PROPOSAL NO. 3APPROVAL OF AMENDMENT OF THE COMPANYS 2021 EQUITY INCENTIVE PLAN
Our Board of Directors believes that stock-based incentive awards can play an important role in the success of our company by
encouraging and enabling our employees, officers, non-employee directors and consultants upon whose judgment, initiative, and efforts we largely depend on for the successful conduct of our business
to acquire a proprietary interest in our company. Our Board of Directors believes that providing such persons with a direct stake in our company assures a closer identification of the interests of such individuals with ours and our stockholders,
thereby stimulating their efforts on our behalf and strengthening their desire to remain with us. Furthermore, TScan competes for talent in a highly competitive environment and equity awards are a key tools used to attract and retain employees.
On May 24, 2023, upon the recommendation of the Compensation Committee, the Companys Board of Directors approved, subject to
and contingent on the approval by the stockholders of the Company within 12 months of the date of such Board approval, Amendment No. 1 (the Plan Amendment) to the TScan Therapeutics, Inc. 2021 Equity Incentive Plan (as so
amended, the Amended 2021 Plan), increasing the number of shares of voting common stock reserved for issuance thereunder by 7,500,000 shares.
On May 24, 2023, the Compensation Committee of the Board approved stock option awards for an aggregate of 7,148,100 shares of voting
common stock to executive officers and other employees with an exercise price equal to the closing price of the voting common stock on the effective date of the grant of $2.49. The Compensation Committee and Board intend to approve stock option
awards for an aggregate of 255,000 shares of voting common stock to non-employee directors and scientific advisory board members on the date of the 2023 Annual Meeting, with an exercise price equal to the
closing price of the voting common stock on such date of grant. These 7,403,100 stock option awards (the Contingent Stock Option Awards) are subject to and contingent upon the approval of the Plan Amendment by the stockholders of the
Company on or within 12 months of the date the Plan Amendment was approved by the Board. The Contingent Stock Option Awards would be subject to vesting schedules, based on the recipients continued service to the Company through the
vesting date.
On June 1, 2023, the Company completed an underwritten public offering (the 2023 Public Offering) of 23,287,134
shares of its voting common stock and pre-funded warrants to purchase up to an aggregate of 47,010,526 shares of its common stock, at a public offering price of $2.00 per share and $1.9999 per pre-funded warrant, raising approximately $140.6 million in gross proceeds, and extending its cash runway into 2026, based on its current expectations regarding operating expenses and capital expenditure
requirements.
In light of the size and terms of the 2023 Public Offering, the Board believes that the grant of the Contingent Stock
Option Awards, subject to stockholder approval of the Plan Amendment, is necessary for the retention and incentivization of our executive officers, employees and other service providers. The Plan Amendment was intended to make sufficient shares
available for the grant of the Contingent Stock Option Awards, subject to and contingent upon the approval of the Plan Amendment by the stockholders of the Company. The stock option awards to our executive officers and employees have an exercise
price equal to the closing price of the voting common stock on the date of the grant of $2.49, expire 10 years from the date of grant and are subject to vesting over four years, with one portion commencing vesting on May 24, 2023, and a second
portion commencing vesting on February 2, 2024. The additional 255,000 Contingent Stock Option Awards are expected to have similar terms, with an exercise price equal to the closing price of the voting common stock on the date of grant on the
date of the 2023 Annual Meeting.
The Plan Amendment, subject to the approval of our stockholders, increases the number of shares of
common stock authorized for future grant under the Amended 2021 Plan by 7,500,000 shares, so that, together with the 2,658,941 shares that remain available for new awards as of June 1, 2023 (1,957,259 from the 2021 Equity Plan and 701,682 from
the 2018 Stock Plan), a total of 10,158,941 shares of our common stock will be available for new awards, subject to the share counting, share recycling and adjustment provisions, including the annual increase, set forth in the Amended 2021 Plan and
described below (or 2,755,841 shares available for new