☐ Preliminary Proxy Statement ☐ Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) ☒ Definitive Proxy Statement ☐ Definitive Additional Materials ☐ Soliciting Material Pursuant to §240.14a-12 | ||
Altimmune, Inc.
☒ No fee required. ☐ Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. (1) Title of each class of securities to which transaction applies: (2) Aggregate number of securities to which transaction applies: (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): (4) Proposed maximum aggregate value of transaction: (5) Total fee paid: ☐ Fee paid previously with preliminary materials. ☐ Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. (1) Amount Previously Paid: (2) Form, Schedule or Registration Statement No.: (3) Filing Party: (4) Date Filed: | ||||
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Altimmune, Inc.
910 Clopper Road, Suite 201S
Gaithersburg, Maryland, 20878
16, 2021
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https://www.cstproxy.com/altimmune/2021. 2021; By Order of the Board of Directors, Vipin K. Garg, Ph.D. 16, 2021
910 Clopper Road, Suite 201S
Gaithersburg,Maryland208782019
2021 ANNUAL MEETING OF STOCKHOLDERS20192021 Annual Meeting of Stockholders (the “AnnualMeeting”) of Altimmune, Inc., a Delaware corporation (the “Company”), will be held on Thursday, September 26, 2019,23, 2021, at 10:008:30 a.m., Eastern Time,Time. The Annual Meeting will be held virtually, conducted via live webcast. You may attend the meeting virtually via the Internet at the offices of Goodwin Procter LLP, 901 New York Ave NW, Washington, DC 20001.seveneight nominees named in the attached Proxy Statement as members of the Company’s Board of Directors for terms expiring at the 20202022 Annual Meeting of Stockholders;2019; vote to approve the Company’s 2019 Employee Stock Purchase Plan;5. vote to approve, for purposes of complying with Nasdaq Listing Rules 5635(a) and 5635(b), to approve the issuance of shares of our Common Stock in connection with the occurrence of Milestone Payments that may become payable in the future to former securityholders of Spitfire Pharma, Inc., pursuant an Agreement and Plan of Merger and Reorganization we entered into in July 2019;6. 7. 9, 2019.10, 2021. You have the right to receive this Notice and vote at the Annual Meeting if you were a stockholder of record at the close of business on August 9, 2019.10, 2021. All stockholders as of the record date, or their duly appointed proxies, may attend the meeting virtually. In order to be able to attend the meeting, you will need the 12-digit control number, which is located on your proxy card, or in the instructions accompanying your proxy materials. Instructions on how to participate in the Annual Meeting are also posted online at https://www.cstproxy.com/altimmune/2021. Please remember that your shares cannot be voted unless you cast your vote by one of the following methods: (1) vote via the Internet or call the toll-free number as indicated on the proxy card; (2) sign and return a paper proxy card; or (3) vote in person at the Annual Meeting.Meeting via the internet.Vipin K. Garg, Ph.D.Chief Executive Officer
August 22, 2019
2019
Annual Meeting virtually to vote on the proposals described in this proxy statement. You will need the 12-digit control number included with these proxy materials to attend the annual meeting.
page at https://www.cstproxy.com/15,337,49339,705,884 shares of Common Stock were outstanding and entitled to be voted at the Annual Meeting.25, 201922, 2021 in order for them to be counted at the Annual Meeting.in personvia the internet at the Annual Meetingin personvirtually at the Annual Meeting; however, we encourage you to vote by proxy card, via the Internet or by telephone in advance of the Annual Meeting, even if you plan to virtually attend the meeting. IfInstructions on how to attend and vote at the Annual Meeting are described at https://www.cstproxy.com/altimmune/2021.planare permitted to vote by Internet or telephone.bring government issued identification.ForSharesRegisteredparticipate intheNameofaBrokerageFirmorBank: In order to vote at the Annual Meeting are also posted online at www.proxyvote.com.must contactencounter any difficulties accessing the brokerage firmvirtual meeting during the check-in or bankmeeting time, please call the technical support number that will be posted on the log in whose name your shares are registered to obtain a proxy and bring it to the Annual Meeting. In order to attend the Annual Meeting you will need to bring an account statement or other acceptable evidence of ownership of Common Stock as of the close of business on August 9, 2019.in person by ballot;via the internet during the Annual Meeting; or (4) giving written notice revoking the proxy to our Corporate Secretary at Altimmune, Inc., 910 Clopper Road, Suite 201S, Gaithersburg, Maryland 20878.in person at the meeting.
Broker authority to vote
Where can I find more information about the terms of the Spitfire Acquisition?
We are including in this Proxy Statement a summary of the material terms of the acquisition (the “Spitfire Acquisition”) of Spitfire Pharma, Inc., a Delaware corporation (“Spitfire”) because we believe an understanding of the Spitfire Acquisition is necessary in order to make an informed voting decision with respect to the potential issuance of our securities in connection with Milestone Payments (as defined below) that may become due in the future under the terms of the Merger Agreement (as defined below). We are not seeking stockholder approval or ratification of the Spitfire Acquisition because the transaction has been consummated and the issuance of the consideration paid at closing did not require stockholder approval. Your vote will determine whether we will have the ability to elect to pay certain Milestone Payments that are earned in the future in Common Stock (or if we will instead be required to make such Milestone Payments in cash). A summary of the terms of the Spitfire Acquisition is set forth below:
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payments of up to $80.0 million upon the achievement of specified worldwide net sales for products developed using the acquired technology within ten (10) years following the approval of a new drug application filed with the FDA.
The IND Milestone Consideration Amount and the Phase 2 Milestone Consideration Amount will be payable in shares of our Common Stock, but the number of shares of our Common Stock to be issued in connection with each milestone amount, if any, are not currently determinable. The number of any shares issued in consideration for the IND Milestone Consideration Amount will be determined based on lower of (A) the average of the closing prices of our Common Stock as reported on the Nasdaq Global Market for the twenty (20) consecutive trading days prior to the IND Reference Date or (B) 125% of the Company Average Closing Price. The value of any shares issued in consideration for the Phase 2 Milestone Consideration Amount shall be determined based the lower of (A) on the average of the closing trading prices of our Common Stock as reported on the Nasdaq Global Market for the twenty (20) consecutive trading days immediately preceding the date of the occurrence of the Phase 2 Milestone Event or (B) 150% of the Company Average Closing Price.
To better understand Proposal 5 and the Spitfire Acquisition, you should carefully read this entire document and the other documents to which we refer. For a more detailed discussion of the Spitfire Acquisition, please see the section entitled “Proposal 5 —APPROVAL
Pursuant to the Merger Agreement, we agreed to seek stockholder approval at our next stockholders meeting following the execution of the Merger Agreement for the possible issuance of shares of our Common Stock pursuant to the Merger Agreement in excess of 19.99% of our outstanding shares.
What will happen if stockholder approval is not obtained to issue shares of Common Stock in excess of 19.99% of our outstanding shares in connection with Milestone Payments?
If we do not obtain stockholder approval to issue Common Stock in excess of 19.99% of our outstanding shares in connection with Milestone Payments, pursuant to the Merger Agreement, we would not be able to make certain Milestone Payments in shares of Common Stock to the extent Milestone Events are achieved resulting in the aggregate number of shares to be issued by us exceeding 20% of our total shares outstanding prior to the Spitfire Acquisition. In the event we do not have stockholder authorization to pay certain of the Milestone Payments in shares of Common Stock, we will instead be required to make such Milestone Payments in cash.
Furthermore, in the event this proposal is not approved, we intend to solicit such approval at next year’s annual meeting.
Other matters to be decided at the Annual Meeting
Merger
INNISFREE M&A INCORPORATED
Stockholders call toll free: (888)
Banks and brokers call collect: (212)750-5833Phone: (917) 262-2373
be committed first and foremost to the interests of the stockholders of the Company. Persons who represent a particular special interest, ideology, narrow perspective or point of view would not, therefore, generally be considered good candidates for election to our Board. The key experience,
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Mitchel Sayare, Director since April 2010 | | | Mitchel Sayare, |
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| Vipin K. Garg, Ph.D. Director since November 2018 | | | Vipin K. Garg, Ph.D. | |
| | | | products including Adzenys |
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| David J. Drutz, M.D. Director Since May 2017 | | | David J. Drutz, M.D. ( | |
| | | | San Antonio. Dr. Drutz received his M.D. from the University of Louisville School of Medicine and postgraduate training in internal medicine and infectious diseases at Vanderbilt University School of Medicine, serving subsequently as a research medical officer in the U.S. Navy (LCDR, USNR). He is certified by the American Board of Internal Medicine; a fellow of the American College of Physicians and the Infectious Diseases Society of America; a member of Alpha Omega Alpha, the American Society of Clinical Oncology and the American Society for Clinical Investigation; and the author of more than 200 peer-reviewed publications in the area of infectious diseases. We believe Dr. Drutz’s significant experience in biotechnology investment and as a physician make him well qualified to serve as a member of our Board of Directors. |
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| John Director since August 2004 | | | John |
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| Philip Director since May 2017 | | | Philip | |
| | | | member of our Board of Directors. |
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| Wayne Pisano Director since August 2018 | | | WaynePisano |
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Diane Jorkasky, M.D. Director since | | Diane Jorkasky, M.D. ( | | ||
| Klaus O. Schafer, M.D., MPH Director since July 2012 | | | Brigadier General (ret.), Klaus O. Schafer, M.D., MPH, (71) has served as a member of our Board of | |
| | | | Directors since July 2012. Dr. Schafer has over 35 years of healthcare leadership experience, having held senior positions in government and industry. He previously held the position of Deputy Assistant to the Secretary of Defense for chemical and biological defense, overseeing the Department’s $1.0 billion program for vaccine, therapeutics, medical device and sensor development against biothreats. He retired from the Air Force as a Brigadier General in the role of Assistant Surgeon General for medical readiness, science and technology. He has managed all aspects of large integrated health care delivery systems, from clinical care, to running clinics and hospitals, managing budgets, professional staffs and large science and technology portfolios. He has private sector business experience in imaging technology, as CEO andco-founder of TessArae LLC, a biotech medical device company. Most recently he held the position of Chief Medical Officer and client executive for health at CACI International, an information technology company. He has been an independent consultant since 2002 and has served as advisory board member to a number of biotech and health related companies. Dr. Schafer earned his Doctor of Medicine and Surgery at the University of Iowa, medical boards in family practice and aerospace medicine in the Air Force, a Master of Public Health at the University of Texas, and a Master of Science at the Dwight D. Eisenhower School of National Security and Resource Strategy. We believe Dr. Schafer’s broad experience base relevant to Altimmune’s core technology makes him well qualified to serve as a member of our Board of Directors. | |
Other than Dr. Sayare and Mr. Gill, none
How nominees to our Board are selected
The Nominating and Corporate Governance Committee of the Board selects nominees for director positions to be recommended by our Board for election as directors and for any vacancies in such positions, develops and recommends for our Board the Corporate Governance Guidelines of the Company and oversees the annual review of the performance of the Board, each director and each committee. The Nominating and Corporate Governance Committee currently consists of Messrs. Pisano (Chair) and Gill and Dr. Drutz. The Board has determined that each member of the Nominating and Corporate Governance Committee other than Mr. Gill, is an independent director in accordance with Nasdaq listing standards. As described above, Mr. Gill is not independent under the Nasdaq listing standards due to his service as Chief Executive Officer of PharmAthene prior to the Merger. However, the Board has determined that Mr. Gill’s membership on the Nominating and Corporate Governance Committee satisfies the standards set out in Nasdaq Rule 5605(e)(3) for
Meetings and attendance
directors recommended for election.
You may also obtain a copy of these documents by writing to Altimmune, Inc., 910 Clopper Road, Suite 201S, Gaithersburg, Maryland 20878, Attention: Investor Relations.
2020
Name | | | Fees earned or paid in cash ($) | | | Stock Awards ($)(1)(2) | | | Option Awards ($)(1) | | | Non-Equity Incentive Plan Compensation ($) | | | Nonqualified Deferred Compensation Earnings ($) | | | All Other Compensation ($) | | | Total ($) | | |||||||||||||||||||||
Mitchel Sayare, Ph.D.(3) | | | | | 70,000 | | | | | | 232,277 | | | | | | 244,517 | | | | | | — | | | | | | — | | | | | | — | | | | | | 546,794 | | |
David J. Drutz, M.D.(4) | | | | | 56,000 | | | | | | 154,852 | | | | | | 244,517 | | | | | | — | | | | | | — | | | | | | — | | | | | | 455,369 | | |
John M Gill(5) | | | | | 51,500 | | | | | | 154,852 | | | | | | 244,517 | | | | | | — | | | | | | — | | | | | | — | | | | | | 450,869 | | |
Philip L. Hodges(6) | | | | | 60,000 | | | | | | 154,852 | | | | | | 244,517 | | | | | | — | | | | | | — | | | | | | — | | | | | | 459,369 | | |
Wayne Pisano(7) | | | | | 57,500 | | | | | | 154,852 | | | | | | 244,517 | | | | | | — | | | | | | — | | | | | | — | | | | | | 456,869 | | |
Diane K. Jorkasky, M.D.(8) | | | | | 28,104 | | | | | | — | | | | | | 191,158 | | | | | | — | | | | | | — | | | | | | — | | | | | | 219,262 | | |
Klaus O. Schafer, M.D., MPH(9) | | | | | 52,500 | | | | | | 154,852 | | | | | | 244,517 | | | | | | — | | | | | | — | | | | | | — | | | | | | 451,869 | | |
Name (1) | Fees earned or paid in cash ($) (2) | Stock Awards ($) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($) | Nonqualified Deferred Compensation Earnings ($) | All Other Compensation ($) | Total ($) | |||||||||||||||||||||
Mitchel Sayare, Ph.D. | 165,417 | — | 24,199 | — | — | — | 189,616 | |||||||||||||||||||||
David J. Drutz, M.D. | 54,500 | — | — | — | — | — | 54,500 | |||||||||||||||||||||
John M. Gill | 42,500 | — | — | — | — | — | 42,500 | |||||||||||||||||||||
Philip L. Hodges | 59,944 | — | — | — | — | — | 59,944 | |||||||||||||||||||||
Klaus O. Schafer, M.D., MPH | 47,667 | — | — | — | — | — | 47,667 | |||||||||||||||||||||
Derace L. Schaffer, M.D (2). | 29,639 | — | — | — | — | — | 29,639 | |||||||||||||||||||||
Wayne Pisano | 18,333 | — | — | — | — | — | 18,333 |
(4) As of December 31, 2020, Dr. Drutz held unexercised options to purchase an aggregate of 46,654 shares of the Common Stock of the Company. (5) As of December 31, 2020, Mr. Gill held unexercised options to purchase an aggregate of 46,234 shares of the Common Stock of the Company. 16 (6) As of December 31, 2020, Mr. Hodges held unexercised options to purchase an aggregate of 46,167 shares of the Common Stock of the Company. (7) As of December 31, 2020, Mr. Pisano held unexercised options to purchase an aggregate of 45,500 shares of the Common Stock of the Company. (8) As of December 31, 2020, Dr. Jorkasky held unexercised options to purchase an aggregate of 49,500 shares of the Common Stock of the Company. (9) As of December 31, 2020, Dr. Schafer held unexercised options to purchase an aggregate of 46,506 shares of the Common Stock of the Company. 17 |
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2021.
Change in Accountants and Engagement of E&Y
principles.
auditing scope or procedure which, if not resolved to the satisfaction of E&Y, would have caused E&Y to make reference to the subject matter of the disagreement in connection with its reports on the Company’s financial statements, and (ii) there were no reportable events as that term is described in Item 304(a)(1)(v) of Regulation S-K.
During the fiscal year ended December 31, 2017, BDO’s report on Private Altimmune’s financial statements did not contain an adverse opinion or disclaimer of opinion, and were not qualified or modified as to uncertainty, audit scope or accounting principles, except that the report on the Company’s financial statements for the fiscal year ended December 31, 2017 contained a modification to the effect that there was substantial doubt as to the Company’s ability to continue as a going concern.
During the fiscal years ended December 31, 2017 (i) there were no disagreements between Private Altimmune or the Company and BDO on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure which, if not resolved to the satisfaction of BDO, would have caused BDO to make reference to the subject matter of the disagreement in connection with its reports on Altimmune’s financial statements, and (ii) there were no reportable events as that term is described in Item 304(a)(1)(v) of Regulation
During the period starting on May 4, 2017, the last day of E&Y’s previous engagement as the Company’s auditor, and ending on the Engagement Date, the Company did not consult with E&Y regarding either (i) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Company’s financial statements or (ii) any matter that was either the subject of a disagreement (as defined in paragraph (a)(1)(iv) of Item 304 of RegulationS-K and the related instructions thereto) or a reportable event (as described in paragraph (a)(1)(v) of Item 304 of RegulationS-K).
Principal Accountants’ Fees and Services
Fee Category | 2018 | 2017 | ||||||
Audit Fees (1) | $ | 848,772 | $ | 690,610 | ||||
Audit Related Fees (2) | $ | — | $ | 130,097 | ||||
Tax Fees (3) | $ | 152,328 | $ | 375,719 | ||||
All Other Fees | $ | — | $ | — | ||||
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Total | $ | 1,000,100 | $ | 1,196,426 | ||||
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Fee Category | | | 2020 | | | 2019 | | ||||||
Audit Fees(1) | | | | $ | 886,499 | | | | | $ | 670,267 | | |
Tax Fees(2) | | | | | — | | | | | | 25,000 | | |
Total | | | | $ | 886,499 | | | | | $ | 695,267 | | |
Immediately following the completion of each fiscal year, the Company’s independent registered public accounting firm shall submit to the Audit Committee (and the Audit Committee shall request from the independent registered public accounting firm), as soon as possible, a formal written statement describing: (i) the independent registered public accounting firm’s internal quality-control procedures; and (ii) all relationships between the independent registered public accounting firm and the Company, including at least the matters set forth in Independence Standards Board Standard No. 1 (IndependenceDiscussionwithAuditCommittees), in order to assess the independent registered public accounting firm’s independence.
Company’s senior management, including particularly its senior financial management, to prepare financial statements with integrity and objectivity and in accordance with generally accepted accounting principles, and relies upon the Company’s independent registered public accounting firm to review or audit, as applicable, such financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”).
February 25, 2021.
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Stockholders are being asked to approve the adoption of the Altimmune, Inc. 2019 Employee Stock Purchase Plan (the “2019 ESPP”), which was previously adopted by our Board of Directors on March 29, 2019. We believe that the adoption of the 2019 ESPP will benefit us by providing employees with an opportunity to acquire shares of our Common Stock and will enable us to attract, retain and motivate valued employees.
Based solely on the closing price of our Common Stock reported on the Nasdaq Global Market on August 16, 2019, the maximum aggregate market value of the 403,500 shares of Common Stock initially reserved for issuance under the 2019 ESPP is $0.82 million.
Summary of the Material Provisions of the 2019 ESPP
The following description of certain provisions of the 2019 ESPP is intended to be a summary only. The summary is qualified in its entirety by the full text of the 2019 ESPP, a copy of which is attached hereto asAppendix A. It is our intention that the 2019 ESPP qualify as an “employee stock purchase plan” under Section 423 of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”).
Shares Subject to the Plan. An aggregate of 403,500 shares are reserved and available for issuance under the 2019 ESPP. If our capital structure changes because of a stock dividend, stock split or similar event, the number of shares that can be issued under the 2019 ESPP will be appropriately adjusted.
Plan Administration. The 2019 ESPP will be administered by our Board of Directors or a committee of the Board that is designated to be responsible for the administration of the 2019 ESPP (the “Administrator”), which will have full authority to administer and interpret the 2019 ESPP and to establish limitations or procedures regarding the 2019 ESPP as it deems advisable.
Eligibility. Any of our employees or any employee of any subsidiary we designate in the future is eligible to participate in the 2019 ESPP so long as the employee, unless otherwise determined in advance of an offering (i) is not customarily employed for less than 20 hours a week, (ii) is not customarily employed for less than five months in any calendar year, (iii) has not been employed for such continuous period preceding the offering date as the administrator may require (provided such period is less than two years) and (iv) is a citizen or resident of anon-U.S. jurisdiction if their participation is prohibited under the laws of the applicablenon-U.S. jurisdiction or if complying with the laws of the applicablenon-U.S. jurisdiction would cause the 2019 Plan or an offering to violate Section 423 of the Code. No employee shall be granted an option (i) if immediately after the grant, such employee would own stock and/or hold outstanding options to purchase stock possessing 5% or more of the total combined voting power or value of all classes of stock of the Company or (ii) which permits the employee’s rights to purchase stock under all employee stock purchase plans of the Company to accrue at a rate which exceeds $25,000 worth of stock for each calendar year in which the option is outstanding. The fair market value of the Company’s Common Stock on August 1, 2019 was $2.38 per share.
Participation; Payroll Deductions. Participation in the 2019 ESPP is limited to eligible employees who authorize payroll deductions equal to a whole percentage of base pay to the 2019 ESPP. Employees may authorize payroll deductions, with a minimum of 1% of base pay and a maximum of 10% of base pay. Once an employee becomes a participant in the 2019 ESPP, that employee will automatically participate in successive offering periods, as described below, until such time as that employee withdraws from the 2019 ESPP, becomes ineligible to participate in the 2019 ESPP, or his or her employment ceases.
Offering Periodsand Purchase Periods. We refer to each offering under the ESPP as an “offering period,” which will consist of one or moresix-month purchase periods. Unless the Administrator otherwise determines, each offering period under the 2019 ESPP will consist of a single purchase period, beginning on each February 1
and August 1 and terminating on the following July 31 or January 31, respectively. The Administrator may establish different offering periods or exercise dates under the 2019 ESPP, provided that no offering period may exceed 27 months in duration. The initial offering period under the ESPP commenced August 1, 2019 and will end on January 31, 2020; provided that no exercise shall occur unless the ESPP is approved by the stockholders.
Exercise Price. On the first day of an offering period, employees participating in that offering period will receive an option to purchase shares of our Common Stock, which will be automatically exercised on the last day of the purchase period. The option exercise price is equal to the lesser of (i) 85% (or such greater percentage as determined by the Administrator) of the fair market value per share of our Common Stock on the first day of the offering period or (ii) 85% (or such greater percentage as determined by the Administrator) of the fair market value per share of our Common Stock on the exercise date.
In general, if an employee is no longer a participant on an exercise date, the employee’s option will be automatically terminated, and the amount of the employee’s accumulated payroll deductions will be refunded.
Terms of Participation. A participant may discontinue participation in the 2019 ESPP or may increase or decrease the rate of payroll deductions during the offering period by submitting notice of a change of status authorizing an increase or decrease in the payroll deduction rate. Any increase or decrease in payroll deductions shall be effective as soon as administratively practicable following the date of the request. The Administrator may limit the number of payroll deduction rate changes during any offering period. A participant’s payroll deduction authorization shall remain in effect for successive offering periods and the Administrator shall be authorized to limit the number of payroll deduction rate changes during any offering period.
Term; Amendments and Termination. The Administrator may, in its discretion, at any time, terminate or amend the 2019 ESPP. Except as provided in the 2019 ESPP, such termination cannot adversely affect options previously granted.
New Plan Benefits
Since participation in the 2019 ESPP is voluntary and benefits under the 2019 ESPP depend on the fair market value of our Common Stock at various future dates and elections made by participants, the benefits or amounts that will or may be received by or allocated to employees under the 2019 ESPP in the future are not determinable.
Summary of Federal Income Tax Consequences
The following is only a summary of the effect of the United States income tax laws and regulations upon an employee and us with respect to an employee’s participation in the 2019 ESPP. This summary does not purport to be a complete description of all federal tax implications of participation in the 2019 ESPP, nor does it discuss the income tax laws of any municipality, state or foreign country in which a participant may reside or otherwise be subject to tax.
A participant in the 2019 ESPP is still subject to income tax on the amounts deducted from their base pay to participate in the 2019 ESPP, but recognizes no taxable income upon exercise of an option to purchase shares of our Common Stock under the terms of the 2019 ESPP. If a participant disposes of shares purchased upon exercise of an option granted under the 2019 ESPP within two years from the first day of the applicable offering period or within one year from the exercise date, which we refer to as a “disqualifying disposition,” the participant will realize ordinary income in the year of that disposition equal to the amount by which the fair market value of the shares on the date the shares were purchased exceeds the purchase price. The amount of ordinary income will be added to the participant’s basis in the shares, and any additional gain or resulting loss recognized on the disposition of the shares will be a capital gain or loss. A capital gain or loss will be long-term if the participant’s holding period is more than 12 months, or short-term if the participant’s holding period is 12 months or less.
If the participant disposes of shares purchased upon exercise of an option granted under the 2019 ESPP at least two years after the first day of the applicable offering period and at least one year after the exercise date, the participant will realize ordinary income in the year of disposition equal to the lesser of (1) the amount by which the fair market value of the Common Stock on the first day of the offering period in which the shares were purchased exceeds the exercise price (determined as if the option had been exercised on the first day of the offering period) and (2) the excess of the amount actually received for the Common Stock over the amount paid. The amount of any ordinary income will be added to the participant’s basis in the shares, and any additional gain recognized upon the disposition after that basis adjustment will be a long-term capital gain. If the fair market value of the shares on the date of disposition is less than the exercise price, there will be no ordinary income and any loss recognized will be a long-term capital loss.
Generally, we are entitled to a tax deduction in the year of a disqualifying disposition equal to the amount of ordinary income recognized by the participant as a result of that disposition. In all other cases, we are not allowed a deduction.
Vote Required
The affirmative vote of a majority of the votes cast for this proposal is required to approve the 2019 ESPP. Abstentions andbroker non-votes will not be counted as either votes cast for or against this proposal.
OUR BOARD RECOMMENDS THAT THE STOCKHOLDERS VOTE “FOR” THE APPROVAL OF THE 2019 EMPLOYEE STOCK PURCHASE PLAN.
PROPOSAL 5 — APPROVAL OF THE ISSUANCE OF OUR COMMON STOCK IN CONNECTION WITH MILESTONE PAYMENTS THAT MAY BECOME PAYABLE IN THE FUTURE TO FORMER EQUITYHOLDERS OF SPITFIRE PHARMA, INC. PURSUANT TO NASDAQ LISTING RULES 5635(A) AND 5635(B)
Background
On July 8, 2019, we entered into an Agreement and Plan of Merger and Reorganization (the “Merger Agreement”) with Springfield Merger Sub, Inc., a Delaware corporation and our wholly-owned subsidiary (“Merger SubI”), Springfield Merger Sub, LLC, a Delaware limited liability company and our wholly-owned subsidiary (“Merger Sub II”), Spitfire Pharma, Inc., a Delaware corporation (“Spitfire”), and David Collier, as the stockholder representative. Spitfire was a preclinical pharmaceutical company developing a noveldual GLP-1/glucagon receptor agonist for the treatmentof non-alcoholic steatohepatitis.
On July 12, 2019 (the “Closing Date”), Merger Sub I merged with and into Spitfire, with Spitfire continuing as the surviving entity (the “FirstMerger”), and, as a part of the same overall transaction, the surviving entity of the First Merger merged with and into Merger Sub II, with Merger Sub II continuing as the surviving entity and our wholly-owned subsidiary (the “Second Merger,” and, together with the First Merger, the “Merger”). Immediately following the consummation of the Second Merger, the name of Merger Sub II was changed to “Spitfire Pharma, LLC”.
In connection with the closing, we issued 1,887,250 unregistered shares of our Common Stock as upfront consideration to certain former equityholders of Spitfire (collectively, the “Spitfire Equityholders”), representing an amount equal to $5.0 million less working capital and transaction expense adjustment amounts (the “Closing Consideration”). The number of shares issued as payment of the Closing Consideration was determined based on the average of the closing prices of our Common Stock as reported on the Nasdaq Global Market for the twenty (20) consecutive trading days prior to and including July 8, 2019, the date on which the parties entered into the Merger Agreement (the “Company Average Closing Price”).
In addition, pursuant to the terms of the Merger Agreement, we will be required to pay future contingent payments (the “Milestone Payments”) of up to $88.0 million in cash and shares of our Common Stock payable by us to the Spitfire Equityholders upon the achievement of the following milestone events (each, a “Milestone Event”):
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payments of up to $80.0 million upon the achievement of specified worldwide net sales of all products developed using the technology acquired in the License Agreement (as discussed below) within ten (10) years following the approval of a new drug application filed with the FDA.
The IND Milestone Consideration Amount and the Phase 2 Milestone Consideration Amount will be payable in shares of our Common Stock, but the number of shares of our Common Stock to be issued in connection with each milestone amount, if any, are not currently determinable. The number of any shares issued in consideration for the IND Milestone Consideration Amount will be determined based on lower of (A) the average of the closing prices of our Common Stock as reported on the Nasdaq Global Market for the twenty (20)
consecutive trading days prior to the IND Reference Date or (B) 125% of the Company Average Closing Price. The value of any shares issued in consideration for the Phase 2 Milestone Consideration Amount shall be determined based the lower of (A) on the average of the closing trading prices of our Common Stock as reported on the Nasdaq Global Market for the twenty (20) consecutive trading days immediately preceding the date of the occurrence of the Phase 2 Milestone Event or (B) 150% of the Company Average Closing Price.
Reasons for Seeking Stockholder Approval
Our Common Stock is listed on the Nasdaq Global Market, and we are subject to the Nasdaq listing standards set forth in its Marketplace Rules (the “Marketplace Rules”). Although we were not required to obtain stockholder approval in connection with the issuance of the Closing Consideration because the shares of our Common Stock issued at closing constituted less than 20% of our outstanding shares and did not constitute a change of control, we are required under Marketplace Rules 5635(a) and 5635(b) to seek stockholder approval for the issuance of shares of Common Stock in connection with the Milestone Payments as further described below.
Nasdaq Marketplace Rule 5635(a) requires stockholder approval prior to the issuance of securities in connection with the acquisition of the stock or assets of another company, including pursuant to an“earn-out” or similar provision, where due to the present or potential issuance of Common Stock (or securities convertible into or exercisable for Common Stock), other than a public offering for cash, the Common Stock to be issued (a) constitutes voting power in excess of 20% of the outstanding voting power prior to the issuance or (b) is or will be in excess of 20% of the outstanding Common Stock prior to the issuance. The Closing Consideration that we have already issued to the Spitfire Equityholders did not constitute more than 20% of our total shares of Common Stock outstanding, so we were not required to obtain stockholder approval for the issuance of these shares. The Closing Consideration constituted an amount of our Common Stock equivalent to approximately 12.3% of our outstanding Common Stock as of July 8, 2019, the execution date of the Merger Agreement. The issuance of additional shares of Common Stock to former the Spitfire Equityholders in connection with the Milestone Payments would be aggregated with the shares we issued as Closing Consideration for purposes of Nasdaq Marketplace Rule 5635(a). Accordingly, issuing additional shares of Common Stock as Milestone Payments to the Spitfire Equityholders may result in the aggregate number of shares issued by us in connection with the Spitfire Acquisition exceeding 20% of our total shares outstanding prior to the Spitfire Acquisition. Therefore, we are requesting stockholder approval for Proposal 5 under this Nasdaq listing standard to ensure that we have stockholder approval to issue shares of Common Stock as Milestone Payments to the extent that any such shares issued, when aggregated with shares previously issued in connection with the Spitfire Acquisition, exceed 20% of our Common Stock outstanding prior to the Spitfire Acquisition. To the extent a Milestone Event is achieved and we pay the corresponding Milestone Payment in shares of our Common Stock, the shares would be valued pursuant to a formula based on the then-market price of our Common Stock.
Pursuant to the Merger Agreement, we agreed to seek stockholder approval at our next stockholders meeting following the execution of the Merger Agreement for the possible issuance of shares of our Common Stock pursuant to the Merger Agreement in excess of 19.99% of our outstanding shares.
Nasdaq Rule 5635(b) requires stockholder approval for issuances of securities that will result in a “change of control” of the issuer, and Nasdaq may deem a change of control to occur when, as a result of an issuance, an investor or a group of investors, acting together, would own, or have the right to acquire, 20% or more of our shares of Common Stock or voting power then issued and outstanding and such ownership or voting power would be the largest ownership position of the Company.
Pursuant to the Marketplace Rules, the 1,887,250 shares issued to the Spitfire Equityholders are not entitled to vote on this Proposal 5 and are not counted in determining votes cast for purposes of this Proposal 5.
Consequences of Not Approving this Proposal
If this Proposal 5 is not approved by the stockholders, we would not be able to make certain Milestone Payments in shares of Common Stock to the extent Milestone Events are achieved resulting in the aggregate number of shares to be issued by us exceeding 20% of our total shares outstanding prior to the Spitfire Acquisition. In such event, we would need to make the Milestone Payments in cash, in order to maintain compliance with applicable Nasdaq listing requirements. We expect we would need to raise additional financing if we are required to make such Milestone Payments in cash to the extent any Milestones are achieved.
Furthermore, in the event this proposal is not approved, we intend to solicit such approval at next year’s annual meeting.
Consequences of Approving the Proposal
If this Proposal 5 is approved and we obtain stockholder authorization to issue in connection with the Merger Agreement shares of Common Stock in excess of 20% of our outstanding shares, pursuant to the terms of the Merger Agreement, no less than 41% of the consideration payable to the Spitfire Equityholders will be paid by the Company in shares of our Common Stock. The actual number of shares that may become issuable as Milestone Payments will depend on multiple factors including the Milestone Events that are actually achieved, the amount of the corresponding Milestone Payments that are paid in shares of our Common Stock, and the market price of our Common Stock at the time that we pay the corresponding Milestone Event in shares of our Common Stock. While we believe that having the ability to pay Milestone Payments in shares of Common Stock offers benefits to the Company and its stockholders, including conservation of cash, the payment of Milestone Payments in shares of Common Stock may cause substantial dilution to the equity interest of our current stockholders.
Interests of Directors and Executive Officers
Our directors and executive officers have no substantial interests, directly or indirectly, in the matters set forth in this proposal except to the extent of their ownership of shares of Common Stock. None of our officers or directors hold any of the securities that were exchanged in the First Exchange Agreements or the Second Exchange Agreements, or were otherwise a party to any such agreements.
Description of the Common Stock That May Be Issued In Connection With Milestone Payments
The shares of Common Stock to be issued upon achievement of a Milestone Event, if any, will be unregistered and the same class of common stock that we have listed on the Nasdaq Global Market under the trading symbol “ALT”. Any issuance of Common Stock in connection with the Milestone Payments will dilute the beneficial ownership of the current holders of our Common Stock. Holders of our Common Stock have no conversion, preemptive or other subscription rights and there are no sinking fund or redemption provisions applicable to the Common Stock.
No Appraisal Rights
Under Delaware law, stockholders are not entitled to appraisal rights with respect to this proposal and the Company will not independently provide stockholders with any such rights.
Vote Required
Unless proxy cards are otherwise marked, the persons named as proxies will vote FOR the approval of this Proposal 5. The affirmative votes of a majority of the votes cast by our stockholders is required to approve this Proposal 5. This means that the majority of the shares voted “for” the proposal must exceed the number of shares voted “against” the proposal. Abstentions and brokernon-votes are not considered votes cast for the foregoing
purpose, and will have no effect on the vote for this proposal. Pursuant to Nasdaq Listing Rule 5635(a) and applicable guidance, the Spitfire Equityholders are not entitled to vote the shares of our Common Stock that have been issued pursuant to the Merger Agreement with respect to this Proposal 5.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” THE APPROVAL OF THE ISSUANCE OF OUR COMMON STOCK PURSUANT TO NASDAQ LISTING RULES 5635(A) AND 5635(B).
Name of Beneficial Owner | Number of Shares Beneficially Owned | Percentage of Shares Beneficially Owned | ||||||
5% or Greater Stockholders: | ||||||||
Velocity Pharmaceutical Holdings LLC (1) | 1,887,250 | 12.30 | % | |||||
Hudson Bay Capital Management (2) | 1,591,148 | 9.99 | ||||||
Directors and Named Executive Officers: | ||||||||
Vipin K. Garg, Ph.D. (3) | 322,907 | 2.1 | % | |||||
William Brown (4) | 30,000 | * | ||||||
Elizabeth A. Czerepak (5) | — | * | ||||||
David J. Drutz, M.D. (6) | 22,126 | * | ||||||
William Enright (7) | 12,195 | * | ||||||
John M. Gill (8) | 23,508 | * | ||||||
Philip L. Hodges (9) | 40,123 | * | ||||||
M. Scot Roberts, Ph.D. (10) | 4,195 | * | ||||||
Mitchel Sayare, Ph.D. (11) | 32,989 | * | ||||||
Klaus O. Schafer, M.D., MPH (12) | 21,206 | * | ||||||
Sybil Tasker, M.D., M.P.H. (13) | 13,141 | * | ||||||
Wayne Pisano (14) | 22,000 | * | ||||||
All Executive Officers and Directors As a Group (11 persons) (15) | 532,340 | 3.4 | % |
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Name of Beneficial Owner | | | Number of Shares Beneficially Owned | | | Percentage of Shares Beneficially Owned | | ||||||
5% or Greater Stockholders: | | | | | | | | | | | | | |
Entities Affiliated with Venrock(1) | | | | | 4,018,407 | | | | | | 9.99% | | |
Directors and Named Executive Officers: | | | | | | | | | | | | | |
Vipin K. Garg, Ph.D.(2) | | | | | 587,289 | | | | | | 1.47% | | |
Will Brown(3) | | | | | 101,429 | | | | | | * | | |
M. Scot Roberts, Ph.D.(4) | | | | | 86,312 | | | | | | * | | |
M. Scott Harris, M.D.(5) | | | | | 84,845 | | | | | | * | | |
Mitchel Sayare, Ph.D.(6) | | | | | 83,697 | | | | | | * | | |
Philip L. Hodges(7) | | | | | 72,746 | | | | | | * | | |
David J. Drutz, M.D.(8) | | | | | 64,590 | | | | | | * | | |
Klaus O. Schafer, M.D., MPH(9) | | | | | 55,406 | | | | | | * | | |
John M. Gill(10) | | | | | 54,366 | | | | | | * | | |
Wayne Pisano(11) | | | | | 53,998 | | | | | | * | | |
Diane K. Jorkasky, M.D.(12) | | | | | 27,278 | | | | | | * | | |
All Executive Officers and Directors as a Group (11 persons)(13) | | | | | 1,271,956 | | | | | | 3.14% | | |
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*
Name | | | Age | |||||||
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Vipin K. Garg, Ph.D. | | | | 64 | | | | President, Chief Executive Officer, and Director | | |
William Brown | | | | 39 | | | | Chief Financial Officer | | |
M. Scot Roberts, Ph.D. | | | | 62 | | | | Chief Scientific Officer | | |
M. Scott Harris, M.D. | | | | | 68 | | | | Chief Medical Officer | |
is currently serves as our President, Chief Executive Officer and a Director. SeeProposal1—ElectionofDirectors—Directorinformation for a discussion of Dr. Garg’s business experience.MastersMaster’s in Chemistry from Illinois State University and a Ph.D. from the Johns Hopkins School of Medicine, Department of Pharmacology and Molecular Sciences.
M. Scott Harris, M.D. currently serves as Chief Medical Officer of the Company. Dr. Harris joined Altimmune in July 2019, a seasoned medical professional with extensive experience in hepatology and gastroenterology and broad expertise in managing clinical trials from early stage development through successful Phase 3 trials. He has led multidisciplinary forums on drug development and clinical trial design at national and international scientific meetings, and fostered collaborations between professional medical societies and the FDA. Previously, he was co-founder and chief medical officer of Lyric Pharmaceuticals, helping raise a $21 million Series A round in 2014. He has also served as chief medical officer of Avaxia Biologics, interim chief medical officer of Tranzyme Pharma, and chief medical officer of Ocera Therapeutics. Dr. Harris was also chief medical officer and vice president of Clinical Affairs at Napo Pharmaceuticals where he authored the pivotal clinical study that led to the approval of crofelemer (Mytesi®), the first Phase 2/3 adaptive trial design resulting in a drug approval. Earlier in his career he held senior roles in global clinical development and medical affairs at Otsuka Pharmaceuticals and Abbott. He sits on the faculty of Georgetown University School of Medicine as an Adjunct Professor, where he directs a course on drug development under a grant from the NIH. Dr. Harris has been a consultant on third-world drug development for the Bill and Melinda Gates Foundation and a speaker at national and international forums on drug development. Dr. Harris has an M.D. from Harvard Medical School and an MS in Administrative Medicine and Population Health from the University of Wisconsin Medical School. His post-graduate training includes residencies at John Hopkins Hospital and the University of Pennsylvania, and a Gastroenterology and Hepatology Fellowship at the Yale University School of Medicine.
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Sybil Tasker,
William Enright, our former Chief Executive Officer (3); and
Elizabeth A. Czerepak, our former Chief Financial Officer (4).
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Elements of Compensation
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Employee Benefits
Name | Year | Salary ($) | Bonus ($) | Stock Awards ($) (2) | Option Awards ($) (2) | Non-Equity Incentive Plan Compensation ($) | Nonqualified Deferred Compensation Earnings ($) | All Other Compensation ($) (3) | Total ($) | |||||||||||||||||||||||
Vipin K. Garg, Ph.D. | 2018 | 43,590 | 100,000 | 1,159,236 | 887,107 | — | — | 31 | 2,189,964 | |||||||||||||||||||||||
Chief Executive Officer (4) | 2017 | — | — | — | — | — | — | — | — | |||||||||||||||||||||||
William Brown | 2018 | — | — | — | — | — | — | 216,000 | 216,000 | |||||||||||||||||||||||
Chief Financial Officer | 2017 | — | — | — | — | — | — | — | — | |||||||||||||||||||||||
Sybil Tasker | 2018 | 397,000 | 125,055 | — | 16,705 | — | — | 7,571 | 546,331 | |||||||||||||||||||||||
Chief Medical Officer | 2017 | 342,426 | 85,725 | — | 238,000 | — | — | 9,086 | 675,237 | |||||||||||||||||||||||
William Enright (5) | 2018 | 410,667 | 184,800 | — | 34,463 | — | — | 7,776 | 637,706 | |||||||||||||||||||||||
Former Chief Executive Officer | 2017 | 368,285 | 87,450 | — | 575,000 | — | — | 14,399 | 1,045,134 | |||||||||||||||||||||||
Elizabeth A. Czerepak (6) | 2018 | 126,923 | — | — | — | — | — | 5,076 | 131,999 | |||||||||||||||||||||||
Former Chief Financial Officer | 2017 | 327,366 | 20,250 | — | 172,000 | — | — | 12,495 | 532,111 |
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Name and Principal Position Year
($)
($)
Awards
($)(1)
Awards
($)(1)
Incentive Plan
Compensation ($)
Deferred
Compensation
Earnings ($)
Compensation
($)(2) Total ($) Vipin K. Garg, Ph.D. 2020 514,375 — — 536,705 354,063 — 29,258 1,434,401 Chief Executive Officer 2019 500,000 — — — 248,016 — 66,631 814,647 2020 339,488 — — 92,991 169,950 — 19,678 622,106 Chief Financial Officer 2019 192,500 — — 151,564 89,627 — 190,656 624,347 M. Scot Roberts, Ph.D. 2020 348,583 — — 92,991 175,000 — 11,400 627,974 Chief Scientific Officer 2019 316,000 — — 85,605 33,831 — 12,825 448,261 2020 377,092 — — 92,991 188,700 — 11,400 670,183 Chief Medical Officer 2019 115,032 — — 171,325 95,318 — 1,233 382,908 2020 — — — — — — — — Former Chief Medical Officer 2019 203,500 — — 146,103 — — 6,912 356,515
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In the event of an employment termination, the Company will pay Dr. Garg his earned but unpaid base salary through the date of termination, accrued but unused vacation pay, unreimbursed business expenses and such employee benefits as may be due to Dr. Garg under the terms of the applicable benefit plans (the “Accrued Benefits”). In addition, if the Company terminates Dr. Garg’s employment for “cause” (as(as defined below), Dr. Garg will be entitled to payment of any unpaid prior year’s annual bonus.
Consulting Agreement with Will Brown, CPA
On May 8, 2018, the Company entered into a consulting agreement with Mr. Brown, in connection with his appointment as Acting Chief Financial Officer and Principal Accounting Officer. The agreement provides Mr. Brown with monthly cash compensation of $27,000 and a stipend of $1,000 per month for expense reimbursement.
On March 14, 2019, the Company and Mr. Brown entered into an amendment to the consulting agreement. The amendment provides that, if Mr. Brown is not appointed as the Company’s full-time Chief Financial Officer by July 1, 2019, then from such date, Mr. Brown will receive a fee of $35,400 for each full month that he continues to provide services as Acting Chief Financial Officer. In addition, if on or after such date, the Company terminates Mr. Brown’s engagement without “Cause” (as defined in the agreement), then subject to his signing
and not revoking a general release of claims against the Company and its affiliates in a form provided by the Company, he will receive $84,000.
Employment Agreement with Sybil Tasker, M.D., MPH
TheWilliam M. Brown, CPA
Company.
In addition, during the term of Mr. Brown’s employment, so long as Mr. Brown’s primary residence is located within 50 miles of his current residence in Highlands Ranch, Colorado, the Company will reimburse Mr. Brown an amount not to exceed $18,000 during any 12-month period to cover Mr. Brown’s commuting expenses, which amount will be grossed up for taxes.
TheM. Scott Harris, M.D.
became an agreement of the Company.Medical Officer. The agreement provides for an initial termprovided that expired on December 31, 2017,Dr. Harris would be employed so long as mutually agreeable to Dr. Harris and a renewal term that is set to expire on December 31, 2018. However, unless either party elects not to renew the agreement by providing at least 90 days prior notice to the other party, the agreement will automatically renew for successiveone-year terms effective January 1, 2019 and each January 1 thereafter. As previously disclosed, on May 8, 2018, Ms. Czerepak resigned from her position with the Company.
Outstanding Equity Awards at 20182020 FiscalYear-End
Name | | | Number of Securities Underlying Unexercised Options (#) Exercisable | | | Number of Securities Underlying Unexercised Options (#) Unexercisable | | | Number of Securities Underlying Unexercised Unearned Options (#) | | | Option Exercise Price ($) | | | Option Expiration Date | | ||||||||||||
Vipin K. Garg, Ph.D. | | | | | 55,710 | | | | 55,711(1) | | | | | — | | | | | | 3.59 | | | | | | 11/30/2028 | | |
| | | | | 110,149 | | | | 101,337(1) | | | | | — | | | | | | 3.59 | | | | | | 11/30/2028 | | |
| | | | | — | | | | 149,500(2) | | | | | — | | | | | | 1.92 | | | | | | 1/2/2030 | | |
William M. Brown, CPA | | | | | 30,000 | | | | —(3) | | | | | — | | | | | | 2.60 | | | | | | 1/2/2024 | | |
| | | | | 18,750 | | | | 31,250(4) | | | | | — | | | | | | 2.34 | | | | | | 6/10/2029 | | |
| | | | | — | | | | 61,400(2) | | | | | — | | | | | | 1.92 | | | | | | 1/2/2030 | | |
M. Scot Roberts, Ph.D. | | | | | 375 | | | | —(5) | | | | | — | | | | | | 401.10 | | | | | | 4/8/2026 | | |
| | | | | 299 | | | | —(5) | | | | | — | | | | | | 77.40 | | | | | | 12/4/2024 | | |
| | | | | 299 | | | | —(5) | | | | | — | | | | | | 17.40 | | | | | | 12/5/2023 | | |
| | | | | 1,361 | | | | 306(6) | | | | | — | | | | | | 74.40 | | | | | | 9/22/2027 | | |
| | | | | 1,152 | | | | 515(7) | | | | | — | | | | | | 13.35 | | | | | | 5/21/2028 | | |
| | | | | 15,625 | | | | 14,375(8) | | | | | — | | | | | | 2.60 | | | | | | 1/2/2029 | | |
| | | | | 16,625 | | | | 21,375(9) | | | | | — | | | | | | 2.95 | | | | | | 3/26/2029 | | |
| | | | | — | | | | 61,400(2) | | | | | — | | | | | | 1.92 | | | | | | 1/2/2030 | | |
M. Scott Harris, M.D. | | | | | 33,437 | | | | 73,563(10) | | | | | — | | | | | | 2.13 | | | | | | 9/9/2029 | | |
| | | | | — | | | | 61,400(2) | | | | | — | | | | | | 1.92 | | | | | | 1/2/2030 | | |
Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | Option Expiration Date | |||||||||||||
Vipin K. Garg, Ph.D. | — | 111,421 | (1) | — | 3.59 | 11/30/2028 | ||||||||||||
— | 211,486 | (1) | — | 3.59 | 11/30/2028 | |||||||||||||
William Brown | — | — | (2) | — | — | — | ||||||||||||
Sybil Tasker, M.D., MPG | 812 | 811 | (3)(5) | — | 401.10 | 4/7/2026 | ||||||||||||
501 | 832 | (4) | — | 123.60 | 6/5/2027 | |||||||||||||
522 | 1,145 | (4) | — | 74.40 | 9/21/2027 | |||||||||||||
— | 1,667 | (5) | — | 13.35 | 5/21/2028 | |||||||||||||
William Enright | — | — | (7) | — | — | — | ||||||||||||
Elizabeth A. Czerepak | — | — | (8) | — | — | — |
(4) This option was granted on June 10, 2019, and 25% became vested and exercisable on June 1, 2020. The aggregate remaining unvested portion will vest and (5) These options were acquired pursuant to the Merger Agreement on May 4, 2017. These options are fully vested. (6) This option was granted on September 22, 2017, and 25% became vested and exercisable on the first anniversary of the grant date. The aggregate remaining unvested portion will vest and become exercisable in equal monthly installments over the 36-month period commencing on September 22, 2018. (7) This option was granted on May 21, 2018, and 25% became vested and exercisable on March 1, 2019. The aggregate remaining unvested portion will vest and become exercisable in equal monthly installments over the 36-month period commencing on April 1, 2019. (8) This option was granted on January 2, 2019, and 25% became vested and exercisable on the first anniversary of the grant date. The aggregate remaining unvested portion will vest and become exercisable in equal monthly installments over the 36-month period commencing on January 2, 2020. (9) This option was granted on March 26, 2019, and 25% became vested and exercisable on the first 32 anniversary of the grant date. The aggregate remaining unvested portion will vest and become exercisable in equal monthly installments over the 36-month period commencing on March 26, 2020. (10) This option was granted on September 9, 2019, and 25% became vested and exercisable on the first anniversary of the grant date. The aggregate remaining unvested portion will vest and become exercisable in equal monthly installments over the 36-month period commencing on September 9, 2020. 33 |
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party transactions.
Exchange Agreements
On June 22, 2018, the Company entered into substantially similar privately negotiated exchange agreements (the “FirstExchangeAgreements”) with certain investors (the “First Investors”). Pursuant to the terms of the First Exchange Agreements, the Company (i) issued 2,560,693 shares of Common Stock, (ii) issued convertible notes (the “ExchangeNotes”) with an aggregate principal value of $1,500,000, which are initially convertible into up to 2,205,883 shares of Common Stock upon the default by the Company, based on a conversion price assuming conversion of the Exchange Notes on the date the First Exchange Agreements were signed, subject to adjustment under certain circumstances in accordance with the terms of the Exchange Notes, and (iii) paid $1,100,000 in aggregate cash consideration, all in exchange for certain warrants to purchase shares of the Common Stock held by the First Investors.
On July 11, 2018, the Company entered into substantially similar privately negotiated exchange agreements (the “SecondExchangeAgreements” and, together with the First Exchange Agreements, the “ExchangeAgreements”) with certain investors (the “Second Investors” and, together with the First Investors, the “Investors”). Pursuant to the terms of the Second Exchange Agreements, the Company issued an aggregate of 963,711 shares of Common Stock to the Second Investors and paid $22,241 in cash in exchange for all of the shares of Series B Redeemable Convertible Preferred Stock held by the Second Investors. Subject to the approval by the Company’s stockholders of the issuance of the Company’s shares of Common Stock pursuant to the Second Exchange Agreements, the Company will issue an additional 4,351,136 shares of Common Stock at the second closing of the Second Exchange Agreements in exchange for the warrants to purchase shares of Common Stock held by the Second Investors. Pursuant to the terms of the Exchange Agreements:
Entities affiliated with Hudson Bay Capital Management LP received an aggregate of 2,079,283 shares of Common Stock, $2,812,797 in cash and an Exchange Note for a principal value of $893,200 pursuant to the First Exchange Agreements;
Novartis Bioventures Ltd. received 663,346 shares of Common Stock and received an additional 2,994,993 shares of Common Stock upon approval by the Company’s stockholders at the 2018 annual meeting of stockholders;
HealthCap V LP received 65,339 shares of Common Stock and received an additional 295,006 shares of Common Stock upon approval by the Company’s stockholders, and OFCO Club V received 996
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UFF Innovation 14 FCPI, UFF Innovation 15 FCPI and Truffle Fortune 4 FCPI received an aggregate of 145,936 shares of Common Stock and received an additional 658,899 shares of Common Stock upon approval by the Company’s stockholders.
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The description of our common stock set forth in the registration statement on Form8-A registering our Common Stock under Section 12 of the Exchange Act, which was filed with the SEC on May 4, 2017, including any amendments or reports filed for purposes of updating such description.
ALTIMMUNE, INC.
2019 EMPLOYEE STOCK PURCHASE PLAN
The following constitute the provisions of the 2019 Employee Stock Purchase Plan of Altimmune, Inc.
1. Purpose. The purpose of the Plan is to provide Employees of the and its Designated Parents or Subsidiaries with an opportunity to purchase Common Stock (as defined below) of the Company through accumulated payroll deductions. It is the intention of the Company to have the Plan qualify as an “employee stock purchase plan” under Section 423 of the Code. The provisions of the Plan, accordingly, shall be construed so as to extend and limit participation in
2. Definitions. As used herein, the following definitions shall apply:
(a) “Acquisition Event” means (i)Day, 7 Days a merger or consolidation in which the Company is not the surviving entity, (ii) any transaction that results in the acquisition of all or substantially all of the Company’s outstanding Common Stock by a single person or entityWeek or by a group of persons or entities acting in concert or (iii)Mail ALTIMMUNE, INC. Your Internet vote authorizes the sale or transfer of all or substantially all of the Company’s assets.
(b) “Administrator” means either the Board or a committee of the Board that is responsible for the administration of the Plan as is designated from timenamed proxies to time by resolution of the Board.
(c) “Applicable Laws” means the legal requirements relating to the administration of employee stock purchase plans, if any, under applicable provisions of federal securities laws, state corporate and securities laws, the Code and the applicable regulations thereunder, the rules of any applicable stock exchange or national market system, and the rules of any foreign jurisdiction applicable to participation in the Plan by residents therein.
(d) “Board” means the Board of Directors of the Company.
(e) “Code” means the Internal Revenue Code of 1986, as amended, and the regulations thereunder.
(f) “Common Stock” means the common stock of the Company, par value $0.001 per share.
(g) “Company” means Altimmune, Inc., a Delaware corporation, and its successors by operation of law.
(h) “Compensation” means an Employee’s base salary from the Company or one or more Designated Parents or Subsidiaries, including such amounts of base salary as are deferred by the Employee (i) under a qualified cash or deferred arrangement described in Section 401(k) of the Code or (ii) to a plan qualified under Section 125 of the Code. Compensation does not include overtime, bonuses, annual awards, other incentive payments, reimbursements or other expense allowances, fringe benefits (cash or noncash), moving expenses, deferred compensation, contributions (other than contributions described in the first sentence) made on the Employee’s behalf by the Company or one or more Designated Parents or Subsidiaries under any employee benefit or welfare plan now or hereafter established, and any other payments not specifically referenced in the first sentence.
(i) “Designated Parents or Subsidiaries” means the Parents or Subsidiaries which have been designated by the Administrator from time to time as eligible to participate in the Plan.
(j) “Effective Date” means March 29, 2019. However, if any Parent or Subsidiary becomes a Designated Parent or Subsidiary after such date, then the Administrator, in its discretion, shall designate a separate Effective Date with respect to the employee-participants of such Designated Parent or Subsidiary.
(k) “Employee” means any individual, including an officer or director, who is an employee of the Company or a Designated Parent or Subsidiary for purposes of Section 423 of the Code. For purposes of the Plan, the employment relationship shall be treated as continuing intact while the individual is on sick leave or other leave of absence approved by the individual’s employer. Where the period of leave exceeds three months and the individual’s right to reemployment is not guaranteed either by statute or by contract, the employment relationship will be deemed to have terminated on the day that is three months and one day following the start of such leave, for purposes of determining eligibility to participate in the Plan.
(l) “Exchange Act” means the Securities Exchange Act of 1934, as amended.
(m) “Exercise Date” means the last day of each Purchase Period.
(n) “Fair Market Value” means, as of any date, the value of Common Stock determined as follows:
(i) If the Common Stock is listed on one or more established stock exchanges, including without limitation The Nasdaq Global Select Market, The Nasdaq Global Market or The Nasdaq Capital Market of the Nasdaq Stock Market, LLC or The New York Stock Exchange, its Fair Market Value shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on the principal exchange or system on which the Common Stock is listed (as determined by the Administrator) on the date of determination (or, if no closing sales price or closing bid was reported on that date, as applicable, on the last trading date such closing sales price or closing bid was reported), as reported in The Wall Street Journal or such other source as the Administrator deems reliable;
(ii) If the Common Stock is regularly quoted on an automated quotation system (including the OTC Bulletin Board) or by a recognized securities dealer, but selling prices are not reported, its Fair Market Value shall be the mean between the high bid and low asked prices for the Common Stock on the date of determination (or, if no such prices were reported on that date, on the last date such prices were reported), as reported in The Wall Street Journal or such other source as the Administrator deems reliable; or
(iii) In the absence of an established market for the Common Stock of the type described in (i) and (ii), above, its Fair Market Value thereof shall be determined by the Administrator in good faith.
(o) “New Exercise Date” has the meaning set forth in Section 18(b).
(p) “Offering” means an offer under the Plan of an Option that may be exercised during an Offering Period. For purposes of the Plan, all Employees eligible to participate pursuant to Section 3 will be deemed to participatevote your shares in the same Offering unless the Administrator otherwise determines that Employees of the Company or one or more Designated Parents or Subsidiaries will be deemed to participate in separate Offerings, in which case the Offerings will be considered separate even if the dates of each such Offering are identical and the provisions of the Plan will separately apply to each Offering. To the extent permittedby Section 1.423-2(a)(1) of the Treasury regulations issued under Section 423 of the Code, the terms of each Offering need not be identical provided that the terms of the Plan and the Offering togethersatisfy Sections 1.423-2(a)(2) and (a)(3) of such Treasury regulations.
(q) “Offering Date” means the first day of each Offering Period.
(r) “Offering Period” means an Offering Period established pursuant to Section 4.
(s) “Option” means, with respect to each Offering Period, a right to purchase shares of Common Stock on the Exercise Date for such Offering Period in accordance with the terms and conditions of the Plan.
(t) “Parent” means a “parent corporation” of the Company, whether now or hereafter existing, as defined in Section 424(e) of the Code.
(u) “Participant” means an Employee of the Company or Designated Parent or Subsidiary who has enrolled in the Plan as set forth in Section 5(a).
(v) “Plan” means this 2019 Employee Stock Purchase Plan.
(w) “Purchase Period” means a period of six months, commencing on February 1 and August 1 of each year and terminating on the next following July 31 or January 31, respectively.
(x) “Purchase Price” means an amount equal to the lower of (i) 85% (or such greater percentage as designated by the Administrator) of the Fair Market Value of a share of Common Stock on the Offering Date or (ii) 85% (or such greater percentage as designated by the Administrator) of the Fair Market Value of a share of Common Stock on the Exercise Date.
(y) “Reserves” means, as of any date, the sum of (i) the number of shares of Common Stock covered by each then outstanding Option under the Plan which has not yet been exercised and (ii) the number of shares of Common Stock which have been authorized for issuance under the Plan but not then subject to an outstanding Option.
(z) “Subsidiary” means a “subsidiary corporation” of the Company, whether now or hereafter existing, as defined in Section 424(f) of the Code.
3. Eligibility.
(a) General. Subject to the further limitations in Sections 3(b) and 3(c), any individual who is an Employee on a given Offering Date shall be eligible to participate in the Plan for the Offering Period commencing with such Offering Date. No individual who is not an Employee shall be eligible to participate in the Plan.
(b) Limitations on Grant and Accrual. Any provisions of the Plan to the contrary notwithstanding, no Employee shall be granted an Option under the Plan (i) if, immediately after the grant, such Employee (taking into account stock owned by any other person whose stock would be attributed to such Employee pursuant to Section 424(d) of the Code) would own stock and/or hold outstanding options to purchase stock possessing 5% or more of the total combined voting power or value of all classes of stock of the Company or of any Parent or Subsidiary or (ii) which permits the Employee’s rights to purchase stock under all employee stock purchase plans of the Company and its Parents or Subsidiaries to accrue at a rate which exceeds $25,000 worth of stock (determined at the Fair Market Value of the shares at the time such Option is granted) for each calendar year in which such Option is outstanding at any time. The determination of the accrual of the right to purchase stock shall be made in accordance with Section 423(b)(8) of the Code.
(c) Other Limits on Eligibility. Notwithstanding Section 3(a), unless otherwise determined prior to the applicable Offer Date, the following Employees shall not be eligible to participate in the Plan for any relevant Offering Period: (i) Employees whose customary employment is 20 hours or less per week; (ii) Employees whose customary employment is for not more than five months in any calendar year; (iii) Employees who have not been employed for such continuous period preceding the Offering Date as the Administrator may require, but in no event shall the required period of continuous employment be equal to or greater than two years; and (iv) Employees who are citizens or residents ofa non-U.S. jurisdiction (without regard to whether they are also citizens of the United States or resident aliens (within the meaning of Section 7701(b)(1)(A) of the Code)) if their participation is prohibited under the laws of theapplicable non-U.S. jurisdiction or if complying with the laws of theapplicable non-U.S. jurisdiction would cause the Plan or an Offering to violate Section 423 of the Code.
4. Offering Periods.
(a) The Plan shall be implemented through overlapping or consecutive Offering Periods until such time as (i) the maximum number of shares of Common Stock available for issuance under the Plan shall have been
purchased or (ii) the Plan shall have been sooner terminated in accordance with Section 19. The maximum duration of an Offering Period shall be 27 months. Initially, unless otherwise determined by the Administrator, the Plan shall be implemented through consecutive Offering Periods of six months’ duration commencing each February 1 and August 1 following the Effective Date.
(b) A Participant shall be granted a separate Option for each Offering Period in which he or she participates. The Option shall be granted on the Offering Date and shall be automatically exercised on the Exercise Date ending within the Offering Period.
(c) Except as specifically provided herein, the acquisition of Common Stock through participation in the Plan for any Offering Period shall neither limit nor require the acquisition of Common Stock by a Participant in any subsequent Offering Period.
5. Participation.
(a) An eligible Employee may become a Participant in the Plan by submitting an authorization of payroll deduction (using such form or method (including electronic forms) as the Administrator may designate from time to time) as of a date in advance of the Offering Date for the Offering Period in which such participation will commence, as required by the Administrator for all eligible Employees with respect to a given Offering Period.
(b) Payroll deductions for a Participant shall commence with the first partial or full payroll period beginning on the Offering Date and shall end on the last complete payroll period during the Offering Period, unless sooner terminated by the Participant as provided in Section 10.
6. Payroll Deductions.
(a) At the time a Participant enrolls in the Plan, the Participant shall elect to have payroll deductions made during the Offering Period in amounts between 1% and not exceeding 10% of the Compensation which the Participant receives during the Offering Period.
(b) All payroll deductions made for a Participant shall be credited to the Participant’s account under the Plan and will be withheld in whole percentages only. A Participant may not make any additional payments into such account.
(c) A Participant may discontinue participation in the Plan as provided in Section 10, or may increase or decrease the rate of payroll deductions during the Offering Period by submitting notice of a change of status (using such form or method (including electronic forms) as the Administrator may designate from time to time) authorizing an increase or decrease in the payroll deduction rate. Any increase or decrease in the rate of a Participant’s payroll deductions shall be effective as soon as administratively practicable following the date of the request. A Participant’s payroll deduction authorization (as modified by any change of status notice) shall remain in effect for successive Offering Periods unless terminated as provided in Section 10. The Administrator shall be authorized to limit the number of payroll deduction rate changes during any Offering Period.
(d) Notwithstanding the foregoing, to the extent necessary to comply with Section 423(b)(8) of the Code and Section 3(b), a Participant’s payroll deductions shall be decreased to 0%. Payroll deductions shall recommence at the rate provided in such Participant’s payroll deduction authorization, as amended, when permitted under Section 423(b)(8) of the Code and Section 3(b), unless such participation is sooner terminated by the Participant as provided in Section 10.
7. Grant of Option. On the Offering Date, each Participant shall be granted an Option to purchase (at the applicable Purchase Price) shares of Common Stock; provided that such Option shall be subject to (i) the limitations set forth in Sections 3(b), 6 and 12 and (ii) such other terms and conditions (applied on a uniform and nondiscriminatory basis) as the Administrator shall determine from time to time. Exercise of the Option shall
occur as provided in Section 8, unless the Participant has withdrawn pursuant to Section 10, and the Option, to the extent not exercised, shall expire on the last day of the Offering Period with respect to which the Option was granted.
8. Exercise of Option. Unless a Participant withdraws from the Plan as provided in Section 10, the Participant’s Option for the purchase of shares of Common Stock will be exercised automatically on the Exercise Date, by applying the accumulated payroll deductions in the Participant’s account to purchase the number of full shares subject to the Option by dividing the Participant’s payroll deductions accumulated prior to the Exercise Date and retained in the Participant’s account as of the Exercise Date by the applicable Purchase Price. No fractional shares will be purchased; any payroll deductions accumulated in a Participant’s account which are not sufficient to purchase a full share shall be carried over to the next Purchase Period or Offering Period, whichever applies, or returned to the Participant, if the Participant withdraws from the Plan. In addition, any amount remaining in a Participant’s account following the purchase of shares on the Exercise Date due to the application of Section 423(b)(8) of the Code or Section 7, shall be returned to the Participant and shall not be carried over to the next Offering Period or Purchase Period. During a Participant’s lifetime, a Participant’s Option to purchase shares hereunder is exercisable only by the Participant.
9. Delivery. Upon receipt of a request from a Participant after each Exercise Date on which a purchase of shares occurs, the Company shall arrange for the delivery to such Participant, as soon as administratively practicable, of the shares purchased upon exercise of the Participant’s Option.
10. Withdrawal; Termination of Employment.
(a) A Participant may, by giving notice to the Company (using such form or method (including electronic forms) as the Administrator may designate from time to time), either (i) withdraw all but not less than all the payroll deductions credited to the Participant’s account and not yet used to exercise the Participant’s Option under the Plan or (ii) terminate future payroll deductions, but allow accumulated payroll deductions to be used to exercise the Participant’s Option under the Plan at any time. If the Participant elects withdrawal alternative (i) described above, all of the Participant’s payroll deductions credited to the Participant’s account will be paid to the Participant as soon as administratively practicable after receipt of notice of withdrawal, the Participant’s Option for the Offering Period will be automatically terminated, and no further payroll deductions for the purchase of shares will be made during the Offering Period. If the Participant elects withdrawal alternative (ii) described above, no further payroll deductions for the purchase of shares will be made during the Offering Period, all of the Participant’s payroll deductions credited to the Participant’s account will be applied to the exercise of the Participant’s Option on the next Exercise Date (subject to Sections 3(b), 6, 7 and 12), and after such Exercise Date, the Participant’s Option for the Offering Period will be automatically terminated and all remaining accumulated payroll deduction amounts shall be returned to the Participant. If a Participant withdraws from an Offering Period, payroll deductions will not resume at the beginning of the succeeding Offering Period unless the Participant enrolls in such succeeding Offering Period. The Administrator may, in its discretion and on a uniform and nondiscriminatory basis, specify procedures for withdrawal.
(b) Upon termination of a Participant’s employment relationship (as described in Section 2(k)) prior to the next scheduled Exercise Date, the payroll deductions credited to such Participant’s account during the Offering Period but not yet used to exercise the Option will be returned to such Participant or, in the case of his or her death, to the person or persons entitled thereto under Section 14, and such Participant’s Option will be automatically terminated without exercise of any portion of such Option.
11. Interest. No interest shall accrue on the payroll deductions credited to a Participant’s account under the Plan.
12. Stock.
(a) The maximum number of shares of Common Stock which shall be made available for sale under the Plan shall be 403,500 shares, subject to adjustment upon changes in capitalization of the Company as provided in
Section 18. If the Administrator determines that on a given Exercise Date the number of shares with respect to which Options are to be exercised may exceed (i) the number of shares then available for sale under the Plan or (ii) the number of shares available for sale under the Plan on the Offering Date(s) of one or more of the Offering Periods in which such Exercise Date is to occur, the Administrator may make an allocation of the shares remaining available for purchase on such Offering Dates or Exercise Date, as applicable, and shall either continue the Offering Period then in effect or terminate any one or more Offering Periods then in effect pursuant to Section 19. Such allocation method shall be “bottom up,” with the result that all Option exercises for one share shall be satisfied first, followed by all exercises for two shares, and so on, until all available shares have been exhausted. Any amount remaining in a Participant’s payroll account following such allocation shall be returned to the Participant and shall not be carried over to any future Purchase Period or Offering Period, as determined by the Administrator.
(b) A Participant will have no interest or voting right in shares covered by the Participant’s Option until such shares are actually purchased on the Participant’s behalf in accordance with the applicable provisions of the Plan. No adjustment shall be made for dividends, distributions or other rights for which the record date is prior to the date of such purchase.
(c) Shares to be delivered to a Participant under the Plan will be registered in the name of the Participant.
13. Administration. The Plan shall be administered by the Administrator, which shall have full and exclusive discretionary authority to construe, interpret and apply the terms of the Plan, to determine eligibility, to adjudicate all disputed claims filed under the Plan, and to designate separate Offerings for the eligible Employees of the Company and one or more Designated Parents or Subsidiaries, in which case the Offerings will be considered separate even if the dates of each such Offering are identical and the provisions of the Plan will separately apply to each Offering. Every finding, decision and determination made by the Administrator shall, to the full extent permitted by Applicable Law, be final and binding upon all persons. Subject to Applicable Laws, no member of the Board or committee of the Board (or its delegates) shall be liable for any good faith action or determination made in connection with the operation, administration or interpretation of the Plan. In the performance of its responsibilities with respect to the Plan, the Administrator may rely upon, and no member of the Board or committee of the Board (or its delegates) shall be liable for any action taken or not taken in reliance upon, information and/or advice furnished by the Company’s officers or employees, the Company’s accountants, the Company’s counsel and any other party that a committee of the Board deems necessary. To the extent not prohibited by Applicable Laws, the Administrator may, from time to time, delegate some or all of its authority under the Plan to a subcommittee or subcommittees or other persons or groups of persons as it deems necessary, appropriate or advisable under conditions or limitations that it may set at or after the time of the delegation. For purposes of the Plan, reference to the Administrator shall be deemed to refer to any subcommittee, subcommittees, or other persons or groups of persons to whom such committee delegates authority pursuant to this Section 13.
14. Designation of Beneficiary.
(a) Each Participant will file a designation (using such form or method (including electronic forms) as the Administrator may designate from time to time) of a beneficiary who is to receive any shares and cash, if any, from the Participant’s account under the Plan in the event of such Participant’s death. If a Participant is married and the designated beneficiary is not the spouse, spousal consent shall be required for such designation to be effective.
(b) Such designation of beneficiary may be changed by the Participant (and the Participant’s spouse, if any) at any time by written notice. In the event of the death of a Participant and in the absence of a beneficiary validly designated under the Plan who is living (or in existence) at the time of such Participant’s death, the Company shall deliver such shares and/or cash to the executor or administrator of the estate of the Participant, or if no such executor or administrator has been appointed (to the knowledge of the Administrator), the Administrator shall deliver such shares and/or cash to the spouse (or domestic partner, as determined by the
Administrator) of the Participant, or if no spouse (or domestic partner) is known to the Administrator, then to the issue of the Participant, such distribution to be made per stirpes (by right of representation), or if no issue are known to the Administrator, then to the heirs at law of the Participant determined in accordance with Section 27.
15. Transferability. No payroll deductions credited to a Participant’s account, Options granted hereunder, or any rights with regard to the exercise of an Option or to receive shares under the Plan may be assigned, transferred, pledged or otherwise disposed of in any way (other than by will, the laws of descent and distribution, or as provided in Section 14) by the Participant. Any such attempt at assignment, transfer, pledge or other disposition shall be without effect, except that the Administrator may, in its sole discretion, treat such act as an election to withdraw funds from an Offering Period in accordance with Section 10.
16. Use of Funds All payroll deductions received or held by the Company under the Plan may be used by the Company for any corporate purpose, and the Company shall not be obligated to segregate such payroll deductions or hold them exclusively for the benefit of Participants. All payroll deductions received or held by the Company may be subject to the claims of the Company’s general creditors. Participants shall have the status of general unsecured creditors of the Company. Any amounts payable to Participants pursuant to the Plan shall be unfunded and unsecured obligations for all purposes, including, without limitation, Title I of the Employee Retirement Income Security Act of 1974, as amended. The Company shall retain at all times beneficial ownership of any investments which the Company may make to fulfill its payment obligations hereunder. Any investments or the creation or maintenance of any trust or any Participant account shall not create or constitute a trust or fiduciary relationship between the Administrator, the Company or any Designated Parent or Subsidiary and a Participant, or otherwise create any vested or beneficial interest in any Participant or the Participant’s creditors in any assets of the Company or a Designated Parent or Subsidiary. The Participants shall have no claim against the Company or any Designated Parent or Subsidiary for any changes in the value of any assets that may be invested or reinvested by the Company with respect to the Plan.
17. Reports. Individual accounts will be maintained for each Participant in the Plan. Statements of account will be given to Participants at least annually, which statements will set forth the amounts of payroll deductions, the Purchase Price, the number of shares purchased and the remaining cash balance, if any.
18. Adjustments Upon Changes in Capitalization; Acquisition Events.
(a) Adjustments Upon Changes in Capitalization. Subject to any required action by the stockholders of the Company, the Administrator, in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan, will, in such manner as it may deem equitable, adjustif you marked, signed and returned your proxy card. Votes submitted electronically over the Reserves, the Purchase Price, the maximum number of shares that mayInternet must be purchased in any Offering Period or Purchase Period, as well as any other terms that the Administrator determines require adjustment, for: (i) any increase or decrease in the number of issued shares of Common Stock resulting from a stock split, reverse stock split, stock dividend, combination or reclassification of the Common Stock; (ii) any other increase or decrease in the number of issued shares of Common Stock effected without receipt of considerationreceived by the Company; or (iii) as the Administrator may determine in its discretion, any other transaction with respect to Common Stock, including a corporate merger, consolidation, acquisition of property or stock, separation (includinga spin-off or other distribution of stock or property)11:59 p.m., reorganization, liquidation (whether partial or complete) or any similar transaction; provided, however, that conversion of any convertible securities of the Company shall not be deemed to have been “effected without receipt of consideration”. Such adjustment, if any, shall be made by the Administrator, and its determination shall be final, binding and conclusiveEastern Time, on all persons. Except as the Administrator determines, no issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason hereof shall be made with respect to, the Reserves and the Purchase Price.
(b) Acquisition Events. In the event of a proposed Acquisition Event, each Option under the Plan shall be assumed by the successor corporation or a parent or subsidiary of the successor corporation, unless the Administrator, in the exercise of its sole discretion and in lieu of such assumption, determines to shorten the Offering Period then in progress by setting a new Exercise Date (the “New Exercise Date”). If the Administrator
shortens the Offering Period then in progress in lieu of assumption in the event of an Acquisition Event, the Administrator shall notify each Participant in writing at least 10 business days prior to the New Exercise Date, that the Exercise Date for the Participant’s Option has been changed to the New Exercise Date and that either:
(i) the Participant’s Option will be exercised automatically on the New Exercise Date, unless prior to such date the Participant has withdrawn from the Offering Period as provided in Section 10; or
(ii) the Company shall pay to the Participant on the New Exercise Date an amount in cash, cash equivalents, or property as determined by the Administrator that is equal to the excess, if any, of (i) the Fair Market Value of the shares subject to the Option over (ii) the Purchase Price due had the Participant’s Option been exercised automatically under Subsection (b)(1) above. In addition, all remaining accumulated payroll deduction amounts shall be returned to the Participant.
(c) For purposes of Section 18(b), an Option granted under the Plan shall be deemed to be assumed if, in connection with the Acquisition Event, the Option is replaced with a comparable option with respect to shares of capital stock of the successor corporation or Parent thereof. The determination of option comparability shall be made by the Administrator prior to the Acquisition Event, and its determination shall be final, binding and conclusive on all persons.
19. Amendment or Termination.
(a) The Administrator may at any time and for any reason terminate or amend the Plan. Except as provided in Section 18, no such termination can adversely affect Options previously granted; provided that the Plan or any one or more Offering Periods then in effect may be terminated by the Administrator on any Exercise Date or by the Administrator establishing a new Exercise Date with respect to any Offering Period and/or Purchase Period then in progress if the Administrator determines that the termination of the Plan or one or more Offering Periods is in the best interests of the Company and its stockholders. Except as provided in Section 18 and this Section 19, no amendment may make any change in any Option theretofore granted which adversely affects the rights of any Participant without the consent of affected Participants. To the extent necessary to comply with Section 423 of the Code (or any successor rule or provision or any other Applicable Law), the Company shall obtain stockholder approval of any amendment in such a manner and to such a degree as required.
(b) Without stockholder consent and without regard to whether any Participant rights may be considered to have been “adversely affected,” the Administrator shall be entitled to limit the frequency and/or number of changes in the amount withheld during Offering Periods, change the length of Purchase Periods within any Offering Period, determine the length of any future Offering Period, determine whether future Offering Periods shall be consecutive or overlapping, establish the exchange ratio applicable to amounts withheld in a currency other than U.S. dollars, establish or change Plan or per Participant limits on share purchases, establish additional terms, conditions, rules or procedures to accommodate the rules or laws of applicable foreign jurisdictions, permit payroll withholding in excess of the amount designated by a Participant in order to adjust for delays or mistakes in the Company’s processing of properly completed withholding elections, establish reasonable waiting and adjustment periods and/or accounting and crediting procedures to ensure that amounts applied toward the purchase of Common Stock for each Participant properly correspond with amounts withheld from the Participant’s Compensation, and establish such other limitations or procedures as the Administrator determines in its sole discretion are advisable and which are consistent with the Plan, in each case to the extent consistent with the requirements of Section 423 of the Code and other Applicable Laws.
20. Notices. All notices or other communications by a Participant to the Company under or in connection with the Plan shall be deemed to have been duly given when received in the form specified by the Administrator at the location, or by the person, designated by the Administrator for the receipt thereof.
21. Conditions Upon Issuance of Shares. Shares shall not be issued with respect to an Option unless the exercise of such Option and the issuance and delivery of such shares pursuant thereto shall comply with all Applicable Laws and shall be further subject to the approval of counsel for the Company with respect to such
compliance. As a condition to the exercise of an Option, the Company may require the Participant to represent and warrant at the time of any such exercise that the shares are being purchased only for investment and without any present intention to sell or distribute such shares if, in the opinion of counsel for the Company, such a representation is required by any Applicable Laws or is otherwise advisable. In addition, no Options shall be exercised or shares issued hereunder before the Plan has been approved by stockholders of the Company as provided in Section 23.
22. Term of Plan. The Plan shall become effective upon the earlier to occur of its adoption by the Board or its approval by the stockholders of the Company. It shall continue in effect for a term of 10 years unless sooner terminated under Section 19.
23. Stockholder Approval. Continuance of the Plan shall be subject to approval by the stockholders of the Company within 12 months before or after the date the Plan is adopted. Such stockholder approval shall be obtained in the degree and manner required under Applicable Laws.
24. No Employment Rights. The Plan does not, directly or indirectly, create any right for the benefit of any employee or class of employees to purchase any shares under the Plan, or create in any employee or class of employees any right with respect to continuation of employment by the Company or a Designated Parent or Subsidiary, and it shall not be deemed to interfere in any way with such employer’s right to terminate, or otherwise modify, an employee’s employment at any time.
25. No Effect on Retirement and Other Benefit Plans. Except as specifically provided in a retirement or other benefit plan of the Company or a Designated Parent or Subsidiary, participation in the Plan shall not be deemed compensation for purposes of computing benefits or contributions under any retirement plan of the Company or a Designated Parent or Subsidiary, and shall not affect any benefits under any other benefit plan of any kind or any benefit plan subsequently instituted under which the availability or amount of benefits is related to level of compensation. The Plan is not a “pension plan” or “welfare plan” under the Employee Retirement Income Security Act of 1974, as amended.
26. Effect of Plan. The provisions of the Plan shall, in accordance with their terms, be binding upon, and inure to the benefit of, all successors of each Participant, including, without limitation, such Participant’s estate and the executors, administrators or trustees thereof, heirs and legatees, and any receiver, trustee in bankruptcy or representative of creditors of such Participant.
27. Governing Law. The Plan and matters arising under or related to it shall be governed by and construed in accordance with the internal laws of the State of Delaware without giving effect to its principles of conflicts of laws. If any provision of the Plan is determined by a court of law to be illegal or unenforceable, the other provisions shall nevertheless remain effective and shall remain enforceable.
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VOTE BY INTERNET—www.proxyvote.com UseSeptember 22, 2021. INTERNET/MOBILE –www.cstproxyvote.comUse the Internet to transmitvote your voting instructions and for electronic delivery of information. Vote by 11:59 P.M. ET on 09/25/2019.proxy. Have your proxy card in handavailable when you access the web site and followabove website. Follow the instructions to obtain your records and to create an electronic voting instruction form. ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS ALTIMMUNE, INC. 910 Clopper Road If you would like to reduce the costs incurred by our company in mailing proxy materials, Suite 201S you can consent to receiving all future proxy statements, proxy cards and annual reports GAITHERSBURG, MD 20878 electronically viae-mail or the Internet. To sign up for electronic delivery, please follow the instructions aboveprompts to vote usingyour shares.VOTE AT THE MEETING –If you plan to attend the Internet and, when prompted, indicate thatvirtual online annual meeting, you agreewill need your 12 digit control number to receive or access proxy materialsvote electronically in future years. VOTE BYPHONE—1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions. Vote by 11:59 P.M. ET on 09/25/2019. Have your proxy card in hand when you call and then followat the instructions. VOTE BY MAILannual meeting. To attend, visit: https://www.cstproxy.com/altimmune/2021MAIL – Mark, sign and date your proxy card and return it in the postage-paid envelope we have providedpostage-paidenvelope provided. PROXYTHE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” PROPOSALS 1, 2, 3 AND 4. Please mark your votes like this 1. Vote to elect the eight nominees named in the attached Proxy Statement as members of the Company’s Board of Directors for terms expiring at the 2022 Annual Meeting of Stockholders.Director of Nominees 3.Hold an advisory vote on the com- pensation of the Company’s named executive officers as disclosed in the attached Proxy Statement. FORAGAINST ABSTAIN (1)Mitchel Sayare, Ph.D.(2)Vipin K. Garg, Ph.D.(3)David J. Drutz, M.D.(4)John M. Gill(5)Philip L. Hodges(6)Diane Jorkasky, M.D.(7)Wayne Pisano(8)Klaus O. Schafer, M.D., MPH FOR all Nominees listed to the left WITHHOLD AUTHORITYto vote (except as marked to the contrary for all nominees listed to the left) 4.Approve the authorization to adjourn the Annual Meeting, if necessary or return itappropriate, to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: KEEP THIS PORTION FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLY THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. For Withhold For Allsolicit additional proxies in favor of the foregoing proposals if there are not sufficient votes to approve the proposals. FORAGAINST ABSTAIN (Instruction: To withhold authority to vote for any All All Except individual nominee(s), mark “For All Except” and writenominee, strike a line through that nominee’s name in the number(s) of the The Board of Directors recommends you vote FOR the following: nominee(s) on the line below. 0 0 0 1. Election of Directors Nominees 01 Mitchel Sayare, Ph.D. 02 Vipin K. Garg, Ph.D. 03 David J. Drutz, M.D. 04 John M. Gill 05 Philip L. Hodges 06 Wayne Pisano 07 Klaus O. Schafer, M.D. The Board of Directors recommends you vote FOR proposalslist above) 2. through 6. For Against Abstain 2. ToVote to ratify the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm 0 0 0 for the year ending December 31, 2019 3. To approve, on an advisory basis, the compensation of the Company’s named executive officers as disclosed in 0 0 0 the 2018 Proxy Statement 4. To approve the Company’s 2019 Employee Stock Purchase Plan (the “2019 ESPP”) 0 0 0 5. To approve, for purposes of complying with Nasdaq Listing Rules 5635(a) and 5635(b)2021. FORAGAINST ABSTAIN CONTROL NUMBER Signature Signature, if held jointly Date , the issuance of shares of 0 0 0 our common stock in connection with the occurrence of milestone payments that may become payable in the future to former securityholders of Spitfire Pharma, Inc. pursuant to an Agreement and Plan of Merger and Reorganization the Company entered into in July 2019 6. To approve the authorization to adjourn the Annual Meeting, if necessary or appropriate, to solicit additional 0 0 0 proxies in favor of the forgoing proposals if there are not sufficient votes to approve the proposals NOTE: UNLESS OTHERWISE SPECIFIED BY THE UNDERSIGNED, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE NOMINEES FOR DIRECTOR LISTED ABOVE AND FOR PROPOSALS 2, 3, 4, 5 and 6, AND WILL BE VOTED BY THE PROXYHOLDERS AT THEIR DISCRETION AS TO ANY OTHER MATTERS PROPERLY TRANSACTED AT THE MEETING OR AT ANY POSTPONEMENT OR ADJOURNMENT THEREOF. TO VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS’ RECOMMENDATIONS, JUST SIGN BELOW—NO BOXES NEED BE R1.0.1.18 CHECKED _ 12021 Note: Please sign exactly as your name(s) appear(s)name appears hereon. When shares are held by joint owners, both should sign. When signing as attorney, executor, administrator, trustee, guardian, or other fiduciary,corporate officer, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or 0000427670 partnership, please sign in full corporate or partnership name, by authorized officer. Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date