Professional Documents
Culture Documents
STATES
SECURITIES
AND
EXCHANGE
COMMISSION
Washington,
D.C.
20549
SCHEDULE
14A
Proxy
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SolicitingMaterialunder240.14a-12
INOVIO
PHARMACEUTICALS,
INC.
(Name
of
Registrant
as
Specified
In
Its
Charter)
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INOVIO
PHARMACEUTICALS,
INC.
660
W.
Germantown
Pike,
Suite
110
Plymouth
Meeting,
Pennsylvania
19462
TotheStockholdersofInovioPharmaceuticals,Inc.:
NoticeisherebygiventhatInovioPharmaceuticals,Inc.willbeholdingitsAnnualMeetingofStockholdersonMay13,2016,at9:00a.m.,localtime,atthe
companysprincipalexecutiveofficeslocatedat660W.GermantownPike,PlymouthMeeting,Pennsylvania19462.
Youarecordiallyinvitedtoattend.
TheNoticeofAnnualMeetingofStockholdersandProxyStatement,whichdescribetheformalbusinesstobeconductedatthemeeting,followthisletter.
AfterreadingtheProxyStatement,pleasepromptlymark,signandreturntheenclosedproxyintheprepaidenvelope(formailingintheUnitedStatesonly)
toassurethatyourshareswillberepresentedatourAnnualMeeting.Yoursharescannotbevotedunlessyoudate,signandreturntheenclosedproxy,attendthe
AnnualMeetinginpersonorvoteyoursharesusingtheautomatedInternetorphonesystem.Regardlessofthenumberofsharesyouown,yourcareful
considerationof,andvoteon,themattersbeforeourstockholdersareimportant.
WhetherornotyouattendtheAnnualMeeting,itisimportantthatyoursharesberepresentedandvotedatthemeeting.Therefore,Iurgeyoutopromptly
voteandsubmityourproxybyphone,viatheInternetorbysigning,datingandreturningtheenclosedproxycardintheenclosedpostage-paidenvelope.Formore
informationonvotingandsubmittingyourproxybyphoneorviatheInternet,seeVotingofProxiesonpage2oftheaccompanyingProxyStatement.Ifyou
decidetoattendtheAnnualMeeting,youwillbeabletovoteinperson,evenifyouhavepreviouslysubmittedyourproxy.
Acopyofour2015AnnualReportisalsoenclosed.
TheBoardofDirectorsandmanagementlookforwardtoseeingyouattheAnnualMeeting.
Verytrulyyours,
J.JosephKim,Ph.D
Chief Executive Officer
Dated:March25,2016
INOVIO
PHARMACEUTICALS,
INC.
660
W.
Germantown
Pike,
Suite
110
Plymouth
Meeting,
Pennsylvania
19462
NOTICE
OF
ANNUAL
MEETING
OF
STOCKHOLDERS
TO
BE
HELD
May
13,
2016
TotheStockholdersofInovioPharmaceuticals,Inc.:
Youareinvitedtoattendour2016AnnualMeetingoftheStockholders,whichwillbeheldonMay13,2016,at9:00a.m.,localtime,at660W.
GermantownPike,PlymouthMeeting,Pennsylvania19462,forthefollowingpurposes:
1.Toelecteightdirectorstoholdofficeuntilour2017AnnualMeetingofStockholdersanduntiltheirsuccessorsareelectedanddulyqualified.Our
Boardhasnominatedandrecommendsforelectionthefollowingpersons:
Avtar Dhillon, M.D.
J. Joseph Kim, Ph.D.
Simon X. Benito
Angel Cabrera, Ph.D.
Morton Collins, Ph.D.
Adel A. F. Mahmoud, M.D., Ph.D.
David B. Weiner, Ph.D.
Nancy J. Wysenski
2.ToratifytheappointmentofErnst&YoungLLPasourindependentregisteredpublicaccountingfirmfortheyearendingDecember31,2016.
3.ToapprovetheInovioPharmaceuticals,Inc.2016OmnibusIncentivePlan.
4.Totransactsuchotherbusinessasmayproperlycomebeforethemeeting.
Our Board recommends a vote for each of the nominees and for proposals 2 and 3.
HoldersofrecordofourcommonstockandholdersofrecordofourSeriesCCumulativeConvertiblePreferredStockatthecloseofbusinessonMarch18,
2016,areentitledtonoticeof,andtovoteat,thismeetingandanyadjournmentsthereof.Fortendayspriortothemeeting,acompletelistofthestockholdersof
recordonMarch18,2016willbeavailableatourprincipalexecutiveoffices,duringordinarybusinesshours,forexaminationbyanyStockholderforanypurpose
relatingtothemeeting.
ByorderoftheBoardof
Directors,
J.JosephKim,Ph.D
Chief Executive Officer
Dated:March25,2016
IMPORTANT:Pleasefillin,date,signandpromptlymailtheenclosedproxycardintheaccompanyingpostpaidenvelopetoassurethatyoursharesare
representedatthemeeting.Ifyouattendthemeeting,youmaychoosetovoteinpersonevenifyouhavepreviouslysentinyourproxycard.
INOVIO
PHARMACEUTICALS,
INC.
660
W.
Germantown
Pike,
Suite
110
Plymouth
Meeting,
Pennsylvania
19462
PROXY
STATEMENT
FOR
ANNUAL
MEETING
OF
STOCKHOLDERS
OurBoardissolicitingproxiesforuseattheAnnualMeetingofStockholderstobeheldatourprincipalexecutiveoffices,660W.GermantownPike,
PlymouthMeeting,Pennsylvania19462onMay13,2016at9:00a.m.localtime,oranyadjournmentthereof,forthepurposessetforthintheaccompanying
NoticeofAnnualMeeting.ThisProxyStatementisdatedMarch25,2016.WearemailingthisProxyStatementtoourstockholdersonoraboutMarch30,2016.
Unlessthecontextrequiresotherwise,referencestowe,us,our,Inovio,andCompanyrefertoInovioPharmaceuticals,Inc.
General
Information
Voting Securities. OnlystockholdersofrecordasofthecloseofbusinessonMarch18,2016willbeentitledtovoteatthemeetingandanyadjournment
thereof.AsofMarch18,2016,wehadthefollowingoutstanding:
72,224,025sharesofcommonstock;and
23sharesofSeriesCCumulativeConvertiblePreferredStock,whichareconvertibleintoanaggregateof8,456sharesofcommonstock.
Youmayvoteinpersonorbyproxy.OntheproposalspresentedinthisProxyStatement,eachholderofsharesofour:
commonstockisentitledtoonevoteforeachshareofstockheld;and
SeriesCPreferredStockisentitledto368votesforeachshareofSeriesCPreferredStockheld.
HoldersofourcommonstockandSeriesCPreferredStockvotetogetherasasingleclassinconnectionwitheachofProposalNos.1,2and3.Ourbylaws
providethatone-thirdofallofthesharesofthestockentitledtovote,whetherpresentinpersonorrepresentedbyproxy,shallconstituteaquorumforthe
transactionofbusinessatthemeeting.Thus,aquorumforthisyearsAnnualMeetingconsistsof24,077,497shares.
Theaffirmativevoteofapluralityofallofthevotescastatameetingatwhichaquorumispresentisnecessaryfortheelectionofeachofthenomineesfor
director.Forpurposesoftheelectionofdirectors,abstentionsandbrokernon-voteswillnotbecountedasvotescastandwillhavenoeffectontheresultofthe
vote,althoughtheywillcounttowardthepresenceofaquorum.Brokernon-votesoccurwhenabrokerholdingacustomerssecuritiesinstreetnamedoesnotvote
onaparticularproposalbecausethebrokerhasnotreceivedvotinginstructionsfromthecustomeroncertainmattersforwhichthebrokerisrequiredtohave
instructionsinordertovote.
TheaffirmativevoteoftheholdersofamajorityoftheofthevotesrepresentedbysharespresentorrepresentedbyproxyandvotingattheAnnualMeeting
isnecessaryfortheapprovaloftheProposalsNos.2and3setforthinthisProxyStatement,asexplainedundereachproposal.Abstentionsandbrokernon-votes
willbecountedaspresentforpurposesofdeterminingthepresenceofaquorumandcouldpreventtheapprovalofaproposalbecausetheydonotcountas
affirmativevotes.
Solicitation of Proxies. Wewillbearthecostofsolicitingproxies.Inaddition,wewillsolicitstockholdersbymail,andwillrequestbanksandbrokers,and
othercustodians,nomineesandfiduciaries,tosolicittheircustomerswhohavesharesofourstockinthenamesofsuchpersonsandwillreimbursethemfortheir
reasonable,out-of-pocketcosts.Wemayusetheservicesofourofficers,directors,andotherstosolicitproxies,personallyorbytelephone,withoutadditional
compensation.
Voting of Proxies. Ifyoursharesareregisteredinyourownname,youmayvotebysigningandmailingacompletedproxycardorbyvotingviatheInternet
orbytelephone.InstructionsforvotingviatheInternetorbytelephonearesetforthontheenclosedproxycard.Tovotebymailingaproxycard,signandreturn
theenclosedproxycardintheenclosedprepaidandaddressedenvelope,andyourshareswillbevotedatthemeetinginthemanneryoudirect.Intheeventthat
youreturnasignedproxycardonwhichnodirectionsarespecified,yourshareswillbevotedFOReachoftheBoardnominees(ProposalNo.1);FORratification
oftheappointmentofErnst&YoungLLPasourindependentregisteredpublicaccountingfirmfortheyearendingDecember31,2016(ProposalNo.2)andFOR
approvaloftheInovioPharmaceuticals,Inc.2016OmnibusIncentivePlan(ProposalNo.3),andinthediscretionoftheproxyholdersastoanyothermattersthat
mayproperlycomebeforethemeeting.Youmayrevokeorchangeapreviouslydeliveredproxyatanytimebeforethemeetingbydeliveringanotherproxywitha
laterdateorbysendingwrittennoticeofrevocationofyourproxytoourSecretaryatourprincipalexecutiveofficesforreceiptbeforethebeginningofthe
meeting.Youmayalsorevokeyourproxybyattendingthemeetingandvotinginperson.Attendanceatthemeetingwillnotinandofitselfrevokeavalidproxy
thatwaspreviouslydelivered;youmustalsovoteinpersonatthemeetingtodoso.
Ifyoursharesareregisteredinthenameofabankorbrokeragefirm,youwillreceiveinstructionsfromtheholderofrecordthatmustbefollowedinorder
fortherecordholdertovotethesharesinaccordancewithyourinstructions.Manybanksandbrokeragefirmshaveaprocessfortheirbeneficialholderstoprovide
instructionsoverthephoneorviatheInternet.IfInternetortelephonevotingisunavailablefromyourbankorbrokeragefirm,pleasecompleteandreturnthe
enclosedvotinginstructioncardintheaddressed,postagepaidenvelopeprovided.
Delivery of Proxy Materials to Households. Householdingisaprogram,approvedbytheSecuritiesandExchangeCommission,ortheSEC,whichallows
companiesandintermediariessuchasbanksorbrokerstosatisfythedeliveryrequirementsforproxystatementsandannualreportsbydeliveringonlyonepackage
ofstockholderproxymaterialtoanyhouseholdatwhichtwoormorestockholdersreside.Ifyouandotherresidentsatyourmailingaddressownsharesofour
commonstockinstreetname,yourbrokerorbankmayhavenotifiedyouthatyourhouseholdwillreceiveonlyonecopyofourproxymaterials.Onceyouhave
receivednoticefromyourbrokerthattheywillbehouseholdingmaterialstoyouraddress,householdingwillcontinueuntilyouarenotifiedotherwiseoruntil
yourevokeyourconsent.If,atanytime,younolongerwishtoparticipateinhouseholdingandwouldprefertoreceiveaseparateproxystatement,orifyouare
receivingmultiplecopiesoftheproxystatementandwishtoreceiveonlyone,pleasenotifyyourbrokerifyoursharesareheldinabrokerageaccount.Ifyouhold
sharesofourcommonstockinyourownnameasaholderofrecord,householdingwillnotapplytoyourshares.
IMPORTANT
NOTICE
REGARDING
THE
AVAILABILITY
OF
PROXY
MATERIALS
FOR
THE
2016
ANNUAL
MEETING
OF
STOCKHOLDERS
TO
BE
HELD
ON
MAY
13,
2016
CopiesofthisProxyStatementandour2015AnnualReporttoStockholdersarealsoavailableonlineatwww.inovio.com .
2
PROPOSAL
NO.
1
ELECTION
OF
DIRECTORS
OurBoardcurrentlyconsistsofeightmembers.Thereareeightnomineesfordirectorthisyear:AvtarDhillon,M.D.,J.JosephKim,Ph.D.,SimonX.Benito,
AngelCabrera,Ph.D.,MortonCollins,Ph.D.,AdelA.F.Mahmoud,M.D.,Ph.D.,DavidB.Weiner,Ph.D.,andNancyJ.Wysenski.Eachofthenomineesis
currentlyoneofourdirectors.Dr.WeinerjoinedourBoardinMarch2016.
Ifelected,thenomineeswillserveasdirectorsuntilourAnnualMeetingofStockholdersin2017anduntiltheirsuccessorsareelectedandqualified.Ifa
nomineedeclinestoserveorbecomesunavailableforanyreason,theproxiesmaybevotedforsuchsubstitutenomineeastheproxyholdersmaydesignate.
Information
Regarding
Directors
Theinformationsetforthbelowastothenomineesfordirectorhasbeenfurnishedtousbythenominees.
Nominees
for
Election
to
Our
Board
AvtarDhillon,M.D.
Age
Present
Position
with
the
Company
55 ChairmanoftheBoardofDirectors
J.JosephKim,Ph.D.
47 President,ChiefExecutiveOfficerandDirector
SimonX.Benito
71 Director
AngelCabrera,Ph.D
48 Director
MortonCollins,Ph.D.
80 Director
AdelA.F.Mahmoud,M.D.,Ph.D.
74 Director
DavidB.Weiner,Ph.D.
60 Director
NancyJ.Wysenski
58 Director
Name
Simon X. Benito hasservedonourBoardsinceDecember2003andqualifiestoserveonourBoardashebringstoourBoardformalaccountingandfinancial
trainingandexpertise,deeppubliccompanyboardexperience,seniormanagementexperienceinthehealthcareindustry,andimportantindustrycontacts.Priorto
hisretirement,Mr.Benitohadasuccessfulandextensivecareerservingseveralmultinationalcorporationsinseniorexecutivepositions,including25yearsat
Merck&Co,Inc.HismostrecentpositionsincludedSeniorVicePresident,MerckVaccineDivision;ExecutiveVicePresident,Merck-MedcoManagedCare;and
ExecutiveDirectorandVicePresident,MerckHumanHealth,Japan.Inaddition,Mr.BenitowasaFellowoftheInstituteofCharteredAccountantsinEnglandand
Walesforover30yearsuntilhisretirementin1999.SinceApril2005,Mr.BenitohasservedasadirectorofDURECTCorporation,apubliclytradedspecialty
pharmaceuticalcompany.
Angel Cabrera, Ph.D. joinedourBoardinJune2012andqualifiestoserveonourBoardashebringstoourBoardsignificantexperienceincorporate
governanceandmanagement.Dr.CabreraiscurrentlyPresidentofGeorgeMasonUniversity,thelargestresearchuniversityinVirginia.Previouslyheledtwo
internationallyrenownedbusinessschools:ThunderbirdSchoolofGlobalManagementinArizonaandIEBusinessSchoolinMadrid.PriortoIEhewasachange
managementconsultantwithAccenture.Dr.CabreraearnedhisPh.D.andM.S.inpsychologyandcognitivesciencefromtheGeorgiaInstituteofTechnologywhichheattendedasaFulbrightScholar-andhisB.S.andM.S.incomputerandelectricalengineeringfromMadridsPolytechnicUniversity.Hehasreceived
severalleadershiprecognitionsfromtheWorldEconomicForum,theAspenInstitute,BusinessWeekandtheFinancialTimes.Hispublicationsinmanagement,
leadership,psychologyandhighereducationhavebeencitedover2,500times.Dr.Cabreraisanadvocateofcorporatesocialresponsibilityandmanagerial
professionalism.Heservesonseveralnon-profitandacademicboards,includingGeorgiaTech,andhasservedontheboardsoftwootherpubliccompanies.
Morton Collins, Ph.D. hasservedonourBoardsinceJune1,2009andqualifiestoserveonourBoardashebringssignificantexperienceinraisingand
deployingcapitalforlifesciencescompanies,extensivebusinessandboardexperienceinthelifescienceindustryandimportantindustrycontacts.Dr.Collinswas
previouslyadirectorofVGXfromJune2008toJune2009.Dr.CollinshasbeentheManagingPartnerofBattelleVentures,whichhefounded,sinceAugust2003.
Forthepast40years,Dr.Collinshasacquiredbroadexpertiseinventurecapitalfundingofearly-stagehigh-technologycompaniesasafounderandmanaging
partneroffivedifferentfunds,BattelleVenturesandDataScienceVenturesI,II,III,andIV.Dr.CollinschairedPresidentReagansTaskForceonInnovationand
EntrepreneurshipandservedastechnologypolicyadvisortoPresidentGeorgeH.W.Bush.HeisaformerPresident,DirectorandChairmanoftheNational
VentureCapitalAssociation,andcurrentlyservesasaDirectorofKopinCorporationandseveralprivatecompanies.Dr.CollinsholdsaB.S.inEngineeringanda
Ph.D.inSciencefromtheUniversityofDelaware,andanM.A.andPh.D.inEngineeringfromPrincetonUniversity.
Adel A. F. Mahmoud, M.D., Ph.D. joinedourBoardonMarch26,2012andqualifiestoserveonourBoardashebringstoourBoardhisexpertiseasaworld
renownedvaccineleaderandinfectiousdiseaseexpert.Dr.MahmoudisatTheWoodrowWilsonSchoolofPublicandInternationalAffairsandTheDepartmentof
MolecularBiologyatPrincetonUniversity.HehasrecentlyretiredasPresidentofMerckVaccinesandmemberofManagementCommitteeofMerck&Company,
Inc.HisprioracademicservicesatCaseWesternReserveUniversityandUniversityHospitalsofClevelandspanned25yearsconcludingasChairmanofMedicine
andPhysician-in-Chieffrom1987to1998.Dr.Mahmoudsacademicpursuitsfocusedoninvestigationsofthebiologyandfunctionofeosinophilsparticularlyin
hostresistancetohelminthicinfectionsaswellasdeterminantsofinfectionanddiseaseinhumanschistosomiasisandotherinfectiousagents.AtMerck,
Dr.Mahmoudledtheefforttodevelopfournewvaccineswhichhavebeenlaunchedin2005-2006,including:combinationofMeasles,Mumps,Rubellaand
Varicella;RotaVirus;ShinglesandHumanPapillomavirus.Dr.MahmoudsleadershipinsettingstrategiesforGlobalHealthshapedtheagendaoftheForumon
MicrobialThreatsoftheInstituteofMedicineinrecentyearsbytacklingtopicalissuessuchasbiologicalthreatsandbioterrorism;SARS;PandemicFluand
others.Heisanactivecontributortoscientificliteratureandauthoredandeditedseveraltextbooksandreports.Dr.MahmoudreceivedhisM.D.degreefromthe
UniversityofCairoin1963andPh.DfromtheUniversityofLondon,SchoolofHygieneandTropicalMedicinein1971.Hewaselectedtomembershipofthe
AmericanSocietyforClinicalInvestigationin1978,theAssociationofAmericanPhysiciansin1980andtheInstituteofMedicineoftheNationalAcademyof
Sciencesin1987.HereceivedtheBaileyK.AshfordAwardoftheAmericanSocietyofTropicalMedicineandHygienein1983,andtheSquibbAwardofthe
InfectiousDiseasesSocietyofAmericain1984.Dr.MahmoudisafellowoftheAmericanCollegeofPhysicians.HeservedontheNationalAdvisoryAllergyand
InfectiousDiseasesCouncilandisapastpresidentoftheCentralSocietyforClinicalResearchandtheInternationalSocietyforInfectiousDiseases.Hecurrently
servesasmemberoftheBoardofIAVIandasChairoftheBoardofIVIinSeoul.
David B. Weiner, Ph.D. joinedourBoardinMarch2016andqualifiestoserveonourBoardasheisaworld-renownedleaderinimmunologyaswellasgene
vaccinesandtherapy.Dr.WeinerrecentlyjoinedTheWistarInstitute,thenationsfirstindependentbiomedicalresearchinstitute,NCI-designatedCancerCenter,
andaninternationalleaderincancer,immunologyandinfectiousdiseaseresearch,asExecutiveVicePresident,DirectorofitsVaccineCenter,andtheW.W.
SmithCharitableTrustEndowedProfessorshipinCancerResearch.Previously,Dr.WeinerwasProfessorofPathology&LaboratoryMedicineattheUniversity
ofPennsylvaniaandChairoftheGeneTherapyandVaccineProgramattheUniversitysPerelmanSchoolofMedicine.Inscientificcircles,Dr.Weinerisknown
asthefatherofDNAvaccines.Hehasmorethan350peer-reviewedpublicationsinscientificjournals,includingmainstreamscientificjournalssuchasScientific
American,andhasbeen
4
designatedbytheInstituteforScientificInformationasoneofthetop-citedscientistsintheworld.Aninventorofmorethan100issuedandpendingUSpatents,
Dr.WeinerhasreceivednumeroushonorsincludingelectionasafellowtotheAmericanAssociationfortheAdvancementofSciencein2011andtheInternational
SocietyforVaccinesin2012.HewastherecipientoftheNIHDirectorsTransformativeResearchAwardandreceivedtheVaccineIndustryExcellenceAwardfor
BestAcademicResearchTeamin2015attheWorldVaccineCongress.Dr.WeinerwashonoredwiththeprestigiousHillemanLectureshipin2015atthe
ChildrensHospitalofPhiladelphiaGrandRoundssessionandreceivedaStoneFamilyAwardfromAbramsonCancerCenterforhisgroundbreakingworkon
DNAvaccinesforcancerimmunetherapy.Dr.WeinerholdsaPh.D.indevelopmentalbiologyfromtheUniversityofCincinnatiCollegeofMedicine,anM.S.in
biologyfromtheUniversityofCincinnati.andaB.S.inbiologyfromSUNYatStonyBrookinStonyBrook,N.Y.
Nancy J. Wysenski joinedourBoardinMarch2015andqualifiestoserveonourBoardasshebringsextensivehealthcareexperienceandprovenleadership
inmanaginggrowth-orientedcompanies.Ms.WysenskiisadirectorofAlkermesPLCandTetraphasePharmaceuticals.Shehasrecentlyservedasadirectorof
ReataPharmaceuticals,aprivatelyheldpharmaceuticalcompany.FromDecember2009throughJune2012,Ms.WysenskiservedastheExecutiveVicePresident
andChiefCommercialOfficerofVertexPharmaceuticalsIncorporated,apubliclytradedpharmaceuticalcompanywheresheledtheefforttobuildthecommercial
infrastructureandlaunchIncivekandKalydeco.PriortojoiningVertex,Ms.WysenskiheldthepositionofChiefOperatingOfficerofEndoPharmaceuticals,a
1,200-personspecialtypharmaceuticalcompany,wheresheledsales,marketing,commercialoperations,supplychainmanagement,humanresourcesandvarious
businessdevelopmentinitiatives.PriortohertimeatEndo,Ms.WysenskiparticipatedintheestablishmentofEMDPharmaceuticals,Inc.,wheresheheldvarious
leadershippositions,includingtheroleofPresidentandChiefExecutiveOfficerfrom2001to2006andVicePresidentofCommercialfrom1999to2001.From
1984to1998,Ms.Wysenskiheldseveralsales-focusedrolesatmajorpharmaceuticalcompanies,includingVicePresidentofFieldSalesforAstraMerck,Inc.
SheisafounderoftheResearchTriangleParkChapteroftheHealthcareBusinesswomen'sAssociationandservedontheNominatingCommitteeandNational
AdvisoryBoardoftheHealthcareBusinesswomen'sAssociation.SheservedontheBoardofTrusteesforNorthCarolinaCentralUniversityforsevenyears.Ms.
WysenskireceivedaB.S.N.inNursingfromKentStateUniversityandanM.B.A.fromBaldwin-WallaceCollege.
Attendance
at
Board
Meetings
and
Committee
Meetings
DuringtheyearendedDecember31,2015,ourBoardmetsixtimes,theAuditCommitteemetfourtimes,theNominationandCorporateGovernance
Committeemetfourtimes,theCompensationCommitteemetseventimesandtheFinanceCommitteemetthreetimes.Eachdirectorattendedatleast75%ofthe
aggregatenumberofmeetingsheldby(i)ourBoardand(ii)thosecommitteesofourBoardonwhichheserved.
Committees
of
Our
Board
UnderourCorporateGovernancePolicy,weexpectourdirectorstoattendourAnnualMeetingofStockholders.Atour2015AnnualMeetingof
Stockholdersallofourdirectorsattended.
Audit Committee
ThefunctionsoftheAuditCommitteeincluderetainingourindependentregisteredpublicaccountingfirm,reviewingitsindependence,reviewingand
approvingtheplannedscopeofourannualaudit,reviewingandapprovinganyfeearrangementswithourindependentregisteredpublicaccountingfirm,
overseeingitsauditwork,reviewingandpre-approvinganynon-auditservicesthatmaybeperformedbyit,reviewingtheadequacyofaccountingandfinancial
controls,reviewingourcriticalaccountingpoliciesandreviewingandapprovinganyrelatedpartytransactions.TheAuditCommitteeactspursuanttoawritten
charterthatisavailableonourwebsiteat:http://media.corporate-ir.net/media_files/irol/10/105128/corpGov/AuditCommittee.pdf.
ThemembersoftheAuditCommitteecurrentlyareSimonBenito(Chair),MortonCollins,AngelCabreraandAvtarDhillon.EachmemberoftheAudit
CommitteeisindependentundertheNASDAQlistingstandards.TheBoardhasdeterminedthatMr.Benitoisanauditcommitteefinancialexpertasdefined
underSECregulations.
Compensation Committee
TheCompensationCommitteereviewsandapprovesthecompensationandbenefitsofourexecutiveofficers,includingtheChiefExecutiveOfficerand
directors,overseestheadministrationofourstockoptionandemployeebenefitsplans,andreviewsgeneralpolicyrelatingtocompensationandbenefits.The
CompensationCommitteemayfromtimetotimedelegatedutiesorresponsibilitiestosubcommitteesortoonememberoftheCompensationCommittee.The
CompensationCommitteeactspursuanttoawrittencharterthatisavailableonourwebsiteat:
http://media.corporateir.net/media_files/irol/10/105128/corpGov/CompCommit.pdf .
ThemembersoftheCompensationCommitteecurrentlyareMortonCollins(Chair),SimonBenito,AdelMahmoudandNancyWysenski.Eachmemberof
theCompensationCommitteeisindependentundertheNASDAQlistingstandards.
5
Duringthethirdquarterof2015,theCompensationCommitteeengagedBarney&Barney,LLC(Barney&Barney),anindependentcompensation
consultant,toprovideinformationoncompensationtrendsandpracticesandtoassisttheminevaluatingourexecutivecompensationpolicyandprograms.This
analysiswasusedtodetermineappropriatelevelsofcompensationforourexecutiveofficersandmakerecommendationsregardingtheamountandformofour
executiveandnon-employeedirectorcompensation.TheworkofBarney&Barneydidnotraiseanyconflictofinterest.
Nomination and Corporate Governance Committee
TheNominationandCorporateGovernanceCommitteeidentifiesprospectivecandidatestoserveonourBoard,recommendsnomineesforelectiontoour
Board,developsandrecommendsBoardmemberselectioncriteria,considerscommitteememberqualification,recommendscorporategovernanceprinciplestoour
Board,andprovidesoversightintheevaluationofourBoardandeachcommittee.TheNominationandCorporateGovernanceCommitteeactspursuanttoa
writtencharteronourwebsiteat:http://media.corporate-ir.net/media_files/irol/10/105128/corpGov/NomandCorpGov.pdf .
ThemembersoftheNominationandCorporateGovernanceCommitteecurrentlyareAngelCabrera(Chair),AvtarDhillon,AdelMahmoundandNancy
Wysenski.EachmemberoftheNominationandCorporateGovernanceCommitteeisindependentundertheNASDAQlistingstandards.
Finance Committee
TheFinanceCommitteewasformedinAugust2012.ThefunctionoftheFinanceCommitteeistoprovideadvicetotheBoardandmanagementregarding
theCompanysfinancingstrategyandotherfinance-relatedmatters.Thisisaninformaladvisorycommitteeanddoesnothaveaformalcharter.Themembersof
theFinanceCommitteearecurrentlyAvtarDhillon(Chair),JosephKim,SimonBenitoandMortonCollins.
Director
Nominations
TheNominationandCorporateGovernanceCommitteeevaluatesandrecommendstoourBoarddirectornomineesforeachelectionofdirectors.Asstatedin
ourCorporateGovernancePolicy,ourBoardseeksmembersfromdiverseprofessionalandpersonalbackgroundswhocombineabroadspectrumofexperience
andexpertisewithareputationforintegrity.
Specifically,infulfillingitsresponsibilities,theNominationandCorporateGovernanceCommitteeconsidersthefollowingfactors:(i)theappropriatesizeof
ourBoardanditscommittees;(ii)ourneedswithrespecttotheparticulartalentsandexperienceofitsdirectors;(iii)theknowledge,skillsandexperienceof
nominees,includingexperienceinourindustry,business,finance,administrationorpublicservice,inlightofprevailingbusinessconditionsandtheknowledge,
skillsandexperiencealreadypossessedbyothermembersofourBoard;(iv)experiencewithaccountingrulesandpractices;(v)applicableregulatoryand
securitiesexchange/associationrequirements(includingtheNASDAQqualitativelistingstandards);and(vi)abalancebetweenthebenefitofcontinuityandthe
desireforafreshperspectiveprovidedbynewmembers.
TheNominationandCorporateGovernanceCommitteesgoalistoassembleaboardthatbringstousavarietyofperspectivesandskills,andsoundbusiness
understandingandjudgment,derivedfromhighqualitybusiness,professional,governmental,community,scientificoreducationalexperience.Indoingso,the
NominationandCorporateGovernanceCommitteealsoconsiderscandidateswithappropriatenon-businessbackgrounds.
Otherthantheforegoingfactors,therearenostatedminimumcriteriafordirectornominees.However,theNominationandCorporateGovernance
Committeemayalsoconsidersuchotherfactorsasitmaydeemareinourbestinterestsandtheinterestsofourstockholders.TheNominationandCorporate
GovernanceCommitteedoes,however,recognizethatunderapplicableregulatoryrequirementsatleastonememberofourBoardmustmeetthecriteriaforan
auditcommitteefinancialexpertasdefinedbySECrules.TheNominationandCorporateGovernanceCommitteealsobelievesitappropriateforourChief
ExecutiveOfficertoparticipateasamemberofourBoard.Further,theCommitteebelievesthatthecontinuingserviceofqualifiedincumbentdirectorspromotes
stabilityandcontinuityintheboardroom,whilegivingusthebenefitoffamiliarityandinsightintoouraffairsthatdirectorshaveaccumulatedduringtheirtenure,
andthereforegenerallyre-nominatesincumbentdirectorswhocontinuetosatisfytheCommitteescriteriaformembershiponourBoard.
Alldirectorsanddirectornomineesarerequiredtosubmitacompletedformofdirectorsandofficersquestionnaireaspartofthenominatingprocess.The
processmayalsoincludeinterviewsandadditionalbackgroundandreferencechecksfornon-incumbentnominees,atthediscretionoftheNominationand
CorporateGovernanceCommittee.
WedonothaveawrittenpolicywithrespecttoBoarddiversity;however,ourCorporateGovernancePolicystatesthattheassessmentofdirectornominees
willincludeconsiderationofdiversity,skillsandexperienceinthecontextoftheneedsofourBoard.TheNominatingandCorporateGovernanceCommitteeand
ourBoardbelievethatadiverseboardleadstoimprovedcompanyperformancebyencouragingnewideas,expandingtheknowledgebaseavailabletomanagement
andfosteringaboardroomculturethatpromotesinnovationandvigorousdeliberation.
6
TheNominationandCorporateGovernanceCommitteeidentifiesnomineesbyfirstevaluatingthecurrentmembersofourBoardwhoarewillingtocontinue
inservice.TheCommitteeconsidersforre-nominationcurrentmembersofourBoardwithskillsandexperiencethatarerelevanttoourbusinessbalancingthe
valueofcontinuityofservicebyexistingmembersofourBoardwiththatofobtaininganewperspective.IfanymemberofourBoarddoesnotwishtocontinuein
service,theNominationandCorporateGovernanceCommitteeidentifiesthedesiredskillsandexperienceofanewnomineeinlightofthecriteriaabove.Current
membersoftheNominationandCorporateGovernanceCommitteeandourBoardwillbeconsultedforsuggestionsastoindividualsmeetingthecriteriaofthe
NominationandCorporateGovernanceCommittee.Researchmayalsobeperformedtoidentifyqualifiedindividuals.IftheNominationandCorporate
GovernanceCommitteebelievesthatourBoardrequiresadditionalcandidatesfornomination,theNominationandCorporateGovernanceCommitteemayexplore
alternativesourcesforidentifyingadditionalcandidates.Thismayincludeengaging,asappropriate,athirdpartysearchfirmtoassistinidentifyingqualified
candidates.
TheNominationandCorporateGovernanceCommitteewillconsidernomineesrecommendedbystockholders.Ourbylawsprovidethatnominationsshallbe
madepursuanttotimelynoticeinwritingtoourcorporatesecretary.Tobetimely,inthecaseofastockholderseekingtohaveanominationincludedinourproxy
statement,astockholdersnoticemustbedeliveredtoormailedandreceivedatourprincipalexecutiveofficesnotlessthan120daysormorethan180daysprior
tothefirstanniversaryofthedateonwhichwefirstmailedourproxymaterials(or,intheabsenceofproxymaterials,ournoticeofmeeting)fortheprevious
yearsannualmeetingofstockholders.However,ifwedidnotholdanannualmeetingthepreviousyear,orifthedateoftheannualmeetingisadvancedmorethan
30dayspriortoordelayedbymorethan30daysaftertheanniversaryoftheprecedingyearsannualmeeting,thennoticebythestockholdertobetimelymustbe
deliveredtoourcorporatesecretaryatourprincipalexecutiveofficesnotlaterthanthecloseofbusinessonthelaterof(i)the90thdaypriortosuchannualmeeting
or(ii)the15thdayfollowingthedayonwhichpublicannouncementofthedateofsuchmeetingisfirstmade.Ifthestockholderisnotseekinginclusionofthe
nominationinourproxystatement,timelynoticeconsistsofastockholdersnoticedeliveredtoormailedandreceivedatourprincipalexecutiveofficesnotless
than90dayspriortothedateoftheannualmeeting.
Thestockholdersnoticerelatingtodirectornomination(s)shallsetforth(a)astoeachpersonwhomthestockholderproposestonominateforelectionorreelectionasadirector,(i)thename,age,businessaddressandresidenceaddressoftheperson,(ii)theprincipaloccupationoremploymentoftheperson,(iii)the
classandnumberofsharesofourcapitalstockwhicharebeneficiallyownedbytheperson,and(iv)anyotherinformationrelatingtothepersonthatisrequiredto
bedisclosedinsolicitationsforproxiesforelectionofdirectorspursuanttoRegulation14AundertheSecuritiesExchangeActof1934,ortheExchangeAct;(b)as
tothestockholdergivingthenotice,(i)thenameandrecordaddressofthestockholder,and(ii)theclassandnumberofsharesofourcapitalstockthatare
beneficiallyownedbythestockholder;(c)astothestockholdergivingthenoticeandanyStockholderAssociatedPerson,asdescribedbelow,totheextentnotset
forthpursuanttotheimmediatelyprecedingclause,whetherandtheextenttowhichanyRelevantHedgeTransaction,asdescribedbelow,hasbeenenteredinto,
and(d)astothestockholdergivingthenoticeandanyStockholderAssociatedPerson,(1)whetherandtheextenttowhichanyDerivativeInstrumentisdirectlyor
indirectlybeneficiallyowned,(2)anyrightstodividendsonoursharesownedbeneficiallybysuchstockholderthatareseparatedorseparablefromtheunderlying
shares,(3)anyproportionateinterestinoursharesorDerivativeInstruments,asdescribedbelow,held,directlyorindirectly,byageneralorlimitedpartnershipin
whichsuchstockholderisageneralpartneror,directlyorindirectly,beneficiallyownsaninterestinageneralpartnerand(4)anyperformance-relatedfees(other
thananasset-basedfee)thatsuchstockholderisentitledtobasedonanyincreaseordecreaseinthevalueofoursharesorDerivativeInstruments,ifany,asofthe
dateofsuchnotice,includingwithoutlimitationanysuchinterestsheldbymembersofsuchstockholdersimmediatefamilysharingthesamehousehold,which
informationshallbesupplementedbysuchstockholderandbeneficialowner,ifany,notlaterthan10daysaftertherecorddateforthemeetingtodisclosesuch
ownershipasoftherecorddate.Wemayrequireanyproposednomineetofurnishsuchotherinformationasmayreasonablyberequiredbyustodeterminethe
eligibilityofsuchproposednomineetoserveasadirector.
Forpurposesofourbylaws:
AStockholderAssociatedPersonofanystockholdermeans(i)anypersoncontrollingorcontrolledby,directlyorindirectly,oractinginconcert
with,suchstockholder,(ii)anybeneficialownerofsharesofourstockownedofrecordorbeneficiallybysuchstockholderand(iii)anyperson
controlling,controlledbyorundercommoncontrolwithsuchStockholderAssociatedPerson;
ARelevantHedgeTransactionisanyhedgingorothertransactionorseriesoftransactions,oranyotheragreement,arrangementorunderstanding
(including,butnotlimitedto,anyshortpositionoranyborrowingorlendingofsharesofstock),theeffectorintentofwhichistomitigatelossor
increaseprofittoormanagetheriskorbenefitofstockpricechangesfor,ortoincreaseordecreasethevotingpowerof,astockholderwithrespectto
anyshareofourstock;and
DerivativeInstrumentmeansanyoption,warrant,convertiblesecurity,stockappreciationright,orsimilarrightwithanexerciseorconversion
privilegeorasettlementpaymentormechanismatapricerelatedtoanyclassor
7
seriesofourshares,whetherornotsuchinstrumentorrightshallbesubjecttosettlementintheunderlyingclassorseriesofourcapitalstockor
otherwise,oranyotherdirectorindirectopportunitytoprofitorshareinanyprofitderivedfromanyincreaseordecreaseinthevalueofourshares.
Corporate
Governance
Policy
and
Code
of
Business
Conduct
and
Ethics
OurCorporateGovernancePolicy,ourCodeofBusinessConductandEthics,includingourCodeofEthics,andthechartersofthecommitteesofourBoard
areavailableonourwebsite,www.inovio.com .
Communications
Policy
OurBoardhasproceduresinplacedesignedtoensureeffectivecommunicationamongus,ourstockholders,prospectiveinvestorsandthepublic,including
thedisseminationofinformationonaregularandtimelybasis.StockholderswhowanttocommunicatewithourBoardoranyindividualdirectorcanwritetoour
Secretaryatthefollowingaddress:660W.GermantownPike,Suite110,PlymouthMeeting,Pennsylvania19462.Yourlettershouldindicatethatyouareoneof
ourstockholders.Dependingonthesubjectmatter,managementwill:
Forwardthecommunicationtothedirectorordirectorstowhomitisaddressed;
Attempttohandletheinquirydirectly,forexample,whereitisarequestforinformationaboutusoritisastock-relatedmatter;or
Notforwardthecommunicationifitisprimarilycommercialinnatureorifitrelatestoanimproperorirrelevanttopic.
Board
Leadership
Structure
OurBoardcurrentlyseparatestherolesofChiefExecutiveOfficerandChairmanoftheBoardinrecognitionofthedifferencesbetweenthetworoles.Our
ChiefExecutiveOfficerisresponsibleforsettingourstrategicdirectionandourday-to-dayleadershipandperformance,whiletheChairmanoftheBoardprovides
guidancetotheChiefExecutiveOfficer,workswiththeChiefExecutiveOfficerinsettingtheagendaforBoardmeetingsandpresidesovermeetingsofthefull
Board.However,ourBoardbelievesitshouldbeabletofreelyselecttheChairmanoftheBoardbasedoncriteriathatitdeemstobeinourbestinterestsandthe
interestsofourstockholders,andthereforeonepersonmay,inthefuture,serveasbothourChiefExecutiveOfficerandChairmanoftheBoard.
ThefunctionsofourBoardarecarriedoutbythefullBoardand,whendelegated,bytheBoardcommittees.Eachdirectorparticipatesinourmajorstrategic
andpolicydecisions.
Board
Role
in
Risk
Management
TheriskoversightfunctionofourBoardiscarriedoutbyboththeBoardandtheAuditCommittee.Managementpreparesandpresentsanannualbusiness
plantotheBoard,whichidentifiesrisksassociatedwithouroperationsandisreviewedquarterlybytheBoard.Asprovidedinitscharter,theAuditCommittee
meetsperiodicallywithmanagementtodiscussmajorfinancialandoperatingriskexposuresandthesteps,guidelinesandpoliciestakenorimplementedrelatedto
riskassessmentandriskmanagement.MattersofstrategicriskareconsideredbyourBoard.EachquartermanagementreportstotheAuditCommitteeonlegal,
finance,accountingandtaxmatters.OurBoardisprovidedwithreportsonlegalmattersatleastquarterlyandonothermattersrelatedtoriskoversightonanas
neededbasis.
Code
of
Ethics
WehaveadoptedaCodeofEthics,whichappliestoalldirectors,officersandemployees,includingtheprincipalexecutiveofficer,principalfinancialand
accountingofficerandcontroller.ThepurposeoftheCodeistopromotehonestandethicalconduct.TheCodeofEthicsisincludedinourCodeofBusiness
ConductandEthicsandisavailableonourwebsiteandisalsoavailableinprint,withoutcharge,uponwrittenrequesttoourcorporatesecretaryat660W.
GermantownPike,Suite110,PlymouthMeeting,Pennsylvania19462.AnyamendmentstoorwaiversoftheCodewillbepromptlypostedonourwebsiteat
www.Inovio.com orinareportonForm8-K,asrequiredbyapplicablelaws.
Board
Member
Independence
OurBoardhasdeterminedthat,exceptforDrs.KimandWeiner,allofthenomineesforelectiontoourBoardlistedaboveare,andallotherindividualswho
servedasmembersofourBoardin2015were,independentasindependenceisdefinedintheNASDAQqualificationstandards.Dr.Kimwasnotconsidered
independentbecauseheisacurrentemployeeandDr.WeinerwasnotconsideredindependentbecausehecurrentlyservesasChairmanoftheScientificAdvisory
Board.
Our
Board
unanimously
recommends
that
you
vote
FOR
each
nominee
listed
above.
The
proxy
holders
will
vote
your
proxy
in
that
manner
unless
you
specify
otherwise
on
the
accompanying
proxy
card.
Report
of
the
Audit
Committee
TheAuditCommitteeoverseesourfinancialreportingprocessonbehalfofourBoard.Managementhastheprimaryresponsibilityforthefinancial
statements,formaintainingeffectiveinternalcontroloverfinancialreporting,andforassessingtheeffectivenessofinternalcontroloverfinancialreporting.In
fulfillingitsoversightresponsibilities,theAuditCommitteereviewedtheauditedconsolidatedfinancialstatementsinourannualreportwithmanagement,
includingadiscussionofthequality,notjusttheacceptability,oftheaccountingprinciples,thereasonablenessofsignificantjudgments,andtheclarityof
disclosuresinthefinancialstatements.
TheAuditCommitteereviewedwithErnst&YoungLLP,whoareresponsibleforexpressinganopinionontheconformityoftheseauditedconsolidated
financialstatementswithgenerallyacceptedaccountingprinciples,theirjudgmentsastothequality,notjusttheacceptability,ofouraccountingprinciplesand
suchothermattersasarerequiredtobediscussedwiththeAuditCommitteebytheStandardsofthePublicCompanyAccountingOversightBoard(UnitedStates)
(PCAOB),includingPCAOBAuditingStandardNo.16,Communications With Audit Committees ,therulesoftheSecuritiesandExchangeCommission(SEC)
andotherapplicableregulations.Inaddition,theAuditCommitteehasdiscussedwithErnst&YoungLLPtheirindependencefrommanagementandtheCompany,
hasreceivedfromErnst&YoungLLPthewrittendisclosuresandtheletterrequiredbyRule3526ofthePCAOBregardingtheindependentregisteredpublic
accountingfirmscommunicationswiththeAuditCommitteeconcerningindependence,andhasconsideredthecompatibilityofnon-auditserviceswithErnstand
Youngsindependence.
TheAuditCommitteemetwithErnst&YoungLLPtodiscusstheoverallscopeoftheirauditservices,theresultsoftheauditandreviews,itsevaluationof
ourinternalcontrols,includinginternalcontroloverfinancialreporting,andtheoverallqualityofourfinancialreporting.Ernst&YoungLLP,asourindependent
registeredpublicaccountingfirm,alsoperiodicallyupdatestheauditcommitteeaboutnewaccountingdevelopmentsandtheirpotentialimpactonourreporting.
ThemeetingswithErnst&YoungLLPwereheldwithandwithoutmanagementpresent.TheAuditCommitteeisnotemployedbyus,nordoesitprovideany
expertassuranceorprofessionalcertificationregardingourconsolidatedfinancialstatements.TheAuditCommitteerelies,withoutindependentverification,onthe
accuracyandintegrityoftheinformationprovided,andrepresentationsmade,bymanagementandourindependentregisteredpublicaccountingfirm.
Basedonthereviewsanddiscussionsreferredtoabove,theAuditCommitteehasrecommendedtoourBoard,andtheBoardhasapproved,thattheaudited
consolidatedfinancialstatementsandmanagementsassessmentoftheeffectivenessoftheCompanysinternalcontroloverfinancialreportingbeincludedinour
annualreportonForm10-KfortheyearendedDecember31,2015,filedbytheCompanywiththeSEC.TheAuditCommitteeandtheBoardalsohave
recommendedtheratificationoftheappointmentofErnst&YoungLLPasourindependentregisteredpublicaccountingfirmfor2016.
ThisAuditCommitteeReportisnotsolicitingmaterial,isnotdeemedtobefiledwiththeSEC,andisnotincorporatedbyreferenceinanyofourfilings
undertheSecuritiesActof1933,asamended,ortheSecuritiesExchangeActof1934,asamended,whethermadebyusbeforeorafterthedatehereof,regardless
ofanygeneralincorporationlanguageinanysuchfiling,excepttotheextentwespecificallyincorporatethismaterialbyreferenceintoanysuchfiling.
TheforegoingreporthasbeenfurnishedbytheAuditCommittee.
SimonX.Benito
AngelCabrera
MortonCollins
AvtarDhillon
Dated:March2,2016
Compensation
of
Directors
Non-Employee Director Compensation Program
EffectiveNovember6,2015,theBoardofDirectorsapprovedanadjustmenttothecashcompensationtobepaidbytheCompanytoitsnon-employee
directorstoprovideforannualretainerpaymentsratherthanper-meetingfees.
Theannualpaymenttonon-employeedirectorswillbe$45,000andtothenon-employeechairmanoftheBoardwillbe$70,000.Additionally,the
chairpersonofeachoftheAuditCommittee,theCompensationCommitteeandtheNominationandCorporateGovernanceCommitteewilleachreceive$20,000,
$15,000and$10,000annually,respectively,andmembersof
9
theAuditCommittee,theCompensationCommittee,theNominationandCorporateGovernanceCommitteeandtheFinanceCommittee(notincluding
chairpersons)willreceive$10,000,$7,000,$5,000and$5,000annually,respectively.
UpontheirelectionorappointmenttoourBoard,eachofournon-employeedirectorswillbegrantedaninitialoptiontopurchaseupto40,000sharesofour
commonstockatthethenfairmarketvaluepursuanttothetermsofourAmendedandRestated2007OmnibusIncentivePlan.Inaddition,eachnon-employee
directorwillbeautomaticallygrantedanoptiontopurchaseupto25,000sharesofourcommonstockifheorsheremainsonourBoardonthedateofeachannual
meetingofstockholders.However,someorallofsuchawardsmaybegrantedasRSU'sequivalenttosuchoptionsataratiotobedeterminedfromtimetotimeby
ourBoardoritsCompensationCommittee.
2015 Non-Employee Director Option and Restricted Stock Unit Grants
DuringtheyearendedDecember31,2015,wegranted10-yearoptionstopurchaseatotalof63,750sharesofourcommonstocktoournon-employee
directors.Mr.Benito,Dr.Collins,Dr.Cabrera,Dr.Dhillon,Dr.MahmoudandMs.Wysenskiallreceivedoptionstopurchase7,500shareseach,exercisableat
$8.01pershare.UponjoiningtheBoard,Ms.Wysenskiwasgrantedoptionstopurchase18,750sharesofourcommonstockexercisableat$7.56pershare.
DuringtheyearendedDecember31,2015,wegranted30,000RSU'stoournon-employeedirectors.Mr.Benito,Dr.Collins,Dr.Cabrera,Dr.Dhillon,
Dr.MahmoudandMs.Wysenskieachreceived5,000RSU's,respectively.
Director
Compensation
Table
Thefollowingtablesetsforthcertaininformationwithrespecttonon-employeedirectorcompensationduring2015.
Fees
Earned
or
Paid
in
Cash
($)
Name
Equity
Awards
($)(1)
Total
($)
Dr.AvtarDhillon(2)
74,500
76,640
151,140
SimonX.Benito(3)
78,000
76,640
154,640
Dr.AngelCabrera(4)
64,250
76,640
140,890
Dr.MortonCollins(5)
78,250
76,640
154,890
Dr.AdelMahmoud(6)
53,750
76,640
130,390
NancyJ.Wysenski(7)
41,250
162,130
203,380
(1)
RepresentsthegrantdatefairvalueofstockoptionsandRSUawardscomputedinaccordancewithFinancialAccountingStandardsBoard(FASB)ASC
Topic718,excludingtheeffectofestimatedforfeitures.SeeNote11StockholdersEquity,toourAuditedConsolidatedFinancialStatementsfortheyear
endedDecember31,2015,fortheassumptionsmadeindeterminingstockcompensationvalues.
(2)
AtDecember31,2015,Dr.Dhillonheldoptionstopurchase225,003sharesofourcommonstockand5,000RSU's.
(3)
AtDecember31,2015,Mr.Benitoheldoptionstopurchase87,500sharesofourcommonstockand5,000RSU's.
(4)
AtDecember31,2015,Dr.Cabreraheldoptionstopurchase46,250sharesofourcommonstockand5,000RSU's.
(5)
AtDecember31,2015,Dr.Collinsheldoptionstopurchase76,203sharesofourcommonstockand5,000RSU's.
(6)
AtDecember31,2015,Dr.Mahmoudheldoptionstopurchase46,250sharesofourcommonstockand5,000RSU's.
(7)
AtDecember31,2015,Ms.Wysenskiheldoptionstopurchase26,250sharesofourcommonstockand5,000RSU's.
.
10
SECURITY
OWNERSHIP
OF
CERTAIN
BENEFICIAL
OWNERS
AND
MANAGEMENT
ThefollowingtablesetsforthinformationasofMarch18,2016withrespecttothebeneficialownershipofourcommonstockby(i)eachpersonknowntous
tobethebeneficialownersofmorethan5%ofourcommonstock,(ii)eachofourdirectorsandnomineesfordirector,(iii)eachofthenamedexecutiveofficers
and(iv)allofourdirectorsandexecutiveofficersasagroup.
BeneficialownershipisdeterminedinaccordancewiththerulesoftheSEC.Incomputingthenumberofsharesbeneficiallyownedbyastockholderandthe
percentageofownershipofthatstockholder,sharesofcommonstockunderlyingsharesofconvertiblepreferredstock,optionsorwarrantsheldbythatstockholder
thatareconvertibleorexercisable,asthecasemaybe,within60daysofMarch18,2016areincluded.Thoseshares,however,arenotdeemedoutstandingforthe
purposeofcomputingthepercentageownershipofanyotherperson.Eachstockholderspercentageofownershipinthefollowingtableisbaseduponsharesof
commonstockoutstandingasofMarch18,2016.
Amount
and
Nature
of
Beneficial
Ownership
of
Shares
of
Common
Stock
Beneficial
Owner
of
Shares
of
Common
Stock(1)(2)
5% Stockholders:
Blackrock,Inc.
4,940,893
Percent
of
Class
of
Shares
of
Common
Stock
6.8%
J.JosephKim(3)
4,720,516
AvtarDhillon(4)
269,585
SimonX.Benito(5)
105,298
AngelCabrera(6)
88,000
MortonCollins(7)
315,894
AdelA.F.Mahmoud(8)
6.4%
51,250
879,809
1.2%
NancyJ.Wysenski(10)
20,312
MarkL.Bagarazzi(11)
302,366
PeterD.Kies(12)
316,654
NiranjanY.Sardesai(13)
366,334
DavidB.Weiner(9)
Allexecutiveofficersanddirectorsasagroup(11persons)
7,436,018
*
9.9%
Lessthan1%
(1)
Thistableisbaseduponinformationsuppliedbyofficers,directorsandprincipalstockholders.Exceptasshownotherwiseinthetable,theaddressofeach
stockholderlistedisincareofourprincipalexecutiveofficesat660W.GermantownPike,Suite100,PlymouthMeeting,Pennsylvania19462.
(2)
Exceptasotherwiseindicatedinthefootnotesofthistableandpursuanttoapplicablecommunitypropertylaws,thepersonsnamedinthetablehavesole
votingandinvestmentpowerwithrespecttoallsharesofcommonstock.BeneficialownershipisdeterminedinaccordancewiththerulesoftheSECand
generallyincludesvotingorinvestmentpowerwithrespecttosecurities.
(3)
Includes1,033,365sharesofcommonstockissuablepursuanttooptionsexercisableand23,333sharesofcommonstockfromRSU'swhichwillbecome
vestedwithin60daysofMarch18,2016.Ofthesharesofcommonstockownedshowninthetable,3,450,000shareshavebeenpledgedassecurity.
(4)
Includes206,252sharesofcommonstockissuablepursuanttooptionsexercisableand5,000sharesofcommonstockfromRSU'swhichwillbecomevested
within60daysofMarch18,2016.
(5)
Includes87,500sharesofcommonstockissuablepursuanttooptionsexercisableand5,000sharesofcommonstockfromRSU'swhichwillbecomevested
within60daysofMarch18,2016.
(6)
Includes46,250sharesofcommonstockissuablepursuanttooptionsexercisableand5,000sharesofcommonstockfromRSU'swhichwillbecomevested
within60daysofMarch18,2016.
11
(7)
Includes76,203sharesofcommonstockissuablepursuanttooptionsexercisableand5,000sharesofcommonstockfromRSU'swhichwillbecomevested
within60daysofMarch18,2016.
(8)
Includes46,250sharesofcommonstockissuablepursuanttooptionsexercisableand5,000sharesofcommonstockfromRSU'swhichwillbecomevested
within60daysofMarch18,2016.
(9)
Includes156,187sharesofcommonstockissuablepursuanttooptionsexercisablewithin60daysofMarch18,2016.
(10)
Includes15,312sharesofcommonstockissuablepursuanttooptionsexercisableand5,000sharesofcommonstockfromRSU'swhichwillbecomevested
within60daysofMarch18,2016.
(11)
Includes281,874sharesofcommonstockissuablepursuanttooptionsexercisablewithin60daysofMarch18,2016.
(12)
Includes285,628sharesofcommonstockissuablepursuanttooptionsexercisablewithin60daysofMarch18,2016.
(13)
Includes329,216sharesofcommonstockissuablepursuanttooptionsexercisablewithin60daysofMarch18,2016.
EXECUTIVE
COMPENSATION
AND
OTHER
INFORMATION
Our
Executive
Officers
ThefollowingtablesetsforthinformationastopersonswhoservedasourexecutiveofficersduringtheyearendedDecember31,2015andasofMarch18,
2016:
J.JosephKim,Ph.D
Age
Position
47 President,ChiefExecutiveOfficerandDirector
MarkL.Bagarazzi,M.D.
55 ChiefMedicalOfficer
PeterD.Kies
52 ChiefFinancialOfficer
NiranjanY.Sardesai,Ph.D
48 ChiefOperatingOfficer
Name
ForbiographicalinformationregardingDr.Kim,seeProposal1ElectionofDirectors.
Mark L. Bagarazzi, M.D.Chief Medical Officer .Dr.BagarazzijoinedusasChiefMedicalOfficerinJanuary2010.Priortojoiningus,Dr.Bagarazziwas
DirectorofWorldwideRegulatoryAffairsforvaccinesandbiologicsatMerck&Co.Dr.Bagarazziledongoingvaccineproductandregulatorydevelopmentof
MercksZOSTAVAX,theleadingvaccinefor
shingles.HesuccessfullyledtheregulatoryprocessthroughtoFDAapprovalofRotaTeq,Mercksvaccineagainstrotavirusandwaslaterresponsibleforglobal
regulatoryactivitiesrelatedtoMerckvaccinecandidatesforthepreventionofHIV/AIDS.PriortojoiningMerckin2001,hewasdirectoroftheHIV/AIDS
programforSt.ChristophersHospitalforChildren
inPhiladelphia.Dr.BagarazziwasanassistantprofessorofpediatricsatDrexelCollegeofMedicineandisaguestlectureronvaccinesandimmunotherapeuticsat
thePerelmanSchoolofMedicineattheUniversityofPennsylvania.Hewasboardcertifiedinpediatricsandpediatricinfectiousdiseasesaftercompletinga
fellowshipinpediatricinfectiousdiseasesattheChildrensHospitalofPhiladelphia.HeholdsaBSinelectricalengineeringmagnacumlaudefromNewJersey
InstituteofTechnologyandreceivedhisMDdegreewithhonorsfromwhatisnowknownasRutgersNewJerseyMedicalSchool.
Peter D. KiesChief Financial Officer. Mr.KieshasbeenemployedasourChiefFinancialOfficersinceJune2002andbringsextensivepubliccompany
governanceandcapitalmarketsexperienceandsignificantindustryexpertise.Forthe15yearspriortojoiningus,Mr.Kiesacquiredbroadexpertiseinthe
functionalandstrategicmanagementofbiotechnologyandhightechnologycompaniesacrossthefullspectrumofcorporategrowth,frominitialpublicofferingto
profitability.FromMay1996untiljoiningus,heservedasChiefFinancialOfficerforNewgenResultsCorporation,andpriortothatservedasControllerforCytel
CorporationandasanauditorforErnst&YoungLLP.Mr.KiesholdsaB.S.inBusinessAdministrationfromUnitedStatesInternationalUniversityinSanDiego,
California.
Niranjan Y. Sardesai, Ph.DChief Operating Officer. Dr.SardesaiwasappointedasourChiefOperatingOfficerinJanuary2012.HeservedasourSenior
VicePresidentofResearchandDevelopmentfollowingtheJune2009mergerwithVGXPharmaceuticals,atwhichcompanyheheldthesameposition.Dr.
SardesaijoinedVGXPharmaceuticalsin2006wherehehelpedformulatethecompanysproductdevelopmentandgrowthstrategiesandreorganizedthecompany
intoaDNAvaccineandimmunotherapiescompany.AcrossVGXandInovio,Dr.SardesaidrovemultipleM&Aandlicensingtransactionstoconsolidatekey
technologies,establishthecorporatefootprint,anddevelopitsimmunotherapiesplatformandproductpipeline.Heledthestrategicout-licensingofourpipeline
productstosecuremajorlicensingdealswithbigpharmacompanies.Hehasraisedover$130MMinnon-dilutivegrantsandcontractfundingfromgovernment
andnon-governmentorganizationsandservedasPrincipalInvestigatoronmulti-institutionalprogramsdevelopingouroncologyandinfectiousdiseaseproducts.
Underhisleadership,ourdevelopmentstageproductshavebeenrecognizedbyseveralpharmaceuticalindustryawardsforinnovationandthepotentialtoaddress
significantunmetneeds.Dr.SardesaiwaspreviouslythefounderandPresidentof
12
NVisionConsultingInc.,afirmprovidingstrategiccounseltoentrepreneuriallifesciencescompanies.HeservedasDirectorofResearchandDevelopmentat
FujirebioDiagnostics,Inc.,whereheoversawtheexpansionofthecompanysoncologyportfolio.Productsdevelopedunderhisleadershipincludegroundbreaking
newtestsformesothelioma(MESOMARK),bladdercancerandamulti-markertestforovariancancer.Dr.SardesaireceivedaPh.D.inChemistryfromthe
CaliforniaInstituteofTechnologyandanMBA(entrepreneurshipandfinance)fromtheWhartonSchooloftheUniversityofPennsylvania,wherehewasthe
recipientoftheShils-ZeidmanAwardinEntrepreneurship.HewasawardedfellowshipsattheScrippsResearchInstituteandtheMassachusettsInstituteof
Technology(MIT).Dr.SardesaireceivedhisBachelorandMasterofSciencedegreesinChemistryfromtheIndianInstituteofTechnology,Bombay.Hehas
authoredover100+peer-reviewedmanuscriptsandbookchapterswithparticularcontributionsinvaccinesandimmunotherapies,oncology,andmedicaldevices;
presentedatover120+invitedlecturesandpresentations,andfiledseveralpatents.Dr.SardesaiwasrecentlyrecognizedbyPharmavoicemagazineasoneofthe
top100mostinfluentialandinspirationalleadersfromacrossthelifesciencesandhealthcareindustry(2015).
Family
Relationships
Nofamilyrelationshipsexistbetweenanyofourdirectorsorexecutiveofficers.
Non-Binding
Vote
Regarding
Compensation
of
Our
Named
Executive
Officers
Atour2014AnnualMeetingofStockholders,ourstockholdersvotedtoapprove,byanon-bindingvote,thecompensationofournamedexecutiveofficers.
Atour2011AnnualMeetingofStockholders,ourstockholdersdetermined,byanon-bindingvote,thatthismatterwillbesubmittedtoourstockholdersfor
approvaleverythreeyears.Therefore,wearesubmittingtheproposalsregardingexecutivecompensationtoourstockholdersatour2017AnnualMeetingof
Stockholders.
COMPENSATION
DISCUSSION
AND
ANALYSIS
Overview
Weareabiopharmaceuticalcompanyfocusedonthediscovery,developmentanddeliveryofanewgenerationofvaccinesandimmunetherapies,called
syntheticvaccines,focusedoncancersandinfectiousdiseases.Thesuccessofdevelopmentcompaniesissignificantlyinfluencedbythequalityandmotivationof
theirworkforce.Ourcompensationprogramsarestraightforwardanddonotmateriallychangefromyeartoyear.Thecoreprincipleofourcompensationfor
executiveofficerscontinuestobeastrongpay-for-performancestructurethattiesasignificantportionofeachexecutiveofficerscompensationtocorporate
performance.Weseektoprovideacompetitivetotalcompensationopportunityforourexecutivemanagementteamthroughacombinationofbasesalary,cash
incentivebonuses,long-termequityincentivecompensationandbenefitprograms.Ourpay-for-performancedrivestheamountofpaythatisactuallyrealized.
ThisCompensationDiscussionandAnalysisdescribesourcompensationobjectives,ourexecutivecompensationprocessandourpoliciesandactionswith
respecttoeachcompensationelement.Wedescribetherationaleforcompensationdecisionsmadein2015withrespecttoourPresidentandChiefExecutive
Officer,ourChiefMedicalOfficer,ourChiefFinancialOfficerandourChiefOperatingOfficer,whowerefertoasournamedexecutiveofficers.
Our
Executive
Compensation
Program
Program Objectives
Wedesignourexecutivecompensationprogramtoachievethefollowingobjectives:
Motivateandrewardexecutiveswhoseknowledge,skillsandperformanceareessentialtooursuccess;
Aligntheperformanceofourexecutivesandtheinterestsofourstockholders;
Recruitandretainexecutivetalent;and
Supportthecorporatebusinessstrategyandbusinessplanbyrewardingachievementbasedonourexpectationsforresultsandattainmentofshort-term
andlong-termgoalsbyourexecutives.
Compensation Process
TheCompensationCommitteeofourBoardhastheprimaryresponsibilityfordeterminingcompensationofourexecutives.OurBoardhasdeterminedthat
eachmemberofourCompensationCommitteeisindependentasthattermisdefinedbyapplicableNASDAQrules,isanoutsidedirectorasdefinedin
Section162(m)oftheInternalRevenueCode,ortheCode,andanon-employeedirectorasdefinedunderSection16oftheExchangeAct.
OurCompensationCommitteedeterminesallcompensationmattersforournamedexecutiveofficers,includingbasesalary,bonuses,andequity
compensation.UtilizinginputfromourChiefExecutiveOfficeraswellasthoseofindependent
13
compensationconsultantsasneeded,theCompensationCommitteemakesanindependentdecisiononcompensationforeachexecutive.TheCompensation
CommitteealsooverseestheChiefExecutiveOfficerandotherseniorofficersinmakingcompensationdeterminationsofournon-executivestaff.Theprimary
goalofourCompensationCommitteeistocloselyaligntheinterestsofournamedexecutiveofficersandstaffwiththoseofourstockholders.Toachievethisgoal,
ourCompensationCommitteereliesoncompensationthatisdesignedtoattractandretainexecutivesandotherstaffwhoseabilitiesarecriticaltoourlong-term
success,thatmotivatesindividualstoperformattheirhighestlevelandthatrewardsachievement.TheCompensationCommitteeassessesperformanceona
numberofsubjectiveandobjectivefactors,includingtheachievementofcompanyandindividualperformancegoals.
Inmakingdecisionsregardingexecutivecompensation,ourCompensationCommitteeconsiders,amongotherthings:
Measurableaccomplishmentsandperformanceofthecompanyinmeetingtheannualobjectives;
Pastcompensationlevelsofeachexecutiveandtheexecutivesasagroup;
Consistencyofcurrentcompensationwithpreviouscompensationdecisionsandbenchmarks;
Existinglevelsofstockandstockoptionownershipamongourexecutives,previousstockoptiongrantsandvestingschedulestoensureexecutive
retentionandalignmentwithstockholderinterests;
Managementrecommendations;and
Generaltrendsinexecutivecompensation.
TheCompensationCommitteeconductsanannualreviewoftheChiefExecutiveOfficersperformanceandreportsitsevaluationtotheBoard.TheBoard
reviewstheCompensationCommitteesevaluationandrecommendationandalsoevaluatestheChiefExecutiveOfficersperformanceaccordingtothegoalsand
objectivesestablishedperiodicallybythefullBoard.ThisreviewservesasthebasisfortherecommendationoftheCompensationCommitteeonChiefExecutive
Officercompensation.
In2015,theCompensationCommitteeengagedBarney&Barney,anindependentcompensationconsultant,toprovideinformationtothemon
compensationtrendsandpracticesandtoassisttheminevaluatingourexecutivecompensationpolicyandprograms.TofacilitatetheCompensationCommittees
reviewanddecisionmakingfortheoverallcompensationstrategy,Barney&BarneyprovidedtheCompensationCommitteewithasurveygroupproxystudy,
generalhealthcareindustrymarketdata,benchmarksforstockoptionsissuancesandrecommendationsontypesofequityawardsforexecutives.Barney&Barney
doesnotprovideservicestoourmanagementwithouttheCompensationCommitteesapproval,buthasbeendirectedbytheCompensationCommitteetoworkin
cooperationwithmanagementasnecessarytogatherinformationtocarryoutitsobligationtotheCompensationCommittee.TheCompensationCommitteehas
assessedtheindependenceofBarney&BarneypursuanttoSECrulesandconcludedthatnoconflictofinterestexiststhatwouldpreventBarney&Barneyfrom
servingasanindependentconsultanttotheCompensationCommittee.
Competitive Considerations
In2015,theCompensationCommitteeengagedBarney&Barney,anindependentcompensationconsultant.AspartoftheCompensationCommittees
ongoingreviewofourcompensationprogramsforfiscalyear2015,theCommitteedeterminedtheaggregateleveloftotalcompensationofourexecutives,the
combinationofelementsusedtocompensateourexecutivesaswellasacomparisontothecompensationofnamedexecutiveofficersofothercompanies.The
CompensationCommitteereviewedcompensationlevelsofthecompaniesreferredtoasourpeergroupasareferencepointofcompensationlevels.Thepeer
groupcompaniesarereferredtocollectivelyasoursurveygroup.The22companiesinoursurveygroupwereselectedbasedoncomparability,sizeand
similarityinthestageofproductdevelopment.Thecriteriafortheselectionwereasfollows:
UnitedStates-basedpublicbiotechcompanieswithafocusononcology;
LeadprograminPhaseIIorlater;
Marketcapitalizationbetween$100millionand$1.2billion;
Researchanddevelopmentbudgetoflessthan$100million;
Lessthan300employees;and
Norevenuesfromcommercialproducts.
Usingtheabovecriteria,thefollowingcompanieswereusedtocomprisethesurveygroup:
14
Advaxis
GalenaBiopharma
Agenus
Geron
ArQule
IderaPharmaceuticals
ArrowheadResearch
ImmuneDesign
BioCrystPharmaceuticals
NewLinkGenetics
ChemoCentryx
PeregrinePharmaceuticals
CTIBioPharma
ProgenicsPharmaceuticals
Curis
SangamoBioSciences
Cytokinetics
SareptaTherapeutics
DynavaxTechnologies
StemlineTherapeutics
Endocyte
ThresholdPharmaceuticals
Thesurveygroupprovidesagaugeofcompensationlevelsfromexternalsourcesandallowsustoassesstheircompensationpractices.Webelievethat
executivecompensationshouldconsistofbasesalarythatiscompetitivewiththoseinoursurveygroup,anannualincentiveplandesignedtoincentivizeour
executiveofficersandequityincentiveawards.Wetargettheseitemsofcompensationtobeatthe60thpercentileofacombinationofoursurveygroupandmarket
studies.Forinstance,atthetimeofthesurvey,ourmarketcapitalizationwasabovethe50thpercentilebutlessthanthe75thpercentileofthesurveygroups
marketcapitalization.Webelievethatthislevelappropriatelyreflectsoursizeandthegoalswehaveforourgrowth,andthatwillallowustoattractandretain
qualityexecutives.
Compensation
Components
Ourexecutivecompensationprimarilyconsistsofbasesalary,cashincentivecompensationandlong-termequity-basedcompensation.Weplacesignificant
emphasisonperformance-basedincentivecompensationthatfocusesonourexecutiveseffortsondeliveringshort-termandlong-termvalueforourstockholders
withoutencouragingexcessiverisktaking.
ThefactorsourCompensationCommitteeconsideredforeachofourexecutivesin2015included:
Overallcorporateperformanceduring2015asmeasuredagainstpredeterminedperformancegoals;
Therolesandresponsibilitiesofourexecutivesinexecutingthecorporategoals;
Ourexecutivesperformanceduring2015ingeneralandasmeasuredagainstpredeterminedperformancegoals;
Therolesandresponsibilitiesofourexecutives;
Theindividualexperienceandskillsofourexecutives;
Anycontractualcommitmentswehavemadetoourexecutivesregardingcompensation;and
Compensationpaidbysimilarcompaniestotheirexecutiveswithsimilarrolesandresponsibilities.
Wehaveanexecutivecompensationphilosophyandgoalsbasedonattracting,retainingandrewardingexperiencedandtalentedexecutiveofficers.In
addition,webelievethatexecutivecompensationshouldbelinkedtocorporateperformanceandaccomplishmentsthatincreasestockholdervalue.Assuch,our
executivecompensationpolicyfocusesonaligningtheinterestsofourexecutiveofficerswiththelong-terminterestsofourstockholdersandwithourcorporate
strategiesandgoals.
BasesalariesofexecutiveofficersarereviewedandapprovedannuallybyourCompensationCommitteeandadjustmentsaremadebasedon(i)salary
recommendationsfromourChiefExecutiveOfficer,(ii)individualperformanceofexecutiveofficersforthepreviousfiscalyear,(iii)ourfinancialresultsforthe
previousyear,and(iv)ourfinancialcondition.OurChiefExecutiveOfficerdoesnotmakerecommendationsregardinghisowncompensation.Inaddition,in
establishingthetotalcompensationpackageforourChiefExecutiveOfficer,theCompensationCommitteepursuesthesameobjectivesandpoliciesthatapplyfor
ourotherexecutiveofficers.
Base Salary
Basesalaryreflectsjobresponsibilities,valuetousandindividualperformance,takingintoconsiderationtheneedtoattractandretainourexecutives.We
determinesalariesforournamedexecutiveofficersinitiallybyreferencetoeachexecutivesemploymentagreement,whichwedescribebelow.TheCompensation
CommitteedeterminesanyincreaseoverthesesalariesbaseduponrecommendationsofourChiefExecutiveOfficer,exceptinthecaseoftheChiefExecutive
Officersowncompensation.TheCompensationCommitteegenerallyreviewsbasesalariesofourexecutivesannuallyandadjustssalariesfromtimetotimeto
realignsalarieswithmarketlevels,individualperformanceandtheperformanceofthecompany.
Achievementofindividualandcorporateaccomplishmentsalongwiththeexecutiveofficerslevelofresponsibility,competitivefactorsandourinternal
policiesregardingsalaryincreaseswereconsideredregarding2014salaryincreases.
15
Merit-basedsalaryincreasesfor2015werebetween5%-7%forJ.JosephKim,MarkBagarazzi,PeterKiesandNiranjanSardesai.Compensationlevelsfor
ourofficerswereadjustedin2014tobemoreinlinewithoursurveygroupandbemorecompetitive.Wetargettheseitemsofcompensationtobeatthe50th
percentileofacombinationofoursurveygroupandmarketstudies.InMarch2016,wesettheannualbasesalaryfor2016forDr.J.JosephKim,ourPresident
andChiefExecutiveOfficer,at$621,348,forPeterKies,ourChiefFinancialOfficer,at$392,701,forMarkBagarazzi,ourChiefMedicalOfficer,at$424,758and
forNiranjanSardesai,ourChiefOperatingOfficer,at$424,758.Salaryincreasesfor2016werebetween4%-7%.
Performance-Based Annual Cash Incentive Compensation
Weprovideforanannualcashincentivethatreinforcesourpay-for-performanceapproach.Thisincentivecompensationisashort-termincentiveprogram
thatrewardsachievementofannualgoalsandobjectives.AnnualincentiveawardsareawardedatthesoledeterminationoftheCompensationCommittee(on
behalfoftheBoard)basedontheactualandmeasurableperformanceofthecompanybasedonasetofcorporateobjectivesforthepreviousyear.
Eachyear,theChiefExecutiveOfficerprovidescompanygoalstotheBoardforreviewandtheBoardapprovesthegoalsandassignsweightings.The
weightingsforeachgoalvaryyeartoyeardependingontheimportanceofthegoalforaparticularyear.Attheendoftheyear,theCompensationCommittee
measuresactualperformanceagainstthepredeterminedperformancegoals,usingmeasurableperformanceparameters.Thetotalcorporateperformance
measurementscorecouldrangefrom80to120%(withthetargetof100%),basedonthecorporateaccomplishmentsmeasuredagainstthatyearsobjectives.For
instance,the2015corporatescorewas98.1%whilethe2014scorewas106.2%.Thesescoresarethenweightedtothetargetbonusnumbers.
Underthe2015annualincentiveplan,thenamedexecutiveofficershadatargetedannualpayoutofbetween40%and65%oftheirbasesalary,basedonthe
achievementofthecorporategoals.
Highlights of the 2015 accomplishments taken into account by the Compensation Committee to determine overall corporate performance included the
following:
ClosedoutPhaseIIVGX-3100studiesandcontinuedwithsignificantpreparationsforthePhaseIIIstudy;
AdvancedHPV-relatedandothercancerprograms;
ConductedcollaborativeclinicalandpreclinicalstudiesincludingRoche,DARPAandMedImmune;
Advancedahigh-qualityandmarketcompetitiveresearchanddevelopmentpipelinewith15peer-reviewedpublicationsandevaluationofover14new
preclinicaltargets;
Receivedrevenueandfundingfromnon-dilutivesourcesincluding$27.5millionup-frontpaymentfromMedImmune;and
CompletedanunderwrittenpublicofferingwithnetproceedstotheCompanyof$81.9million.
Wegenerallygrantstockoptionstoouremployees,includingournamedexecutiveofficers,inconnectionwiththeirinitialemploymentwithus.Wealso
typicallygrantstockoptionsandrestrictedstockunitsonanannualbasisaspartofannualperformancereviewsofouremployees.Wegrantequityincentive
compensationtoourexecutiveofficersbecausewebelievedoingsowillmotivateourexecutivesbyaligningtheirinterestmorecloselywiththeinterestofour
stockholders.
OnMarch5,2015,wegrantedstockoptionstopurchase85,000shares,60,000shares,60,000sharesand60,000sharesofourcommonstocktoJ.Joseph
Kim,MarkL.Bagarazzi,PeterD.KiesandNiranjanY.Sardesai,respectively,atanexercisepriceof$7.56pershare.OnMay8,2015wegrantedstockoptionsto
purchase40,000sharesofourcommonstocktoJ.JosephKimatanexercisepriceof$8.01pershare.Allstockoptionawardsvestinfourequalinstallmentsof
25%immediatelyasofthegrantdateand25%oneachanniversarythereafter.OnMarch5,2015wegrantedrestrictedstockunitsof40,000,25,000,25,000and
25,000toJ.JosephKim,MarkL.Bagarazzi,PeterD.KiesandNiranjanY.Sardesai,respectively,withagrantdatefairvalueof$7.56pershare.OnMay8,2015
wegrantedrestrictedstockunitsof70,000toJ.JosephKimwithagrantdatefairvalueof$8.01pershare.Allrestrictedstockunitsvestoverthreeyearsinthree
equalinstallmentsbeginningonthefirstanniversaryofthegrantdate.
OnMarch9,2016,wegrantedstockoptionstopurchase172,000shares,67,500shares,67,500sharesand67,500sharesofourcommonstocktoJ.Joseph
Kim,MarkL.Bagarazzi,PeterD.KiesandNiranjanY.Sardesai,respectively,atanexercisepriceof$7.02pershare.Allstockoptionawardsvestinfourequal
installmentsof25%immediatelyasofthegrantdateand25%oneachanniversarythereafter.OnMarch9,2016wegrantedrestrictedstockunitsof172,000,
75,000,75,000and75,000toJ.JosephKim,MarkL.Bagarazzi,PeterD.KiesandNiranjanY.Sardesai,respectively,withagrantdatefairvalueof$7.02per
share.
Other
Aspects
of
Our
Compensation
Philosophy
Other Benefits
Weprovideournamedexecutiveofficerswiththesameemployeebenefitsthatallofourotheremployeesreceiveunderourbroad-basedbenefitplans.These
plansprovideforhealthbenefits,lifeinsuranceandotherwelfarebenefits.
Perquisites
Wedonotprovideournamedexecutiveofficerswithanyretirementorwelfareplanbenefitsthatwedonotprovidetoallofourotheremployees.
Risks Related to Compensation Policies and Practices
TheCompensationCommitteehasconsideredwhetherouroverallcompensationprogramforemployeesin2016createsincentivesforemployeestotake
excessiveorunreasonablerisksthatcouldmateriallyharmourCompany.Webelievethatseveralfeaturesofourcompensationpoliciesformanagementemployees
appropriatelymitigatesuchrisks,includingamixoflong-andshort-termcompensationincentivesthatwebelieveisproperlyweighted,theuniformityof
compensationpracticesacrossourCompanyandtheuseofour2016businessplan,whichtheCompensationCommitteeregardsassettinganappropriatelevelof
risktakingforus,asabaselineforbonusplantargetsforourmanagement.Wealsobelieveourinternallegalandfinancialcontrolsappropriatelymitigatethe
probabilityandpotentialimpactofanindividualemployeecommittingustoaharmfullong-termbusinesstransactioninexchangeforshort-termcompensation
benefits.
Recoupment Policy
Inordertoalignfurthermanagementsinterestswiththeinterestsofourstockholdersandtosupportgoodcorporategovernancepractices,itistheintention
ofourBoardtoadoptarecoupmentpolicyapplicabletoourannualbonusbasedonourresultsofoperationsandtostockoptionswehavegrantedtoourexecutive
officerspromptlyfollowingthedefinitiveadoptionofregulationsundertheDodd-FrankAct.SubjecttorulesoftheSECandNASDAQ,intheeventthatweare
requiredtoprepareanaccountingrestatementduetothematerialnoncompliancewithanyfinancialreportingrequirementunderthefederalsecuritieslaws,wewill
recoverfromanyofourcurrentorformerexecutiveofficers,asdeterminedinaccordancewithsuchrules,whoreceivedincentive-basedcompensation(including
stockoptionsawardedascompensation)duringthethree-yearperiodprecedingthedateonwhichwearerequiredtoprepareanaccountingrestatement,basedon
theerroneousdata,inexcessofwhatwouldhavebeenpaidtotheexecutiveofficerundertheaccountingrestatementandanyrespectiveprofitsthatofficerhas
realizedfromthesaleofoursecuritiesduringthe12-monthperiodprecedingthedateonwhichwearerequiredtoprepareanaccountingrestatement.
EXECUTIVE
COMPENSATION
ThissectionoftheProxyStatementsetsforthcompensationinformationfor,Dr.J.JosephKim,Ph.D.,ourChiefExecutiveOfficer,Dr.MarkL.Bagarazzi,
M.D.,ourChiefMedicalOfficer,PeterD.Kies,ourChiefFinancialOfficerandDr.NiranjanY.Sardesai,Ph.D.,ourChiefOperatingOfficer(eachanamed
executiveofficerandcollectivelythenamedexecutiveofficers).
17
Summary
Compensation
Table
Thefollowingtablesetsforthinformationconcerningthecompensationofournamedexecutiveofficersfor2015,2014and2013.
Name
and
Principal
Position
Dr.J.JosephKim,
President,ChiefExecutive
OfficerandDirector
Dr.MarkL.Bagarazzi,
ChiefMedicalOfficer
PeterD.Kies,
ChiefFinancialOfficer
Dr.NiranjanY.Sardesai,
ChiefOperatingOfficer
Year
Salary
($)(1)
Bonus
($)
Option
Awards
($)(5)
All
Other
Compensation
($)(6)
Total
($)
698,599
380,964 (2)
1,445,798
8,562
2,533,923
2014
602,097
362,567
(3)
1,129,108
10,620
2,104,392
2013
539,838
312,998 (4)
170,548
8,381
1,031,765
2015
390,977
155,771 (2)
462,567
8,567
1,017,882
2014
353,168
137,901
(3)
659,875
10,817
1,161,761
2013
307,583
106,704 (4)
71,392
8,317
493,996
2015
393,230
144,015
(2)
462,567
6,966
1,006,778
2014
347,941
127,493 (3)
659,875
6,405
1,141,714
2013
318,833
103,147 (4)
71,392
5,755
499,127
2015
390,977
155,771
(2)
462,567
8,429
1,017,744
2014
348,940
137,901 (3)
659,875
11,325
1,158,041
2013
303,060
106,704 (4)
71,392
8,288
489,444
2015
(1)
Salaryincludescontributionsmadebytheemployertoour401(k)planandvacationpayouts(ifapplicable).
(2)
Bonuspaymentsfor2015weremadeinMarch2016.
(3)
Bonuspaymentsfor2014weremadeinMarch2015.
(4)
Bonuspaymentsfor2013weremadeinApril2014.
(5)
RepresentsthegrantdatefairvalueofstockoptionsandrestrictedstockunitscomputedinaccordancewithFASBASCTopic718,excludingthe
effectofestimatedforfeitures.SeeNote11StockholdersEquity,toourAuditedConsolidatedFinancialStatementsfortheyearended
December31,2015fortheassumptionsmadeindeterminingstockcompensationvalues.
(6)
Represents401(k)matchamountsfortherespectiveyears.
Grants
of
Plan
Based
Awards
Thefollowingtablesetsforthcertaininformationwithrespecttostockandoptionawardsandotherplan-basedawardsgrantedtoournamedexecutive
officersduring2015.
18
All
Other
Option
Awards:
Number
of
Securities
Underlying
Options(#)
Exercise
or
Base
Price
of
Option
Awards
($/Share)
Grant
Date
Fair
Value
of
Stock
and
Option
Awards($)
Name
Grant
Date
J.JosephKim
3/5/2015(1)
85,000 $
7.56
387,553
3/5/2015(2)
40,000 $
302,400
5/8/2015(1)
40,000 $
8.01
195,145
5/8/2015(2)
70,000 $
235,000
MarkL.Bagarazzi
3/5/2015(1)
60,000 $
7.56
273,567
3/5/2015(2)
25,000 $
189,000
85,000
PeterD.Kies
3/5/2015(1)
60,000 $
7.56
273,567
3/5/2015(2)
25,000 $
189,000
85,000
NiranjanY.Sardesai
3/5/2015(1)
60,000 $
7.56
273,567
3/5/2015(2)
25,000 $
189,000
85,000
(1)
Thesestockoptionawardsvest25%immediatelyand25%oneachanniversarythereafter.
(2)
Theserestrictedstockunitsvestoverthreeyearsinthreeequalinstallmentsbeginningonthefirstanniversaryofthegrantdate.
560,700
1,445,798
462,567
462,567
462,567
Options
Exercised
Table
Therewerenooptionsexercisedbyournamedexecutiveofficersduring2015.
Outstanding
Equity
Awards
at
Fiscal
Year-End
Table
ThefollowingtablessetforthcertaininformationwithrespecttooutstandingequityawardsheldbythenamedexecutiveofficersatDecember31,2015.
Name
OPTION
AWARDS
Number
of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
Number
of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
Option
Exercise
Price($)
Option
Expiration
Date
Dr.J.JosephKim
245,300
5.08
5/1/2016
147,180
5.08
1/18/2017
61,325
5.08
9/28/2017
49,060
5.08
9/12/2018
70,000
6.28
9/30/2019
62,500
4.56
3/11/2021
103,750
2.40
2/23/2022
80,625
26,875
2.16
3/14/2023
37,500
37,500
12.92
3/26/2024
25,000
25,000
8.80
5/22/2024
21,250
63,750
7.56
3/5/2025
8.01
5/8/2025
10,000
30,000
913,490
183,125
Dr.MarkL.Bagarazzi
68,750
4.40
1/4/2020
30,000
4.56
3/11/2021
43,750
2.40
2/23/2022
19
33,750
11,250
2.16
3/14/2023
18,750
18,750
12.92
3/26/2024
19,374
19,376
8.80
5/22/2024
15,000
45,000
7.56
3/5/2025
229,374
94,376
PeterD.Kies
11,250
11.56
3/7/2016
18,751
12.64
3/8/2017
7,501
3.48
2/1/2018
15,000
4.24
7/9/2018
10,001
2.00
12/9/2018
21,251
6.28
9/30/2019
30,000
4.56
3/11/2021
43,750
2.40
2/23/2022
33,750
11,250
2.16
3/14/2023
18,750
18,750
12.92
3/26/2024
19,374
19,376
8.80
5/22/2024
15,000
45,000
7.56
3/5/2025
244,378
Dr.NiranjanY.Sardesai
94,376
33,116
6.12
6,133
6.12
1/5/2017
3,680
6.12
1/18/2017
18,398
6.12
11/1/2017
12,265
6.12
9/12/2018
30,000
6.28
9/30/2019
30,000
4.56
3/11/2021
12,500
1.76
1/3/2022
43,750
2.40
2/23/2022
33,750
11,250
2.16
3/14/2023
18,750
18,750
12.92
3/26/2024
19,374
19,376
8.80
5/22/2024
15,000
45,000
7.56
3/5/2025
276,716
94,376
8/28/2016
AtDecember31,2015,Dr.Kimheld110,000non-vestedrestrictedstockunits("RSU"s)andDr.Bagarazzi,Mr.KiesandDr.Sardesaieachheld25,000
non-vestedRSU's.
Employment
Agreement
with
J.
Joseph
Kim,
Ph.D.
Underanexecutiveemploymentagreement,J.JosephKim,Ph.D.servesasourChiefExecutiveOfficer.TheagreementprovidesthatDr.Kimisentitledto
receiveanannualsalaryof$254,616,subjecttoupwardadjustment.Heisalsoeligibletoreceiveanincentivecashbonusuptotheamount,baseduponthecriteria
asmaybedeterminedbyourBoardandtargetedat30%ormoreofthebasesalary.Inadditiontothesalaryandcashbonus,heisalsoentitledtoparticipateinour
employeebenefitplansorprograms,andshallbeentitledtosuchotherfringebenefits,asarefromtimetotimeadoptedbyourBoard.Dr.Kimscurrentbase
salaryis$621,000.
UnderDr.Kimsemploymentagreement,ifweterminatehisemploymentatanytimewithoutcause,asdefinedintheemploymentagreement,Dr.Kimis
entitledtoreceiveseverancecompensationintheformofmonthlypaymentsofhisthen-currentbasesalaryandoftheproratabonusamountforaperiodof
24monthsfollowingtheeffectivedateofsuchtermination.Theproratabonusamountshallmeanone-twelfthofthegreaterof(A)themostrecentannualcash
bonuspaidpriortohistermination,or(B)theaverageofthethreemostrecentannualcashbonusespaidpriortohistermination.Wewillalsocontinuetopayhis
COBRApremiumsfor18monthsthereafter.
IfDr.Kimisterminatedasaresultofchange-in-control,Dr.Kimisentitledtoreceivepaymentsduetohimundertheconditionsofterminationwithout
causeasoutlinedaboveandalump-sumcashseverancepaymentequaltohisthen-current
20
monthlybasesalaryandtheproratabonusamountmultipliedby24butdiscountedtopresentvaluebasedonapplicablefederalrateundertheCode.
ForpurposesofDr.Kimsemploymentagreement,causemeans(1)convictionofDr.Kimofanyfelony;(2)participationbyDr.Kiminanyfraudoract
ofdishonestyagainstus;(3)materialviolationbyDr.Kimof(i)anycontractbetweenusandDr.Kim,or(ii)anystatutorydutyofDr.Kimtous;(4)conductof
Dr.Kimthat,baseduponagoodfaithandreasonablefactualinvestigationanddeterminationbyourBoard,demonstratesDr.Kimsgrossunfitnesstoserve;or
(5)thecontinued,willfulrefusalorfailurebyDr.KimtoperformanymaterialdutiesreasonablyrequestedbyourBoard;provided,however,thatinthecaseof
conductdescribedinclauses(3),(4)and(5)above,suchconductshallnotconstitutecauseunless(a)ourBoardshallhavegivenDr.Kimwrittennoticesetting
forthwithspecificity(i)theconductdeemedtoconstitutecause,(ii)reasonableactionthatwouldremedytheobjectionableconductand(iii)areasonabletime
(notlessthan10days)withinwhichDr.Kimmaytakesuchremedialaction,and(b)Dr.Kimshallnothavetakensuchspecifiedremedialactionwithinsuch
specifiedreasonabletime.
Undertheemploymentagreement,achangeincontrolshallbedeemedtohaveoccurredupon:
(i)anacquisitionbyanyperson,entityorgroup(withinthemeaningofSection13(d)(3)or14(d)(2)oftheExchangeAct),ofbeneficialownership
(withinthemeaningofRule13d-3promulgatedundertheExchangeAct)of30%ormoreofeither(A)ourthenoutstandingsharesofcommonstockofor(B)the
combinedvotingpowerofourthenoutstandingvotingsecuritiesentitledtovotegenerallyintheelectionofdirectors;excluding,however,thefollowing:(1)any
acquisitiondirectlyfromus,otherthananacquisitionbyvirtueoftheexerciseofaconversionprivilegeunlessthesecuritybeingsoconvertedwasitselfacquired
directlyfromus;(2)anyacquisitionbyus;and(3)anyacquisitionbyanemployeebenefitplan(orrelatedtrust)sponsoredormaintainedbyus;
(ii)achangeinthecompositionofourBoardsuchthatduringanyperiodoftwoconsecutiveyears,individualswhoatthebeginningofsuchperiod
constituteourBoard,andanynewdirector(otherthanadirectordesignatedbyapersonwhohasenteredintoanagreementwithustoeffectatransactiondescribed
inclause(i),(iii)or(iv)ofthisdefinitionwhoseelectionbyourBoardornominationforelectionbyourstockholderswasapprovedbyavoteofatleasttwo-thirds
ofthedirectorsthenstillinofficewhoeitherweredirectorsatthebeginningoftheperiodorwhoseelectionornominationforelectionwaspreviouslysoapproved,
ceaseforanyreasontoconstituteatleastamajorityofthemembersthereof;
(iii)theapprovalbyourstockholdersofamerger,consolidation,reorganizationorsimilarcorporatetransaction,whetherornotwearethesurviving
corporationinsuchtransaction,inwhichoutstandingsharesofourcommonstockareconvertedinto(A)sharesofstockofanothercompany,otherthana
conversionintosharesofvotingcommonstockofthesuccessorcorporation(oraholdingcompanythereof)representing51%ormoreofthevotingpowerofall
capitalstockthereofoutstandingimmediatelyafterthemergerorconsolidationor(B)othersecurities(ofeitheroursecuritiesorsecuritiesofanothercompany)or
cashorotherproperty;
(iv)theapprovalbyourstockholdersoftheissuanceofsharesofourcommonstockinconnectionwithamerger,consolidation,reorganizationor
similarcorporatetransactioninanamountinexcessof49%ofthenumberofsharesofourcommonstockoutstandingimmediatelypriortotheconsummationof
suchtransaction;or
(v)theapprovalbyourstockholdersof(A)thesaleorotherdispositionofallorsubstantiallyallofourassetsor(B)ourcompleteliquidationor
dissolution.
Employment
Agreement
with
Mark
L.
Bagarazzi,
M.
D.
InJanuary2012,weenteredintoanemploymentagreementwithDr.BagarazzipursuanttowhichheservesasChiefMedicalOfficer.Theemployment
agreementprovidesanannualbasesalaryintheamountof$312,000forDr.Bagarazzi,subjecttoupwardadjustmentyearlybyourCompensationCommittee.
Undertheemploymentagreement,Dr.Bagarazziiseligibletoreceiveanincentivecashbonusuptotheamount,baseduponthecriteriaandpayableatsuchtimes
asdeterminedbyourBoardoritsCompensationCommittee.Dr.Bagarazziisalsoentitledtoparticipateinsuchemployeebenefitplansandprogramsandis
entitledtosuchotherfringebenefits,asarefromtimetotimeadoptedbyourBoardoritsCompensationCommitteeandmadeavailablebyusgenerallyto
employeesofsimilarposition,andshallbeeligibleforsuchawardsandbenefits,ifany,pursuanttoourplansandprogramsasdeterminedbyourBoardorits
CompensationCommittee.Dr.Bagarazziscurrentbasesalaryis$425,000.
IfDr.Bagarazzisemploymentisterminatedbyreasonofdeathortotaldisability,wewillpayDr.Bagarazziorhisestateorrepresentative,asapplicable,any
unpaidportionofhisbasesalarycomputedonaproratabasisthroughthedateoftermination,anyunreimbursedexpenses,allotheraccruedbutunpaidrightsas
determinedunderanyofourplansandprogramsinwhichDr.Bagarazziisthenparticipating,and,inthecaseoftotaldisability,acontinuationofmedicalbenefits
forupto60daysandCOBRApremiumsforsixmonthsthereafter.Inthecaseoftotaldisability,Dr.Bagarazziwillalsoreceivealump-sumpaymentequaltosix
monthsofhisaggregatebasesalarythenineffect.
21
IfweterminateDr.Bagarazzisemploymentforcause,asdefinedintheagreement,orifDr.Bagarazziterminatesemploymentforotherthangoodreason,as
definedintheagreement,wewillpayhimanyunpaidportionofhisbasesalarycomputedonaproratabasisthroughthedateoftermination,anyunreimbursed
expensesandallotheraccruedbutunpaidrightsasdeterminedunderourplansandprogramsinwhichheisthenparticipating.
IfweterminateDr.Bagarazzisemploymentotherthanonaccountofdeath,totaldisabilityorcause,orDr.Bagarazziterminateshisemploymentforgood
reason,asdefinedintheagreement,on30dayspriorwrittennotice,wewillpayhimanyunpaidportionofhisbasesalarycomputedonapro-ratabasisthrough
thedateoftermination,anyunreimbursedexpenses,allotheraccruedbutunpaidrightsasdeterminedunderourplansandprogramsinwhichDr.Bagarazziisthen
participating,aseverancepaymentintheformofmonthlypaymentsofbasesalaryforaperiodof12monthsfollowingtheeffectivedateofterminationand
COBRApaymentsfor12monthsfollowingtheeffectivedateoftermination.Theemploymentagreementcontainscertainnon-competitionandnon-disclosure
covenants.
IfDr.Bagarazziisterminatedasaresultofchange-in-control,Dr.Bagarazziisentitledtoreceivepaymentsduetohimundertheconditionsoftermination
withoutcauseasoutlinedaboveandalump-sumcashseverancepaymentequaltohisthen-currentmonthlybasesalaryandtheproratabonusamountmultipliedby
12butdiscountedtopresentvaluebasedonapplicablefederalrateundertheCode.
Undertheemploymentagreement,achangeincontrolshallbedeemedtohaveoccurredupon:
(i)anacquisitionbyanyperson,entityorgroup(withinthemeaningofSection13(d)(3)or14(d)(2)oftheExchangeAct),ofbeneficialownership
(withinthemeaningofRule13d-3promulgatedundertheExchangeAct)of30%ormoreofeither(A)ourthenoutstandingsharesofcommonstockofor(B)the
combinedvotingpowerofourthenoutstandingvotingsecuritiesentitledtovotegenerallyintheelectionofdirectors;excluding,however,thefollowing:(1)any
acquisitiondirectlyfromus,otherthananacquisitionbyvirtueoftheexerciseofaconversionprivilegeunlessthesecuritybeingsoconvertedwasitselfacquired
directlyfromus;(2)anyacquisitionbyus;and(3)anyacquisitionbyanemployeebenefitplan(orrelatedtrust)sponsoredormaintainedbyus;
(ii)achangeinthecompositionofourBoardsuchthatduringanyperiodoftwoconsecutiveyears,individualswhoatthebeginningofsuchperiod
constituteourBoard,andanynewdirector(otherthanadirectordesignatedbyapersonwhohasenteredintoanagreementwithustoeffectatransactiondescribed
inclause(i),(iii)or(iv)ofthisdefinitionwhoseelectionbyourBoardornominationforelectionbyourstockholderswasapprovedbyavoteofatleasttwo-thirds
ofthedirectorsthenstillinofficewhoeitherweredirectorsatthebeginningoftheperiodorwhoseelectionornominationforelectionwaspreviouslysoapproved,
ceaseforanyreasontoconstituteatleastamajorityofthemembersthereof;
(iii)theapprovalbyourstockholdersofamerger,consolidation,reorganizationorsimilarcorporatetransaction,whetherornotwearethesurviving
corporationinsuchtransaction,inwhichoutstandingsharesofourcommonstockareconvertedinto(A)sharesofstockofanothercompany,otherthana
conversionintosharesofvotingcommonstockofthesuccessorcorporation(oraholdingcompanythereof)representing51%ormoreofthevotingpowerofall
capitalstockthereofoutstandingimmediatelyafterthemergerorconsolidationor(B)othersecurities(ofeitheroursecuritiesorsecuritiesofanothercompany)or
cashorotherproperty;
(iv)theapprovalbyourstockholdersoftheissuanceofsharesofourcommonstockinconnectionwithamerger,consolidation,reorganizationor
similarcorporatetransactioninanamountinexcessof49%ofthenumberofsharesofourcommonstockoutstandingimmediatelypriortotheconsummationof
suchtransaction;or
(v)theapprovalbyourstockholdersof(A)thesaleorotherdispositionofallorsubstantiallyallofourassetsor(B)ourcompleteliquidationor
dissolution.
Employment
Agreement
with
Peter
D.
Kies
OnNovember7,2014,weenteredintoanewemploymentagreementwithMr.Kies.Theemploymentagreementprovidedforanannualbasesalaryof
$230,000,subjecttoupwardadjustmentyearlybytheCompensationCommittee.Eachfiscalyear,theCompensationCommitteeandMr.Kiesshallagreetohis
performancemilestonesandtheamountofbonusforwhichMr.KieswillbeeligibleifMr.KiesasChiefFinancialOfficerachievessuchmilestones.Mr.Kies
currentbasesalaryis$393,000.
IfMr.Kiesisterminatedinvoluntarywithoutcause,otherthanonaccountofdeath,Mr.Kiesshallreceiveseverancepaymentsintheformofmonthly
paymentsofhisbasesalaryandCOBRApremiumsforaperiodoftwelvemonths.
IfMr.Kiesterminatestheagreementduetoourmaterialbreachordefault,achangeinhispositionordutiesoracompanyrelocationofhispositionwithout
hisconsentwithintheinitialtermoftheagreementorafterachangeofcontrol,orweterminateMr.Kieswithoutcauseorupondeathordisability,Mr.Kies(orhis
estateasapplicable)maybeentitledtoanamountequaltotheannualbonus,ifany,multipliedbythefractionofwhichthenumberofdaysbetweenthefiscalyear
endrelatedtothebonusandthedateofterminationisthenumerator,and365isthedenominator.
22
Inaddition,forpurposesoftheemploymentagreement,wemayimmediatelyterminateMr.Kiesforcauseupontheoccurrenceofanyofthefollowing
events:(i)Mr.Kiesactsunlawfully,dishonestly,inbadfaithorgrosslynegligentwithrespecttoourbusinessasdeterminedbyourBoard(insomecases,upon
completionofareasonableinvestigationandprovisionofadetailedreportoftheresultsofsuchinvestigationtoMr.Kies);(ii)Mr.Kiescommitsanycrimeor
fraudagainstusorourpropertyortheconvictionofemployeeofanyfelonyoffenseorcrimereasonablylikelytobringdiscreditupontheemployeeorus;or(iii)a
materialbreachordefaultofanytermoftheemploymentagreementbyMr.Kiesifsuchmaterialbreachordefaultremainsunremedied30daysafterwedeliver
writtennoticeofthematerialbreachordefaulttoMr.Kies.
IfMr.Kiesisterminatedasaresultofchange-in-control,Mr.Kiesisentitledtoreceivepaymentsduetohimundertheconditionsofinvoluntarytermination
withoutcauseasoutlinedaboveandalump-sumcashseverancepaymentequaltohisthen-currentmonthlybasesalaryandtheproratabonusamountmultipliedby
12butdiscountedtopresentvaluebasedonapplicablefederalrateundertheCode.
Undertheemploymentagreement,achangeincontrolshallbedeemedtohaveoccurredupon:
(i)anacquisitionbyanyperson,entityorgroup(withinthemeaningofSection13(d)(3)or14(d)(2)oftheExchangeAct),ofbeneficialownership
(withinthemeaningofRule13d-3promulgatedundertheExchangeAct)of30%ormoreofeither(A)ourthenoutstandingsharesofcommonstockofor(B)the
combinedvotingpowerofourthenoutstandingvotingsecuritiesentitledtovotegenerallyintheelectionofdirectors;excluding,however,thefollowing:(1)any
acquisitiondirectlyfromus,otherthananacquisitionbyvirtueoftheexerciseofaconversionprivilegeunlessthesecuritybeingsoconvertedwasitselfacquired
directlyfromus;(2)anyacquisitionbyus;and(3)anyacquisitionbyanemployeebenefitplan(orrelatedtrust)sponsoredormaintainedbyus;
(ii)achangeinthecompositionofourBoardsuchthatduringanyperiodoftwoconsecutiveyears,individualswhoatthebeginningofsuchperiod
constituteourBoard,andanynewdirector(otherthanadirectordesignatedbyapersonwhohasenteredintoanagreementwithustoeffectatransactiondescribed
inclause(i),(iii)or(iv)ofthisdefinitionwhoseelectionbyourBoardornominationforelectionbyourstockholderswasapprovedbyavoteofatleasttwo-thirds
ofthedirectorsthenstillinofficewhoeitherweredirectorsatthebeginningoftheperiodorwhoseelectionornominationforelectionwaspreviouslysoapproved,
ceaseforanyreasontoconstituteatleastamajorityofthemembersthereof;
(iii)theapprovalbyourstockholdersofamerger,consolidation,reorganizationorsimilarcorporatetransaction,whetherornotwearethesurviving
corporationinsuchtransaction,inwhichoutstandingsharesofourcommonstockareconvertedinto(A)sharesofstockofanothercompany,otherthana
conversionintosharesofvotingcommonstockofthesuccessorcorporation(oraholdingcompanythereof)representing51%ormoreofthevotingpowerofall
capitalstockthereofoutstandingimmediatelyafterthemergerorconsolidationor(B)othersecurities(ofeitheroursecuritiesorsecuritiesofanothercompany)or
cashorotherproperty;
(iv)theapprovalbyourstockholdersoftheissuanceofsharesofourcommonstockinconnectionwithamerger,consolidation,reorganizationor
similarcorporatetransactioninanamountinexcessof49%ofthenumberofsharesofourcommonstockoutstandingimmediatelypriortotheconsummationof
suchtransaction;or
(v)theapprovalbyourstockholdersof(A)thesaleorotherdispositionofallorsubstantiallyallofourassetsor(B)ourcompleteliquidationor
dissolution.
Employment
Agreement
with
Niranjan
Y.
Sardesai,
Ph.D.
InJanuary2012,weenteredintoanemploymentagreementwithDr.SardesaipursuanttowhichheservesasChiefOperatingOfficer.Theemployment
agreementprovidesanannualbasesalaryintheamountof$312,000forDr.Sardesai,subjecttoupwardadjustmentyearlybyourCompensationCommittee.Under
theemploymentagreement,Dr.Sardesaiiseligibletoreceiveanincentivecashbonusuptotheamount,baseduponthecriteriaandpayableatsuchtimesas
determinedbyourBoardoritsCompensationCommittee.Dr.Sardesaiisalsoentitledtoparticipateinsuchemployeebenefitplansandprogramsandisentitledto
suchotherfringebenefits,asarefromtimetotimeadoptedbyourBoardoritsCompensationCommitteeandmadeavailablebyusgenerallytoemployeesof
similarposition,andshallbeeligibleforsuchawardsandbenefits,ifany,pursuanttoourplansandprogramsasdeterminedbyourBoardoritsCompensation
Committee.Mr.Sardesaiscurrentbasesalaryis$425,000.
IfDr.Sardesaisemploymentisterminatedbyreasonofdeathortotaldisability,wewillpayDr.Sardesaiorhisestateorrepresentative,asapplicable,any
unpaidportionofhisbasesalarycomputedonaproratabasisthroughthedateoftermination,anyunreimbursedexpenses,allotheraccruedbutunpaidrightsas
determinedunderanyofourplansandprogramsinwhichMr.Sardesaiisthenparticipating,and,inthecaseoftotaldisability,acontinuationofmedicalbenefits
forupto60daysandCOBRApremiumsforsixmonthsthereafter.Inthecaseoftotaldisability,Dr.Sardesaiwillalsoreceivealump-sumpaymentequaltosix
monthsofhisaggregatebasesalarythenineffect.
23
IfweterminateDr.Sardesaisemploymentforcause,asdefinedintheagreement,orifDr.Sardesaiterminatesemploymentforotherthangoodreason,as
definedintheagreement,wewillpayhimanyunpaidportionofhisbasesalarycomputedonaproratabasisthroughthedateoftermination,anyunreimbursed
expensesandallotheraccruedbutunpaidrightsasdeterminedunderourplansandprogramsinwhichheisthenparticipating.
IfweterminateDr.Sardesaisemploymentwithoutcause,thatisotherthanonaccountofdeath,totaldisabilityorcauseorDr.Sardesaiterminateshis
employmentforgoodreason,asdefinedintheagreement,on30dayspriorwrittennotice,wewillpayhimanyunpaidportionofhisbasesalarycomputedona
pro-ratabasisthroughthedateoftermination,anyunreimbursedexpenses,allotheraccruedbutunpaidrightsasdeterminedunderourplansandprogramsinwhich
Dr.Sardesaiisthenparticipating,aseverancepaymentintheformofmonthlypaymentsofbasesalaryforaperiodof12monthsfollowingtheeffectivedateof
terminationandCOBRApaymentsfor12monthsfollowingtheeffectivedateoftermination.Theemploymentagreementcontainscertainnon-competitionand
non-disclosurecovenants.
IfDr.Sardesaiisterminatedasaresultofchange-in-control,Dr.Sardesaiisentitledtoreceivepaymentsduetohimundertheconditionsoftermination
withoutcauseasoutlinedaboveandalump-sumcashseverancepaymentequaltohisthen-currentmonthlybasesalaryandtheproratabonusamountmultipliedby
12butdiscountedtopresentvaluebasedonapplicablefederalrateundertheCode.
Undertheemploymentagreement,achangeincontrolshallbedeemedtohaveoccurredupon:
(i)anacquisitionbyanyperson,entityorgroup(withinthemeaningofSection13(d)(3)or14(d)(2)oftheExchangeAct),ofbeneficialownership
(withinthemeaningofRule13d-3promulgatedundertheExchangeAct)of30%ormoreofeither(A)ourthenoutstandingsharesofcommonstockofor(B)the
combinedvotingpowerofourthenoutstandingvotingsecuritiesentitledtovotegenerallyintheelectionofdirectors;excluding,however,thefollowing:(1)any
acquisitiondirectlyfromus,otherthananacquisitionbyvirtueoftheexerciseofaconversionprivilegeunlessthesecuritybeingsoconvertedwasitselfacquired
directlyfromus;(2)anyacquisitionbyus;and(3)anyacquisitionbyanemployeebenefitplan(orrelatedtrust)sponsoredormaintainedbyus;
(ii)achangeinthecompositionofourBoardsuchthatduringanyperiodoftwoconsecutiveyears,individualswhoatthebeginningofsuchperiod
constituteourBoard,andanynewdirector(otherthanadirectordesignatedbyapersonwhohasenteredintoanagreementwithustoeffectatransactiondescribed
inclause(i),(iii)or(iv)ofthisdefinitionwhoseelectionbyourBoardornominationforelectionbyourstockholderswasapprovedbyavoteofatleasttwo-thirds
ofthedirectorsthenstillinofficewhoeitherweredirectorsatthebeginningoftheperiodorwhoseelectionornominationforelectionwaspreviouslysoapproved,
ceaseforanyreasontoconstituteatleastamajorityofthemembersthereof;
(iii)theapprovalbyourstockholdersofamerger,consolidation,reorganizationorsimilarcorporatetransaction,whetherornotwearethesurviving
corporationinsuchtransaction,inwhichoutstandingsharesofourcommonstockareconvertedinto(A)sharesofstockofanothercompany,otherthana
conversionintosharesofvotingcommonstockofthesuccessorcorporation(oraholdingcompanythereof)representing51%ormoreofthevotingpowerofall
capitalstockthereofoutstandingimmediatelyafterthemergerorconsolidationor(B)othersecurities(ofeitheroursecuritiesorsecuritiesofanothercompany)or
cashorotherproperty;
(iv)theapprovalbyourstockholdersoftheissuanceofsharesofourcommonstockinconnectionwithamerger,consolidation,reorganizationor
similarcorporatetransactioninanamountinexcessof49%ofthenumberofsharesofourcommonstockoutstandingimmediatelypriortotheconsummationof
suchtransaction;or
(v)theapprovalbyourstockholdersof(A)thesaleorotherdispositionofallorsubstantiallyallofourassetsor(B)ourcompleteliquidationor
dissolution.
HadterminationduetoachangeofcontroleventoccurredasofDecember31,2015,ournamedexecutiveofficerswouldhavereceivedthefollowing
paymentsoveratwenty-fourmonthperiodforDr.Kimandatwelve-monthperiodforDr.Bagarazzi,Mr.KiesandDr.Sardesai.
Potential
Change
of
Control
Payments
Named
Executive
Officer
Dr.J.JosephKim
1,557,467
Dr.MarkL.Bagarazzi
534,871
PeterKies
494,493
Dr.NiranjanY.Sardesai
534,871
24
Compensation
Committee
Interlocks
and
Insider
Participation
NomemberoftheCompensationCommitteeisorwasduring2015anemployee,orisoreverhasbeenanofficerofourCompany.Noneofourexecutive
officershasservedduring2015asadirectororamemberoftheCompensationCommitteeofanothercompany.
Report
of
Compensation
Committee
TheCompensationCommitteeoftheBoardofDirectorshasreviewedanddiscussedthematterscontainedunderthetitleCompensationDiscussionand
Analysis,ofthisProxyStatementwithourmanagementand,basedonsuchreviewanddiscussionswerecommendedtotheBoardthattheCompensation
DiscussionandAnalysisbeincludedinthisProxyStatement.PortionsofthisProxyStatement,includingtheCompensationDiscussionandAnalysis,havebeen
incorporatedbyreferenceintotheCompanysAnnualReportonForm10-KfortheCompanysfiscalyearendedDecember31,2015.
Respectfully
submitted,
MortonCollins
(Chair)
SimonX.
Benito
Adel
Mahmoud
NancyJ.
Wysenski
Dated:March9,2016
Equity
Compensation
Plan
Information
ThefollowingtablesetsforthourequitycompensationplaninformationasofDecember31,2015.Allofourequitycompensationplanshavebeenapproved
byoursecurityholders,andweassumedtheVGXstockoptionsasaresultofthemergerwithVGX.
Number
of
securities
to
be
issued
upon
exercise
of
outstanding
options
and
vesting
of
RSU's
Plan
Equitycompensationplansapprovedbysecurityholders:
2007OmnibusIncentivePlan
Weightedaverage
exercise
price
Number
of
securities
remaining
available
for
future
issuance
under
equity
compensation
plans
4,708,425 $
6.27
2,020,627
Amended2000StockOptionPlan
148,878
12.15
VGXstockoptionsassumedinmerger
1,235,061
5.30
6,092,364 $
6.22
2,020,627
AsofJanuary1,2015thenumberofsecuritiesavailableforfutureissuanceunderthe2007OmnibusIncentivePlanincreasedby513,833.
Certain
Relationships
and
Related
Transactions
SinceJanuary1,2013,therehasnotbeen,noristherecurrentlyproposed,anytransactionorseriesofsimilartransactionstowhichwewereorareapartyin
whichtheamountinvolvedexceeds$120,000andinwhichanydirector,executiveofficerorbeneficialholderofmorethan5%ofanyclassofourvotingsecurities
ormembersofsuchpersonsimmediatefamilyhadorwillhaveadirectorindirectmaterialinterest.UnderthecharterofourAuditCommittee,allrelatedparty
transactionsrequiredtobedisclosedunderSECRegulationS-K,Item404,mustbereviewedandapprovedbyourAuditCommitteeafterdiscussionwith
managementofthebusinessrationaleforthetransactionsandwhetherappropriatedisclosureshavebeenmade.
SECTION
16(A)
BENEFICIAL
OWNERSHIP
REPORTING
COMPLIANCE
Section16(a)oftheExchangeActrequiresourofficers,directorsandpersonswhobeneficiallyownmorethantenpercentofourcommonstocktofilewith
theSECinitialreportsofownershipandreportsofchangesinbeneficialownershipofourcommonstock.Officers,directorsand10%orgreaterstockholdersare
requiredbytheSECregulationstofurnishuswithcopiesofallSection16(a)formstheyfile.
25
Basedsolelyonourreviewofthecopiesofsuchreportsfurnishedtous,managementbelievesthatallofficers,directorsandgreaterthantenpercent
stockholderscompliedwiththefilingrequirementsofSection16(a)fortheyearendedDecember31,2015.
26
PROPOSAL
NO.
2
RATIFICATION
OF
APPOINTMENT
OF
INDEPENDENT
REGISTERED
PUBLIC
ACCOUNTING
FIRM
TheAuditCommitteehasappointedErnst&YoungLLPasourindependentregisteredpublicaccountingfirmforthefiscalyearendingDecember31,2016
andhasfurtherdirectedthattheappointmentoftheindependentregisteredpublicaccountingfirmbesubmittedforratificationbyourstockholdersattheAnnual
Meeting.RepresentativesofErnst&YoungLLPareexpectedtobepresentattheAnnualMeeting,willhaveanopportunitytomakeastatementiftheysodesire
andwillbeavailabletorespondtoappropriatequestions.
StockholderratificationoftheappointmentofErnst&YoungLLPasourindependentregisteredpublicaccountingfirmisnotrequiredbyourbylawsor
otherwise.However,ourBoardissubmittingtheappointmentofErnst&YoungLLPtothestockholdersforratificationasamatterofgoodcorporatepractice.If
ourstockholdersfailtoratifytheappointment,theAuditCommitteewillreconsiderwhetherornottoretainthatfirm.Eveniftheappointmentisratified,theAudit
Committeeinitsdiscretionmaydirecttheappointmentofadifferentindependentregisteredpublicaccountingfirmatanytimeduringtheyearifitdeterminesthat
suchachangewouldbeinthebestinterestsofusandourstockholders.
TheaffirmativevoteoftheholdersofamajorityofthesharespresentorrepresentedbyproxyandvotingattheAnnualMeetingisrequiredtoratifythe
appointmentofErnst&YoungLLP.Abstainswillbecountedthesameasifvotedagainsttheproposal.
ThefollowingtablesetsforththeaggregatefeesbilledtousforthefiscalyearsendedDecember31,2015and2014byErnst&YoungLLP:
Year
Audit
Fees
Tax
Fees
Total
Fees
2015
861,430 $
69,500 $
930,930
2014
852,658 $
73,000 $
925,658
PROPOSAL
NO.
3
APPROVAL
OF
THE
INOVIO
PHARMACEUTICALS,
INC.
2016
OMNIBUS
INCENTIVE
PLAN
Our2016OmnibusIncentivePlan(thePlan),wasapprovedbyourBoardonMarch9,2016.Inlightofourcurrentlyanticipatedneedtograntadditional
equityincentivesinthefuture,ourBoardbelievestheadoptionofthePlanisappropriatetoensurethatwecontinuetohaveasufficientnumberofsharesinorder
tomeetourretentionandhiringneeds.UnderapplicableNasdaqStockMarketrules,wearerequiredtoobtainstockholderapprovalofthePlan.Suchapprovalis
alsonecessarytopermitustocontinuetograntIncentiveStockOptions(ISOs)toemployeesunderSection422oftheInternalRevenueCodeof1986,as
amended(Code),andtoensurethatcompensationpaidunderthePlancontinuestobeeligibleforanexemptionfromthelimitsonthetaxdeductibilityimposed
bySection162(m)ofCode.CodeSection162(m)limitsthedeductibilityofcertaincompensationpaidtoindividualswhoarecoveredemployeesasdefined
underSection162(m)anddescribedinmoredetailbelow.WeincludeacopyofthePlanasAppendixAtothisproxystatement,andthesummaryofthePlan
containedinthisProposalNo.3doesnotpurporttobecompleteandisqualifiedinitsentiretybyreferencetosuchAppendix.
AsofMarch18,2016,therewereawardsoutstandingunderour2007OmnibusIncentivePlantoacquire6,605,005sharesofcommonstockataweighted
averageexercisepriceof$5.90pershare.AsofMarch18,2016,4executiveofficers,7non-employeeBoardmembersandapproximately153otheremployeesand
consultantswereeligibletoparticipateinthePlan.OurcommonstockistradedontheNasdaqGlobalSelectMarketunderthesymbolINO.OnMarch18,2016,
thelastreportedsalespriceforourcommonstockasquotedontheNasdaqGlobalSelectMarketwas$7.12pershare.
ThepurposeofthePlanistopromotetheinterestsoftheCompanyanditsstockholdersbyprovidingincentivestomotivateselectedemployees,directorsand
consultantsoftheCompanytoachievelong-termcorporateobjectivesandtoenablestock-basedandcash-basedincentiveawardstoqualifyasperformance-based
compensationforpurposesofthetaxdeductionlimitationsunderSection162(m)oftheCode.AsofMarch18,2016,637,880sharesofcommonstockremained
availableforissuanceunderour2007OmnibusIncentivePlan,andnofurthergrantsmaybemadeunderthatplanafterMarch31,2017.Inlightofthesmall
numberofsharesavailableforissuanceunderthe2007OmnibusIncentivePlanandtheimpendingterminationofsuchplan,theBoardbelievesitisnecessaryto
adoptandapprovethePlaninordertoaccomplishthepurposesofthePlanandenableustoattract,hire,retainandmotivatetheskilledemployeesweneedtobe
successful,especiallyinthecompetitivelabormarketsinwhichwecompete.IfthestockholdersdonotapprovethePlan,thePlanwillnotbeadoptedandno
awardswillbegrantedunderthePlan.
ApprovalofthePlanwillrequiretheaffirmativevoteofatleastamajorityinvotinginterestofthestockholderspresentinpersonorbyproxyandentitledto
voteonthisproposal,assumingthepresenceofaquorum.Abstentionswillcountasifvotedagainsttheproposal.Brokernon-voteswillnotbecountedwith
respecttothisproposalasthesharesrepresentedtherebyarenotentitledtovoteonthisproposal.IfthestockholdersdonotapprovethePlan,itwillnotbe
implemented,buttheCompanyreservestherighttoadoptsuchothercompensationplansandprogramsthatdonototherwiserequirestockholderapprovalasit
deemsappropriateandinthebestinterestsoftheCompanyanditsstockholders.
The
Board
of
Directors
Unanimously
Recommends
a
Vote
FOR
the
proposal
to
approve
the
Plan.
General. ThePlanprovidesforthegrantofISOs,NonstatutoryStockOptions(NSOs),StockAppreciationRights(SARs),RestrictedShares,
RestrictedStockUnits(RSUs),PerformanceAwards,andotherstock-basedawardsorshort-termcashincentiveawards.
Shares Subject to the Plan. IfourstockholdersapprovethePlan,themaximumnumberofsharesoftheCompanyscommonstockavailableforissuance
overthetermofthePlanmaynotexceed6,000,000shares,providedthatcommencingwiththefirstbusinessdayofeachcalendaryearbeginningwithJanuary1,
2018,suchmaximumnumberofsharesshallbeincreasedby2,000,000sharesofcommonstockunlesstheBoarddetermines,foranysuchcalendaryear,to
increasesuchmaximumamountbyafewernumberofshares.ThemaximumnumberofsharesofourcommonstockavailableforissuanceasISOsovertheterm
ofthePlanmaynotexceed6,000,000shares.Themaximumnumberofsharesofourcommonstocksubjecttograntstoournon-executiveofficerdirectorsshall
notexceed500,000sharesintheaggregateinanycalendaryear.
Intheeventofanymerger,consolidation,reorganization,recapitalization,separation,partialorcompleteliquidation,stockdividend,stocksplit,reversestock
split,splitup,spin-off,orotherdistributionofourstockorproperty,acombinationorexchangeofourcommonstock,dividendinkind,orotherlikechangein
capitalstructure,changeinthenumberofoutstandingsharesofcommonstock,distribution(otherthannormalcashdividends)tostockholdersoftheCompany,or
anysimilarcorporateevent,theCompensationCommitteeshallmakeappropriateadjustmentstothenumberandkindofsharessubjecttooutstandingawards,the
purchasepriceorexercisepriceforsuchshares,thenumberandkindofsharesavailableforfutureissuanceunderthePlan,themaximumnumberofsharesin
respectofwhichawardscanbemadetoanyparticipantinacalendaryear,andotherdeterminationsapplicabletooutstandingawards.
28
Commonstockcoveredbyanyunexercisedportionsofterminatedorforfeitedoptions,commonstocksubjecttoRestrictedShareawards,RSUsandother
stock-basedawardsthatareterminatedorforfeitedandcommonstocksubjecttoawardsthatareotherwisesurrenderedbyaparticipantmayagainbesubjectto
newawardsunderthePlan.SharesofcommonstocksurrenderedtoorwithheldbytheCompanyinpaymentorsatisfactionofanoptionspurchasepriceortax
withholdingobligationwithrespecttoanawardwillbeavailableforthegrantofnewawardsunderthePlan.IntheeventoftheexerciseofSARs,whetherornot
grantedintandemwithoptions,onlythenumberofsharesofcommonstockactuallyissuedinpaymentofsuchSARswillbechangedagainstthenumberofshares
ofcommonstockavailableforthegrantofawardsunderthePlan.
Administration. TheCompensationCommitteeoftheBoardadministersthePlan.AllawardsareapprovedbytheCompensationCommittee,[exceptthat
ourChiefExecutiveOfficerand/orChairmanoftheBoardofDirectorsmayapproveoptiongrantstopersonsbelowthelevelofVicePresidentoftheCompanyto
amaximumindividualgrantof50,000options].WithrespecttotheparticipationofindividualswhosetransactionsintheCompanysequitysecuritiesaresubject
toSection16oftheExchangeAct,thePlanmustbeadministeredincompliancewiththerequirements,ifany,ofRule16b-3undertheExchangeAct.Subjectto
theprovisionsofthePlan,theCompensationCommitteedeterminesthepersonstowhomawardsaretobegranted,thenumberofsharestobecoveredbyeach
award,whetheranoptionistobeanISOoraNSO,thetermsofvestingandexercisabilityofeachoptionorotheraward,includingtheeffectthereonofan
optioneesterminationofservice,thetypeofconsiderationtobepaidtotheCompanyuponexerciseofanoption,thedurationofeachaward,andallotherterms
andconditionsoftheawards,subjecttotheconditionthatneitherourboardofdirectorsnortheCompensationCommitteemayrepricestockoptions.Futuregrants
underthePlanarenotyetdeterminable.
Eligibility. Generally,allemployees,directorsandconsultantsoftheCompanyorofanypresentorfutureparentorsubsidiarycorporationsoftheCompany
areeligibletoparticipateinthePlan.AnypersoneligibleunderthePlanmaybegrantedaNSO.However,onlyemployeesmaybegrantedISOs.
Terms and conditions of awards. EachawardgrantedunderthePlanisevidencedbyawrittenagreementbetweentheCompanyandtheparticipant
specifyingthenumberofsharessubjecttotheawardandtheothertermsandconditionsoftheaward,consistentwiththerequirementsofthePlan.Thepurchase
pricepersharesubjecttoanoption(ortheexercisepricepershareinthecaseofaSAR)mustequalatleastthefairmarketvalueofashareoftheCompanys
commonstockonthedateofgrant.ThepurchasepriceofanyISOgrantedtoapersonwhoatthetimeofgrantownsstockpossessingmorethan10%ofthetotal
combinedvotingpowerofallclassesofstockoftheCompanyoranyparentorsubsidiarycorporationoftheCompany,referredtoasa10%Stockholder,mustbe
atleast110%ofthefairmarketvalueofashareoftheCompanyscommonstockonthedateofgrant.ThetermofanyawardunderthePlanmaynotbeformore
thantenyearsorfiveyearsinthecaseofISOsawardedtoany10%Stockholder.TotheextentthattheaggregatefairmarketvalueofsharesoftheCompanys
commonstocksubjecttooptionsdesignatedasISOsthatbecomeexercisableforthefirsttimebyaparticipantduringanycalendaryearexceeds$100,000,such
excessoptionsshallbetreatedasNSOs.
Generally,anoptionspurchasepricemaybepaidincash,bycheck,orincashequivalent,bytenderofsharesoftheCompanyscommonstockownedbythe
optioneehavingafairmarketvaluenotlessthantheexerciseprice,orbyanylawfulmethodapprovedbytheboardorbyanycombinationofthese.The
CompensationCommitteemayneverthelessrestricttheformsofpaymentpermittedinconnectionwithanyoptiongrant.
TheCompensationCommitteewillspecifywhenoptionsgrantedunderthePlanwillbecomeexercisableandvested.Sharessubjecttooptionsgenerallyvest
andbecomeexercisableininstallments,subjecttotheoptioneescontinuedemploymentorserviceorachievementofspecifiedmilestones.
AwardsofRestrictedSharesconsistofaspecifiednumberofsharesofcommonstocksubjecttosuchterms,conditionsandtransferrestrictionsbasedon
performancestandards,periodsofservice,retentionbytheparticipantofaspecifiednumberofsharesofcommonstockorothercriteria.AwardsofRSUsgive
participantsarighttoreceivesharesofcommonstockinthefuturesubjecttosuchterms,conditionsandrestrictionsasestablishedbytheCompensation
Committee.RSUswillbesettledforcommonstock,cashoracombinationofbothassoonaspracticableaftertheCompensationCommitteehasdeterminedthat
thetermsandconditionsoftheRSUhasbeensatisfied(oratalaterdateifthedistributionhasbeendeferred).
PerformanceAwardsconsistoftherighttoreceiveapaymentcontingentontheextenttowhichpredeterminedperformancetargetshavebeenmetduringan
awardperiod,whichshallbetwoormorefiscalorcalendaryears.IntheCompensationCommitteesdiscretion,newlyhiredoreligibleparticipantsmaybe
allowedtoreceivePerformanceAwardsafteranawardperiodhascommenced.PaymentsofearnedPerformanceAwardswillbemadeincash,commonstock,ora
combinationofcashandcommonstock.
Otherstock-basedawardssuchasstockpurchaserights(withorwithoutloanstoparticipantsbytheCompany),awardsofcommonstock,orawardsvaluedin
wholeorinpartbyreferencetocommonstockordividendsoncommonstockmaybegrantedeitheraloneorinadditiontootherawardsunderthePlan.If
specifiedbytheCompensationCommitteeintheawardagreement,therecipientofastock-basedawardmaybeentitledtoreceive,currentlyoronadeferredbasis,
interest,dividendsordividendequivalentswithrespecttothecommonstockorothersecuritiescoveredbytheaward.
29
ExecutiveofficersoftheCompanywhoarecoveredemployeesforpurposesofSection162(m)oftheCodewillbeeligibletoreceiveshort-termcash
incentiveawardsunderthePlan.TheCompensationCommitteewillestablishobjectiveperformancetargetsforafiscalyearbasedononeormoreperformance
criteria,andawardswillbepayabletoparticipantsincasheachyearuponwrittencertificationbytheCompensationCommitteeofattainingthespecified
performancetargetsfortheprecedingfiscalyear.NotwithstandingtheattainmentbytheCompanyofthespecifiedperformancecriteria,theCommitteehasthe
discretion,whichneednotbeapplieduniformlyamongallparticipants,toreduceoreliminatetheawardthatwouldbeotherwisepaid.
Transferability of awards. RestrictedSharesmaynotbeassigned,transferred(otherthanbywillorthelawsofdescentanddistribution,ortoanintervivos
trust),pledgedorsoldpriortolapseoftheirrestrictions.Allotherawardsmaynotbeassignedortransferred(otherthanbywillorthelawsofdescentand
distribution),andduringthelifetimeofaparticipant,onlytheparticipant(orapersonalrepresentative)mayexerciserightsunderthePlan.Aparticipants
beneficiarymayexercisetheparticipantsrightstotheextenttheyareexercisableunderthePlanfollowingthedeathoftheparticipant.
Section 162(m) of the Code. Themaximumnumberofsharesofcommonstockwithrespecttowhichawardsmaybegrantedtoaparticipantduringa
calendaryearis500,000sharesandthemaximumamountofcash-basedawardsthatmaybegrantedtoaparticipantduringacalendaryearis$1,500,000.The
foregoingsharelimitationshallbeadjustedproportionatelybytheCompensationCommitteeinconnectionwithanychangeintheCompanyscapitalizationdueto
astocksplit,stockdividend,mergerorsimilareventaffectingthecommonstockanditsdeterminationshallbefinal,bindingandconclusive.UnderCode
Section162(m)nodeductionisallowedinanytaxableyearoftheCompanyforcompensationinexcessof$1millionpaidtotheCompanyscoveredemployees.
Anexceptiontothisruleappliestocompensationthatispaidtoacoveredemployeepursuanttoastockincentiveplanapprovedbyshareholdersandthatspecifies,
amongotherthings,themaximumnumberofshareswithrespecttowhichoptionsandstockappreciationrightsmaybegrantedtoeligibleparticipantsundersuch
planduringaspecifiedperiod.Compensationpaidpursuanttooptionsgrantedundersuchaplanandwithanexercisepriceequaltothefairmarketvalueof
commonstockonthedateofgrantisdeemedtobeinherentlyperformance-based,sincesuchawardsprovidevaluetoparticipantsonlyifthestockprice
appreciates.TotheextentrequiredbySection162(m)oftheCodeortheregulationsthereunder,inapplyingtheforegoinglimitation,ifanyawardiscanceled,the
canceledawardshallcontinuetocountagainstthemaximumnumberofsharesofcommonstockwithrespecttowhichanawardmaybegrantedtoaparticipant.
InorderforRestrictedStockandRestrictedStockUnitstoqualifyasperformance-basedcompensation,theCompensationCommitteemustestablisha
performancegoalwithrespecttosuchawardinwritingnotlaterthan90daysafterthecommencementoftheservicestowhichitrelatesandwhiletheoutcomeis
substantiallyuncertain.Inaddition,theperformancegoalmustbestatedintermsofanobjectiveformulaorstandard.
UnderCodeSection162(m),acoveredemployeeistheCompanyschiefexecutiveofficerandthethreeothermosthighlycompensatedofficersofthe
Companyotherthanthechieffinancialofficer.
ThePlanincludesthefollowingperformancecriteriathatmaybeconsideredbytheCompensationCommitteewhengrantingperformance-basedawards:
(i)netearningsornetincome(beforeoraftertaxes),(ii)earningspershareorearningspersharegrowth,totalunitsorunitgrowth,(iii)netsales,salesgrowth,total
revenue,orrevenuegrowth,(iv)netoperatingprofit,(v)returnmeasures(including,butnotlimitedto,returnonassets,capital,investedcapital,equity,salesor
revenue),(vi)cashflow(including,butnotlimitedto,operatingcashflow,freecashflow,cashflowreturnonequity,andcashflowreturnoninvestment),
(vii)earningsbeforeoraftertaxes,interest,depreciationand/oramortization,(viii)grossoroperatingmargins,(ix)productivityratios,(x)sharepriceorrelative
shareprice(including,butnotlimitedto,growthmeasuresandtotalstockholderreturn),(xi)expensetargets,(xii)margins,(xiii)operatingefficiency,(xiv)market
shareorchangeinmarketshare,(xv)customerretentionorsatisfaction,(xvi)workingcapitaltargets,(xvii)completionofstrategicfinancinggoals,acquisitionsor
alliancesandclinicalprogress,(xviii)Companyprojectmilestonesand(xvii)economicvalueadded(netoperatingprofitaftertaxminusthesumofcapital
multipliedbythecostofcapital).
Merger. Effectiveuponamerger,asdefinedinthePlan,alloutstandingawardsshallterminateunlesstheyareassumedorcontinuedinconnectionwiththe
merger.TheCompensationCommitteehastheauthoritytoprovideforfullorpartialvestingofunvestedawardsandthereleasefromrestrictionsontransferand
repurchaseorforfeiturerightsofawardsinconnectionwithamerger.TheCompensationCommitteemayconditionanysuchawardvestingandexercisabilityor
releasefromrestrictionsontheterminationofserviceoftheparticipanttotheCompanywithinaspecifiedperiodfollowingtheeffectivedateofthemerger.
Change in control. Unlessotherwiseprovidedintheapplicableawardagreement,effectiveuponachangeincontrol,asdefinedinthePlan,alloptionsand
SARsoutstandingonthedateofsuchchangeincontrolwillbecomeimmediatelyandfullyexercisable,exceptastooptionsorSARsgrantedtoaparticipantwhere
achangeincontrolresultedfromsuchparticipantsbeneficialownershipoftheCompanyssecurities.Unlessotherwiseprovidedintheapplicableaward
agreement,effectiveuponachangeincontrol,allrestrictionsapplicabletoRestrictedShareandRSUawardswillterminatefullyandthefullnumberofshares
subjecttoeachRestrictedShareawardorthenumberofsharessubjecttosettlementundereachRSUwillimmediately
30
bedelivered,exceptastoRestrictedShareandRSUawardsgrantedtoaparticipantwhereachangeincontrolresultedfromsuchparticipantsbeneficialownership
oftheCompanyssecurities.Unlessotherwiseprovidedintheapplicableawardagreement,intheeventofachangeincontrol,allPerformanceAwardsshall
immediatelybecomevestedandpayabletoallparticipantsasprovidedinthePlan,within30daysaftersuchchangeincontrol,exceptastoPerformanceAwards
grantedtoaparticipantwhereachangeincontrolresultedfromsuchparticipantsbeneficialownershipoftheCompanyssecurities.
Termination or amendment. Unlesssoonerterminated,noawardsmaybegrantedunderthePlanafterMarch9,2026.TheBoardmayterminateoramend
thePlanatanytime,but,noamendmentmayadverselyaffectanoutstandingawardwithouttheconsentoftheparticipant,ormakeanyamendmentthatrequires
stockholderapprovalundertheCodeorunderanyotherapplicablelaworruleofanystockexchangethatliststheCompanyscommonstockwithoutstockholder
approval.
Federal
Income
Tax
Consequences
of
the
2016
Omnibus
Incentive
Plan
ThefollowingsummaryisintendedonlyasageneralguideastotheUnitedStatesfederalincometaxconsequencesundercurrentlawofparticipationinthe
Plananddoesnotattempttodescribeallpossiblefederalorothertaxconsequencesofsuchparticipationortaxconsequencesbasedonparticularcircumstances.
ISOs. ThegrantofanISOunderthePlanwillnotresultinanyfederalincometaxconsequencestotheoptioneeortheCompany.Anoptioneerecognizesno
federaltaxableincomeuponexercisinganISO(subjecttothealternativeminimumtaxrulesdiscussedbelow),andtheCompanyreceivesnodeductionatthetime
ofexercise.IntheeventofadispositionofstockacquireduponexerciseofanISO,thetaxconsequencesdependuponhowlongtheoptioneehasheldthesharesof
commonstock.IftheoptioneedoesnotdisposeoftheshareswithintwoyearsaftertheISOwasgranted,norwithinoneyearaftertheISOwasexercised,the
optioneewillrecognizealong-termcapitalgain(orloss)equaltothedifferencebetweenthesalepriceofthesharesandthepurchaseprice.TheCompanyisnot
entitledtoanydeductionunderthesecircumstances.
Iftheoptioneefailstosatisfyeitheroftheforegoingholdingperiods,heorshemustrecognizeordinaryincomeintheyearofthedisposition(referredtoasa
disqualifyingdisposition).Theamountofsuchordinaryincomegenerallyisthelesserof(i)thedifferencebetweentheamountrealizedonthedispositionand
thepurchasepriceor(ii)thedifferencebetweenthefairmarketvalueofthestockontheexercisedateandthepurchaseprice.Anygaininexcessoftheamount
taxedasordinaryincomewillbetreatedasalongorshort-termcapitalgain,dependingonwhetherthestockwasheldformorethanoneyear.Intheyearofthe
disqualifyingdisposition,theCompanyisentitledtoadeductionequaltotheamountofordinaryincomerecognizedbytheoptionee,subjecttopossiblelimitations
imposedbySection162(m)oftheCodeandsolongastheoptioneestotalcompensationisdeemedreasonableinamount.
ThespreadunderanISO-i.e.,thedifferencebetweenthefairmarketvalueofthesharesatthetimeofexerciseandthepurchaseprice-isclassifiedasanitem
ofadjustmentintheyearofexerciseforpurposesofthealternativeminimumtax.Ifanoptioneesalternativeminimumtaxliabilityexceedssuchoptionees
regularincometaxliability,theoptioneewillowethelargeramountoftaxes.InordertoavoidtheapplicationofalternativeminimumtaxwithrespecttoISOs,the
optioneemustselltheshareswithinthesamecalendaryearinwhichtheISOsareexercised.However,suchasaleofshareswithinthesameyearofexercisewill
constituteadisqualifyingdisposition,asdescribedabove.
IntheeventanISOisamended,suchoptionmaybeconsidereddeferredcompensationandsubjecttotherulesofSection409AoftheCode.Anoptionsubject
toSection409AoftheCodethatfailstocomplywiththerulesofSection409Acanresultintheaccelerationofincomerecognition,a20%additionaltax
obligation,pluspenaltiesandinterest.Inaddition,theamendmentofanISOmayconverttheoptionfromanISOtoaNSO.
NSOs. ThegrantofaNSOunderthePlanwillnotresultinanyfederalincometaxconsequencestotheoptioneeortheCompany.UponexerciseofaNSO,
theoptioneeissubjecttoincometaxesattherateapplicabletoordinarycompensationincomeonthedifferencebetweentheoptionpurchasepriceandthefair
marketvalueofthesharesonthedateofexercise.Thisincomeissubjecttowithholdingforfederalincomeandemploymenttaxpurposes.TheCompanyisentitled
toanincometaxdeductionintheamountoftheincomerecognizedbytheoptionee,subjecttopossiblelimitationsimposedbySection162(m)oftheCodeandso
longastheCompanywithholdstheappropriatetaxeswithrespecttosuchincome(ifrequired)andtheoptioneestotalcompensationisdeemedreasonablein
amount.Anygainorlossontheoptioneessubsequentdispositionofthesharesofcommonstockwillreceivelongorshort-termcapitalgainorlosstreatment,
dependingonwhetherthesharesareheldformorethanoneyearfollowingexercise.TheCompanywillnotreceiveataxdeductionforanysuchgain.
IntheeventaNSOisamended,suchoptionmaybeconsidereddeferredcompensationandsubjecttotherulesofSection409AoftheCode,whichprovide
rulesregardingthetimingofpaymentofdeferredcompensation.AnoptionsubjecttoSection409AoftheCodethatfailstocomplywiththerulesofSection409A
mayresultintheaccelerationofincomerecognition,a20%additionaltaxobligation,pluspenaltiesandinterest.
Restricted Shares. ThegrantofRestrictedShareswillsubjecttherecipienttoordinarycompensationincomeonthedifferencebetweentheamountpaid(if
any)forsuchstockandthefairmarketvalueofthesharesonthedatethattherestrictionslapse.Thisincomeissubjecttowithholdingforfederalincomeand
employmenttaxpurposes.TheCompanyis
31
entitledtoanincometaxdeductionintheamountoftheordinaryincomerecognizedbytherecipient,subjecttopossiblelimitationsimposedbySection162(m)of
theCodeandsolongastheCompanywithholdstheappropriatetaxeswithrespecttosuchincome(ifrequired)andtherecipientstotalcompensationisdeemed
reasonableinamount.Anygainorlossontherecipientssubsequentdispositionoftheshareswillreceivelongorshort-termcapitalgainorlosstreatment
dependingonhowlongthestockhasbeenheldsincetherestrictionslapsed.TheCompanywillnotreceiveataxdeductionforanysuchgain.
RecipientsofRestrictedSharesmaymakeanelectionunderSection83(b)oftheCode(aSection83(b)Election)torecognizeasordinarycompensation
incomeintheyearthatsuchRestrictedSharesaregranted,theamountequaltothespreadbetweentheamountpaidforsuchstockandthefairmarketvalueonthe
dateoftheissuanceofthestock.Ifsuchanelectionismade,therecipientrecognizesnofurtheramountsofcompensationincomeuponthelapseofanyrestrictions
andanygainorlossonsubsequentdispositionwillbelongorshort-termcapitalgaintotherecipient.ASection83(b)Electionmustbemadewithin30daysfrom
thetimetheRestrictedSharesareissued.
SARs. RecipientsofSARsgenerallyshouldnotrecognizeincomeuntilaSARisexercised(assumingthereisnoceilingonthevalueoftheright).Upon
exercise,therecipientwillnormallyrecognizetaxableordinaryincomeforfederalincometaxpurposesequaltotheamountofcashandfairmarketvalueofthe
shares,ifany,receiveduponsuchexercise.Recipientswhoareemployeesgenerallywillbesubjecttowithholdingforfederalincomeandemploymenttax
purposeswithrespecttoincomerecognizeduponexerciseofaSAR.Recipientswillrecognizegainuponthedispositionofanysharesreceivedonexerciseofa
SARequaltotheexcessof(i)theamountrealizedonsuchdispositionover(ii)theordinaryincomerecognizedwithrespecttosuchsharesundertheprinciplesset
forthabove.Thatgainwillbetaxableaslongorshort-termcapitalgaindependingonwhethertheshareswereheldformorethanoneyear.TheCompanywillbe
entitledtoataxdeductiontotheextentandintheyearthatordinaryincomeisrecognizedbytherecipient,subjecttopossiblelimitationsimposedby
Section162(m)oftheCodeandsolongastheCompanywithholdstheappropriatetaxeswithrespecttosuchincome(ifrequired)andtherecipientstotal
compensationisdeemedreasonableinamount.
IntheeventaSARisamended,suchSARmaybeconsidereddeferredcompensationandsubjecttotherulesofSection409AoftheCode,whichprovide
rulesregardingthetimingofpaymentofdeferredcompensation.ASARsubjecttoSection409AoftheCodethatfailstocomplywiththerulesofSection409A
mayresultintheaccelerationofincomerecognition,a20%additionaltaxobligation,pluspenaltiesandinterest.
RSUs. RecipientsofRSUsgenerallyshouldnotrecognizeincomeuntilsuchunitsareconvertedintocashorsharesofstock.Uponconversion,therecipient
willnormallyrecognizetaxableordinaryincomeforfederalincometaxpurposesequaltotheamountofcashandfairmarketvalueoftheshares,ifany,received
uponsuchconversion.RecipientswhoareemployeesgenerallywillbesubjecttowithholdingforfederalincometaxpurposesuponconversionoftheRSUsand
withholdingforemploymenttaxpurposeswhentheRSUsvest.Participantswillrecognizegainuponthedispositionofanysharesreceiveduponconversionofthe
RSUsequaltotheexcessof(i)theamountrealizedonsuchdispositionover(ii)theordinaryincomerecognizedwithrespecttosuchsharesundertheprinciplesset
forthabove.Thatgainwillbetaxableaslongorshort-termcapitalgaindependingonwhethertheshareswereheldformorethanoneyear.TheCompanywillbe
entitledtoataxdeductiontotheextentandintheyearthatordinaryincomeisrecognizedbytherecipient,subjecttopossiblelimitationsimposedby
Section162(m)oftheCodeandsolongastheCompanywithholdstheappropriatetaxeswithrespecttosuchincome(ifrequired)andtherecipientstotal
compensationisdeemedreasonableinamount.
RSUsalsocanbeconsiderednonqualifieddeferredcompensationandsubjecttotheSection409AoftheCode.AgrantofRSUsthatdoesnotmeetthe
requirementsofSection409AoftheCodewillresultintheaccelerationofincomerecognition,a20%additionaltaxobligation,pluspenaltiesandinterest.
Performance Awards. RecipientsofPerformanceAwardsgenerallyshouldnotrecognizeincomeuntilsuchawardsarepaidincashorsharesofstock.
Uponpayment,therecipientwillnormallyrecognizetaxableordinaryincomeforfederalincometaxpurposesequaltotheamountofcashandfairmarketvalueof
theshares,ifany,receivedinsuchpayment.Recipientswhoareemployeesgenerallywillbesubjecttowithholdingforfederalincomeandemploymenttax
purposeswithrespecttoincomerecognizeduponthepaymentofPerformanceAwards.Participantswillrecognizegainuponthedispositionofanysharesreceived
uponthepaymentofPerformanceAwardsequaltotheexcessof(i)theamountrealizedonsuchdispositionover(ii)theordinaryincomerecognizedwithrespect
tosuchsharesundertheprinciplessetforthabove.Thatgainwillbetaxableaslongorshort-termcapitalgaindependingonwhethertheshareswereheldformore
thanoneyear.TheCompanywillbeentitledtoataxdeductiontotheextentandintheyearthatordinaryincomeisrecognizedbytherecipient,subjecttopossible
limitationsimposedbySection162(m)oftheCodeandsolongastheCompanywithholdstheappropriatetaxeswithrespecttosuchincome(ifrequired)andthe
recipientstotalcompensationisdeemedreasonableinamount.
Other stock-based awards. Recipientsofunrestrictedstockwillrecognizeordinaryincomeequaltothedifferencebetweentheamountpaidforsuch
unrestrictedstockandthefairmarketvalueoftheunrestrictedstockonthegrantdate.Thisincomeissubjecttowithholdingforfederalincomeandemployment
taxpurposes.Anygainorlossontherecipientssubsequentdispositionofthesharesreceiveslongorshort-termcapitalgainorlosstreatmentdependingonhow
longthestockhasbeenheldsincethedatesuchunrestrictedstockwasgranted.TheCompanywillbeentitledtoataxdeductiontotheextent
32
andintheyearthatordinaryincomeisrecognizedbytherecipient,subjecttopossiblelimitationsimposedbySection162(m)oftheCodeandsolongasthe
Companywithholdstheappropriatetaxeswithrespecttosuchincome(ifrequired)andtherecipientstotalcompensationisdeemedreasonableinamount.
Dividends and dividend equivalents. Recipientsofawardsthatearndividendsordividendequivalentsrecognizeordinaryincomeonanydividend
paymentsreceivedwithrespecttounvestedand/orunexercisedsharessubjecttosuchawards,whichincomeissubjecttowithholdingforfederalincomeand
employmenttaxpurposes.
Short-term cash incentive awards. Recipientsofshort-termcashincentiveawardswillrecognizeordinaryincomeequaltotheamountpaidundersuch
awards.Thisincomeissubjecttowithholdingforfederalincomeandemploymenttaxpurposes.TheCompanywillbeentitledtoataxdeductiontotheextentand
intheyearthatordinaryincomeisrecognizedbytherecipient,subjecttopossiblelimitationsimposedbySection162(m)oftheCodeandsolongastheCompany
withholdstheappropriatetaxeswithrespecttosuchincome(ifrequired)andtherecipientstotalcompensationisdeemedreasonableinamount.
Plan
Benefits
Theadministratorwillmakefutureawardsatitsdiscretion,andwethereforecannotdeterminethenumberofoptionsandotherawardsthatmaybeawarded
inthefuturetoeligibleparticipants(includingournon-employeedirectors,namedexecutiveofficersandallcurrentemployees).
Stock
Option
Awards
(#)
Name
J.JosephKim,Ph.D.,President,ChiefExecutiveOfficerandDirector
PeterD.Kies,ChiefFinancialOfficer
NiranjanY.Sardesai,Ph.D.,ChiefOperatingOfficer
MarkL.Bagarazzi,M.D.,ChiefMedicalOfficer
Allcurrentexecutiveofficersasagroup(4people)
Allcurrentnon-employeedirectorsasagroup(7people)
Allemployees,excludingcurrentexecutiveofficers,asagroup
33
STOCKHOLDER
PROPOSALS
TO
BE
PRESENTED
AT
NEXT
ANNUAL
MEETING
Stockholdersproposals,includingproposalsunderRule14a-8undertheExchangeAct,intendedtobepresentedatthenextAnnualMeetingofStockholders
tobeheldin2017mustbereceivedatourprincipalexecutiveofficesnolaterthanDecember1,2016,inordertobeconsideredforinclusionintheproxy
statementandformofproxyrelatingtothatmeeting.Proposalsmustcomplywiththeproxyrulesrelatingtostockholderproposalstobeincludedinourproxy
materials.Pursuanttoourbylaws,stockholderswhowishtosubmitaproposalforconsiderationatour2017AnnualMeetingofStockholders,includinga
nominationfordirector,butwhodonotwishtosubmitaproposalforinclusioninourproxystatement,alsomustdeliveracopyoftheirproposalnoearlierthan
October2,2016andnolaterthanDecember1,2016,unlessthedateofthe2017AnnualMeetingofStockholdershasbeenadvancedbymorethan30calendar
daysfromthedatecontemplatedherein,inwhichcasetheproposalmustbereceivedbyusnolaterthanthecloseofbusinessonthe15thbusinessdayfollowing
thedateonwhichthe2017AnnualMeetingofStockholdersispubliclyannounced.
AdirectornominationproposalmustincludetheinformationsetforthinourbylawsandasdescribedunderDirectorNominationsabove.Inthecaseof
otherstockholderproposalsotherthanwithrespecttostockholderproposalsrelatingtodirectornomination(s),astockholdersnoticetotheSecretaryshallsetforth
astoeachmatterthestockholderproposestobringbeforetheannualmeeting(i)abriefdescriptionofthebusinessdesiredtobebroughtbeforetheannualmeeting
andthereasonsforconductingsuchbusinessattheannualmeetingand(ii)astothestockholdergivingthenotice,thesameinformationregardingtheproposing
stockholderandanyStockholderAssociatedPersonsassetforthunderourbylawsandasdescribedunderDirectorNominationsabove.
ProposalsshouldbedeliveredtoInovioPharmaceuticals,Inc.,660W.GermantownPike,Suite110,PlymouthMeeting,Pennsylvania19462,Attn:
CorporateSecretary.Toavoidcontroversyandestablishtimelyreceipt,itissuggestedthatstockholderssendtheirproposalsbycertifiedmail,returnreceipt
requested.Otherwise,wemayexercisediscretionaryvotingwithrespecttosuchstockholdersproposalpursuanttoauthorityconferredonusbyproxiestobe
solicitedbyourBoardanddeliveredtousinconnectionwiththemeeting.Youarealsoadvisedtoreviewourbylaws,whichmayberequestedinwritingfromour
Secretaryattheaddressaboveandwhichcontainadditionalrequirementsaboutadvancenoticeofstockholderproposals.
ANNUAL
REPORT
WearemailingourAnnualReportforthefiscalyearendedDecember31,2015tostockholdersofrecordasofMarch18,2016.OurAnnualReportdoesnot
constitute,andshouldnotbeconsidered,apartofthisProxyStatement.
AcopyofourAnnualReportwillbefurnishedwithoutchargeuponreceiptofawrittenrequestofanypersonwhowasabeneficialownerofourcommon
stockonMarch18,2016.RequestsshouldbedirectedtoInovioPharmaceuticals,Inc.,660W.GermantownPike,Suite110,PlymouthMeeting,Pennsylvania
19462;Attention:InvestorRelations.
34
TRANSACTION
OF
OTHER
BUSINESS
AtthedateofthisProxyStatement,theonlybusinesswhichourBoardintendstopresentorknowsthatotherswillpresentatthemeetingisassetforth
above.Ifanyothermatterormattersareproperlybroughtbeforethemeeting,oranyadjournmentthereof,itistheintentionofthepersonsnamedinthe
accompanyingformofproxytovotetheproxyonsuchmattersinaccordancewiththeirbestjudgment.Yourcooperationingivingthismatteryourimmediate
attentionandreturningyourproxieswillbeappreciated.
ByOrderofthe
BoardofDirectors
J.JosephKim,Ph.D.
Chief Executive
Officer
Dated:March25,2016
PlymouthMeeting,Pennsylvania
35
Appendix
A
INOVIO
PHARMACEUTICALS,
INC.
2016
OMNIBUS
INCENTIVE
PLAN
ARTICLE
I
PURPOSE
AND
ADOPTION
OF
THE
PLAN
1.1Purpose.ThepurposeoftheInovioPharmaceuticals,Inc.2016OmnibusIncentivePlan(asamendedfromtimetotime,thePlan)istoassistin
attractingandretaininghighlycompetentemployees,directorsandconsultantstoactasanincentiveinmotivatingselectedemployees,directorsandconsultantsof
theCompanyanditsSubsidiariestoachievelong-termcorporateobjectivesandtoenablestock-basedandcash-basedincentiveawardstoqualifyasperformancebasedcompensationforpurposesofthetaxdeductionlimitationsunderSection162(m)oftheCode.
1.2AdoptionandTerm.ThePlanhasbeenapprovedbytheBoardtobeeffectiveasofMarch9,2016,subjecttotheapprovalofthestockholdersof
theCompany.ThePlanshallremainineffectuntilterminatedbyactionoftheBoard;provided,however,thatnoAwardsmaybegrantedhereunderafterthetenth
anniversaryofitsinitialeffectivedate.
ARTICLE
II
DEFINITIONS
ForthepurposeofthePlan,capitalizedtermsshallhavethefollowingmeanings:
2.1AwardmeansanyoneoracombinationofNon-QualifiedStockOptionsorIncentiveStockOptionsdescribedinArticleVI,StockAppreciation
RightsdescribedinArticleVI,RestrictedSharesandRestrictedStockUnitsdescribedinArticleVII,PerformanceAwardsdescribedinArticleVIII,otherstockbasedAwardsdescribedinArticleIX,short-termcashincentiveAwardsdescribedinArticleXoranyotherAwardmadeunderthetermsofthePlan.
2.2AwardAgreementmeansawrittenagreementbetweentheCompanyandaParticipantorawrittenacknowledgmentfromtheCompanytoa
ParticipantspecificallysettingforththetermsandconditionsofanAwardgrantedunderthePlan.
2.3AssumedmeansthatpursuanttoaMergereither(i)theAwardisexpresslyaffirmedbytheCompany,(ii)thecontractualobligationsrepresentedby
theAwardareexpresslyassumed(andnotsimplybyoperationoflaw)bythesuccessorentityoritsparentinconnectionwiththeMergerwithappropriate
adjustmentstothenumberandtypeofsecuritiesofthesuccessorentityoritsparentsubjecttotheAwardandtheexerciseorpurchasepricethereofwhichatleast
preservesthe
36
compensationelementoftheAwardexistingatthetimeoftheMergerasdeterminedinaccordancewiththeinstrumentsevidencingtheagreementtoassumethe
Award,or(iii)theAwardisotherwisetocontinueineffectfollowingtheMerger.
2.4AwardPeriodmeans,withrespecttoanAward,theperiodoftime,ifany,setforthintheAwardAgreementduringwhichspecifiedtarget
performancegoalsmustbeachievedorotherconditionssetforthintheAwardAgreementmustbesatisfied.
2.5Beneficiarymeansanindividual,trustorestatewhoorwhich,byawrittendesignationoftheParticipantfiledwiththeCompany,orifnosuch
writtendesignationisfiled,byoperationoflaw,succeedstotherightsandobligationsoftheParticipantunderthePlanandtheAwardAgreementuponthe
Participantsdeath.
2.6BoardmeanstheBoardofDirectorsoftheCompany.
2.7ChangeinControlmeanstheoccurrenceofsubparagraph(a),(b),or(c)beloworanycombinationofsaidevent(s).Notwithstandingtheforegoing,
thetermChangeofControlshallalsohavesuchadditionalmeaningsasarepermittedorrequiredunderSection409A:
(a)ChangeofOwnershipoftheCompany.AchangeofownershipoftheCompanyoccursonthedatethatanyonepersonorpersonsacting
asaGroup(asthattermisdefinedinSubparagraph(2)below)acquiresownershipofthestockoftheCompany,that,togetherwithstockheldbysuchpersonor
Group,constitutesmorethanfiftypercent(50%)ofthetotalfairmarketvalueortotalvotingpowerofthestockoftheCompanyorofanycorporationthatownsat
leastfiftypercent(50%)ofthetotalfairmarketvalueandtotalvotingpowerofCompany.
(1)However,ifanypersonorGroupisconsideredtoownmorethanfiftypercent(50%)ofthetotalfairmarketvalueortotalvotingpowerofthestockof
theCompany,theacquisitionofadditionalstockbythesamepersonorGroupofpersonsisnotconsideredtocauseaChangeofControl.Inaddition,theterm
ChangeofControlshallapplyifthereisanincreaseinthepercentageofstockownedbyanyonepersonorpersons,actingasaGroup,asaresultofatransaction
inwhichtheCompanyacquiresitsstockinexchangeforproperty.Therulesetforthintheimmediatelyprecedingsentenceappliesonlywhenthereisatransferof
stockofCompany(orissuanceofstockofCompany)andthestockofCompanyremainsoutstandingafterthetransaction.
(2)PersonswillnotbeconsideredtobeactingasaGroupsolelybecausetheypurchaseorownstockoftheCompanyatthesametime,orasaresultof
thesamepublicoffering.However,personswillbeconsideredtobeactingasaGroupiftheyareshareholdersofCompanyandit,oritsparent,entersintoa
merger,consolidation,purchaseoracquisitionofstockorsimilarbusinesstransactionwithanothercorporation.IfapersonownsstockinCompanyandanother
corporationisinvolvedinabusinesstransaction,thentheshareholderofCompanyisdeemedtobeactingasaGroupwithothershareholdersintheCompanyprior
tothetransaction
(b)EffectiveChangeofControl.IftheCompanydoesnotqualifyunderSubparagraph(a),above,thenitmaystillmeetthedefinitionof
ChangeofControl,oneitherofthefollowingdates:
37
(1)Thedateanyoneperson,ormorethanoneperson,actingasaGroupacquires(orhasacquiredduringthetwelve(12)monthperiodendingonthedate
ofthemostrecentacquisitionbysuchpersonorpersons)ownershipofstockofCompanypossessingthirtypercent(30%)ormoreofthetotalvotingpowerofthe
stockofCompany;or
(2)ThedateamajorityofthenumbersoftheCompanysBoardofDirectorsarereplacedduringany12-monthperiodbydirectorswhoseappointmentor
electionisnotendorsedbyamajorityofthemembersoftheCompanysBoardofDirectorsbeforethedateoftheappointmentorelection.
(c)ChangeinOwnershipofCompanysAssets.AchangeintheownershipofasubstantialportionofCompanysassetsoccursonthedate
thatanyperson,ormorethanonepersonactingasaGroup,acquiresorhasacquiredduringthe12-monthperiodendingonthedateofthemostrecentacquisition
bysuchpersonorpersons)assetsfromtheCompanythathaveatotalfairmarketvalueequaltomorethanfortypercent(40%)ofthetotalgrossfairmarketvalue
ofalloftheassetsoftheCompanyimmediatelybeforesuchacquisitionoracquisitions.Forthispurpose,grossfairmarketvaluemeansthevalueoftheassetsof
theCompany,orthevalueoftheassetsbeingdisposedof,determinedwithoutregardtoanyliabilitiesassociatedwithsuchassets.
(1)TherewillbenoChangeinControlunderthisSubparagraph(c)whenthereisatransfertoanentitythatiscontrolledbytheshareholdersofthe
Companyimmediatelyafterthetransfer.AtransferofassetsbyCompanyisnottreatedasachangeinownershipofsuchassetsiftheassetsaretransferredto:
(i)AshareholderofCompany(immediatelybeforetheassettransfer)inexchangefororwithrespecttoitsstock;
(ii)Anentity,fiftypercent(50%)ormoreofthetotalvalueorvotingpowerofwhichisowneddirectlyorindirectly,bytheCompany;
(iii)Aperson,ormorethanoneperson,actingasaGroup,thatowns,directlyorindirectly,fiftypercent(50%)ormoreofthetotalvalueorvotingpower
ofalltheoutstandingstockoftheCompany;or
(iv)Anentity,atleastfiftypercent(50%)ofthetotalvalueorvotingpowerofwhichisowned,directlyorindirectly,byapersondescribedin
Subparagraphc.,above.
(d)Theconsummation(i.e. closing)ofasaleorotherdispositionofallorsubstantiallyalltheassetsoftheCompany,unless,followingsuch
saleordisposition,allorsubstantiallyalloftheindividualsandentitieswhoweretherespectivebeneficialownersoftheOutstandingCommonStockand
CompanyVotingSecuritiesimmediatelypriortosuchreorganization,mergerorconsolidation,followingsuchreorganization,mergerorconsolidationbeneficially
own,directlyorindirectly,morethanseventyfivepercent(75%)of,respectively,thethenoutstandingsharesofcommonstockandthecombinedvotingpowerof
thethenoutstandingvotingsecuritiesentitledtovotegenerallyintheelectionofdirectorsortrustees,asthecasemaybe,oftheentitypurchasingsuchassetsin
substantiallythesameproportionastheirownershipoftheOutstandingCommonStockandCompanyVotingSecuritiesimmediatelypriortosuchsaleor
disposition,asthecasemaybe;or
(e)acompleteliquidationordissolutionoftheCompany.
38
2.8CodemeanstheInternalRevenueCodeof1986,asamended.ReferencestoasectionoftheCodeshallincludethatsectionandanycomparable
sectionorsectionsofanyfuturelegislationthatamends,supplementsorsupersedessaidsection.
2.9CommitteemeanstheCompensationCommitteeoftheBoard.
2.10CompanymeansInovioPharmaceuticals,Inc.anditssuccessors.
2.11CommonStockmeansthecommonstockoftheCompany,parvalue$0.001pershare.
2.12CompanyVotingSecuritiesmeansthecombinedvotingpowerofalloutstandingvotingsecuritiesoftheCompanyentitledtovotegenerallyinthe
electionofdirectorstotheBoard.
2.13DateofGrantmeansthedatedesignatedbytheCommitteeasthedateasofwhichitgrantsanAward,whichshallnotbeearlierthanthedateon
whichtheCommitteeapprovesthegrantingofsuchAward.
2.14DividendEquivalentAccountmeansabookkeepingaccountinaccordancewithunderSection11.17andrelatedtoanAwardthatiscreditedwith
theamountofanycashdividendsorstockdistributionsthatwouldbepayablewithrespecttothesharesofCommonStocksubjecttosuchAwardshadsuchshares
beenoutstandingsharesofCommonStock.
2.15ExchangeActmeanstheSecuritiesExchangeActof1934,asamended.
2.16ExercisePricemeans,withrespecttoaStockAppreciationRight,theamountestablishedbytheCommitteeintheAwardAgreementwhichisto
besubtractedfromtheFairMarketValueonthedateofexerciseinordertodeterminetheamountofthepaymenttobemadetotheParticipant,asfurtherdescribed
inSection6.2(b).
2.17FairMarketValuemeans,onanydate,(i)theclosingsalepriceofashareofCommonStock,asreportedontheAmericanStockExchange(or
otherestablishedstockexchangeonwhichtheCommonStockisregularlytraded)onsuchdateor,iftherewerenosalesonsuchdate,onthelastdatepreceding
suchdateonwhichasalewasreported;or(ii)ifsharesofCommonStockarenotlistedfortradingonanestablishedstockexchange,FairMarketValueshallbe
determinedbytheCommitteeingoodfaith.
2.18IncentiveStockOptionmeansastockoptionwithinthemeaningofSection422oftheCode.
2.19Mergermeansanymerger,reorganization,consolidation,exchange,transferofassetsorothertransactionhavingsimilareffectinvolvingthe
Company.
2.20Non-QualifiedStockOptionmeansastockoptionwhichisnotanIncentiveStockOption.
2.21OptionsmeansallNon-QualifiedStockOptionsandIncentiveStockOptionsgrantedatanytimeunderthePlan.
2.22OutstandingCommonStockmeans,atanytime,theissuedandoutstandingsharesofCommonStock.
2.23ParticipantmeansapersondesignatedtoreceiveanAwardunderthePlaninaccordancewithSection5.1.
39
2.24PerformanceAwardsmeansAwardsgrantedinaccordancewithArticleVIII.
2.25PerformanceGoalsarebasedononeormoreofthefollowingmeasuresandintendedtocomplywiththeperformance-basedcompensation
exceptionunderCodeSection162(m):
Netearningsornetincome(beforeoraftertaxes)
Earningspershareorearningspersharegrowth,totalunits,orunitgrowth
Netsales,salesgrowth,totalrevenue,orrevenuegrowth
Netoperatingprofit
Returnmeasures(including,butnotlimitedto,returnonassets,capital,investedcapital,equity,sales,orrevenue)
Cashflow(including,butnotlimitedto,operatingcashflow,freecashflow,cashflowreturnonequity,andcashflowreturnoninvestment)
Earningsbeforeoraftertaxes,interest,depreciation,and/oramortization
Grossoroperatingmargins
Productivityratios
Sharepriceorrelativeshareprice(including,butnotlimitedto,growthmeasuresandtotalstockholderreturn)
Expensetargets
Margins
Operatingefficiency
Marketshareorchangeinmarketshare
Customerretentionorsatisfaction
Workingcapitaltargets
Completionofstrategicfinancinggoals,acquisitionsoralliancesandclinicalprogress
Companyprojectmilestones
EconomicvalueaddedorEVA(netoperatingprofitaftertaxminusthesumofcapitalmultipliedbythecostofcapital)
Withoutlimitingthegeneralityoftheforegoing(andtothedegreeconsistentwithCodeSection162(m)),theCommitteeshallhavetheauthority,atthe
timeitestablishestheperformanceobjectivesforanygivenperformanceperiod,tomakeequitableadjustmentsinthebusinesscriteriainrecognitionof
unusualornon-recurringevents
40
affectingtheCompanyoritsoperatingunits,inresponsetochangesinapplicablelawsorregulations,ortoaccountforitemsofgain,lossorexpense
determinedtobeextraordinaryorunusualinnatureorinfrequentinoccurrenceorrelatedtothedisposalofasegmentofabusinessorrelatedtoachange
ingenerallyacceptedaccountingprinciples,orastheCommitteedeterminestobeappropriatetoreflectatruemeasurementoftheprofitabilityofthe
Companyoritsoperatingunits,asapplicableandtootherwisesatisfytheobjectivesofthePlan.
2.26PlanhasthemeaninggiventosuchterminSection1.1.
2.27PurchasePrice,withrespecttoOptions,shallhavethemeaningsetforthinSection6.1(b).
2.28RestrictedSharesmeansCommonStocksubjecttorestrictionsimposedinconnectionwithAwardsgrantedunderArticleVII.
2.29RestrictedStockUnitmeansaunitrepresentingtherighttoreceiveCommonStockorthevaluethereofinthefuturesubjecttorestrictions
imposedinconnectionwithAwardsgrantedunderArticleVII.
2.30Rule16b-3meansRule16b-3promulgatedbytheSecuritiesandExchangeCommissionunderSection16oftheExchangeAct,asthesamemay
beamendedfromtimetotime,andanysuccessorrule.
2.31StockAppreciationRightsmeansawardsgrantedinaccordancewithArticleVI.
2.32SubsidiarymeansasubsidiaryoftheCompanywithinthemeaningofSection424(f)oftheCode.
2.33TerminationofServicemeansthevoluntaryorinvoluntaryterminationofaParticipantsserviceasanemployee,directororconsultantwiththe
CompanyoraSubsidiaryforanyreason,includingdeath,disability,retirementorastheresultofthedivestitureoftheParticipantsemployeroranysimilar
transactioninwhichtheParticipantsemployerceasestobetheCompanyoroneofitsSubsidiaries.Whetherenteringmilitaryorothergovernmentserviceshall
constituteTerminationofService,orwhetherandwhenaTerminationofServiceshalloccurasaresultofdisability,shallbedeterminedineachcasebythe
Committeeinitssolediscretion.
ARTICLE
III
ADMINISTRATION
3.1Committee.
(a)DutiesandAuthority.ThePlanshallbeadministeredbytheCommitteeandtheCommitteeshallhaveexclusiveandfinalauthorityineach
determination,interpretationorotheractionaffectingthePlananditsParticipants.TheCommitteeshallhavethesolediscretionaryauthoritytointerpretthePlan,
toestablishandmodifyadministrativerulesforthePlan,toimposesuchconditionsandrestrictionsonAwardsasitdeterminesappropriate,andtomakeallfactual
determinationswithrespecttoandtakesuchstepsinconnectionwiththePlanandAwardsgrantedhereunderasitmaydeemnecessaryoradvisable.The
Committeeshallnot,however,haveorexerciseanydiscretionthatwoulddisqualifyamountspayableunderArticleXasperformance-basedcompensationfor
purposesofSection162(m)oftheCode.TheCommitteemaydelegatesuchofitspowersandauthorityunderthePlanasitdeemsappropriatetoasubcommittee
oftheCommitteeor
41
designatedofficersoremployeesoftheCompany.Inaddition,thefullBoardmayexerciseanyofthepowersandauthorityoftheCommitteeunderthePlan.Inthe
eventofsuchdelegationofauthorityorexerciseofauthoritybytheBoard,referencesinthePlantotheCommitteeshallbedeemedtorefer,asappropriate,tothe
delegateoftheCommitteeortheBoard.ActionstakenbytheCommitteeoranysubcommitteethereof,andanydelegationbytheCommitteetodesignatedofficers
oremployees,underthisSection3.1shallcomplywithSection16(b)oftheExchangeAct,theperformance-basedprovisionsofSection162(m)oftheCode,and
theregulationspromulgatedundereachofsuchstatutoryprovisions,ortherespectivesuccessorstosuchstatutoryprovisionsorregulations,asineffectfromtime
totime,totheextentapplicable.
(b)Indemnification.EachpersonwhoisorshallhavebeenamemberoftheBoardortheCommittee,oranofficeroremployeeofthe
CompanytowhomauthoritywasdelegatedinaccordancewiththePlanshallbeindemnifiedandheldharmlessbytheCompanyagainstandfromanyloss,cost,
liability,orexpensethatmaybeimposeduponorreasonablyincurredbysuchindividualinconnectionwithorresultingfromanyclaim,action,suit,orproceeding
towhichheorshemaybeapartyorinwhichheorshemaybeinvolvedbyreasonofanyactiontakenorfailuretoactunderthePlanandagainstandfromanyand
allamountspaidbyhimorherinsettlementthereof,withtheCompanysapproval,orpaidbyhimorherinsatisfactionofanyjudgmentinanysuchaction,suit,or
proceedingagainsthimorher,providedheorsheshallgivetheCompanyanopportunity,atitsownexpense,tohandleanddefendthesamebeforeheorshe
undertakestohandleanddefenditonhisorherownbehalf;provided,however,thattheforegoingindemnificationshallnotapplytoanyloss,cost,liability,or
expensethatisaresultofhisorherownwillfulmisconduct.Theforegoingrightofindemnificationshallnotbeexclusiveofanyotherrightsofindemnificationto
whichsuchpersonsmaybeentitledundertheCompanysCertificateofIncorporationorBylaws,conferredinaseparateagreementwiththeCompany,asamatter
oflaw,orotherwise,oranypowerthattheCompanymayhavetoindemnifythemorholdthemharmless.
ARTICLE
IV
SHARES
4.1NumberofSharesIssuable.ThemaximumaggregatenumberofsharesofCommonStockthatmaybeissuedpursuanttoAwardsshallbe
6,000,000sharesofCommonStock,andcommencingwiththefirstbusinessdayofeachcalendaryearbeginningwithJanuary1,2018,suchmaximumaggregate
numberofsharesofCommonStockshallbeincreasedby2,000,000sharesofCommonStockunlesstheBoarddetermines,foranysuchyear,toincreasesuch
maximumamountbyafewernumberofshares.Nomorethan6,000,000sharesofCommonStockmaybeissuedunderthePlanasIncentiveStockOptions,and
suchnumbershallnotbesubjecttoannualadjustmentasdescribedabove.TheforegoingsharelimitsshallbesubjecttoadjustmentinaccordancewithSection
11.7.ThesharestobeofferedunderthePlanshallbeauthorizedandunissuedCommonStock,orissuedCommonStockthatshallhavebeenreacquiredbythe
Company.
4.2SharesSubjecttoTerminatedAwards.CommonStockcoveredbyanyunexercisedportionsofterminatedorforfeitedOptions(includingcanceled
Options)grantedunderArticleVI,CommonStockforfeitedasprovidedinSection7.2(a),StockUnitsandotherstock-basedAwardsterminatedorforfeitedas
providedinArticleIX,andCommonStocksubjecttoanyAwardsthatareotherwisesurrenderedbytheParticipantmayagainbesubjecttonewAwardsunderthe
Plan.SharesofCommonStocksurrenderedtoorwithheldbytheCompanyinpaymentorsatisfactionofthePurchasePriceofanOptionortaxwithholding
obligationwithrespecttoanAwardshallbeavailableforthegrantofnewAwardsunderthePlan.IntheeventoftheexerciseofStockAppreciationRights,
whetherornotgrantedintandemwithOptions,onlythenumberofsharesof
42
CommonStockactuallyissuedinpaymentofsuchStockAppreciationRightsshallbechargedagainstthenumberofsharesofCommonStockavailableforthe
grantofAwardshereunder.
ARTICLE
V
PARTICIPATION
5.1EligibleParticipants.ParticipantsinthePlanshallbesuchemployees,directorsandconsultantsoftheCompanyanditsSubsidiariesasthe
Committee,initssolediscretion,maydesignatefromtimetotime.TheCommitteesdesignationofaParticipantinanyyearshallnotrequiretheCommitteeto
designatesuchpersontoreceiveAwardsorgrantsinanyotheryear.ThedesignationofaParticipanttoreceiveAwardsorgrantsunderoneportionofthePlan
doesnotrequiretheCommitteetoincludesuchParticipantunderotherportionsofthePlan.TheCommitteeshallconsidersuchfactorsasitdeemspertinentin
selectingParticipantsandindeterminingthetypeandamountoftheirrespectiveAwards.IncentiveStockOptionsmayonlybegrantedtoemployeesofthe
CompanyoritsSubsidiaries.SubjecttoadjustmentinaccordancewithSection11.7,inanycalendaryear,noParticipantshallbegrantedAwardsinrespectofmore
than500,000sharesofCommonStock(whetherthroughgrantsofOptionsorStockAppreciationRightsorotherAwardsofCommonStockorrightswithrespect
thereto)orcash-basedAwardsformorethan$1,500,000.00.Furthermore,subjecttoadjustmentinaccordancewithSection11.7,inanycalendaryear,nomore
thanatotalof500,000sharesofCommonStockmaybegrantedasAwardsunderthePlantotheCompanysnon-employeedirectors.
ARTICLE
VI
STOCK
OPTIONS
AND
STOCK
APPRECIATION
RIGHTS
6.1OptionAwards.
(a)GrantofOptions.TheCommitteemaygrant,tosuchParticipantsastheCommitteemayselect,OptionsentitlingtheParticipantto
purchasesharesofCommonStockfromtheCompanyinsuchnumber,atsuchprice,andonsuchtermsandsubjecttosuchconditions,notinconsistentwiththe
termsofthePlan,asmaybeestablishedbytheCommittee.ThetermsofanyOptiongrantedunderthePlanshallbesetforthinanAwardAgreement.
(b)PurchasePriceofOptions.ThePurchasePriceofeachshareofCommonStockwhichmaybepurchaseduponexerciseofanyOption
grantedunderthePlanshallbedeterminedbytheCommittee;provided,however,thatinnoeventshallthePurchasePricebelessthantheFairMarketValueon
theDateofGrant.InthecaseofanIncentiveStockOptiongrantedtoaParticipantwho,ontheDateofGrantownsstockrepresentingmorethantenpercent(10%)
ofthevotingpowerofallclassesofstockoftheCompanyoritsSubsidiaries,thepershareexercisepriceshallbenotlessthanonehundredtenpercent(110%)of
theFairMarketValuepershareofCommonStockontheDateofGrant.
(c)DesignationofOptions.TheCommitteeshalldesignate,atthetimeofthegrantofeachOption,theOptionasanIncentiveStockOption
oraNon-QualifiedStockOption.
(d)IncentiveStockOptionShareLimitation.NotwithstandinganOptionsdesignationasanIncentiveStockOption,anOptionwillqualifyas
anIncentiveStockOptionundertheCodeonlytotheextentthe$100,000limitationofSection422(d)oftheCodeisnotexceeded.The$100,000limitationof
Section422(d)oftheCodeiscalculatedbasedonthe
43
aggregateFairMarketValue(measuredontheDateofGrant)ofthesharesofCommonStocksubjecttoOptionsdesignatedasIncentiveStockOptionswhichfirst
becomeexercisableinanyonecalendaryear(underthePlanoranyotherplansoftheCompanyanditsSubsidiaries).Forpurposesofthiscalculation,Incentive
StockOptionsshallbetakenintoaccountintheorderinwhichtheyweregranted.
(e)RightsAsaStockholder.AParticipantoratransfereeofanOptionpursuanttoSection11.4shallhavenorightsasastockholderwith
respecttoCommonStockcoveredbyanOptionuntiltheParticipantortransfereeshallhavebecometheholderofrecordofanysuchshares,andnoadjustment
shallbemadefordividendsincashorotherpropertyordistributionsorotherrightswithrespecttoanysuchCommonStockforwhichtherecorddateispriorto
thedateonwhichtheParticipantoratransfereeoftheOptionshallhavebecometheholderofrecordofanysuchsharescoveredbytheOption;provided,however,
thatParticipantsareentitledtoshareadjustmentstoreflectcapitalchangesunderSection11.7.
6.2StockAppreciationRights.
(a)StockAppreciationRightAwards.TheCommitteeisauthorizedtogranttoanyParticipantoneormoreStockAppreciationRights.Such
StockAppreciationRightsmaybegrantedeitherindependentoforintandemwithOptionsgrantedtothesameParticipant.StockAppreciationRightsgrantedin
tandemwithOptionsmaybegrantedsimultaneouslywith,or,inthecaseofNon-QualifiedStockOptions,subsequentto,thegranttosuchParticipantoftherelated
Option;providedhowever,that:(i)anyOptioncoveringanyshareofCommonStockshallexpireandnotbeexercisableupontheexerciseofanyStock
AppreciationRightwithrespecttothesameshare,(ii)anyStockAppreciationRightcoveringanyshareofCommonStockshallexpireandnotbeexercisableupon
theexerciseofanyrelatedOptionwithrespecttothesameshare,and(iii)anOptionandStockAppreciationRightcoveringthesameshareofCommonStockmay
notbeexercisedsimultaneously.UponexerciseofaStockAppreciationRightwithrespecttoashareofCommonStock,theParticipantshallbeentitledtoreceive
anamountequaltotheexcess,ifany,of(A)theFairMarketValueofashareofCommonStockonthedateofexerciseover(B)theExercisePriceofsuchStock
AppreciationRightestablishedintheAwardAgreement,whichamountshallbepayableasprovidedinSection6.2(c).
(b)ExercisePrice.TheExercisePriceestablishedunderanyStockAppreciationRightgrantedunderthePlanshallbedeterminedbythe
Committee,butinthecaseofStockAppreciationRightsgrantedintandemwithOptionsshallnotbelessthanthePurchasePriceoftherelatedOption;provided,
however,thatinnoeventshalltheExercisePricebelessthantheFairMarketValueontheDateofGrant.UponexerciseofStockAppreciationRightsgrantedin
tandemwithoptions,thenumberofsharessubjecttoexerciseunderanyrelatedOptionshallautomaticallybereducedbythenumberofsharesofCommonStock
representedbytheOptionorportionthereofwhicharesurrenderedasaresultoftheexerciseofsuchStockAppreciationRights.
(c)PaymentofIncrementalValue.AnypaymentwhichmaybecomeduefromtheCompanybyreasonofaParticipantsexerciseofaStock
AppreciationRightmaybepaidtotheParticipantasdeterminedbytheCommittee(i)allincash,(ii)allinCommonStock,or(iii)inanycombinationofcashand
CommonStock.IntheeventthatalloraportionofthepaymentismadeinCommonStock,thenumberofsharesofCommonStockdeliveredinsatisfactionof
suchpaymentshallbedeterminedbydividingtheamountofsuchpaymentorportionthereofbytheFairMarketValueontheExerciseDate.Nofractionalshare
ofCommonStockshallbeissuedtomakeanypaymentinrespectofStockAppreciationRights;ifany
44
fractionalsharewouldbeissuable,thecombinationofcashandCommonStockpayabletotheParticipantshallbeadjustedasdirectedbytheCommitteetoavoid
theissuanceofanyfractionalshare.
6.3TermsofStockOptionsandStockAppreciationRights.
(a)ConditionsonExercise.AnAwardAgreementwithrespecttoOptionsorStockAppreciationRightsmaycontainsuchwaitingperiods,
exercisedatesandrestrictionsonexercise(including,butnotlimitedto,periodicinstallments)asmaybedeterminedbytheCommitteeatthetimeofgrant.
(b)DurationofOptionsandStockAppreciationRights.OptionsandStockAppreciationRightsshallterminateuponthefirsttooccurofthe
followingevents:
(i)ExpirationoftheOptionorStockAppreciationRightasprovidedintheAwardAgreement;or
(ii)TerminationoftheAwardintheeventofaParticipantsdisability,retirement,deathorotherTerminationofServiceasprovided
intheAwardAgreement;or
(iii)TenyearsfromtheDateofGrant;
(iv)InthecaseofanIncentiveStockOptiongrantedtoaParticipantwho,atthetimetheIncentiveStockOptionisgranted,owns
stockrepresentingmorethantenpercent(10%)ofthevotingpowerofallclassesofstockoftheCompanyoranyofitsSubsidiaries,fiveyearsfromtheDateof
Grantor
(v)SolelyinthecaseofaStockAppreciationRightgrantedintandemwithanOption,upontheexpirationoftherelatedOption.
(c)AccelerationorExtensionofExerciseTime.TheCommittee,initssolediscretion,shallhavetheright(butshallnotbeobligated),
exercisableonoratanytimeaftertheDateofGrant,topermittheexerciseofanOptionorStockAppreciationRight(i)priortothetimesuchOptionorStock
AppreciationRightwouldbecomeexercisableunderthetermsoftheAwardAgreement,(ii)aftertheterminationoftheOptionorStockAppreciationRightunder
thetermsoftheAwardAgreement,or(iii)aftertheexpirationoftheOptionorStockAppreciationRight.
6.4ExerciseProcedures.EachOptionandStockAppreciationRightgrantedunderthePlanshallbeexercisedpriortothecloseofbusinessonthe
expirationdateoftheOptionorStockAppreciationRightbynoticetotheCompanyorbysuchothermethodasprovidedintheAwardAgreementorasthe
Committeemayestablishorapprovefromtimetotime.ThePurchasePriceofsharespurchaseduponexerciseofanOptiongrantedunderthePlanshallbepaidin
fullincashbytheParticipantpursuanttotheAwardAgreement;provided,however,thattheCommitteemay(butshallnotberequiredto)permitpaymenttobe
madebydeliverytotheCompanyofeither(a)CommonStock(whichmayincludeRestrictedSharesorsharesotherwiseissuableinconnectionwiththeexercise
oftheOption,subjecttosuchrulesastheCommitteedeemsappropriate)or(b)anycombinationofcashandCommonStock,or(c)suchotherconsiderationasthe
Committeedeemsappropriateandincompliancewithapplicablelaw(includingpaymentunderanarrangementconstitutingabrokeragetransactionaspermitted
undertheprovisionsofRegulationTapplicabletocashlessexercisespromulgatedbytheFederalReserveBoard,unlessprohibitedbySection402oftheSarbanesOxleyActof2002).IntheeventthatanyCommonStockshallbetransferredtothe
45
CompanytosatisfyalloranypartofthePurchasePrice,thepartofthePurchasePricedeemedtohavebeensatisfiedbysuchtransferofCommonStockshallbe
equaltotheproductderivedbymultiplyingtheFairMarketValueasofthedateofexercisetimesthenumberofsharesofCommonStocktransferredtothe
Company.TheParticipantmaynottransfertotheCompanyinsatisfactionofthePurchasePriceanyfractionalshareofCommonStock.AnypartofthePurchase
PricepaidincashupontheexerciseofanyOptionshallbeaddedtothegeneralfundsoftheCompanyandmaybeusedforanypropercorporatepurpose.Unless
theCommitteeshallotherwisedetermine,anyCommonStocktransferredtotheCompanyaspaymentofallorpartofthePurchasePriceupontheexerciseofany
Optionshallbeheldastreasuryshares.
6.5ChangeinControl.UnlessotherwiseprovidedbytheCommitteeintheapplicableAwardAgreement,intheeventofaChangeinControl,all
OptionsoutstandingonthedateofsuchChangeinControl,andallStockAppreciationRightsshallbecomeimmediatelyandfullyexercisable.Theprovisionsof
thisSection6.5shallnotbeapplicabletoanyOptionsorStockAppreciationRightsgrantedtoaParticipantifanyChangeinControlresultsfromsuch
Participantsbeneficialownership(withinthemeaningofRule13d-3undertheExchangeAct)ofCommonStockorCompanyVotingSecurities.
ARTICLE
VII
RESTRICTED
SHARES
AND
RESTRICTED
STOCK
UNITS
7.1AwardofRestrictedStockandRestrictedStockUnits.TheCommitteemaygranttoanyParticipantanAwardofRestrictedSharesconsistingofa
specifiednumberofsharesofCommonStockissuedtotheParticipantsubjecttosuchterms,conditionsandforfeitureandtransferrestrictions,whetherbasedon
performancestandards,periodsofservice,retentionbytheParticipantofownershipofspecifiedsharesofCommonStockorothercriteria,astheCommitteeshall
establish.TheCommitteemayalsograntRestrictedStockUnitsrepresentingtherighttoreceivesharesofCommonStockinthefuturesubjecttosuchterms,
conditionsandrestrictions,whetherbasedonperformancestandards,periodsofservice,retentionbytheParticipantofownershipofspecifiedsharesofCommon
Stockorothercriteria,astheCommitteeshallestablish.Withrespecttoperformance-basedAwardsofRestrictedSharesorRestrictedStockUnitsintendedto
qualifyasperformance-basedcompensationforpurposesofSection162(m)oftheCode,performancetargetswillconsistofspecifiedlevelsofoneormoreof
thePerformanceGoals.ThetermsofanyRestrictedShareandRestrictedStockUnitAwardsgrantedunderthePlanshallbesetforthinanAwardAgreement
whichshallcontainprovisionsdeterminedbytheCommitteeandnotinconsistentwiththePlan.
7.2RestrictedShares.
(a)IssuanceofRestrictedShares.AssoonaspracticableaftertheDateofGrantofaRestrictedShareAwardbytheCommittee,theCompany
shallcausetobetransferredonthebooksoftheCompany,oritsagent,CommonStock,registeredonbehalfoftheParticipant,evidencingtheRestrictedShares
coveredbytheAward,butsubjecttoforfeituretotheCompanyasoftheDateofGrantifanAwardAgreementwithrespecttotheRestrictedSharescoveredbythe
AwardisnotdulyexecutedbytheParticipantandtimelyreturnedtotheCompany.AllCommonStockcoveredbyAwardsunderthisArticleVIIshallbesubject
totherestrictions,termsandconditionscontainedinthePlanandtheAwardAgreemententeredintobytheParticipant.Untilthelapseorreleaseofallrestrictions
applicabletoanAwardofRestrictedShares,thesharecertificatesrepresentingsuchRestrictedSharesmaybeheldincustodybytheCompany,itsdesignee,or,if
thecertificatesbeararestrictivelegend,bytheParticipant.UponthelapseorreleaseofallrestrictionswithrespecttoanAwardasdescribedinSection7.2(d),
46
oneormoresharecertificates,registeredinthenameoftheParticipant,foranappropriatenumberofsharesasprovidedinSection7.2(d),freeofanyrestrictions
setforthinthePlanandtheAwardAgreementshallbedeliveredtotheParticipant.
(b)StockholderRights.BeginningontheDateofGrantoftheRestrictedShareAwardandsubjecttoexecutionoftheAwardAgreementas
providedinSection7.2(a),theParticipantshallbecomeastockholderoftheCompanywithrespecttoallsharessubjecttotheAwardAgreementandshallhaveall
oftherightsofastockholder,including,butnotlimitedto,therighttovotesuchsharesandtherighttoreceivedividends;provided,however,thatanyCommon
StockdistributedasadividendorotherwisewithrespecttoanyRestrictedSharesastowhichtherestrictionshavenotyetlapsed,shallbesubjecttothesame
restrictionsassuchRestrictedSharesandheldorrestrictedasprovidedinSection7.2(a).
(c)RestrictiononTransferability.NoneoftheRestrictedSharesmaybeassignedortransferred(otherthanbywillorthelawsofdescentand
distribution,ortoanintervivostrustwithrespecttowhichtheParticipantistreatedastheownerunderSections671through677oftheCode,excepttotheextent
thatSection16oftheExchangeActlimitsaParticipantsrighttomakesuchtransfers),pledgedorsoldpriortolapseoftherestrictionsapplicablethereto.
(d)DeliveryofSharesUponVesting.Uponexpirationorearlierterminationoftheforfeitureperiodwithoutaforfeitureandthesatisfactionof
orreleasefromanyotherconditionsprescribedbytheCommittee,oratsuchearliertimeasprovidedundertheprovisionsofSection7.4,therestrictionsapplicable
totheRestrictedSharesshalllapse.Aspromptlyasadministrativelyfeasiblethereafter,subjecttotherequirementsofSection11.5,theCompanyshalldeliverto
theParticipantor,incaseoftheParticipantsdeath,totheParticipantsBeneficiary,oneormoresharecertificatesfortheappropriatenumberofsharesofCommon
Stock,freeofallsuchrestrictions,exceptforanyrestrictionsthatmaybeimposedbylaw.
(e)ForfeitureofRestrictedShares.SubjecttoSections7.2(f)and7.4,allRestrictedSharesshallbeforfeitedandreturnedtotheCompanyand
allrightsoftheParticipantwithrespecttosuchRestrictedSharesshallterminateunlesstheParticipantcontinuesintheserviceoftheCompanyoraSubsidiaryas
anemployeeuntiltheexpirationoftheforfeitureperiodforsuchRestrictedSharesandsatisfiesanyandallotherconditionssetforthintheAwardAgreement.The
Committeeshalldeterminetheforfeitureperiod(whichmay,butneednot,lapseininstallments)andanyothertermsandconditionsapplicablewithrespecttoany
RestrictedShareAward.
(f)WaiverofForfeiturePeriod.NotwithstandinganythingcontainedinthisArticleVIItothecontrary,theCommitteemay,initssole
discretion,waivetheforfeitureperiodandanyotherconditionssetforthinanyAwardAgreementunderappropriatecircumstances(includingthedeath,disability
orretirementoftheParticipantoramaterialchangeincircumstancesarisingafterthedateofanAward)andsubjecttosuchtermsandconditions(including
forfeitureofaproportionatenumberoftheRestrictedShares)astheCommitteeshalldeemappropriate.
7.3RestrictedStockUnits.
(a)SettlementofRestrictedStockUnits.PaymentsshallbemadetoParticipantswithrespecttotheirRestrictedStockUnitsassoonas
practicableaftertheCommitteehasdeterminedthatthetermsandconditionsapplicabletosuchAwardhavebeensatisfiedoratalaterdateifdistributionhasbeen
deferred.PaymentstoParticipantswithrespecttoRestrictedStockUnitsshallbemadeintheformofCommonStock,orcashoracombinationofboth,asthe
Committeemaydetermine.TheamountofanycashtobepaidinlieuofCommonStockshallbedeterminedonthebasisoftheFairMarket
47
ValueoftheCommonStockonthedateanysuchpaymentisprocessed.AstosharesofCommonStockwhichconstitutealloranypartofsuchpayment,the
Committeemayimposesuchrestrictionsconcerningtheirtransferabilityand/ortheirforfeitureasmaybeprovidedintheapplicableAwardAgreementorasthe
Committeemayotherwisedetermine,providedsuchdeterminationismadeonorbeforethedatecertificatesforsuchsharesarefirstdeliveredtotheapplicable
Participant.
(b)ShareholderRights.UntilthelapseorreleaseofallrestrictionsapplicabletoanAwardofRestrictedStockUnits,nosharesofCommon
StockshallbeissuedinrespectofsuchAwardsandnoParticipantshallhaveanyrightsasashareholderoftheCompanywithrespecttothesharesofCommon
StockcoveredbysuchAwardofRestrictedStockUnits.
(c)WaiverofForfeiturePeriod.NotwithstandinganythingcontainedinthisSection7.3tothecontrary,theCommitteemay,initssole
discretion,waivetheforfeitureperiodandanyotherconditionssetforthinanyAwardAgreementunderappropriatecircumstances(includingthedeath,disability
orretirementoftheParticipantoramaterialchangeincircumstancesarisingafterthedateofanAward)andsubjecttosuchtermsandconditions(including
forfeitureofaproportionatenumberofsharesissuableuponsettlementoftheRestrictedStockUnitsconstitutinganAward)astheCommitteeshalldeem
appropriate.
(d)DeferralofPayment.IfapprovedbytheCommitteeandsetforthintheapplicableAwardAgreement,aParticipantmayelecttodeferthe
amountpayablewithrespecttotheParticipantsRestrictedStockUnitsinaccordancewithsuchtermsasmaybeestablishedbytheCommittee.
7.4ChangeinControl.UnlessotherwiseprovidedbytheCommitteeintheapplicableAwardAgreement,intheeventofaChangeinControl,all
restrictionsapplicabletoRestrictedSharesandRestrictedStockUnitAwardsshallterminatefullyandtheParticipantshallimmediatelyhavetherighttothe
deliveryinaccordancewithSection7.2(d)ofasharecertificateorcertificatesevidencinganumberofsharesofCommonStockequaltothefullnumberofshares
subjecttoeachsuchAward(inthecaseofRestrictedStock)orpaymentinaccordancewithSection7.3(a)ofanumberofsharesofCommonStockdeterminedby
theCommittee,initsdiscretion,but,inthecaseofaperformance-basedorothercontingentAward,innoeventlessthanthenumberofsharespayableatthe
targetlevelforeachsuchAward(inthecaseofRestrictedStockUnits).TheprovisionsofthisSection7.4shallnotbeapplicabletoanyRestrictedShareor
RestrictedStockUnitAwardgrantedtoaParticipantifanyChangeinControlresultsfromsuchParticipantsbeneficialownership(withinthemeaningof
Rule13d-3undertheExchangeAct)ofCommonStockorCompanyVotingSecurities.
ARTICLE
VIII
PERFORMANCE
AWARDS
8.1PerformanceAwards.
(a)AwardPeriodsandCalculationsofPotentialIncentiveAmounts.TheCommitteemaygrantPerformanceAwardstoParticipants.A
PerformanceAwardshallconsistoftherighttoreceiveapayment(measuredbytheFairMarketValueofaspecifiednumberofsharesofCommonStock,
increasesinsuchFairMarketValueduringtheAwardPeriodand/orafixedcashamount)contingentupontheextenttowhichcertainpredeterminedperformance
targetshavebeenmetduringanAwardPeriod.TheAwardPeriodshallbetwoormorefiscalorcalendaryearsasdeterminedbytheCommittee.
48
TheCommittee,initsdiscretionandundersuchtermsasitdeemsappropriate,maypermitnewlyeligibleParticipants,suchasthosewhoarepromotedornewly
hired,toreceivePerformanceAwardsafteranAwardPeriodhascommenced.
(b)PerformanceTargets.SubjecttoSection11.18,theperformancetargetsapplicabletoaPerformanceAwardmayincludesuchgoalsrelated
totheperformanceoftheCompanyor,whererelevant,anyoneormoreofitsSubsidiariesordivisionsand/ortheperformanceofaParticipantasmaybe
establishedbytheCommitteeinitsdiscretion.InthecaseofPerformanceAwardstocoveredemployees(asdefinedinSection162(m)oftheCode),thetargets
willbelimitedtospecifiedlevelsofoneormoreofthePerformanceGoals.TheperformancetargetsestablishedbytheCommitteemayvaryfordifferentAward
PeriodsandneednotbethesameforeachParticipantreceivingaPerformanceAwardinanAwardPeriod.
(c)EarningPerformanceAwards.AParticipant'sPerformanceAwardshallbedeterminedbasedontheattainmentofwrittenPerformance
GoalsapprovedbytheCommitteeforaperformanceperiodestablishedbytheCommittee(i)whiletheoutcomeforthatperformanceperiodissubstantially
uncertainand(ii)nomorethan90daysafterthecommencementoftheperformanceperiodtowhichtheperformancegoalrelatesor,ifless,thenumberofdays
whichisequalto25percentoftherelevantperformanceperiod.
(d)PaymentofEarnedPerformanceAwards.SubjecttotherequirementsofSection11.5,paymentsofearnedPerformanceAwardsshallbe
madeincashorCommonStock,oracombinationofcashandCommonStock,inthediscretionoftheCommittee.TheCommittee,initssolediscretion,may
define,andsetforthintheapplicableAwardAgreement,suchtermsandconditionswithrespecttothepaymentofearnedPerformanceAwardsasitmaydeem
desirable.TheCommitteeshalldeterminewhether,withrespecttoaperformanceperiod,theapplicablePerformanceGoalshavebeenmetwithrespecttoagiven
Participantand,iftheyhave,shallsocertifyandascertaintheamountoftheapplicablePerformanceAward.NoPerformanceAwardswillbepaidforsuch
performanceperioduntilsuchcertificationismadebytheCommittee.TheamountofthePerformanceAwardactuallypaidtoagivenParticipantmaybeless(but
notmore)thantheamountdeterminedbytheapplicableperformancegoalformula,atthediscretionoftheCommittee.TheamountofthePerformanceAward
determinedbytheCommitteeforaperformanceperiodshallbepaidtotheParticipantatsuchtimeasdeterminedbytheCommitteeinitssolediscretionafterthe
endofsuchperformanceperiod;provided,however,thataParticipantmay,ifandtotheextentpermittedbytheCommitteeandconsistentwiththeprovisionsof
Section409AoftheCode,electtodeferpaymentofaPerformanceAward.
8.2TerminationofService.IntheeventofaParticipantsTerminationofServiceduringanAwardPeriod,theParticipantsPerformanceAwardsshall
beforfeitedexceptasmayotherwisebeprovidedintheapplicableAwardAgreement.
8.3ChangeinControl.UnlessotherwiseprovidedbytheCommitteeintheapplicableAwardAgreement,intheeventofaChangeinControl,all
PerformanceAwardsforallAwardPeriodsshallimmediatelybecomefullyvestedandpayabletoallParticipantsandshallbepaidtoParticipantsinaccordance
withSection8.1(d),within30daysaftersuchChangeinControl.TheprovisionsofthisSection8.3shallnotbeapplicabletoanyPerformanceAwardgrantedtoa
ParticipantifanyChangeinControlresultsfromsuchParticipantsbeneficialownership(withinthemeaningofRule13d-3undertheExchangeAct)ofCommon
StockorCompanyVotingSecurities.
ARTICLE
IX
OTHER
STOCK-BASED
AWARDS
49
9.1GrantofOtherStock-BasedAwards.(as amended May 14, 2010 )Otherstock-basedawards,consistingofstockpurchaserights(withorwithout
loanstoParticipantsbytheCompanycontainingsuchtermsastheCommitteeshalldetermine),AwardsofCommonStock,orAwardsvaluedinwholeorinpart
byreferenceto,orotherwisebasedon,CommonStockordividendsonCommonStock,maybegrantedeitheraloneorinadditiontoorinconjunctionwithother
AwardsunderthePlan.SubjecttotheprovisionsofthePlan,theCommitteeshallhavesoleandcompleteauthoritytodeterminethepersonstowhomandthetime
ortimesatwhichsuchAwardsshallbemade,thenumberofsharesofCommonStocktobegrantedpursuanttosuchAwards,andallotherconditionsofthe
Awards.AnysuchAwardshallbeconfirmedbyanAwardAgreementexecutedbytheCommitteeandtheParticipant,whichAwardAgreementshallcontainsuch
provisionsastheCommitteedeterminestobenecessaryorappropriatetocarryouttheintentofthePlanwithrespecttosuchAward.
9.2TermsofOtherStock-BasedAwards.InadditiontothetermsandconditionsspecifiedintheAwardAgreement,Awardsmadepursuanttothis
ArticleIXshallbesubjecttothefollowing:
(a)AnyCommonStocksubjecttoAwardsmadeunderthisArticleIXmaynotbesold,assigned,transferred,pledgedorotherwiseencumbered
priortothedateonwhichthesharesareissued,or,iflater,thedateonwhichanyapplicablerestriction,performanceordeferralperiodlapses;and
(b)IfspecifiedbytheCommitteeintheAwardAgreement,therecipientofanAwardunderthisArticleIXshallbeentitledtoreceive,
currentlyoronadeferredbasis,interestordividendsordividendequivalentswithrespecttotheCommonStockorothersecuritiescoveredbytheAward;and
(c)TheAwardAgreementwithrespecttoanyAwardshallcontainprovisionsdealingwiththedispositionofsuchAwardintheeventofa
TerminationofServicepriortotheexercise,paymentorothersettlementofsuchAward,whethersuchterminationoccursbecauseofretirement,disability,death
orotherreason,withsuchprovisionstotakeaccountofthespecificnatureandpurposeoftheAward.
ARTICLE
X
SHORT-TERM
CASH
INCENTIVE
AWARDS
10.1Eligibility.ExecutiveofficersoftheCompanywhoarefromtimetotimedeterminedbytheCommitteetobecoveredemployeesforpurposes
ofSection162(m)oftheCodewillbeeligibletoreceiveshort-termcashincentiveawardsunderthisArticleX.
10.2Awards.
(a)PerformanceTargets.TheCommitteeshallestablishobjectiveperformancetargetsbasedonspecifiedlevelsofoneormoreofthe
PerformanceGoals.SuchperformancetargetsshallbeestablishedbytheCommitteeonatimelybasistoensurethatthetargetsareconsideredpreestablishedfor
purposesofSection162(m)oftheCode.AParticipant'sperformancetargetsshallbedeterminedbasedontheattainmentofwrittenPerformanceGoalsapproved
bytheCommitteeforaperformanceperiodestablishedbytheCommittee(i)whiletheoutcomeforthatperformanceperiodissubstantiallyuncertainand(ii)no
morethan90daysafterthecommencementoftheperformanceperiodtowhichtheperformancegoalrelatesor,ifless,thenumberofdayswhichisequalto
25percentoftherelevantperformanceperiod.
50
(b)AmountsofAwards.Inconjunctionwiththeestablishmentofperformancetargetsforafiscalyear,theCommitteeshalladoptan
objectiveformula(onthebasisofpercentagesofParticipantssalaries,sharesinabonuspoolorotherwise)forcomputingtherespectiveamountspayableunder
thePlantoParticipantsifandtotheextentthattheperformancetargetsareattained.SuchformulashallcomplywiththerequirementsapplicabletoperformancebasedcompensationplansunderSection162(m)oftheCodeand,totheextentbasedonpercentagesofabonuspool,suchpercentagesshallnotexceed100%in
theaggregate.
(c)PaymentofAwards.AwardswillbepayabletoParticipantsincasheachyearuponpriorwrittencertificationbytheCommitteeof
attainmentofthespecifiedperformancetargetsfortheprecedingfiscalyear.TheCommitteeshalldeterminewhether,withrespecttoaperformanceperiod,the
applicablePerformanceGoalshavebeenmetwithrespecttoagivenParticipantand,iftheyhave,shallsocertifyandascertaintheamountoftheapplicable
PerformanceAward.NoawardswillbepaidforsuchperformanceperioduntilsuchcertificationismadebytheCommittee.Theamountoftheawarddetermined
bytheCommitteeforaperformanceperiodshallbepaidtotheParticipantatsuchtimeasdeterminedbytheCommitteeinitssolediscretionaftertheendofsuch
performanceperiod;provided,however,thataParticipantmay,ifandtotheextentpermittedbytheCommitteeandconsistentwiththeprovisionsofSection409A
oftheCode,electtodeferpaymentofanaward.
(d)NegativeDiscretion.NotwithstandingtheattainmentbytheCompanyofthespecifiedperformancetargets,theCommitteeshallhavethe
discretion,whichneednotbeexerciseduniformlyamongtheParticipants,toreduceoreliminatetheawardthatwouldbeotherwisepaid.
(e)Guidelines.TheCommitteeshalladoptfromtimetotimewrittenpoliciesforitsimplementationofthisArticleX.Suchguidelinesshall
reflecttheintentionoftheCompanythatallpaymentshereunderqualifyasperformance-basedcompensationunderSection162(m)oftheCode.
(f)Non-ExclusiveArrangement.TheadoptionandoperationofthisArticleXshallnotprecludetheBoardortheCommitteefromapproving
othershort-termincentivecompensationarrangementsforthebenefitofindividualswhoareParticipantshereunderastheBoardorCommittee,asthecasemaybe,
deemsappropriateandinthebestoftheCompany.
ARTICLE
XI
TERMS
APPLICABLE
GENERALLY
TO
AWARDS
GRANTED
UNDER
THE
PLAN
11.1PlanProvisionsControlAwardTerms.ExceptasprovidedinSection11.16,thetermsofthePlanshallgovernallAwardsgrantedunderthePlan,
andinnoeventshalltheCommitteehavethepowertograntanyAwardunderthePlanwhichiscontrarytoanyoftheprovisionsofthePlan.Intheeventany
provisionofanyAwardgrantedunderthePlanshallconflictwithanyterminthePlanasconstitutedontheDateofGrantofsuchAward,theterminthePlanas
constitutedontheDateofGrantofsuchAwardshallcontrol.ExceptasprovidedinSection11.3andSection11.7,thetermsofanyAwardgrantedunderthePlan
maynotbechangedaftertheDateofGrantofsuchAwardsoastomateriallydecreasethevalueoftheAwardwithouttheexpresswrittenapprovaloftheholder.
51
11.2AwardAgreement.NopersonshallhaveanyrightsunderanyAwardgrantedunderthePlanunlessanduntiltheCompanyandtheParticipantto
whomsuchAwardshallhavebeengrantedshallhaveexecutedanddeliveredanAwardAgreementorreceivedanyotherAwardacknowledgmentauthorizedby
theCommitteeexpresslygrantingtheAwardtosuchpersonandcontainingprovisionssettingforththetermsoftheAward.
11.3ModificationofAwardAfterGrant.NoAwardgrantedunderthePlantoaParticipantmaybemodified(unlesssuchmodificationdoesnot
materiallydecreasethevalueoftheAward)aftertheDateofGrantexceptbyexpresswrittenagreementbetweentheCompanyandtheParticipant,providedthat
anysuchchange(a)shallnotbeinconsistentwiththetermsofthePlan,and(b)shallbeapprovedbytheCommittee.
11.4LimitationonTransfer.ExceptasprovidedinSection7.1(c)inthecaseofRestrictedShares,aParticipantsrightsandinterestunderthePlanmay
notbeassignedortransferredotherthanbywillorthelawsofdescentanddistribution,andduringthelifetimeofaParticipant,onlytheParticipantpersonally(or
theParticipantspersonalrepresentative)mayexerciserightsunderthePlan.TheParticipantsBeneficiarymayexercisetheParticipantsrightstotheextentthey
areexercisableunderthePlanfollowingthedeathoftheParticipant.Notwithstandingtheforegoing,totheextentpermittedunderSection16(b)oftheExchange
ActwithrespecttoParticipantssubjecttosuchSection,theCommitteemaygrantNon-QualifiedStockOptionsthataretransferable,withoutpaymentof
consideration,toimmediatefamilymembersoftheParticipantortotrustsorpartnershipsforsuchfamilymembers,andtheCommitteemayalsoamend
outstandingNon-QualifiedStockOptionstoprovideforsuchtransferability.
11.5Taxes.TheCompanyshallbeentitled,iftheCommitteedeemsitnecessaryordesirable,towithhold(orsecurepaymentfromtheParticipantin
lieuofwithholding)theamountofanywithholdingorothertaxrequiredbylawtobewithheldorpaidbytheCompanywithrespecttoanyamountpayableand/or
sharesissuableundersuchParticipantsAward,orwithrespecttoanyincomerecognizeduponadisqualifyingdispositionofsharesreceivedpursuanttothe
exerciseofanIncentiveStockOption,andtheCompanymaydeferpaymentorissuanceofthecashorsharesuponexerciseorvestingofanAwardunless
indemnifiedtoitssatisfactionagainstanyliabilityforanysuchtax.TheamountofsuchwithholdingortaxpaymentshallbedeterminedbytheCommitteeand
shallbepayablebytheParticipantatsuchtimeastheCommitteedeterminesinaccordancewiththefollowingrules:
(a)TheParticipantshallhavetherighttoelecttomeethisorherwithholdingrequirement(i)byhavingwithheldfromsuchAwardatthe
appropriatetimethatnumberofsharesofCommonStock,roundeduptothenextwholeshare,whoseFairMarketValueisequaltotheamountofwithholding
taxesdue,(ii)bydirectpaymenttotheCompanyincashoftheamountofanytaxesrequiredtobewithheldwithrespecttosuchAwardor(iii)byacombinationof
sharesandcash.
(b)InthecaseofParticipantswhoaresubjecttoSection16oftheExchangeAct,theCommitteemayimposesuchlimitationsandrestrictions
asitdeemsnecessaryorappropriatewithrespecttothedeliveryorwithholdingofsharesofCommonStocktomeettaxwithholdingobligations.
11.6SurrenderofAwards.AnyAwardgrantedunderthePlanmaybesurrenderedtotheCompanyforcancellationonsuchtermsastheCommittee
andtheholderapprove.WiththeconsentoftheParticipant,theCommitteemaysubstituteanewAwardunderthePlaninconnectionwiththesurrenderbythe
ParticipantofanequitycompensationawardpreviouslygrantedunderthePlanoranyotherplansponsoredbytheCompany;provided,however,thatnosuch
substitution
52
shallbepermittedwithouttheapprovaloftheCompanysstockholdersifsuchapprovalisrequiredbytherulesofanyapplicablestockexchange.
11.7AdjustmentstoReflectCapitalChanges.
(a)Recapitalization.Intheeventofanycorporateeventortransaction(including,butnotlimitedto,achangeintheCommonStockorthe
capitalizationoftheCompany)suchasamerger,consolidation,reorganization,recapitalization,separation,partialorcompleteliquidation,stockdividend,stock
split,reversestocksplit,splitup,spin-off,orotherdistributionofstockorpropertyoftheCompany,acombinationorexchangeofCommonStock,dividendin
kind,orotherlikechangeincapitalstructure,numberofoutstandingsharesofCommonStock,distribution(otherthannormalcashdividends)toshareholdersof
theCompany,oranysimilarcorporateeventortransaction,theCommittee,inordertopreventdilutionorenlargementofParticipantsrightsunderthePlan,shall
makeequitableandappropriateadjustmentsandsubstitutions,asapplicable,toorofthenumberandkindofsharessubjecttooutstandingAwards,thePurchase
PriceorExercisePriceforsuchshares,thenumberandkindofsharesavailableforfutureissuanceunderthePlanandthemaximumnumberofsharesinrespectof
whichAwardscanbemadetoanyParticipantinanycalendaryear,andotherdeterminationsapplicabletooutstandingAwards.TheCommitteeshallhavethe
powerandsolediscretiontodeterminetheamountoftheadjustmenttobemadeineachcase.
(b)Merger.EffectiveupontheconsummationofaMerger,alloutstandingAwardsunderthePlanshallterminate.However,allsuchAwards
shallnotterminatetotheextenttheyareAssumedinconnectionwiththeMerger.TheCommitteeshallhavetheauthority,exercisableeitherinadvanceofany
actualoranticipatedMergeroratthetimeofanactualMergerandexercisableattheDateofGrantofanAwardunderthePlanoranytimewhileanAward
remainsoutstanding,toprovideforthefullorpartialautomaticvestingandexercisabilityofoneormoreoutstandingunvestedAwardsunderthePlanandthe
releasefromrestrictionsontransferandrepurchaseorforfeiturerightsofsuchAwardsinconnectionwithaMerger,onsuchtermsandconditionsasthe
Committeemayspecify.TheCommitteealsoshallhavetheauthoritytoconditionanysuchAwardvestingandexercisabilityorreleasefromsuchlimitationsupon
thesubsequentTerminationofServiceoftheParticipantwithinaspecifiedperiodfollowingtheeffectivedateoftheMerger.TheCommitteemayprovidethatany
AwardssovestedorreleasedfromsuchlimitationsinconnectionwithaMergershallremainfullyexercisableuntiltheexpirationorsoonerterminationofthe
Award.AnyIncentiveStockOptionacceleratedunderthisSection11.7(b)inconnectionwithaMergershallremainexercisableasanIncentiveStockOption
undertheCodeonlytotheextentthe$100,000dollarlimitationofSection422(d)isnotexceeded.
(c)OptionstoPurchaseSharesorStockofAcquiredCompanies.AfteranyMergerinwhichtheCompanyoraSubsidiaryshallbeasurviving
corporation,theCommitteemaygrantsubstitutedoptionsundertheprovisionsofthePlan,pursuanttoSection424oftheCode,replacingoldoptionsgranted
underaplanofanotherpartytotheMergerwhosesharesorstocksubjecttotheoldoptionsmaynolongerbeissuedfollowingtheMerger.Theforegoing
adjustmentsandmannerofapplicationoftheforegoingprovisionsshallbedeterminedbytheCommitteeinitssolediscretion.Anysuchadjustmentsmayprovide
fortheeliminationofanyfractionalshareswhichmightotherwisebecomesubjecttoanyOptions.
11.8NoRighttoContinuedService.NopersonshallhaveanyclaimofrighttobegrantedanAwardunderthePlan.NeitherthePlannoranyaction
takenhereundershallbeconstruedasgivinganyParticipantanyrighttoberetainedintheserviceoftheCompanyoranyofitsSubsidiaries.
53
11.9AwardsNotIncludableforBenefitPurposes.PaymentsreceivedbyaParticipantpursuanttotheprovisionsofthePlanshallnotbeincludedinthe
determinationofbenefitsunderanypension,groupinsuranceorotherbenefitplanapplicabletotheParticipantwhichismaintainedbytheCompanyoranyofits
Subsidiaries,exceptasmaybeprovidedunderthetermsofsuchplansordeterminedbytheBoard.
11.10GoverningLaw.AlldeterminationsmadeandactionstakenpursuanttothePlanshallbegovernedbythelawsofCaliforniaandconstruedin
accordancetherewith.
11.11NoStrictConstruction.NoruleofstrictconstructionshallbeimpliedagainsttheCompany,theCommittee,oranyotherpersoninthe
interpretationofanyofthetermsofthePlan,anyAwardgrantedunderthePlanoranyruleorprocedureestablishedbytheCommittee.
11.12CompliancewithRule16b-3.Itisintendedthat,unlesstheCommitteedeterminesotherwise,AwardsunderthePlanbeeligibleforexemption
underRule16b-3.TheBoardisauthorizedtoamendthePlanandtomakeanysuchmodificationstoAwardAgreementstocomplywithRule16b-3,asitmaybe
amendedfromtimetotime,andtomakeanyothersuchamendmentsormodificationsasitdeemsnecessaryorappropriatetobetteraccomplishthepurposesofthe
PlaninlightofanyamendmentsmadetoRule16b-3.
11.13Captions.Thecaptions(i.e.,allSectionheadings)usedinthePlanareforconvenienceonly,donotconstituteapartofthePlan,andshallnotbe
deemedtolimit,characterizeoraffectinanywayanyprovisionsofthePlan,andallprovisionsofthePlanshallbeconstruedasifnocaptionshavebeenusedin
thePlan.
11.14Severability.Wheneverpossible,eachprovisioninthePlanandeveryAwardatanytimegrantedunderthePlanshallbeinterpretedinsuch
mannerastobeeffectiveandvalidunderapplicablelaw,butifanyprovisionofthePlanoranyAwardatanytimegrantedunderthePlanshallbeheldtobe
prohibitedbyorinvalidunderapplicablelaw,then(a)suchprovisionshallbedeemedamendedtoaccomplishtheobjectivesoftheprovisionasoriginallywritten
tothefullestextentpermittedbylawand(b)allotherprovisionsofthePlanandeveryotherAwardatanytimegrantedunderthePlanshallremaininfullforce
andeffect.
11.15AmendmentandTermination.
(a)Amendment.TheBoardshallhavecompletepowerandauthoritytoamendthePlanatanytime;provided,however,thattheBoardshall
not,withouttherequisiteaffirmativeapprovalofstockholdersoftheCompany,makeanyamendmentwhichrequiresstockholderapprovalundertheCodeorunder
anyotherapplicablelaworruleofanystockexchangewhichlistsCommonStockorCompanyVotingSecurities.NoterminationoramendmentofthePlanmay,
withouttheconsentoftheParticipanttowhomanyAwardshalltheretoforehavebeengrantedunderthePlan,adverselyaffecttherightofsuchindividualunder
suchAward.
(b)Termination.TheBoardshallhavetherightandthepowertoterminatethePlanatanytime.NoAwardshallbegrantedunderthePlan
aftertheterminationofthePlan,buttheterminationofthePlanshallnothaveanyothereffectandanyAwardoutstandingatthetimeoftheterminationofthePlan
maybeexercisedafterterminationofthePlanatanytimepriortotheexpirationdateofsuchAwardtothesameextentsuchAwardwouldhavebeenexercisable
hadthePlannotterminated.
54
11.16ForeignQualifiedAwards.AwardsunderthePlanmaybegrantedtosuchemployeesoftheCompanyanditsSubsidiarieswhoareresidingin
foreignjurisdictionsastheCommitteeinitssolediscretionmaydeterminefromtimetotime.TheCommitteemayadoptsuchsupplementstothePlanasmaybe
necessaryorappropriatetocomplywiththeapplicablelawsofsuchforeignjurisdictionsandtoaffordParticipantsfavorabletreatmentundersuchlaws;provided,
however,thatnoAwardshallbegrantedunderanysuchsupplementwithtermsorconditionsinconsistentwiththeprovisionsetforthinthePlan.
11.17DividendEquivalents.ForanyAwardgrantedunderthePlan,theCommitteeshallhavethediscretion,upontheDateofGrantorthereafter,to
establishaDividendEquivalentAccountwithrespecttotheAward,andtheapplicableAwardAgreementoranamendmenttheretoshallconfirmsuch
establishment.IfaDividendEquivalentAccountisestablished,thefollowingtermsshallapply:
(a)TermsandConditions.DividendEquivalentAccountsshallbesubjecttosuchtermsandconditionsastheCommitteeshalldetermineand
asshallbesetforthintheapplicableAwardAgreement.Suchtermsandconditionsmayinclude,withoutlimitation,fortheParticipantsAccounttobecreditedas
oftherecorddateofeachcashdividendontheCommonStockwithanamountequaltothecashdividendswhichwouldbepaidwithrespecttothenumberof
sharesofCommonStockthencoveredbytherelatedAwardifsuchsharesofCommonStockhadbeenownedofrecordbytheParticipantonsuchrecorddate.
(b)UnfundedObligation.DividendEquivalentAccountsshallbeestablishedandmaintainedonlyonthebooksandrecordsoftheCompany
andnoassetsorfundsoftheCompanyshallbesetaside,placedintrust,removedfromtheclaimsoftheCompanysgeneralcreditors,orotherwisemadeavailable
untilsuchamountsareactuallypayableasprovidedhereunder.
11.18AdjustmentofPerformanceGoalsandTargets.NotwithstandinganyprovisionofthePlantothecontrary,theCommitteeshallhavetheauthority
toadjustanyPerformanceGoal,performancetargetorotherperformance-basedcriteriaestablishedwithrespecttoanyAwardunderthePlanifcircumstances
occur(including,butnotlimitedto,unusualornonrecurringevents,changesintaxlawsoraccountingprinciplesorpracticesorchangedbusinessoreconomic
conditions)thatcauseanysuchPerformanceGoal,performancetargetorperformance-basedcriteriatobeinappropriateinthejudgmentoftheCommittee;
provided,thatwithrespecttoanyAwardthatisintendedtoqualifyfortheperformance-basedcompensationexceptionunderSection162(m)oftheCodeandthe
regulationsthereunder,anyadjustmentbytheCommitteeshallbeconsistentwiththerequirementsofSection162(m)andtheregulationsthereunder.
11.19LegalityofIssuance.NotwithstandinganyprovisionofthePlanoranyapplicableAwardAgreementtothecontrary,theCommitteeshallhave
thesolediscretiontoimposesuchconditions,restrictionsandlimitations(includingsuspendingexercisesofOptionsorStockAppreciationRightsandthetolling
ofanyapplicableexerciseperiodduringsuchsuspension)ontheissuanceofCommonStockwithrespecttoanyAwardunlessanduntiltheCommitteedetermines
thatsuchissuancecomplieswith(i)anyapplicableregistrationrequirementsundertheSecuritiesActof1933ortheCommitteehasdeterminedthatanexemption
therefromisavailable,(ii)anyapplicablelistingrequirementofanystockexchangeonwhichtheCommonStockislisted,and(iii)anyotherapplicableprovision
ofstate,federalorforeignlaw,includingforeignsecuritieslawswhereapplicable.
55
11.20RestrictionsonTransfer.RegardlessofwhethertheofferingandsaleofCommonStockunderthePlanhavebeenregisteredundertheSecurities
Actof1933orhavebeenregisteredorqualifiedunderthesecuritieslawsofanystate,theCompanymayimposerestrictionsuponthesale,pledge,orothertransfer
ofsuchCommonStock(includingtheplacementofappropriatelegendsonstockcertificates)if,inthejudgmentoftheCompanyanditscounsel,suchrestrictions
arenecessaryordesirabletoachievecompliancewiththeprovisionsoftheSecuritiesActof1933,thesecuritieslawsofanystate,theUnitedStatesoranyother
applicableforeignlaw.
11.21FurtherAssurances.AsaconditiontoreceiptofanyAwardunderthePlan,aParticipantshallagree,upondemandoftheCompany,todoallacts
andexecute,deliverandperformalladditionaldocuments,instrumentsandagreementswhichmaybereasonablyrequiredbytheCompany,toimplementthe
provisionsandpurposesofthePlan.
56
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INOVIO
PHARMACEUTICALS,
INC.
1.
To
elect
the
following
directors
to
serve
for
a
term
ending
upon
the
2017
Annual
Meeting
of
Stockholders
and
until
their
successors
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elected
and
qualified.
01)AvtarS.Dhillon,M.D.
02)J.JosephKim,Ph.D.
03)SimonX.Benito
04)MortonCollins,Ph.D.
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Signature(PLEASESIGNWITHINBOX)
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2016
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TheundersignedalsoacknowledgesreceiptoftheaccompanyingNoticeofAnnualMeetingofStockholdersandProxyStatement.
Pleasedateandsignexactlyasyourname(s)is(are)shownonthesharecertificate(s)towhichtheProxyapplies.Whensharesareheldasjointtenants,bothshouldsign.Whensigningasanexecutor,administrator,trustee,guardian,attorney-in-factorotherfiduciary,pleasegivefulltitleas
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M35099-Z55250
INOVIO
PHARMACEUTICALS,
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PROXY
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