Tenax Therapeutics, Inc PRE 14A, filed Apr 20, 2021
Tenax Therapeutics, Inc. (TENX)
PRE 14A
2021-04-20
For: 2021-06-10
View Original
Added on
October 17, 2026
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE
14A
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed
by the Registrant ☒
Filed
by a Party other than the Registrant ☐
Check
the appropriate box:
☒
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 Rule 14a-12
TENAX
THERAPEUTICS, INC.
(Name of Registrant as Specified In Its Charter)
Not Applicable
(Name of Person(s) Filing Proxy Statement if other than the
Registrant)
Payment
of Filing Fee (Check the appropriate box):
☒
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:
TENAX THERAPEUTICS, INC.
ONE Copley Parkway, Suite 490
Morrisville, North Carolina 27560
April [●], 2021
Dear
Stockholders:
It is my pleasure to invite you to the Annual
Meeting of Stockholders of Tenax Therapeutics, Inc., to be held
on June 10,
2021, at 9:00 a.m. at the
offices of Tenax Therapeutics, Inc. located at ONE Copley Parkway,
Suite 490, Morrisville, North Carolina 27560. Due to
the ongoing uncertainty regarding the
spread of the coronavirus, or COVID-19, in the United States, it
may become necessary to change the date, time, location, and/or
format of the Annual Meeting in order to comply with advisories or
mandates of federal, state, and local governments, and related
agencies or, in our sole determination, to ensure the safety of
those who attend. We will announce any such change in advance by
issuing a press release and filing the announcement with the
Securities and Exchange Commission. This booklet includes the Notice of Annual
Meeting of Stockholders and Proxy Statement. The Proxy Statement
provides information about the business we will conduct at the
meeting. We hope you will be able to attend the meeting, where you
can vote in person.
The
matters to be acted upon at the meeting are described in the
accompanying Notice of Annual Meeting of Stockholders and Proxy
Statement.
Whether
or not you plan to attend the Annual Meeting personally, and
regardless of the number of shares you own, it is important that
your shares be represented at the Annual Meeting. We need more than
half of our outstanding common shares to be represented at the
Annual Meeting to establish a quorum. Every vote counts!
Accordingly, we urge you to complete the enclosed proxy and return
it to our vote tabulators promptly in the envelope provided. If you
do attend the Annual Meeting and wish to vote in person, you may
withdraw your proxy at that time. You may also elect to vote your
shares by telephone or electronically via the Internet. With
respect to shares held through a broker, bank or nominee, please
follow the separate instructions from your broker, bank or nominee
on how to vote your shares.
|
|
Sincerely,
/s/ Anthony
DiTonno
Anthony
DiTonno
Chief
Executive Officer
|
YOUR SHARES CANNOT BE VOTED UNLESS YOU SIGN AND RETURN THE ENCLOSED
PROXY, VOTE YOUR SHARES BY TELEPHONE OR INTERNET, OR ATTEND THE
ANNUAL MEETING IN PERSON.
TENAX THERAPEUTICS, INC.
ONE Copley Parkway, Suite 490
Morrisville, North Carolina 27560
Notice of Annual Meeting of Stockholders
To Be Held on June 10, 2021
To the
Stockholders:
The stockholders of Tenax Therapeutics,
Inc. (the “Company”) will hold an annual meeting (the
“Annual Meeting”) on June 10, 2021, at 9:00 a.m. at the offices of Tenax
Therapeutics, Inc. located at ONE Copley Parkway, Suite 490,
Morrisville, North Carolina 27560. Due to the ongoing uncertainty regarding the
spread of the coronavirus, or COVID-19, in the United States, it
may become necessary to change the date, time, location, and/or
format of the Annual Meeting in order to comply with advisories or
mandates of federal, state, and local governments, and related
agencies or, in our sole determination, to ensure the safety of
those who attend. We will announce any such change in advance by
issuing a press release and filing the announcement with the
Securities and Exchange Commission.
The
purpose of the meeting is to propose and act upon the following
matters:
1.
the
election of the nine director nominees described in the Proxy
Statement to serve as directors until the sooner of the 2022 Annual
Meeting of Stockholders or the election and qualification of their
successors;
2.
to
approve the conversion of our Series B Preferred Stock into shares
of common stock;
3.
to
approve Amendment No. 2 to our 2016 Stock Incentive Plan to
increase the number of shares authorized for issuance under the
plan by 750,000 shares; and
4.
the
ratification of the appointment of Cherry Bekaert LLP as our
independent registered public accounting firm for the fiscal year
ending December 31, 2021.
At the
Annual Meeting we may transact such other business as may properly
come before the meeting or any adjournment thereof.
The
above matters are described in the Proxy Statement accompanying
this notice. The board of directors (the “Board”)
recommends that you vote “FOR” the election of the
director nominees listed in the Proxy Statement, “FOR”
the approval of the conversion of our Series B Preferred Stock into
common stock, “FOR” the approval of Amendment No. 2 to
our 2016 Stock Incentive Plan to increase the number of shares
authorized for issuance thereunder and “FOR”
ratification of the appointment of Cherry Bekaert LLP as the
independent registered public accounting firm of the
Company.
The
Board has fixed the close of business on April 13, 2021 as the record date for
determining those stockholders who will be entitled to notice of
and to vote at the Annual Meeting. Representation of at least a
majority in voting interest of our common stock, either in person
or by proxy, is required to constitute a quorum for purposes of
voting on the proposals set forth above.
It
is important that your shares be represented at the Annual Meeting
to establish a quorum.
WHETHER
OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE COMPLETE, DATE
AND SIGN THE ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE.
Your proxy may be revoked at any time prior to the time it is voted
at the Annual Meeting.
Your
vote is important, and we appreciate your cooperation in
considering and acting on the matters presented.
|
|
By
order of the Board of Directors,
/s/ Nancy J. Hecox
Nancy
J. Hecox, Corporate Secretary
|
April [●], 2021
TENAX THERAPEUTICS, INC.
PROXY STATEMENT
Important Notice Regarding the Availability of Proxy
Materials
For the Stockholder Meeting to be held on June 10, 2021
The Notice of Annual Meeting of Stockholders, Proxy Statement, Form
of Proxy, and 2020 Annual Report to Stockholders are available
at www.iproxydirect.com/TENX
The
board of directors (the “Board of Directors” or the
“Board”) of Tenax Therapeutics, Inc. is asking for your
proxy for use at the 2021 Annual Meeting of Stockholders (the
“Annual Meeting”) and any adjournments of the meeting.
The meeting will be held at the offices of Tenax Therapeutics, Inc.
located at ONE Copley Parkway, Suite 490, Morrisville, North
Carolina 27560 on June 10, 2021, at 9:00 a.m. local time, to elect
the nine director nominees described in this Proxy Statement, to
approve the conversion of our Series B Preferred Stock into shares
of common stock, to approve Amendment No. 2 to our 2016 Stock
Incentive Plan (the “2016 Plan”) to increase the number
of shares authorized for issuance under the 2016 Plan by 750,000
shares, to ratify the appointment of Cherry Bekaert LLP as our
independent registered public accounting firm and to conduct such
other business as may be properly brought before the
meeting.
The Board of Directors recommends that you vote “FOR”
the election of the director nominees listed in this Proxy
Statement, “FOR” the approval of the conversion of our
Series B Preferred Stock into common stock, “FOR” the
approval of Amendment No. 2 to our 2016 Plan to increase the number
of shares authorized for issuance thereunder and “FOR”
ratification of the appointment of Cherry Bekaert LLP as our
independent registered public accounting firm.
This
Proxy Statement and the accompanying proxy card are first being
delivered to stockholders on or about April [●], 2021.
All
references in this Proxy Statement to “Tenax,”
“Tenax Therapeutics,” “we,”
“our” and “us” mean Tenax Therapeutics,
Inc.
Will the Annual Meeting be impacted by the coronavirus (COVID-19)
outbreak?
We
are actively monitoring the public health and travel safety
concerns relating to the outbreak of the coronavirus, or COVID-19,
in the United States, including the advisories or mandates of
federal, state, and local governments, and related agencies. Due to
the rapidly evolving circumstances and the uncertainties
surrounding COVID-19, it may become necessary to change the
location, date, and/or time of the Annual Meeting to comply with
these advisories and mandates or, in our sole determination, to
ensure the safety of those who attend. If circumstances dictate, it
may become necessary for us to conduct the Annual Meeting
“virtually” through the internet or through other
electronic or telephonic means in lieu of an in-person
meeting.
If it becomes necessary to change the date, time, location, and/or
format of the Annual Meeting, in lieu of mailing additional
soliciting materials or amending this Proxy Statement, we will
announce the decision in advance by issuing a press release, filing
the announcement with the Securities and Exchange Commission (the
"SEC") and taking other reasonable steps to notify other parties
involved in the proxy process of the change(s). Any such press
release and filing with the SEC will also be available on our
website at www.tenaxthera.com.
We
recommend that you monitor our press releases or filings with the
SEC in the event that circumstances require us to change the date,
time, location or format of the Annual Meeting, particularly if you
plan to attend the Annual Meeting in person. We encourage all
stockholders to vote their shares prior to the Annual Meeting. Even
if you plan to attend the Annual Meeting, we recommend that you
vote your shares in advance using one of the methods described
below under “How do I vote?” to ensure that your vote
will be counted in the event that you later decide not to attend
the Annual Meeting.
1
What is the difference between holding shares as a stockholder of
record and as a beneficial owner?
Many of
our stockholders hold their shares through a broker, bank or other
nominee rather than directly in their own name as the stockholder
of record. As summarized below, there are some distinctions between
shares held of record and those owned beneficially.
Stockholder of Record. If your shares
are registered directly in your name with our transfer agent,
Issuer Direct Corporation
(“Issuer Direct”), you are considered, with
respect to those shares, the stockholder of record, and these proxy
materials are being sent directly to you by Issuer Direct on our behalf. As the
stockholder of record, you have the right to grant your voting
proxy directly to us or to vote in person at the Annual Meeting. We
have enclosed a proxy card for you to use.
Beneficial Owner. If your shares are
held in a stock brokerage account or by a bank or other nominee,
you are considered the beneficial owner of shares held in street
name and the proxy materials are being sent to you by your broker
or nominee who is considered, with respect to those shares, the
stockholder of record. As the beneficial owner, you have the right
to direct your broker or nominee on how to vote and are also
invited to attend the Annual Meeting. However, since you are not
the stockholder of record, you may not vote these shares in person
at the meeting unless you receive a proxy from your broker or
nominee. Your broker or nominee has enclosed a voting instruction
card for you to use. If you wish to attend the Annual Meeting and
vote in person, please mark the box on the voting instruction card
received from your broker or nominee and return it to them so that
you can receive a legal proxy to present at the Annual
Meeting.
How many votes do I have?
You
are entitled to one vote for each share of our common stock that
you hold.
How is the vote counted?
Votes cast by proxy or in person at the Annual
Meeting will be counted by persons appointed by us to act as
tellers for the meeting. The tellers will count shares represented
by proxies that withhold authority to vote for a nominee for
election as a director only as shares that are present and entitled
to vote for purposes of determining the presence of a quorum. None
of the withheld votes will be counted as votes “for” a
director. Shares properly voted to “abstain” and broker
non-votes on a particular matter are considered as shares that are
entitled to vote for the purpose of determining a quorum but
are generally not treated as votes
cast for the matter. Abstentions do not count as a vote
against the proposals. A broker
non-vote occurs when a broker holding shares for a customer does
not vote on a particular proposal because the broker has not
received voting instructions on the matter from its customer and is
barred by stock exchange rules from exercising discretionary
authority to vote on the matter.
How do I vote?
If
you are a stockholder of record, you may vote using any of the
following methods:
●
Proxy Vote by Mail.
Return the enclosed proxy form by mail
using the enclosed prepaid envelope. Be sure to complete, sign and
date the form before mailing. If you are a stockholder of record
and you return your signed proxy form but do not indicate your
voting preferences, the persons named in the proxy form will
vote FOR the election of each director nominated by the
Board of Directors, FOR the approval of the conversion of
our Series B Preferred Stock into common stock, FOR the approval of Amendment No. 2 to
our 2016 Plan to increase the number of shares authorized for
issuance thereunder, FOR the ratification of the appointment of Cherry
Bekaert LLP as our independent registered public accounting firm
and at the discretion of the persons named in the proxy on any
other matter that comes before the meeting for a
vote.
2
●
Proxy Vote by Internet.
You may use the Internet to transmit
your voting instructions up until 11:59 p.m. Eastern Daylight Time
on June 9, 2021
by going to the website
www.iproxydirect.com/TENX.Please have
your proxy card in hand when you access the website and follow the
instructions to obtain your records and to create an electronic
voting instruction form.
●
Proxy Vote by Phone.
You may use any touch-tone telephone
to transmit your voting instructions up until 11:59 p.m. Eastern
Daylight Time on June 9,
2021 by calling the toll-free
number 1-866-752-VOTE (8683).
Have your proxy card in hand when you call and then follow the
instructions.
●
In Person at the Annual
Meeting. All stockholders may
vote in person at the Annual Meeting. You may also be represented
by another person at the meeting by executing a proper proxy
designating that person.
If
you are a beneficial owner because your shares are held in a stock
brokerage account or by a bank or other nominee, to vote your
shares you must direct your broker, bank or nominee how to vote
your shares by using the voting instructions included in the
mailing you received, or attend the Annual Meeting by following the
directions below under “Who Can Attend the Annual
Meeting?”
What can I do if I change my mind after I vote my
shares?
If
you are a stockholder of record, you may revoke your proxy at any
time before it is voted at the Annual Meeting by:
●
sending
written notice of revocation to our Corporate
Secretary;
●
submitting
a new, proper proxy by mail (not by Internet or phone) after the
date of the revoked proxy; or
●
attending
the Annual Meeting and voting in person.
If
you are a beneficial owner of shares, you may submit new voting
instructions by contacting your broker, bank or
nominee.
When is the record date for the Annual Meeting?
The Board has fixed the record date for the Annual
Meeting as of the close of business on April 13, 2021.
How many votes can be cast by all stockholders?
There
were 14,969,312 shares of our common stock outstanding on the
record date and entitled to vote at the Annual Meeting. Each share
of common stock is entitled to one vote on each
matter.
What constitutes a quorum?
A
majority of the outstanding shares present or represented by proxy,
or 7,484,657 shares, constitutes a quorum for the purpose of
adopting proposals at the Annual Meeting. If you submit a properly
executed proxy, then you will be considered part of the
quorum.
What vote is required to approve each item?
For
the election of the directors, the nine directors who receive the
greatest number of votes cast in person or by proxy will be elected
directors.
3
The
approval of the conversion of our Series B Preferred Stock into
shares of common stock requires approval by a majority of the total
votes cast in person or by proxy (exclusive of any shares that were
issued pursuant to our transaction with PHPrecisionMed, Inc.
(“PHPM”)).
The approval of Amendment No. 2 to our 2016 Plan
to increase the number of shares authorized for issuance thereunder
and the ratification of
Cherry Bekaert LLP as our independent
registered public accounting firm each requires approval by a
majority of the total votes cast in person or by proxy. Although
ratification is not required by our bylaws or otherwise, the Board
is submitting the selection of Cherry Bekaert LLP to our
stockholders for ratification as a matter of good corporate
practice. If our stockholders do not ratify the appointment, the
Audit and Compliance Committee will reconsider whether or not to
retain Cherry Bekaert LLP but still may retain them. Even if the
selection is ratified, the Audit and Compliance Committee may
change the appointment at any time during the year if it determines
that such change would be in the best interests of us and our
stockholders.
If
there are insufficient votes to approve the proposals, your proxy
may be voted by the persons named in the proxy to adjourn the
Annual Meeting in order to solicit additional proxies in favor of
the approval of such proposals. If the Annual Meeting is adjourned
or postponed for any purpose, at any subsequent reconvening of the
Annual Meeting your proxy will be voted in the same manner as it
would have been voted at the original convening of the Annual
Meeting unless you withdraw or revoke your proxy. Your proxy may be
voted in this manner even though it may have been voted on the same
or any other matter at a previous session of the Annual
Meeting.
Who can attend the Annual Meeting?
All
stockholders as of April 13,
2021 may attend the Annual Meeting. If you are listed as a
stockholder of record you may attend the Annual Meeting if you
bring proof of identification. If you are the beneficial owner of
shares held in street name, you will need to bring proof of
identification and provide proof of ownership by bringing either a
copy of a brokerage statement or a letter from the record holder
indicating that you owned the shares as of April 13, 2021.
What does it mean if I receive more than one proxy card or voting
instruction form?
It
means that you have multiple accounts at the transfer agent or with
brokers. Please complete and return all proxy cards or voting
instruction forms to ensure that all of your shares are
voted.
Where can I find more information about Tenax
Therapeutics?
We file
periodic reports and proxy statements with the SEC. Our SEC filings
are available from the SEC’s Internet site at
http://www.sec.gov, which contains reports and other information
regarding issuers that file electronically. Our filings with the
SEC are available without charge on our website
(http://www.tenaxthera.com) as soon as reasonably practicable after
filing.
Who can help answer my questions about the Annual Meeting or how to
submit or revoke my proxy?
If you
are the stockholder of record, please contact:
Tenax
Therapeutics, Inc.
Attn:
Investor Relations
ONE
Copley Parkway, Suite 490
Morrisville, NC
27560
Telephone: (919)
855-2100
If your
shares are held in street name, please call the telephone number
provided on your voting instruction form or contact your broker
directly.
4
PROPOSAL 1: ELECTION OF DIRECTORS
Nominees for Election as Directors
All
nine of the persons nominated for election to the Board of
Directors at the Annual Meeting are currently serving as our
directors. We are not aware of any nominee who will be unable or
will decline to serve as a director. If a nominee becomes unable or
declines to serve, the Board will either select a substitute
nominee or reduce the size of the Board. If you have submitted a
proxy and a substitute nominee is selected, your shares will be
voted for election of the substitute nominee, if any, designated by
the Board of Directors. The term of office of each person elected
as a director will continue until the
sooner of the 2022 Annual Meeting of Stockholders or the
election and qualification of his successor.
The
following table lists the nominees for election and information
about each as of April 16,
2021:
|
Name
|
|
Age
|
|
Position with Tenax Therapeutics, Inc.
|
|
Director Since
|
|
June
Almenoff, MD, PhD
|
|
64
|
|
Director
|
|
February
2021
|
|
Steven
Boyd
|
|
40
|
|
Director
|
|
July
2020
|
|
Michael
Davidson, MD
|
|
64
|
|
Director
|
|
February
2021
|
|
Anthony
A. DiTonno
|
|
72
|
|
Chief
Executive Officer and Director
|
|
December
2011
|
|
Declan
Doogan, MD
|
|
69
|
|
Director
|
|
February
2021
|
|
Keith
Maher, MD
|
|
53
|
|
Director
|
|
July
2020
|
|
James
Mitchum
|
|
68
|
|
Director
|
|
September
2015
|
|
Gerald
T. Proehl
|
|
62
|
|
Chair
|
|
April
2014
|
|
Stuart
Rich, MD
|
|
71
|
|
Chief
Medical Officer and Director
|
|
February
2021
|
The
Merger Agreement for the PHPM Merger (each as defined in Proposal 2
below) required us to (i) at our first regularly scheduled Board
meeting following the closing of the PHPM Merger, appoint one
director designated by the representative of the PHPM stockholders
(the “PHPM Representative”) to serve on the Board, and
(ii) as promptly as practicable after we have obtained stockholder
approval for the conversion of the Series B Preferred Stock issued
in the PHPM Merger, appoint two additional directors designated by
the PHPM Representative to serve on the Board. Accordingly, at a
Board meeting held on February 25, 2021, we appointed Dr. Rich to
the Board. In addition, the PHPM Representative notified us that
Dr. Davidson and Dr. Doogan were the intended designees for the two
additional directors the PHPM Representative is expected to be
entitled to designate pursuant to the Merger Agreement, and because
of the Company’s desire to expand the expertise of the Board,
Dr. Davidson and Dr. Doogan were appointed at the February 25, 2021
Board meeting prior to the receipt of stockholder approval for the
transaction as contemplated in the Merger Agreement.
Ronald
R. Blanck, Gregory Pepin and Chris A Rallis are not standing for
re-election at the 2021 Annual Meeting. Effective upon the election
of directors at the 2021 Annual Meeting, the number of directors
constituting the Board will be reduced from 12 to 9.
June Almenoff, MD,
PhD, has served as a director
since February 2021. Dr. Almenoff is an accomplished biopharma
executive with over 20 years of senior leadership experience. She
served as President and Chief Medical Officer of Furiex
Pharmaceuticals (“Furiex”), which was acquired by
Actavis plc (now AbbVie) for $1.2B. Furiex developed eluxadoline
(Viberzi®), which is approved in both the United States and
Europe. Prior to joining Furiex, Dr. Almenoff was at
GlaxoSmithKline (GSK) for 12 years, where she held various
positions of increasing responsibility. She was a Vice President in
the Clinical Safety Organization, chaired a PhRMA-FDA working
group, and worked in the area of scientific licensing. Dr. Almenoff
also led the development of pioneering systems for minimizing risk
in drug development, which have been widely adopted by industry and
regulators. Dr. Almenoff led or contributed to numerous regulatory
submissions and product approvals. She is currently Chief Medical
Officer of RedHill Biopharma (Nasdaq: RDHL). She also serves on the
investment advisory board of the Harrington Discovery Institute and
the boards of Brainstorm Cell Therapeutics (Nasdaq: BCLI) and
inSoma Bio. Dr. Almenoff has strong expertise in translational
medicine, clinical development, commercial strategy, and business
development, and has previously advised biotech boards and
management in these areas. Dr. Almenoff received her B.A. cum laude
from Smith College and graduated with AOA honors from the
M.D.-Ph.D. program at the Icahn (Mt. Sinai) School of Medicine. She
completed post-graduate medical training at Stanford University
Medical Center and served on the faculty of Duke University School
of Medicine. She is an adjunct professor at Duke, a Fellow of the
American College of Physicians (FACP) and has authored close to 60
publications.
5
We
believe that Dr. Almenoff’s medical background and experience
in drug development, commercial strategy, C level leadership as
well as her Board experience on both public and private companies
qualify her to serve on our Board.
Steven Boyd has
served as a director since July 2020. Mr. Boyd has served since
2012 as the chief investment officer of Armistice Capital, LLC
(“Armistice”), a long-short equity hedge fund focused
on the health care and consumer sectors. From 2005 to 2012,
Mr. Boyd was a research analyst at Senator Investment
Group, York Capital and SAB Capital Management, where he focused on
health care. Mr. Boyd began his career as an analyst at
McKinsey & Company. Mr. Boyd currently serves as a
member of the boards of directors of Aytu BioScience, Inc., Cerecor
Inc. and EyeGate Pharmaceuticals, Inc. Mr. Boyd received
a B.S. in economics and a B.A. in political science from The
Wharton School of the University of Pennsylvania.
We
believe that Mr. Boyd’s investment management experience and
skills qualify him to serve on our Board and provide the Board with
valuable insight into the investment community.
Michael Davidson, MD
has served as a director since February 2021. Dr. Davidson was the
Founder and former Chief Scientific Officer of Corvidia
Therapeutics, which was recently acquired by Novo-Nordisk for $2.1
billion. Dr. Davidson also serves as Clinical Professor and
Director of the Lipid Clinic at the University of Chicago Pritzker
School of Medicine. He is a leading expert in the field of
Lipidology and was named in The Best Doctors in America for the
past 10 years. Dr. Davidson was the co-founding Chief Medical
Officer of Omthera Pharmaceuticals in 2008, which was later
acquired by Astra Zeneca Pharmaceutical in 2013 for $443M. He also
founded the Chicago Center for Clinical Research, which became the
largest investigator site in the United States and was acquired by
Pharmaceutical Product Development in 1996. His research background
encompasses both pharmaceutical and nutritional clinical trials
including extensive research on statins, novel lipid-lowering
drugs, and omega-3 fatty acids. Dr. Davidson is board-certified in
internal medicine, cardiology, and clinical lipidology and served
as President of the National Lipid Association from 2010 to 2011.
He received his BA/MS from Northwestern University and MD from The
Ohio State University School of Medicine
We believe that Dr.
Davidson’s medical background and extensive experience in
clinical development qualify him to serve on our
Board.
Anthony A. DiTonno
has served as a director since December 2011 and as our Chief
Executive Officer since June 2018. From January 2013 until May
2018, Mr. DiTonno served as Chief Executive Officer of Avantis
Medical Systems, Inc., a medical device company that develops and
manufactures catheter-based endoscopic devices. From
April 2003 until December 2011, Mr. DiTonno was President and Chief
Executive Officer of Neurogesx Inc., a biopharmaceutical company
based in the San Francisco Bay area (“Neurogesx”).
During his time at Neurogesx, Mr. DiTonno also served on its board
of directors. Mr. DiTonno has funded companies through a
variety of financial arrangements including private and public
financings, partnerships and debt. He has also been successful in
gaining regulatory approvals in both the United States and European
Union. Previously, he was Executive Vice President of Marketing and
Sales at Enteric Medical Technologies Inc., which was acquired by
Boston Scientific Company; President and Chief Executive Officer of
Lifesleep Systems, Inc.; and Vice President and General Manager of
Olcassen Pharmaceuticals, which was sold to Watson Laboratories.
Early in his career, he held a variety of positions of increasing
responsibility at Rorer Group, Inc. (Rhône Poulenc Rorer) and
Wyeth Laboratories. Mr. DiTonno received an M.B.A. from Drexel
University and a B.S. in Business Administration from St.
Joseph’s University.
We
believe that Mr. DiTonno’s extensive corporate experience and
financial background qualify him to serve on our Board and provides
valuable insight to the Company.
6
Declan Doogan, MD
has served as a director since February 2021. Dr. Doogan has over
30 years of industry experience in both major pharma and biotech.
He was the Senior Vice President and Head of Worldwide Development
at Pfizer, where many multibillion-dollar programs were delivered
(e.g., Viagra, Lipitor and Zoloft). He has held a number of
executive positions in Pfizer in the U.S., the U.K. and Japan.
Since leaving Pfizer in 2007 he has been engaged in executive roles
in small pharma. Declan was CMO and acting CEO of Amarin (AMRN:
Nasdaq), transforming it from a failing neuroscience company to a
vibrant cardiovascular company with a market capitalization of over
one billion dollars before his departure. He is Chairman and
co-founder of Biohaven (BHVN:NYSE) and an investor in emerging
biotechnology and technology companies. He holds a number of Board
appointments, principally in pharma companies, and is also a
visiting professor at Glasgow University Medical School. Dr. Doogan
received his medical degree from Glasgow University in 1975. He is
a Fellow of the Royal College of Physicians and the Faculty
Pharmaceutical Medicine and holds a Doctorate of Science at the
University of Kent in the U.K.
We believe that Dr. Doogan’s
medical background, experience in clinical development and
extensive board experience on both public and privately held life
sciences companies qualify him to serve on our Board.
Keith Maher, MD has
served as a director since July 2020. Dr. Maher has served as a
managing director at Armistice since 2019. From 2007 to 2018, Dr.
Maher held senior roles at Schroder Investment Management, Omega
Advisors and Gracie Capital. Dr. Maher joined Gracie from Valesco
Healthcare Partners, a global healthcare fund he founded in
partnership with Paramount Bio Capital. Prior to starting Valesco,
Dr. Maher was a managing director at Weiss, Peck & Greer
Investments (“WPG”). He joined WPG from Lehman
Brothers, where he worked as an equity research analyst covering
medical device and technology companies. Dr. Maher currently serves
on the board EyeGate Pharmaceuticals, Inc. Dr. Maher received a
B.A. in biology from Boston University, an M.B.A. from Northwestern
University’s Kellogg Graduate School of Management and an
M.D. from Albany Medical College. Dr. Maher completed his clinical
training at the Mount Sinai Medical Center in the Department of
Medicine.
James Mitchum has
served as a director since September 2015. Mr. Mitchum
has served as the Chief Executive Officer of RegaloRx, a patient
assistance provider since January 2019. From September 2014 to
December 2018, he served as Chief Executive Officer of Heart to
Heart International, a non-profit international humanitarian
organization. From March 2009 to July 2012, Mr. Mitchum
served as President of the Americas for EUSA Pharma, Inc., where he
oversaw the streamlining of that business as well as the
development, FDA approval and successful launch of a pediatric
oncology drug in 2011. From 2005 to 2008, Mr. Mitchum served as
President and Chief Executive Officer of Enturia, Inc., a privately
owned drug-device company, based in Kansas City. From 2003 to 2005,
Mr. Mitchum served as the President and Chief Executive Officer of
Sanofi-Aventis Group Japan and was Chief Executive for Aventis
Pharma UK from 2000 through 2002. He served in many senior
financial roles from 1985 until 1999 with HMR and predecessor
companies and was the Corporate Controller for HMR from 1997 until
2000. From 2014 until 2017, Mr. Mitchum served as a
director and head of the audit committee for NephroGenex Inc., a
development-stage company. Mr. Mitchum has also served as a
director on numerous private company and organization
boards. Mr. Mitchum earned an MBA in Business from the
University of Tennessee in Knoxville, Tennessee and a Bachelor of
Science degree in Business and Math from Milligan College in
Johnson City, Tennessee.
We believe that Mr.
Mitchum's experience in managing companies in the life sciences
industry, as well as his financial and operational expertise,
qualify him to serve on our Board.
Mr.
Mitchum serves as chair of the Audit and Compliance
Committee.
Gerald T.
Proehl has
served as a director since April 2014. Currently, Mr. Proehl is a
Founder, President, Chair, CEO and Director of Dermata
Therapeutics, Inc., a private biotechnology company. From January
2002 to January 2014, Mr. Proehl was the President, Chief Executive
Officer and a Director of Santarus, Inc. (“Santarus”),
a company that he helped to found in 1999. From March
2000 through December 2001, Mr. Proehl was President and Chief
Operating Officer of Santarus, and from April 1999 to March 2000,
Mr. Proehl was Vice President, Marketing and Business Development
of Santarus. Mr. Proehl helped lead the sale of Santarus
to Salix Pharmaceuticals for $2.6 billion in January of
2014. Prior to joining Santarus, Mr. Proehl was with
Hoechst, Marion Roussel (“HMR”)
for 14 years where he served in various capacities, including Vice
President of Global Marketing. During his career at HMR he worked
across numerous therapeutic areas, including CNS, cardiovascular,
and gastrointestinal. Mr. Proehl previously served on the boards of
Sophiris Bio Inc., Ritter Pharmaceuticals, Inc., and Auspex
Pharmaceuticals, Inc. Mr. Proehl holds a B.S. in education from the
State University of New York at Cortland, an M.A. in exercise
physiology from Wake Forest University and an M.B.A. from Rockhurst
University.
7
We
believe that Mr. Proehl’s general business and commercial
experience in the pharmaceutical industry, as well as his strong
background in business operations developed through his leadership
at other companies, qualify him to serve on our Board.
Mr.
Proehl serves as chair of the Corporate Governance and Nominating
Committee and the Compensation Committee.
Stuart Rich, MD has
served as our Chief Medical Officer since January 2021 and a
director since February 2021. Dr. Rich joined the Company from
PHPM, where he was a co-founder and held the positions of Chief
Executive Officer and Director from October 2018 until January
2021. Prior to PHPM, Dr. Rich served as the Chief Medical Officer
(part-time) of United Therapeutics from October 2003 until December
2004. Dr. Rich currently serves as Professor of Medicine at
Northwestern University Feinberg School of Medicine and as Director
of the Pulmonary Vascular Disease Program at the Bluhm
Cardiovascular Institute, a U.K. based charity, and of the
Cardiovascular Medical and Research Foundation, a U.S. based
charity. Prior to Northwestern University, Dr. Rich was the
Professor of Medicine and Chief of the Section of Cardiology at the
University of Illinois College of Medicine in Chicago from July
1980 until July 1996, was Professor of Medicine at the Rush Heart
Institute of the Rush University School of Medicine from July 1996
until September 2004 and was Professor of Medicine at the Section
of Cardiology of the University of Chicago Pritzker School of
Medicine from September 2004 until July 2015. Dr. Rich received his
B.S. in Biology at the University of Illinois and his M.D. at
Loyola University Stritch School of Medicine, and he completed his
residency in medicine at the Washington University of St. Louis and
his fellowship in cardiology at the University of
Chicago.
We believe that Dr.
Rich’s extensive medical background in the field of pulmonary
hypertension and experience as a consultant and standing member of
the Cardiovascular and Renal Advisory Committee of the FDA qualify
him to serve on our Board.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE
ELECTION OF EACH OF THE DIRECTOR NOMINEES.
CORPORATE GOVERNANCE MATTERS
Code of Ethics
We have
adopted a Code of Ethics and Business Conduct (the “Code of
Ethics”) applicable to all of our officers, directors and
employees, including our principal executive officer, principal
financial officer, principal accounting officer, controller, or
persons performing similar functions. A copy of this Code of Ethics
is posted on our website
at http://investors.tenaxthera.com/TENX/corporate_governance.
In the event the Code of Ethics is revised, or any waiver is
granted under the Code of Ethics with respect to our principal
executive officer, principal financial officer, principal
accounting officer, controller, or persons performing similar
functions, notice of such revision or waiver will be posted on our
website or disclosed on a current report on Form 8-K as
required.
Board Composition and Independence of Directors
Our
Board of Directors currently has twelve members, of which nine are
standing for re-election at the 2021 Annual Meeting. Dr. Ronald R.
Blanck, currently our Chair, and June Almenoff, Steven Boyd,
Michael Davidson, Anthony A. DiTonno, Declan Doogan, Keith Maher,
James Mitchum, Gregory Pepin, Gerald T. Proehl and Chris A. Rallis
are currently our directors. Following the 2021 Annual Meeting, and
provided that all nominees are elected, Gerald T. Proehl will be
our Chair and June Almenoff, Steven Boyd, Michael Davidson, Anthony
A. DiTonno, Declan Doogan, Keith Maher, and James Mitchum will be
our directors.
8
In
accordance with the listing rules of The Nasdaq Stock Market LLC
(“Nasdaq”), our Board of Directors must consist of a
majority of “independent directors,” as determined in
accordance with Nasdaq Rule 5605(a)(2). The Board has determined
that current directors Drs.
Almenoff, Davidson, Maher and Doogan, and Messrs. Boyd, Mitchum and
Proehl are independent directors in accordance with applicable
Nasdaq listing rules. The Board performed a review to determine the
independence of the director nominees and made a subjective
determination as to each of these independent director nominees
that no transactions, relationships, or arrangements exist that, in
the opinion of the Board, would interfere with the exercise of
independent judgment in carrying out the responsibilities of a
director of the Company. In making these determinations, the Board
reviewed the information provided by the director nominees with
regard to each individual’s business and personal activities
as they may relate to us and our management.
Attendance at Meetings
The
Board met four times during Fiscal 2020, and each of our directors
attended at least 75% of the aggregate of the total number of board
meetings held during the period each has been a director and the
total number of meetings held by all committees on which each
director then served. From time to time the Board also acted
through written consents. We have no formal policy requiring
director attendance at the Annual Meeting, although all directors
are expected to attend the Annual Meeting if they are able to do
so. All six directors of the Company who were members of the Board
at the time of the Annual Meeting in 2020 attended the 2020 Annual
Meeting.
Board Leadership Structure
The
Board recognizes that one of its key responsibilities is to
evaluate and determine its optimal leadership structure so as to
provide independent oversight of management. The Board understands
that there is no single, generally accepted approach to providing
Board leadership and that given the dynamic and competitive
environment in which we operate, the right Board leadership
structure may vary as circumstances warrant. Consistent with this
understanding, the independent Directors consider the Board’s
leadership structure on an annual basis. This consideration
includes the pros and cons of alternative leadership structures in
light of our operating and governance environment at the time, with
the goal of achieving the optimal model for effective oversight of
management by the Board.
Currently, Mr.
DiTonno, who has been a member of our Board of Directors since
December 2011, serves as our Chief Executive Officer and Dr.
Blanck, who has been a member of our Board of Directors since
December 2009, serves as our Chairman of the Board. Based on the
Board’s most recent review of our Board leadership structure,
the Board has determined that this leadership structure is optimal
for the Company because it allows Mr. DiTonno to focus on leading
our business and operations and carrying out our strategy, and Dr.
Blanck, our Chairman of the Board, to focus on leading our
Board’s oversight of our strategy and business.
In
considering its leadership structure, the Board has taken a number
of factors into account. The Board, which consists of highly
qualified and experienced directors, a majority of whom are
independent, exercises a strong, independent oversight function.
This oversight function is enhanced by the fact that all of the
Board’s three key Committees—Audit and Compliance,
Compensation, and Corporate Governance and Nominating—are
composed entirely of independent directors. A number of Board and
Committee processes and procedures, including regular executive
sessions of directors, periodic executive sessions of the
independent directors, and annual evaluations of our Chief
Executive Officer’s performance against pre-determined goals,
provide substantial independent oversight of our Chief Executive
Officer’s performance. The Board believes that these factors
provide the appropriate balance between the authority of those who
oversee the Company and those who manage it on a day-to-day
basis.
Board’s Role in Risk Oversight
We
operate in a highly complex and regulated industry and are subject
to a number of significant risks. The Board plays a key role with
respect to our risk oversight, such as determining whether and
under what circumstances we will engage in financing transactions
or enter into strategic alliances and collaborations. The Board is
also involved in our management of risks related to our financial
condition or to the development and commercialization of our
product candidates.
9
To
facilitate its oversight of the Company, the Board of Directors has
delegated certain functions (including the oversight of risks
related to these functions) to Board committees. The Audit and
Compliance Committee reviews and discusses with management our
major financial risk exposures and the steps management has taken
to monitor and control such exposures, the Compensation Committee
evaluates the risks presented by our compensation programs and
analyzes these risks when making compensation decisions, and the
Corporate Governance and Nominating Committee evaluates whether the
composition of the Board is appropriate to respond to the risks
that we face. The roles of these committees are discussed in more
detail below.
Although the Board
of Directors has delegated certain functions to various committees,
each of these committees regularly reports to and solicits input
from the full Board regarding its activities.
Standing Committees
Our
Board of Directors has three standing committees: the Audit and
Compliance Committee, the Compensation Committee, and the Corporate
Governance and Nominating Committee. Copies of the charters of the
Audit and Compliance, Compensation, and Corporate Governance and
Nominating Committees, as they may be amended from time to time,
are available on our website at
http://www.tenaxthera.com.
The
Board has determined that all of the members of each of the Audit
and Compliance, Compensation, and Corporate Governance and
Nominating Committees are independent as defined under Nasdaq
rules, and, in the case of all members of the Audit and Compliance
Committee, that they meet the additional independence requirements
of Rule 10A-3 under the Securities Exchange Act of
1934.
Audit and Compliance
Committee.
The
Audit and Compliance Committee’s principal responsibilities
include:
●
overseeing
the accounting and financial reporting processes of the Company and
audits of our financial statements;
●
acting
on behalf of the Board in providing oversight with respect to (i)
the quality and integrity of our financial statements and internal
accounting and financial controls; (ii) all audit, review and
attest services relating to our financial statements and internal
control over financial reporting (collectively, “Audit
Services”), including the appointment, compensation,
retention and oversight of the work of the independent auditors
engaged to provide Audit Services to us; and (iii) our compliance
with legal and regulatory requirements;
●
reporting
to the Board on such matters as the Audit and Compliance Committee
deems necessary or appropriate to assure that the Board is informed
of any significant developments within the scope of the Audit and
Compliance Committee’s responsibilities that merit the
attention of the Board;
●
providing
the report required of the Audit and Compliance Committee by the
rules of the SEC for inclusion in our annual proxy
statement;
●
conducting
review and oversight of any related person transactions, other than
related person transactions for which the Board has delegated
review to another independent body of the Board; and
●
fulfilling
such other responsibilities as may be required of the Audit and
Compliance Committee under applicable laws and
regulations.
10
The
members of the Audit and Compliance Committee are currently Messrs.
Mitchum and Rallis and Dr. Blanck. Mr. Mitchum serves as chair of
the Audit and Compliance Committee. The Board of Directors has
determined that Messrs. Mitchum and Rallis and Dr. Blanck each
qualify as an “audit committee financial expert” as
defined by applicable SEC rules. The Audit and Compliance Committee
met 5 times during Fiscal 2020.
Compensation Committee.
The
Compensation Committee’s primary responsibilities
include:
●
assisting
the Board in discharging its overall responsibility relating to
executive officer and director compensation and overseeing and
reporting to the Board as appropriate on our compensation and
benefit policies, programs and plans, including our stock-based
compensation programs;
●
recommending
the compensation of all executive officers and non-employee
directors;
●
engaging
and evaluating any compensation consultants, independent counsel
and other advisers used to assist in the evaluation of director or
executive compensation, including evaluation of the advisers’
independence in advance of engagement;
●
reviewing
our succession and development plans for executive officers and
other members of senior management; and
●
preparing
an annual report on executive compensation for inclusion in our
proxy statement, if required by applicable laws.
The
members of the Compensation Committee are currently Messrs. Proehl,
Pepin and Rallis. Mr. Proehl serves as chair of the Compensation
Committee. The Compensation Committee met 5 times during Fiscal
2020.
Corporate Governance and Nominating Committee.
The
Corporate Governance and Nominating Committee’s primary
responsibilities include:
●
identifying
individuals qualified to become directors and recommending that the
Board select the candidates for all directorships to be filled by
the Board or by the stockholders;
●
upon
the recommendation of the Compensation Committee, determining
compensation arrangements for non-employee directors;
●
developing
and recommending to the Board corporate governance principles for
the Company; and
●
otherwise
taking a leadership role in shaping the corporate governance of the
Company.
The
members of the Corporate Governance and Nominating Committee are
currently Messrs. Proehl and Pepin and Dr. Blanck. Mr. Proehl
serves as chair of the Corporate Governance and Nominating
Committee. The Corporate Governance and Nominating Committee met 2
times during Fiscal 2020.
11
Processes and Procedures for Executive and Director
Compensation
The
Compensation Committee has the authority to review and recommend to
the Board the compensation of the Chief Executive Officer and all
other executive officers. The Corporate Governance and Nominating
Committee has authority to determine and approve all matters
pertaining to compensation of our directors. In making its
recommendation to the Board with respect to the compensation of the
Chief Executive Officer, the Compensation Committee considers,
among other things, the Chief Executive Officer’s performance
of established corporate goals and objectives previously approved
by the Board. In making its recommendation to the Board with
respect to the compensation of other executive officers, the
Compensation Committee takes into account, among other things, each
executive officer’s performance in light of established goals
and objectives as well as the recommendations of the Chief
Executive Officer. The Chief Executive Officer has no input and may
not be present during voting or deliberations about his
compensation. In making its determination with respect to director
compensation, the Corporate Governance and Nominating Committee
considers, among other things, the Compensation Committee’s
recommendation, the Board’s overall level of performance, the
individual director’s participation in committees, the
compensation paid to other director’s in similarly situated
companies, and our financial growth.
Our
Compensation Committee may delegate its authority to the chair of
the committee to the extent it deems necessary to finalize matters
as to which the committee has given its general
approval.
The
Compensation and Corporate Governance and Nominating Committees
have the authority to retain compensation consultants and other
outside advisors to assist in discharging their responsibilities.
In setting 2020 compensation, neither of these committees engaged
an outside compensation consultant.
Procedures for Director Nominations
Under
the charter of the Corporate Governance and Nominating Committee,
the Committee is responsible for identifying from a wide field of
candidates, including women and minority candidates, and
recommending that the Board select qualified candidates for
membership on the Board. In evaluating the suitability of
individual director candidates, the Committee takes into account
such factors as it considers appropriate, which may include (i)
ensuring that the Board, as a whole, is diverse as to race, gender,
culture, thought and geography, such that the Board reflects a
range of viewpoints, backgrounds, skills, experience and expertise,
and consists of individuals with relevant technical skills,
industry knowledge and experience, financial expertise and local or
community ties; (ii) minimum individual qualifications, including
strength of character, mature judgment, relevant career experience,
independence of thought and an ability to work collegially; (iii)
questions of independence, possible conflicts of interest and
whether a candidate has special interests or a specific agenda that
would impair his or her ability to effectively represent the
interests of all stockholders; (iv) the extent to which the
candidate would fill a present need on the Board; and (v) whether
the candidate can make sufficient time available to perform the
duties of a director. The
Corporate Governance and Nominating Committee implements and
assesses the effectiveness of these factors and the Board’s
commitment to diversity by considering these factors in our
assessment of potential director nominees and the overall make-up
of our Board. In determining whether to recommend a director
for re-election, the Committee will consider the director’s
past attendance at meetings and participation in and contributions
to the activities of the Board.
The
Corporate Governance and Nominating Committee does not set
specific, minimum qualifications that nominees must meet in order
to be recommended to the Board, but rather the Board believes that
each nominee should be evaluated based on his or her individual
merits, taking into account the needs of the Company and the
composition of the Board. The Corporate Governance and Nominating
Committee conducts appropriate inquiries into the backgrounds and
qualifications of possible nominees and investigates and reviews
each proposed nominee’s qualifications for service on the
Board. The Corporate Governance and Nominating Committee may engage
outside search firms to assist in identifying or evaluating
potential nominees.
The
Corporate Governance and Nominating Committee will consider
candidates recommended by stockholders. It is the policy of the
Corporate Governance and Nominating Committee that candidates
recommended by stockholders will be given appropriate consideration
in the same manner as other candidates. The procedure for
submitting candidates for consideration by the Corporate Governance
and Nominating Committee for election at our 2022 Annual Meeting is
described under “Other Matters—Stockholder
Proposals.”
12
Stockholder Communications with Directors
It is
the policy of the Company and the Board to encourage free and open
communication between stockholders and the Board. Any stockholder
wishing to communicate with the Board should send any communication
to Tenax Therapeutics, Inc., Attn: Corporate Secretary, ONE Copley
Parkway, Suite 490, Morrisville, North Carolina 27560. Any such
communication must be in writing and must state the number of
shares beneficially owned by the stockholder making the
communication. Our Corporate Secretary will forward such
communication to the full Board or to any individual director or
directors to whom the communication is directed unless the
communication is unduly hostile, threatening, illegal, or similarly
inappropriate, in which case the Corporate Secretary has the
authority to discard the communication or take appropriate legal
action regarding the communication. This policy is not designed to
preclude other communications between the Board and stockholders on
an informal basis.
AUDIT COMMITTEE REPORT
The
Audit and Compliance Committee has reviewed our audited financial
statements for the year ended December 31, 2020 and has discussed
these statements with management. The Audit and Compliance
Committee has also discussed with Cherry Bekaert LLP, our
independent registered public accounting firm during the year ended
December 31, 2020, the matters required to be discussed by the
applicable requirements of the Public Company Accounting Oversight
Board and the Securities and Exchange Commission.
The
Audit and Compliance Committee also received from Cherry Bekaert
LLP the written disclosures and the letter required by applicable
requirements of the Public Company Accounting Oversight Board
regarding Cherry Bekaert LLP’s communications with the Audit
and Compliance Committee concerning independence and discussed with
Cherry Bekaert LLP its independence.
Based
on the review and discussions noted above, the Audit and Compliance
Committee recommended to the Board that the audited financial
statements be included in our Annual Report on Form 10-K for the
year ended December 31, 2020, for filing with the SEC.
With
respect to the above matters, the Audit and Compliance Committee
submits this report.
|
|
James
Mitchum
Ronald
R. Blanck
Chris
A. Rallis
|
MANAGEMENT
The names and ages of our executive officers as of
April 16, 2021 are listed below. Our executive officers are
appointed by the Board to hold office until their successors
are duly appointed and qualified, or until their
resignation, retirement, death, removal, or
disqualification. The
information appearing below and certain information regarding
beneficial ownership of securities by certain executive officers
contained in this proxy statement has been furnished to us by the
executive officers. Information regarding Mr. DiTonno and Dr. Rich
is included in the director nominee profiles set forth
above.
|
Name
|
Age
|
Position
|
|
Anthony
A. DiTonno
|
72
|
Chief Executive Officer
|
|
Michael
B. Jebsen, CPA
|
49
|
President and Chief Financial Officer
|
|
Stuart
Rich, MD
|
71
|
Chief Medical Officer
|
Michael B.
Jebsen joined the Company as
our Accounting Manager in April 2009, was elected Chief Financial
Officer, Executive Vice President Finance and Administration in
August 2009, and served as Interim Chief Executive Officer from
April 2017 through May 2018. Mr. Jebsen also served as our Interim
Chief Executive Officer from August 2011 until November 2013.
Before joining us, he was an auditor with Grant Thornton, LLP from
July 2003 through December 2005 and from April 2008 through April
2009. In addition, he held various positions, including Chief
Ethics Officer, Senior Internal Auditor, and Senior Financial
Analyst with RTI International, a non-profit research and
development organization, from January 2006 to February 2008. Mr.
Jebsen holds a Master of Science in Accounting from East Carolina
University and is a Certified Public Accountant, licensed in North
Carolina.
13
EXECUTIVE COMPENSATION
The
following tables and narrative discussion summarize the
compensation we paid for services in all capacities rendered to us
during the years ended December 31, 2020 and 2019 by our principal
executive officer and all other “Named Executive
Officers” during Fiscal 2020. We
had no other executive officers during any part of Fiscal
2020.
Summary Compensation Table
|
|
|
|
Salary
|
Bonus
|
Stock Awards(1)
|
Option Awards(1)
|
Non-Equity Incentive Plan
Compensation (2)
|
All Other
Compensation
|
Total
|
|
Name and Principal Position
|
|
Year
|
($)
|
($)
|
($)
|
($)
|
($)
|
($)
|
($)
|
|
Anthony A.
DiTonno
|
|
2020
|
440,750
|
-
|
-
|
71,709
|
221,450
|
-
|
733,909
|
|
Chief
Executive Officer
|
|
2019
|
430,000
|
-
|
-
|
-
|
75,250
|
-
|
505,250
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael B.
Jebsen, CPA
|
|
2020
|
349,981
|
-
|
-
|
71,709
|
175,844
|
-
|
597,534
|
|
President and
Chief Financial Officer
|
|
2019
|
339,788
|
-
|
-
|
-
|
59,753
|
-
|
399,541
|
(1)
The
amounts in these columns reflect the aggregate grant date fair
value of awards granted during the year computed in accordance with
Financial Accounting Standards Board ASC Topic 718, Compensation
— Stock Compensation. The assumptions made in determining the
fair values of our stock and option awards are set forth in Note E
to our Financial Statements included in our Form 10-K for Fiscal
2020, filed with the SEC on March 31, 2021.
(2)
These
payments were made based on achievement of annual goals in
accordance with each of Mr. DiTonno’s and Mr. Jebsen’s
employment agreements, which are described below in the section
entitled “—Employment and Other
Contracts.”
Narrative to Summary Compensation Table
Elements of Compensation
During
Fiscal 2020, we compensated our Named Executive Officers generally
through a mix of (i) base salary, (ii) annual cash bonus based on
achievement of predetermined operational goals and (iii) long-term
equity compensation, in the form of options or restricted common
stock.
Annual Base Salaries
The
Named Executive Officers receive a base salary to compensate them
for services rendered to us. The base salary payable to each Named
Executive Officer is intended to provide a fixed component of
compensation reflecting the executive’s skill set,
experience, role and responsibilities. In Fiscal 2020, we paid an
annual base salary of $440,750 to Mr. DiTonno and $349,981 to Mr.
Jebsen.
Cash Bonuses
Under
each of their employment agreements, each of our Named Executive
Officers were eligible to receive annual cash bonuses based on
achievement of annual goals. During Fiscal 2020, Mr. DiTonno and
Mr. Jebsen were eligible to receive a target cash bonus consisting
of 50% of their base salaries, based on 100% achievement of the
predetermined operational goals. There is no cap on the bonuses for
greater than 100% achievement of goals, and there is no
pre-identified threshold amount that must be achieved to receive
any cash bonus payment. Our Compensation Committee evaluated
performance for Fiscal 2020 and, upon the Compensation
Committee’s recommendation, the Board determined that Mr.
DiTonno and Mr. Jebsen would receive 100% of their target cash
bonuses.
14
Long-Term Equity Compensation
We
award stock options to our key employees, including to our
non-executive employees, on an annual basis and subject to approval
by (i) the Board upon the Compensation Committee’s
recommendation with respect to executive officers and (ii) the
Compensation Committee with respect to all other
employees.
Other Elements of Compensation
Employee Benefits and Perquisites
We
maintain broad based benefits that are provided to all employees,
including health and dental insurance. Our executive officers are
eligible to participate in all of our employee benefit plans, in
each case, on the same basis as other employees.
No Tax Gross-Ups
We do
not make gross-up payments to cover our Named Executive
Officers’ personal income taxes that may pertain to any of
the compensation or perquisites paid or provided by
us.
Severance and Change-of-Control Benefits
Pursuant to
employment agreements we have entered into with the Named Executive
Officers, each such officer is entitled to specified benefits in
the event of the termination of his employment under specified
circumstances, including termination following a change in control
of the Company. We have provided more detailed information about
these benefits under the caption “—Employment and Other
Contracts” below.
Employment and Other Contracts
Anthony A. DiTonno
Effective June 1,
2018, we entered into an employment agreement with Mr. DiTonno (the
“DiTonno Employment Agreement”). Under the DiTonno
Employment Agreement, Mr. DiTonno receives an annual base salary of
$430,000. Mr. DiTonno also receives participation in medical
insurance, dental insurance, and other benefit plans on the same
basis as the Company’s other officers. Under the DiTonno
Employment Agreement, Mr. DiTonno is also eligible to receive an
annual cash bonus consisting of 50% of his base salary, based on
100% achievement of annual goals (with no cap on the bonus for
greater than 100% achievement of goals). The DiTonno Employment
Agreement also provides for a one-time non-statutory stock option
grant of 50,000 shares of common stock. The DiTonno Employment
Agreement states that the Company will pay Mr. DiTonno up to
$30,000 to cover costs associated with relocation
expenses.
The
DiTonno Employment Agreement is effective for a one-year term, and
automatically renews for additional one-year terms, unless the
DiTonno Employment Agreement is terminated in advance of renewal or
either party gives notice at least 90 days prior to the end of the
then current term of an intention not to renew. If Mr. DiTonno is
terminated without cause, if he terminates his employment for good
reason, or if we elect not to renew the DiTonno Employment
Agreement, Mr. DiTonno would be entitled to receive (i) one year of
base salary, (ii) a pro-rated amount of the annual bonus that he
would have received had 100% of goals been achieved, and (iii) one
year of COBRA reimbursements or benefits payments, as applicable.
Mr. DiTonno’s entitlement to these payments is conditioned
upon execution of a release of claims.
For
purposes of the DiTonno Employment Agreement: (i)
“cause” includes (a) a willful material breach of the
agreement by Mr. DiTonno, (b) material misappropriation of Company
property, (c) material failure to comply with Company policies, (d)
abuse of illegal drugs or abuse of alcohol in a manner that
interferes with the performance of Mr. DiTonno’s duties, (e)
dishonest or illegal action that is materially detrimental to the
Company, and (f) failure to disclose material conflicts of
interest, and (ii) “good reason” includes (a) a
material reduction in base salary, (b) a material reduction of Mr.
DiTonno’s authority, duties or responsibility, (c) certain
changes in geographic location of Mr. DiTonno’s employment,
or (d) a material breach of the DiTonno Employment Agreement by the
Company.
15
Michael B. Jebsen
Effective November
13, 2013, we entered into an amended and restated employment
agreement with Mr. Jebsen (the “Jebsen Employment
Agreement”). Under the Jebsen Employment Agreement, Mr.
Jebsen received an annual base salary of $285,000. Mr. Jebsen also
receives participation in medical insurance, dental insurance and
other benefit plans on the same basis as our other officers. Under
the Jebsen Employment Agreement, Mr. Jebsen is also eligible to
receive an annual cash bonus consisting of 50% of his base salary,
based on 100% achievement of annual goals (with no cap on the bonus
for greater than 100% achievement of goals). The Jebsen Employment
Agreement also provided for a one-time non-statutory stock option
grant of 44,662 shares of common stock upon stockholder approval of
an amendment to our 1999 Amended Stock Plan (as defined below) to
increase the amount of stock options authorized for issuance
thereunder, which occurred in April 2014. In addition to the
foregoing, Mr. Jebsen also received a fixed monthly automobile
allowance of $800 and annual grants totaling 22 shares of
restricted common stock, vesting over a 12-month period, of which
nine shares will only vest so long as he continues serving as our
Treasurer.
On June
18, 2015, we entered into an amendment to the Jebsen Employment
Agreement. The amendment to Mr. Jebsen’s employment agreement
increased his base salary to $325,000 from $285,000, effective as
of May 1, 2015, while removing the fixed monthly automobile
allowance of $800.
The
Jebsen Employment Agreement is effective for a one-year term, and
automatically renews for additional one-year terms, unless the
Jebsen Employment Agreement is terminated in advance of renewal or
either party gives notice at least 90 days prior to the end of the
then current term of an intention not to renew. If Mr. Jebsen is
terminated without cause, if he terminates his employment for good
reason, or if we elect not to renew the Jebsen Employment
Agreement, Mr. Jebsen would be entitled to receive (i) one year of
base salary, (ii) a pro-rated amount of the annual bonus that he
would have received had 100% of goals been achieved, and (iii) one
year of COBRA reimbursements or benefits payments, as applicable.
Mr. Jebsen’s entitlement to these payments is conditioned
upon execution of a release of claims.
For
purposes of the Jebsen Employment Agreement: (i)
“cause” includes (a) a willful material breach of the
agreement by Mr. Jebsen, (b) material misappropriation of the
Company’s property, (c) material failure to comply with the
Company’s policies, (d) abuse of illegal drugs or abuse of
alcohol in a manner that interferes with the performance of Mr.
Jebsen’s duties, (e) dishonest or illegal action that is
materially detrimental to the Company, and (f) failure to disclose
material conflicts of interest, and (ii) “good reason”
includes (a) a material reduction in base salary, (b) a material
reduction of Mr. Jebsen’s authority, duties or
responsibility, (c) certain changes in geographic location of Mr.
Jebsen’s employment, or (d) a material breach of the Jebsen
Employment Agreement by us.
On
March 21, 2011, we entered into an indemnification agreement with
Mr. Jebsen, which provides that in respect of acts or omissions
occurring prior to such time as Mr. Jebsen ceases to serve as our
officer Mr. Jebsen will receive (i) indemnification and advancement
of expenses to the extent provided under our Certificate of
Incorporation and to the fullest extent permitted by applicable law
and (ii) indemnification against any adverse tax consequences in
connection with prior option awards that may have been
non-compliant with Section 409A of the IRC.
On
April 3, 2017, the Board appointed Mr. Jebsen as our Interim Chief
Executive Officer, and he continued to serve as our President and
Chief Financial Officer. In connection with Mr. Jebsen’s
appointment as Interim Chief Executive Officer, we provided Mr.
Jebsen with additional compensation of $10,000 per month for each
month that he served as Interim Chief Executive Officer. In
addition, Mr. Jebsen was granted, on the effective date of his
appointment as Interim Chief Executive Officer, a stock option to
purchase 10,000 shares of our common stock. The award will vest
over a four-year period, with 25% of the option award vesting on
the first four anniversaries of the grant date provided Mr. Jebsen
remains continuously employed with us through each anniversary,
however, the vesting of the stock option will accelerate and become
fully vested upon the achievement of specified performance goals.
Mr. Jebsen completed his service as our Interim Chief Executive
Officer on May 31, 2018.
16
Equity Awards
In
September 1999, our Board of Directors approved the 1999 Stock
Plan, which provided for the granting of incentive and nonstatutory
stock options to employees and directors to purchase up to 667
shares of our common stock. The 1999 Stock Plan was approved by
stockholders on October 10, 2000. Options granted under the 1999
Stock Plan generally have vesting schedules of up to four years and
have expiration periods of generally ten years. On June 17, 2008,
our stockholders approved an amendment and restatement to the 1999
Stock Plan (the “1999 Amended Stock Plan”) to increase
the number of shares of common stock available for awards under the
plan from 667 to 2,000, to increase the maximum number of shares
covered by awards granted under the 1999 Stock Plan to an eligible
participant from 667 to 834 shares, and to make additional
technical changes to update the plan. On September 30, 2011, our
stockholders approved an amendment to the 1999 Amended Stock Plan,
to increase the number of shares of common stock available for
awards under the plan from 2,000 to 15,000. On March 13, 2014, our
stockholders approved a second amendment to the 1999 Amended Stock
Plan, to increase the number of shares of common stock available
for awards under the plan from 15,000 to 200,000. On September 15,
2015, our stockholders approved a third amendment to the 1999
Amended Stock Plan, to increase the number of shares of common
stock available for awards under the plan from 200,000 to 250,000.
Persons eligible to receive grants under the 1999 Amended Stock
Plan consisted of all of our employees, including executive
officers and non-employee directors. As of December 31, 2020 and
2019, we had 57,648 and 191,706 outstanding options under the 1999
Amended Stock Plan, respectively. As of December 31, 2020 and 2019,
there were no outstanding shares of restricted stock under the 1999
Amended Stock Plan, respectively. The 1999 Amended Stock Plan
expired on June 17, 2018 and no new grants may be made under that
plan after that date. However, unexpired awards granted under the
1999 Amended Stock Plan remain outstanding and subject to the terms
of the 1999 Amended Stock Plan.
On June 16, 2016, our
stockholders approved the 2016 Plan, which provided for the
issuance of up to 150,000 shares of common stock. On June 13, 2019,
our stockholders approved an amendment to the 2016 Plan to increase
the number of shares authorized for issuance under the 2016 Plan by
600,000 shares. Under the 2016 Plan, with the approval of the
Compensation Committee, the Company may grant stock options, stock
appreciation rights, restricted stock, restricted stock units,
performance shares, performance units, cash-based awards or other
stock-based awards. As of December 31, 2020 and 2019, there were
393,500 and 52,500 outstanding options under the 2016 Plan,
respectively. As of December 31, 2020 and 2019, there were 356,500
and 697,500 shares of common stock available for grant under the
2016 Plan, respectively. See Proposal 3 in this Proxy
Statement for a description of the proposed Amendment No. 2 to the
2016 Plan to increase the number of shares authorized for issuance
under the 2016 Plan by 750,000 shares.
Outstanding Equity Awards
The
following table provides information about outstanding equity
awards held by the Named Executive Officers as of December 31,
2020.
17
Outstanding Equity Awards as of December 31, 2020
|
|
Option Awards(1)
|
Stock Awards
|
|||||
|
Name and Principal Position
|
Number of securities underlying
unexercised options (Exercisable)
|
Number of securities underlying
unexercised options (Unexercisable)
|
Equity incentive plan award:
number of securities underlying unexercised unearned
options
|
Option exercise
price
|
Option expiration
date
|
Number of shares or units of stock that have not
vested
|
Market value of shares or units of stock that have not
vested
|
|
|
(#)
|
(#)
|
(#)
|
($/Sh)
|
|
(#)
|
($)
|
|
Anthony
A. DiTonno
|
-
|
75,000
|
-
|
1.18
|
3/1/30
|
-
|
-
|
|
Chief
Executive Officer
|
25,000
|
25,000
|
-
|
6.10
|
6/1/28
|
-
|
-
|
|
500
|
-
|
-
|
6.23
|
5/1/28
|
-
|
-
|
|
|
500
|
-
|
-
|
10.60
|
5/1/27
|
-
|
-
|
|
|
500
|
-
|
-
|
54.40
|
5/1/26
|
-
|
-
|
|
|
500
|
-
|
-
|
68.40
|
5/1/25
|
-
|
-
|
|
|
500
|
-
|
-
|
96.40
|
5/1/24
|
-
|
-
|
|
|
487
|
-
|
-
|
93.20
|
5/1/23
|
-
|
-
|
|
|
64
|
-
|
-
|
712.00
|
5/1/22
|
-
|
-
|
|
|
25
|
-
|
-
|
760.00
|
12/16/21
|
-
|
-
|
|
|
|
|
|
|
|
|
|
|
|
Michael
B. Jebsen, CPA
|
-
|
75,000
|
-
|
1.18
|
3/1/30
|
-
|
-
|
|
President
and Chief Financial Officer
|
10,000
|
-
|
-
|
11.20
|
4/3/27
|
-
|
-
|
|
7,500
|
-
|
-
|
41.40
|
12/15/26
|
-
|
-
|
|
|
2
|
-
|
-
|
736.00
|
4/1/21
|
-
|
-
|
|
|
2
|
-
|
-
|
772.00
|
3/1/21
|
-
|
-
|
|
|
2
|
-
|
-
|
772.00
|
2/1/21
|
-
|
-
|
|
|
2
|
-
|
-
|
768.00
|
1/1/21
|
-
|
-
|
|
(1)
Except
as otherwise noted, the option awards reflected in these columns
vested immediately on the date of grant. The date of grant for each
of these options is the date 10 years prior to the expiration date
reflected in this table.
(2)
These
options were granted with the following vesting schedule: 25% on
each anniversary of the grant date.
18
Equity Compensation Plan Information
The
following table provides information about the securities
authorized for issuance under our equity compensation plans as of
December 31, 2020.
|
|
(a)
|
(b)
|
(c)
|
|
|
Number of securities to be issued upon exercise
of outstanding options, warrants and rights
|
Weighted-average exercise price of outstanding options,
warrants and rights
|
Number of securities remaining available for future
issuances under equity compensation plans (excluding securities
reflected in column (a))
|
|
Plan category
|
|
|
|
|
Equity
compensation plans approved by security holders
|
57,648
|
$46.34
|
356,500(1)
|
|
Equity
compensation plans not approved by security holders
|
—
|
—
|
—
|
|
Total
|
57,648
|
$46.34
|
356,500
|
|
(1)
|
Represents the number of shares available for future issuance under
the 2016 Plan. All of these shares are available for issuance as
restricted stock or other stock-based awards under the 2016
Plan.
|
DIRECTOR COMPENSATION
The
following table summarizes the compensation paid to non-employee
directors for Fiscal 2020.
Fiscal 2020 Director Compensation
|
|
Fees Earned or Paid in Cash
|
Option Awards
(1)
|
Stock Awards
|
All Other Compensation
|
Total
|
|
Director
|
($)
|
($)
|
($)
|
($)
|
($)
|
|
Ronald
R. Blanck, DO
|
66,000
|
271
|
-
|
-
|
66,271
|
|
Steven
Boyd (2)
|
-
|
-
|
-
|
-
|
-
|
|
Keith
Maher, MD (2)
|
-
|
-
|
-
|
-
|
-
|
|
James
Mitchum
|
60,000
|
271
|
-
|
-
|
60,271
|
|
Gregory
Pepin
|
53,500
|
271
|
-
|
-
|
53,771
|
|
Gerald
T. Proehl
|
62,000
|
271
|
-
|
-
|
62,271
|
|
Chris
A. Rallis
|
57,500
|
271
|
-
|
-
|
57,771
|
|
(1)
|
The amounts in this column reflect the aggregate grant date fair
value of awards granted during
the year computed in accordance with Financial Accounting Standards
Board ASC Topic 718, Compensation- Stock Compensation. The
assumptions made in determining the fair values of our option
awards are set forth in Note E to our Financial Statements included
in our Form 10-K for Fiscal 2020, filed with the SEC on March 31,
2021. As of December 31, 2020, our non-employee directors
then serving on the Board held the following aggregate stock
options: Dr. Blanck, 4,026; Mr. Mitchum, 3,750; Mr. Pepin, 3,500;
Mr. Proehl, 4,250; and Mr. Rallis, 3,990.
|
|
(2)
|
Mr. Boyd and Dr. Maher have agreed not to receive compensation for
their service as members of the Board of Directors in light of
their positions with Armistice.
|
19
During
Fiscal 2020, all of our non-employee directors, with the exception
of Mr. Boyd and Dr. Maher who were not compensated, were paid the
following compensation for service on the Board and Board
Committees according to the policies established for director
compensation by the Corporate Governance and Nominating
Committee:
●
An
annual director fee in each fiscal year of $45,000 ($55,000 for our
Board chairman), which was paid in equal quarterly installments on
the first day of each fiscal quarter;
●
An
annual Audit and Compliance Committee member fee in each fiscal
year of $7,500 ($15,000 for our Audit and Compliance Committee
chairman), which was paid in equal quarterly installments on the
first day of each fiscal quarter;
●
An
annual Compensation Committee member fee in each fiscal year of
$5,000 ($10,000 for our Compensation Committee chairman), which was
paid in equal quarterly installments on the first day of each
fiscal quarter;
●
An
annual Nominating and Corporate Governance Committee member fee in
each fiscal year of $3,500 ($7,000 for our Nominating and Corporate
Governance Committee chairman), which was paid in equal quarterly
installments on the first day of each fiscal quarter;
●
An
annual grant of 500 stock options, which vest one year after the
grant date and are exercisable for a period of ten years;
and
●
Reimbursement
of travel and related expenses for attending Board and committee
meetings, as incurred.
We
will maintain an appropriate director’s and officer’s
insurance policy at all times for our non-employee
directors.
Fiscal 2021 Director Compensation
On
April 15, 2021, the Board adopted a revised director compensation
policy with effect as of June 10, 2021. Pursuant to the revised
policy designated non-employee members of the Board shall be
compensated for their service on the Board and Board
committees:
●
An
annual director fee in each fiscal year of $45,000 ($55,000 for our
board chairman), which is paid in equal quarterly installments on
the first day of each fiscal quarter;
●
An
annual audit committee member fee in each fiscal year of $7,500
($15,000 for our audit committee chairman), which is paid in equal
quarterly installments on the first day of each fiscal
quarter;
●
An
annual compensation committee member fee in each fiscal year of
$5,000 ($10,000 for our compensation committee chairman), which is
paid in equal quarterly installments on the first day of each
fiscal quarter;
●
An
annual nominating and corporate governance committee member fee in
each fiscal year of $3,500 ($7,000 for our nominating and corporate
governance committee chairman), which is paid in equal quarterly
installments on the first day of each fiscal quarter;
●
An
annual grant of 5,000 stock options (6,250 stock options in the
initial year), which vest one-year after the grant date and are
exercisable for a period of ten years, issued at the date of the
Annual Meeting of Stockholders each year; and
●
Reimbursement
of travel and related expenses for attending Board and committee
meetings, as incurred.
20
OWNERSHIP OF SECURITIES
Principal Stockholders and Share Ownership by
Management
The
following table sets forth, as of April 16, 2021, the number and
percentage of the outstanding shares of common stock that,
according to the information supplied to us, were beneficially
owned by (i) each person who is currently a director or a director
nominee, (ii) our Named Executive Officers, (iii) all current
directors and executive officers as a group and (iv) each person
who, to our knowledge, is the beneficial owner of more than five
percent of the outstanding common stock. Except as otherwise
indicated, the persons named in the table have sole voting and
dispositive power with respect to all shares beneficially owned,
subject to community property laws where applicable.
|
Beneficial Owner
Name and Address (1)
|
Amount and Nature of Beneficial Ownership
(2)
|
Percent of Class
|
|
Principal Stockholders
|
|
|
|
Armistice Capital, LLC (3)
510 Madison Avenue, 7th Floor
New
York, NY 10022
|
2,992,364
|
19.99%
|
|
Hudson Bay Capital Management LP
(4)
777 Third Avenue, 30th
Floor
New
York, NY 10017
|
777,202
|
4.94%
|
|
Officers and Directors
|
|
|
|
June Almenoff, MD
|
-
|
*
|
|
Ronald R. Blanck, DO (5)
|
5,088
|
*
|
|
Steven Boyd (3),(5)
|
2,992,364
|
19.99%
|
|
Michael Davidson, MD (5)
|
94,645
|
*
|
|
Anthony DiTonno (5)
|
66,236
|
*
|
|
Declan Doogan, MD (5)
|
567,871
|
3.79%
|
|
Michael B. Jebsen, CPA (5)
|
72,067
|
*
|
|
Keith Maher
|
-
|
*
|
|
James Mitchum (5)
|
5,050
|
*
|
|
Gregory Pepin (5)
|
5,787
|
*
|
|
Gerald T. Proehl (5)
|
5,745
|
*
|
|
Chris A. Rallis (5)
|
4,719
|
*
|
|
Stuart Rich, MD (5)
|
662,517
|
4.43%
|
|
All officers and directors as a group (11
persons)(5)
|
4,482,089
|
29.69%
|
* Less than 1%
|
(1)
|
Unless otherwise noted, all addresses are in care of Tenax
Therapeutics, Inc. at ONE Copley Parkway, Suite 490, Morrisville,
North Carolina 27560.
|
|
(2)
|
Based upon 14,969,312 shares of common stock outstanding on April
16, 2021. The number and percentage of shares beneficially owned is
determined in accordance with Rule 13d-3 of the Exchange Act and
the information is not necessarily indicative of beneficial
ownership for any other purpose. Under such rule, beneficial
ownership includes any shares as to which the person has sole or
shared voting power or investment power and also any shares that
the person has the right to acquire within 60 days of April 16,
2021 through the exercise of any stock options, warrants or
other rights or the conversion of preferred stock. Any shares that
a person has the right to acquire within 60 days are deemed to be
outstanding for the purpose of computing the percentage ownership
of such person but are not deemed outstanding for the purpose of
computing the percentage ownership of any other
person.
|
21
|
(3)
|
Armistice,
Armistice Capital Master Fund Ltd. (“ACMF”)
and Steven Boyd share voting and dispositive power over 2,019,995
shares, 5,260,005 shares exercisable under pre-funded warrants and
12,216,467 shares issuable upon the exercise of warrants. Steven
Boyd disclaims beneficial ownership of the reported securities
except to the extent of his pecuniary interest
therein. Pursuant to the terms of certain of the
warrants held by ACMF, ACMF could not exercise such warrants to the
extent it (together with its affiliates) would beneficially own,
after such exercise, more than 19.99% of the outstanding shares of
common stock (the “Blocker”).
Consequently, these reporting persons currently are not able to
exercise all of their warrants due to the
Blocker.
|
|
(4)
|
Based on a Schedule 13G filed with the SEC on February 10, 2021,
Hudson Bay Capital Management LP (“HBCM”) and Sander
Gerber have shared voting and dispositive power over the
securities. HBCM serves as the investment manager of Hudson Bay
Master Fund. As such, HBCM may be deemed to be the beneficial owner
of all shares of common stock if any, underlying the warrants held
by Hudson Bay Master Fund. Mr. Gerber serves as the managing member
of Hudson Bay Capital GP LLC, which is the general partner of the
HBCM. Mr. Gerber disclaims beneficial ownership of these
securities.
|
|
(5)
|
With respect to Dr. Blanck, includes 4,026 shares of common stock
subject to options that are vested, vesting, exercisable or
convertible, as applicable, within 60 days of April 16,
2021;
With respect to Mr. Boyd, includes 2,019,995 shares, 5,260,005
shares exercisable under pre-funded warrants and 12,216,467 shares
issuable upon the exercise of warrants held by ACMF, an entity with
which Mr. Boyd is affiliated due to his position as Chief
Investment Officer. Mr. Boyd may be deemed to have shared voting
and dispositive power over the shares beneficially owned by
Armistice Capital, LLC, but disclaims such beneficial ownership
except to the extent of their pecuniary interest therein, if
any;
With respect to Dr. Davidson, excludes 512,000 shares of common
stock that are issuable upon conversion of outstanding Series B
Preferred Stock that will become convertible only upon stockholder
approval as described in this Proxy Statement;
With respect to Mr. DiTonno, includes 66,076 shares of common stock
subject to options that are vested, vesting, exercisable or
convertible, as applicable, within 60 days of April 16,
2021;
With respect to Dr. Doogan, excludes 3,070,000 shares of common
stock that are issuable upon conversion of outstanding Series B
Preferred Stock that will become convertible only upon stockholder
approval as described in this Proxy Statement;
With respect to Mr. Jebsen, includes 43,008 shares of common stock
subject to options that are vested, vesting, exercisable or
convertible, as applicable, within 60 days of April 16,
2021;
With respect to Mr. Mitchum, includes 3,750 shares of common stock
subject to options that are vested, vesting, exercisable or
convertible, as applicable, within 60 days of April 16, 2021 and
1,300 shares for which voting and investment power is shared with
Mr. Mitchum’s spouse;
With respect to Mr. Pepin, includes 3,500 shares of common
stock subject to options that are vested, vesting, exercisable or
convertible, as applicable, within 60 days of April 16, 2021.
With respect to Mr. Proehl, includes 4,250 shares of common stock
subject to options that are vested, vesting, exercisable or
convertible, as applicable, within 60 days of April 16, 2021 and
1,495 shares for which voting and investment power is shared with
Mr. Proehl’s spouse;
With respect to Mr. Rallis, includes 3,990 shares of common stock
subject to options that are vested, vesting, exercisable or
convertible, as applicable, within 60 days of April 16,
2021;
With respect to Dr. Rich, excludes 3,581,000 shares of common stock
that are issuable upon conversion of outstanding Series B Preferred
Stock that will become convertible only upon stockholder approval
as described in this Proxy Statement; and
With respect to all officers and directors as a group, excludes
7,163,000 shares of common stock that are issuable upon conversion
of outstanding Series B Preferred Stock that will become
convertible only upon stockholder approval as described in this
Proxy Statement; and includes 5,260,005 shares exercisable under
pre-funded warrants, subject to the Blocker described in (3) above,
12,216,467 shares issuable upon the exercise of warrants, subject
to the Blocker described in (3) above and 128,500 shares of common
stock subject to options that are vested, vesting, convertible, or
exercisable, as applicable, within 60 days of April 16,
2021.
|
22
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Related Party Transactions
We have
not engaged in any related party transaction since January 1, 2019
in which the amount involved exceeds $120,000 and in which any of
our directors, executive officers or any holder of more than 5% of
our common stock, or any member of the immediate family of any of
these persons or entities controlled by any of them, had or will
have a direct or indirect material interest, other than the
compensation arrangements described in “Executive and
Director Compensation.”
DELINQUENT SECTION 16(A) REPORTS
The
members of our Board of Directors, our executive officers, and
persons who hold more than 10% of our outstanding common stock are
subject to the reporting requirements of Section 16(a) of the
Securities Exchange Act of 1934, as amended (the “Exchange
Act”), which requires them to file reports with respect to
their ownership of our common stock and their transactions in such
common stock.
Based
solely upon our review of the Section 16(a) reports in our records
for Fiscal 2020 transactions in our common stock, we believe that
during the fiscal year ended December 31, 2020 and prior fiscal
years our officers, directors and greater than 10% owners timely
filed all reports they were required to file under Section 16(a),
except that Form 4s were not
timely filed in connection with the stock option awards on May 1,
2020 to each of Messrs. Blanck, DiTonno, Mitchum, Rallis and
Proehl.
PROPOSAL 2: APPROVAL OF THE CONVERSION OF SERIES B PREFERRED
STOCK
On
January 15, 2021, we, through our wholly owned subsidiary, Life
Newco II, Inc., a Delaware corporation (“Life Newco”),
acquired 100% of the equity of PHPrecisionMed Inc.
(“PHPM”) pursuant to an Agreement and Plan of Merger,
dated January 15, 2021, by and among us, Life Newco, PHPM and Dr.
Stuart Rich, solely in his capacity as the PHPM Representative (the
“Merger Agreement”). We refer to the transaction
pursuant to the Merger Agreement as the “PHPM
Merger.”
Pursuant to the
Merger Agreement, we issued 1,892,905 shares of our common stock
and 10,232 shares of our Series B convertible preferred stock
(“Series B Preferred Stock”), which are convertible
into an aggregate of 10,232,000 shares of common stock
(collectively the “Consideration”) to the PHPM
stockholders. The rights, preferences and privileges of the Series
B Preferred Stock are set forth in the Certificate of Designation
of Series B Convertible Preferred Stock that we filed with the
Secretary of State of the State of Delaware on January 15, 2021.
Each share of Series B Preferred Stock will automatically convert
into (i) 881.5 shares of Common Stock following receipt of the
approval of the stockholders of the Company for such conversion
(the “Conversion Approval”), and (ii) 118.5 shares of
Common Stock 24 months after the date of issuance of the Series B
Preferred Stock, subject to reduction for indemnification claims.
The number of shares of Common Stock into which the Series B
Preferred Stock converts is subject to adjustment in the case of
stock splits, stock dividends, combinations of shares and similar
recapitalization transactions. The Preferred Stock does not carry
dividends or a liquidation preference. The Series B Preferred Stock
carries voting rights aggregating 4.99% of the Company’s
Common Stock voting power immediately prior to the closing of the
PHPM Merger.
In
connection with the closing of the PHPM Merger, PHPM’s
co-founder, Chief Executive Officer and stockholder, Stuart Rich,
became our Chief Medical Officer.
Reasons for this Proposal
Because
our common stock is listed on the NASDAQ Capital Market, we are
required to obtain stockholder approval prior to the issuance of
securities in connection with the acquisition of another company
where, among other things, the number of shares of common stock to
be issued, including shares issued pursuant to an earn-out
provision or similar contingency, is or will be equal to or in
excess of 20% of the number of shares of common stock outstanding
before the issuance of the stock or other securities. Our issuance
of the Consideration to the PHPM stockholders, once the Series B
Preferred Stock is converted to common stock, would involve an
issuance of shares of common stock in excess of 20% of the number
of shares of common stock outstanding before the issuance to the
PHPM stockholders. Accordingly, we are seeking the Conversion
Approval to satisfy the NASDAQ rules in order to allow us to
convert the Series B Preferred Stock and to satisfy our contractual
obligations under the Merger Agreement, in which we agreed to
undertake to seek the Conversion Approval at this Annual
Meeting.
23
The
transaction documents related to the PHPM Merger contain provisions
that prohibit conversion of the Series B Preferred Stock until the
Conversion Approval is obtained. The Merger Agreement also requires
us to use our reasonable best efforts to seek the Conversion
Approval no later than July 31, 2021. If the Conversion Approval is
not received at this Annual Meeting, none of the Series B Preferred
Stock will be converted to common stock. In addition, the Merger
Agreement requires us to call a stockholders meeting every 90 days
thereafter to seek stockholder approval for the Conversion until
the earlier of the date stockholder approval for the Conversion is
obtained or the Series B Preferred Stock is no longer outstanding,
which could have a material adverse effect on our liquidity
position.
Effect of this Proposal
The
shares issued in connection with the PHPM Merger will not affect
the rights of the holders of outstanding common stock but will
cause substantial dilution to existing stockholders’ voting
power and in the future earnings per share of their common stock.
When additional shares of common stock are issued upon the
conversion of the Series B Preferred Stock, such new shares will
have the same voting and other rights and privileges as the
currently issued and outstanding shares of common stock, including
the right to cast one vote per share on all matters and to
participate in dividends when and to the extent declared and
paid.
Required Vote for Approval
Assuming the
existence of a quorum, this proposal will be approved if the number
of shares voted in favor of the proposal to approve the conversion
of the Series B Preferred Stock into common stock (excluding any
shares of common stock issued in connection with the PHPM Merger)
exceeds the number of shares voted against the proposal. As such,
abstentions and broker non-votes will not affect the outcome of the
vote.
No Preemptive Rights
The
holders of common stock have no preemptive rights to any future
issuances of common stock.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE
“FOR” THE APPROVAL OF THE CONVERSION OF THE
SERIES B PREFERRED STOCK INTO COMMON STOCK.
PROPOSAL 3: APPROVAL OF AMENDMENT NO. 2 TO THE 2016 STOCK INCENTIVE
PLAN
Our
2016 Plan originally authorized for issuance 3,000,000 shares of
our common stock under the plan. As a result of the 1-for-20
reverse stock split effected on February 23, 2018, the number of
shares authorized for issuance under the 2016 Plan was reduced to
150,000. On June 13, 2019, Amendment No. 1 to the 2016 Plan
increased the number of shares of common stock authorized for
issuance under the 2016 Plan to a total of 750,000 shares. On April
[●],
2021, our Board of Directors approved, subject to stockholder
approval, Amendment No. 2 to the 2016 Plan to increase the number
of shares of common stock authorized for issuance under the 2016
Plan to a total of 1.5 million shares, representing an increase of
750,000 shares. The additional requested shares represent
approximately 5% of our total outstanding shares as of April 14,
2021. Based upon our assessment of our anticipated grants under the
2016 Plan, as amended, we believe that the proposed increase in the
number of shares will be sufficient to meet our equity compensation
requirements for approximately three years from the date of the
Annual Meeting.
The
purpose of the 2016 Plan is to advance the interests of our company
and our stockholders through awards that give eligible employees,
directors and third party service providers a personal stake in our
growth, development and financial success. Awards under the 2016
Plan are also intended to motivate eligible employees, directors
and third party service providers to devote their best efforts to
our business and help us attract and retain the services of
eligible employees, directors and third party service providers who
are in a position to make significant contributions to our future
success and align them with stockholder interests.
24
We are
requesting that stockholders approve Amendment No. 2 to the 2016
Plan to satisfy Nasdaq rules relating to equity compensation. In
addition, approval would allow us to qualify additional options for
treatment as incentive stock options for purposes of Section 422 of
the Internal Revenue Code. If stockholder approval is not received,
the Compensation Committee will reconsider Amendment No. 2 to the
2016 Plan, and the present 2016 Plan would remain in effect without
such amendment. In addition, if stockholder approval is not
received, we may seek to hold
additional stockholder meetings until stockholder approval is
obtained.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE
“FOR” THE APPROVAL OF AMENDMENT NO. 2 TO THE
2016 STOCK INCENTIVE PLAN.
Summary of the 2016 Plan Features
The
following is a brief summary of the 2016 Plan, as amended by
Amendment No. 1 and Amendment No 2, and is qualified in its
entirety by reference to a copy of the 2016 Plan, Amendment No. 1
and Amendment No. 2 attached to this proxy statement as Appendix
A.
Shares Available
The
total number of shares of common stock available for issuance under
the 2016 Plan is 806,500, subject to adjustment for future stock
splits, stock dividends and similar changes in the capitalization
of our company.
Any
shares related to Awards (as defined below) which terminate by
expiration, forfeiture, cancellation, or otherwise without the
issuance of such shares, are settled in cash in lieu of shares, or
are exchanged with the Compensation Committee’s permission,
prior to the issuance of shares, for Awards not involving shares,
shall be available again for grant under the 2016
Plan.
Shares
of common stock covered by an Award will be reserved for that Award
while it remains outstanding but shall only be counted as used to
the extent they are actually issued; provided, however, that the
full number of stock appreciation rights granted that are to be
settled by the issuance of shares shall be counted against the
number of shares available for award under the 2016 Plan,
regardless of the number of shares actually issued upon settlement
of such stock appreciation rights. Further, any shares
of common stock withheld to satisfy tax withholding obligations on
Awards issued under the 2016 Plan and shares tendered to pay the
exercise price of Awards under the 2016 Plan will not be eligible
to be returned as available shares under the 2016
Plan.
Description of Awards
The
2016 Plan provides for the grant of stock options, stock
appreciation rights, restricted stock, restricted stock units,
performance shares, performance units, cash-based awards, or other
stock-based awards (collectively
“Awards”).
Stock Options. Optionees
receive the right to purchase a specified number of shares of our
common stock at a specified option price and subject to such other
terms and conditions as are specified in connection with the option
grant. The option price for each grant of an option
under the 2016 Plan will be determined by the Compensation
Committee in its sole discretion and shall be specified in the
Award agreement; provided, however, the option price on the date of
grant must be at least equal to 100% of the fair market value of
the common stock on the date of grant; provided, further, however,
that the option price must be at least equal to 110% of the fair
market value of the common stock on the date of grant with respect
to any incentive stock option issued to a participant who, on the
date of such grant, owns stock possessing more than 10% of the
total combined voting power of all classes of stock of our company
or of any subsidiary corporation (a “10%
Shareholder”). The term of an option and the
period or periods during which, and conditions pursuant to which,
an option may vest and be exercised will be determined by the
Compensation Committee, although the option term may not exceed 10
years (or five years with respect to incentive options granted to
an employee who is a 10% Shareholder). Any option not exercised
before expiration of the option period will terminate. Options
generally are subject to certain restrictions on exercise if the
participant terminates employment or service. The 2016
Plan permits the Compensation Committee to determine the manner of
payment of the exercise price of options, including through payment
by cash or its equivalent, in connection with a “cashless
exercise” through a broker, by surrender to us of shares of
common stock, or by any other lawful means.
25
Stock Appreciation
Rights. Stock Appreciation Rights
(“SARs”) entitle recipients to profit from increases in
the value of our common stock, without buying
shares. Like options, SARs benefit the holder when our
common stock price increases. The primary difference is
that the recipient is not required to pay an exercise price, but
instead just receives the amount of the increase in the form of
cash or stock. Upon the exercise of a SAR, the holder of
a SAR is entitled to receive payment from our company in an amount
determined by multiplying (i) the difference between the fair
market value of a share of common stock on the date of exercise
over the grant price per share of such SAR by (ii) the number of
shares of common stock with respect to which the SAR is being
exercised. The grant price may be no less than 100% of the fair
market value per share of the common stock on the date the SAR is
granted. SARs vest and become exercisable according to
the terms established by the Compensation Committee. No
SAR may be exercised more than 10 years after it was granted, or
such shorter period as may apply with respect to a particular SAR.
SARs generally are subject to certain restrictions on exercise if
the participant terminates employment or service.
Restricted Stock and Restricted Stock
Units. Subject to the limitations of the 2016
Plan, the Compensation Committee may grant shares of restricted
stock and/or restricted stock units to participants in such amounts
as the Compensation Committee determines. Restricted stock units
are similar to restricted stock except that no shares of common
stock are actually awarded to the participant on the date of
grant. Restricted stock and restricted stock units will
be subject to certain conditions which must be met in order for the
restricted stock or restricted stock units to vest and/or be earned
(in whole or in part) and no longer subject to forfeiture.
Restricted stock awards may be payable in shares of common stock,
and restricted stock units may be payable in cash or whole shares
of common stock, or partly in cash and partly in whole shares of
common stock, in accordance with the Compensation Committee’s
discretion. The Compensation Committee has authority to
determine the restriction period for each grant of restricted stock
and/or restricted stock units and will determine the conditions
that must be met in order for such Award to be granted or to vest
or be earned (in whole or in part). These conditions may include
(but are not limited to) payment of a stipulated purchase price,
restrictions based upon the achievement of specific performance
goals, time-based restrictions on vesting following the attainment
of the performance goals, time-based restrictions, and/or
restrictions under applicable laws or under the requirements of any
stock exchange or market upon which such shares are listed or
traded, or holding requirements or sale restrictions placed on the
shares by us upon vesting of such restricted stock or restricted
stock units. Restricted stock and/or restricted stock
units generally are subject to certain restrictions on vesting if
the participant terminates employment or service.
Performance Shares and Performance
Units. Subject to the limitations of the 2016
Plan, the Compensation Committee may grant performance units and/or
performance shares to participants in such amounts and upon such
terms as the Compensation Committee determines. An award
of a performance share is a grant of a right to receive shares of
common stock or the cash value thereof, or a combination thereof
(as determined in the Compensation Committee’s discretion),
which is contingent upon the achievement of performance goals
during a specified period and which has a value equal to the fair
market value of a share of common stock on the grant date. An award
of a performance unit is a grant of a right to receive shares of
common stock, a designated dollar value amount of common stock, or
a combination thereof (as determined in the Compensation
Committee’s discretion) which is contingent upon the
achievement of performance goals during a specified period, and
which has an initial value established by the Compensation
Committee at the time of grant. The Compensation
Committee will set performance goals in its discretion which,
depending on the extent to which they are met, will determine the
value and/or number of performance units and/or performance shares
that will be paid out to a participant. Performance
units and/or performance shares generally are subject to certain
restrictions on vesting if the participant terminates employment or
service.
Cash-Based Awards and Other Stock-Based
Awards. Subject to the limitations of the 2016
Plan, the Compensation Committee may grant cash-based awards to
participants in such amounts and upon such terms as the
Compensation Committee may determine. The Compensation
Committee may also grant other types of equity-based or
equity-related Awards not otherwise described by the terms of the
2016 Plan in such amounts and subject to such terms and conditions
as the Compensation Committee may determine. Such Awards may
involve the transfer of actual shares of common stock to
participants, or payment in cash or otherwise of amounts based on
the value of shares, and may include, without limitation, Awards
designed to comply with or take advantage of the applicable local
laws of jurisdictions other than the United States. Each
cash-based award will specify a payment amount or payment range as
determined by the Compensation Committee. Each other
stock-based award will be expressed in terms of shares of common
stock or units based on shares of common stock, as determined by
the Compensation Committee. If the Compensation
Committee exercises its discretion to establish performance goals,
the number and/or value of cash-based awards or other stock-based
awards that will be paid out to a participant will depend on the
extent to which the performance goals are
met. Cash-based awards or other stock-based awards may
be payable in cash or shares of common stock, in accordance with
the Compensation Committee’s
discretion. Cash-based awards or other stock-based
awards generally are subject to certain restrictions on vesting if
the participant terminates employment or service.
26
Dividend and Dividend
Equivalents. The Compensation Committee may grant
dividends or dividend equivalents based on the dividends declared
on shares that are subject to any Award, to be credited as of
dividend payment dates, during the period between the date the
Award is granted and the date the Award is exercised, vests, or
expires, as determined by the Compensation Committee; provided,
however, that dividends or dividend equivalents credited with
respect to performance-based Awards will be subject to the same
underlying performance-based vesting conditions as the Awards and
will not be subject to discretion. The dividends or
dividend equivalents may be subject to any limitations and/or
restrictions determined by the Compensation Committee.
Limitations on Awards
The
maximum number of shares that may be issued pursuant to awards
granted under the 2016 Plan may not exceed 1.5 million shares. In
addition, under the 2016 Plan, unless and until the Compensation
Committee determines that an Award to a Covered Employee (as
defined in section 162(m) of the IRC) shall not be designed to
qualify as performance-based compensation under section 162(m) of
the IRC, the following annual award limits shall apply to grants of
such Awards under the 2016 Plan:
●
Options: The maximum aggregate
number of shares of common stock subject to options granted in any
one year to any one participant will be 1,000,000 shares, as
adjusted pursuant to the 2016 Plan;
●
SARs: The maximum aggregate
number of shares of common stock subject to SARs granted in any one
year to any one participant will be 1,000,000 shares, as adjusted
pursuant to the 2016 Plan;
●
Restricted Stock or Restricted Stock
Units: The maximum aggregate Awards of restricted stock or
restricted stock units in any one year to any one participant will
be 500,000 shares, as adjusted pursuant to the 2016
Plan;
●
Performance Units or Performance
Shares: The maximum aggregate Awards of performance units or
performance shares that a participant may receive in any one year
will be 500,000 shares, as adjusted pursuant to the 2016 Plan, or
equal to the value of 500,000 shares, as adjusted pursuant to the
2016 Plan, determined as of the date of vesting or payout, as
applicable;
●
Cash-Based Awards: The maximum
aggregate amount awarded or credited with respect to cash-based
awards to any one participant in any one year may not exceed the
greater of the value of $4,000,000 or 1,000,000 shares, as adjusted
pursuant to the 2016 Plan, determined as of the date of vesting or
payout, as applicable; and
●
Other Stock-Based Awards: The
maximum aggregate grants with respect to other stock-based awards
in any one year to any one participant will be 1,000,000 shares, as
adjusted pursuant to the 2016 Plan.
Change
in Control
Unless
otherwise expressly provided in an Award agreement, with respect to
each outstanding Award that is assumed or substituted in connection
with a change in control (as defined in the 2016 Plan), in the
event that (i) a change in control occurs and (ii) the
participant’s employment or service is involuntarily
terminated by us, our successor or affiliate thereof without cause
(as defined in the 2016 Plan) on or after the effective time of the
change in control but prior to 18 months following such change in
control, then Awards will be treated as follows:
●
Options and SARs: Any and all
options and SARs granted under the 2016 Plan will become
exercisable, and will remain exercisable in accordance with their
terms;
●
Restricted Stock, Restricted Stock
Units or Other Stock-Based Awards: Any restriction periods
and restrictions imposed on all outstanding Awards of restricted
stock, restricted stock units or other stock-based awards will
lapse and be settled as soon as reasonably practicable, but in no
event later than 10 days following such termination of employment;
and
27
●
Performance Units, Performance Shares
or other Performance-Based Awards: For each performance
unit, performance share or other performance-based Awards, all
performance goals or similar performance-based vesting criteria
will be deemed achieved at 100% of target levels and all other
terms and conditions will be deemed met as of the date of the
participant’s termination of employment or service and the
Award shall be settled as soon as reasonably practicable but in no
event later than 10 days following termination of
employment.
For
purposes of the 2016 Plan, an Award will be considered assumed if,
following the change in control, the Award confers the right to
purchase or receive, for each share subject to the Award
immediately prior to the change in control, the consideration
received in the change in control by holders of common stock for
each share held on the effective date of the transaction; provided,
however, that if the consideration received in the change in
control is not solely common stock of the successor corporation or
its parent, the Compensation Committee may, with the consent of the
successor corporation, provide for the consideration to be received
upon the exercise of an option or SAR, for each share subject to
the Award, to be solely common stock of the successor corporation
or its parent equal in fair market value to the per share
consideration received by holders of common stock in the change in
control.
For
purposes of the 2016 Plan, an Award will be considered assumed or
substituted if, upon the occurrence of a change in control after
which there will be a generally recognized U.S. public market for
(i) our stock, (ii) common stock for which our stock is exchanged,
or (iii) the common stock of a successor or acquirer entity (such
publicly traded stock, “Public Shares”), the then
outstanding Awards are assumed, exchanged or substituted for by a
successor or acquirer entity such that following the change in
control, the Awards relate to the Public Shares and, except as
otherwise provided by the 2016 Plan, remain subject to the terms
and conditions that were applicable to the Awards prior to the
change in control.
Unless
otherwise expressly provided in an Award agreement, with respect to
each outstanding Award that is not assumed or substituted in
connection with a change in control, then prior to the occurrence
of the change in control Awards will be treated as
follows:
●
Options and SARs: Any and all
options and SARs granted under the 2016 Plan will vest in full and
become immediately exercisable in accordance with their terms and
the Compensation Committee will notify the participant in writing
that the options or SARs will be exercisable for a period of time
determined by the Compensation Committee in its sole discretion and
the option or SAR will terminate upon the expiration of the stated
period; and
●
Restricted Stock, Restricted Stock
Units, Performance Units, Performance Shares or Other Stock-Based
Awards: Any restriction periods and restrictions imposed on
all outstanding Awards of restricted stock, restricted stock units,
performance units, performance shares or other stock-based awards
will lapse and be settled as soon as reasonably practicable, but in
no event later than 10 days following the change in
control.
Notwithstanding any
other provisions of the 2016 Plan, in the event that each
outstanding Award is not assumed or substituted in connection with
a change in control and except as would otherwise result in adverse
tax consequences under section 409A of the IRC, the Compensation
Committee may, in its discretion, provide that each Award shall,
immediately upon the occurrence of a change in control, be
cancelled in exchange for a payment in cash or securities in an
amount equal to (i) the excess if any of the consideration paid per
share in the change in control over the exercise or purchase price
per share subject to the Award multiplied by (ii) the number of
shares granted under the Award. Without limiting the
generality of the foregoing, in the event that the consideration
paid per share in the change in control is less than or equal to
the exercise price or purchase price per share subject to the
Award, the Compensation Committee may, in its discretion, cancel
such Award without any consideration upon the occurrence of a
change in control.
28
Transferability
Except
as otherwise provided in the 2016 Plan, during a
participant’s lifetime, his or her Awards will be exercisable
only by such participant or such participant’s legal
representative. Awards will not be transferable other
than by will or the laws of descent and distribution; no Awards
will be subject, in whole or in part, to attachment, execution, or
levy of any kind; and any purported transfer in violation of these
restrictions will be null and void. The
Compensation Committee may establish procedures as it deems
appropriate for a participant to designate a beneficiary to whom
any amounts payable or shares deliverable in the event of, or
following, such participant’s death, may be
provided.
Eligibility of Recipients
Employees,
directors and third party service providers of Tenax Therapeutics
are eligible to be granted Awards under the 2016
Plan. As of April 16, 2021, eleven employees, including
three executive officers, and seven non-employee directors are
eligible to receive Awards under the 2016
Plan.
On
April 16, 2021, the last reported sale price of our common stock on
the Nasdaq Capital Market was $1.82.
Federal Income Tax Consequences
The
following generally describes the principal federal (but not state
and local) income tax consequences of awards granted under the 2016
Plan as of this time. The summary is general in nature and is not
intended to cover all tax consequences that may apply to a
particular participant or to our company. The provisions of the IRC
and related regulations are complicated and their impact in any one
case may depend upon the particular circumstances.
Incentive Stock Options. A
participant will not have income upon the grant of an incentive
stock option. Also, except as described below, a participant will
not have income upon exercise of an incentive stock option if the
participant has been employed by us or a 50% or more owned
corporate subsidiary at all times beginning with the option grant
date and ending three months before the date the participant
exercises the option. If the participant has not been so employed
during that time, then the participant will be taxed as described
below under “Nonqualified Stock Options.” The exercise
of an incentive stock option may subject the participant to the
alternative minimum tax.
A
participant will have income upon the sale of the stock acquired
under an incentive stock option at a profit (if sales proceeds
exceed the exercise price). The type of income will depend on when
the participant sells the stock. If a participant sells the stock
more than two years after the option was granted and more than one
year after the option was exercised, then all of the profit will be
long-term capital gain. If a participant sells the stock prior to
satisfying these waiting periods, then the participant will have
engaged in a disqualifying disposition and a portion of the profit
will be ordinary income and a portion may be capital gain. This
capital gain will be long-term if the participant has held the
stock for more than one year and otherwise will be short-term. If a
participant sells the stock at a loss (sales proceeds are less than
the exercise price), then the loss will be a capital loss. This
capital loss will be long-term if the participant held the stock
for more than one year and otherwise will be
short-term.
Nonqualified Stock Options (Nonstatutory Stock
Options). A participant will not have income upon
the grant of a nonqualified stock option. A participant will have
compensation income upon the exercise of a nonqualified stock
option equal to the value of the stock on the day the participant
exercised the option less the exercise price. Upon sale of the
stock, the participant will have capital gain or loss equal to the
difference between the sales proceeds and the value of the stock on
the day the option was exercised. This capital gain or loss will be
long-term if the participant has held the stock for more than one
year and otherwise will be short-term.
Stock Appreciate Rights. A
participant will not have income upon the grant of a
SAR. However, a participant will have compensation taxed
at ordinary income tax rates when a SAR is exercised, to the extent
of the difference between the grant price and the value of the
stock on the date of exercise.
29
Restricted Stock. A
participant will not have income upon the grant of restricted stock
unless an election under section 83(b) of the IRC is made within 30
days of the date of grant. If a timely 83(b) election is made, then
a participant will have compensation income on each share equal to
the value of the stock at date of grant less the purchase price
paid, if any. When the stock is sold, the participant will have
capital gain or loss equal to the difference between the sales
proceeds and the value of the stock on the date of grant. If the
participant does not make an 83(b) election, then when the stock
vests the participant will have compensation taxed at ordinary
income tax rates on the value of the stock on the vesting date less
the purchase price, if any. When the stock is later sold, the
participant will also incur capital gain or loss equal to the sales
proceeds less the value of the stock on the vesting date. Any
capital gain or loss will be long-term if the participant held the
stock for more than one year and otherwise will be
short-term.
Restricted Stock Units, Performance Share
Awards, Performance Unit Awards, Dividends and Dividend
Equivalents. The federal income tax consequences
of the award of restricted stock units, performance share awards,
performance unit awards or dividend equivalents will depend on the
conditions of the particular award. Generally, the grant of one of
these Awards does not result in taxable income to the participant.
However, the participant will recognize ordinary compensation
income (taxable at ordinary income tax rates) at settlement of the
Award in an amount equal to any cash and/or the fair market value
of any common stock received (determined as of the date that the
award is not subject to a substantial risk of forfeiture or freely
transferable).
Cash-Based Awards and Other Stock-Based
Awards. A participant will not have income upon
the grant of a cash-based award or other stock-based
award. However, a participant will have ordinary
compensation income (taxed at ordinary income tax rates) for cash
payments and/or the fair market value of any shares or other
property received in connection with cash-based awards or other
stock-based awards in the year such payments or shares are received
or made available to the participant without substantial
limitations or restrictions. When any shares received in
connection with cash-based awards or other stock-based awards is
sold, the participant will have capital gain or loss equal to the
sales proceeds less the value of the stock on the vesting date. Any
capital gain or loss will be long-term if the participant held the
stock for more than one year and otherwise will be
short-term.
Tax Consequences to Tenax
Therapeutics. There will be no tax consequences
to Tenax Therapeutics except that we will be entitled to a
deduction when a participant has compensation income. Any such
deduction will be subject to the limitations of section 162(m) of
the IRC.
Section 409A of the IRC
Section
409A of the IRC imposes certain requirements on nonqualified
deferred compensation. Certain awards provided under the
2016 Plan could be viewed as deferring income for participants and
may, therefore, be subject to section 409A of the
IRC. While it is our intent to have the 2016 Plan and
all awards under the 2016 Plan be exempt from or comply with the
requirements of section 409A of the IRC, including related
regulations and guidance, there can be no assurance that awards
made under the 2016 Plan will satisfy those
requirements. In the event an award is subject to
section 409A of the IRC but does not satisfy the requirements of
section 409A of the IRC, the participant may be subject to
immediate income tax inclusion of the deferred amounts, an
additional 20% excise tax on amounts includible in income, and
interest and penalty charges on such amounts from the date the
amounts became vested. We undertake no responsibility to
take, or to refrain from taking, any actions in order to achieve a
certain
Plan Awards
The
following table sets forth with respect to each individual and
group listed below (i) the number of shares of common stock issued
or issuable pursuant to stock options granted under the 2016 Plan
and (ii) the number of shares underlying restricted stock awards
granted under the 2016 Plan, in each case since the 2016
Plan’s effectiveness on June 16, 2016 through April 16, 2021.
Any future awards to eligible participants under the 2016 Plan are
subject to the discretion of the Compensation Committee or Board
and therefore are not determinable at this time. The table does not
include grants made under any other compensation plan.
30
CUMULATIVE GRANTS SINCE PLAN INCEPTION IN 2016
|
|
Number of Shares
Underlying Options Granted
|
Number of Shares
Underlying Restricted Stock Awards
Granted
|
|
Anthony
DiTonno
|
215,000
|
-
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Michael B. Jebsen,
CPA
|
145,000
|
-
|
|
June Almenoff, MD,
PhD
|
-
|
-
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|
Ronald Blanck,
DO
|
1,000
|
-
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|
Steven
Boyd
|
-
|
-
|
|
Michael Davidson,
MD
|
-
|
-
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|
Declan Doogan,
MD
|
-
|
-
|
|
Keith Maher,
MD
|
-
|
-
|
|
James
Mitchum
|
1,000
|
-
|
|
Gregory
Pepin
|
1,000
|
-
|
|
Gerald T.
Proehl
|
1,000
|
-
|
|
Chris A.
Rallis
|
1,000
|
-
|
|
Stuart Rich,
MD
|
|
-
|
|
All current
executive officers as a group
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360,000
|
-
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|
All current
directors who are not executive officers as a group
|
5,000
|
-
|
|
All associates of
directors, executive officers or nominees
|
-
|
-
|
|
All other persons
who received or are to receive 5% of plan awards
|
290,000
|
-
|
|
All employees,
including all current officers who are not executive officers, as a
group
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328,500
|
-
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31
Equity Compensation Plan Information
The
following table provides information about the securities
authorized for issuance under our equity compensation plans as of
December 31, 2020.
|
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(a)
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(b)
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(c)
|
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Number of securities to be
issued upon exercise of outstanding options, warrants and
rights
|
Weighted-average
exercise price of outstanding options,
warrants and rights
|
Number of securities remaining
available for future issuances under equity compensation plans
(excluding securities reflected in column (a))
|
|
Plan category
|
|
|
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|
Equity
compensation plans approved by security holders
|
393,500
|
$1.81
|
356,500(1)
|
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Equity
compensation plans not approved by security holders
|
—
|
—
|
—
|
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Total
|
393,500
|
$1.81
|
356,500
|
|
(1)
|
Represents the number of shares available for future issuance under
the 2016 Plan. All of these shares are available for issuance as
restricted stock or other stock-based awards under the 2016
Plan.
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PROPOSAL
4: RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
Independent Registered Public Accounting Firm
The
Audit and Compliance Committee has selected Cherry Bekaert LLP as
our independent registered public accounting firm for the year
ending December 31, 2021. Cherry Bekaert LLP served as our
independent registered public accounting firm for the year ending
December 31, 2020. Representatives
of Cherry Bekaert LLP are
expected to be present at the Annual Meeting and will have the
opportunity to make a statement, if they desire to do so, and will
be available to respond to appropriate questions from our
stockholders.
Cherry
Bekaert LLP has served as our independent auditor since January
2009. In determining whether to reappoint Cherry Bekaert LLP, our
Audit and Compliance Committee reviewed the quality of the
committee’s discussions with the lead audit partner, the
performance of the audit team assigned to our account, Cherry
Bekaert LLP’s technical expertise and industry knowledge,
Cherry Bekaert LLP’s tenure as our independent auditor and
the potential impact of changing auditors. Our Audit and Compliance
Committee believes that these factors, in particular Cherry Bekaert
LLP’s long-term knowledge of the Company, enable it to
perform its audits with effectiveness and efficiency.
Our
organizational documents do not require that the stockholders
ratify the selection of Cherry Bekaert LLP as our independent
registered public accounting firm. We request such ratification as
a matter of good corporate practice. If the stockholders do not
ratify the selection, the Audit and Compliance Committee will
reconsider whether to retain Cherry Bekaert LLP, but still may
retain them. Even if the selection is ratified, the Audit and
Compliance Committee, in its discretion, may change the appointment
at any time during the year if it determines that such a change
would be in the best interests of us and our
stockholders.
32
The
aggregate fees billed for professional services by professional
accounting firms in the years ending December 31, 2020 and 2019
were as follows:
|
|
2020
|
2019
|
|
|
|
|
|
Audit fees (1)
|
$119,950
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$123,400
|
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Audit-Related Fees (2)
|
-
|
-
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Tax fees (3)
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8,800
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15,450
|
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All Other Fees (4)
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-
|
-
|
|
Total
fees
|
$128,750
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$138,850
|
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(1)
|
This category includes fees billed for the fiscal years shown for
professional services for the audit of our annual financial
statements, review of financial statements included in our
quarterly reports on Form 10-Q, and services that are normally
provided by the independent auditor in connection with statutory
and regulatory filings or engagements for the relevant fiscal
years.
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(2)
|
This category includes fees billed in the fiscal years shown for
assurance and related services that are reasonably related to the
performance of the audit or review of our financial statements and
are not reported under the category “Audit Fees.” There
were no audit-related fees billed to us in 2020 and
2019.
|
|
(3)
|
This category includes fees billed in the fiscal years shown for
professional services for tax compliance, tax advice, and tax
planning.
|
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(4)
|
This category includes fees billed in the fiscal years shown for
products and services provided by the principal accountant that are
not reported in any other category. There were no other fees billed
to us in 2020 and 2019.
|
It is
our Audit and Compliance
Committee’s policy and procedure to approve in advance all
audit engagement fees and terms and all permitted non-audit
services provided by our independent registered public accounting
firm. We believe that all audit engagement fees and terms and
permitted non-audit services provided by our independent registered
public accounting firm as described in the above table were
approved in advance by our Audit and
Compliance Committee.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE
“FOR” THE RATIFICATION OF THE SELECTION
OF CHERRY BEKAERT LLP AS OUR INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM.
OTHER MATTERS
Other Business
As of
the date of this Proxy Statement, the Board knows of no other
matters that may come before the Annual Meeting. However, if any
matters other than those referred to herein should be presented
properly for consideration and action at the Annual Meeting, or any
adjournment or postponement thereof, the proxies will be voted with
respect thereto in accordance with the best judgment and in the
discretion of the proxy holders.
Stockholder Proposals
Under
certain conditions, stockholders may request us to include a
proposal for action at a forthcoming meeting of our stockholders in
the proxy materials for such meeting. All stockholder proposals
intended to be presented at our 2022 Annual Meeting of Stockholders
must be received by us no later than December [●], 2021 for inclusion in
the proxy statement and proxy card relating to such meeting.
However, if the date of the 2022
Annual Meeting is changed by more than 30 days from the date
of the first anniversary of the 2021 Annual Meeting, then the
deadline is a reasonable time before we begin to print and mail our
proxy statement for the 2022 Annual Meeting.
33
In
addition, our bylaws require that we be given advance notice of
stockholder nominations for election to the Board of Directors and
of other matters that stockholders wish to present for action at an
annual meeting of stockholders, other than matters included in our
proxy statement. The required notice must be in writing, include
the information set forth in the bylaws and be received by our
corporate secretary at our principal offices not less than 120 days
nor more than 150 days prior to the one-year anniversary of the
preceding year’s annual meeting, provided, however, that if
the date of the annual meeting is more than 30 days before or more
than 60 days after the one-year anniversary of the preceding
year’s annual meeting, a stockholder’s notice must be
received not later than the 90th day prior to such annual meeting, or if
later, the 10th day following
the day on which public disclosure of the date of the annual
meeting was first made. In order to comply with the time periods
set forth in our bylaws, appropriate notice for the 2022 Annual
Meeting would need to be provided to our corporate secretary no
earlier than January 11, 2022, and no later than February 10,
2022.
Costs of Soliciting Proxies
We will
bear the cost of this solicitation, including the preparation,
printing, and mailing of the proxy statement, proxy card, and any
additional soliciting materials sent by us to stockholders. Our
directors, officers, and employees may solicit proxies personally
or by telephone without additional compensation. We will also
reimburse brokerage firms and other persons representing beneficial
owners of shares for reasonable expenses incurred in forwarding
proxy soliciting materials to the beneficial owners.
Availability of Report on Form 10-K
Copies of our Annual Report on Form 10-K for
the year ended December 31, 2020, including financial statements
and schedules, are available on our website at
http://www.tenaxthera.com and will be provided upon written
request, without charge, to any person whose proxy is being
solicited. Written requests should be made to Tenax Therapeutics,
Inc., Attn: Investor Relations, ONE Copley Parkway, Suite 490,
Morrisville, North Carolina 27560.
Stockholders Sharing the Same Last Name and Address
Only
one annual report or proxy statement, as applicable, may be
delivered to multiple stockholders sharing an address unless we
have received contrary instructions from one or more of the
stockholders. We will deliver promptly upon written or oral request
a separate copy of the annual report or proxy statement, as
applicable, to a stockholder at a shared address to which a single
copy was delivered. Requests for additional copies should be
directed to Investor Relations by e-mail addressed to
n.hecox@tenaxthera.com, by mail addressed to Tenax Therapeutics,
Inc., Attn: Investor Relations, ONE Copley Parkway, Suite 490,
Morrisville, North Carolina 27560, or by telephone at (919)
855-2100. Stockholders sharing an address and currently receiving a
single copy may contact Investor Relations as described above to
request that multiple copies be delivered in future years.
Stockholders sharing an address and currently receiving multiple
copies may request delivery of a single copy in future years by
contacting Investor Relations as described above.
REQUESTS FOR DIRECTIONS TO OUR COMPANY’S ANNUAL
MEETING
The
2021 Annual Meeting of Stockholders will be held on June 10, 2021 at the offices of Tenax
Therapeutics, Inc. located at ONE Copley Parkway, Suite 490,
Morrisville, North Carolina 27560 at 9:00 a.m., Eastern Daylight Time. Requests
for directions to the meeting location may be directed to Tenax
Therapeutics, Inc., Attn: Investor Relations, ONE Copley Parkway,
Suite 490, Morrisville, North Carolina 27560.
34
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TENAX THERAPEUTICS, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS
ANNUAL
MEETING OF STOCKHOLDERS – JUNE 10, 2021 AT 9:00 AM LOCAL
TIME
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CONTROL ID:
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REQUEST ID:
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The
undersigned stockholder of Tenax Therapeutics, Inc. hereby appoints
Nancy J.M. Hecox and Michael B. Jebsen, or either of them, as
proxies, each with full powers of substitution, to represent and to
vote as proxy, as designated, all shares of common stock of Tenax
Therapeutics, Inc. held of record by the undersigned on April 13,
2021, at the Annual Meeting of Stockholders (the “Annual
Meeting”) to be held on Thursday, June 10, 2021 at 9:00 a.m.,
local time, at the offices of Tenax Therapeutics, Inc. located at
ONE Copley Parkway, Suite 490, Morrisville, North Carolina 27560,
or at any adjournment or postponement thereof. The undersigned
hereby revokes all prior proxies.
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(CONTINUED AND TO BE SIGNED ON REVERSE SIDE.)
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VOTING
INSTRUCTIONS
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If you vote by phone, fax or internet, please DO NOT mail your
proxy card.
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MAIL:
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Please
mark, sign, date, and return this Proxy Card promptly using the
enclosed envelope.
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INTERNET:
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https://www.iproxydirect.com/TENX
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PHONE:
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1-866-752-VOTE
(8683)
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ANNUAL MEETING OF THE STOCKHOLDERS OF
TENAX THERAPEUTICS, INC.
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PLEASE
COMPLETE, DATE, SIGN AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE:
☒
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PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
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Proposal
1
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FOR
ALL
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WITHHOLD
ALL
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FOR
ALL
EXCEPT
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Election
of Directors:
|
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☐
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☐
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CONTROL ID:
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June
Almenoff, MD, PhD
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☐
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REQUEST ID:
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Steven
Boyd
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☐
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Michael
Davidson, MD
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☐
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Anthony
A. DiTonno
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☐
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Declan
Doogan, MD
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☐
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Keith
Maher, MD
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☐
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James
Mitchum
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☐
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Gerald
T. Proehl
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☐
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Stuart
Rich, MD
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☐
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Proposal
2
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FOR
|
|
AGAINST
|
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ABSTAIN
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Approval
to convert shares of our Series B convertible preferred stock
(“Series B Preferred Stock”), into shares of common
stock.
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☐
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☐
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☐
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Proposal
3
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FOR
|
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AGAINST
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ABSTAIN
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Approval
of Amendment No. 2 to our 2016 Stock Incentive Plan to increase the
number of shares authorized for issuance under the plan by 750,000
shares.
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☐
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☐
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☐
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Proposal
4
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FOR
|
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AGAINST
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ABSTAIN
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Ratification
of the appointment of Cherry Bekaert LLP as our independent
registered public accounting firm for the fiscal year ending
December 31, 2021.
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☐
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☐
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☐
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MARK
“X” HERE IF YOU PLAN TO ATTEND THE MEETING:
☐
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE
ELECTION OF EACH OF THE DIRECTOR NOMINEES. THE BOARD OF DIRECTORS
RECOMMENDS THAT YOU VOTE “FOR” THE CONVERSION OF SERIES
B PREFERRED STOCK INTO COMMON SHARES, “FOR” THE
APPROVAL OF AMENDMENT NO. 2 TO OUR 2016 STOCK INCENTIVE PLAN TO
INCREASE THE NUMBER OF SHARES AUTHORIZED FOR ISSUANCE THEREUNDER,
AND “FOR” RATIFICATION OF THE APPOINTMENT OF CHERRY
BEKAERT LLP AS THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM OF
THE COMPANY.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER
SPECIFIED HEREIN BY THE UNDERSIGNED STOCKHOLDER. THIS PROXY, IF
DULY EXECUTED AND RETURNED, WILL BE VOTED “FOR” THE
ELECTION OF EACH OF THE DIRECTOR NOMINEES AND “FOR”
PROPOSALS 2, 3 AND 4 IF NO INSTRUCTION TO THE CONTRARY IS
INDICATED. THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
MATTERS AS MAY PROPERLY COME BEFORE THE ANNUAL MEETING OF
STOCKHOLDERS IN ACCORDANCE WITH THEIR JUDGMENT.
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MARK HERE FOR ADDRESS CHANGE ☐ New Address (if applicable):
____________________________
____________________________
____________________________
IMPORTANT: Please sign exactly as your name or names appear
on this Proxy. When shares are held jointly, each holder should
sign. When signing as executor, administrator, attorney, trustee or
guardian, please give full title as such. If the signer is a
corporation, please sign full corporate name by duly authorized
officer, giving full title as such. If signer is a partnership,
please sign in partnership name by authorized
person.
Dated:
________________________, 2021
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(Print Name of
Stockholder and/or Joint Tenant)
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(Signature of
Stockholder)
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(Second Signature
if held jointly)
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