the ability to access the proxy materials on the website referred to in the Internet Availability Notice or request to receive a printed set of the proxy materials. Stockholders may request to receive proxy materials in printed form by telephone, mail, by logging on to http://www.proxyvote.com or electronically by email on an ongoing basis. The Company encourages stockholders to take advantage of the availability of the proxy materials on the Internet to help reduce the environmental impact of our stockholderannual meetings.
How can I get electronic access to the proxy materials?
The Internet Availability Notice will provide you with instructions regarding how to:
· View the Company’s proxy materials for the Meeting on the Internet; and
· Instruct the Company to send future proxy materials to you electronically by email.
| ● | View the Company’s proxy materials for the Virtual Meeting on the Internet; and | |
| ● | Instruct the Company to send future proxy materials to you electronically by email. |
Choosing to receive future proxy materials by email will save the Company the cost of printing and mailing documents to you and will reduce the impact of the Company’s stockholderannual meetings on the environment. If you choose to receive future proxy materials by email, you will receive an email message next year with instructions containing a link to those materials. Your election to receive proxy materials by email will remain in effect until you terminate it.
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Who can vote at the Meeting?annual meeting of stockholders?
Stockholders who owned shares of our common stock, par value $0.01 per share (“Common Stock”), on February 1, 2018January 17, 2023 (the “Record Date”) may attend and vote at the Virtual Meeting. There were 16,631,19130,922,830 shares of Common Stock outstanding on the Record Date. All shares of Common Stock have one vote per share and vote together as a single class. Information about the stockholdings of our directors and executive officers is contained in the section of this Proxy Statement entitled “Beneficial Ownership of Principal Stockholders, Officers and Directors” on page 2023 of this Proxy Statement.
What is the proxy card?
The proxy card enables you to appoint Dr. Amit Kumar, our Chairman President and Chief Executive Officer, and Michael Catelani, our President, Chief Operating Officer and Chief Financial Officer, as your representatives at the Virtual Meeting. By completing and returning the proxy card or voting online as described herein, you are authorizing Dr. Kumar and Mr. Catelani to vote your shares at the Virtual Meeting in accordance with your instructions on the proxy card. This way, your shares will be voted whether or not you attend the Virtual Meeting. Even if you plan to attend the Virtual Meeting, we think that it is a good idea to complete and return your proxy card before the Virtual Meeting date just in case your plans change. If a proposal comes up for vote at the Virtual Meeting that is not on the proxy card, the proxies will vote your shares, under your proxy, according to their best judgment. The proxy card (or voter information form) will also contain your control number. You will need to use the control number appearing on your proxy card to vote prior to or at the Virtual Meeting.
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What am I voting on?
You are being asked to vote:
1. To approve an amendmentelect Dr. Amit Kumar, Dr. Arnold Baskies, Emily Gottschalk, and Lewis H. Titterton, Jr. as directors (the “Director Nominees”) to Article FOURTH ofserve on the Company’s Certificate of Incorporation, as amended (the “Certificate of Incorporation”), to increase the number of authorized shares of Common Stock from 24,000,000 to 48,000,000 (the “Amendment Proposal”);
2. To approve an amendment to Article FIRST of the Certificate of Incorporation to change the name of the Company from “ITUS Corporation” to “Anixa Biosciences, Inc.,” such name change to occur at such time and date as determined by the Board of Directors (the “Board”) in its sole discretion (the “Name Change Proposal”);for a one-year term that expires at the 2024 Annual Meeting of Stockholders, or until their successors are elected and qualified;
2. To approve on a non-binding, advisory basis the compensation of our named executive officers;
3. To adoptratify the “ITUS Corporation 2018 Share Incentive Plan”appointment by the Board of Haskell & White LLP (the “Incentive Plan ProposalAuditor”); as the Company’s independent registered public accounting firm for the fiscal year ending October 31, 2023; and
4. To transact such other business as may properly come before the Virtual Meeting or any adjournment thereof.
How does the Board recommend that I vote?
Our Board unanimously recommends that the stockholders vote “FOR” all of the Amendment Proposal, Name Change ProposalDirector Nominees, “FOR” the approval on a non-binding, advisory basis of the compensation of our named executive officers, and “FOR” the Incentive Plan Proposal.ratification of the appointment of the Auditor as the Company’s independent registered public accounting firm for the fiscal year ending October 31, 2023.
What is the difference between holding shares as a stockholder of record and as a beneficial owner?
Most of our stockholders hold their shares in an account at a brokerage firm, bank or other nominee holder, rather than holding share certificates in their own name. As summarized below, there are some distinctions between shares held of record and those owned beneficially.
Stockholder of Record
If, on the Record Date, your shares were registered directly in your name with our transfer agent, American Stock Transfer & Trust Company, LLC, you are a “stockholder of record” who may vote at the Virtual Meeting, and we are sending these proxy materials directly to you. As the stockholder of record, you have the right to direct the voting of your shares as described below. Whether or not you plan to attend the Virtual Meeting, please complete, date and sign the enclosed proxy card to ensure that your vote is counted.
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Beneficial Owner
If, on the Record Date, your shares were held in an account at a brokerage firm or at a bank or other nominee holder, you are considered the beneficial owner of shares held “in street name,” and these proxy materials are being forwarded to you by or at the direction of your broker or nominee who is considered the stockholder of record for purposes of voting at the Virtual Meeting. As the beneficial owner, you have the right to direct your broker on how to vote your shares and to attend the Meeting. However, sinceVirtual Meeting as described below. Whether or not you are notplan to attend the stockholder of record, you may notVirtual Meeting, please vote these shares in person atprior to the Virtual Meeting unless you receive a valid proxy fromas described below to ensure that your brokerage firm, bank or other nominee holder. To obtain a valid proxy, you must make a special request of your brokerage firm, bank or other nominee holder. If you do not make this request, you can still vote by using the voting instruction card enclosed with this proxy statement; however, you will not be able to vote in person at the Meeting. is counted.
If I am a stockholder of record of the Company’s Common Stock, howHow do I vote?vote my shares?
There are four ways to vote:
1. (1) Via the Internet. You mayUse the internet to vote by going to the internet address listed on your proxy via the Internet by following the instructions provided with thecard or Internet Availability Notice; have your proxy card or Internet Availability Notice in hand as you will be prompted to enter your control number to create and submit an electronic vote. If you vote in this manner, your “proxy,” whose name is listed on the proxy card or Internet Availability Notice, will vote your shares as you instruct on the proxy card or Internet Availability Notice. If you sign and return the proxy card or submit an electronic vote but do not give instructions on how to vote your shares, your shares will be voted as recommended by the Board.
2. (2) Via telephone. Using a touch-tone telephone, you may transmit your voting instructions to the number provided on your proxy card or in the Internet Availability Notice. Have your proxy card or Internet Availability Notice in hand as you will be prompted to enter your control number to create and submit a telephonic vote.
3. (3) In person. If you are a stockholder of record, youYou may vote in person at the Meeting. The Company will give you a ballotVirtual Meeting by following the instructions when you arrive.log-in for the Virtual Meeting. Have your proxy card or Internet Availability Notice in hand as you will be prompted to enter your control number to vote at the Virtual Meeting.
4. (4) By Mail. You may vote by mail. If you requestrequested printed copies of the proxy materials by mail and are a record holder, you may vote by proxy by filling out the proxy card and sending it back in the envelope provided.
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If I am a beneficial owner of shares held in street name, how do I vote?
There are four ways to vote:
1. Via the Internet. You may vote by proxy via the Internet by following the instructions provided by your brokerage firm, bank, broker-dealer or other similar organization that holds your shares.
2. Via telephone. Using a touch-tone telephone, you may transmit your voting instructions to the number provided in the Internet Availability Notice.
3. In person. If you are a beneficial owner of shares held in street name and you wish to vote in person at the Meeting, you must obtain a legal proxy from the brokerage firm, bank, broker-dealer or other similar organization that holds your shares. Please contact that organization for instructions regarding obtaining a legal proxy.
4. By Mail. If you requestrequested printed copies of the proxy materials by mail and are a beneficial holder you may vote by proxy by filling out the vote instruction form and sending it back in the envelope provided by your brokerage firm, bank, broker-dealer or other similar organization that holds your shares.
How do I request a paper copy of the proxy materials?
There are four ways to request a paper copy of proxy materials:
· By mail. You may obtain a paper copy of the proxy materials by sending a written notice to the Company at 3150 Almaden Expressway, Suite 250, San Jose, CA 95118, Attn: Michael Catelani, Secretary.
· By telephone. You may obtain a paper copy of the proxy materials by calling 1(800) 579-1639 or the Company at (408) 708-9808.
· Via the Internet. You may obtain a paper copy of the proxy materials by logging on to http://www.proxyvote.com.
· By Email. You may obtain a paper copy of the proxy materials by email at sendmaterial@proxyvote.com.
| ● | By mail: You may obtain a paper copy of the proxy materials by writing to us at Anixa Biosciences, Inc., 3150 Almaden Expressway, Suite 250, San Jose, CA 95118, Attn: Michael Catelani, Secretary. | |
| ● | By telephone. You may obtain a paper copy of the proxy materials by calling 1 (800)-579-1639 or the Company at (408) 708-9808. | |
| ● | Via the Internet: You may obtain a paper copy of the proxy materials by logging on to http://www.proxyvote.com. | |
| ● | By Email: You may obtain a paper copy of the proxy materials by email at sendmaterial@proxyvote.com. |
Please make your request for a paper copy as instructed above on or before March 15, 2018February 22, 2023 to facilitate timely delivery.
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What does it mean if I receive more than one proxy card?
You may have multiple accounts at the transfer agent and/or with brokerage firms. Please sign and return all proxy cards to ensure that all of your shares are voted.
What if I change my mind after I return my proxy?
You may revoke your proxy and change your vote at any time before the polls close at the Virtual Meeting. You may do this by:
· sending a written notice to Michael Catelani, our corporate Secretary, stating that you would like to revoke your proxy of a particular date;
· signing another proxy card with a later date and returning it before the polls close at the Meeting; or
· attending the Meeting and voting in person.
| ● | sending a written notice to Michael Catelani, our corporate Secretary, stating that you would like to revoke your proxy of a particular date; | |
| ● | signing another proxy card with a later date and returning it before the polls close at the Virtual Meeting; or | |
| ● | voting at the Virtual Meeting. |
Please note, however, that if your shares are held of record by a brokerage firm, bank or other nominee, you mustmay need to instruct your broker, bank or other nominee that you wish to change your vote by following the procedures on the voting form provided to you by the broker, bank or other nominee. If your shares are held in street name, and you wish to attend and vote at the Meeting, you must bring to the Meeting a legal proxy from the broker, bank or other nominee holding your shares, confirming your beneficial ownership of the shares and giving you the right to vote your shares.
Will my shares be voted if I do not sign and return my proxy card?
If your shares are held in your name and you do not sign and return your proxy card, your shares will not be voted unless you vote in person at the Virtual Meeting. If you hold your shares in the name of a broker, bank or other nominee, your nominee may determine to vote your shares at its own discretion on certain routine matters, such as the Amendment Proposal and Name Change Proposal,ratification of the Auditor, absent instructions from you. However, due to voting rules that may prevent your bank or broker from voting your uninstructed shares on a discretionary basis in the Incentive Plan Proposalelection of directors and other non-routine matters,the compensation of our named executive officers, it is important that you cast your vote.
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How may I vote with respect to each proposal and how are votes counted?
YouYour voting options will be dependent on the particular proposal for which you wish to cast a vote. With respect to proposal 1 (the election of directors), you may vote “for,” “against” or “abstain” on each“for” all of the Director Nominees or “withhold” authority to vote for one or all of the Director Nominees. With respect to proposals being placed before our stockholders.2 and 3, you may vote “for” or “against” the proposal or you may “abstain” from casting a vote on such proposal. Abstentions, votes marked “withheld” and broker non-votes will be counted for the purpose of determining whether a quorum is present at the Virtual Meeting.
Broker non-votes occur on a matter when a broker is not permitted to vote on that matter without instructions from the beneficial owner and instructions are not given. These matters are referred to as “non-routine” matters. The Incentive Plan Proposal iselection of the directors and the non-binding advisory vote on executive compensation are “non-routine.” Thus, in tabulating the voting result for this proposal,these proposals, shares that constitute broker non-votes are not considered votes cast on that proposal. The Amendment Proposal and Name Change Proposal are eachratification of the appointment of the Auditor is a “routine” matter and therefore a broker may vote on those mattersthis matter without instructions from the beneficial owner as long as instructions are not given.
How many votes are required to elect the Director Nominees as directors of the Company?
In the election of directors, the four persons receiving the highest number of affirmative votes at the Virtual Meeting will be elected. Only shares that are voted in favor of a particular nominee will be counted toward that nominee’s achievement of a plurality. Shares present at the Virtual Meeting that are not voted for a particular nominee or shares present by proxy where the stockholder properly withheld authority to vote for such nominee will not be counted toward that nominee’s achievement of a plurality.
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How many votes are required to approve the Amendment Proposal?non-binding advisory vote on executive compensation?
How many votes are required to approveratify the Name Change Proposal?Company’s independent public accountants?
The affirmative vote of the holders of a majority of the outstanding shares of Common Stock entitled to vote on this matter at the Meeting is required for approval of the Name Change Proposal. With respect to an abstention, the shares will be considered present and entitled to vote at the Meeting and they will have the same effect as a vote against the matter.
How many votes are required to approve the Incentive Plan Proposal?
The affirmative vote of a majority of the votes cast at the Virtual Meeting by the holders of Common Stock entitled to vote is required to approveratify the Incentive Plan Proposal. With respect to an abstention, the sharesAuditor as our independent registered public accounting firm for the year ending October 31, 2023. Abstentions will be considered present and entitled tohave no direct effect on the outcome of this proposal, but since this is a routine matter, brokers may vote at the Meeting buton this proposal provided that they will have no effect on the vote of the Incentive Plan Proposal.not received instructions from a beneficial owner
What happens if I don’t indicate how to vote my proxy?
If you just sign your proxy card without providing further instructions, your shares will be counted as a “for” vote for eachall of the Amendment Proposal, Name Change ProposalDirector Nominees, “for” the approval on a non-binding, advisory basis of the compensation of our named executive officers, and Incentive Plan Proposal.“for” the ratification of the appointment of the Auditor as the Company’s independent registered public accounting firm for the fiscal year ending October 31, 2023.
Is my vote kept confidential?
Proxies, ballots and voting tabulations identifying stockholders are kept confidential and will not be disclosed except as may be necessary to meet legal requirements.
Where do I find the voting results of the Virtual Meeting?
We will announce voting results at the Virtual Meeting and file a Current Report on Form 8-K announcing the voting results of the Virtual Meeting.
Who can help answer my questions?
You can contact our corporate Secretary, Michael Catelani, at (408) 708-9808 or by sending a letter to Mr. Catelani at the offices of the Company at 3150 Almaden Expressway, Suite 250, San Jose, CA 95118 with any questions about proposals described in this Proxy Statement or how to execute your vote.
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General
This Proxy Statement is being furnished to you, as a stockholderstockholders of ITUS Corporation,Anixa Biosciences, Inc. as part of the solicitation of proxies by our Board for use at the Virtual Meeting to be held on March 29, 2018,9, 2023, and any adjournment or postponement thereof. This Proxy Statement is first being furnished to stockholders on or about February 12, 2018.January 27, 2023. This Proxy Statement provides you with information you need to know to be able to vote or instruct your proxy how to vote at the Virtual Meeting.
Date, Time, Place of Virtual Meeting
The Virtual Meeting will be held on a virtual basis on Thursday, March 9, 2023 at 10:00 a.m. on Thursday, March 29, 2018, at the Company’s corporate offices at 3150 Almaden Expressway, Suite 250, San Jose, California 95118,Pacific, or such other date, time and place to which the Meeting may be adjourned or postponed.
Purpose of the Virtual Meeting
At the Virtual Meeting, the Company will ask stockholders to consider and vote upon the following proposals:
1. To approve an amendmentelect the Director Nominees to Article FOURTH ofserve on the Company’s CertificateBoard for a one-year term that expires at the 2024 Annual Meeting of Incorporation to increase the number of authorized shares of Common Stock from 24,000,000 to 48,000,000;Stockholders, or until their successors are elected and qualified;
2. To approve an amendment to Article FIRSTon a non-binding, advisory basis the compensation of our named executive officers;
3. To ratify the Certificate of Incorporation to change the name of the Company from “ITUS Corporation” to “Anixa Biosciences, Inc.,” such name change to occur at such time and date as determinedappointment by the Board in its sole discretion;of the Auditor as the Company’s independent registered public accounting firm for the fiscal year ending October 31, 2023; and
3. To adopt the “ITUS Corporation 2018 Share Incentive Plan”; and
4. To transact such other business as may properly come before the Virtual Meeting or any adjournment thereof.
Recommendations of the Board
After careful consideration of each nominee for director, the Board has unanimously determined to recommend that stockholders vote “FOR” each of the Amendment Proposal, Name Change ProposalDirector Nominees, “FOR” the approval on a non-binding, advisory basis of the compensation of our named executive officers, and Incentive Plan Proposal.“FOR” the ratification of the appointment of the Auditor as the Company’s independent registered public accounting firm for the fiscal year ending October 31, 2023.
Record Date and Voting Power
Our Board fixed the close of business on February 1, 2018,January 17, 2023, as the record date for the determination of the outstanding shares of Common Stock entitled to notice of, and to vote on, the matters presented at this Virtual Meeting. As of the Record Date, there were 16,631,19130,922,830 shares of Common Stock outstanding. Each share of Common Stock entitles the holder thereof to one vote. Accordingly, a total of 16,631,19130,922,830 votes may be cast at this Virtual Meeting.
Quorum and Required Vote
A quorum of stockholders is necessary to hold a valid meeting. A quorum will be present at the meeting if a majority of the Common Stock outstanding and entitled to vote at the Virtual Meeting is represented in personvirtually at the Virtual Meeting or by proxy. Abstentions, votes marked “withheld” and broker non-votes will count as present for purposes of establishing a quorum.
In the election of directors, the four persons receiving the highest number of affirmative votes cast at the Virtual Meeting will be elected. Only shares that are voted in favor of a particular nominee will be counted toward that nominee’s achievement of a plurality. Shares present at the Meeting that are not voted for a particular nominee or shares present by proxy where the stockholder properly withheld authority to vote for such nominee will not be counted toward that nominee’s achievement of a plurality.
The affirmative vote of the holders of a majority of the outstanding sharesvotes cast at the Virtual Meeting by the holders of Common Stock entitled to vote on this matter at the Meeting is required for approvalto approve on a non-binding advisory basis the compensation of the Amendment Proposal.our named executive officers. With respect to an abstention, the shares will be considered present and entitled to vote at the Virtual Meeting, andbut they will have the sameno effect as a vote againston the matter.
The affirmative vote of the holders of a majority of the outstanding shares of Common Stock entitled to vote on this matter at the Meeting is required for approval of the Name Change Proposal. With respect to an abstention, the shares will be considered present and entitled to vote at the Meeting and they will have the same effect as a vote against the matter.proposal.
The affirmative vote of a majority of the votes cast at the Virtual Meeting by the holders of Common Stock entitled to vote is required to approveratify the Incentive Plan Proposal. With respect to an abstention, the shares will be considered present and entitled to vote atAuditor as our independent registered public accounting firm for the Meeting, but theyyear ending October 31, 2023. Abstentions will have no effect on the voteratification of the Incentive Plan Proposal.
appointment of the Auditor. Brokers may use their discretion to vote shares held by them of record for this proposal if they have not been provided with voting instructions from the beneficial owner of the shares of Common Stock.
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Voting
There are four ways to vote:
1. Via the Internet. Use the Internetinternet to vote by going to the Internetinternet address listed on your proxy card or Internet Availability Notice; have your proxy card or Internet Availability Notice in hand as you will be prompted to enter your control number and to create and submit an electronic vote. If you vote in this manner, your “proxy,” whose name is listed on the proxy card and Internet Availability Notice, will vote your shares as you instruct on the proxy card. If you sign and return the proxy card or submit an electronic vote but do not give instructions on how to vote your shares, your shares will be voted as recommended by the Board. If you are not a record holder, you may vote by proxy via the Internet by following the instructions provided by your brokerage firm, bank, broker-dealer or other similar organization that holds your shares.
2. Via Telephone. Using a touch-tone telephone, you may transmit your voting instructions to the number provided on your proxy card or in the Internet Availability Notice. Have your proxy card or Internet Availability Notice in hand as you will be prompted to enter your control number to create and submit a telephonic vote.
3. In person. If you are a stockholder of record, youYou may vote in person at the Meeting. The Company will give you a ballotVirtual Meeting by following the instructions when you arrive. Iflog-in for the Virtual Meeting. Have your proxy card or Internet Availability Notice in hand as you are a beneficial owner of shares of Common Stock held in street name and you wishwill be prompted to enter your control number to vote in person at the Virtual Meeting you must obtain a legal proxy from the brokerage firm, bank, broker-dealer or other similar organization that holds your shares. Please contact that organization for instructions regarding obtaining a legal proxy.
4. By mail. You may vote by mail. If you request printed copies of the proxy materials by mail and are a record holder, you may vote by proxy by filling out the proxy card and sending it back in the envelope provided. If you request printed copies of the proxy materials by mail and are a beneficial holder you may vote by proxy by filling out the vote instruction form and sending it back in the envelope provided by your brokerage firm, bank, broker-dealer or other similar organization that holds your shares.
While we know of no other matters to be acted upon at this year’s Virtual Meeting, it is possible that other matters may be presented at the Virtual Meeting. If that happens and you have signed and not revoked a proxy card, your proxy will vote on such other matters in accordance with his best judgment.
A special note for those who plan to attend the Meeting and vote in person: if your shares are held in the name of a broker, bank or other nominee, you must bring a statement from your brokerage account or a letter from the person or entity in whose name the shares are registered indicating that you are the beneficial owner of those shares as of the record date. In addition, you will not be able to vote at the Meeting unless you obtain a legal proxy from the record holder of your shares.Expenses
Expenses
The expense of preparing, printing and mailing this Proxy Statement, exhibits and the proxies solicited hereby will be borne by the Company. In addition to the use of the mails, proxies may be solicited by officers, directors and regular employees of the Company, without additional remuneration, by personal interviews, telephone, email or facsimile transmission. The Company will also request brokerage firms, nominees, custodians and fiduciaries to forward proxy materials to the beneficial owners of shares of Common Stock held of record and will provide reimbursements for the cost of forwarding the material in accordance with customary charges.
Revocability of Proxies
Proxies given by stockholders of record for use at the Virtual Meeting may be revoked at any time prior to the exercise of the powers conferred. In addition to revocation in any other manner permitted by law, stockholders of record giving a proxy may revoke the proxy by an instrument in writing, executed by the stockholder or his attorney authorized in writing or, if the stockholder is a corporation, under its corporate seal, by an officer or attorney thereof duly authorized, and deposited either at the corporate headquarters of the Company at any time up to and including the last business day preceding the day of the Virtual Meeting, or any adjournments thereof, at which the proxy is to be used, or with the chairman of such Virtual Meeting on the day of the Virtual Meeting or adjournments thereof, and upon either of such deposits the proxy is revoked.
No Right of Appraisal
None of Delaware law, our Certificate of Incorporation, or our Bylaws, as amended, provides for appraisal or other similar rights for dissenting stockholders in connection with any of the proposals to be voted upon at this Virtual Meeting. Accordingly, our stockholders will have no right to dissent and obtain payment for their shares.
Who Can Answer Your Questions About Voting Your Shares
You can contact our corporate Secretary, Michael Catelani, at (408) 708-9808 or by sending a letter to Mr. Catelani at offices of the Company at 3150 Almaden Expressway, Suite 250, San Jose, CA 95118 with any questions about proposals described in this Proxy Statement or how to execute your vote.
Principal Offices
The principal executive offices of the Company are located at 3150 Almaden Expressway, Suite 250, San Jose, CA 95118. The Company’s telephone number at such address is (408) 708-9808.
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ALL PROXIES RECEIVED WILL BE VOTED IN ACCORDANCE WITH THE CHOICES SPECIFIED ON SUCH PROXIES. PROXIES WILL BE VOTED IN FAVOR OF A PROPOSAL IF NO CONTRARY SPECIFICATION IS MADE. ALL VALID PROXIES OBTAINED WILL BE VOTED AT THE DISCRETION OF THE PERSONS NAMED IN THE PROXY WITH RESPECT TO ANY OTHER BUSINESS THAT MAY COME BEFORE THE MEETING. THE BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE AMENDMENT ELECTION OF EACH OF THE DIRECTOR NOMINEES, “FOR” the approval on a non-binding, advisory basis of the compensation of our named executive officers, AND “FOR” THE RATIFICATION OF THE APPOINTMENT OF THE AUDITOR as the Company’s independent registered public accounting firm FOR THE FISCAL YEAR ENDING OCTOBER 31, 2023.
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PROPOSAL NAME CHANGE PROPOSAL AND INCENTIVE PLAN PROPOSAL.1
ELECTION OF DIRECTORS
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PROPOSAL 1AMENDMENT PROPOSAL
Description of Proposal
On January 25, 2018, the Board acted by written consent to unanimously approve an amendment to the Certificate of Incorporation, subject to stockholder approval, to increase the number of shares of Common Stock authorized by 24,000,000 from 24,000,000 to 48,000,000. The Board directed the Amendment Proposal to be submitted to a vote of the Company’s stockholders at the Meeting.
The Company’s Certificate of Incorporation currently authorizes the issuance of up to 24,000,000 shares of Common Stock and 20,000 shares of preferred stock. The Amendment Proposal will not increase or otherwise affect the Company’s authorized preferred stock.
On the Record Date, the Company had an aggregate 16,631,191 shares of Common Stock issued and outstanding and no shares of preferred stock issued or outstanding. Also on the Record Date, the Company had 1,664,446 shares reserved for issuance upon exercise of outstanding options under the Company’s 2010 Share Incentive Plan, 14,400 shares reserved for issuance upon exercise of outstanding options under the Company’s 2003 Share Incentive Plan, 1,780,000 shares reserved for issuance upon exercise of outstanding options not granted under such plans and 829,400 shares reserved for issuance upon exercise of outstanding warrants.
Reasons for the Amendment Proposal
The Board believes it is inhas nominated the best interestDirector Nominees to stand for election at the Virtual Meeting. Stockholders will be asked to elect each of the CompanyDirector Nominees, each to increasehold office until the number2024 Annual Meeting of authorized sharesStockholders or until his or her successor is elected and qualified. The enclosed proxy, if returned, and unless indicated to the contrary, will be voted for the election of Common Stock in order to giveeach of the Company greater flexibility in considering and planning for future potential business needs.Director Nominees.
The additional sharesWe have been advised by each of Common Stock willthe Director Nominees that he or she is willing to be available for issuance by the Board for various corporate purposes, including but not limitednamed as a nominee and each is willing to raising capital, providing equity incentivesserve, or continue to employees, officers or directors, effecting stock dividends, establishing strategic relationships with other companies and expanding our business through the acquisition of other businesses or products.serve as a director if elected. If the amendment is approved, the additional authorized shares would be available for issuance atsome unexpected occurrence should make necessary, in the discretion of the Board, and without further stockholder approval, exceptthe substitution of some other person for the nominees, it is the intention of the persons named in the proxy to vote for the election of such other persons as may be requireddesignated by lawthe Board.
Board Qualifications
We believe that the collective skills, experiences and qualifications of our directors provide our Board with the expertise and experience necessary to advance the interests of our stockholders. In selecting directors, the Board considers candidates that possess qualifications and expertise that will enhance the composition of the Board, including the considerations set forth below. The considerations set forth below are not meant as minimum qualifications, but rather as guidelines in weighing all of a candidate’s qualifications and expertise. In addition to the individual attributes of each of our current directors described below, we believe that our directors should have the highest professional and personal ethics and values, consistent with our longstanding values and standards. They should have broad experience at the policy-making level in business, exhibit commitment to enhancing stockholder value and have sufficient time to carry out their duties and to provide insight and practical wisdom based on their past experience.
Director Nominees
Our Board currently consists of four directors, Dr. Amit Kumar, Dr. Arnold Baskies, Emily Gottschalk, and Lewis H. Titterton, Jr. At the Virtual Meeting, four directors are to be elected (Dr. Amit Kumar, Dr. Arnold Baskies, Emily Gottschalk, and Lewis H. Titterton, Jr.), each to serve until the next Annual Meeting of Stockholders and until his or her successor shall be elected and shall qualify. Each of the rulescurrent directors that has determined to stand for reelection at the Virtual Meeting has been nominated for reelection to the Board. All of the Director Nominees are available for election as members of the Board. If for any reason a Director Nominee becomes unavailable for election, the proxies solicited by the Board will be voted for a substitute nominee selected by the Board.
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The following sets forth the biographical background information for all of our Director Nominees:
Dr. Kumar has served as our Chief Executive Officer since July 2017, as a director of the Company since November 2012 and as Chairman of the Board since August 2016. From July 2017 until April 2022, he served as President and from June 2015 until August 2016, he served as Vice Chairman of the Board. Dr. Kumar served as a strategic advisor to the Company from September 2012 until July 2017. He has been Executive Chairman of the board of directors of Anixa Diagnostics Corporation, a wholly-owned subsidiary of the Company since June 2015. Upon his appointment as Executive Chairman, Dr. Kumar resigned from his position as the Chief Executive Officer of Geo Fossil Fuels LLC, an energy company, which he had held since December 2010. From September 2001 to June 2010, he was President and Chief Executive Officer of CombiMatrix Corporation, a NASDAQ listed biotechnology company, and also served as director from September 2000 to June 2012. He was Vice President of Life Sciences of Acacia Research Corporation, a publicly traded investment company, from July 2000 to August 2007 and also served as a director from January 2003 to August 2007. Dr. Kumar served as Chairman of the board of directors of Ascent Solar Technologies, Inc., a publicly-held solar energy company, from June 2007 to September 2022. He served as a director of Aeolus Pharmaceuticals, Inc., a publicly traded biotechnology company, from June 2004 to June 2018. Dr. Kumar served as Chairman of Actym Therapeutics, a private biotechnology company until January 2023. Dr. Kumar has served on the board of the American Cancer Society since 2016. Dr. Kumar holds an A.B. in Chemistry from Occidental College. After graduate studies at Stanford University and Caltech, he received his Ph.D. from Caltech and completed his post-doctoral training at Harvard University. He has experience in technology driven startups, both at the board of directors and operating levels, in a broad variety of areas including finance, acquisitions, research and development, and marketing, and, as described above, has served as a director and/or officer of various publicly traded companies.
Dr. Baskies has served on our Board since September 2018. He previously served as a director of the Company from August 2016 until September 2017. Dr. Baskies is a surgical oncologist affiliated with Virtua Health Systems in southern New Jersey, where he specializes in surgical oncology and general surgery, and is Clinical Professor of Surgery at Rowan School of Medicine. He trained at Boston University Medical Center and the Surgery Branch of the National Cancer Institute where his early research involved immunotherapy. He has extensive experience in all facets of general surgical and surgical oncologic problems, with special interests in the treatment of breast cancer, gastrointestinal cancers, thyroid cancer, melanoma, and parathyroid disease, and is a co-investigator in several national studies dealing with breast cancer prevention. Dr. Baskies has served as a director of Baudax Bio, Inc., a publicly-held drug development company, since August 2020. He served as Chairman of the New Jersey Governor’s Task Force on Early Detection, Prevention and Treatment of Cancer, having created and chaired the cancer control plan for the state from 2000-2016, and is a member of numerous societies, including the Society of Surgical Oncology, the American Society of Breast Surgeons, the American Society of Clinical Oncology, and the American College of Surgeons. Dr. Baskies has been involved with the American Cancer Society for 43 years. He was awarded the Society’s Silver Chalice Award in 1998 and the Society’s St. George National Award in 2009. He has held leadership positions at many levels of the organization, including service as the first board scientific officer for the American Cancer Society Board of Directors in 2015, and was the chief medical officer and Chairman of the Board of Directors of the former Eastern Division of the American Cancer Society. In 2017, he served as the Chairman of the National Board of Directors of the American Cancer Society. He helped develop the current guidelines for breast cancer screening and colon cancer screening which are used on a daily basis in the United States and internationally. He chairs the Global Cancer Control Advisory Council for the society, the St. Baldrick’s Foundation/ACS Alliance, and currently serves on the Global Breast Cancer Initiative of the World Health Organization. He has helped set the standards for cancer care accreditation through his involvement with the Commission on Cancer and the National Accreditation Program for Breast Centers. He currently serves on the Executive Committees, standards development and quality improvement and technology committees of both organizations. He is also a member of the Executive Committee and a Vice President of the Israel Cancer Research Fund. He received a medical degree from Boston University School of Medicine in 1975 where he was awarded the Itabashi Cancer Research Prize, and a bachelor of arts degree, summa cum laude, from Boston University College of Liberal Arts in 1971.
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Ms. Gottschalk has served on our Board since October 2019. She is an experienced marketer with over 30 years of developing products for the consumer marketplace. She has been the Chief Executive Officer of The Garr Group, Inc. since 1997, a diverse entertainment and new product development company that she founded that sells entertainment and general merchandise to the mass, specialty and on-line market. The Garr Group identifies “white space” opportunities in the marketplace and defines and develops products that uniquely touch consumers’ lives. The Garr Group is equally focused on brick and mortar, on-line and emerging distribution channels. Previously, she was Marketing Director of Zany Brainy, a children’s educational toy store that she helped launch. Since 1997, Ms. Gottschalk’s companies have produced over 150 million CD’s/DVD’s to the US retail market, developed a proprietary Android tablet called “RealPad, by AARP” with Intel and has created private label brands across the home, sporting goods and electronics market. She is a graduate of Cornell University’s School of Hotel Administration and serves on the board of several philanthropic organizations.
Mr. Titterton has served as a director of the Company since July 2017, and as Lead Independent Director since July 2018. He previously served as a director of the Company from August 2010 through August 2016 and July 1999 through January 2003, as the Chairman of the board from July 2012 through August 2016, and interim Chief Executive Officer from August 2012 until September 2012. He served on the board of directors of ParkerVision, Inc., a publicly traded wireless technology company, from September 2018 to April 2019. His background is in high technology with an emphasis on health care and he was the Chairman of the board of directors of NYMED, Inc., a diversified health services company, from 1989 until October 2018. Mr. Titterton founded MedE America, Inc. in 1986 and was Chief Executive Officer of Management and Planning Services, Inc. from 1978 to 1986. He holds an MBA from the State University of New York at Albany, and a B.A. degree from Cornell University. Mr. Titterton has been involved with our Company as a director or investor for over twenty years. Mr. Titterton also has substantial experience with advising on the strategic development of technology companies and over forty years of experience in various aspects of the technology industry.
We believe that our Director Nominees represent a desirable mix of backgrounds, skills, experiences, genders and members of underrepresented communities. Below are some of the specific experiences, qualifications, attributes or skills of each Director Nominee in addition to the biographical information provided above that led to the conclusion that each person should serve as one of our directors in light of our business and structure:
Dr. Kumar is an experienced research scientist and entrepreneur, and has experience in technology driven startups, both at the board and operating levels, in a broad variety of areas including finance, acquisitions, R&D, and marketing, and has served as a director and officer of other publicly traded companies.
Dr. Baskies is an experienced surgical oncologist who has previously served as the Chairman of the National Board of Directors of the American Cancer Society.
Ms. Gottschalk is an experienced executive and marketer and has started and run companies selling products to the consumer market.
Mr. Titterton has been involved with our Company as a director or investor for over twenty years. Mr. Titterton also has substantial experience with advising on the strategic development of technology companies and over forty years of experience in various aspects of the technology industry.
In addition to the foregoing, we believe that each of the Director Nominees that is nominated for reelection is well-qualified to serve as a member of our Board due to their prior experience and work with and on our Board.
Required Vote
In the election of directors, the four persons receiving the highest number of affirmative votes cast at the Virtual Meeting will be elected.
Recommendation of the Board
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR” ELECTION OF EACH OF THE NOMINEES FOR DIRECTOR.
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Current Directors and Executive Officers as of the Date of this Proxy Statement
Listed below are the names of the current directors and executive officers of the Company, their ages and positions held as of the Record Date and biographies if not disclosed above:
| Name | Age | Position with the Company | Director and/or Executive Officer Since | |||
| Dr. Amit Kumar | 58 | Chairman of the Board and Chief Executive Officer | 2012 | |||
| Dr. Arnold Baskies | 73 | Director | 2018 | |||
| Emily Gottschalk | 62 | Director | 2019 | |||
| Lewis H. Titterton, Jr. | 78 | Lead Independent Director | 2017 | |||
| Michael J. Catelani | 56 | President, Chief Operating Officer and Chief Financial Officer | 2016 |
Mr. Catelani has served as our President since April 2022, as our Chief Operating Officer since July 2017 and as our Chief Financial Officer since November 2016. Mr. Catelani is a seasoned executive with over 30 years of experience in finance and operations. From October 2012 to July 2017, he served as a contract Chief Financial Officer to a number of established privately held businesses in the biotechnology field. He served on the board of directors of PRC Clinical, a privately held clinical research organization, from January 2015 to July 2017. In July 2006, he co-founded Tacere Therapeutics, Inc., a privately held biotechnology company, and served as its Chairman, President and Chief Financial Officer until its sale in October 2012. While at Tacere, Mr. Catelani was instrumental in establishing and managing a $150 million drug development collaboration with Pfizer, Inc. Prior to Tacere, he served on the Board of Directors and was the Chief Financial Officer of Benitec Biopharma Limited, at the time an Australian Securities Exchange-listed biotechnology company. Prior to Benitec, Mr. Catelani served as Vice President and Chief Financial Officer at Axon Instruments, Inc., a U.S. corporation publicly traded on the Australian Securities Exchange that was a leading designer and manufacturer of instrumentation and software systems for biotechnology and diagnostics research. Prior to Axon, he served as the Vice President of Finance for Media Arts Group, Inc., an NYSE-listed branded consumer products company. Mr. Catelani has also worked with several early-stage start-up companies in multiple industries, including biotechnology, cleantech and retail, in advisory and management roles. Mr. Catelani began his professional career at Ernst & Young and is a CPA (Inactive). He holds a B.S. degree in Accounting from California State University, Sacramento and an MBA from the University of California, Davis.
Except for Dr. Kumar, Dr. Baskies, and Mr. Titterton, none of our current directors or executive officers has served as a director of another public company within the past five years.
To the best of the Company’s then-current listing marketknowledge, there are no arrangements or exchange. Asunderstandings between any director, Director Nominee or executive officer and any other person pursuant to which any person was selected as a director, Director Nominee or executive officer. There are no family relationships between any of the dateCompany’s directors, Director Nominees or executive officers. To the Company’s knowledge there have been no material legal proceedings as described in instruction 4 to Item 103 of this proxy statement,Regulation S-K or Item 401(f) of Regulation S-K during the last ten years that are material to an evaluation of the ability or integrity of any of the Company’s directors, Director Nominees or executive officers.
Board of Directors and Corporate Governance
General
Our Board oversees the activities of our management in the handling of the business and affairs of our company. Our common stock trades on the NASDAQ Capital Markets and we are subject to listing requirements which include the requirement that our Board be comprised of a majority of “independent” directors. Dr. Arnold Baskies, Emily Gottschalk, and Lewis H. Titterton, Jr. (our Lead Independent Director) currently meet the definition of “independent” as defined by the SEC. The Board of Directors has separately designated audit, nominating and compensation committees. Our Chairman, Dr. Amit Kumar, is an employee of the Company and as such does not currentlyqualify as an “independent” director.
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Committees of the Board
On July 9, 2015, the Board established an audit committee (the “Audit Committee”), compensation committee (the “Compensation Committee”) and nominating and corporate governance committee (the “Nominating Committee”). Each committee has a charter which will be reviewed on an annual basis by the members of such committee. A current copy of each committee charter is available to stockholders on the Company’s website at http://ir.anixa.com/committee-charters.
Audit Committee
We have any plan or arrangementa separately-designated standing Audit Committee established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Nasdaq Listing Rules. The audit committee will be at all times composed of exclusively independent directors who are “financially literate,” meaning they are able to issue any sharesread and understand fundamental financial statements, including the Company’s balance sheet, income statement and cash flow statement. In addition, the committee will have at least one member who qualifies as an “audit committee financial expert” as defined in rules and regulations of Common Stock, including through a financing transaction, if this proposal is approved.the SEC.
The additional sharesprincipal duties and responsibilities of Common Stockthe Company’s audit committee are to appoint the Company’s independent auditors, oversee the quality and integrity of the Company’s financial reporting and the audit of the Company’s financial statements by its independent auditors and in fulfilling its obligations, the Company’s audit committee will review with the Company’s management and independent auditors the scope and result of the annual audit, the auditors’ independence and the Company’s accounting policies.
The audit committee will be required to report regularly to the Board to discuss any issues that arise with respect to the quality or integrity of the Company’s financial statements, its compliance with legal or regulatory requirements and the performance and independence of the Company’s independent auditors.
Audit Committee Report
Review with Management. The Audit Committee has reviewed and discussed our audited financial statements with management.
Review and Discussions with Independent Auditors. The Audit Committee discussed with the Auditor the matters required to be authorizeddiscussed by adoptionStatement on Auditing Standards No. 61, as amended (AICPA, Professional Standards, Vol. 1, AU section 380), as adopted by the Public Company Accounting Oversight Board (“PCAOB”) in Rule 3200T.
The Audit Committee also received written disclosures and the letter from the Auditor required by applicable requirements of the Amendment Proposal would have rights identicalPCAOB regarding the Auditor’s communications with the Audit Committee concerning independence and has discussed with the Auditor their independence.
Conclusion. Based on the review and discussions referred to above, the currently issuedAudit Committee determined to include our audited financial statements in our Annual Report on Form 10-K for fiscal year 2022, for filing with the SEC.
The members of the Audit Committee are Lewis H. Titterton, Jr. (Chairman), Dr. Arnold Baskies and outstanding sharesEmily Gottschalk. Our Board has determined that Mr. Titterton qualifies as an Audit Committee financial expert as defined by SEC rules, based on his education, experience and background. Please see Mr. Titterton’s biographical information above for a description of Common Stockhis relevant experience.
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Compensation Committee
The Compensation Committee will be at all times composed of exclusively independent directors. Among other functions, the Compensation Committee will oversee the compensation of the Company’s chief executive officer and other executive officers and senior management, including plans and programs relating to cash compensation, incentive compensation, equity-based awards and other benefits and perquisites and administers any such plans or programs as required by the terms thereof. The Compensation Committee has the authority to directly engage, at our expense, any compensation consultants or other advisers as it deems necessary to carry out its responsibilities in determining the amount and form of employee, executive and director compensation.
The members of the compensation committee are Lewis H. Titterton, Jr. (Chairman), Dr. Arnold Baskies and Emily Gottschalk.
Compensation Committee Processes and Procedures. The Compensation Committee meets at least two times per year and with greater frequency, if necessary. The agenda for each meeting is usually developed by the Chair of the Compensation Committee, in consultation with management. The Compensation Committee meets regularly in executive session. However, from time to time, various members of management and other employees as well as outside advisors or consultants may be invited by the Compensation Committee to make presentations, to provide financial or other background information or advice or to otherwise participate in Compensation Committee meetings. The Chief Executive Officer may negotiate the terms of his or her compensation with the Compensation Committee, but the Chief Executive Officer does not participate in, and is not present during, deliberations or determinations of the Compensation Committee regarding his compensation or individual performance objectives. The charter of the Compensation Committee grants the Compensation Committee full access to all books, records, facilities and personnel of the Company. AdoptionIn addition, under its charter, the Compensation Committee has the authority to obtain, at the expense of the Amendment Proposal would not affect the rights of existing holders of Common StockCompany, advice and would not have any immediate dilutive effect on the proportionate voting powerassistance from internal and external legal, accounting or other rightsadvisers and other external resources that the Compensation Committee considers necessary or appropriate in the performance of existing stockholders. Like existing holders, holders of shares of Common Stock issued following adoptionits duties. The Compensation Committee has direct responsibility for the oversight of the proposed amendment would not be entitledwork of any advisers engaged for the purpose of advising the Compensation Committee. In particular, the Compensation Committee has the sole authority to pre-emptive rights with respectretain compensation consultants to any future issuancesassist in its evaluation of Common Stockexecutive and director compensation, including the authority to approve the consultant’s reasonable fees and other retention terms. Under its charter, to the extent required by SEC and Nasdaq rules, the Compensation Committee may select, or preferred stock. Any issuance of sharesreceive advice from, a compensation consultant, legal counsel or other adviser to the Compensation Committee, other than in connection with a stock split or combination would reducein-house legal counsel and certain other types of advisers, only after taking into consideration six factors, prescribed by the proportionate ownership interest inSEC and Nasdaq, that bear upon the Companyadviser’s independence; however, there is no requirement that each holder had immediately prior to the issuance and, depending on the price at which such shares are issued, could have a negative effect on the market price of the Common Stock.
Anti-Takeover Considerationsany adviser be independent.
The Company hasCompensation Committee generally holds one or more meetings during the fourth quarter of the calendar year to discuss and make recommendations to the Board for annual compensation adjustments, annual bonuses, annual equity awards, and new corporate performance objectives. In addition, the Compensation Committee typically holds a meeting shortly after the Annual Meeting of Shareholders to determine director compensation as well as executive officer equity compensation. However, the Compensation Committee also considers matters related to individual compensation, such as compensation for new executive hires, as well as high-level strategic issues, such as the efficacy of the Company’s compensation strategy, potential modifications to that strategy and new trends, plans or approaches to compensation, at various meetings throughout the year. Generally, the Compensation Committee’s process comprises two related elements: the determination of compensation levels and the establishment of performance objectives for the current year. For executives other than the Chief Executive Officer, the Compensation Committee solicits and considers evaluations and recommendations submitted to the Compensation Committee by the Chief Executive Officer. In the case of the Chief Executive Officer, the evaluation of his performance is conducted by the Compensation Committee, which determines recommendations to the Board regarding any adjustments to his compensation as well as awards to be granted. For all executives and directors as part of its deliberations, the Compensation Committee may review and consider, as appropriate, materials such as financial reports and projections, operational data, tax and accounting information, tally sheets that set forth the total compensation that may become payable to executives in various hypothetical scenarios, executive and director stock ownership information, company stock performance data, analyses of historical executive compensation levels and current Company-wide compensation levels, compensation data from comparative companies, compensation surveys, and recommendations of any compensation consultant, if applicable.
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Nominating and Corporate Governance Committee
The Nominating Committee will be at all times composed of exclusively independent directors. The principal duties and responsibilities of the Nominating Committee are to identify qualified individuals to become board members, recommend to the Board individuals to be designated as nominees for election as directors at the annual meetings of stockholders, and develop and recommend to the Board the Company’s corporate governance guidelines. In selecting directors, the Nominating Committee will consider candidates that possess qualifications and expertise that will enhance the composition of the Board, including the considerations set forth below. The considerations set forth below are not proposedmeant as minimum qualifications, but rather as guidelines in weighing all of a candidate’s qualifications and expertise.
| ● | Candidates should be individuals of personal integrity and ethical character. | |
| ● | Candidates should have background, achievements, and experience that will enhance our Board. This may come from experience in areas important to our business, substantial accomplishments or prior or current associations with institutions noted for their excellence. | |
| ● | Candidates should have demonstrated leadership ability, the intelligence and ability to make independent analytical inquiries and the ability to exercise sound business judgment. | |
| ● | Candidates should be free from conflicts that would impair their ability to discharge the fiduciary duties owed as a director to the Company and its stockholders, and we will consider directors’ independence from our management and stockholders. | |
| ● | Candidates should have, and be prepared to devote, adequate time and energy to the Board and its committees to ensure the diligent performance of their duties, including by attending meetings of the Board and its committees. | |
| ● | Due consideration will be given to the Board’s overall balance of diversity of perspectives, backgrounds and experiences, as well as age, gender, ethnicity and underrepresented communities. | |
| ● | Consideration will also be given to relevant legal and regulatory requirements. |
We are of the increaseview that the continuing service of qualified incumbents promotes stability and continuity in the board room, contributing to the Board’s ability to work as a collective body, while giving us the benefit of the familiarity and insight into our affairs that our directors accumulate during their tenure. Accordingly, the process of the Nominating Committee for identifying nominees for directors will reflect our practice of generally re-nominating incumbent directors who continue to satisfy the Board’s criteria for membership on the Board, whom the Nominating Committee believes continue to make important contributions and who consent to continue their service on the Board. If the Nominating Committee determines that an incumbent director consenting to re-nomination continues to be qualified and has satisfactorily performed his or her duties as director during the preceding term, and that there exist no reasons, including considerations relating to the composition and functional needs of the Board as a whole, why in the Nominating Committee’s view the incumbent should not be re-nominated, the Nominating Committee will, absent special circumstances, generally propose the incumbent director for re-election. Although we do not have a formal policy regarding the consideration of diversity in identifying and evaluating potential director candidates, the Nominating Committee will take into account the personal characteristics (gender, ethnicity, age and underrepresented communities), skills and experience, qualifications and background of current and prospective directors’ diversity as one factor in identifying and evaluating potential director candidates, so that the Board, as a whole, will possess what the nominating and corporate governance committee believes are appropriate skills, talent, expertise and backgrounds necessary to oversee our Company’s business.
If the incumbent directors are not nominated for re-election or if there is otherwise a vacancy on the Board, the Nominating Committee may solicit recommendations for nominees from persons that the Nominating Committee believes are likely to be familiar with qualified candidates, including from members of the Board and management. While the Nominating Committee may also engage a professional search firm to assist in identifying qualified candidates, the Nominating Committee did not engage any third party to identify or evaluate or assist in identifying or evaluating the Director Nominees. We do not have a policy with regard to the consideration of director candidates recommended by stockholders. Due to the size of our Company and Board, the Nominating Committee does not believe that such a policy is necessary.
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Depending on its level of familiarity with the candidates, the Nominating Committee may choose to interview certain candidates that it believes may possess qualifications and expertise required for membership on the Board. It may also gather such other information it deems appropriate to develop a well-rounded view of the candidate. Based on reports from those interviews or from Board members with personal knowledge and experience with a candidate, and on all other available information and relevant considerations, the Nominating Committee will select and nominate candidates who, in its view, are most suited for membership on the Board.
The members of the nominating and corporate governance committee are Dr. Arnold Baskies (Chairman), Lewis H. Titterton, Jr., and Emily Gottschalk.
Board Leadership Structure and Role in Risk Oversight
Our Board currently consists of four directors. On July 26, 2018, the independent members of the Board appointed Mr. Titterton as the lead independent director. The lead independent director’s responsibilities include presiding at meetings of the Board at which the Chairman of the Board (who also serves as Chief Executive Officer of the Company) is not present, including executive sessions of the independent directors, and serving as a liaison between the Chairman of the Board and the independent directors. The independent directors are able to meet independently with the Company’s independent registered public accounting firm without management to discuss the Company’s financial statements and related audits. Therefore, while the Board has appointed a lead independent director, to the extent the composition of the Board changes in the future, the Board may reevaluate the role or necessity for a lead independent director. We have determined that this structure is appropriate given the size of the Company and our operations.
Management is responsible for the day-to-day management of risks the Company faces, while the Board as a whole has ultimate responsibility for the Company’s oversight of risk management. Our Board takes an enterprise-wide approach to risk oversight, designed to support the achievement of organizational objectives, including strategic objectives, to improve long-term organizational performance and enhance stockholder value. A fundamental part of risk oversight is not only understanding the risks a Company faces and what steps management is taking to manage those risks, but also understanding what level of risk is appropriate for the Company. As a critical part of this risk management oversight role, our Board encourages full and open communication between management and the Board. Our Board regularly reviews material strategic, operational, financial, compensation and compliance risks with management. In addition, our management team regularly reports to the full Board regarding their areas of responsibility and a component of these reports is risk within the area of responsibility and the steps management has taken to monitor and control such exposures. Additional review or reporting on risk is conducted as needed or as requested by our Board.
Attendance
There were seven meetings, exclusive of action by unanimous written consent, of the Board held during fiscal year 2022. Dr. Kumar, Dr. Baskies, Mr. Titterton, and Ms. Gottschalk attended all of the aggregate number of authorized sharesmeetings of the Board that they were eligible to attend.
There were five meetings, exclusive of action by unanimous written consent, of the Audit Committee held during fiscal year 2022. Mr. Titterton and Dr. Baskies attended all of the meetings of the Audit Committee that they were eligible to attend. Ms. Gottschalk attended four of the meetings of the Audit Committee that she was eligible to attend.
There were three meetings, exclusive of action by unanimous written consent, of the Compensation Committee held during fiscal year 2022. Each of the committee members attended all of the meetings of the Compensation Committee that they were eligible to attend.
There were two meetings, exclusive of action by unanimous written consent, of the Nominating Committee held during fiscal year 2022. Each of the committee members attended all of the meetings of the Nominating Committee that they were eligible to attend.
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All members of our Board who then were serving as directors and were director nominees at that time attended our 2022 annual meeting of stockholders. We encourage our directors to attend the annual meeting of stockholders.
Code of Ethics
We have adopted a formal code of ethics that applies to our principal executive officer, principal financial officer, principal accounting officer or controller or persons performing similar functions. We will provide a copy of our code of ethics to any person without charge, upon request. For a copy of our code of ethics write to Secretary, Anixa Biosciences, Inc., 3150 Almaden Expressway, Suite 250, San Jose, California 95118. A current copy of our code of ethics is also available on our website at http://ir.anixa.com/governance-docs.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires our directors, executive officers and ten percent stockholders to file initial reports of ownership and reports of changes in ownership of our Common Stock with the intentionSEC. Directors, executive officers and ten percent stockholders are also required to furnish us with copies of using the additional authorized shares for anti-takeover purposes, butall Section 16(a) forms that they file. Based upon a review of these filings, we believe that all required Section 16(a) fillings were made on a timely basis during fiscal year 2022.
Transactions with Related Persons
Aside from compensation arrangements with executive officers described below, there are no other transactions entered into by the Company with related persons.
Related Person Transaction Approval Policy
While we have no written policy regarding approval of transactions between us and a related person, our Board, as matter of appropriate corporate governance, reviews and approves all such transactions, to the extent required by applicable rules and regulations. Generally, management would present to the Board for approval at the next regularly scheduled Board meeting any related person transactions proposed to be ableentered into by us. The Board may approve the transaction if it is deemed to usebe in the additional sharesbest interests of our stockholders and the Company.
Executive Compensation
The following table sets forth certain information for the fiscal years ended October 31, 2022 and 2021, with respect to oppose a hostile takeover attemptcompensation awarded to, earned by or delay or prevent changes in control or managementpaid to our Chairman of the Company. For example, without further stockholder approval,Board and Chief Executive Officer and our President, Chief Operating Officer and Chief Financial Officer (the “Named Executive Officers”). No other executive officer received total compensation in excess of $100,000 during fiscal year 2022.
SUMMARY COMPENSATION TABLE
| Name and Principal Position | Year | Salary ($) | Bonus ($) | Option Awards ($) (1) | All Other Compensation ($) (2) | Total Compensation ($) | ||||||||||||||||||
| Dr. Amit Kumar | 2022 | $ | 630,593 | $ | 400,000 | $ | 1,088,000 | $ | 40,440 | $ | 2,159,033 | |||||||||||||
| Chairman of the Board and Chief Executive Officer | 2021 | $ | 573,346 | $ | 200,000 | $ | 10,146,500 | $ | 39,240 | $ | 10,959,086 | |||||||||||||
| Michael J. Catelani (3) | 2022 | $ | 400,958 | $ | 150,000 | $ | 1,297,600 | $ | - | $ | 1,848,558 | |||||||||||||
| President, Chief Operating Officer and Chief Financial Officer | 2021 | $ | 315,698 | $ | 100,000 | $ | 866,650 | $ | - | $ | 1,282,348 | |||||||||||||
| (1) | These amounts have been calculated in accordance with Accounting Standards Codification (“ASC”) 718. A discussion of assumptions used in valuation of option awards may be found in Note 2 to our Consolidated Financial Statements for fiscal year ended October 31, 2022, included in our Annual Report on Form 10-K. These amounts reflect our accounting expense for these stock options and do not correspond to the actual value that may be recognized by our Named Executive Officers. | |
| (2) | These amounts reflect the sum of the incremental cost to us of all perquisites and personal benefits, which consisted of compensation for use of a home office and reimbursement of medical insurance benefits for Dr. Kumar. | |
| (3) | Effective April 14, 2022, Mr. Catelani was promoted to President of the Company and his base annual salary was increased to $434,512. |
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Employment Agreements
We have not entered into employment agreements with either of our named executive officers. Each of Dr. Kumar and Mr. Catelani are engaged as at-will employees of the Board could sell sharesCompany.
Stock Options
Outstanding Stock Option Awards
The following table sets forth certain information with respect to unexercised stock options held by the Named Executive Officers outstanding on October 31, 2022:
| OUTSTANDING OPTION AWARDS | ||||||||||||||
| Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Un-Exercisable | Option Exercise Price ($) | Option Expiration Date | ||||||||||
| Time-based Option Awards | ||||||||||||||
| Dr. Amit Kumar | 40,000 | $ | 2.575 | 11/8/2023 | ||||||||||
| 200,000 | $ | 2.92 | 2/18/2026 | |||||||||||
| 600,000 | $ | 3.70 | 5/8/2028 | |||||||||||
| 505,556 | (1) | 14,444 | (1) | $ | 3.84 | 12/12/2029 | ||||||||
| 638,889 | (2) | 361,111 | (2) | $ | 2.83 | 12/23/2030 | ||||||||
| 236,111 | (3) | 263,889 | (3) | $ | 4.02 | 6/1/2031 | ||||||||
| 111,111 | (4) | 388,889 | (4) | $ | 2.74 | 3/10/2032 | ||||||||
| Michael J. Catelani | 50,000 | $ | 4.85 | 11/15/2026 | ||||||||||
| 200,000 | $ | 0.96 | 7/6/2027 | |||||||||||
| 500,000 | $ | 3.70 | 5/8/2028 | |||||||||||
| 97,222 | (1) | 2,778 | (1) | $ | 3.84 | 12/12/2029 | ||||||||
| 63,889 | (2) | 36,111 | (2) | $ | 2.83 | 12/23/2030 | ||||||||
| 47,222 | (3) | 52,778 | (3) | $ | 4.02 | 6/1/2031 | ||||||||
| 111,111 | (4) | 388,889 | (4) | $ | 2.74 | 3/10/2032 | ||||||||
| 19,444 | (5) | 80,556 | (5) | $ | 2.52 | 4/14/2032 | ||||||||
| Performance-based Option Awards | ||||||||||||||
| Dr. Amit Kumar | 500,000 | $ | 3.70 | 5/8/2028 | ||||||||||
| 500,000 | (6) | 1,500,000 | (4) | $ | 4.02 | 6/1/2031 | ||||||||
| Michael J. Catelani | 25,000 | (6) | 75,000 | (4) | 4.020 | 6/1/2031 | ||||||||
| (1) | Options vest and become exercisable in 36 consecutive monthly installments, beginning December 31, 2019 and continuing through November 30, 2022. |
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| (2) | Options vest and become exercisable in 36 consecutive monthly installments, beginning December 31, 2020 and continuing through November 30, 2023. | |
| (3) | Options vest and become exercisable in in 36 consecutive monthly installments, beginning June 30, 2021 and continuing through May 31, 2024. | |
| (4) | Options vest and become exercisable in in 36 consecutive monthly installments, beginning March 31, 2022 and continuing through February 28, 2025 | |
| (5) | Options vest and become exercisable in in 36 consecutive monthly installments, beginning April 30, 2022 and continuing through March 31, 2025. | |
| (6) | Options shall vest as follows: (i) 25% of the granted options vest if during any 5 trading day period the average closing stock price of the Company’s Common Stock is at least $5.00, (ii) 25% of the granted options vest if during any 5 trading day period the average closing stock price of the Company’s Common Stock is at least $6.00, (iii) 25% of the granted options vest if during any 5 trading day period the average closing stock price of the Company’s Common Stock is at least $7.00, and (iv) 25% of the granted options vest if during any 5 trading day period the average closing stock price of the Company’s Common Stock is at least $8.00. |
Stock Option Grants
The following table summarizes stock option grants during fiscal year 2022.
| GRANTS OF OPTION AWARDS | ||||||||||||||
| Name | Grant Date | Number of Securities Underlying Unexercised Options (#) | Exercise Price of Option Awards ($) | Grant Date Fair Value ($)(1) | ||||||||||
| Time-based Option Awards | ||||||||||||||
| Dr. Amit Kumar | 3/10/2022 | 500,000 | $ | 2.74 | $ | 1,088,000 | ||||||||
| Michael J. Catelani | 3/10/2022 | 500,000 | $ | 2.74 | $ | 1,088,000 | ||||||||
| 4/14/2022 | 100,000 | $ | 2.52 | $ | 209,600 | |||||||||
(1) These amounts have been calculated in accordance with ASC 718. A discussion of Common assumptions used in valuation of option awards may be found in Note 2 to our Consolidated Financial Statements for fiscal year ended October 31, 2022, included in our Annual Report on Form 10-K. These amounts reflect our accounting expense for these stock options and restricted stock awards and do not correspond to the actual value that may be recognized by our Named Executive Officers.
Stock inOption Exercises
During the year ended October 31, 2022, Dr. Kumar exercised 640,000 stock options on a private transaction to purchasers who would oppose a takeover and/or favor the current Board. In addition, the Certificate of Incorporation authorizescashless basis resulting in the issuance of “blank check” preferred148,100 shares of common stock withfor a total value of $1,219,200.
Stock Awards
There are currently no outstanding restricted stock awards.
Potential Payments upon Termination or Change in Control
Dr. Amit Kumar
The time-based and performance-based options granted Dr. Kumar pursuant to our 2010 Share Incentive Plan and our 2018 Share Incentive Plan (collectively the designations, rights and preferences as may be determined from time to time by“Share Plans”) provide for the Board. Accordingly, the Board is empowered, without stockholder approval, to issue preferred stock with dividend, liquidation, conversion, voting or other rights that could adversely affect the voting power or other rightsvesting of the holdersunvested portion of our Common Stock. The issuance of preferred stock could discourage, delay or preventhis options to be accelerated and such accelerated options to become immediately exercisable upon a change in control as defined below. The intrinsic value of the Companyoptions that would be accelerated would be $4,924,866, which was calculated based on the excess of our closing share price on October 31, 2022 and also may haveeach option’s exercise price, multiplied by the effect of discouraging a third party from making a tender offer or otherwise attempting to obtain control of the Company even though the transaction might be economically beneficial to the Company and its stockholders. Although this proposal to increase the authorized number of shares of Common Stock has been prompted by business and financial considerations and not by the threat of any known or threatened hostile takeover attempt, stockholders shouldoptions that would be aware that approval of this proposal could facilitate future efforts by the Company to oppose changes in control of the Company and perpetuate the Company’s management, including transactions in which the stockholders might otherwise receive a premiumaccelerated for their shares over then-current market prices.
Effecting the Amendment Proposaleach grant.
IfMichael J. Catelani
The time-based and performance-based options granted Mr. Catelani pursuant to our Share Plans provide for the Amendment Proposalvesting of the unvested portion of his options to be accelerated and such accelerated options to become immediately exercisable upon a change in control as defined below. The intrinsic value of the options that would be accelerated would be $1,667,141, which was calculated based on the excess of our closing share price on October 31, 2022 and each option’s exercise price, multiplied by the number of options that would be accelerated for each grant.
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Change in Control
Under our 2010 Share Incentive Plan and our 2018 Share Incentive Plan, “change in control” means:
| ● | Change in Ownership: A change in ownership of the Company occurs on the date that any one person, or more than one person acting as a group, acquires ownership of stock of the Company that, together with stock held by such person or group, constitutes more than 50% of the total fair market value or total voting power of the stock of the Company, excluding the acquisition of additional stock by a person or more than one person acting as a group who is considered to own more than 50% of the total fair market value or total voting power of the stock of the Company. | |
| ● | Change in Effective Control: A change in effective control of the Company occurs on the date that either: |
| ○ | any one person, or more than one person acting as a group, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) ownership of stock of the Company possessing 30% or more of the total voting power of the stock of the Company; or | |
| ○ | a majority of the members of the Board is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the Board before the date of the appointment or election; provided, that this paragraph will apply only to the Company if no other corporation is a majority shareholder. |
| ● | Change in Ownership of Substantial Assets: A change in the ownership of a substantial portion of the Company’s assets occurs on the date that any one person, or more than one person acting as a group, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) assets from the Company that have a total gross fair market value equal to or more than 40% of the total gross fair market value of the assets of the Company immediately before such acquisition or acquisitions. For this purpose, “gross fair market value” means the value of the assets of the Company, or the value of the assets being disposed of, determined without regard to any liabilities associated with such assets. |
It is the intent that this definition be construed consistent with the definition of “Change of Control” as defined under Code Section 409A and the applicable treasury regulations, as amended from time to time.
Director Compensation
On March 10, 2022, after a review of non-employee director compensation at comparable companies, the Board approved cash and equity compensation of directors. Each non-employee director shall receive cash compensation of $50,000 paid in four quarterly installments, and the grant of a 10 year nonqualified stock option to purchase 100,000 shares of common stock exercisable at $2.74, such option vesting monthly over a one year period. Our employee director, Dr. Amit Kumar, did not receive any additional compensation for services provided as a director during fiscal year 2022.
The following table sets forth compensation of Lewis H. Titterton, Jr., Dr. Arnold Baskies, and Emily Gottschalk, our non-employee directors, during fiscal year 2022:
DIRECTORS’ COMPENSATION
| Name | Cash ($) | Option Awards ($) (1)(2) | Total Compensation ($) | |||||||||
| Lewis H. Titterton, Jr. | $ | 50,000 | $ | 217,600 | $ | 267,600 | ||||||
| Dr. Arnold Baskies | $ | 50,000 | $ | 217,600 | $ | 267,600 | ||||||
| Emily Gottschalk | $ | 50,000 | $ | 217,600 | $ | 267,600 | ||||||
| (1) | These amounts have been calculated in accordance with ASC 718. A discussion of assumptions used in valuation of option awards may be found in Note 2 to our Consolidated Financial Statements for fiscal year ended October 31, 2022, included in our Annual Report on Form 10-K. These amounts reflect our accounting expense for these stock options and do not correspond to the actual value that may be recognized by our directors. | |
| (2) | At October 31, 2022, Mr. Titterton, Dr. Baskies and Ms. Gottschalk held unexercised stock options to purchase 929,000, 288,000 and 205,000 shares respectively, of our common stock. |
Board Diversity Matrix
| Board Diversity Matrix as of January 27, 2023 | ||||||||
| Total Number of Directors | 4 | |||||||
| Female | Male | Non-Binary | Did Not Disclose Gender | |||||
| Part I: Gender Identity | ||||||||
| Directors | 1 | 3 | - | - | ||||
| Part II: Demographic Background | ||||||||
| African American or Black | - | - | - | - | ||||
| Alaskan Native or Native American | - | - | - | - | ||||
| Asian | - | 1 | - | - | ||||
| Hispanic or Latinx | - | - | - | - | ||||
| Native Hawaiian or Pacific Islander | - | - | - | - | ||||
| White | 1 | 2 | - | - | ||||
| Two or More Races or Ethnicities | - | - | - | - | ||||
| LGBTQ+ | - | |||||||
Did Not Disclose Demographic Background | - | |||||||
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APPROVAL ON AN ADVISORY BASIS OF THE COMPENSATION OF NAMED EXECUTIVE OFFICERS
Introduction
In accordance with Section 951 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”) and Section 14A of the Exchange Act, the following proposal, commonly known as a “Say on Pay” proposal, enables our stockholders to vote to approve, on a non-binding advisory basis, the compensation of our named executive officers as disclosed in this proxy statement in accordance with applicable SEC rules.
Our goal for our executive compensation program is to attract, motivate and retain a talented team of executives who will provide leadership for our success, and thereby increase stockholder value. We believe that our executive compensation program satisfies this goal and is strongly aligned with the long-term interests of our stockholders. We urge stockholders to read the section titled “Executive Compensation” elsewhere in this proxy statement for additional details about our executive compensation programs, including information about the compensation of our named executive officers in 2022.
We are asking our stockholders to indicate their support for our named executive officer compensation as described in this proxy statement. This “say-on-pay” proposal gives our stockholders the opportunity to express their views on our named executive officers’ compensation. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our named executive officers described in this proxy statement. Accordingly, we will ask our stockholders to vote FOR the following resolution at the Virtual Meeting:
“RESOLVED, that the stockholders of Anixa Biosciences, Inc. approve, on an advisory basis, the compensation of the named executive officers, as disclosed in the Anixa Biosciences, Inc. proxy statement for the 2023 Annual Meeting of Stockholders pursuant to the compensation disclosure rules of the SEC.”
This say-on-pay vote is advisory, and therefore, is not binding on us, our Compensation Committee or our Board. Our Board and our Compensation Committee value the opinions of our stockholders, and to the extent that this resolution is not approved by a majority of the votes properly cast, we may review and consider the results of this advisory vote in future compensation deliberations.
Vote Required
The approval, on an advisory basis, of the stockholders by a majority of the votes properly cast at the Virtual Meeting is being sought to approve the compensation of our named executive officers as disclosed in this proxy statement.
Recommendation
Our Board recommends that stockholders vote FOR the approval on an advisory basis of the compensation of our named executive officers as disclosed in this proxy statement.
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RATIFICATION OF THE APPOINTMENT OF THE
COMPANY’S INDEPENDENT AUDITORS FOR FISCAL YEAR 2023
Introduction
On November 29, 2022, the Audit Committee of the Company’s Board of Directors appointed the firm of Haskell & White LLP to serve as the Company’s independent auditors for our fiscal year ending October 31, 2023. Stockholders will be asked to ratify the Audit Committee’s appointment of the Auditor to serve as our independent auditors. The Board, through its Audit Committee, is directly responsible for appointing the Company’s independent registered public accounting firm. The Board is not bound by the outcome of this vote but will consider these voting results when selecting the Company’s independent auditor for fiscal year 2024. A representative of the Auditor is not expected to be present at the Virtual Meeting.
Fees
The following table describes fees for professional audit services rendered and billed by Haskell & White LLP, our present independent registered public accounting firm and principal accountant, for the audit of our consolidated financial statements and for other services during fiscal years 2022 and 2021.
| Type of Fee | 2022 | 2021 | ||||||
| Audit Fees (1) | $ | 79,775 | $ | 83,450 | ||||
| Audit Related Fees (2) | 7,800 | 2,000 | ||||||
| Tax Fees (3) | 30,000 | 28,600 | ||||||
| All Other Fees (4) | 16,500 | 17,500 | ||||||
| Total | $ | 134,750 | $ | 131,550 | ||||
| (1) | Audit fees for fiscal years 2022 and 2021 represent fees billed for services rendered by Haskell & White LLP for the audit of our consolidated financial statements and review of our quarterly reports on Form 10-Q. | |
| (2) | Audit related fees for fiscal years 2022 and 2021 represent fees billed for services rendered by Haskell & White LLP in connection with our Registration Statements filed during fiscal years 2022 and 2021. | |
| (3) | Tax Fees for fiscal years 2022 and 2021 represent fees billed for services rendered by Haskell & White LLP for the preparation of Federal and State income tax returns. | |
| (4) | All other fees for fiscal years 2022 and 2021 represent fees billed for services rendered by Haskell & White LLP in connection with the preparation of comfort letters and research of various tax subjects. |
Our Audit Committee has determined that the services provided by the Auditor are compatible with maintaining the independence of the Auditor as our independent registered public accounting firm.
The Board has established pre-approval policies and procedures pursuant to which the Board approved the foregoing audit, tax and non-audit services provided by the Auditor in 2022. Consistent with the Audit Committee’s responsibility for engaging our independent auditors, all audit and permitted non-audit services require pre-approval by the full Board. Fee estimates for these services are approved by the stockholders, shortly after the Meeting we will file an amendment to the Certificate of Incorporation with the Secretary of State of Delaware, such amendment to become effective upon filing. The amendment proposed by the Company to Article FOURTHChairman of the Certificate of Incorporation is attached to this Proxy Statement as Annex A. Neither Delaware law, nor the Certificate of Incorporation, nor the Company’s Bylaws, as amended, provides for appraisal or other similar rights for dissenting stockholders in connection with this proposal. Accordingly, the Company’s stockholders will have no right to dissent and obtain payment for their shares.Board based on information provided by our management.
Required Vote
13
Required Vote
ApprovalRatification of the Amendment Proposalappointment by the Audit Committee of the Auditor as the Company’s independent registered public accounting firm for the fiscal year ending October 31, 2023 requires the affirmative vote of a majority of the issued and outstanding shares of Common Stock voting as one class. Abstentions are considered present for purposes of establishing a quorum but will count as a vote against the Amendment Proposal.votes cast at this Virtual Meeting.
Recommendation of the Board
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE Amendment PROPOSAL.RATIFICATION OF THE APPOINTMENT BY THE BOARD OF HASKELL & WHITE LLP AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING OCTOBER 31, 2023.
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14
NAME CHANGE PROPOSAL
Introduction
On January 25, 2018, the Board acted by written consent to unanimously adopt the amendment to Article FIRST of our Certificate of Incorporation to change the Company’s name from “ITUS Corporation” to “Anixa Biosciences, Inc.,” such name change to occur at such time and date, if at all, as determined by the Board in its sole discretion. The Board is now asking you to approve this Name Change Amendment.
Effecting the Name Change Amendment requires that Article FIRST of our Certificate of Incorporation be amended. The amended text replacing the current Article FIRST is attached as Annex B to this Proxy Statement. If approved, the Name Change Amendment will be effective upon the filing of such amendment to the Certificate of Incorporation in the form attached as Annex B with the Secretary of State of Delaware with such filing to occur, if at all, at the sole discretion of the Board.
Stockholders will not be required to exchange outstanding stock certificates for new stock certificates if the Name Change Amendment is adopted and the Board, in its sole discretion, determines to effect the name change. When the Board effectuates the name change, the Company expects to change its trading symbol from “ITUS” to “ANIX,” it being understood that such symbol may not be available at the time of the name change and it further being understood that the Board, in its sole discretion, may choose a new symbol, whether or not “ANIX” is available, at the time of the name change.
Reason for the Name Change Proposal
Now that we have fully transitioned our business from the development, acquisition, licensing, and enforcement of patented technologies into a biotechnology company, our Board believes that the Company should better align its corporate name with our current business and mission. The Board believes that “Anixa Biosciences, Inc.” better reflects our current business and mission.
Text of Proposed Amendment; Effectiveness
The proposed Amendment will change Article FIRST of the Certificate of Incorporation to replace the current name of the Company, “ITUS Corporation,” with “Anixa Biosciences, Inc.” The Name Change Amendment will become effective upon its filing with the Secretary of State of Delaware.
Required VoteSolicitation
Approval of the Name Change Proposal requires the affirmative vote of a majority of the issued and outstanding shares of Common Stock voting as one class. Abstentions are considered present for purposes of establishing a quorum but will count as a vote against the Name Change Proposal.
Recommendation of the Board
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE NAME CHANGE PROPOSAL.
15
PROPOSAL 3INCENTIVE PLAN PROPOSAL
Introduction
We are asking our stockholders to approve the “ITUS Corporation 2018 Share Incentive Plan,” pursuant to which 5,000,000 shares of our Common Stock subject to replenishment will be reserved for issuance under the Plan in the form of (a) Stock Options, (b) Stock Appreciation Rights, (c) Stock Awards, (d) Performance Awards and (e) Stock Units (“Awards”). We will not grant or issue any Awards under the Plan unless at the time of such grant or issuance we have a sufficient number of authorized shares of Common Stock available to make such grant or issuance. On January 25, 2018, our Board adopted the Plan to attract and retain the best available personnel, to provide additional incentive to officers, employees, non-employee directors and consultants to the Company or any of its subsidiaries or affiliates and to promote the success of the Company’s business.
The following summary describes the material features of the Plan. The summary, however, does not purport to be a complete description of all the provisions of the Plan. Capitalized terms used but not defined in this proposal shall have the same meaning ascribed to them in the Plan, a copy of which is attached hereto as Annex C. The following description is qualified in its entirety by reference to the Plan.
Description of the Plan
Administration. The Plan will be initially administered by our compensation committee (the "Committee"). The Committee will have the authority to determine the terms and conditions of any agreements evidencing any Awards granted under the Plan and to adopt, alter and repeal rules, guidelines and practices relating to the Plan. Our Committee will have full discretion to administer and interpret the Plan and to adopt such rules, regulations and procedures as it deems necessary or advisable and to determine, among other things, the time or times at which the awards may be exercised and whether and under what circumstances an award may be exercised.
Eligibility. Officers, employees, non-employee directors and consultants to the Company or any of its subsidiaries or affiliates are eligible to participate in the Plan. As of the date of this proxy, the Company has two officers, one of which is also a director, four non-officer directors, six employees and five consultants. Our Committee has the sole and complete authority to determine who will be granted an award under the Plan.
A Number of Shares Authorized. The maximum aggregate number of shares of Common Stock that may be subject to Awards, including Stock Options, granted under the Plan is 5,000,000 shares, subject to certain adjustments. Additionally, commencing on the first business day in January 2019 and on the first business day of each calendar year thereafter while the Plan is in effect, the maximum aggregate number of shares of Common Stock available for issuance under this Plan will be increased such that, as of such first business day, the maximum aggregate number of shares of Common Stock available for issuance under the Plan will be no less than 2,000,000 shares. Any shares of Common Stock subject to a Stock Option or Stock Appreciation Right which for any reason is cancelled or terminated without having been exercised, any shares subject to Stock Awards, Performance Awards or Stock Units which are forfeited, any shares subject to Performance Awards settled in cash, any shares delivered to the Company as part or full payment for the exercise of a Stock Option or Stock Appreciation Right or any shares delivered to the Company in satisfaction of any tax withholding arising in connection with any Benefit consisting of shares of Common Stock, as the case may be, shall again be available for Awards under the Plan.
Duration. The Plan will have a term of ten years and no further awards may be granted under the Plan after that date.
Awards Available for Grant. Our Committee may grant awards of Non-Qualified Stock Options, Incentive (qualified) Stock Options, Stock Appreciation Rights, Stock Awards, Performance Awards and Stock Units or any combination of the foregoing.
Transferability. Each Award may be exercised during the participant’s lifetime only by the participant or, if permissible under applicable law, by the participant’s guardian or legal representative and may not be otherwise transferred or encumbered by a participant other than by will or by the laws of descent and distribution. Our Committee, however, may permit awards (other than incentive stock options) to be transferred to family members, a trust for the benefit of such family members, a partnership or limited liability company whose partners or stockholders are the participant and his or her family members or anyone else approved by it.
Amendment. Our Board may amend, suspend or terminate the Plan at any time; however, shareholder approval to amend the Plan may be necessary if the law or exchange that the company is then trading on so requires. No amendment, suspension or termination will impair the rights of any participant or recipient of any award without the consent of the participant or recipient.
Change in Control. Except to the extent otherwise provided in an Award agreement, in the event of a Change in Control as defined in the plan, all outstanding Stock Options and Stock Appreciation Rights issued under the Plan will become fully vested.
U.S. Federal Income Tax Consequences
The following is a general summary of the material U.S. federal income tax consequences of the grant and exercise and vesting of awards under the Plan and the disposition of shares acquired pursuant to the exercise of such awards and is intended to reflect the current provisions of the Code and the regulations thereunder. This summary is not intended to be a complete statement of applicable law, nor does it address foreign, state, local and payroll tax considerations. Moreover, the U.S. federal income tax consequences to any particular participant may differ from those described herein by reason of, among other things, the particular circumstances of such participant.
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Options. There are a number of requirements that must be met for a particular option to be treated as a qualified option. One such requirement is that shares of common stock acquired through the exercise of a qualified option cannot be disposed of before the later of (i) two years from the date of grant of the option, or (ii) one year from the date of exercise. Holders of qualified options will generally incur no federal income tax liability at the time of grant or upon exercise of those options. However, the spread at exercise will be an “item of tax preference,” which may give rise to “alternative minimum tax” liability for the taxable year in which the exercise occurs. If the holder does not dispose of the shares before the later of two years following the date of grant and one year following the date of exercise, the difference between the exercise price and the amount realized upon disposition of the shares will constitute long-term capital gain or loss, as the case may be. Assuming both holding periods are satisfied, no deduction will be allowed to the company for federal income tax purposes in connection with the grant or exercise of the qualified option. If, within two years following the date of grant or within one year following the date of exercise, the holder of shares acquired through the exercise of a qualified option disposes of those shares, the participant will generally realize taxable compensation at the time of such disposition equal to the difference between the exercise price and the lesser of the fair market value of the share on the date of exercise or the amount realized on the subsequent disposition of the shares, and that amount will generally be deductible by the company for federal income tax purposes, subject to the possible limitations on deductibility under Sections 280G and 162(m) of the Code for compensation paid to executives designated in those Sections. Finally, if an otherwise qualified option becomes first exercisable in any one year for shares having an aggregate value in excess of $100,000 (based on the grant date value), the portion of the qualified option in respect of those excess shares will be treated as a non-qualified stock option for federal income tax purposes.
No income will be realized by a participant upon grant of a non-qualified stock option. Upon the exercise of a non-qualified stock option, the participant will recognize ordinary compensation income in an amount equal to the excess, if any, of the fair market value of the underlying exercised shares over the option exercise price paid at the time of exercise. The company will be able to deduct this same amount for U.S. federal income tax purposes, but such deduction may be limited under Sections 280G and 162(m) of the Code for compensation paid to certain executives designated in those Sections.
Restricted Stock. A participant will not be subject to tax upon the grant of an award of restricted stock unless the participant otherwise elects to be taxed at the time of grant pursuant to Section 83(b) of the Code. On the date an award of restricted stock becomes transferable or is no longer subject to a substantial risk of forfeiture, the participant will recognize taxable compensation equal to the difference between the fair market value of the shares on that date over the amount the participant paid for such shares, if any, unless the participant made an election under Section 83(b) of the Code to be taxed at the time of grant. If the participant made an election under Section 83(b), the participant will recognize taxable compensation at the time of grant equal to the difference between the fair market value of the shares on the date of grant over the amount the participant paid for such shares, if any. (Special rules apply to the receipt and disposition of restricted shares received by officers and directors who are subject to Section 16(b) of the Securities Exchange Act of 1934 (the “Exchange Act”)). The company will be able to deduct, at the same time as it is recognized by the participant, the amount of taxable compensation to the participant for U.S. federal income tax purposes, but such deduction may be limited under Sections 280G and 162(m) of the Code for compensation paid to certain executives designated in those Sections.
Restricted Stock Units. A participant will not be subject to tax upon the grant of a restricted stock unit award. Rather, upon the delivery of shares or cash pursuant to a restricted stock unit award, the participant will have taxable compensation equal to the fair market value of the number of shares (or the amount of cash) the participant actually receives with respect to the award. The company will be able to deduct the amount of taxable compensation to the participant for U.S. federal income tax purposes, but the deduction may be limited under Sections 280G and 162(m) of the Code for compensation paid to certain executives designated in those Sections.
SARs. No income will be realized by a participant upon grant of an SAR. Upon the exercise of an SAR, the participant will recognize ordinary compensation income in an amount equal to the fair market value of the payment received in respect of the SAR. The company will be able to deduct this same amount for U.S. federal income tax purposes, but such deduction may be limited under Sections 280G and 162(m) of the Code for compensation paid to certain executives designated in those Sections.
Stock Bonus Awards. A participant will have taxable compensation equal to the difference between the fair market value of the shares on the date the shares of common stock subject to the award are transferred to the participant over the amount the participant paid for such shares, if any. The company will be able to deduct, at the same time as it is recognized by the participant, the amount of taxable compensation to the participant for U.S. federal income tax purposes, but such deduction may be limited under Sections 280G and 162(m) of the Code for compensation paid to certain executives designated in those Sections.
Section 162(m). In general, Section 162(m) of the Code denies a publicly held corporation a deduction for U.S. federal income tax purposes for compensation in excess of $1,000,000 per year per person to its principal executive officer, principal financial officer and the three other officers (other than the principal executive officer and principal financial officer) whose compensation is disclosed in its proxy statement as a result of their total compensation, subject to certain exceptions.
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THE FOREGOING IS ONLY A SUMMARY OF THE EFFECT OF U.S. FEDERAL INCOME TAXATION INTENDED FOR THE INFORMATION OF THE COMPANY'S STOCKHOLDERS AND NOT AS TAX GUIDANCE TO RECIPIENTS OF AWARDS. THE FOREGOING DOES NOT PURPORT TO BE A COMPLETE STATEMENT OF THE LAW IN THIS AREA. DIFFERENT TAX RULES MAY APPLY TO SPECIFIC RECIPIENTS AND TRANSACTIONS UNDER THE PLAN AND UNDER THE INCOME TAX LAWS OF ANY MUNICIPALITY, STATE OR FOREIGN COUNTRY IN WHICH ANY ELIGIBLE INDIVIDUAL MAY RESIDE.
New Plan Benefits
Future grants under the Plan will be made at the discretion of the Committee and, accordingly, are not yet determinable. In addition, the value of the Awards granted under the Plan will depend on a number of factors, including the fair market value of our shares of common stock on future dates, the exercise decisions made by the participants and/or the extent to which any applicable performance goals necessary for vesting or payment are achieved. Consequently, it is not possible to determine the benefits that might be received by participants receiving discretionary grants under, or having their annual bonus paid pursuant to, the Plan.
Required Vote
Approval of the Plan will require the affirmative vote of the holders of a majority of the shares of the Company’s common stock represented in person or by proxy and entitled to vote at the Meeting. Assuming the presence of a quorum of more than 50% of the shares of our common stock, the failure to vote will have no effect on the outcome of the vote.
Interests of Directors or Officers
Our directors may grant awards under the Incentive Plan to themselves as well as our officers, in addition to granting awards to our other employees.
Recommendation of the Board
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE INCENTIVE PLAN PROPOSAL.
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Proxy Solicitation
Proxies
A stockholder may revoke his, her or its proxy at any time prior to its use by giving written notice to the Secretary of the Company, by executing a revised proxy at a later date or by attending the Meeting and voting in person.date. Proxies in the form enclosed, unless previously revoked, will be voted at the Virtual Meeting in accordance with the specifications made thereon or, in the absence of such specifications in accordance with the recommendations of the Board.
Securities Outstanding; Votes Required
Securities Outstanding
As of the close of business on the Record Date there were 16,631,19130,922,830 shares of Common Stock outstanding. Stockholders are entitled to one vote for each share of Common Stock owned. In the election of directors, the four persons receiving the highest number of affirmative votes cast at the Virtual Meeting will be elected. The affirmative vote of a majority of the votes properly cast at the Virtual Meeting or by proxy is required for approval of proposals 2 and 3. Shares of the Common Stock represented at the meeting and by executed proxies received by the Company will be counted for purposes of establishing a quorum at the Virtual Meeting, regardless of how or whether such shares are voted on any specific proposal.
Other Business
Other Business
Our Board knows of no other matter to be presented at the Virtual Meeting. If any additional matter should properly come before the Virtual Meeting, it is the intention of the persons named in the enclosed proxy to vote such proxy in accordance with their judgment on any such matters.
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Beneficial Ownership of Principal Stockholders, Officers and Directors
The following table sets forth certain information with respect to our common stock beneficially owned as of the Record Date by (a) each person who is known by our management to be the beneficial owner of more than 5% of our outstanding common stock, (b) each of our directors and executive officers, and (c) all directors and executive officers as a group:
| Name and Address of Beneficial Owner | Amount and Nature of Beneficial Ownership (1)(2)(3) | Percent of Class (4) | ||||||
| Directors and Officers of the Company | ||||||||
| Dr. Amit Kumar 3150 Almaden Expressway, Suite 250 San Jose, CA 95118 | 4,069,323 | 11.8 | % | |||||
| Lewis H. Titterton, Jr. 3150 Almaden Expressway, Suite 250 San Jose, CA 95118 | 1,623,904 | 5.1 | % | |||||
| Michael J. Catelani 3150 Almaden Expressway, Suite 250 San Jose, CA 95118 | 1,245,290 | 3.9 | % | |||||
| Dr. Arnold Baskies 3150 Almaden Expressway, Suite 250 San Jose, CA 95118 | 392,167 | 1.3 | % | |||||
| Emily Gottschalk 3150 Almaden Expressway, Suite 250 San Jose, CA 95118 | 254,832 | * | % | |||||
| All Directors and Executive Officers as a Group (5 persons) | 7,585,516 | 20.4 | % | |||||
| * | Less than 1%. | |
| (1) | A beneficial owner of a security includes any person who directly or indirectly has or shares voting power and/or investment power with respect to such security or has the right to obtain such voting power and/or investment power within sixty (60) days. Except as otherwise noted, each designated beneficial owner in this proxy statement has sole voting power and investment power with respect to the shares of common stock beneficially owned by such person. | |
| (2) | Includes 240,000 shares, 524,000 shares, 250,000 shares, 83,000, and 1,097,000 shares which Dr. Amit Kumar, Lewis H. Titterton, Jr., Michael J. Catelani, Dr. Arnold Baskies and all directors and executive officers as a group, respectively, have the right to acquire within 60 days upon exercise of options granted pursuant to the 2010 Share Incentive Plan. | |
| (3) | Includes 3,367,223 shares, 325,834 shares, 975,000 shares, 209,167 shares, 209,167 shares and 5,086,391 shares which Dr. Amit Kumar, Lewis H. Titterton, Jr., Michael J. Catelani, Dr. Arnold Baskies, Emily Gottschalk and all directors and executive officers as a group, respectively, have the right to acquire within 60 days upon exercise of options granted pursuant to the 2018 Share Incentive Plan. | |
| (4) | Based on 30,922,830 shares of common stock outstanding as of the Record Date. |
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Deadline for Submission of Stockholder Proposals for 20182024 Annual Meeting of Stockholders
For any proposal to be considered for inclusion in our proxy statement and form of proxy for submission to the stockholders at our 20182024 Annual Meeting of Stockholders, it must be submitted in writing and comply with the requirements of Rule 14a-8 of the Securities Exchange Act. Such proposals must be received by the Company at its offices at 3150 Almaden Expressway, Suite 250, San Jose, CA 95118 no later than April 10, 2018.September 30, 2023.
Stockholders may present proposals intended for inclusion in our proxy statement for our 20182024 Annual Meeting of Stockholders provided that such proposals are received by the Secretary of the Company in accordance with the time schedules set forth in, and otherwise in compliance with, applicable SEC regulations, and the Company’s Bylaws, as amended, as applicable. Proposals submitted not in accordance with such regulations will be deemed untimely or otherwise deficient; however, the Company will have discretionary authority to include such proposals in the 2018 Proxy Statement.
Stockholder Communicationsdeficient.
Stockholders wishing to communicate with the Board may direct such communications to the Board c/o the Company, Attn: Dr. Amit Kumar. Dr. Kumar will present a summary of all stockholder communications to the Board at subsequent Board meetings. The directors will have the opportunity to review the actual communications at their discretion.
Additional InformationAccompanying this Proxy Statement is a copy of the Company’s Annual Report on Form 10-K for the year ended October 31, 2022. Such Report includes the Company’s audited financial statements for the 2022 fiscal year and certain other financial information.
WeIn addition, we are subject to certain informational requirements of the Exchange Act and in accordance therewith file reports, proxy statements and other information with the SEC. Such reports, proxy statements and other information are available on the SEC’s website at www.sec.gov. Stockholders who have questions in regard to any aspect of the matters discussed in this Proxy Statement should contact Michael Catelani, Secretary of the Company, at 3150 Almaden Expressway, Suite 250, San Jose, CA 95118.
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BENEFICIAL OWNERSHIP OF PRINCIPAL STOCKHOLDERS, OFFICERS AND DIRECTORSPROXY
The following table sets forth certain information with respect to our common stock beneficially owned as of the Record Date by (a) each person who is known by our management to be the beneficial owner of more than 5% of our outstanding common stock, (b) each of our directors and executive officers, and (c) all directors and executive officers as a group:THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Amount and Nature of (1)(2)(3)(4) | Percent of Class (5) | |
Directors and Officers of the Company | ||
Dr. Amit Kumar | 945,297 | 5.4% |
3150 Almaden Expressway, Suite 250 |
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Bruce Johnson | 677,817 | 4.1% |
3150 Almaden Expressway, Suite 250 |
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Dr. John Monahan | 93,000 | *% |
3150 Almaden Expressway, Suite 250 |
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Lewis H. Titterton | 1,121,544 | 6.6% |
3150 Almaden Expressway, Suite 250 |
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San Jose, CA 95118 |
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Richard H. Williams | 150,000 | *% |
3150 Almaden Expressway, Suite 250 |
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San Jose, CA 95118 |
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Michael J. Catelani | 20,838 | *% |
3150 Almaden Expressway, Suite 250 |
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All Directors and Executive Officers as a | 3,008,496 | 16.8% | * Less than 1%. |
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(1) A beneficial owner of a security includes any person who directly or indirectly has or shares voting power and/or investment power with respect to such security or has the right to obtain such voting power and/or investment power within sixty (60) days. Except as otherwise noted, each designated beneficial owner has sole voting power and investment power with respect to the shares of common stock beneficially owned by such person.THE UNDERSIGNED HEREBY APPOINTS DR. AMIT KUMAR AND MICHAEL CATELANI, AND EACH OF THEM, AS PROXIES OF THE UNDERSIGNED, WITH FULL POWER OF SUBSTITUTION, TO VOTE ALL THE SHARES OF COMMON STOCK OF ANIXA BIOSCIENCES, INC. HELD OF RECORD BY THE UNDERSIGNED ON JANUARY 17, 2023, AT THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MARCH 9, 2023, OR ANY ADJOURNMENT THEREOF.
(2) Includes 178,889 shares, 61,000 shares, 43,000 shares, 199,000 shares, 50,000 shares, 20,838 shares and 552,727 shares which1. Election of Dr. Amit Kumar, Bruce Johnson, Dr. John Monahan,Arnold Baskies, Emily Gottschalk, and Lewis H. Titterton, Richard H. Williams, Michael J. CatelaniJr. to hold office until the 2024 Annual Meeting of Stockholders or their successors are elected and all directors and executive officers as a group, respectively, have the right to acquire within 60 days upon exercise of options granted pursuant to the 2010 Share Incentive Plan . qualified.
(3) Includes 2,000 shares, 2,000 shares and 4,000 shares that[ ] FOR ALL THE NOMINEES
[ ] WITHHOLD AUTHORITY FOR THE NOMINEES
[ ] FOR ALL EXCEPT (see instructions)
[ ] Dr. Amit Kumar
[ ] Dr. Arnold Baskies
[ ] Emily Gottschalk
[ ] Lewis H. Titterton, Jr.
Instructions: to withhold authority for any individual nominee, mark “FOR ALL EXCEPT” and all directors and executive officers as a group, respectively, have the right to acquire within 60 days upon exercise of warrants purchased by themfill in the private placement on July 15, 2014.circle next to the nominee you wish to withhold for.
(4) Includes 640,000 shares, 12,000 shares, 86,000 shares and 738,000 shares which Dr. Amit Kumar, Bruce Johnson, Lewis H. Titterton and all directors and2. To approve on a non-binding, advisory basis the compensation of our named executive officers as a group, respectively, have the right to acquire within 60 days pursuant to option agreements with the Company.officers:
(5) Based on 16,631,191 shares of common stock outstanding as of the Record Date.[ ] FOR [ ] AGAINST [ ] ABSTAIN
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EXECUTIVE COMPENSATION
[ ] FOR [ ] AGAINST [ ] ABSTAIN
The shares represented by or paid to our Chairmanthis proxy, when properly executed, will be voted as specified by the undersigned stockholder(s). If this card contains no specific voting instructions, the shares will be voted FOR each of the Board, our Presidentdirectors and Chief Executive Officer and our Chief Operating Officer and Chief Financial Officer (the “Named Executive Officersproposals described on this card.”). No other executive officer received total compensation in excess of $100,000 during fiscal year 2017.
SUMMARY COMPENSATION TABLE | ||||||
Name and Principal Position |
Year |
Salary ($) |
Bonus ($) | Option Awards ($) (2) | All Other Compensation ($) (3) | Total Compensation ($) |
Dr. Amit Kumar (1) Chairman of the Board, President and Chief Executive Officer | 2017 2016
| $ 300,000 $ 300,000 | $ - $ 200,000 | $ 141,938 $ 566,896 | $ 12,000 $ 12,000 | $ 453,938 $ 1,078,896 |
Robert A. Berman (4) Chief Executive Officer and Director | 2017 2016 | $ 228,077 $ 300,000 | $ - $ 200,000 | $ - $ 566,896 | $ 300,000 $ - | $ 528,077 $ 1,066,896 |
Michael J. Catelani (5) Chief Operating Officer and Chief Financial Officer | 2017 | $ 174,561 | $ - | $ 385,859 | $ - | $ 560,420 |
(1) Dr. Kumar has servedIn their discretion, the proxies are authorized to vote upon such other business as may properly come before the Company’s Executive Chairman of the Board since August 2016. On July 6, 2017 Dr. Kumar was appointed President and Chief Executive Officer of the Company.meeting.
(2) Amounts inPlease mark, sign, date and return this proxy promptly using the Option Awards column represent the aggregate grant date fair value of stock option awards made during the fiscal years ended October 31, 2017 and 2016 for each Named Executive Officer in accordance with Accounting Standards Codification (“ASCaccompanying postage pre-paid envelope. THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF Anixa Biosciences, Inc.”) 718 and also reflects the repricing of outstanding options for Dr. Kumar and Mr. Catelani on September 6, 2017. For more information pertaining the valuation of option awards and the repricing of our options, please refer to our Annual Report on Form 10-K for the year ended October 31, 2017.
(3) Amounts in the All Other Compensation column reflect, for each Named Executive Officer, the sum of the incremental cost to us of all perquisites and personal benefits, which for Dr. Kumar consisted solely of compensation for use of a home office, and for Mr. Berman consisted solely of severance obligations related to his resignation on July 6, 2017.
(4) Mr. Berman resigned his position as Chief Executive Officer and director on July 6, 2017.
(5) Mr. Catelani has served as the Company’s Chief Financial Officer since November 1, 2016. On July 6, 2017, Mr. Catelani was appointed Chief Operating Officer of the Company.
Consulting Agreement with Dr. Amit Kumar
| Signature of Stockholder(s) | Date |
When shares are held by joint tenants, both should sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such. If a corporation, please sign the corporate name by the president or other authorized officer. If a partnership, please sign in the partnership name by an authorized person.
On September 19, 2012, the Company entered into a Consulting Agreement with Dr. Amit Kumar (the “Kumar Agreement”) pursuant to which Dr. Kumar agreed to provide business consulting services for an initial annual consulting fee of $120,000. On June 15, 2015, Dr. Kumar was appointed Vice Chairman of the Company and Executive Chairman of Anixa Diagnostics Corporation, a wholly-owned subsidiary of the Company. As a result of this appointment, Dr. Kumar’s cash compensation was increased to $300,000VOTE BY INTERNET— You may cast your vote by the Board. On August 23, 2016, Dr. Kumar was appointed Executive Chairman of the Company, and on July 6, 2017 Dr. Kumar was appointed President and Chief Executive Officer of the Company. The terms of the Kumar Agreement still remain in effect.visiting http://www.proxyvote.com.
If Dr. Kumar’s services are terminated byUse the Company or he terminates his servicesInternet to transmit your voting instructions and for any reason or no reason,electronic delivery of information up until 11:59 P.M. Eastern Time the Company shall be obligatedday before the meeting date. Have your proxy card in hand when you access the website and follow the instructions to payobtain your records and to Dr. Kumar only any earned compensation and/or bonus due under the Kumar Agreement and any unpaid reasonable and necessary expenses, due to him through the date of termination. All such payments shall be made in a lump sum immediately following termination.
Employment Agreement with Robert Berman
On September 19, 2012, the Company entered intocreate an Employment Agreement with Mr. Berman (the “Berman Agreement”) to serve as President and Chief Executive Officer of the Company. Pursuant to the Berman Agreement, Mr. Berman initially received an annual base salary of $290,000, which was increased to $300,000 by the Board effective November 1, 2013.
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On July 6, 2017, Mr. Berman resigned as President and Chief Executive Officer and as a director. Pursuant to the terms of a separation agreement entered into on August 16, 2017 between Mr. Berman and the Company, Mr. Berman is entitled to receive severance payments in an aggregate amount of $300,000 to be paid in four separate tranches with the final payment occurring on June 1, 2018.
Stock Options
The following table sets forth certain information with respect to unexercised stock options held by the Named Executive Officers outstanding on October 31, 2017: electronic voting instruction form.
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(1) Options vested and became exercisable in 36 consecutive monthly installments, beginning December 31, 2013 and continuing through November 30, 2016.
(2) Options vest and become exercisable in 36 consecutive monthly installments, beginning March 31, 2016 and continuing through February 28, 2019.
(3) Options were to vest and become exercisable in 36 consecutive monthly installments, beginning March 31, 2016 and continuing through February 28, 2019. However, pursuant to a separation agreement between the Company and Mr. Berman, the options vested and became exercisable upon Mr. Berman’s resignation on July 6, 2017.
(4) Options vest and become exercisable in one installment of 16,666 on November 1, 2017 and the remainder in eight consecutive quarterly installments, beginning January 31, 2018 and continuing through October 31, 2019.
(5) Options vest and become exercisable in one installment of 50,000 on July 6, 2018 and the remainder in twelve consecutive quarterly installments, beginning October 31, 2018 and continuing through July 31, 2021.
The following table summarizes stock option grants during fiscal year 2017.
GRANTS OF PLAN BASED AWARDS TABLE | ||||
Name | Grant Date | All Other Option Awards: Number of Securities Underlying Options (#) | Exercise Price of Option Awards ($) | Grant Date Fair Value (1) ($) |
Michael J. Catelani | 11/15/16 | 50,000 | $0.67 | $237,125 |
| 7/6/17 | 200,000 | $0.67 | $187,571 |
(1) Grant date fair value reflects the repricing of options on September 6, 2017
No stock options were exercised by Named Officers during fiscal 2017.
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Option Re-Pricing
On September 6, 2017, the compensation committee of the Company re-priced certain issued and outstanding stock options to purchase in the aggregate 2,029,600 shares of Common Stock for all of the current officers, directors and employees of the Company (the “Re-Priced Options”) pursuant to the authority granted to the compensation committee by the Board. The new exercise price of the Re-Priced Options is $0.67, the closing sales price of the Company’s common stock on September 6, 2017.
All other terms of the previously granted Re-Priced Options remain the same, including without limitation, the number of shares underlying the options granted, the vesting periods of the options, and the expiration dates of the options.
The Company recorded additional stock-based compensation expense resulting from the incremental value of the fair value of the Re-Priced Options compared to the fair value of the original options immediately prior to the re-pricing of approximately $261,000 in fiscal year ended October 31, 2017.
The following stock option grants and related stock option agreements issued to the Company’s Named Executive Officers and directors were affected by the re-pricing:
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Potential Payments upon Termination or Change in Control
Dr. Amit Kumar
Options granted Dr. Kumar on February 18, 2016 provide for the vesting of the unvested portion of his options to be accelerated and such accelerated options to become immediately exercisable if Dr. Kumar is terminated without cause or upon a change in control as defined below. The intrinsic value of options granted on February 18, 2016 would be $122,667, which was calculated by multiplying (a) 88,889 options (being the number of options granted to him on February 18, 2016 that would be accelerated) by (b) an amount equal to the excess of (x) our closing share price on October 31, 2017 of $2.05 and (y) the options’ exercise price of $0.67 per share.
Michael J. Catelani
Options granted Mr. Catelani on July 6, 2017 provide for the vesting of the unvested portion of his options to be accelerated and such accelerated options to become immediately exercisable if Mr. Catelani is terminated without cause or upon a change in control as defined below. The intrinsic value of options granted on July 6, 2017 would be $276,000, which was calculated by multiplying (a) 200,000 options (being the number of options granted to him on July 6, 2017 that would be accelerated) by (b) an amount equal to the excess of (x) our closing share price on October 31, 2017 of $2.05 and (y) the options’ exercise price of $0.67 per share.
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Under the 2010 Share Incentive Plan, “change in control” means:
· Change in Ownership: A change in ownership of the Company occurs on the date that any one person, or more than one person acting as a group, acquires ownership of stock of the Company that, together with stock held by such person or group, constitutes more than 50% of the total fair market value or total voting power of the stock of the Company, excluding the acquisition of additional stock by a person or more than one person acting as a group who is considered to own more than 50% of the total fair market value or total voting power of the stock of the Company.
· Change in Effective Control: A change in effective control of the Company occurs on the date that either: Any one person, or more than one person acting as a group, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) ownership of stock of the Company possessing 30% or more of the total voting power of the stock of the Company; or
· a majority of the members of the Board is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the Board before the date of the appointment or election; provided, that this paragraph will apply only to the Company if no other corporation is a majority shareholder.
· Change in Ownership of Substantial Assets: A change in the ownership of a substantial portion of the Company’s assets occurs on the date that any one person, or more than one person acting as a group, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) assets from the Company that have a total gross fair market value equal to or more than 40% of the total gross fair market value of the assets of the Company immediately before such acquisition or acquisitions. For this purpose, “gross fair market value” means the value of the assets of the Company, or the value of the assets being disposed of, determined without regard to any liabilities associated with such assets.
It is the intent that this definition be construed consistent with the definition of “Change of Control” as defined under Code Section 409A and the applicable treasury regulations, as amended from time to time.
There is no present arrangement for cash compensation of directors for services in that capacity. Consistent with the non-employee director compensation approved on March 28, 2013 for calendar year 2013, on November 8, 2013, the Board approved an amendment to the 2010 Share Incentive Plan to provide that on January 1st of each year commencing on January 1, 2014, each non-employee director (a “Director Participant”) of the Company at that time shall automatically be granted a 10 year nonqualified stock option to purchase 12,000 shares of common stock (or 16,000 in the case of the Chairman of the Board to the extent he qualifies as a Director Participant), with an exercise price equal to the closing price on the date of grant, that will vest in four equal quarterly installments in the year of grant. In addition, each person who is a Director Participant and joins the Board after January 1 of any year, shall be granted on the date such person joins the Board, a nonqualified stock option to purchase 12,000 shares of common stock (or 16,000 in the case of the Chairman of the Board) pro-rated based upon the number of calendar quarters remaining in the calendar year in which such person joins the Board (rounded up for partial quarters). In addition to the foregoing, Dr. Monahan and Mr. Titterton, and in lieu of the foregoing, Messrs. Johnson and Williams, were each granted a nonqualified stock option to purchase 50,000 shares of common stock on September 22, 2017. Further, on September 22, 2017, Mr. Williams was granted an additional nonqualified stock option to purchase 50,000 shares of common stock.
Our employee directors, Dr. Amit Kumar and Robert A. Berman, did not receive any additional compensation for services provided as a director during fiscal year 2017. The following table sets forth compensation of Bruce F. Johnson, Dr. John Monahan, Lewis H. Titterton, Jr., and Richard H. Williams, our non-employee directors, and Dr. Arnold Baskies and Dale Fox, our former non-employee directors, for fiscal year 2017:
DIRECTORS’ COMPENSATION | |||
Name | Option Awards ($) (1) | All Other Compensation ($) (2) | Total Compensation ($) |
Bruce F. Johnson (3) | $ 94,722 | $ 113,500 | $ 208,222 |
Dr. John Monahan | $ 150,195 | $ 113,500 | $ 263,695 |
Lewis H. Titterton, Jr. | $ 137,255 | $ 113,500 | $ 250,755 |
Richard H. Williams (3) | $ 189,444 | $ 113,500 | $ 302,944 |
Dr. Arnold Baskies (3) | $ 79,109 | $ - | $ 79,109 |
Dale Fox (3) | $ 58,739 | $ - | $ 58,739 |
(1) Amounts in the Option Awards column represent the aggregate grant date fair value of stock option awards made during the fiscal year ended October 31, 2017, in accordance with ASC 718 and also reflects the repricing of outstanding options for Drs. Monahan and Baskies and Messrs. Titterton and Fox on September 6, 2017. See the section entitled “Option Re-Pricing” above. A discussion of assumptions used in valuation of option awards may be found in Note 2 to our Consolidated Financial Statements for fiscal year ended October 31, 2017, included elsewhere in this Annual Report on Form 10-K. At October 31, 2017, Bruce Johnson, Dr. John Monahan, Lewis Titterton and Richard Williams held unexercised stock options to purchase 100,400, 68,000, 310,000 and 100,000 shares respectively, of our common stock.
(2) On September 22, 2017, each non-employee director was awarded 50,000 shares of common stock under the 2010 Share Incentive Plan. The closing price of the Company’s common stock on the date of the award was $2.27. Amounts in the All Other Compensation column represent the market value of the shares on the date they were awarded.
(3) Dr. Baskies and Mr. Fox resigned as directors, and Messrs. Johnson and Williams became directors, on September 22, 2017.
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ANNEX A
CERTIFICATE OF AMENDMENT TO THE
CERTIFICATE OF INCORPORATION
OF ITUS CORPORATION
The undersigned, for the purposes of amending the Certificate of Incorporation of ITUS Corporation (the “Corporation”), a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware, does hereby certify that:
FIRST: The Board of Directors of the Corporation (the “Board”) duly adopted in accordance with Section 141(f) of the DCGL on January 25, 2018, a resolution proposing and declaring advisable the following amendment to replace Article FOURTH of the Certificate of Incorporation of said Corporation:
“FOURTH: The total number of shares of stock that the Corporation shall have authority to issue is forty eight million twenty thousand (48,020,000), of which forty eight million (48,000,000) shall be Common Stock of the par value of $0.01 per share and twenty thousand (20,000) shall be Preferred Stock of the par value of $100 per share. The 20,000 shares of Preferred Stock may be issued from time to time in one or more series, each of such series to have such voting powers, full or limited, or no voting powers, designations, preferences and relative participating, optional or other special rights and qualifications and limitations or restrictions as are stated and expressed in the resolutions providing for the issue of such series adopted by the Board of Directors as hereinafter provided. Authority is hereby expressly granted to the Board of Directors to establish and designate one or more series of Preferred Stock and to fix the relative rights, preferences and limitations of each series, including without limitation:
1. The number of shares to constitute such series and the distinctive designations thereof;
2. The dividend rate to which such shares shall be entitled and the restrictions, limitations and conditions upon the payment of such dividends, whether dividends shall be cumulative, the date or dates from which dividends (if cumulative) shall accumulate and the dates on which dividends (if declared) shall be payable;
3. Whether or not the shares of such series shall be redeemable and, if so, the terms, limitations and restrictions with respect to such redemption, including without limitation the manner of selecting shares for redemption if less than all shares are to be redeemed, and the amount, if any, in addition to any accrued dividends thereon, which the holders of shares of such series shall be entitled to receive upon the redemption thereof, which amount may vary at different redemption dates and may be different with respect to shares redeemed through the operation of any purchase, retirement or sinking fund and with respect to shares otherwise redeemed;
4. The amount in addition to any accrued dividends thereon which the holders of shares of such series shall be entitled to receive upon the voluntary or involuntary liquidation, dissolution or winding up of the Corporation, which amount may vary at different dates and may vary depending on whether such liquidation, dissolution or winding up is voluntary or involuntary;
5. Whether or not the shares of such series shall be subject to the operation of a purchase, retirement or sinking fund and, if so, the terms, limitations and restrictions with respect thereto, including without limitation whether such purchase, retirement or sinking fund shall be cumulative or non—cumulative, the extent to and the manner in which such fund shall be applied to the purchase, retirement or redemption of the shares of such series for retirement or to other corporate purposes and the terms and provisions relative to the operation thereof;
6. Whether or not the shares of such series shall have conversion privileges and, if so, prices or rates of conversion and the method, if any, of adjusting the same;
7. The voting powers, if any, of such series; and
8. Any other relative rights, preferences and limitations thereof as shall not be inconsistent with this Article.”
SECOND: The holders of a majority of the issued and outstanding voting stock of the Corporation have voted in favor of said amendment at a duly convened meeting of the stockholders of the Corporation.
THIRD: The aforesaid amendment was duly adopted in accordance with the applicable provisions of Section 242 of the DGCL.
FOURTH: The aforesaid amendment shall be effective as of _____ A.M. Eastern Standard Time on _____, 20__.
IN WITNESS WHEREOF, the Corporation has caused this Amendment to the Certificate of Incorporation of the Corporation to be duly executed by the undersigned this ____ day of _________, 20__.
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ANNEX B
CERTIFICATE OF AMENDMENT TO THE
CERTIFICATE OF INCORPORATION
OF ITUS CORPORATION
The undersigned, for the purposes of amending the Certificate of Incorporation of ITUS Corporation (the “Corporation”), a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware, does hereby certify that:
FIRST: The Board of Directors of the Corporation (the “Board”) duly adopted in accordance with Section 141 of the DCGL on January 25, 2018, a resolution proposing and declaring advisable the following amendment to Article FIRST of the Certificate of Incorporation of said Corporation:
SECOND: The holders of a majority of the issued and outstanding voting stock of the Corporation have voted in favor of said amendment at a duly convened meeting of the stockholders of the Corporation.
THIRD: The aforesaid amendment was duly adopted in accordance with the applicable provisions of Section 242 of the DGCL.
FOURTH: The aforesaid amendment shall be effective as of ___ A.M. Eastern Standard Time on ___________, 2018.
IN WITNESS WHEREOF, the Corporation has caused this Amendment to the Certificate of Incorporation of the Corporation to be duly executed by the undersigned this ___ day of _________, 20__.
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ANNEX C
ITUS CORPORATION
2018 SHARE INCENTIVE PLAN
1. Purpose. The ITUS Corporation 2018 Share Incentive Plan (the "Plan") is intended to provide incentives which will attract, retain and motivate highly competent persons as officers, employees and non-employee directors ("Director Participants"), of, and consultants to, ITUS Corporation (the "Company") and its subsidiaries and affiliates, by providing them opportunities to acquire shares of the Company's common stock, par value $.01 per share (the "Common Stock"), or to receive monetary payments based on the value of such shares pursuant to the Benefits (as defined below) described herein. Additionally, the Plan is intended to assist in further aligning the interests of the Company's officers, employees and consultants to those of its other stockholders.
2. Administration.
a. The Plan will be administered by a committee (the "Committee") appointed by the Board of Directors of the Company from among its members (which may be the Compensation Committee) and shall be comprised, unless otherwise determined by the Board of Directors, solely of not less than two members who shall be (i) "Non-Employee Directors" within the meaning of Rule 16b 3(b)(3) (or any successor rule) promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act") and (ii) "outside directors" within the meaning of Treasury Regulation Section 1.162-27(e)(3) under Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code"). The Committee is authorized, subject to the provisions of the Plan, to establish such rules and regulations as it deems necessary for the proper administration of the Plan and to make such determinations and interpretations and to take such action in connection with the Plan and any Benefits granted hereunder as it deems necessary or advisable. All determinations and interpretations made by the Committee shall be binding and conclusive on all participants and their legal representatives. No member of the Committee and no employee of the Company shall be liable for any act or failure to act hereunder, except in circumstances involving his or her bad faith, gross negligence or willful misconduct, or for any act or failure to act hereunder by any other member or employee or by any agent to whom duties in connection with the administration of this Plan have been delegated. The Company shall indemnify members of the Committee and any agent of the Committee who is an employee of the Company, a subsidiary or an affiliate against any and all liabilities or expenses to which they may be subjected by reason of any act or failure to act with respect to their duties on behalf of the Plan, except in circumstances involving such person's bad faith, gross negligence or willful misconduct.
b. The Committee may delegate to one or more of its members, or to one or more agents, such administrative duties as it may deem advisable, and the Committee, or any person to whom it has delegated duties as aforesaid, may employ one or more persons to render advice with respect to any responsibility the Committee or such person may have under the Plan. The Committee may employ such legal or other counsel, consultants and agents as it may deem desirable for the administration of the Plan and may rely upon any opinion or computation received from any such counsel, consultant or agent. Expenses incurred by the Committee in the engagement of such counsel, consultant or agent shall be paid by the Company, or the subsidiary or affiliate whose employees have benefited from the Plan, as determined by the Committee.
3. Participants. Participants will consist of such officers, employees and Director Participants of, and such consultants to, the Company and its subsidiaries and affiliates as the Committee in its sole discretion determines to be significantly responsible for the success and future growth and profitability of the Company and whom the Committee may designate from time to time to receive Benefits under the Plan. Designation of a participant in any year shall not require the Committee to designate such person to receive a Benefit in any other year or, once designated, to receive the same type or amount of Benefit as granted to the participant in any other year. The Committee shall consider such factors as it deems pertinent in selecting participants and in determining the type and amount of their respective Benefits.
4. Type of Benefits. Benefits under the Plan may be granted in any one or a combination of (a) Stock Options, (b) Stock Appreciation Rights, (c) Stock Awards, (d) Performance Awards and (e) Stock Units (each as described below, and collectively, the "Benefits"). Stock Awards, Performance Awards, and Stock Units may, as determined by the Committee in its discretion, constitute Performance-Based Awards, as described in Section 11 hereof. Benefits shall be evidenced by agreements (which need not be identical) in such forms as the Committee may from time to time approve; provided, however, that in the event of any conflict between the provisions of the Plan and any such agreements, the provisions of the Plan shall prevail.
5. Common Stock Available Under the Plan. The maximum aggregate number of shares of Common Stock that may be subject to Benefits, including Stock Options, granted under this Plan shall be 5,000,000 shares, which may be authorized and unissued or treasury shares, subject to any adjustments in accordance with Section 14 hereof. Additionally, commencing on the first business day in January 2019 and on the first business day of each calendar year thereafter while the Plan is in effect, the maximum aggregate number of shares of Common Stock available for issuance under this Plan shall be increased such that, as of such first business day, the maximum aggregate number of shares of Common Stock available for issuance under this Plan shall be no less than 2,000,000 shares. Any shares of Common Stock subject to a Stock Option or Stock Appreciation Right which for any reason is cancelled or terminated without having been exercised, any shares subject to Stock Awards, Performance Awards or Stock Units which are forfeited, any shares subject to Performance Awards settled in cash, any shares delivered to the Company as part or full payment for the exercise of a Stock Option or Stock Appreciation Right or any shares delivered to the Company in satisfaction of any tax withholding arising in connection with any Benefit consisting of shares of Common Stock, as the case may be, shall again be available for Benefits under the Plan.
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6. Stock Options. Stock Options will consist of awards from the Company that will enable the holder to purchase a number of shares of Common Stock, at set terms. Stock Options may be "incentive stock options", within the meaning of Section 422 of the Code ("Incentive Stock Options"), or Stock Options which do not constitute Incentive Stock Options ("Nonqualified Stock Options"); provided, however, that grants of Incentive Stock Options may only be made to employees of the Company, a subsidiary corporation or parent corporation and that Incentive Stock Option grants made prior to approval of the grant of Incentive Stock Options under the Plan by stockholders of the Company shall be subject to such approval and provided, further, that if stockholder approval of the grant of Incentive Stock Options under the Plan is not obtained within twelve months of adoption of the Plan by the Board of Directors, any Stock Option granted during the twelve month period after adoption of the Plan by the Board of Directors that is designated as an Incentive Stock Option shall be treated thereafter as Nonqualified Stock Option. The Committee will have the authority to grant to any participant, including officers, employees, Director Participants, and consultants, Nonqualified Stock Options, or, for those participants who are employees of the Company, a subsidiary corporation or parent corporation both types of Stock Options (in each case with or without Stock Appreciation Rights). Each Stock Option shall be subject to such terms and conditions consistent with the Plan as the Committee may impose from time to time, subject to the following limitations:
a. Exercise Price. Each Stock Option granted hereunder shall have such per-share exercise price as the Committee may determine at the date of grant provided that such per share exercise price shall be at least equal to the Fair Market Value; subject to subsection (d), below.
b. Payment of Exercise Price. The option exercise price may be paid in cash or, in the discretion of the Committee, by the delivery of shares of Common Stock of the Company then owned by the participant, or by delivery to the Company of (x) irrevocable instructions to deliver directly to a broker the stock certificates representing the shares for which the Stock Option is being exercised, and (y) irrevocable instructions to such broker to sell such shares for which the Stock Option is being exercised, and promptly deliver to the Company the portion of the proceeds equal to the Stock Option exercise price and any amount necessary to satisfy the Company's obligation for withholding taxes, or any combination thereof. For purposes of making payment in shares of Common Stock, such shares shall be valued at their Fair Market Value (as defined below) on the date of exercise of the Stock Option and shall have been held by the participant for at least six months. To facilitate the foregoing, the Company may enter into agreements for coordinated procedures with one or more brokerage firms. The Committee may prescribe any other method of paying the exercise price that it determines to be consistent with applicable law and the purpose of the Plan, including, without limitation, in lieu of the exercise of a Stock Option by delivery of shares of Common Stock of the Company then owned by a participant, providing the Company with a notarized statement attesting to the number of shares owned, where upon verification by the Company, the Company would issue to the participant only the number of incremental shares to which the participant is entitled upon exercise of the Stock Option. The Committee may, at the time of grant, provide for the grant of a subsequent Restoration Stock Option if the exercise price is paid for by delivering previously owned shares of Common Stock of the Company. Restoration Stock Options (i) may be granted in respect of no more than the number of shares of Common Stock tendered in exercising the predecessor Stock Option, (ii) shall have an exercise price equal to the Fair Market Value on the date the Restoration Stock Option is granted, and (iii) may have an exercise period that does not extend beyond the remaining term of the predecessor Stock Option. In determining which methods a participant may utilize to pay the exercise price, the Committee may consider such factors as it determines are appropriate.
c. Exercise Period. Stock Options granted under the Plan shall be exercisable at such time or times and subject to such terms and conditions as shall be determined by the Committee; provided, however, that no Stock Option shall be exercisable later than ten years after the date it is granted. All Stock Options shall terminate at such earlier times and upon such conditions or circumstances as the Committee shall in its discretion set forth in such option agreement at the date of grant; provided, however, the Committee may, in its sole discretion, later waive any such condition.
d. Limitations on Incentive Stock Options. Incentive Stock Options may be granted only to participants who are employees of the Company or one of its subsidiaries (within the meaning of Section 424(f) of the Code) at the date of grant. The aggregate Fair Market Value (determined as of the time the Stock Option is granted) of the Common Stock with respect to which Incentive Stock Options are exercisable for the first time by a participant during any calendar year (under all option plans of the Company and of any parent corporation or subsidiary corporation (as defined in Sections 424(e) and (f) of the Code, respectively)) shall not exceed $100,000. For purposes of the preceding sentence, Incentive Stock Options will be taken into account in the order in which they are granted. The per-share exercise price of an Incentive Stock Option shall not be less than 100% of the Fair Market Value of the Common Stock on the date of grant, and no Incentive Stock Option may be exercised later than ten years after the date it is granted; provided, however, Incentive Stock Options may not be granted to any participant who, at the time of grant, owns stock possessing (after the application of the attribution rules of Section 424(d) of the Code) more than 10% of the total combined voting power of all classes of stock of the Company or any parent or subsidiary corporation of the Company, unless the exercise price is fixed at not less than 110% of the Fair Market Value of the Common Stock on the date of grant and the exercise of such option is prohibited by its terms after the expiration of five years from the date of grant of such option.
e. Post-Severance Exercises. Upon termination of employment of any employee, termination of service on the Board of Directors of a Director Participant or of the continuing services of any consultant with the Company and all subsidiary corporations and parent corporations of the Company, any Stock Option previously granted to the employee, Director Participant or consultant, unless otherwise specified by the Committee in the Stock Option agreement, shall, to the extent not theretofore exercised, terminate and become null and void; provided, however, that:
i. if the employee, Director Participant or consultant shall die while in the employ or service of such corporation or at a time when such employee, Director Participant or consultant was entitled to exercise a Stock Option as herein provided, the legal representative of such employee, Director Participant or consultant, or such person who acquired such Stock Option by bequest or inheritance or by reason of the death of the employee, Director Participant or consultant, may, not later than one (1) year from the date of death, exercise such Stock Option, to the extent not theretofore exercised, in respect of any or all of such number of shares of Common Stock as specified by the Committee in such Stock Option; and
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ii. if the employment of any employee or the continuing services of any Director Participant or consultant to whom such Stock Option shall have been granted shall terminate by reason of the employee's, Director Participant's or consultant's retirement (at such age or upon such conditions as shall be specified by the Committee), disability (as described in Section 22(e)(3) of the Code) or dismissal by the employer other than for cause (as defined below), and while such employee, Director Participant or consultant is entitled to exercise such Stock Option as herein provided, such employee, Director Participant or consultant shall have the right to exercise such Stock Option so granted in respect of any or all of such number of shares as specified by the Committee in such Stock Option, at any time up to and including ninety (90) days after the date of such termination.
In no event, however, shall any person be entitled to exercise any Stock Option after the expiration of the period of exercisability of such Stock Option or Right, as specified in such option agreement at the date of grant.
If an employee, Director Participant or consultant voluntarily terminates his or her employment or continuing services, or is discharged "for cause", any Stock Option granted hereunder shall, unless otherwise specified by the Committee in the option agreement, forthwith terminate with respect to any unexercised portion thereof.
If a Stock Option granted hereunder shall be exercised by the legal representative of a deceased grantee or by a person who acquired a Stock Option granted hereunder by bequest or inheritance or by reason of the death of any employee, Director Participant or consultant or former employee, former Director Participant or former consultant, written notice of such exercise shall be accompanied by a certified copy of letters testamentary or equivalent proof of the right of such legal representative or other person to exercise such Stock Option.
For the purposes of the Plan, the term "for cause" shall mean (a) with respect to an employee, Director Participant or consultant who is a party to a written service agreement with, or, alternatively, participates in a compensation or benefit plan of the Company or a subsidiary corporation or parent corporation of the Company, which agreement or plan contains a definition of "for cause" or "cause" (or words of like import) for purposes of termination of employment or services thereunder by the Company or such subsidiary corporation or parent corporation of the Company, "for cause" or "cause" as defined therein; or (b) in all other cases, as determined by the Committee or the Board of Directors, in its sole discretion, (i) the willful commission by an employee, Director Participant or consultant of an act that causes or may cause substantial damage to the Company or a subsidiary corporation or parent corporation of the Company; (ii) the commission by an employee, Director Participant or consultant of an act of fraud in the performance of such employee's or consultant's duties on behalf of the Company or a subsidiary corporation or parent corporation of the Company; (iii) conviction of the employee, Director Participant or consultant for commission of a felony in connection with the performance of his duties on behalf of the Company or a subsidiary corporation or parent corporation of the Company; or (iv) the continuing failure of an employee, Director Participant or consultant to perform the duties of such employee, Director Participant or consultant to the Company or a subsidiary corporation or parent corporation of the Company after written notice thereof and a reasonable opportunity to be heard and cure such failure are given to the employee, Director Participant or consultant by the Committee.
For the purposes of the Plan, an employment relationship shall be deemed to exist between an individual and a corporation if, at the time of the determination, the individual was an "employee" of such corporation for purposes of Section 422(a) of the Code. If an individual is on leave of absence taken with the consent of the corporation by which such individual was employed, or is on active military service, and is determined to be an "employee" for purposes of the exercise of a Stock Option, such individual shall not be entitled to exercise such Stock Option during such period unless such individual shall have obtained the prior written consent of such corporation, which consent shall be signed by the chairman of the board of directors, the president, a senior vice-president or other duly authorized officer of such corporation.
A termination of employment or services shall not be deemed to occur by reason of (i) the transfer of an employee or consultant from employment or retention by the Company to employment or retention by a subsidiary corporation or a parent corporation of the Company or (ii) the transfer of an employee or consultant from employment or retention by a subsidiary corporation or a parent corporation of the Company to employment or retention by the Company or by another subsidiary corporation or parent corporation of the Company. Termination of a consultant's services shall be considered to occur when he ceases to perform services on a regular basis; provided, however, termination of a consultant's services shall not be deemed to occur where the termination of services is due to such consultant becoming an employee of the Company or a subsidiary corporation or a parent corporation.
In the event an employee changes status to a consultant, all Stock Option grants shall continue for the remainder of the exercise period, provided, however, any Incentive Stock Options shall, three (3) months after termination of employment, be treated as a Nonqualified Stock Option for the remainder of the exercise period.
In the event of the complete liquidation or dissolution of a subsidiary corporation, or if such corporation ceases to be a subsidiary corporation, any unexercised Stock Options theretofore granted to any person employed by or rendering consulting services to such subsidiary corporation will be deemed cancelled unless such person is employed by or renders continuing services to the Company or by any parent corporation or another subsidiary corporation after the occurrence of such event. If a Stock Option is to be cancelled pursuant to the provisions of the previous sentence, notice of such cancellation will be given to each employee or consultant holding unexercised Stock Options, and such holder will have the right to exercise such Stock Options in full during the thirty (30) day period following notice of such cancellation.
f. Each Stock Option issued under this Section 6 shall be fully vested and exercisable, unless otherwise specified in the grant agreement.
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7. Stock Appreciation Rights.
a. The Committee may, in its discretion, grant Stock Appreciation Rights to the holders of any Stock Options granted hereunder. In addition, Stock Appreciation Rights may be granted independently of, and without relation to, Stock Options. A Stock Appreciation Right means a right to receive a payment in cash, Common Stock or a combination thereof, in an amount equal to the excess of (x) the Fair Market Value, or other specified valuation, of a specified number of shares of Common Stock on the date the right is exercised over (y) the Fair Market Value, or other specified valuation (which shall be no less than the Fair Market Value) of such shares of Common Stock on the date the right is granted, all as determined by the Committee; provided, however, that if a Stock Appreciation Right is granted in substitution for a Stock Option, the designated Fair Market Value in the award agreement may be the Fair Market Value on the date such Stock Option was granted. Each Stock Appreciation Right shall be fully vested unless otherwise specified in the grant agreement. Each Stock Appreciation Right shall be subject to such terms and conditions as the Committee shall impose from time to time.
b. Stock Appreciation Rights granted under the Plan shall be exercisable at such time or times and subject to such terms and conditions as shall be determined by the Committee; provided, however, that no Stock Appreciation Rights shall be exercisable later than ten years after the date it is granted. All Stock Appreciation Rights shall terminate at such earlier times and upon such conditions or circumstances as the Committee shall in its discretion set forth in such right at the date of grant.
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c. The exercise of any Stock Appreciation Right after termination of employment of a participant with the Company, a subsidiary of the Company or with any company providing consulting services to the Company shall be subject to the same terms and conditions as set forth in Section 6(e) above.
8. Stock Awards. The Committee may, in its discretion, grant Stock Awards (which may include mandatory payment of bonus incentive compensation in stock) consisting of Common Stock issued or transferred to participants with or without other payments therefor. Stock Awards may be subject to such terms and conditions as the Committee determines appropriate, including, without limitation, restrictions on the sale or other disposition of such shares, the right of the Company to reacquire such shares for no consideration upon termination of the participant's employment, and may constitute Performance-Based Awards, as described in Section 11 hereof. Each Stock Award shall be fully vested unless otherwise specified in the grant agreement. The Committee may require the participant to deliver a duly signed stock power, endorsed in blank, relating to the Common Stock covered by such an Award. The Committee may also require that the stock certificates evidencing such shares be held in custody or bear restrictive legends until the restrictions thereon shall have lapsed. The Stock Award shall specify whether the participant shall have, with respect to the shares of Common Stock subject to a Stock Award, all of the rights of a holder of shares of Common Stock of the Company, including the right to receive dividends and to vote the shares.
9. Performance Awards.
a. Performance Awards may be granted to participants at any time and from time to time, as shall be determined by the Committee. Performance Awards may constitute Performance-Based Awards, as described in Section 11 hereof. The Committee shall have complete discretion in determining the number, amount and timing of awards granted to each participant. Such Performance Awards may be in the form of shares of Common Stock or Stock Units. Performance Awards may be awarded as short-term or long-term incentives. Performance targets may be based upon, without limitation, Company-wide, divisional and/or individual performance.
b. With respect to those Performance Awards that are not intended to constitute Performance-Based Awards, the Committee shall have the authority at any time to make adjustments to performance targets for any outstanding Performance Awards which the Committee deems necessary or desirable unless at the time of establishment of such targets the Committee shall have precluded its authority to make such adjustments.
c. Payment of earned Performance Awards shall be made in accordance with terms and conditions prescribed or authorized by the Committee. The participant may elect to defer, or the Committee may require or permit the deferral of, the receipt of Performance Awards upon such terms as the Committee deems appropriate.
10. Stock Units.
a. The Committee may, in its discretion, grant Stock Units to participants hereunder. The Committee shall determine the criteria for the vesting of Stock Units. Stock Units may constitute Performance Based Awards, as described in Section 11 hereof. A Stock Unit granted by the Committee shall provide payment at such time as the award agreement shall specify. Shares of Common Stock issued pursuant to this Section 10 may be issued with or without other payments therefor as may be required by applicable law or such other consideration as may be determined by the Committee. The Committee shall determine whether a participant granted a Stock Unit shall be entitled to a Dividend Equivalent Right (as defined below).
b. Upon vesting of a Stock Unit, unless the participant has elected to defer payment under subsection (c) below, shares of Common Stock representing the Stock Units shall be distributed to the participant unless the Committee provides for the payment of the Stock Units in cash or partly in cash and partly in shares of Common Stock equal to the value of the shares of Common Stock which would otherwise be distributed to the participant.
c. A participant may elect not to receive a distribution upon the vesting of such Stock Unit and for the Company to continue to maintain the Stock Unit on its books of account. Any such election shall be in conformity with Code Section 409A and in such event, the value of a Stock Unit shall be payable in shares of Common Stock pursuant to the agreement of deferral.
d. A "Stock Unit" means a notional account representing one share of Common Stock. A "Dividend Equivalent Right" means the right to receive the amount of any dividend paid on the share of Common Stock underlying a Stock Unit, which shall be payable in cash or in the form of additional Stock Units.
11. Performance-Based Awards. Certain Benefits granted under the Plan may be granted in a manner such that the Benefits qualify for the performance-based compensation exemption of Section 162(m) of the Code ("Performance-Based Awards"). As determined by the Committee in its sole discretion, either the granting or vesting of such Performance-Based Awards shall be based on achievement of hurdle rates and/or growth rates in one or more business criteria that apply to the individual participant, one or more business units or the Company as a whole. The business criteria shall be as follows, individually or in combination: (i) net earnings; (ii) earnings per share; (iii) net sales growth; (iv) market share; (v) net operating profit; (vi) expense targets; (vii) working capital targets relating to inventory and/or accounts receivable; (viii) operating margin; (ix) return on equity; (x) return on assets; (xi) planning accuracy (as measured by comparing planned results to actual results); (xii) market price per share; and (xiii) total return to stockholders. In addition, Performance Based Awards may include comparisons to the performance of other companies, such performance to be measured by one or more of the foregoing business criteria. With respect to Performance-Based Awards, (i) the Committee shall establish in writing (x) the performance goals applicable to a given period, and such performance goals shall state, in terms of an objective formula or standard, the method for computing the amount of compensation payable to the participant if such performance goals are obtained and (y) the individual employees or class of employees to which such performance goals apply no later than 90 days after the commencement of such period (but in no event after 25% of such period has elapsed) and (ii) no Performance-Based Awards shall be payable to or vest with respect to, as the case may be, any participant for a given period until the Committee certifies in writing that the objective performance goals (and any other material terms) applicable to such period have been satisfied. With respect to any Benefits intended to qualify as Performance-Based Awards, after establishment of a performance goal, the Committee shall not revise such performance goal or increase the amount of compensation payable thereunder (as determined in accordance with Section 162(m) of the Code) upon the attainment of such performance goal. Notwithstanding the preceding sentence, the Committee may reduce or eliminate Benefits payable upon the attainment of such performance goal.
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12. Securities Laws. The Committee shall have the power to make each grant under the Plan subject to such conditions as it deems necessary or appropriate to comply with the then-existing requirements of the Securities Act of 1933, as amended, or the Exchange Act, including Rule 16b-3 (or any similar rule) of the Securities and Exchange Commission. Notwithstanding any provision in the Plan or an option document to the contrary, if the Committee determines, in its sole discretion, that issuance of Shares pursuant to the exercise of a Stock Option should be delayed pending registration or qualification under federal or state securities laws or the receipt of a legal opinion that an appropriate exemption from the application of federal or state securities laws is available, the Committee may defer exercise of any Stock Option until such Shares are appropriately registered or qualified or an appropriate legal opinion has been received, as applicable.
13. Foreign Laws. The Committee may grant Benefits to individual participants who are subject to the tax laws of nations other than the United States, which Benefits may have terms and conditions as determined by the Committee as necessary to comply with applicable foreign laws. The Committee may take any action which it deems advisable to obtain approval of such Benefits by the appropriate foreign governmental entity; provided, however, that no such Benefits may be granted pursuant to this Section 13 and no action may be taken which would result in a violation of the Exchange Act, the Code or any other applicable law.
14. Adjustment Provisions; Change in Control.
a. If there shall be any change in the Common Stock of the Company or the capitalization of the Company through merger, consolidation, reorganization, recapitalization, stock dividend, stock split, reverse stock split, split up, spin-off, combination of shares, exchange of shares, dividend in kind or other like change in capital structure or distribution (other than normal cash dividends) to stockholders of the Company in order to prevent dilution or enlargement of participants' rights under the Plan, the Committee, in its sole discretion, shall adjust, in an equitable manner, as applicable, the number and kind of shares that may be issued under the Plan, the number and kind of shares subject to outstanding Benefits, the exercise price applicable to outstanding Benefits, and the Fair Market Value of the Common Stock and other value determinations applicable to outstanding Benefits; provided, however, that any such arithmetic adjustment to a Performance-Based Award shall not cause the amount of compensation payable thereunder to be increased from what otherwise would have been due upon attainment of the unadjusted award. Appropriate adjustments may also be made by the Committee in the terms of any Benefits under the Plan to reflect such changes or distributions and to modify any other terms of outstanding Benefits on an equitable basis, including modifications of performance targets and changes in the length of performance periods; provided, however, that any such arithmetic adjustment to a Performance-Based Award shall not cause the amount of compensation payable thereunder to be increased from what otherwise would have been due upon attainment of the unadjusted award. In addition, other than with respect to Stock Options, Stock Appreciation Rights, and other awards intended to constitute Performance-Based Awards, the Committee is authorized to make adjustments to the terms and conditions of, and the criteria included in, Benefits in recognition of unusual or nonrecurring events affecting the Company or the financial statements of the Company, or in response to changes in applicable laws, regulations, or accounting principles. Notwithstanding the foregoing, (i) each such adjustment with respect to an Incentive Stock Option shall comply with the rules of Section 424(a) of the Code, and (ii) in no event shall any adjustment be made which would render any Incentive Stock Option granted hereunder other than an incentive stock option for purposes of Section 422 of the Code. The determination of the Committee as to the foregoing adjustments, if any, shall be conclusive and binding on participants under the Plan.
b. Notwithstanding any other provision of this Plan, if there is a Change in Control of the Company, all then outstanding Stock Options and Stock Appreciation Rights shall immediately vest and become exercisable. For purposes of this Section 14(b), a "Change in Control" of the Company shall be deemed to have occurred upon the earliest of the following events:
i. Change in Ownership: A change in ownership of the Company occurs on the date that any one person, or more than one person acting as a group, acquires ownership of stock of the Company that, together with stock held by such person or group, constitutes more than 50% of the total fair market value or total voting power of the stock of the Company, excluding the acquisition of additional stock by a person or more than one person acting as a group who is considered to own more than 50% of the total fair market value or total voting power of the stock of the Company.
ii. Change in Effective Control: A change in effective control of the Company occurs on the date that either:
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1. Any one person, or more than one person acting as a group, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) ownership of stock of the Company possessing 30% or more of the total voting power of the stock of the Company; or
2. A majority of the members of the Board of Directors of the Company is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the board of directors before the date of the appointment or election; provided, that this paragraph (B) will apply only to the Company if no other corporation is a majority shareholder.
iii. Change in Ownership of Substantial Assets: A change in the ownership of a substantial portion of the Company's assets occurs on the date that any one person, or more than one person acting as a group, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) assets from the Company that have a total gross fair market value equal to or more than 40% of the total gross fair market value of the assets of the Company immediately before such acquisition or acquisitions. For this purpose, "gross fair market value" means the value of the assets of the Company, or the value of the assets being disposed of, determined without regard to any liabilities associated with such assets.
It is the intent that this definition be construed consistent with the definition of "Change of Control" as defined under Code Section 409A and the applicable treasury regulations, as amended from time to time. The Committee, in its discretion, may determine that, upon the occurrence of a Change in Control of the Company or the other events specified in Section 14(a), each Stock Option and Stock Appreciation Right outstanding hereunder shall terminate within a specified number of days after notice to the holder, and such holder shall receive, with respect to each share of Common Stock subject to such Stock Option or Stock Appreciation Right, an amount equal to the excess of the Fair Market Value of such shares of Common Stock immediately prior to the occurrence of such Change in Control over the exercise price per share of such Stock Option or Stock Appreciation Right; such amount to be payable in cash, in one or more kinds of property (including the property, if any, payable in the transaction) or in a combination thereof, as the Committee, in its discretion, shall determine. The provisions contained in the preceding sentence shall be inapplicable to a Stock Option or Stock Appreciation Right granted within six (6) months before the occurrence of a Change in Control if the holder of such Stock Option or Stock Appreciation Right is subject to the reporting requirements of Section 16(a) of the Exchange Act and no exception from liability under Section 16(b) of the Exchange Act is otherwise available to such holder.
15. Nontransferability. Each Benefit granted under the Plan to a participant shall not be transferable otherwise than by will or the laws of descent and distribution, and shall be exercisable, during the participant's lifetime, only by the participant. In the event of the death of a participant, each Stock Option or Stock Appreciation Right theretofore granted to him or her shall be exercisable during such period after his or her death as the Committee shall in its discretion set forth in such option or right at the date of grant and then only by the executor or administrator of the estate of the deceased participant or the person or persons to whom the deceased participant's rights under the Stock Option or Stock Appreciation Right shall pass by will or the laws of descent and distribution. Notwithstanding the foregoing, at the discretion of the Committee, an award of a Benefit, other than an Incentive Stock Option, to any director, officer or employee of the Company with at least 15 years of service may permit the transferability of a Benefit by such participant solely to the participant's spouse, siblings, parents, children and grandchildren or trusts for the benefit of such persons or partnerships, corporations, limited liability companies or other entities owned solely by such persons, including trusts for such persons, subject to any restriction included in the award of the Benefit.
16. Other Provisions. The award of any Benefit under the Plan may also be subject to such other provisions (whether or not applicable to the Benefit awarded to any other participant) as the Committee determines appropriate, including, without limitation, for the installment purchase of Common Stock under Stock Options, for the installment exercise of Stock Appreciation Rights, to assist the participant in financing the acquisition of Common Stock, for the forfeiture of, or restrictions on resale or other disposition of, Common Stock acquired under any form of Benefit, for the acceleration of exercisability or vesting of Benefits in the event of a change in control of the Company, for the payment of the value of Benefits to participants in the event of a change in control of the Company, or understandings or conditions as to the participant's employment in addition to those specifically provided for under the Plan. In addition, the Committee shall have the right to accelerate, in whole or in part, from time to time, conditionally or unconditionally, rights to exercise any Stock Option granted hereunder. The provisions in this Section 17 may be exercised even if such exercise causes an earlier recognition of income to the Participant due to Code Section 409A or otherwise.
17. Fair Market Value. For purposes of this Plan and any Benefits awarded hereunder, Fair Market Value shall be (i) the closing price of the Company's Common Stock on the date of calculation (or on the last preceding trading date if Common Stock was not traded on such date) if the Company's Common Stock is readily tradeable on a national securities exchange or other market system, (ii) if the Company's Common Stock is not readily tradeable, Fair Market Value shall mean the amount determined in good faith by the Committee as the fair market value of the Common Stock of the Company and (iii) in connection with a Change in Control of the Company or an event specified in Section 15(a), the value of the consideration paid to stockholders in connection with such Change in Control or event or if no consideration is paid in respect thereof, the amount determined pursuant to clause (i) or (ii), above.
18. Withholding. All payments or distributions of Benefits made pursuant to the Plan shall be net of any amounts required to be withheld pursuant to applicable federal, state and local tax withholding requirements. If the Company proposes or is required to distribute Common Stock pursuant to the Plan, it may require the recipient to remit to it or to the corporation that employs such recipient an amount sufficient to satisfy such tax withholding requirements prior to the delivery of any certificates for such Common Stock. In lieu thereof, the Company or the employing corporation shall have the right to withhold the amount of such taxes from any other sums due or to become due from such corporation to the recipient as the Committee shall prescribe. The Committee may, in its discretion and subject to such rules as it may adopt (including any as may be required to satisfy applicable tax and/or non-tax regulatory requirements), permit an optionee or award or right holder to pay all or a portion of the federal, state and local withholding taxes arising in connection with any Benefit consisting of shares of Common Stock by electing to have the Company withhold shares of Common Stock having a Fair Market Value equal to the amount of tax to be withheld, such tax calculated at rates required by statute or regulation.
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19. Tenure. A participant's right, if any, to continue to serve the Company or any of its subsidiaries or affiliates as an officer, employee, or otherwise, shall not be enlarged or otherwise affected by his or her designation as a participant under the Plan.
20. Unfunded Plan. Participants shall have no right, title, or interest whatsoever in or to any investments which the Company may make to aid it in meeting its obligations under the Plan. Nothing contained in the Plan, and no action taken pursuant to its provisions, shall create or be construed to create a trust of any kind, or a fiduciary relationship between the Company and any participant, beneficiary, legal representative or any other person. To the extent that any person acquires a right to receive payments from the Company under the Plan, such right shall be no greater than the right of an unsecured general creditor of the Company. All payments to be made hereunder shall be paid from the general funds of the Company and no special or separate fund shall be established and no segregation of assets shall be made to assure payment of such amounts except as expressly set forth in the Plan. The Plan is not intended to be subject to the Employee Retirement Income Security Act of 1974, as amended.
21. No Fractional Shares. No fractional shares of Common Stock shall be issued or delivered pursuant to the Plan or any Benefit. The Committee shall determine whether cash, or Benefits, or other property shall be issued or paid in lieu of fractional shares or whether such fractional shares or any rights thereto shall be forfeited or otherwise eliminated.
22. Duration, Amendment and Termination. No Benefit shall be granted more than ten years after the Effective Date. The Committee may amend the Plan from time to time or suspend or terminate the Plan at any time. Nevertheless, if the Plan has been previously approved by the Company's stockholders, the Committee may not, without obtaining approval within twelve months before or after such action by such vote of the Company's stockholders as may be required, amend the Plan if such amendment would: (i) disqualify any Incentive Stock Options granted under the Plan; (ii) increase the aggregate number of shares of Common Stock that may be delivered through Stock Options under the Plan; (iii) increase either of the maximum amounts which can be paid to an individual participant under the Plan as set forth in Section 5 hereof; (iv) change the types of business criteria on which Performance-Based Awards are to be based under the Plan; or (v) modify the requirements as to eligibility for participation in the Plan. The Committee may amend the terms of any Benefit theretofore granted, prospectively or retroactively, but no such amendment shall impair the rights of any participant without his consent. In its sole discretion, the Committee may reduce the exercise price for any or all outstanding Stock Options or Stock Appreciation Rights, by repricing or replacing or offering to replace such Benefits, at any time and on any basis it believes is appropriate and consistent with the Plan's purposes.
23. Governing Law. This Plan, Benefits granted hereunder and actions taken in connection herewith shall be governed and construed in accordance with the laws of the State of Delaware (regardless of the law that might otherwise govern under applicable Delaware principles of conflict of laws).
24. Effective Date.
a. The Plan shall be effective as of ______, 2018, the date on which the Plan was adopted by the Board of Directors and the Company’s stockholders (the "Effective Date").
b. This Plan shall terminate on ______, 2028 (unless sooner terminated by the Committee).
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