UNITED STATES
SECURITIES AND EXCHANGE
COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
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| x | Definitive Proxy Statement | |
| o | Definitive Additional Materials | |
| o | Soliciting Material Under Rule § 240.14a-12 | |
| SIGA TECHNOLOGIES, INC. |
| (Name of Registrant as Specified in Its Charter) |
| N/A |
| (Name of Person(s) Filing Proxy Statement, if other than the Registrant) |
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SIGA Technologies, Inc.
35 East 62nd Street
New York, New York 10065
(212) 672-9100
35 East 62nd Street
New York, New York 10065
(212) 672-9100
April 12,
2010
Dear Stockholder:
You are cordially invited to attend our 2010
Annual Meeting of Stockholders on May 13, 2010, at 10:00 a.m. (local time), at
the offices of Kramer Levin Naftalis & Frankel LLP, 1177 Avenue of the
Americas, 29th
Floor, New York, New York 10036. On the following pages you will find the formal
notice of the annual meeting and proxy statement.
To ensure that you are represented at the
Annual Meeting, whether or not you plan to attend the meeting in person, please
read carefully the accompanying proxy statement, which describes the matters to
be voted upon, and please complete, date, sign and return the enclosed proxy
card promptly.
I hope that you will attend the
meeting and I look forward to seeing you there.
| Sincerely, | |
| Eric A. Rose, M.D. | |
| Chief Executive Officer | |
| and Chairman of the Board |
SIGA Technologies, Inc.
35 East 62nd Street
New York, New York 10065
35 East 62nd Street
New York, New York 10065
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 13, 2010
TO BE HELD ON MAY 13, 2010
NOTICE IS HEREBY GIVEN that the Annual Meeting
of Stockholders (the “Annual Meeting”) of SIGA Technologies, Inc., a Delaware
corporation (“SIGA”), will be held on Thursday, May 13, 2010, at 10:00 a.m.
(local time), at the offices of Kramer Levin Naftalis & Frankel LLP, 1177
Avenue of the Americas, 29th Floor, New York, New
York 10036, and at any adjournment.
At the Annual Meeting, SIGA’s
stockholders will be voting on proposals to do the following:
| 1. |
To elect ten
directors to the Board of Directors of SIGA;
|
||
| 2. |
To ratify the
appointment of PricewaterhouseCoopers LLP as the independent registered
public accounting firm of SIGA for the fiscal year ending December 31,
2010;
|
||
| 3. |
To adopt the
SIGA Technologies, Inc. 2010 Stock Incentive Plan; and
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||
| 4. |
To transact
such other business as may properly come before the Annual Meeting or at
any adjournment or postponement thereof.
|
||
Stockholders of record at the close of
business on March 31, 2010 are entitled to notice of, and to vote at, the Annual
Meeting or any adjournment or postponement thereof. A list of such stockholders
will be available at the Annual Meeting and for any purpose properly related to
the Annual Meeting, during the ten days prior to the Annual Meeting, at SIGA’s
office, during ordinary business hours.
All stockholders are cordially invited to
attend the Annual Meeting. If you do not expect to be present at the Annual
Meeting, you are requested to fill in, date and sign the enclosed proxy and mail
it promptly in the enclosed envelope to make sure that your shares are
represented at the Annual Meeting. In the event you decide to attend the Annual
Meeting in person, you may, if you desire, revoke your proxy and vote your
shares in person.
Directions to the offices of Kramer Levin
Naftalis & Frankel LLP are included on the outside back cover of the Proxy
Statement for the Annual Meeting.
YOUR VOTE IS IMPORTANT
IF YOU ARE UNABLE TO BE PRESENT PERSONALLY,
PLEASE MARK, SIGN AND DATE THE
ENCLOSED PROXY, WHICH IS BEING SOLICITED BY THE BOARD OF DIRECTORS, AND RETURN
IT PROMPTLY IN THE ENCLOSED ENVELOPE.
ENCLOSED PROXY, WHICH IS BEING SOLICITED BY THE BOARD OF DIRECTORS, AND RETURN
IT PROMPTLY IN THE ENCLOSED ENVELOPE.
| By Order of the Board of Directors, | |
| Ayelet Dugary | |
| Secretary |
New York, New
York
April 12, 2010
April 12, 2010
Important Notice Regarding the Availability of
Proxy Materials
for the Annual Meeting of Stockholders to be Held on May 13, 2010.
for the Annual Meeting of Stockholders to be Held on May 13, 2010.
The Proxy Statement and 2009 Annual Report on
Form 10-K are
available in the “Investor Relations” section of our website at www.siga.com
available in the “Investor Relations” section of our website at www.siga.com
SIGA Technologies, Inc.
35 East 62nd Street
New York, New York 10065
(212) 672-9100
35 East 62nd Street
New York, New York 10065
(212) 672-9100
———————
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
MAY 13, 2010
———————
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
MAY 13, 2010
———————
This proxy statement is furnished to
stockholders of SIGA Technologies, Inc. (“SIGA”, the “Company” or “we”) in
connection with the solicitation of proxies, in the accompanying form, by the
Board of Directors of SIGA (the “Board of Directors”) for use in voting at the
Annual Meeting of Stockholders (the “Annual Meeting”) to be held at the offices
of Kramer Levin Naftalis & Frankel LLP, 1177 Avenue of the Americas, 29th
Floor, New York, New York 10036, on Thursday, May 13, 2010, at 10:00 a.m. (local
time), and at any adjournment or postponement thereof.
This proxy statement and the accompanying form
of proxy are first being mailed to stockholders on or about April 12, 2010.
VOTING RIGHTS AND SOLICITATION OF PROXIES
Purpose of the Annual Meeting
The specific proposals to be considered and
acted upon at the Annual Meeting are summarized in the accompanying Notice of
Annual Meeting of Stockholders. Each proposal is described in more detail in
this proxy statement.
Record Date and Outstanding Shares
The Board of Directors has fixed the close of
business on March 30, 2010 as the record date (the “Record Date”) for the
determination of stockholders entitled to notice of, and to vote at, the Annual
Meeting. Only stockholders of record at the close of business on the Record Date
will be entitled to vote at the Annual Meeting or any and all adjournments or
postponements thereof. As of the Record Date, SIGA had issued and outstanding
43,573,727 shares of common stock, par value $.0001 per share (“Common
Stock”).
Voting at the Annual Meeting
Each share of Common Stock outstanding on the
Record Date will be entitled to one vote on each matter submitted to a vote of
the stockholders. Cumulative voting by stockholders is not permitted.
The presence, in person or by proxy, of the
holders of a majority of the votes entitled to be cast by the stockholders
entitled to vote at the Annual Meeting is necessary to constitute a quorum.
Abstentions will be counted as shares present for purposes of determining the
presence of a quorum on all matters. Brokers holding shares for beneficial
owners in “street name” must vote those shares according to specific
instructions they receive from the owners of such shares. If instructions are
not received, brokers may vote the shares, in their discretion, depending on the
type of proposals involved. Broker “non-votes” result when brokers are precluded
from exercising their discretion on certain types of proposals. Brokers have
discretionary authority to vote under the rules governing brokers to vote
without instructions from the beneficial owner on certain “routine” items, such
as the ratification of the appointment of the independent registered public
accounting firm (Proposal 2) and, accordingly, your shares may be voted by your
broker on Proposal 2. However, brokers do not have discretionary authority to
vote on the other proposals included herein. Shares that are voted by brokers on
some but not all of the matters will be treated as shares present for purposes
of determining the presence of a quorum on all matters, but will not be treated
as shares entitled to vote at the Annual Meeting on those matters as to which
authority to vote is withheld by the broker.
For the election of directors, a plurality of
the votes cast is required. Abstentions and broker “non-votes” are not
considered to have been voted for the purpose of the election of
directors.
1
For the ratification of the appointment of
PricewaterhouseCoopers LLP as the independent registered public accounting firm
of SIGA for the fiscal year ending December 31, 2010, the affirmative vote of a
majority of the total votes cast on such proposal in person or by proxy at the
Annual Meeting is required. Abstentions and broker “non-votes” are not
considered to have been voted on this proposal. Brokers and other nominees
continue to have discretionary voting power to vote without instructions from
the beneficial owner on the ratification of the appointment of the independent
auditor and, accordingly, your shares may be voted by your broker on this
proposal.
For the adoption of the SIGA Technologies,
Inc. 2010 Stock Incentive Plan, the affirmative vote of a majority of the total
votes cast on such proposal in person or by proxy at the Annual Meeting is
required. Abstentions and broker “non-votes” for such proposal are not
considered to have been voted on the proposal.
Dissenters’ Rights
Proposals 1, 2 and 3 do not give rise to any
statutory right of a stockholder to dissent and obtain the appraisal of or
payment for such stockholder’s shares.
Revocability and Voting of Proxies
Any person signing a proxy in the form
accompanying this proxy statement has the power to revoke it prior to the Annual
Meeting or at the Annual Meeting prior to the vote pursuant to the proxy. A
proxy may be revoked by any of the following methods:
by writing a letter
delivered to Ayelet Dugary, Secretary of SIGA, stating that the proxy is
revoked;
by submitting another
proxy with a later date; or
by attending the
Annual Meeting and voting in person.
Please note, however, that if a stockholder’s
shares are held of record by a broker, bank or other nominee and that
stockholder wishes to vote at the Annual Meeting, the stockholder must bring to
the Annual Meeting a letter from the broker, bank or other nominee confirming
that stockholder’s beneficial ownership of the shares.
Unless we receive specific instructions to the
contrary or unless such proxy is revoked, shares represented by each properly
executed proxy will be voted: (i) FOR the election of each of SIGA’s nominees as
a director; (ii) FOR the ratification of the appointment of
PricewaterhouseCoopers LLP as the independent registered public accounting firm
of SIGA for the fiscal year ending December 31, 2010; (iii) FOR the adoption of
the SIGA Technologies, Inc. 2010 Stock Incentive Plan; and (iv) with respect to
any other matters that may properly come before the Annual Meeting, at the
discretion of the proxy holders. SIGA does not presently anticipate that any
other business will be presented for action at the Annual Meeting.
Solicitation
SIGA will pay the costs of soliciting proxies.
SIGA may reimburse brokerage firms and other persons representing beneficial
owners of shares for their expenses in forwarding solicitation material to
beneficial owners. Directors, officers and regular employees may also solicit
proxies by telephone, facsimile or other means or in person. They will not
receive any additional payments for the solicitation.
2
PROPOSAL NO. 1
ELECTION OF DIRECTORS
Ten directors are to be elected at the Annual
Meeting to hold office until the next Annual Meeting of Stockholders and until
their successors have been duly elected and qualified. Unless otherwise
instructed, the proxy holders will vote the proxies received by them FOR the
election of the ten persons named in the table below as directors of SIGA.
Proxies cannot be voted for a greater number of persons than the nominees named.
In the event that any of the below listed nominees for director should become
unavailable for election for any presently unforeseen reason, the persons named
in the accompanying proxy form have the right to use their discretion to vote
for a substitute.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE “FOR” THE
ELECTION OF DR. ROSE, MR. ANTAL, MR. BAYER, MR. CONSTANCE, MR. FASMAN, DR.
HAMMER, MR. MARSHALL, MR. SAVAS, MR. SLOVIN AND DR. WEINER AS DIRECTORS (ITEM 1
OF THE ENCLOSED PROXY CARD).
Director Nominee Information
The following table sets forth biographical
information of each director nominee, including their ages, data on their
business backgrounds and the names of public companies and other selected
entities for which they also serve as directors:
| Name | Age | Position | |||
| Eric A. Rose, M.D. | 59 | Chief Executive Officer and Chairman of the Board | |||
| James J. Antal* | 59 | Director | |||
| Michael J. Bayer* | 62 | Director | |||
| Thomas E. Constance* | 73 | Director | |||
| Steven L. Fasman* | 47 | Director | |||
| Scott M. Hammer, M.D.* | 62 | Director | |||
| Joseph W. Marshall, III* | 57 | Director | |||
| Paul G. Savas* | 47 | Director | |||
| Bruce Slovin* | 74 | Director | |||
| Michael A. Weiner, M.D.* | 63 | Director | |||
| * Determined by the Board of Directors to be independent pursuant to Rule 5605 of the NASDAQ Marketplace Rules. | |||||
Eric A. Rose, M.D. was elected Chairman of the
Board of Directors on January 25, 2007, and, on March 1, 2007, became the
Company’s Chief Executive Officer. Dr. Rose has served as a director of SIGA
since April 19, 2001 and served as Interim Chief Executive Officer of SIGA
during April-June 2001. In April 2008, Dr. Rose assumed the chairmanship of the
Department of Health Policy at Mount Sinai School of Medicine. From 1994 through
2007, Dr. Rose served as Chairman of the Department of Surgery and
Surgeon-in-Chief of the Columbia Presbyterian Center of New York Presbyterian
Hospital. Dr. Rose is a director of Abiomed, Inc. and a former director of
PharmaCore, Inc., TransTech Pharma, Inc., Nephros, Inc., Keryx
Biopharmaceuticals, Inc. and Nexell Therapeutics Inc. Dr. Rose is a graduate of
both Columbia College and Columbia University College of Physicians &
Surgeons. In addition to his roles at SIGA, Dr. Rose holds a position as
Executive Vice President – Life Sciences at MacAndrews & Forbes Holdings
Inc., an affiliate of a SIGA shareholder. Dr. Rose’s experience and training as
a practicing physician and a nationally recognized cardiothoracic surgeon
enables him to bring valuable insight to the Board of Directors, including
through his understanding of the scientific aspects of our business and the
ability to assist in prioritizing opportunities for drug development. In
addition, Dr. Rose managed a large research portfolio and an extensive research
and education budget at the Columbia Presbyterian Center, giving him a critical
perspective on drug discovery and development and the issues facing
pharmaceutical and biotechnology companies.
James J. Antal has served as a director of
SIGA since November 2004. Mr. Antal has been an active consultant and founding
investor in several Southern California based emerging companies since his
retirement from Experian in 2002. He has served as Chief Financial Advisor to
Black Mountain Gold Coffee Co. (2003-2005), and as Chief Financial Officer of
Pathway Data, Inc. (2005 to 2009). Mr. Antal joined the board of directors and
serves as the chairman of the audit committee for Cleveland Bio Labs, effective
upon the completion of its initial public offering in July 2006. Mr. Antal was
the Chief Financial Officer and Chief Investment Officer from 1996 to 2002 for
Experian, a $1.6 billion global information services subsidiary of UK-based GUS
plc. Prior to the GUS acquisition of Experian (the former TRW Inc. Information
Systems and Services businesses), Mr. Antal held various finance positions with
TRW from 1978 to 1996, including Senior Vice President of Finance for TRW
Information Systems and Services and TRW Inc. Corporate Director of Financial
Reporting and Accounting. He earned his undergraduate degree in accounting from
The Ohio State University in 1973, and became a certified public accountant
(Ohio) in 1974. He engaged in active practice as a CPA with Ernst & Ernst
until 1978. Mr. Antal has served as a director of First American Real Estate
Solutions, an Experian joint venture with First American Financial Corp. Mr.
Antal has many years of valuable business, leadership and management experience
that provides him with insight into many aspects of SIGA’s business, including
an understanding of corporate finance, financial statements, accounting matters
and capital markets. Mr. Antal also brings financial experience to the Board of
Directors through his 32-year career as an entrepreneur, his various financial
positions at other public companies and through his service as chairman of the
audit committee for Cleveland Bio Labs.
3
Michael J. Bayer has served as a director of
SIGA since October 2008. Mr. Bayer has been a private consultant in the energy
and national security sectors since 2003. Mr. Bayer is the President and Chief
Executive Officer of Dumbarton Strategies LLC, an energy and national security
consulting firm. He is the Chairman of the U.S. Department of Defense’s Business
Board and a member of the Sandia National Laboratory’s National Security
Advisory Panel, the U.S. Department of Defense’s Science Board and the Chief of
Naval Operations’ Executive Panel. Mr. Bayer serves as a director of Dyncorp
International, Inc., where he serves on the audit committee and the nominating
and corporate governance committee, and as a director of Willbros Group, Inc.,
where he chairs the governance and nomination committee. Mr. Bayer is a former
director of Stratos Global Corporation, Duratek, Inc. and Athena Inc. Mr. Bayer
brings many years of experience in the defense industry to the Board of
Directors, which positions him to provide oversight for our Company in
a highly regulated industry and to provide guidance in government relations,
particularly with the Department of Defense and other government agencies. Mr.
Bayer also brings substantial corporate governance and compliance oversight
expertise through his service on the audit committee and nominating and
corporate governance committee of Dyncorp International and through his service
as the chair of the governance and nominating committee of Willbros Group.
Thomas E. Constance has served as a director
of SIGA since April 2001. Mr. Constance is Chairman and, since 1994, a partner
of Kramer Levin Naftalis & Frankel LLP, a law firm in New York City, which
SIGA has retained to provide certain legal services. Mr. Constance serves as a
Trustee of the M.D. Sass Foundation and St. Vincent’s Services. He also serves
on the Advisory Board of Directors of Barington Capital, L.P. As a practicing
attorney, Mr. Constance brings to the Board of Directors many years of
experience counseling public companies with respect to governance and other
legal matters.
Steven L. Fasman has served as a director of
SIGA since May 2007. He has been Senior Vice President-Law at MacAndrews &
Forbes Holdings Inc. since 2004. Prior to that, he served as Vice President-Law
at MacAndrews & Forbes during 1998-2003 and Senior Counsel at MacAndrews
& Forbes during 1992-1997. From 1987 to 1992, he was associated with Paul,
Weiss, Rifkind, Wharton & Garrison. Mr. Fasman’s extensive business and
legal experience in pharmaceutical regulation and as a practicing attorney is
valuable to SIGA with respect to the evaluation of potential business
transactions as well as ongoing corporate governance matters. Mr. Fasman’s
experience in the field of intellectual property law is particularly beneficial
to SIGA, given the central importance of intellectual property to SIGA’s
business.
Scott M. Hammer, M.D. has served as a director
of SIGA since December 2006. Dr. Hammer is the Harold C. Neu Professor of
Medicine, Professor of Epidemiology and Chief of the Division of Infectious
Diseases at the Columbia University Medical Center (CUMC). Dr. Hammer’s major
investigative interest is the treatment and prevention of HIV disease. He is an
investigator in the National Institutes of Health sponsored AIDS Clinical Trials
Group (ACTG), a multicenter organization which performs clinical trials designed
to improve the understanding and treatment of HIV infection and its
complications. As an ACTG investigator, Dr. Hammer chaired the two largest
national trials of antiretroviral therapy carried out by that group in the
1990’s, studies which contributed to the current standard of care of HIV
infection. In addition to his interest in the treatment of persons with
established HIV infection, Dr. Hammer is an investigator in the National
Institutes of Health sponsored HIV Vaccine Trials Network (HVTN), a multicenter
organization whose mission is to develop an effective preventive HIV vaccine. He
is the current protocol chair of HVTN 505, an advanced phase II study of the
preventive HIV vaccine regimen developed by NIAID’s Vaccine Research Center. He
is a former Chair of the AIDS Vaccine Research Working Group of the Division of
AIDS, NIAID, and the Antiviral Products Advisory Committee of the Food and Drug
Administration and currently serves on the Editorial Board of the New England
Journal of Medicine. Dr. Hammer is a former Chair of the International AIDS
Society-USA’s Antiretroviral Guidelines Panel and is Vice Chair of the World
Health Organization’s Strategic and Technical Advisory Committee for HIV/AIDS.
He formerly chaired the Guidelines Development Group of the WHO’s Antiretroviral
Guidelines for Resource Limited Settings and co-chaired the Steering Committee
of the WHO’s Global HIV Drug Resistance Surveillance Program. In his role as
Chief of the Division of Infectious Diseases at CUMC, he is dedicated to fellow
and faculty growth and to the development of state-of-the-art infection
surveillance at the institutional and regional levels to improve and protect the
public health. Dr. Hammer’s experience and training in epidemiology and
infectious diseases bring valuable insight to the Board, including through his
understanding of the scientific aspects of our business, his understanding of
the healthcare community that forms SIGA’s customer base and his perspectives on
the development of antiviral drugs.
4
Joseph W. “Chip” Marshall, III has served as a
director of SIGA since early 2009. Mr. Marshall is the former President and
Chief Executive Officer of Temple University Health System (2001-2008). In 2000,
he became Chair of Temple University Health System and served in that capacity
until 2007. Prior to 2000, Marshall was a founding partner at Goldman &
Marshall P.C., Philadelphia, PA, a corporate health-care law firm. He received
his B.A. and J.D. degrees (1975 and 1979, respectively) from Temple University.
In 1990, he joined the Temple University Board of Trustees. He was a founding
member of the Temple University Health System Board of Directors in 1995. He
served on the Pennsylvania State Ethics Commission in the 1980’s and early
1990’s, including as Chairman for a portion of that period. During 2005-2006, he
served as a Member of the Federal Medicaid Commission. Additionally, during
2004-2006, he served as a Member of the Pennsylvania Gaming Control Board. Mr.
Marshall has more than 30 years of experience in health care and is a prominent
and highly regarded figure in the health care and higher education sectors. His
excellent leadership, visibility and expertise in health care are of
considerable value to the Board of Directors.
Paul G. Savas has served as a director of SIGA
since January 2004. Mr. Savas is Executive Vice President and Chief Financial
Officer at MacAndrews & Forbes Holdings Inc. He joined MacAndrews &
Forbes Holdings Inc. in 1994 as Director of Corporate Finance, served in various
positions of increasing responsibility and became Chief Financial Officer in
2007. He also serves as Executive Vice President and Chief Financial Officer of
M & F Worldwide Corp. and serves as a director of Harland Clarke Holding
Corp. and TransTech Pharma, Inc. Mr. Savas is a former director of REV Holdings
LLC and PharmaCore Inc. Mr. Savas provides our Board valuable business,
leadership and management insights with respect to our strategic operational and
financial direction. Mr. Savas’s strong financial background, including his work
at MacAndrews & Forbes and his service on other boards, also provides
financial expertise to the Board of Directors, including an understanding of
financial statements, corporate finance, accounting and capital
markets.
Bruce Slovin has served as a director of SIGA
since October 2008. Mr. Slovin has been the President of 1 Eleven Associates,
LLC, a private investment firm, for over five years. From 1980 to 2000, Mr.
Slovin was an executive officer of MacAndrews & Forbes Holdings Inc. and
several of its affiliates. Mr. Slovin is a director of Cantel Industries and M
& F Worldwide Corp. As a result of Mr. Slovin’s long career in various
operating and financial positions, he provides the Board of Directors valuable
business, leadership and management insights into many aspects of our business.
Michael A. Weiner, M.D. has served as a
director of SIGA since 2001. Dr. Weiner has been the Hettinger Professor of
Pediatrics at Columbia University College of Physicians and Surgeons since 1996.
Dr. Weiner is also the Director of Pediatric Oncology at New York Presbyterian
Hospital. Dr. Weiner was a director of Nexell Therapeutics, Inc. (f/k/a VimRx)
from March 1996 to February 1999. Dr. Weiner is a 1972 graduate of the New York
State Health Sciences Center at Syracuse and was a post-graduate student at New
York University and Johns Hopkins University. Dr. Weiner’s many years of
experience and training as a practicing physician enable him to bring important
perspectives on issues facing our drug discovery process and assist us in
prioritizing opportunities for drug development. Dr. Weiner’s prominence in the
medical field and relationships in the medical and academic communities are a
valuable asset to the Board of Directors.
Meetings of the Board of Directors
During 2009, the Board of Directors held eight
meetings. During 2009, one director, Michael J. Bayer, attended fewer than 75%
of the aggregate of the meetings of the Board of Directors and the committees on
which he served during the period for which he has been a director or committee
member. During 2009, no action was taken
by unanimous written consent of the Board of Directors.
Those members of the Board of Directors who
are independent as defined by Rule 5605 of the NASDAQ Marketplace Rules (the
“Independent Directors”) are also required, pursuant to Rule 5605(b)(2) of the
NASDAQ Marketplace Rules, to regularly convene executive sessions where only
such Independent Directors are present. Such meetings may be in conjunction with
regularly scheduled meetings of the Board of Directors. Each member of the Board
of Directors is also urged to attend the annual meeting of SIGA’s stockholders.
Eight members of the Board of Directors attended SIGA’s 2009 annual meeting of
stockholders.
5
Committees of the Board of Directors
The Board of Directors currently has, and
appoints the members of, standing Audit, Compensation and Nominating and
Corporate Governance Committees. Each member of the Audit, Compensation and
Nominating and Corporate Governance Committees is an Independent Director. Each
of these committees has a written charter approved by the Board of the Directors
in March 2004. A copy of each charter is posted on SIGA’s website at
www.siga.com under the “Corporate Governance” section.
Audit Committee.
The Audit Committee, which currently consists of directors Paul G. Savas, James
J. Antal, and Bruce Slovin, held twelve meetings during 2009. The Board of
Directors has determined that each of the members of the Audit Committee is
“independent” under the applicable laws, rules and regulations. The Company has
determined that Mr. Savas is an “audit committee financial expert” within the
meaning of Regulation S-K promulgated by the Securities and Exchange Commission
(the “SEC”). The purpose of the Audit Committee is to assist the Board of
Directors in the oversight of the integrity of SIGA’s financial statements,
SIGA’s compliance with legal and regulatory matters, the independent registered
public accounting firm’s qualifications and independence, and the performance of
SIGA’s independent registered public accounting firm. The primary
responsibilities of the Audit Committee are set forth in its charter and include
various matters with respect to the oversight of SIGA’s accounting and financial
reporting process and audits of the financial statements of SIGA on behalf of
the Board of Directors. The Audit Committee also selects the independent
registered public accounting firm to conduct the annual audit of SIGA’s
financial statements; reviews the proposed scope of such audit; reviews the
Company’s accounting and financial controls with the independent registered
public accounting firm and our financial accounting staff; and reviews and
approves transactions, if any, between us and our directors, officers, and their
affiliates. A copy of the Audit Committee charter is available on SIGA’s website
at www.siga.com under the “Corporate Governance” section. Also see the section
of this proxy statement entitled “Report of the Audit Committee”.
Compensation Committee. The Compensation Committee, which currently consists of directors
Steven L. Fasman, Paul G. Savas, Bruce Slovin, and Michael A. Weiner, held five
meetings during 2009. The Board of Directors has determined that each of the
members of the Compensation Committee is “independent” within the meaning of the
NASDAQ listing standards. The Compensation Committee functions include reviewing
and approving the compensation and benefits for SIGA’s executive officers,
administering SIGA’s stock plans and making recommendations to the Board of
Directors regarding these matters. A copy of the Compensation Committee charter
is available on SIGA’s website at www.siga.com under the “Corporate Governance”
section. Also see the section of this proxy statement entitled “Compensation
Discussion and Analysis”.
Nominating and Corporate Governance Committee. The Nominating and Corporate Governance
Committee (the “Nominating Committee”), which currently consists of directors
Michael J. Bayer, James J. Antal and Michael A. Weiner, held three meetings in
2009. The Board of Directors has determined that each of the members of the
Nominating Committee is “independent” within the meaning of the NASDAQ listing
standards. The Nominating Committee is responsible for searching for and
recommending to the Board of Directors potential nominees for director
positions, making recommendations to the Board of Directors regarding the size
and composition of the Board of Directors and its committees, monitoring the
Board of Director’s effectiveness and developing and implementing SIGA’s
corporate governance procedures and policies. A copy of the Nominating and
Corporate Governance Committee charter is available on SIGA’s website at
www.siga.com under the “Corporate Governance” section.
In selecting candidates for the Board of
Directors, the Nominating Committee begins by determining whether the incumbent
directors whose terms expire at the annual meeting of stockholders desire and
are qualified to continue their service on the Board of Directors. SIGA is of
the view that the continuing service of qualified incumbents promotes stability
and continuity of the Board of Directors, giving SIGA the benefit of the
familiarity and insight into SIGA’s affairs that its directors have accumulated
during their tenure, while contributing to the Board of Director’s ability to
work as a collective body. Accordingly, it is the policy of the Nominating
Committee, absent special circumstances, to nominate qualified incumbent
directors who continue to satisfy the Nominating Committee’s criteria for
membership on the Board of Directors, whom the Nominating Committee believes
will continue to make important contributions to the Board of Directors and who
consent to stand for re-election and, if re-elected, to continue their service
on the Board of Directors. If there are positions on the Board of Directors for
which the Nominating Committee will not be re-nominating an incumbent director,
or if there is a vacancy on the Board of Directors, the Nominating Committee
will solicit recommendations for nominees from persons whom the Nominating
Committee believes are likely to be familiar with qualified candidates,
including members of the Board of Directors and management of SIGA. The
Nominating Committee may also engage a professional search firm to assist in the
identification of qualified candidates, but did not do so in 2009. As to each
recommended candidate that the Nominating Committee believes merits serious
consideration, the Nominating Committee will collect as much information,
including without limitation, soliciting views from other directors and SIGA’s
management and having one or more Nominating Committee members interview each
such candidate, regarding each candidate as it deems necessary or appropriate in
order to make an informed decision with respect to such candidate. The
Nominating Committee considers the overall qualifications of prospective
nominees for director, including the particular experience, expertise and
outlook that they would bring to the Board of Directors. While diversity may
contribute to this overall evaluation, it is not considered by the Nominating
Committee as a separate or independent factor in identifying nominees for
director. Based on all available information and relevant considerations, the
Nominating Committee will select, for each directorship to be filled, a
candidate who, in the view of the Nominating Committee, is most suited for
membership on the Board of Directors. In making its selection, SIGA will
evaluate candidates proposed by stockholders under criteria similar to the
evaluation of other candidates, except that the Nominating Committee may
consider, as one of the factors in its evaluation of stockholder recommended
nominees, the size and duration of the interest of the recommending stockholder
or stockholder group in the equity of SIGA. This consideration may also include
how long the recommending stockholder intends to continue holding its equity
interest in SIGA.
6
The Nominating Committee has adopted a policy
with regard to the minimum qualifications that must be met by a Nomination
Committee-recommended nominee for a position on the Board of Directors. Pursuant
to this policy, the Nominating Committee generally requires that all candidates
for the Board of Directors be of high personal integrity and ethical character
and not have any interest that would, in the view of the Nominating Committee,
materially impair the candidate’s ability to (i) exercise independent judgment
or (ii) otherwise discharge the fiduciary duties owed as a director to SIGA and
its stockholders. In addition, candidates must be able to represent fairly and
equally all stockholders of SIGA without favoring or advancing any particular
stockholder or other constituency of SIGA. Candidates must have demonstrated
achievement in one or more fields of business, professional, governmental,
communal, scientific or educational endeavor. Candidates are expected to have
sound judgment and a general appreciation regarding major issues facing public
companies of a size and operational scope similar to SIGA, including
contemporary governance concerns, regulatory obligations of a public issuer,
strategic business planning, competition in a global economy, and basic concepts
of corporate finance. Candidates must also have, and be prepared to devote,
adequate time to the Board of Directors and its committees. It is expected that,
taking into account their other business and professional commitments, including
their service on the boards of other companies, each candidate will be available
to attend meetings of the Board of Directors and any committees on which the
candidate will serve, as well as SIGA’s annual meeting of stockholders. SIGA
also requires that at least a majority of the directors serving at any time on
the Board of Directors are independent, as defined under the rules of the NASDAQ
stock market and that at least three of the directors satisfy the financial
literacy requirements required for service on the Audit Committee under the
rules of the NASDAQ stock market.
The Nominating Committee has adopted a policy,
summarized in this paragraph, with regard to the consideration of director
candidates recommended by stockholders. The Nominating Committee will consider
recommendations for the nomination of directors submitted by holders of SIGA’s
shares entitled to vote generally in the election of directors. The Nominating
Committee will give consideration to these recommendations for positions on the
Board of Directors where the Nominating Committee has not determined to
re-nominate a qualified incumbent director. While the Nominating Committee has
not established a minimum number of shares that a stockholder must own in order
to present a nominating recommendation for consideration, or a minimum length of
time during which the stockholder must own its shares, the Nominating Committee
may take into account the size and duration of a recommending stockholder’s
ownership interest in SIGA. The Nominating Committee may also consider whether
the stockholder making the nominating recommendation intends to maintain an
ownership interest in SIGA of substantially the same size as at its interest at
the time of making the recommendation. The Nominating Committee may refuse to
consider recommendations of nominees who do not satisfy the minimum
qualifications prescribed by the Nominating Committee for board candidates.
The Nominating Committee has adopted
procedures to be followed by stockholders in submitting recommendations of
candidates for directors. The procedures are posted on SIGA’s website at
www.siga.com under the “Corporate Governance” section. Pursuant to these
procedures, a stockholder (or group of stockholders) wishing to submit a
nominating recommendation for an annual meeting of stockholders should arrange
to deliver it to SIGA not later than 120 calendar days prior to the first
anniversary of the date of the proxy statement for the prior annual meeting of
stockholders. All stockholder nominating recommendations should be in writing,
addressed to the “Nominating and Corporate Governance Committee” in care of
SIGA’s Chief Financial Officer at SIGA’s principal headquarters, 35 East 62nd Street, New York, NY
10065. Submissions should be made by mail, courier or personal delivery. A
nominating recommendation should be accompanied by the following information
concerning each recommending stockholder:
The name and address,
including telephone number, of the recommending stockholder;
7
The number and class
of SIGA’s shares owned (beneficially or of record) by the recommending
stockholder and the time period for which such shares have been held;
A statement from the
stockholder as to whether the stockholder has a good-faith intention to continue
to hold the reported shares through the date of SIGA’s next annual meeting of
stockholders;
Sufficient
information about the proposed nominee for the Nominating Committee to make an
informed decision regarding the qualifications of the proposed nominee;
Any relationship
between the proposed nominee and the recommending stockholder; and
Such other
information as the Nominating Committee may reasonably request.
The nominating recommendation must be
accompanied by the consent of the proposed nominee to be interviewed by the
Nominating Committee, if the Nominating Committee chooses to do so in its
discretion (and the recommending stockholder must furnish the nominee’s contact
information for this purpose), and, if nominated and elected, to serve as a
director of SIGA.
Compensation Committee Interlocks and Insider
Participation
None.
Code of Ethics
SIGA has adopted a Code of Ethics and Business
Conduct that applies to its officers, directors and employees, including without
limitation, our Chief Executive Officer, Chief Financial Officer, and Chief
Scientific Officer. The Code of Ethics and Business Conduct is available, free
of charge, on SIGA’s website at www.siga.com under the “Corporate Governance”
section. In the event that there is any amendment to or waiver from any
provision of the Code of Ethics and Business Conduct that requires disclosure
under Item 5.05 of Form 8-K, SIGA intends to satisfy these disclosure
requirements by posting such information on its website, as permitted by Item
5.05(c) of Form 8-K.
Stockholder Communications with the Board of
Directors
SIGA stockholders may send communications to
the Board of Directors, any committee of the Board of Directors or an individual
director. The process for so communicating is posted on SIGA’s website at
www.siga.com under the “Corporate Governance” section.
Board Leadership Structure
The Board of Directors believes that our CEO
is best situated to serve as Chairman because he is the director most familiar
with our business and industry and most capable of effectively identifying
strategic priorities and leading the discussion and implementation of strategy.
Independent directors and management have different perspectives and roles in
strategy development. Our independent directors bring experience, oversight
skills and expertise from outside our organization and industry, while the CEO
brings company-specific experience and expertise. The Board of Directors
believes that the combined role of Chairman and CEO promotes strategy
development and implementation, and facilitates information flow between
management and the Board of Directors, which are essential to effective
governance.
One of the principal responsibilities of the
Board of Directors is to develop strategic direction and hold management
accountable for implementing the strategy once it is developed. The Board of
Directors believes the combined role of Chairman and CEO, together with an
informed and engaged Board, is in the best interest of shareholders because it
provides the appropriate balance between strategy development and independent
oversight of management. The Board of Directors has no independent director
permanently designated as a “Lead Director”, although the independent directors
designate a leader for that meeting each time that they go into executive
session. The Board of Directors intends to review its leadership structure
periodically and consider whether other structures might be appropriate.
8
The Board’s Role in Risk
Oversight
The Board of Directors has an active role, as
a whole and at the committee level, in overseeing management of our risks. The
Board of Directors regularly reviews information about our financial condition
and operations, and the risks associated with each. Our Board’s Compensation
Committee is responsible for overseeing the management of risks relating to our
executive compensation plans and arrangements. The Audit Committee oversees
management of financial reporting risks and considers the effects of systemic
risks inherent in our business. The Nominating and Corporate Governance
Committee manages risks associated with the independence of the Board of
Directors and potential conflicts of interest. Although each committee is
responsible for evaluating certain risks and overseeing the management of those
risks, the entire Board of Directors is regularly informed about them through
committee reports.
9
REPORT OF THE AUDIT COMMITTEE
The members of the Audit Committee have been
appointed by the Board of Directors. During the 2009 fiscal year, the Audit
Committee consisted solely of independent directors, as defined in Rule
5605(a)(2) of the NASDAQ Marketplace Rules. The Audit Committee operates under a
written charter that was amended and restated by the Board of Directors in March
2004 in order to assure continued compliance by SIGA with SEC and NASDAQ rules
enacted in response to requirements of the Sarbanes-Oxley Act. The Audit
Committee reviews and reassesses the adequacy of its written charter on an
annual basis.
The Audit Committee assists the Board of
Directors in monitoring the integrity of SIGA’s financial statements, the
independent registered public accounting firm’s qualifications and independence,
the performance of the independent registered public accounting firm, and SIGA’s
compliance with applicable legal and regulatory requirements. Management is
responsible for SIGA’s internal controls and the financial reporting process.
The independent registered public accounting firm is responsible for performing
an independent audit of SIGA’s financial statements in accordance with generally
accepted auditing standards and for issuing a report on those financial
statements. The Audit Committee monitors and oversees these processes.
In this context, the Audit Committee has
reviewed and discussed the audited financial statements for the year ended
December 31, 2009 with management and with PricewaterhouseCoopers LLP, SIGA’s
independent registered public accounting firm. The Audit Committee has discussed
with PricewaterhouseCoopers LLP the matters required to be discussed by the
statement on Auditing Standards No. 61, as amended (AICPA, Professional Standards, Vol. 1. AU section 380), as adopted by the Public Company Oversight
Board in Rule 3200T, which includes, among other items, matters related to the
conduct of the audit of SIGA’s annual financial statements.
The Audit Committee has also received the
written disclosures and the letter from PricewaterhouseCoopers LLP required by
applicable requirements of the Public Company Accounting Oversight Board
regarding the independent registered public accounting firm’s communications
with the Audit Committee concerning independence, and has discussed with
PricewaterhouseCoopers LLP the issue of their independence from SIGA and
management. In addition, the Audit Committee has considered whether the
provision of non-audit services by the independent registered public accounting
firm in 2009 is compatible with maintaining the auditors’ independence and has
concluded that it is.
Based on its review of the audited financial
statements and the various discussions noted above, the Audit Committee
recommended to the Board of Directors that the audited financial statements be
included in SIGA’s Annual Report on Form 10-K for the year ended December 31,
2009. The Audit Committee has also recommended, subject to stockholder
ratification, the selection of SIGA’s independent registered public accounting
firm for the year ending December 31, 2010.
The members of the Audit Committee are Paul G.
Savas, James J. Antal, and Bruce Slovin, none of whom is, or, during the fiscal
year 2009, was, an employee of SIGA.
During the period January 1, 2009 through May
13, 2009, the Audit Committee was comprised of Paul G. Savas, James J. Antal,
and Judy S. Slotkin. On May 13, 2009, the Board of Directors elected Bruce
Slovin to serve on the Committee. Some events described in this report occurred
before Mr. Slovin joined to serve as a member of the Audit Committee.
| Respectfully submitted by the Audit Committee, | |
| Paul G. Savas, Chairman | |
| James J. Antal | |
| Bruce Slovin |
10
COMPENSATION COMMITTEE REPORT ON EXECUTIVE
COMPENSATION
The Compensation Committee,
comprised of independent directors, has:
(1) reviewed and
discussed the Compensation Discussion and Analysis included in this proxy
statement with management; and
(2) based on the
review and discussions referred to in paragraph (1) above, the Compensation
Committee recommended to the Board of Directors that the Compensation Discussion
and Analysis be included in the Company’s proxy statement relating to the 2010
Annual Meeting of shareholders.
| Respectfully submitted by the Compensation Committee, | |
| Steven L. Fasman, Chairman | |
| Paul G. Savas | |
| Bruce Slovin | |
| Michael A. Weiner |
11
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
Ownership of Common Stock
The following tables set forth certain
information regarding the beneficial ownership of SIGA’s voting securities as of
March 10, 2010 of (i) each person known to SIGA to beneficially own more than 5%
of the applicable class of voting securities, (ii) each director and director
nominee of SIGA, (iii) each Named Executive Officer and (iv) all directors and
executive officers of SIGA as a group. As of March 10, 2010, a total of
43,244,635 shares of Common Stock were outstanding. Each share of Common Stock
is entitled to one vote on matters on which holders of Common Stock are eligible
to vote. The column entitled “Percentage of Total Voting Stock Outstanding”
shows the percentage of total voting stock beneficially owned by each listed
party.
The number of shares beneficially owned is
determined under rules promulgated by the Securities and Exchange Commission,
and the information is not necessarily indicative of beneficial ownership for
any other purpose. Under those rules, beneficial ownership includes any shares
as to which the individual has sole or shared voting power or investment power
and also any shares which the individual has the right to acquire within 60 days
of March 10, 2010, through the exercise or conversion of any stock option,
convertible security, warrant or other right. Unless otherwise indicated, each
person or entity named in the table has sole voting power and investment power
(or shares that power with that person’s spouse) with respect to all shares of
capital stock listed as owned by that person or entity.
| Amount of | Percentage of | Percentage of | ||||||||
| Name and Address of | Beneficial | Common Stock | Total Voting | |||||||
| Beneficial Owner (1) | Ownership (2) | Outstanding | Stock Outstanding | |||||||
| MacAndrews & Forbes LLC. (3) | 8,291,036 | (5) | 18.19 | % | 18.19 | % | ||||
| STH Partners L.P. (4) | 3,851,969 | 8.91 | % | 8.91 | % | |||||
| James J. Antal | ||||||||||
| 30952 Steeplechase Dr. | ||||||||||
| San Juan Capistrano, CA 92675 | 86,154 | (6) | * | * | ||||||
| Michael J. Bayer | ||||||||||
| Dumbarton Strategies | ||||||||||
| 3130 Dumbarton Street, NW | ||||||||||
| Washington D.C., 20007 | 35,000 | (7) | * | * | ||||||
| Thomas E. Constance | ||||||||||
| 1177 Avenue of the Americas | ||||||||||
| New York, NY 10036 | 281,267 | (8) | * | * | ||||||
| Steven L. Fasman | 47,000 | (9) | * | * | ||||||
| Scott M. Hammer, M.D. | ||||||||||
| 161 Fort Washington Ave. | ||||||||||
| New York, NY 10032 | 55,000 | (10) | * | * | ||||||
| Joseph W. Marshall III | ||||||||||
| 500 Office Center Drive, Suite 400 | ||||||||||
| Ft. Washington, PA 19034 | 35,000 | (7) | * | * | ||||||
| Eric A. Rose, M.D. | 913,648 | (12) | 2.07 | % | 2.07 | % | ||||
| Paul G. Savas | 111,484 | (13) | * | * | ||||||
| Bruce Slovin | ||||||||||
| 1 Eleven Associates LLC | ||||||||||
| 111 East 61st Street | ||||||||||
| New York, NY 10065 | 55,000 | (7) | * | * | ||||||
| Michael A. Weiner, M.D. | ||||||||||
| 161 Fort Washington Ave. | ||||||||||
| New York, NY 10032 | 60,000 | (11) | * | * | ||||||
| Ayelet Dugary | 156,667 | (14) | * | * | ||||||
12
| Amount of | Percentage of | Percentage of | ||||||||
| Name and Address of | Beneficial | Common Stock | Total Voting | |||||||
| Beneficial Owner (1) | Ownership (2) | Outstanding | Stock Outstanding | |||||||
| Dennis E. Hruby, Ph.D. | 641,666 | (14) | 1.46 | % | 1.46 | % | ||||
| All Executive Officers and Directors as a | ||||||||||
| group (twelve persons) | 2,477,886 | (15) | 5.6 | % | 5.6 | % | ||||
| (1) | Unless otherwise indicated the address of each beneficial owner identified is 35 East 62nd Street, New York, New York 10065. | |
| (2) | Unless otherwise indicated, each person has sole investment and voting power with respect to the shares indicated. For purposes of this table, a person or group of persons is deemed to have “beneficial ownership” of any shares as of a given date which such person has the right to acquire within 60 days after such date. For purposes of computing the percentage of outstanding shares held by each person or group of persons named above on a given date, any security which such person or persons has the right to acquire within 60 days after such date is deemed to be outstanding for the purpose of computing the percentage ownership of such person or persons, but is not deemed to be outstanding for the purpose of computing the percentage ownership of any other person. | |
| (3) | MacAndrews & Forbes LLC is a direct, wholly owned subsidiary of MacAndrews & Forbes Holdings Inc., a holding company whose sole stockholder is Ronald O. Perelman. | |
| (4) | STH Partners L.P. (“STH”) is a holding company, the general partner of which is MK Holdings One LLC and the limited partner of which is MacAndrews & Forbes LLC (having a 100% limited partner interest in STH). STH and its general and limited partners are parties to a letter agreement pursuant to which the parties agreed that (i) the general partner of STH shall have sole power to dispose of the shares of Common Stock held by STH and (ii) on all matters to be voted on by the stockholders of the Company, all shares of Common Stock held by STH shall be voted in the same proportion as the votes cast by all other holders of voting stock of the Company. | |
| (5) | Includes 2,329,004 shares of Common Stock issuable upon exercise of warrants. | |
| (6) | Includes 75,000 shares of Common Stock issuable upon exercise of options. | |
| (7) | Includes 35,000 shares of Common Stock issuable upon exercise of options | |
| (8) | Includes 265,000 shares of Common Stock issuable upon exercise of options. | |
| (9) | Includes 45,000 shares issuable upon exercise of options. | |
| (10) | Includes 55,000 shares issuable upon exercise of options. | |
| (11) | Includes 60,000 shares issuable upon exercise of options. | |
| (12) | Includes 786,668 shares of Common Stock issuable upon exercise of options. | |
| (13) | Includes 9,123 shares of Common Stock issuable upon exercise of warrants and 75,000 shares issuable upon exercise of options. | |
| (14) | Neither of Ms. Dugary or Dr. Hruby own shares of Common Stock. All shares listed as beneficially owned by each of them are shares issuable upon exercise of stock options. | |
| (15) | See footnotes (5)-(13). | |
13
MANAGEMENT
Executive Officers
The following table sets forth
certain information with respect to the executive officers of SIGA:
| Name | Age | Position | ||||
| Eric A. Rose, M.D. | 59 | Chief Executive Officer and Chairman of the Board | ||||
| Ayelet Dugary (1) | 43 | Chief Financial Officer and Secretary | ||||
| Dennis E. Hruby, Ph.D. | 58 | Vice President, Chief Scientific Officer | ||||
| (1) | Ms. Dugary was appointed to serve as Acting Chief Financial Officer on February 1, 2009 and as Chief Financial Officer effective April 29, 2009. |
Ayelet Dugary became Chief Financial Officer
of SIGA as of April 29, 2009. Ms. Dugary served as SIGA’s Acting Chief Financial
Officer from February 2009 to April 2009, and Director of Finance and Controller
from December 2004 to January 2009. From 1997 to 2004, Ms. Dugary served in
various positions of increasing responsibility with PricewaterhouseCoopers, LLP,
the last of which was Senior Manager, where she gained substantial auditing
experience and assisted clients in the development of their financial reporting
and regulatory compliance procedures. Ms. Dugary holds an MBA from the
University of Santa Clara, CA.
Dennis E. Hruby, Ph.D. has served as Vice
President - Chief Scientific Officer since June 2000. From April 1, 1997 through
June 2000, Dr. Hruby was our Vice President of Research. From January 1996
through March 1997, Dr. Hruby served as a senior scientific advisor to SIGA. Dr.
Hruby is a Professor of Microbiology at Oregon State University, and from 1990
to 1993 was Director of the Molecular and Cellular Biology Program and Associate
Director of the Center for Gene Research and Biotechnology. Dr. Hruby
specializes in virology and cell biology research, and the use of viral and
bacterial vectors to produce recombinant vaccines. He is a member of the
American Society of Virology, the American Society for Microbiology and a fellow
of the American Academy of Microbiology. Dr. Hruby received a Ph.D. in
microbiology from the University of Colorado Medical Center and a B.S. in
microbiology from Oregon State University.
See Director Nominee Information,
above, for a biography of Dr. Rose.
14
COMPENSATION DISCUSSION AND ANALYSIS
Overview
The Compensation Committee of the Board of
Directors is responsible for implementing the Board of Director’s directives
relating to the compensation of our named executive officers, as well as our
other key employees. In this regard, the Compensation Committee has the
responsibility to establish a compensation policy for officers and key employees
designed to (i) attract and retain the best possible executive talent; (ii) tie
annual and long-term cash and stock incentives to achievement of measurable
corporate and individual performance objectives; and (iii) provide competitive
compensation to our officers and key employees to align executives’ incentives
with the creation of stockholder value.
As a general matter, the
compensation policy for officers and key employees includes:
- base salary, which is
determined on an annual or semi-annual basis
- annual or other time-based
cash incentive compensation, and
- long-term incentive compensation in the form of equity participation awards.
This section discusses the principles
underlying our executive compensation policies, our decisions to date and the
principles that we expect to use in coming years.
Our Named Executive Officers
For 2009, our Named Executive
Officers and their titles were:
| Name | Title | |
| Dr. Eric A. Rose | Chief Executive Officer and Chairman of the Board | |
| Ayelet Dugary | Chief Financial Officer and Secretary (1) | |
| Dr. Dennis E. Hruby | Chief Scientific Officer and Vice President | |
| Thomas N. Konatich | Former Chief Financial Officer (2) |
| (1) | On April 29, 2009, Ms. Dugary became Chief Financial Officer. | |
| (2) | Mr. Konatich became Chief Financial Officer on April 1, 1998. Effective January 31, 2009 the Company and Mr. Konatich agreed not to extend the terms of Mr. Konatich’s employment agreement and effective January 31, 2009, Mr. Konatich’s employment with the Company ended. | |
Our Executive Compensation Decision Process
Overview
Our Compensation Committee reviews and
approves on a periodic basis the corporate goals and objectives with respect to
the compensation for the Chief Executive Officer and other executive
officers.
Role of Executive Officers in Setting Compensation Decisions
Regarding most compensation matters, the Chief
Executive Officer has historically provided recommendations to the Compensation
Committee relying on his personal experience with respect to evaluating the
contribution of our other executive officers. Dr. Eric A. Rose, our Chief
Executive Officer and Chairman of the Board of Directors, is involved in
compensation recommendations, with input from our Chief Financial Officer and
Chief Scientific Officer, as it relates to the compensation of other key
employees. The Compensation Committee considers, but retains the right to reject
or modify, such recommendations. Although the Chief Executive Officer may attend
a portion of the meetings of the Compensation Committee, neither he nor any
other member of management may be present during executive sessions of the
Compensation Committee. Moreover, the Chief Executive Officer may not be present
when decisions with respect to his compensation are made. The Committee has
used, on more than one occasion, a third-party compensation
consultant.
Compensation Advisors
The Compensation Committee has the authority
to retain compensation consultants to advise the Compensation Committee as it
deems necessary to carry out its duties. In 2009, the Compensation Committee
retained the services of Compensation Advisory Partners LLC as its independent
executive compensation consultant. In connection with this engagement, the
Compensation Committee requested that Compensation Advisory Partners LLC review
the fairness of the compensation package for Dr. Rose, Dr. Hruby and Ms.
Dugary.
15
Competitive Market Analysis and Benchmarking
In reviewing and recommending the compensation
of the Chief Executive Officer and other executive officers, the Compensation
Committee considers the compensation awarded to officers of similarly situated
companies, our performance, the respective individual’s performance,
compensation given to our officers in past years, anticipated changes to future
duties and other factors the Compensation Committee deems appropriate. As a
framework for the Compensation Committee’s decisions regarding the compensation
of the Company’s named executive officers during 2010, the Compensation
Committee evaluated aggregate executive compensation data from the fiscal years
2008 and 2009 regarding the chief executive officer, chief financial officer,
and chief scientific officer of Emergent Biosolutions Inc., Human Genome
Sciences, Inc., Cubist Pharmaceuticals, Inc., Alexion Pharmaceuticals, Inc.,
ViroPharma Inc, Enzon Pharmaceuticals, Inc., SciClone Pharmaceuticals, Inc,
Dynavax Technologies Corp., and Hemispherx Biopharma Inc. SIGA’s third-party
compensation consultant selected these companies as similarly situated because
they are all biotechnology companies specializing either in small-molecule drugs
or solutions to bioterrorism and, with the exception of Human Genome Sciences
and Alexion Pharmaceuticals, have comparable market capitalizations. The
Committee found the aggregate compensation paid to each of the Company’s named
executive officers, in general, was consistent with the compensation paid to
executive officers of the selected peer group after taking into account
differences, such as product sales, total research revenue, scope of supervisory
responsibility of employees and nature of other commitments, between the Company
and the peer group.
Evaluations
The Compensation Committee evaluates at least
once a year the performance of our officers and other key employees in light of
goals and objectives established by the Committee and, based upon these
evaluations, the Compensation Committee recommends to the full Board of
Directors the annual compensation for our officers and key employees, including
base salary, bonus, incentive, and equity compensation. In its evaluation of the
Chief Executive Officer, the Compensation Committee considers overall management
of the Company, the progress achieved by our drug candidates, the establishment
and maintenance of successful relationships with the Company’s various funding
and research partners and potential customers and successful relations with the
Board of Directors and the shareholders. In its evaluation of the Chief
Financial Officer, the Committee considers the Company’s financial performance,
the Chief Financial Officer’s role in achieving our financial goals, the Chief
Financial Officer’s relationships with the shareholders and potential investors,
the Chief Financial Officer’s efforts with respect to financial regulatory
compliance (including compliance with NASDAQ rules, the securities laws and all
related regulations), and the preparation of and compliance with the Company’s
budget. In its evaluation of the Company’s Chief Scientific Officer, the
Committee considers achievement of program objectives within budgetary
requirements, new grants and other third-party funding obtained, relationships
with regulators and current and possible future scientific partners, compliance
with grant requirements and management of the Company’s research facility
located in Corvallis, OR.
Our Compensation Philosophy and Program
Objectives
The overall objectives of the
Company's compensation program are to attract and retain the best possible
executive talent, to motivate these executives to achieve the goals inherent in
the Company's business strategy, to maximize the link between executive and
stockholder interests through a stock option plan and to recognize individual
contributions as well as overall business results. To achieve these objectives,
the Company has developed an overall compensation strategy and specific
compensation plans that tie a substantial portion of an executive's compensation
to performance.
Our Executive Compensation Program
Overview
The key elements of the Company's
compensation program consist of fixed compensation in the form of base salary,
and the discretion to award variable compensation in the forms of incentive
compensation and stock option awards. The Compensation Committee's policies with
respect to each of these elements are discussed below. In addition, while the
elements of compensation described below are considered separately, the
Compensation Committee takes into account the full compensation package offered
by the Company to the individual, including pension benefits, insurance and
other benefits, as well as the programs described below.
16
Base Salary
The compensation philosophy of the Company is
to maintain executive base salary at a competitive level to enable the Company
to attract and retain executives and key employee talent needed to accomplish
the Company’s goals. In determining the appropriate base salary levels and, to a lesser extent,
other compensation elements, the Compensation Committee considers the scope of
responsibility, prior experience and past accomplishments, and anticipated
changes to future job responsibilities, as well as historical practices within
the Company. Economic and business conditions affecting the Company are also
considered. The Compensation Committee also considers historical levels of
salary paid by the Company as well as the provisions in the various executive’s
employment contracts with the Company, which contracts are more fully discussed
elsewhere in this proxy statement.
Periodic adjustments in base salary may be
merit-based with respect to individual performance or tied to the Company’s
financial condition or other competitive factors. The Compensation Committee
takes into account the effect of any corporate transactions that have been
consummated during the relevant year and, where appropriate, also considers
non-financial performance measures. These include the Company's competitive
position, scientific developments and improvements in relations with employees
and investors.
For Dr. Rose, Ms. Dugary and Dr. Hruby, we
paid as base salary in 2009 the amounts required under their employment
agreements. These amounts were reviewed and set by our Compensation Committee.
These base salary levels reflect our Compensation Committee’s subjective
judgment, which took into account each executive’s respective position and
tenure, our present needs, the executive’s individual performance, achievements
and prior contributions and anticipated performance levels.
Annual Incentive Compensation
The Compensation Committee, in its discretion,
may establish cash incentive programs and otherwise award bonuses to executive
officers and key employees. Annual incentive compensation to our executive
officers is payable pursuant to contractual provisions with certain executives
that provide eligibility to receive discretionary bonuses, in the sole
discretion of the Board of Directors based on the executives’ performance,
economic and business conditions affecting the Company, and the financial
condition of the Company. The Compensation Committee makes recommendations to
the Board of Directors with respect to such amounts. For 2009, Dr. Hruby
received a discretionary bonus of $75,000 and no other executive officers
received a discretionary bonus. In addition, Dr. Hruby is contractually entitled
to certain guaranteed cash bonus payments each year of his current employment
agreement. His guaranteed cash bonus for 2009 was $75,000. Ms. Dugary is also
contractually entitled to certain guaranteed cash bonus payments. Her guaranteed
cash bonus for 2009 was $50,000. Dr. Rose’s employment agreement does not
provide for guaranteed bonus payments. We believe that the annual incentive
bonuses motivate and encourage our executives to fulfill our objectives and
provide us with the opportunity to recognize superior individual performance.
Long-Term Incentive Awards
The Compensation Committee believes that
granting stock options provides officers and key employees with a strong
economic interest in maximizing stock price appreciation over the long term. The
Committee also believes that the practice of granting stock options can be
useful in retaining and recruiting the key talent necessary to ensure the
Company’s continued success. This element of compensation has been governed by
the Amended and Restated 1996 Incentive and Non-Qualified Stock Option Plan (the
“Option Plan”), which provides for grants of incentive stock options and
non-qualified stock options to our executives, directors and key employees. The
Option Plan is administered by our Compensation Committee, which reviews
management’s recommendations concerning persons to be granted stock options, and
determines the number of stock options to be granted to each such person, and
the terms and conditions of any stock options as permitted under the Option
Plan. The exercise price of stock options is set by the Compensation Committee
and has been at a price at least equal to the market price of the Common Stock
on the date of the grant. The options therefore do not have any value to the
executive unless the market price of the Common Stock rises, which ensures that
the interests of our executives are aligned with those of our shareholders.
Through these option grants, we seek to emphasize the importance of improving
the performance of our stock price, increasing shareholder value over the
long-term. Elsewhere in this proxy, the Board urges that the stockholders
approve an updated version of the Option Plan.
Both incentive options (“Incentive Options”)
and nonqualified options (“Nonqualified Options”) may be granted under the
Option Plan. An Incentive Option is intended to qualify as an incentive stock
option within the meaning of Section 422 of the Internal Revenue Code of 1986,
as amended (the "Code"). As such, any Incentive Option granted under the Option
Plan will have an exercise price of not less than 100% of the fair market value
of the shares on the date on which such option is granted. With respect to an
Incentive Option granted to an employee who owns more than 10% of the total
combined voting stock of SIGA or of any parent or subsidiary of SIGA, the
exercise price for such option must be at least 110% of the fair market value of
the shares subject to the option on the date the option is granted.
17
In determining the size of an option grant to
a named executive officer, the Compensation Committee considers not only
competitive market factors, changes in responsibility and the executive
officers’ achievement of pre-established goals, but also the number, term and
vesting of options previously granted to the officer. The Compensation Committee
may also consider the total compensation package or changes made thereto, when
determining whether to make an option award.
Additional Benefits and Perquisites
Our officers and key employees are entitled to
participate in the benefit plans which are generally available to all employees,
including health, dental, life, and accidental disability. For each of these
benefit plans, the Company makes contributions to the premiums paid to the
plans. The Company also offers a 401(k) defined contribution plan, but it makes
no contribution to the 401(k) plan. In each case, we provide these benefits to
our executive officers on the same basis as our other employees.
Severance and Change in Control Agreements
We also provide some of our executive officers
with severance and change in control arrangements in their employment contracts.
We believe that severance and change of control packages are a common
characteristic of compensation for key executive officers. They are intended to
provide our executive officers with a sense of security in making the commitment
to dedicate their professional careers to our success. Due to our size relative
to other public companies and our operating history, we believe that severance
and change in control arrangements are necessary to help us attract and retain
necessary skilled and qualified executive officers to continue to grow our
business.
Our Compensation Policies
Section 162(m) Policy
The Compensation Committee has found
it unnecessary to consider the applicability of Section 162(m) of the Code
because no executive officer receives compensation in excess of one million
dollars.
Common Share Ownership Requirements
While we have not adopted a formal written
policy on common share ownership requirements, part of our compensation
philosophy involves common share ownership by our executive officers, because we
believe that it helps to align their financial interests with those of our
shareholders. We also recognize, on the other hand, that our executive officers
cannot acquire more than 10% of our common shares without triggering adverse tax
consequences. In addition, we expect our executive officers to abide by the
provisions of our 2004 Policy on Confidential Information and Insider
Trading.
Timing of Awards
Our Compensation Committee has the authority
to issue equity awards under our Option Plan. We expect that the Compensation
Committee will continue making option awards to our executive officers and key
employees when appropriate. The Compensation Committee strives to ensure that
any award is made in such a manner to avoid even the appearance of manipulation
because of its award date.
Financial Restatement
Although we have not adopted a formal written
policy, it is our Board of Directors’ informal policy that the Compensation
Committee will, to the extent permitted by governing law, have the sole and
absolute authority and discretion in consultation with the Board of Directors,
to make retroactive adjustments to any cash or equity based incentive payments
to executive officers where the payment was based upon the achievement of
certain financial results that were subsequently the subject of a restatement,
without regard to misconduct being involved. If the Compensation Committee chose
to exercise this discretion, we would seek to recover any amount determined to
have been improperly paid to the executive officer.
18
Summary Compensation Table
The following table sets forth the total
compensation of the Company’s Named Executive Officers for the fiscal year ended
December 31, 2009.
Summary Compensation Table
| Change in | ||||||||||||||||||
| Pension | ||||||||||||||||||
| Non- | Value and | |||||||||||||||||
| Equity | Nonqualified | |||||||||||||||||
| Incentive | Deferred | |||||||||||||||||
| Stock | Option | Plan | Compensation | All Other | ||||||||||||||
| Name and Principal | Bonus | Awards | Awards | Compensation | Earnings | Compensation | ||||||||||||
| Position | Year | Salary ($) | ($) | ($) | (4) ($) | ($) | ($) | ($) | Total ($) | |||||||||
| Eric A. Rose, M.D. | 2009 | 400,000 | - | - | - | - | - | - | 400,000 | |||||||||
| Chief Executive | 2008 | 400,000 | - | - | 590,760 | - | - | - | 990,760 | |||||||||
| Officer (1) | 2007 | 333,750 | - | - | 366,180 | - | - | - | 699,930 | |||||||||
| Ayelet Dugary | 2009 | 225,000 | 50,000 | - | 135,045 | - | - | - | 410,045 | |||||||||
| Chief Financial | 2008 | 180,000 | 40,000 | - | - | - | - | - | 220,000 | |||||||||
| Officer (2) | 2007 | 180,000 | 40,000 | - | 45,773 | - | - | - | 265,773 | |||||||||
| Dennis E. Hruby, Ph.D. | 2009 | 275,000 | 150,000 | - | 135,045 | - | - | - | 560,045 | |||||||||
| Chief Scientific Officer | 2008 | 250,000 | 125,000 | - | - | - | - | - | 375,000 | |||||||||
| 2007 | 250,000 | 125,000 | - | 549,270 | - | - | - | 924,270 | ||||||||||
| Thomas N. Konatich | 2009 | 40,063 | 125,000 | 165,063 | ||||||||||||||
| Former Chief Financial | 2008 | 250,000 | 60,000 | - | - | - | - | - | 310,000 | |||||||||
| Officer (3) | 2007 | 250,000 | 60,000 | - | 274,635 | - | - | - | 584,635 | |||||||||
| (1) | Dr. Rose became Chief Executive Officer on March 1, 2007. | |
| (2) | Ms. Dugary became Acting Chief Financial Officer on February 1, 2009 and Chief Financial Officer on April 29, 2009. | |
| (3) | Mr. Konatich became Chief Financial Officer on April 1, 1998. Effective January 31, 2009 the Company and Mr. Konatich agreed not to extend the terms of Mr. Konatich’s employment agreement and effective January 31, 2009, Mr. Konatich’s employment with the Company ended. | |
| (4) | Option awards represent the fair value on the grant date. | |
Salary
The amounts reported in the “Salary” column
above represent base salaries paid to each of the Named Executive Officers for
the fiscal year ended 2009.
Bonus
The amounts reported in the “Bonus” column
above for the year ended December 31, 2009, include bonus which was accrued and
paid with respect to 2009 performance.
Option Awards
The Option Plan was adopted in 1996 and
amended in 2001, 2004 and 2005. The maximum number of shares of Common Stock
available for issuance under the Option Plan is 11,000,000. Stock options may be
granted to key employees, consultants and outside directors pursuant to the
Option Plan.
The Option Plan is administered by our
Compensation Committee, which reviews management’s recommendations concerning
persons to be granted stock options, and determines the number of stock options
to be granted to each such person, and the terms and conditions of any stock
options as permitted under the Option Plan. The members of the Compensation
Committee are Steven L. Fasman, who serves as Chair, Paul G. Savas, Bruce
Slovin, and Michael A. Weiner, M.D. See “Committees of the Board of Directors”
above for more information.
Both Incentive Options and Nonqualified
Options may be granted under the Option Plan. An Incentive Option is intended to
qualify as an incentive stock option within the meaning of Section 422 of the
Code. Any Incentive Option granted under the Option Plan will have an exercise
price of not less than 100% of the fair market value of the shares on the date
on which such option is granted. With respect to an Incentive Option granted to
an employee who owns more than 10% of the total combined voting stock of SIGA or
of any parent or subsidiary of SIGA, the exercise price for such option must be
at least 110% of the fair market value of the shares subject to the option on
the date the option is granted.
19
Options to purchase 7,506,054 shares
of Common Stock were outstanding as of December 31, 2009.
All Other Compensation
The amount reported in the “All Other
Compensation” reflects payments made to Mr. Konatich under a separation and
release agreement entered into with Mr. Konatich on January 29,
2009.
Grants of Plan Based Awards
During the year ended December 31, 2009, the
Compensation Committee recommended the award of 50,000 options to each of Ayelet
Dugary, Chief Financial Officer, and Dennis Hruby, Chief Scientific Officer. For
each award, the Compensation Committee recommended that the options become
exercisable according to the following vesting schedule: 16,666 shall vest on
March 5, 2010, 16,667 shall vest on March 5, 2011 and the remaining 16,667 shall
vest on March 5, 2012. The Board of Directors approved the award, and
all of the aforementioned options have an exercise price of $4.70 per share.
The Compensation Committee determined that it
was in the best interest of our Company to issue stock options to motivate the
aforementioned executive officers to contribute to our growth and to continue
their service with our Company. The number of shares granted to each named
executive officer was determined by the Committee based on its consideration of
the named executive officer’s individual responsibilities and ability to
significantly enhance key company initiatives.
The following table provides a summary
regarding plan-based awards granted to the Named Executive Officers in 2009:
| Grant | |||||||||
| Option Awards: | Date Fair | ||||||||
| Number of | Exercise | Value of | |||||||
| Securities | Price of | Stock | |||||||
| Name and Principal | Grant | Underlying | Option | Option | |||||
| Position | Date | Options | Awards | Awards | |||||
| Ayelet Dugary | 03/05/09 | 50,000 | $ | 4.70 | 135,045 | ||||
| Dennis E. Hruby, Ph.D. | 03/05/09 | 50,000 | $ | 4.70 | 135,045 | ||||
Employment Agreements
We currently have employment agreements with
Dr. Rose, Ms. Dugary and Dr. Hruby. Dr. Rose’s employment agreement became
effective as of March 1, 2007 and the most recent amendments to the employment
agreements of Ms. Dugary and Dr. Hruby became effective as of March 11, 2009. We
have included below descriptions of the current employment agreements of each of
these officers, as amended. On January 29, 2009, SIGA and Mr. Konatich agreed
not to extend the current term of Mr. Konatich’s employment agreement, and
therefore his employment with SIGA terminated effective January 31,
2009.
Eric A. Rose – Chief Executive Officer
On January 31, 2007, we entered into an
employment agreement with Eric A. Rose, M.D., pursuant to which he became our
Chief Executive Officer, effective as of March 1, 2007. The current term of his
employment agreement expires on December 31, 2010, and, unless either party
provides thirty (30) days notice prior to the end of the term, shall
automatically renew for additional one (1) year periods thereafter. Pursuant to
the employment agreement, we agree to pay to Dr. Rose an annual base salary of
$400,000, subject to any cost of living adjustments as may be approved by our
Board of Directors. Dr. Rose is also eligible to receive bonus payments (in
either cash or stock options) as may be approved by the Board of Directors in
its sole discretion. We may terminate his employment agreement (with or without
cause), provided that upon any termination by us without cause (including,
without limitation, termination without cause upon a change in control), or
termination by Dr. Rose for good reason, we will be obligated to continue to pay
Dr. Rose’s base salary for one year, and all stock options and other stock-based
grants to Dr. Rose shall immediately and irrevocably vest and become exercisable upon the date of termination and
shall remain exercisable for a period of not less than one (1) year from the
date of termination. Further detail on our severance obligations to Dr. Rose,
including the definitions of “cause”, “good reason” and “change in control” is
set forth below under the heading “Potential Payments Upon Termination or Change
in Control”.
20
Ayelet Dugary –Chief Financial Officer
On March 11, 2009, we amended Ayelet Dugary’s
existing employment agreement, and pursuant to such amendment she became our
Acting Chief Financial Officer, effective as of February 1, 2009. On April 29, 2009,
Ms. Dugary because our Chief Financial Officer. The current term of Ms. Dugary’s
employment agreement expires on January 22, 2011. Pursuant to her employment
agreement, as amended, we agree to pay to Ms. Dugary an annual base salary of
$225,000, subject to any cost of living adjustments as may be approved by our
Board of Directors, and an annual cash bonus of $50,000. Ms. Dugary is also
eligible to receive bonus payments (in either cash or stock options) as may be
approved by the Board of Directors in its sole discretion. We may terminate the
employment agreement (with or without cause), provided that upon any termination
by SIGA without cause (including, without limitation, termination without cause
upon a change in control, as such term is defined in the employment agreement),
or termination by Ms. Dugary for good reason (as such term is defined in the
employment agreement), SIGA will be obligated to continue to pay Ms. Dugary’s
base salary for one year, and all stock options and other stock-based grants to
Ms. Dugary shall immediately and irrevocably vest and become exercisable upon
the date of termination and shall remain exercisable for a period of not less
than one year from the date of termination. In addition, unless either party
provides notice of its desire not to renew the Dugary Employment Agreement
thirty (30) days prior to the expiration of the then-current term, the
employment Agreement shall automatically renew for additional one (1) year
periods. In the event that Ms. Dugary’s employment is not renewed by SIGA upon
the expiration of its term, Ms. Dugary will receive severance in an amount equal
to her annual base salary at the time of such non-renewal. The agreement also
provides that Ms. Dugary shall report to the Board of Directors, SIGA’s Chief
Executive Officer or any other executive officer in a position senior to her.
All other material terms of the original employment agreement remain
unchanged.
Previously Ms. Dugary was employed as SIGA’s
Director of Finance and Controller since December 2004, where she was
responsible for SIGA’s financial planning and reporting, including SIGA’s SEC
filings and communication with the Board of Directors.
Further detail on our severance obligations to
Ms. Dugary including the definitions in her current employment agreement of
“cause”, “good reason” and “change in control” is set forth below under the
heading “Potential Payments Upon Termination or Change in Control”.
Dennis E. Hruby – Chief Scientific Officer
On January 22, 2007, we entered into an
amended and restated employment agreement with Dr. Dennis E. Hruby, our Chief
Scientific Officer, which replaced his prior employment agreement. The current
employment agreement expires on January 21, 2011. On March 11, 2009, we amended
Dr. Hruby’s employment agreement whereby we agreed to pay Dr. Hruby an annual
base salary of $275,000, subject to any cost of living adjustments as may be
approved by our Board of Directors, and an annual cash bonus of no less than
$75,000 and no more than $150,000. In addition, unless either party provides
notice of its desire not to renew the Hruby Employment Agreement thirty (30)
days prior to the expiration of the then-current term, the employment Agreement
shall automatically renew for additional one (1) year periods. In the event that
Dr. Hruby’s employment is not renewed by SIGA upon the expiration of its term,
Dr. Hruby will receive severance in an amount equal to his annual base salary at
the time of such non-renewal. The agreement also provides that Dr. Hruby shall
report to the Board of Directors, SIGA’s Chief Executive Officer or any other
executive officer in a position senior to him. All other material terms of the
original employment agreement remain unchanged. Pursuant to his employment
agreement, we may terminate his employment agreement (with or without cause),
provided that upon any termination by us without cause (including, without
limitation, termination without cause upon a change in control), or termination
by Dr. Hruby for good reason, we will be obligated to continue to pay Dr.
Hruby’s base salary for two years, and all stock options and other stock-based
grants to Dr. Hruby shall immediately and irrevocably vest and become
exercisable upon the date of termination and shall remain exercisable for a
period of not less than two (2) years from the date of termination.
Further detail on our severance obligations to
Dr. Hruby including the definitions in his current employment agreement of
“cause”, “good reason” and “change in control” is set forth below under the
heading “Potential Payments Upon Termination or Change in Control”.
21
Thomas N. Konatich – Former Chief Financial Officer
On January 29, 2009, SIGA and Mr. Konatich
agreed not to extend the current term of Mr. Konatich’s employment agreement,
and therefore his employment with SIGA terminated effective January 31, 2009. In
connection with Mr. Konatich’s departure, SIGA entered into a Separation and
Release Agreement (the “Konatich Separation Agreement”) with Mr. Konatich on
January 29, 2009. Pursuant to the Konatich Separation Agreement, Mr. Konatich
resigned as Vice President, Chief Financial Officer, Treasurer and Secretary of
SIGA, effective January 31, 2009. In addition, all existing employment
agreements between SIGA and Mr. Konatich were terminated.
Mr. Konatich continued to receive his base
salary for a period of six months following January 31, 2009. In addition, Mr.
Konatich elected COBRA continuation coverage for health insurance benefits and
SIGA provided to Mr. Konatich health insurance benefits through July 31, 2009.
The Konatich Separation Agreement further provided that certain vested stock
options granted to Mr. Konatich under the Option Plan, which would otherwise
have expired within 90 days of January 31, 2009, be extended until December 31,
2009.
Outstanding Equity Awards at Fiscal Year End
The following table provides certain summary
information concerning unexercised options and equity incentive plan awards for
each Named Executive Officer as of December 31, 2009.
| Equity | Equity | |||||||||||||||||
| Incentive | Incentive | |||||||||||||||||
| Plan | Plan | |||||||||||||||||
| Awards: | Awards: | |||||||||||||||||
| Number | Market or | |||||||||||||||||
| Equity | Market | of | Payout | |||||||||||||||
| Incentive | Value of | Unearned | Value of | |||||||||||||||
| Plan Awards: | Number of | Shares or | Shares, | Unearned | ||||||||||||||
| Number of | Number of | Number of | Shares or | Units of | Units or | Shares, | ||||||||||||
| Securities | Securities | Securities | Units of | Stock | Other | Units or | ||||||||||||
| Underlying | Underlying | Underlying | Stock | That | Rights | Other | ||||||||||||
| Name and | Unexercised | Unexercised | Unexercised | Option | Option | That Have | Have Not | That | Rights That | |||||||||
| Principal | Options (#) | Options (#) | Unearned | Exercise | Expiration | Not | Vested | Have Not | Have Not | |||||||||
| Position | Exercisable | Unexercisable | Options (#) | Price ($) | Date | Vested | (#) | Vested (#) | vested ($) | |||||||||
| Eric A. Rose, M.D. Chief Executive Officer (1) |
600,000 | - | - | 2.50 | 5/3/2011 | - | - | - | - | |||||||||
| 10,000 | - | - | 1.22 | 6/2/2015 | - | - | - | - | ||||||||||
| 10,000 | - | - | 2.72 | 12/19/2016 | - | - | - | - | ||||||||||
| 133,334 | - | 66,666 | 3.10 | 7/26/2017 | - | - | - | - | ||||||||||
| 33,334 | - | 366,666 | 2.49 | 11/14/2018 | - | - | - | - | ||||||||||
| Ayelet Dugary Chief Financial Officer (2) |
140,000 | - | - | 1.50 | 12/15/2014 | - | - | - | - | |||||||||
| 16,666 | - | 8,334 | 3.10 | 7/26/2017 | - | - | - | - | ||||||||||
| - | - | 50,000 | 4.70 | 3/5/2019 | - | - | - | - | ||||||||||
| Dennis E. Hruby, Ph.D., Chief Scientific Officer |
125,000 | - | - | 2.00 | 5/25/2010 | |||||||||||||
| 300,000 | - | - | 2.50 | 7/23/2012 | - | - | - | - | ||||||||||
| 150,000 | - | - | 1.40 | 6/29/2014 | - | - | - | - | ||||||||||
| 66,666 | - | 233,334 | 3.10 | 7/26/2017 | - | - | - | - | ||||||||||
| - | - | 50,000 | 4.70 | 3/5/2019 | - | - | - | - |
| (1) | Dr. Rose became Chief Executive Officer on March 1, 2007. | |
| (2) | Ms. Dugary became Acting Chief Financial Officer on February 1, 2009 and Chief Financial Officer on April 29, 2009. | |
Option Exercises and Stock
Vested
During the fiscal year ended December 31,
2009, no options were exercised by any of our officers. Our officers did not
receive any stock awards during the year ended December 31, 2009.
Fiscal Year-End Option Values
The following table provides certain summary
information concerning stock options held as of December 31, 2009 by SIGA’s
Named Executive Officers.
22
| Number of Securities | Value of Unexercised In-The- | ||||||||
| Underlying Unexercised | Money Options At Fiscal Year- | ||||||||
| Options # | End ($) (1) | ||||||||
| Exercisable | Unexercisable | Exercisable | Unexercisable | ||||||
| Eric A. Rose, M.D. | 786,667 | 433,333 | $ | 2,526,934 | - | ||||
| Ayelet Dugary (2) | 136,876 | 78,124 | $ | 575,232 | - | ||||
| Dennis E. Hruby, Ph.D. | 608,333 | 316,667 | $ | 2,214,999 | - | ||||
| (1) | Based upon the closing price on December 31, 2009, as reported on the Nasdaq Global Market and the exercise price per option. | |
| (2) | Ms. Dugary became Acting Chief Financial Officer on February 1, 2009 and Chief Financial Officer on April 29, 2009. | |
Potential Payments Upon Termination or Change
in Control
Severance Arrangement for Eric A. Rose
The following table and footnotes describe and
quantify the potential payments to Dr. Rose upon termination or change in
control, assuming that such termination or change in control was effective as of
December 31, 2009:
| Termination by the | |||||||||
| Company without cause | Termination by the | ||||||||
| (or by the officer for | Termination upon death | Company due to a | |||||||
| Dr. Eric A. Rose | good cause) | or disability | change in control | ||||||
| Aggregate monthly cash payments | $ | 400,000 | $ | - | $ | 400,000 | |||
| Lump sum cash payment | - | - | - | ||||||
| Value of accelerated stock options | 663,588 | - | 663,588 | ||||||
| Total | $ | 1,063,588 | $ | - | $ | 1,063,588 | |||
Pursuant to Dr. Rose’s current employment
agreement (which was effective as of March 1, 2007), the following termination
and change in control-related circumstances would trigger payments or the
provision of other benefits:
- Termination by the Company without
cause or by Dr. Rose for good reason.
- Termination by the Company within
90 days of the occurrence of a change in control (other than for
cause)
- Termination by the Company for
cause or by Dr. Rose without good reason.
- Termination by the Company based on Dr. Rose’s death or total disability.
If Dr. Rose’s employment agreement is
terminated without cause or if Dr. Rose terminates his employment for good
reason, he will be entitled to the following: (i) any accrued but unpaid salary
for services rendered through the date of termination (ii) any vacation accrued
to the date of termination, in accordance with Company policy; (iii) any accrued
but unpaid expenses through the date of termination required to be reimbursed in
accordance with his employment agreement; (iv) any benefits to which he may be
entitled upon termination pursuant to the plans, programs and grants referred to
in the employment agreement in accordance with the terms of such plans, programs
and grants, (v) the continued payment of his salary for one (1) year; and (vi)
the Company shall take all such action as is necessary such that all stock
options and other stock-based grants to Dr. Rose shall, immediately and
irrevocably vest and become exercisable as of the date of termination and shall
remain exercisable for a period of not less than one (1) year from the date of
termination.
If Dr. Rose’s employment agreement is
terminated within 90 days after the occurrence of a change in control other than
for cause, he will be entitled to the following: (i) any accrued but unpaid
salary for services rendered through the date of termination (ii) any vacation
accrued to the date of termination, in accordance with Company policy; (iii) any
accrued but unpaid expenses through the date of termination required to be
reimbursed in accordance with his employment agreement; (iv) any benefits to
which he may be entitled upon termination pursuant to the plans, programs and
grants referred to in the employment
agreement in accordance with the terms of such plans, programs and grants, (v)
the continued payment of his salary for one (1) year; and (vi) the Company shall
take all such action as is necessary such that all stock options and other
stock-based grants to Dr. Rose shall, immediately and irrevocably vest and
become exercisable as of the date of termination and shall remain exercisable
for a period of not less than one (1) year from the date of termination.
23
If Dr. Rose’s employment is terminated for
cause, or if he voluntarily terminates his employment, he will be entitled to
the following: (i) any accrued but unpaid salary for services rendered through
the date of termination (ii) any vacation accrued to the date of termination, in
accordance with Company policy; (iii) any accrued but unpaid expenses through
the date of termination required to be reimbursed in accordance with his
employment agreement; and (iv) any benefits to which he may be entitled upon
termination pursuant to the plans, programs and grants referred to in the
employment agreement in accordance with the terms of such plans, programs and
grants.
If Dr. Rose’s employment is terminated prior
to the expiration of the term by reason of death or total disability, his estate
or beneficiaries will be entitled to the following: (i) any accrued but unpaid
salary for services rendered through the date of termination (ii) any vacation
accrued to the date of termination, in accordance with Company policy; (iii) any
accrued but unpaid expenses through the date of termination required to be
reimbursed in accordance with his employment agreement; and (iv) any benefits to
which he may be entitled upon termination pursuant to the plans, programs and
grants referred to in the employment agreement in accordance with the terms of
such plans, programs and grants.
Severance Arrangement for Ayelet Dugary
The following table and footnotes describe and
quantify the potential payments to Ms. Dugary upon termination, change in
control or in the event that her contract is not renewed, assuming that such
termination, change in control or non-renewal was effective as of December 31,
2009:
| Termination by the | |||||||||
| Company without cause | Termination by the | ||||||||
| (or by the officer for | Termination upon death | Company due to a | |||||||
| Ayelet Dugary | good cause) | or disability | change in control | ||||||
| Aggregate monthly cash payments | $ | 225,000 | $ | - | $ | 225,000 | |||
| Lump sum cash payment | - | - | - | ||||||
| Value of accelerated stock options | 150,304 | - | 150,304 | ||||||
| Total | $ | 375,304 | $ | - | $ | 375,304 | |||
Pursuant to Ms. Dugary’s employment agreement,
the following termination and change in control-related circumstances would
trigger payments or the provision of other benefits:
- Termination by the Company without
cause or by Ms. Dugary for good reason.
- Termination by the Company within
90 days of the occurrence of a change in control (other than for
cause)
- Termination by the Company for
cause or by Ms. Dugary without good reason.
- Termination by the Company based
on Ms. Dugary’s death or total disability.
- Failure by the Company to renew the employment agreement at the end of its term.
If Ms. Dugary’s employment agreement is
terminated without cause or if Ms. Dugary terminates her employment for good
reason, she will be entitled to the following: (i) any accrued but unpaid salary
for services rendered through the date of termination (ii) any vacation accrued
to the date of termination, in accordance with Company policy; (iii) any accrued
but unpaid expenses through the date of termination required to be reimbursed in
accordance with her employment agreement; (iv) any benefits to which she may be
entitled upon termination pursuant to the plans, programs and grants referred to
in the employment agreement in accordance with the terms of such plans, programs
and grants, (v) the continued payment of her salary for one (1) year; and (vi)
the Company shall take all such action as is necessary such that all stock
options and other stock-based grants to Ms. Dugary shall, immediately and
irrevocably vest and become exercisable as of the date of termination and shall
remain exercisable for a period of not less than one (1) year from the date of
termination.
24
If Ms. Dugary’s employment agreement is
terminated within 90 days after the occurrence of a change in control other than
for cause, she will be entitled to the following: (i) any accrued but unpaid
salary for services rendered through the date of termination (ii) any vacation
accrued to the date of termination, in accordance with Company policy; (iii) any
accrued but unpaid expenses
through the date of termination required to be reimbursed in accordance with her
employment agreement; (iv) any benefits to which she may be entitled upon
termination pursuant to the plans, programs and grants referred to in the
employment agreement in accordance with the terms of such plans, programs and
grants, (v) the continued payment of her salary for one (1) year; and (vi) the
Company shall take all such action as is necessary such that all stock options
and other stock-based grants to Ms. Dugary shall, immediately and irrevocably
vest and become exercisable as of the date of termination and shall remain
exercisable for a period of not less than one (1) year from the date of
termination.
If Ms. Dugary’s employment is terminated for
cause, or if she voluntarily terminates her employment, she will be entitled to
the following: (i) any accrued but unpaid salary for services rendered through
the date of termination (ii) any vacation accrued to the date of termination, in
accordance with Company policy; (iii) any accrued but unpaid expenses through
the date of termination required to be reimbursed in accordance with her
employment agreement; and (iv) any benefits to which she may be entitled upon
termination pursuant to the plans, programs and grants referred to in the
employment agreement in accordance with the terms of such plans, programs and
grants.
If Ms. Dugary’s employment is terminated prior
to the expiration of the term by reason of death or total disability, her estate
or beneficiaries will be entitled to the following: (i) any accrued but unpaid
salary for services rendered through the date of termination (ii) any vacation
accrued to the date of termination, in accordance with Company policy; (iii) any
accrued but unpaid expenses through the date of termination required to be
reimbursed in accordance with her employment agreement; and (iv) any benefits to
which she may be entitled upon termination pursuant to the plans, programs and
grants referred to in the employment agreement in accordance with the terms of
such plans, programs and grants.
In the event that the Company elects not to
renew Ms. Dugary’s employment agreement, she shall be entitled to the continued
payment of the Base Salary for one year (such sums to be paid at the times and
in the amounts such Base Salary would have been paid had Executive’s employment
continued).
No other material changes were made
to Ms. Dugary’s severance arrangement.
Severance Arrangement for Dennis E. Hruby
The following table and footnotes describe and
quantify the potential payments to Dr. Hruby upon termination, change in control
or in the event that his contract is not renewed, assuming that such
termination, change in control or non-renewal was effective as of December 31,
2009:
| Termination by the | |||||||||
| Company without cause | Termination by the | ||||||||
| (or by the officer for | Termination upon death | Company due to a | |||||||
| Dr. Dennis E. Hruby | good cause) | or disability | change in control | ||||||
| Aggregate monthly cash payments | $ | 550,000 | $ | - | $ | 550,000 | |||
| Lump sum cash payment | - | - | - | ||||||
| Value of accelerated stock options | 562,256 | - | 562,256 | ||||||
| Total | $ | 1,112,256 | $ | - | $ | 1,112,256 | |||
Pursuant to Dr. Hruby’s employment agreement,
the following termination and change in control-related circumstances would
trigger payments or the provision of other benefits:
- Termination by the Company without
cause or by Dr. Hruby for good reason.
- Termination by the Company within
90 days of the occurrence of a change in control (other than for
cause)
- Termination by the Company for
cause or by Dr. Hruby without good reason.
- Termination by the Company based
on Dr. Hruby’s death or total disability.
- Failure by the Company to renew the employment agreement at the end of its term.
If Dr. Hruby’s employment agreement is
terminated without cause or if Dr. Hruby terminates his employment for good
reason, he will be entitled to the following: (i) any accrued but unpaid salary
for services rendered through the date of termination (ii) any vacation accrued
to the date of termination, in accordance with Company policy; (iii) any accrued
but unpaid expenses through the date of termination required to be reimbursed in
accordance with his employment agreement; (iv) any benefits to which he may be
entitled upon termination pursuant to the plans, programs and grants referred to
in the employment agreement in
accordance with the terms of such plans, programs and grants, (v) the continued
payment of his salary for two (2) years; and (vi) the Company shall take all
such action as is necessary such that all stock options and other stock-based
grants to Dr. Hruby shall, immediately and irrevocably vest and become
exercisable as of the date of termination and shall remain exercisable for a
period of not less than one (1) year from the date of termination.
25
If Dr. Hruby’s employment agreement is
terminated within 90 days after the occurrence of a change in control other than
for cause, he will be entitled to the following: (i) any accrued but unpaid
salary for services rendered through the date of termination (ii) any vacation
accrued to the date of termination, in accordance with Company policy; (iii) any
accrued but unpaid expenses through the date of termination required to be
reimbursed in accordance with his employment agreement; (iv) any benefits to
which he may be entitled upon termination pursuant to the plans, programs and
grants referred to in the employment agreement in accordance with the terms of
such plans, programs and grants, (v) the continued payment of his salary for two
(2) years; and (vi) the Company shall take all such action as is necessary such
that all stock options and other stock-based grants to Dr. Hruby shall,
immediately and irrevocably vest and become exercisable as of the date of
termination and shall remain exercisable for a period of not less than one (1)
year from the date of termination.
If Dr. Hruby’s employment is terminated for
cause, or if he voluntarily terminates his employment, he will be entitled to
the following: (i) any accrued but unpaid salary for services rendered through
the date of termination (ii) any vacation accrued to the date of termination, in
accordance with Company policy; (iii) any accrued but unpaid expenses through
the date of termination required to be reimbursed in accordance with his
employment agreement; and (iv) any benefits to which he may be entitled upon
termination pursuant to the plans, programs and grants referred to in the
employment agreement in accordance with the terms of such plans, programs and
grants.
If Dr. Hruby’s employment is terminated prior
to the expiration of the term by reason of death or total disability, his estate
or beneficiaries will be entitled to the following: (i) any accrued but unpaid
salary for services rendered through the date of termination (ii) any vacation
accrued to the date of termination, in accordance with Company policy; (iii) any
accrued but unpaid expenses through the date of termination required to be
reimbursed in accordance with his employment agreement; and (iv) any benefits to
which he may be entitled upon termination pursuant to the plans, programs and
grants referred to in the employment agreement in accordance with the terms of
such plans, programs and grants.
In the event that the Company elects not to
renew Dr. Hruby’s employment agreement, he shall be entitled to the continued
payment of the base salary for one year (such sums to be paid at the times and
in the amounts such Base Salary would have been paid had Dr. Hruby’s employment
continued).
No other material changes were made
to Dr. Hruby’s severance arrangement.
Severance Arrangement for Thomas N. Konatich
On January 29, 2009, SIGA and Thomas N.
Konatich, SIGA’s Chief Financial Officer, agreed not to extend the current term
of Mr. Konatich’s employment agreement, and therefore his employment with SIGA
terminated effective January 31, 2009. In connection with Mr. Konatich’s
departure, SIGA entered into the Konatich Separation Agreement with Mr. Konatich
on January 29, 2009. Pursuant to the Konatich Separation Agreement, Mr. Konatich
resigned as Vice President, Chief Financial Officer, Treasurer and Secretary of
SIGA, effective January 31, 2009. In addition, all existing employment
agreements between SIGA and Mr. Konatich were terminated. Mr.
Konatich received his base salary of $20,833 per month for a period of six
months following January 31, 2009. In addition, because Mr. Konatich timely
elected COBRA continuation coverage for health insurance benefits and Mr.
Konatich did not become employed by a third party that provided medical and
dental benefits, SIGA provided to Mr. Konatich health insurance benefits through
July 31, 2009. The Konatich Separation Agreement further required that certain
vested stock options granted to Mr. Konatich under the Option Plan, which would
otherwise have expired within 90 days of January 31, 2009, were extended until
December 31, 2009.
26
Other General Terms
Circumstances Triggering Payments
“Cause”, “good reason” and “change of control”
are defined in Dr. Rose, Ms. Dugary, and Dr. Hruby’s current employment
agreement as follows:
“Cause” generally
includes:
- executive officer’s neglect or
failure or refusal to perform his duties under the applicable employment
agreement (other than as a result of total or partial incapacity due to
physical or mental illness);
- any act by or omission of
executive officer constituting gross negligence or willful misconduct in
connection with the performance of his duties that could reasonably be
expected to materially injure the reputation, business or business
relationships of the Company or any of its affiliates;
- perpetration of an intentional and
knowing fraud against or affecting the Company or any of its affiliates or any
customer, client, agent, or employee thereof;
- the commission by or indictment of
executive officer for (A) a felony or (B) any misdemeanor involving moral
turpitude, deceit, dishonesty or fraud (“indictment”, for these purposes,
meaning a United States-based indictment, probable cause hearing or any other
procedure pursuant to which an initial determination of probable or reasonable
cause with respect to such offense is made);
- the breach of a covenant set forth
in the applicable employment agreement; or
- any other material breach to the applicable employment agreement.
“Good reason”
generally includes:
- the Company failing to pay
executive officer his base salary;
- executive officer no longer
holding his agreed upon office or offices of equivalent stature, or his
functions and/or duties being materially diminished; or
- executive officer’s job site being involuntarily relocated to a location which is more than fifty (50) miles from the agreed upon region.
a “Change in Control”
is deemed to occur upon:
- the consummation of a transaction
or a series of related transactions pursuant to which any “person” (as such
term is used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of
1934 (“Exchange Act”), other than executive officer, his designee(s) or
“affiliate(s)” (as defined in Rule 12b-2 under the Exchange Act), is or
becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Company representing forty
percent (40%) or more of the combined voting power of the Company’s then
outstanding securities;
- stockholders of the Company
approving a merger or consolidation of the Company with any other entity,
other than a merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity) more than eighty percent (80%) of the
combined voting power of the voting securities of the Company or such
surviving entity outstanding immediately after such merger or consolidation;
or
- the stockholders of the Company approving a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of, or the Company sells or disposes of, all or substantially all of the Company’s assets.
Pursuant to each of their respective current
employment agreements, during the respective terms thereof plus an additional
twenty-four months thereafter, Dr. Rose, Ms. Dugary and Dr. Hruby have agreed
not to engage in any competitive business with us or to induce our employees to
terminate their employment or to solicit our customers. We agree to indemnify
each of them under their respective employment agreements for liabilities
incurred because of their employment and to provide each of them with the full
protection of any directors’ and officers’ liability insurance policies
maintained generally for the benefit of our officers.
27
Equity Compensation Plan
Information
The following table sets forth certain
compensation plan information with respect to both equity compensation plans
approved by security holders and equity compensation plans not approved by
security holders as of December 31, 2009:
| Number of securities | |||||||
| remaining available for | |||||||
| Number of securities | Weighted-average | future issuance under | |||||
| to be issued upon | exercise price of | equity compensation | |||||
| exercise of | outstanding | plans (excluding | |||||
| outstanding options, | options, warrants | securities reflected in | |||||
| Plan Category | warrants and rights | and rights | column (a)) | ||||
| (a) | (b) | (c) | |||||
| Equity compensation plans approved by security holders (1) | 6,124,917 | $ | 2.76 | 584,464 | |||
| Equity compensation plans not approved by security holders | 125,000 | $ | 2.00 | - | |||
| Total | 6,249,917 | $ | 2.74 | 584,464 | |||
| (1) | The Option Plan. | |
| (2) | A total of 2,630,983 options awarded under the plan were previously exercised by their holders. | |
As of December 31, 2009, there were no
outstanding options that had been awarded outside of the Company’s equity
compensation plan.
28
Director Compensation
During the fiscal year ending December 31,
2009, the directors of SIGA received Total Compensation under the Option Plan as
shown in the following table.
| Non-Equity | Nonqualified | |||||||||||
| Fees Earned | Option | Incentive Plan | Deferred | All Other | ||||||||
| or paid in | Stock | Awards (9) | Compensation | Compensation | Compensation | |||||||
| Name | Cash ($) | Awards ($) | ($) | ($) | earnings ($) | ($) | ||||||
| James J. Antal (2) (3) | 15,500 | - | 40,883 | - | - | - | ||||||
| Michael J. Bayer (2) | 6,000 | 40,883 | ||||||||||
| Thomas E. Constance | 8,000 | - | 40,883 | - | - | - | ||||||
| Steven L. Fasman (4) | 13,000 | - | 40,883 | - | - | - | ||||||
| Scott M. Hammer, M.D. | 6,000 | - | 40,883 | - | - | - | ||||||
| Joseph W. Marshall, III (1) | 6,000 | 79,161 | - | - | - | |||||||
| Adnan M. Mjalli, Ph.D. (7) | 2,000 | - | 40,883 | - | - | - | ||||||
| Mehmet C. Oz, M.D. (8) | 5,000 | - | 40,883 | - | - | - | ||||||
| Eric A. Rose, M.D. (5) | - | - | - | - | - | - | ||||||
| Paul G. Savas (2) (4) | 22,500 | - | 40,883 | - | - | - | ||||||
| Judy S. Slotkin | 6,500 | - | - | - | - | - | ||||||
| Bruce Slovin (2) (4) | 14,000 | - | 40,883 | - | - | - | ||||||
| Michael Weiner, M.D. (3) (4) | 11,500 | - | 40,883 | - | - | - |
| (1) | Mr. Marshall was elected to serve on the Board of Directors on March 11, 2009. | |
| (2) | Member of the Audit Committee | |
| (3) | Member of the Nominating Committee | |
| (4) | Member of the Compensation Committee | |
| (5) | Chairman of the Board | |
| (6) | Ms. Slotkin served on the Board of Directors until May 13, 2009. | |
| (7) | Dr. Mjalli served on the Board of Directors until December 15, 2009. | |
| (8) | Dr. Oz served on the Board of Directors until January 12, 2010. | |
| (9) | Option awards represent the fair value on the grant date. | |
The aggregate number of stock option awards
held by each of the directors at December 31, 2009, and the number of stock
option awards granted in the current fiscal year are shown in the following
table:
| Total Option | ||||
| Awards | ||||
| Option Awards | Outstanding at | |||
| During the Current | December 31, 2009 | |||
| Name | Year (#) | (#) | ||
| James J. Antal | 10,000 | 75,000 | ||
| Michael J. Bayer | 10,000 | 35,000 | ||
| Thomas E. Constance | 10,000 | 265,000 | ||
| Steven L. Fasman | 10,000 | 45,000 | ||
| Scott M. Hammer, M.D. | 10,000 | 55,000 | ||
| Joseph W. Marshall, III | 35,000 | 35,000 | ||
| Adnan M. Mjalli, Ph.D. | 10,000 | 75,000 | ||
| Mehmet C. Oz, M.D. | 10,000 | 150,000 | ||
| Eric A. Rose, M.D. | - | 786,668 | ||
| Paul G. Savas | 10,000 | 75,000 | ||
| Bruce Slovin | 10,000 | 35,000 | ||
| Michael Weiner, M.D. | 10,000 | 60,000 |
29
Director Fees and Equity Compensation
Directors who are not currently receiving compensation as officers or
employees of the Company or any of its affiliates receive $1,000 per meeting for
board meetings and will be reimbursed for expenses incurred by them in
connection with serving on our Board of Directors. The chairman of each of the
Audit Committee, Nominating Committee, and the Compensation Committee will each
receive $1,000 per meeting for meetings of the Audit Committee, Nominating and
Compensation Committee, respectively. All other members of the respective
committees will receive $500 per meeting for meetings of the committees.
Non-employee directors will receive an
initial grant of 25,000 options, upon such non-employee director's first
election to the Board of Directors, which such options will be granted under the
Option Plan. In addition, non-employee directors will receive an annual grant of
10,000 options under the Option Plan, made at each Annual Meeting and commencing
with the 2005 Annual Meeting. All such options have an exercise price equal to
the fair market value of the underlying SIGA shares on the date of grant.
30
TRANSACTIONS WITH RELATED
PERSONS
Review, Approval or Ratification of
Transactions with Related Persons
The Company’s policies and procedures for
reviewing, approving, and ratifying transactions with related persons are set
forth in a written policy.
Under these procedures, at each calendar
year’s first regularly scheduled Audit Committee meeting, management recommends
related party transactions be entered into by the Company for that calendar
year, including the proposed aggregate value of such transactions, if
applicable. After review, the Audit Committee either approves or disapproves
such transactions, and at each subsequently scheduled meeting, management is
required to update the Audit Committee as to any material change to those
proposed transactions.
Further, in the event management recommends
any further related party transactions subsequent to the first calendar year
meeting, such transactions may be presented to the Audit Committee for approval
or preliminarily entered into by management subject to ratification by the Audit
Committee; provided that, if ratification shall not be forthcoming, management
shall make all reasonable efforts to cancel or annul such
transactions.
In addition, with respect to any related party
transaction that includes a compensation component, management will submit the
terms of such proposed compensation (or any subsequent material changes to such
compensation) to the Compensation Committee for its review. After its review,
the Compensation Committee either approves or disapproves the compensation
component of the related party transaction and informs management and the Audit
Committee of such approval or disapproval.
Transactions with Related
Persons
Based on information provided by the directors
and the executive officers, the Audit Committee determined that there were no
related person transactions to be reported in this proxy statement other
than:
Kramer Levin Naftalis & Frankel LLP, the
Company’s legal counsel, billed the Company for legal services provided to the
Company. One of our directors, Thomas Constance, is a partner at Kramer Levin
Naftalis & Frankel LLP.
On June 19, 2008, SIGA entered into a letter
agreement (the “Letter Agreement”), with MacAndrews & Forbes LLC
(“M&F”), a related party, for M&F’s commitment to invest (the
“Investment Commitment”), at SIGA’s discretion, up to $8 million over a one-year
period (the “Investment Period”) in exchange for (i) SIGA common stock at per
share price equal to the lesser of (A) $3.06 or (B) the average of the
volume-weighted average price per share for the 5 trading days immediately
preceding each funding date, and (ii) warrants to purchase 40% of the number of
SIGA shares acquired by M&F, exercisable at 115% of the common stock
purchase price on such funding date (the “Consideration Warrants”). The
Consideration Warrants will be exercisable for up to 4 years following the
issuance of such warrants. M&F has the option, during the Investment Period,
to invest in the Company under the same investment terms (the “Investment
Option”).
On April 29, 2009, SIGA and M&F entered
into a letter agreement (the “Extension Agreement”) extending the Investment
Period of the Company’s Letter Agreement with M&F through June 19, 2010 and
increasing the number of draws pursuant to the Investment Commitment and the
Investment Option to no more than six. On April 30, 2009, the Company issued
M&F 490,196 shares of common stock and 196,078 warrants to acquire common
stock in exchange for total proceeds of $1.5 million. The warrants are
exercisable until April 30, 2013, for an exercise price of $3.519 per share. On
September 17, 2009, the Company issued M&F 326,797 shares of common stock
and 130,719 warrants to acquire common stock in exchange for total proceeds of
$1.0 million. The warrants are exercisable until September 17, 2013, for an
exercise price of $3.519 per share. As of December 31, 2009, $5.5 million of the
commitment remains outstanding.
In addition, in consideration for the
commitment of M&F, on June 19, 2008, M&F received warrants to purchase
238,000 shares of SIGA common stock, exercisable at $3.06 (the “Commitment
Warrants”). The Commitment Warrants are exercisable until June 19, 2012. The
Company initially recorded all costs related to the Letter Agreement, including
the fair value of the Commitment Warrants, as deferred transaction costs. Upon
the issuance of common stock and warrants to purchase shares of common stock on
April 30, 2009, the Company recorded a reduction in its additional paid-in
capital for the effect of the related transaction costs.
On December 1, 2009 the Company entered into an Office Service Agreement
with an affiliate of M&F to occupy office space for approximately $8,000 per
month. The agreement is cancelable upon 60 days notice by SIGA or the
affiliate.
31
PROPOSAL NO. 2
RATIFICATION OF APPOINTMENT
OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee of the Board of Directors
has appointed the firm of PricewaterhouseCoopers LLP as SIGA’s independent
registered public accounting firm to audit the financial statements of SIGA for
the fiscal year ending December 31, 2010, and recommends that stockholders vote
for ratification of this appointment. PricewaterhouseCoopers LLP has audited
SIGA’s financial statements since January 1997. Representatives of
PricewaterhouseCoopers LLP are expected to be present at the Annual Meeting and
will have the opportunity to make a statement if they desire to do so, and are
expected to be available to respond to appropriate questions. The affirmative
vote of a majority of the total votes cast on such proposal in person or by
proxy at the Annual Meeting will be required to ratify the selection of
PricewaterhouseCoopers LLP.
If the stockholders fail to ratify the
selection, the Audit Committee will reconsider its selection of auditors. Even
if the selection is ratified, the Audit Committee, in its discretion, may direct
the appointment of a different independent registered public accounting firm at
any time during the year, if it determines that such change would be in the best
interests of SIGA and its stockholders.
Audit Fees
PricewaterhouseCoopers LLP billed SIGA
$390,600 in the aggregate, for professional services rendered and expenses
incurred by them for the audit of SIGA’s annual financial statements for the
fiscal year ended December 31, 2009, reviews of the interim financial statements
included in SIGA’s Forms 10-Q filed during the year ended December 31, 2009 and
consents and reviews of various documents filed with the SEC during the year
ended December 31, 2009.
PricewaterhouseCoopers LLP billed SIGA
$324,000 in the aggregate, for professional services rendered and expenses
incurred by them for the audit of SIGA’s annual financial statements for the
fiscal year ended December 31, 2008, reviews of the interim financial statements
included in SIGA’s Forms 10-Q filed during the year ended December 31, 2008 and
consents and reviews of various documents filed with the SEC during the year
ended December 31, 2008.
Audit Related Fees
PricewaterhouseCoopers LLP billed SIGA
$230,800 in the aggregate, for audit related services rendered by them during
the year ended December 31, 2009, related to the audit of our government
grants.
PricewaterhouseCoopers LLP billed SIGA $20,000
in the aggregate, for audit related services rendered by them during the year
ended December 31, 2008.
Tax Fees
PricewaterhouseCoopers LLP did not render any
professional services for tax compliance, tax advice or tax planning during
either of the fiscal years ended December 31, 2009 or December 31,
2008.
All Other Fees
PricewaterhouseCoopers LLP billed SIGA $2,400
in the aggregate for a subscription to technical accounting
software during the years ended December 31, 2008 and 2009.
Policy on Audit Committee Pre-Approval of
Audit and Permissible Non-Audit Services of Independent Registered Public
Accounting Firm
The Audit Committee’s policy is to pre-approve
all audit and permissible non-audit services provided by the independent
registered public accounting firm. These services may include audit services,
audit-related services, tax services, and other services.
SIGA did not make use in fiscal year 2009 of
the rule that waives pre-approval requirements for non-audit services in certain
cases if the fees for these services constitute less than 5% of the total fees
paid to the auditor during the year.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE “FOR” THE
RATIFICATION OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS SIGA’S
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING
DECEMBER 31, 2010 (ITEM 2 OF THE ENCLOSED PROXY CARD).
32
PROPOSAL 3
SIGA TECHNOLOGIES, INC. 2010 STOCK INCENTIVE
PLAN
Background and Reasons for
Adoption
The Board of Directors has adopted the SIGA
Technologies, Inc. 2010 Stock Incentive Plan (the “Plan”), subject to approval
by the Company’s stockholders at the Annual Meeting. The purpose of the Plan is
to update and supersede the Amended and Restated 1996 Incentive and
Non-Qualified Stock Option Plan in order to establish a flexible vehicle through
which the Company may offer equity-based compensation incentives to eligible
personnel of the Company and its subsidiaries in order to attract, motivate,
reward and retain such personnel and to further align the interests of such
personnel with those of the Company’s stockholders. The following description of
the Plan is qualified in its entirety by reference to the full text of such
Plan, which is set forth in Annex A to this proxy statement.
General Description of the
Plan
Awards. The Plan
authorizes the grants of non-qualified stock options (“NQOs”), incentive stock
options (“ISOs”), shares of restricted stock and shares of unrestricted stock
(collectively, NQOs, ISOs, restricted stock and unrestricted stock are referred
to as “Awards”). Under the Plan, the Company may deliver authorized but unissued
shares of Common Stock, treasury shares of Common Stock, and shares of Common
Stock acquired by the Company for the purposes of the Plan.
Maximum Number of Shares. A maximum of 2,000,000 shares of Common Stock are available for
grants pursuant to Awards under the Plan. The following shares of Common Stock
shall again become available for Awards under the Plan: any shares subject to an
Award under the Plan that remain unissued upon the cancellation or termination
of the Award for any reason; any shares of restricted stock that are forfeited,
provided that any dividends paid on such shares are also forfeited; any shares
in respect of an Award that is settled for cash and any shares subject to an
Award that are withheld or surrendered in order to pay the exercise price or to
satisfy the tax withholding obligations related to the Award. The maximum number
of shares of Common Stock with respect to which any individual may be granted
Awards during any one calendar year is 1,000,000 shares.
Administration. The
Plan is administered by the Compensation Committee, or such other committee or
subcommittee as the Board of Directors appoints (the “Committee”). If the
Committee does not exist, or for any other reason determined by the Board of
Directors, the Board of Directors may act as the Committee. The Committee or the
Board of Directors may delegate to one or more officers of the Company the
authority to designate the individuals (from among those eligible to receive
Awards, other than such officer(s) themselves) who will receive Awards under the
Plan, to the fullest extent permitted by applicable law. The Committee
determines the key persons who will receive Awards, the type of Awards granted,
and the number of shares subject to each Award. The Committee also determines
the prices, expiration dates and other material features of Awards. The
Committee has the authority to interpret and construe any provision of the Plan
and to adopt such rules and regulations for administering the Plan as it deems
necessary or appropriate. All decisions and determinations of the Committee are
final, binding and conclusive. No member of the Committee shall be liable for
any action or determination made in good faith with respect to the Plan or any
Award.
Eligibility.
Officers, directors (including non-employee directors), and salaried employees
of, and consultants to, the Company and its subsidiaries, as the Committee in
its sole discretion shall select, are eligible to receive Awards under the Plan.
As of March 31, 2010, the Company believes approximately 60 individuals are
eligible to participate in the Plan. However, the granting of Awards is
discretionary and it is not possible to determine how many individuals actually
will receive Awards under the Plan.
Termination of Plan. No Award may be granted under the plan after the tenth anniversary of
the adoption of the Plan.
Power to Amend. The
Board of Directors may, at any time, suspend or discontinue the Plan or revise
or amend it in any respect whatsoever. The Board of Directors will determine
whether any amendment should be subject to the approval of the stockholders of
the Company.
The Committee may, in its sole discretion,
without amending the Plan, amend any Award in any manner, including to (i)
accelerate the date on which an Award becomes exercisable or vested, (ii) waive
any condition imposed with respect to an Award, or (iv) waive any forfeiture or
expiration of an Award in connection with a termination of employment. No
amendment or modification to the Plan or any Award may impair the grantee’s
rights under any previously granted and outstanding Award without the consent of
the grantee.
33
Summary of Awards Available Under the
Plan
Non-Qualified Stock Options. The exercise price per share of each NQO
granted under the Plan is determined by the Committee on the grant date and will
not be less than the fair market value of a share of Stock on the grant date.
Each NQO is exercisable for a term, not to exceed ten years, established by the
Committee on the grant date. The exercise price must be paid in cash or, subject
to the approval of the Committee, in shares of Stock valued at their fair market
value on the date of exercise or by such other method as the Committee may from
time to time prescribe.
The Plan contains provisions applicable to the
exercise of NQOs subsequent to a grantee’s termination of employment for
“cause,” other than for cause, or due to “disability” (as each such term is
defined in the Plan) or death. These provisions apply unless the Committee
establishes alternative provisions with respect to an Award. In general, these
provisions provide that NQOs that are not exercisable at the time of such
termination shall expire upon the termination of employment and NQOs that are
exercisable at the time of such termination shall remain exercisable until the
earlier of the expiration of their original term and (i) in the event of a
grantee’s termination other than for cause, the expiration of 90 days after such
termination of employment and (ii) in the event of a grantee’s disability or
death, the first anniversary of such termination. In the event the Company
terminates the grantee’s employment for cause, all NQOs held by the grantee,
whether or not then exercisable, terminate immediately as of the commencement of
business on the termination of employment date.
Stock options generally are not transferable
other than by will or the laws of descent and distribution, except that the
Committee may permit transfers to the grantee’s family members or trusts for the
benefit of family members.
Incentive Stock Options. Generally, ISOs are options that may provide certain federal income tax
benefits to a grantee not available with NQOs. An ISO has the same Plan
provisions as a NQO, except that:
- In order to receive the tax
benefits, a grantee must hold the shares acquired upon exercise of an ISO for
at least two years after the grant date and at least one year after the
exercise date.
- The aggregate fair market value of
shares of Stock (determined on the ISO grant date) with respect to which ISOs
are exercisable for the first time by a grantee during any calendar year
(whether issued under the Plan or any other plan of the Company or its
subsidiaries) may not exceed $100,000.
- In the case of an ISO granted to
any individual who owns stock possessing more than ten percent of the total
combined voting power of all classes of stock of the Company, the exercise
price per share must be at least 110% of the fair market value of a share of
Stock at the time the ISO is granted, and the ISO cannot be exercisable more
than five years from the grant date.
- An option cannot be treated as an ISO if it is exercised more than three months following the grantee’s termination of employment for any reason other than death or disability, or more than one year after the grantee’s termination of employment for disability, unless the grantee died during such three-month or one-year period. ISOs are not transferable other than by will or by the laws of descent and distribution.
Restricted Stock.
Prior to the vesting of any restricted shares, the shares are not transferable
by the grantee and are forfeitable. Vesting of the shares may be based on
continued employment with the Company and/or upon the achievement of specific
performance goals, as the Committee determines on the grant date. The Committee,
at the time that shares of restricted stock are granted, may impose additional
conditions to the vesting of the shares. Unvested shares of restricted stock are
forfeited upon a grantee’s termination of employment for any
reason.
Unrestricted Stock.
Shares of Stock may be granted by the Committee and may be payable at such times
and subject to such conditions as the Committee determines; provided that any
such awards to officers or directors shall involve a number of shares determined
by the Committee as being reasonable and shall be identified as being granted in
lieu of salary or cash bonus.
Certain Corporate Changes
The Plan provides that in the event of a
change in the capitalization of the Company, a stock dividend or split, a merger
or combination of shares and certain other similar events, there will be an
adjustment in the number of shares of Common Stock available to be delivered
under the Plan, the number of shares subject to Awards, and the exercise prices
of certain Awards. The Plan also provides for the adjustment or termination of
Awards upon the occurrence of certain corporate events.
34
Tax Withholding
The Plan provides that a grantee may be
required by the Committee to meet certain tax withholding requirements by
remitting to the Company cash or, if the Committee approves, through the
withholding of shares otherwise payable to the grantee.
New Plan Benefits
Since no Awards have been made under the Plan
and since Awards under the Plan are wholly discretionary, amounts payable under
the Plan are not determinable at this time.
Summary of Federal Tax
Consequences
The following is a brief description of the
federal income tax treatment that will generally apply to Awards under the Plan
based on current federal income tax rules.
Non-Qualified Options. The grant of an NQO will not result in taxable income to the grantee.
Except as described below, the grantee will realize ordinary income at the time
of exercise in an amount equal to the excess of the fair market value of the
Common Stock acquired over the exercise price for those shares, and the Company
will be entitled to a corresponding deduction. Gains or losses realized by the
grantee upon disposition of such shares will be treated as capital gains and
losses, with the basis in such Common Stock equal to the fair market value of
the shares at the time of exercise.
Incentive Stock Options. The grant of an incentive stock option will not result in taxable income
to the grantee. The exercise of an incentive stock option will not result in
taxable income to the grantee provided that the grantee was, without a break in
service, an employee of the Company or a subsidiary during the period beginning
on the date of the grant of the option and ending on the date three months prior
to the date of exercise (one year prior to the date of exercise if the grantee
is disabled, as that term is defined in the Code). The excess of the fair market
value of the Common Stock at the time of the exercise of an incentive stock
option over the exercise price is an adjustment that is included in the
calculation of the grantee’s alternative minimum taxable income for the tax year
in which the incentive stock option is exercised.
If the grantee does not sell or otherwise
dispose of the Common Stock within two years from the date of the grant of the
incentive stock option or within one year after the transfer of such Common
Stock to the grantee, then, upon disposition of such Common Stock, any amount
realized in excess of the exercise price will be taxed to the grantee as capital
gain and the Company will not be entitled to a corresponding deduction. A
capital loss will be recognized to the extent that the amount realized is less
than the exercise price.
If the foregoing holding period requirements
are not met, the grantee will generally realize ordinary income at the time of
the disposition of the shares, in an amount equal to the lesser of (i) the
excess of the fair market value of the Common Stock on the date of exercise over
the exercise price, or (ii) the excess, if any, of the amount realized upon
disposition of the shares over the exercise price and the Company will be
entitled to a corresponding deduction. If the amount realized exceeds the value
of the shares on the date of exercise, any additional amount will be capital
gain. If the amount realized is less than the exercise price, the grantee will
recognize no income, and a capital loss will be recognized equal to the excess
of the exercise price over the amount realized upon the disposition of the
shares. The Company will be entitled to a deduction to the extent that the
grantee recognizes ordinary income because of a disqualifying
disposition.
Restricted Stock.
The grant of restricted stock will not result in taxable income at the time of
grant and the Company will not be entitled to a corresponding deduction,
assuming that the restrictions constitute a “substantial risk of forfeiture” for
federal income tax purposes. Upon the vesting of shares of restricted stock, the
holder will realize ordinary income in an amount equal to the then fair market
value of those shares, and the Company will be entitled to a corresponding
deduction. Gains or losses realized by the grantee upon disposition of such
shares will be treated as capital gains and losses, with the basis in such
shares equal to the fair market value of the shares at the time of vesting.
Dividends paid to the holder during the restriction period, if so provided, will
also be compensation income to the grantee and the Company will be entitled to a
corresponding deduction. A grantee may elect pursuant to Section 83(b) of the
Code to have income recognized at the date of grant of a restricted stock award
and to have the applicable capital gain holding period commence as of that date,
and the Company will be entitled to a corresponding deduction.
35
Unrestricted Stock.
The grant of unrestricted stock will result in taxable income for the recipient
at the time of grant in an amount equal to the then fair market value of those
shares and the Company will be entitled to a corresponding deduction. Gains or
losses realized by the grantee upon disposition of such shares will be treated
as capital gains and losses, with the basis in such shares equal to the fair
market value of the shares at the time of grant.
$1 Million Limit.
Section 162(m) of the Code disallows a federal income tax deduction for certain
compensation in excess of $1 million per year paid to each of the Company’s
chief executive officer and its four other most highly compensated executive
officers. Stock options generally are exempt from this limitation.
Change in Control.
Any acceleration of the vesting or payment of Awards under the Plan caused by an
event of a change in control in the Company may cause part or all of the
consideration involved to be treated as an “excess parachute payment” under the
Code, which may subject the grantee to a 20% excise tax and preclude deduction
by the Company.
Tax Advice. The
preceding discussion is based on federal tax laws and regulations presently in
effect, which are subject to change, and the discussion does not purport to be a
complete description of the federal income tax aspects of the Plan. A grantee
may also be subject to state and local taxes in connection with the grant of
Awards under the Plan.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE “FOR” THE
ADOPTION OF THE SIGA TECHNOLOGIES, INC. 2010 STOCK INCENTIVE PLAN (ITEM 3 OF THE
ENCLOSED PROXY CARD).
36
ANNEX A
SIGA TECHNOLOGIES, INC.
2010 STOCK INCENTIVE PLAN
I. General
a) Purpose
The
purpose of the SIGA Technologies, Inc. 2010 Stock Incentive Plan (the “Plan”) is
to establish a flexible vehicle through which SIGA Technologies, Inc., a
Delaware corporation (the “Company”), may offer equity-based compensation
incentives to eligible personnel of the Company and its subsidiaries in order to
attract, motivate, reward and retain such personnel and to further align the
interests of such personnel with those of the stockholders of the
Company.
b) Administration
1. Administration by Committee; Constitution of Committee. The Plan shall be
administered by the Compensation Committee of the Board of Directors of the
Company (the “Board”) or such other committee or subcommittee as the Board may
designate (the “Committee”). The members of the Committee shall be appointed by,
and serve at the pleasure of, the Board. If the Committee does not exist, or for
any other reason determined by the Board, the Board may take any action under
the Plan that would otherwise be the responsibility of the
Committee.
2. Committee’s Authority. The Committee shall have the authority to (i)
exercise all of the powers granted to it under the Plan, (ii) construe,
interpret and implement the Plan and any award certificates issued under the
Plan, (iii) prescribe, amend and rescind rules and regulations relating to the
Plan, including rules governing its own operations, (iv) make all determinations
necessary or advisable in administering the Plan, (v) correct any defect, supply
any omission and reconcile any inconsistency in the Plan, and (vi) amend the
Plan to reflect changes in applicable law.
3. Committee Action; Delegation. Actions of the Committee shall be taken by
the vote of a majority of its members. Except as otherwise required by
applicable law, any action may be taken by a written instrument signed by a
majority of the Committee members, and action so taken shall be fully as
effective as if it had been taken by a vote at a meeting. Notwithstanding the
foregoing or any other provision of the Plan, the Committee (or the Board acting
instead of the Committee), may delegate to one or more officers of the Company
the authority to designate the individuals (other than such officer(s)), among
those eligible to receive awards pursuant to the terms of the Plan, who will
receive rights or options under the Plan and the size of each such grant, to the
fullest extent permitted by applicable law.
4. Determinations Final. The determination of the Committee on all matters
relating to the Plan or any award under the Plan shall be final, binding and
conclusive.
5. Limit on Committee Members’ Liability. No member of the Committee shall
be liable for any action or determination made in good faith with respect to the
Plan or any award thereunder.
c) Persons Eligible for Awards
The
persons eligible to receive awards under the Plan are those officers, directors
(whether or not they are employed by the Company), and salaried employees of,
and consultants to, the Company and any direct or indirect subsidiaries
(collectively, “key persons”) as the Committee in its absolute discretion shall
select.
d) Types of Awards Under Plan
Awards
may be made under the Plan in the form of (a) incentive stock options, (b)
non-qualified stock options, (c) restricted stock and (d) unrestricted stock,
all as more fully set forth in Article II. The term “award” means any of the
foregoing. No incentive stock option may be granted to a person who is not an
employee of the Company or one of its subsidiary corporations on the date of
grant.
37
e) Shares Available for Awards; Adjustments to Awards
6. Aggregate Number Available; Certificate Legends. Subject to adjustment as
provided under Section 1.5(d)(i)
below, the total number of shares of common stock of the Company, par value
$0.0001 per share (“Common Stock”) with respect to which awards may be granted
pursuant to the Plan shall not exceed the sum of 2,000,000 shares. Shares
issued pursuant to the Plan may be authorized but unissued Common Stock,
authorized and issued Common Stock held in the Company’s treasury or Common
Stock acquired by the Company for the purposes of the Plan. The Committee may
direct that any stock certificate evidencing shares issued pursuant to the Plan
shall bear a legend setting forth such restrictions on transferability as may
apply to such shares.
7. Individual Limits. Except as provided in this Section 1.5(b), no
provision of this Plan shall be deemed to limit the number or value of shares
otherwise available for awards under the Plan with respect to which the
Committee may make awards to any one eligible person. Subject to adjustment as
provided in Section 1.5(d)(i) hereof, the total number of shares of Common Stock
with respect to which awards may be granted to any one employee of the Company
or a subsidiary during any one calendar year shall not exceed 1,000,000
shares. Stock options and stock appreciation rights granted and subsequently
canceled or deemed to be canceled in a calendar year shall count against this
limit even after their cancellation.
8. Certain Shares to Become Available Again. The following shares of Common
Stock shall again become available for awards under the Plan: (i) any shares
that are subject to an award under the Plan and that remain unissued upon the
cancellation or termination of such award for any reason whatsoever, (ii) any
shares subject to awards that are settled in cash, (iii) any shares subject to
an award that are withheld or surrendered in order to pay the exercise or
purchase price under an award or to satisfy the tax withholding obligations
associated with the exercise, vesting or settlement of an award and (iv) any
shares of restricted stock forfeited pursuant to the terms of the Plan or the
award, provided that any dividends paid on such shares are also
forfeited.
9. Adjustments to Available Shares and Existing Awards Upon Changes in
Common Stock or Certain Other
Events. Upon certain changes in Common Stock or other corporate events, the
number of shares of Common Stock available for issuance with respect to awards
that may be granted under the Plan, and that are the subject of existing awards,
shall be adjusted or shall be adjustable, as follows:
(a) Shares Available for Grants. In the event of
any change in the number of shares of Common Stock outstanding by reason of any
stock dividend or split, reverse stock split, recapitalization, merger,
consolidation, combination or exchange of shares or similar corporate change,
the maximum number of shares of Common Stock with respect to which the Committee
may grant awards under Section 1.5(a) above and the annual individual limit
under Section 1.5(b) above, shall be appropriately adjusted by the Committee. In
the event of any change in the number of shares of Common Stock outstanding by
reason of any other event or transaction, the Committee may, but need not, make
such adjustments in the maximum number and class of shares of Common Stock with
respect to which the Committee may grant awards under Section 1.5(a) above and
the annual individual limit under Section 1.5(b) above, in each case as the
Committee may deem appropriate.
(b) Outstanding Restricted Stock. Unless the
Committee in its absolute discretion otherwise determines, any securities or
other property (including dividends paid in cash) received by a grantee with
respect to a share of restricted stock, which has not yet vested, as a result of
any dividend, stock split, reverse stock split, recapitalization, merger,
consolidation, combination, exchange of shares or otherwise, will not vest until
such share of restricted stock vests, and shall be promptly deposited with the
Company.
(c) Outstanding Options – Increase or Decrease in
Issued Shares Without Consideration. Subject to any required action by the
stockholders of the Company, in the event of any increase or decrease in the
number of issued shares of Common Stock resulting from a subdivision or
consolidation of shares of Common Stock or the payment of a stock dividend (but
only on the shares of Common Stock), or any other increase or decrease in the
number of such shares effected without receipt of consideration by the Company,
the Committee shall proportionally adjust the number of shares of Common Stock
subject to each outstanding option and the exercise price-per-share of Common
Stock of each such option to the extent necessary to prevent the enlargement or
dilution of rights with respect to such options.
38
(d) Outstanding Options – Certain Mergers. Subject
to any required action by the shareholders of the Company, in the event that the
Company shall be the surviving corporation in any merger or consolidation
(except a merger or consolidation as a result of which the holders of shares of
Common Stock receive securities of another corporation), each option outstanding
on the date of such merger or consolidation shall pertain to and apply to the
securities which a holder of the number of shares of Common Stock subject to
such option would have received in such merger or consolidation.
(e) Outstanding Options – Certain Other
Transactions. In the event of (1) a dissolution or liquidation of the Company,
(2) a merger or consolidation involving the Company in which the Company is not
the surviving corporation or (3) a merger or consolidation involving the Company
in which the Company is the surviving corporation but the holders of shares of
Common Stock receive securities of another corporation and/or other property,
including cash, the Committee shall, in its absolute discretion, either:
(i) cancel, effective immediately prior to such
event (whether or not prior to the occurrence of such event, each option
outstanding is exercisable), and, in full consideration of such cancellation,
pay to the grantee to whom such option was granted an amount in cash, for each
share of Common Stock subject to such option, equal to the excess of (x) the
value, as determined by the Committee in its absolute discretion, of the
property (including cash) received by the holder of a share of Common Stock as a
result of such event over (y) the exercise price of such option;
(ii) Cause all options, whether or not otherwise
exercisable, to be fully exercisable on a date at least 10 days prior to the
completion of such event, and to expire as of the completion of such event; or
(iii) if the acquiring or successor entity is
publicly traded on a major securities exchange, provide for the exchange of each
option outstanding immediately prior to such event (whether or not then
exercisable) for an option with respect to, as appropriate, the number of shares
of stock in such acquiring or successor entity which a holder of the number of
shares of Common Stock subject to such option would have received and, incident
thereto, make an equitable adjustment as determined by the Committee in its
absolute discretion in the exercise price of the option or the number of shares
or amount of property subject to the option or, if appropriate, provide for a
cash payment to the grantee to whom such option was granted in partial
consideration for the exchange of the option.
(f) Outstanding Options – Other Changes. In the
event of any change in the capitalization of the Company or a corporate change
other than those specifically referred to in Section 1.5(d)(iii), (iv) or (v)
above, the Committee may, in its absolute discretion, make such adjustments in
the number and class of shares subject to options outstanding on the date on
which such change occurs and in the per-share exercise price of each such option
as the Committee may consider appropriate to prevent dilution or enlargement of
rights. In addition, if and to the extent the Committee determines it is
appropriate, the Committee may elect to cancel each option outstanding
immediately prior to such event (whether or not then exercisable), and, in full
consideration of such cancellation, pay to the grantee to whom such option was
granted an amount in cash, for each share of Common Stock subject to such
option, equal to the excess of (x) the Fair Market Value of Common Stock on the
date of such cancellation over (y) the exercise price of such option.
(g) No Other Rights. Except as expressly provided
in the Plan, no grantee shall have any rights by reason of any subdivision or
consolidation of shares of stock of any class, the payment of any dividend, any
increase or decrease in the number of shares of stock of any class or any
dissolution, liquidation, merger or consolidation of the Company or any other
corporation. Except as expressly provided in the Plan, no issuance by the
Company of shares of stock of any class, or securities convertible into shares
of stock of any class, shall affect, and no adjustment by reason thereof shall
be made with respect to, the number of shares of Common Stock subject to an
award or the exercise price of any option.
39
f) Definitions of Certain Terms
10. The term “Cause” shall have the meaning set forth in any employment
agreement between the Participant and the Company in effect as of the date the
event giving rise to cause occurred. In the absence of such an employment
agreement provision, “Cause” shall mean: (i) the Participant's conviction of any
crime (whether or not involving the Company) constituting a felony in the
jurisdiction involved; (ii) conduct of the Participant related to the
Participant's employment for which either criminal or civil penalties against
the Participant or the Company may be sought; (iii) material violation of the
Company's policies, including, without limitation, those relating to sexual
harassment, the disclosure or misuse of confidential information, or those set
forth in Company manuals or statements of policy; (iv) serious neglect or
misconduct in the performance of the Participant's duties for the Company or
willful or repeated failure or refusal to perform such duties; or (v) any
material violation by the Participant of the terms of any agreement between the
Participant and the Company, including, without limitation, any employment or
non-competition agreement. Any rights the Company may have hereunder in respect
of the events giving rise to Cause shall be in addition to the rights the
Company may have under any other agreement with a Participant or at law or in
equity. Any determination of whether a Participant's employment is (or is deemed
to have been) terminated for Cause shall be made by the Committee in its sole
discretion, which determination shall be final and binding on all parties. If,
subsequent to a Participant's termination of employment (whether voluntary or
involuntary) without Cause, it is discovered that the Participant's employment
could have been terminated for Cause, such Participant's employment shall be
deemed to have been terminated for Cause. A Participant's termination of
employment for Cause shall be effective as of the date of the occurrence of the
event giving rise to Cause, regardless of when the determination of Cause is
made.
11. The term “employment” shall be deemed to mean an employee’s employment
with, or a consultant’s provision of services to, the Company or any Company
subsidiary and each Board member’s service as a Board member.
12. The “Fair Market Value” of a share of Common Stock on any day shall be
the last sale price on such date on the Nasdaq Stock Market, or, if no reported
sales take place on the applicable date, the average of the high bid and low
asked price of Common Stock on such date or, if no such quotation is made on
such date, on the next preceding day on which there were quotations, provided
that such quotations shall have been made within the ten (10) business days
preceding the applicable date, and if there is no such quotation, the Fair
Market Value shall be determined in good faith by the Committee in a manner
consistently applied.
13. The term “incentive stock option” means an option that is intended to
qualify for special federal income tax treatment pursuant to sections 421 and
422 of the Code as now constituted or subsequently amended, or pursuant to a
successor provision of the Code, and which is so designated in the applicable
award certificate. Any option that is not specifically designated as an
incentive stock option shall under no circumstances be considered an incentive
stock option. Any option that is not an incentive stock option is referred to
herein as a “non-qualified stock option”.
14. In relation to the Company, the term “subsidiary corporation” shall be
defined in accordance with sections 424(f) of the Code.
15. A grantee shall be deemed to have “terminated employment” on (i) the date
the grantee ceases to be employed by, or to provide consulting services for, the
Company or any Company subsidiary, or any corporation (or any of its
subsidiaries) which assumes the grantee’s award in a transaction to which
section 424(a) of the Code applies; or (ii) the date the grantee ceases to be a
Board member, provided, however, that in the case of a grantee (x) who is, at
the time of reference, both an employee or consultant and a Board member, or (y)
who ceases to be engaged as an employee, consultant or Board member and
immediately is engaged in another of such relationships with the Company or any
Company subsidiary, the grantee shall be deemed to have a “termination of
employment” upon the later of the dates determined pursuant to clauses (i) and
(ii) of this Section 1.6(f). For purposes of clause (i) of this Section 1.6(f),
a grantee who continues his or her employment or consulting relationship with a
Company subsidiary subsequent to its sale by the Company shall have a
termination of employment upon the date of such sale. The Committee may in its
absolute discretion determine whether any leave of absence constitutes a
termination of employment for purposes of the Plan and the impact, if any, of
any such leave of absence on awards theretofore made under the
Plan.
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II. Awards Under the Plan
g) Certificates Evidencing Awards
Each award granted under the Plan shall be
evidenced by a written certificate (“award certificate”) which shall contain
such provisions as the Committee may in its absolute discretion deem necessary
or desirable. By accepting an award pursuant to the Plan, a grantee thereby
agrees that the award shall be subject to all of the terms and provisions of the
Plan and the applicable award certificate.
h) Terms of Stock Options
16. Stock Option Grants. The Committee may grant incentive stock options and
non-qualified stock options (collectively, “options”) to purchase shares of
Common Stock from the Company, to such key persons, and in such amounts and
subject to such vesting and forfeiture provisions and other terms and
conditions, as the Committee shall determine in its absolute discretion, subject
to the provisions of the Plan.
17. Option Exercise Price. Each award certificate with respect to an option
shall set forth the amount (the “option exercise price”) payable by the grantee
to the Company upon exercise of the option evidenced thereby. The option
exercise price per share shall be determined by the Committee in its absolute
discretion; provided, however, that the option exercise price shall be at least
100% of the Fair Market Value of a share of Common Stock on the date the option
is granted, and provided further that in no event shall the option exercise
price be less than the par value of a share of Common Stock.
18. Exercise Period. The exercise of an option shall be subject to the
following:
(a) Ten-Year Limit. No stock option shall be
exercisable more than 10 years after the date of grant.
(b) Vesting. The Committee shall determine and set
forth in the applicable award certificate the date or dates on which such option
shall become vested, which may be based on continued employment and/or the
achievement of specified performance goals.
(c) Beginning of Exercise Period. An option will
be exercisable when it vests, and may be exercised in whole or in
part.
(d) End of Exercise Period. Unless the applicable
award certificate otherwise provides, once an installment becomes exercisable,
it shall remain exercisable until the earlier of (A) the tenth anniversary of
the date of grant of the award or (B) the expiration, cancellation or
termination of the award.
(e) Termination of Employment – Generally. Except
as otherwise provided below in this Section 2.2(c), or in the applicable award
certificate, upon a Participant’s termination of employment, the following shall
apply:
(iv) Generally. If a Participant’s employment
terminates for any reason other than death, disability or cause, then: (x) all
options not yet exercisable as of the date of such termination shall expire on
the date of such termination and (y) all options that are exercisable as of the
date of such termination shall remain exercisable for the 90-day period
following such termination of employment.
(v) Death or Disability. If a Participant’s
employment terminates due to the Participant’s death or disability, then: (x)
all options not yet exercisable as of the date of such termination shall expire
on the date of such termination and (y) all options that are exercisable as of
the date of such termination shall remain exercisable until the first
anniversary of the Participant’s termination of employment.
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(vi) Cause. If a Participant’s employment is
terminated for cause, all options not theretofore exercised shall terminate upon
the commencement of business on the date of the Participant’s termination of
employment.
(vii) Restrictions on Exercise Following Death. Any
exercise of an option following a grantee’s death shall be made only by the
grantee’s executor or administrator or other duly appointed representative
reasonably acceptable to the Committee, unless the grantee’s will specifically
disposes of such option, in which case such exercise shall be made only by the
recipient of such specific disposition. If a grantee’s personal representative
or the recipient of a specific disposition under the grantee’s will shall be
entitled to exercise any option pursuant to the preceding sentence, such
representative or recipient shall be bound by all the terms and conditions of
the Plan and the applicable award certificate which would have applied to the
grantee.
(f) Special Rules for Incentive Stock Options. No
option that remains exercisable for more than three months following a grantee’s
termination of employment for any reason other than death (including death
within three months after the termination of employment or within one year after
a termination due to disability) or disability, or for more than one year
following a grantee’s termination of employment as the result of disability, may
be treated as an incentive stock option.
19. Incentive Stock Options: $100,000 Limitation. To the extent that the
aggregate Fair Market Value (determined as of the time the option is granted) of
the stock with respect to which incentive stock options are first exercisable by
any employee during any calendar year shall exceed $100,000, or such higher
amount as may be permitted from time to time under section 422 of the Code, such
options shall be treated as non-qualified stock options.
20. Incentive Stock Options: 10% Owners. Notwithstanding the foregoing
provisions of this Section 2.2, an incentive stock option may not be granted
under the Plan to an individual who, at the time the option is granted, owns
stock possessing more than 10% of the total combined voting power of all classes
of stock of his or her employer or of its parent or subsidiary (as such
ownership may be determined for purposes of section 422(b)(6) of the Code)
unless (i) at the time such incentive stock option is granted the option
exercise price is at least 110% of the Fair Market Value of the shares subject
thereto and (ii) the incentive stock option by its terms is not exercisable
after the expiration of 5 years from the date it is granted.
i) Exercise of Options
Subject to the other provisions of
this Article II, each option granted under the Plan shall be exercisable as
follows:
21. Notice of Exercise. An option shall be exercised by the filing of a
written notice with the Company or the Company’s designated exchange agent (the
“exchange agent”), on such form and in such manner as the Committee shall in its
absolute discretion prescribe.
22. Payment of Exercise Price. Any written notice of exercise of an option
shall be accompanied by payment for the shares being purchased. Such payment
shall be made: (i) by certified or official bank check (or the equivalent
thereof acceptable to the Company or its exchange agent) for the full option
exercise price; or (ii) with the consent of the Committee, by delivery of shares
of Common Stock owned by the grantee (whether acquired by option exercise or
otherwise, provided that if such shares were acquired pursuant to the exercise
of a stock option, they were acquired at least six months prior to the option
exercise date or such other period as the Committee may from time to time
determine) having a Fair Market Value (determined as of the exercise date) equal
to all or part of the option exercise price and a certified or official bank
check (or the equivalent thereof acceptable to the Company or its exchange
agent) for any remaining portion of the full option exercise price; (iii) by
means of a brokered cashless exercise; or (iv) at the discretion of the
Committee and to the extent permitted by law, by such other provision,
consistent with the terms of the Plan, as the Committee may from time to time
prescribe.
23. Delivery of Certificates Upon Exercise. Promptly after receiving payment
of the full option exercise price, the Company or its exchange agent shall
deliver to the grantee or to such other person as may then have the right to
exercise the option, certificate or certificates for the shares of Common Stock
for which the option has been exercised or shall establish an account evidencing
ownership of such shares in uncertificated form. If the method of payment
employed upon option exercise so requires, and if applicable law permits, a
grantee may direct the Company, or its exchange agent, as the case may be, to
deliver the stock certificate(s) to the grantee’s stockbroker.
42
24. No Shareholder Rights. No grantee of an option (or other person having
the right to exercise such option) shall have any of the rights of a shareholder
of the Company with respect to shares subject to such option until the issuance
of a stock certificate to such person for such shares or the establishment of
such account. Except as otherwise provided in Section 1.5(d) above, no
adjustment shall be made for dividends, distributions or other rights (whether
ordinary or extraordinary, and whether in cash, securities or other property)
for which the record date is prior to the date such stock certificate is issued
or such account is established.
j) Compensation in Lieu of Exercise of an Option
Upon written application of the
grantee of an option, the Committee in its absolute discretion may determine to
substitute, for the exercise of such option, compensation to the grantee not in
excess of the difference between the option exercise price and the Fair Market
Value of the shares covered by such written application on the date of such
application. Such compensation shall be in shares of Common Stock, and the
payment thereof may be subject to conditions, all as the Committee shall
determine in its absolute discretion. In the event compensation is substituted
pursuant to this Section 2.4 for the exercise, in whole or in part, of an
option, the number of shares subject to the option shall be reduced by the
number of shares for which such compensation is substituted.
k) Transferability of Options
Except as otherwise provided in an applicable
award certificate evidencing an option, during the lifetime of a grantee, each
option granted to a grantee shall be exercisable only by the grantee and no
option shall be assignable or transferable otherwise than by will or by the laws
of descent and distribution. Any attempt to transfer any option other than as
permitted herein shall be void and immediately cancelled, and no such option
shall in any manner be liable for or subject to the debts, contracts,
liabilities or torts of any person who shall be entitled to such option, nor
shall any option be subject to attachment or legal process for or against such
person. The Committee may, in any applicable award certificate evidencing an
option (other than an incentive stock option to the extent inconsistent with the
requirements of section 422 of the Code applicable to incentive stock options),
permit a grantee to transfer all or some of the options to (A) the grantee’s
spouse, children or grandchildren (“immediate family members”), (B) a trust or
trusts for the exclusive benefit of such immediate family members, or (C) other
parties approved by the Committee in its absolute discretion. Following any such
transfer, any transferred options shall continue to be subject to the same terms
and conditions as were applicable immediately prior to the transfer, and the
transferee shall be subject to all obligations under the Plan as if such person
were the grantee.
l) Grant of Restricted Stock
25. Restricted Stock Grants. The Committee may grant restricted shares of
Common Stock to such key persons, in such amounts and subject to such vesting
and forfeiture provisions and other terms and conditions as the Committee shall
determine in its absolute discretion, subject to the provisions of the Plan.
Restricted stock awards may be made independently of or in connection with any
other award under the Plan. A grantee of a restricted stock award shall have no
rights with respect to such award unless such grantee accepts the award within
such period as the Committee shall specify by accepting delivery of an award
certificate in such form as the Committee shall determine and, in the event the
restricted shares are newly issued by the Company, makes payment to the Company
or its exchange agent in an amount at least equal to the par value of the shares
as required by the Committee and in accordance with the applicable Delaware
law.
26. Issuance of Stock Certificate(s). Promptly after a grantee accepts a
restricted stock award, the Company or its exchange agent shall issue to the
grantee a stock certificate or stock certificates for the shares of Common Stock
covered by the award or shall establish an account evidencing ownership of the
stock in uncertificated form. Upon the issuance of such stock certificate(s) or
establishment of such account, the grantee shall have the rights of a
shareholder with respect to the restricted stock, subject to: (i) the
nontransferability restrictions and forfeiture provision described in Sections
2.6(d) and 2.6(e) below; (ii) in the Committee’s absolute discretion, a
requirement that any dividends paid on such shares shall be held in escrow until
all restrictions on such shares have lapsed; and (iii) any other restrictions
and conditions contained in the applicable award certificate.
43
27. Custody of Stock Certificate(s). Unless the Committee shall otherwise
determine, any stock certificates issued evidencing shares of restricted stock
shall remain in the possession of the Company until such shares are free of any restrictions specified in the
applicable award certificate. The Committee may direct that such stock
certificate(s) bear a legend setting forth the applicable restrictions on
transferability and that any such account include electronic coding indicating
such restrictions.
28. Nontransferability. Shares of restricted stock may not be sold, assigned,
transferred, pledged or otherwise encumbered or disposed of except as otherwise
specifically provided in the Plan or the applicable award certificate. The
Committee at the time of grant shall specify the date or dates (which may depend
upon or be related to a period of continued employment with the Company, the
attainment of performance goals or other conditions or a combination of such
conditions) on which the nontransferability of the restricted stock shall
lapse.
29. Forfeiture Upon Termination of Employment. Except as may otherwise be
provided by the Committee at any time prior to a grantee’s termination of
employment, a grantee’s termination of employment for any reason (including
death) shall cause the immediate forfeiture of all shares of restricted stock
that have not yet vested as of the date of such termination of employment.
Unless the Committee determines otherwise, all dividends paid on such shares
also shall be forfeited, whether by termination of any escrow arrangement under
which such dividends are held, by the grantee’s repayment of dividends received
directly, or otherwise.
m) Grant of Unrestricted Stock
The Committee may grant (or sell at
a purchase price at least equal to par value) shares of Common Stock free of
restrictions under the Plan, to such key persons and in such amounts as the
Committee shall determine in its absolute discretion. Shares may be thus granted
or sold in respect of past services or other valid consideration.
n) Right of Recapture
If at any time after the date on
which a grantee has been granted or become vested in an award pursuant to the
achievement of performance goals, the Committee determines that the earlier
determination as to the achievement of the performance goals was based on
incorrect data and that in fact the performance goals had not been achieved or
had been achieved to a lesser extent than originally determined, then (i) any
award or portion of an award granted based on such incorrect determination shall
be forfeited, (ii) any award or portion of an award that became vested based on
such incorrect determination shall be deemed to be not vested, and (iii) any
amounts paid to the grantee based on such incorrect determination shall be paid
by the grantee to the Company upon notice from the Company.
III. Miscellaneous
o) Amendment of the Plan; Modification of Awards
30. Amendment of the Plan. The Board may from time to time suspend,
discontinue, revise or amend the Plan in any respect whatsoever, except that no
such amendment shall materially impair any rights or materially increase any
obligations under any award theretofore made under the Plan without the consent
of the grantee (or, upon the grantee’s death, the person having the right to
exercise the award). For purposes of this Section 3.1, any action of the Board
or the Committee that in any way alters or affects the tax treatment of any
award or that in the absolute discretion of the Board is necessary to prevent an
award from being subject to tax under Section 409A of the Code shall not be
considered to materially impair any rights of any grantee. The Board shall
determine, in its absolute discretion, whether to submit any amendment of the
Plan to stockholders for approval; in making such determination it is expected
that the Board will take into account the prerequisites for favorable tax
treatment to the Company and grantees of awards made under the Plan, and such
other considerations as the Board deems relevant.
31. Modification of Awards. The Committee may cancel any award under the
Plan. The Committee also may amend any outstanding award certificate, including,
without limitation, by amendment which would: (i) accelerate the time or times
at which the award becomes unrestricted or vested or may be exercised; (ii)
waive or amend any goals, restrictions or conditions set forth in the award
certificate; or (iii) waive or amend any applicable provision of the Plan or
award certificate with respect to the termination of the award upon termination
of employment, provided however, that no such amendment may lower the exercise
price of an outstanding option. However, any such cancellation or amendment
(other than an amendment pursuant to Section 1.5(d)) above that materially
impairs the rights or materially increases the obligations of a grantee under an
outstanding award shall be made only with the consent of the grantee (or, upon
the grantee’s death, the person having the right to exercise the
award).
44
p) Consent Requirement
32. No Plan Action without Required Consent. If the Committee shall at any
time determine that any Consent (as defined in Section 3.2(b) below) is
necessary or desirable as a condition of, or in connection with, the granting of
any award under the Plan, the issuance or purchase of shares or exercise of
other rights thereunder, or the taking of any other action thereunder (each such
action being hereinafter referred to as a “Plan action”), then such Plan action
shall not be taken or permitted, in whole or in part, unless and until such
Consent shall have been effected or obtained to the full satisfaction of the
Committee.
33. Consent Defined. The term “Consent” as used herein with respect to any
Plan action means (i) any and all listings, registrations or qualifications in
respect thereof upon any securities exchange or under any federal, state or
local law, rule or regulation, (ii) any and all written agreements and
representations by the grantee with respect to the disposition of shares, or
with respect to any other matter, which the Committee shall deem necessary or
desirable to comply with the terms of any such listing, registration or
qualification or to obtain an exemption from the requirement that any such
listing, qualification or registration be made and (iii) any and all consents,
clearances and approvals in respect of a Plan action by any governmental or
other regulatory bodies.
34. Representations, Legend. The Committee may require as a condition to the
receipt of shares of Common Stock pursuant to an award under the Plan that the
grantee or any other person receiving shares pursuant to the award represent
that such person is not acquiring the shares with a view to distribution thereof
and to make such other securities law related representations as the Committee
shall request. In addition to any legend required by the Plan, any certificate
representing Common Stock acquired in respect of an award may bear such legends
as the Company deems advisable to assure compliance with all applicable laws and
regulations.
q) Nonassignability
35. General. Except as expressly provided herein or by the terms of an award
certificate: (a) no award or right granted to any person under the Plan or under
any award certificate shall be assignable or transferable other than by will or
by the laws of descent and distribution; and (b) all rights granted under the
Plan or any award certificate shall be exercisable during the life of the
grantee only by the grantee or the grantee’s legal representative.
36. Payment to Minors, Etc. Any benefit payable to or for the benefit of a
minor, an incompetent person or other person incapable of receipt thereof shall
be deemed paid when paid to such person's guardian or to the party providing or
reasonably appearing to provide for the care of such person, and such payment
shall fully discharge the Committee, the Board, the Company, its affiliates and
their employees, agents and representatives with respect thereto.
r) Requirement of Notification of Election Under Section 83(b) of the
Code
If any grantee shall, in connection
with the acquisition of shares of Common Stock under the Plan, make the election
permitted under section 83(b) of the Code (i.e., an election to include in gross
income in the year of transfer the amounts specified in section 83(b)), such
grantee shall notify the Company of such election within 10 days of filing
notice of the election with the Internal Revenue Service, in addition to any
filing and notification required pursuant to regulations issued under the
authority of Code section 83(b).
s) Requirement of Notification Upon Disqualifying Disposition Under Section
421(b) of the Code
Each grantee of an incentive stock
option shall notify the Company of any disposition of shares of Common Stock
issued pursuant to the exercise of such option under the circumstances described
in section 421(b) of the Code (relating to certain disqualifying dispositions),
within 10 days of such disposition.
t) Withholding Taxes
37. With Respect to Cash Payments. Whenever cash is to be paid pursuant to an
award under the Plan, the Company shall be entitled to deduct therefrom an
amount sufficient in its opinion to satisfy all federal, state and other
governmental tax withholding requirements related to such payment.
45
38. With Respect to Delivery of Common Stock. Whenever shares of Common Stock
are to be delivered pursuant to an award under the Plan, the Company shall be
entitled to require as a condition of delivery that the grantee remit to the
Company an amount sufficient in the opinion of the Company to satisfy all
federal, state and other governmental tax withholding requirements related
thereto. With the approval of the Committee, which the Committee shall have
absolute discretion whether or not to give, the grantee may satisfy the
foregoing condition by electing to have the Company withhold from delivery
shares having a value equal to the amount of tax to be withheld. Such shares
shall be valued at their Fair Market Value as of the date on which the amount of
tax to be withheld is determined. Fractional share amounts shall be settled in
cash. Such a withholding election may be made with respect to all or any portion
of the shares to be delivered pursuant to an award.
u) Employment Provisions
39. Right of Discharge Reserved. Nothing in the Plan or in any award
certificate shall confer upon any grantee the right to continue employment with
the Company or any affiliated entity or affect any right which the Company or
any affiliated entity may have to terminate such employment.
40. Confidentiality. The acceptance of an award by a grantee shall be deemed
to be a covenant by the grantee that he or she will not disclose to anyone
outside the Company or its affiliates, or use in any manner other than in the
furtherance of the Company's or its affiliate's business, without written
authorization from the Company, any confidential information or proprietary
information relating to the business of the Company or its affiliates that is
acquired by a grantee prior to the grantee's termination of
employment.
v) Nature of Payments
41. Consideration for Services Performed. Any and all grants of awards and
issuances of shares of Common Stock under the Plan shall be in consideration of
services performed for the Company by the grantee.
42. Not Taken into Account for Benefits. All such grants and issuances shall
constitute a special incentive payment to the grantee and shall not be taken
into account in computing the amount of salary or compensation of the grantee
for the purpose of determining any benefits under any pension, retirement,
profit-sharing, bonus, life insurance or other benefit plan of the Company or
under any agreement between the Company and the grantee, unless such plan or
agreement specifically otherwise provides.
w) Non-Uniform Determinations
The Committee’s determinations under
the Plan need not be uniform and may be made by it selectively among persons who
receive, or who are eligible to receive, awards under the Plan (whether or not
such persons are similarly situated). Without limiting the generality of the
foregoing, the Committee shall be entitled, among other things, to make
non-uniform and selective determinations, and to enter into non-uniform and
selective award certificates, as to (a) the persons to receive awards under the
Plan, (b) the terms and provisions of awards under the Plan, and (c) the
treatment of leaves of absence pursuant to Section 1.6(f) above.
x) Severability of Provisions
If any provision of the Plan shall
be held invalid or unenforceable, such invalidity or unenforceability shall not
affect any other provisions hereof, and this Plan shall be construed and
enforced as if such provisions had not been included.
y) Other Payments or Awards
Nothing contained in the Plan shall
be deemed in any way to limit or restrict the Company from making any award or
payment to any person under any other plan, arrangement or understanding,
whether now existing or hereafter in effect.
z) Headings
Any Article, Section or other
subdivision headings contained herein are for the purpose of convenience only
and are not intended to expand, limit or otherwise define the contents of such
subdivisions.
46
aa) Effective Date and Term of Plan
43. Adoption; Shareholder Approval. The Plan was adopted by the Board on May
13, 2010, subject to approval by the Company’s shareholders. All awards under
the Plan prior to such shareholder approval are subject in their entirety to
such approval. If such approval is not obtained prior to the first anniversary
of the date of adoption of the Plan, the Plan and all awards thereunder shall
terminate on that date.
44. Termination of Plan. Unless sooner terminated by the Board or pursuant to
paragraph (a) above, the provisions of the Plan respecting the grant of any
award pursuant to which shares of Common Stock will be granted shall terminate
on the tenth anniversary of the date of the Plan’s adoption by the Board. All
awards made under the Plan prior to the termination of the Plan shall remain in
effect until such awards have been satisfied or terminated in accordance with
the terms and provisions of the Plan and the applicable award
certificates.
bb) Restriction on Issuance of Stock Pursuant to Awards
The Company shall not permit any
shares of Common Stock to be issued pursuant to awards granted under the Plan
unless such shares of Common Stock are fully paid and non-assessable, within the
meaning of applicable law.
cc) Governing Law
Except to the extent preempted by
any applicable federal law, the Plan will be construed and administered in
accordance with the laws of the State of Delaware, without giving effect to
principles of conflict of laws.
47
STOCKHOLDER PROPOSALS
Pursuant to Rule 14a-8 under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), stockholder proposals
submitted for inclusion in our proxy materials for the 2011 Annual Meeting of
Stockholders must be received at our principal executive offices, 35 East
62nd Street, New
York, New York 10065, Attention: Secretary, not later than December 12, 2010. In
order to avoid controversy, stockholders should submit proposals by means,
including electronic means, that permit them to prove the date of delivery. Such
proposals must comply with SIGA’s By-Laws and the requirements of Regulation 14A
of the Exchange Act.
If a stockholder intends to present a proposal
for consideration at the next annual meeting outside of the processes of Rule
14a-8 under the Exchange Act, we must receive notice of such proposal at the
address given above by February 26, 2011. If not received by such date, such
notice will be considered untimely under Rule 14a-4(c)(1) under the Exchange
Act, and our proxies will have discretionary voting authority with respect to
such proposal, if presented at the annual meeting. We will not be required to
include any such proposal in our proxy materials.
The deadlines described above are calculated
by reference to the mailing date of the proxy materials for this year’s annual
meeting. If the date of next year’s annual meeting is more than 30 days earlier
or later than the anniversary of this year’s meeting, SIGA will, in a timely
manner, inform stockholders of such change and the effect of such change on the
deadlines given above by including a notice in our Annual Report on Form 10-K,
one of our Quarterly Reports on Form 10-Q, a Current Report on Form 8-K or by
any other means reasonably calculated to inform stockholders.
SECTION 16(a) BENEFICIAL
OWNERSHIP REPORTING COMPLIANCE
OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires
SIGA’s officers and directors, and persons who own more than ten percent of a
registered class of SIGA’s equity securities, to file reports of ownership and
changes in ownership with the SEC. Officers, directors and greater than ten
percent stockholders are required by SEC regulation to furnish SIGA with copies
of all Section 16(a) reports that they file.
Based solely upon review of the copies of such
reports furnished to SIGA and written representations from certain of SIGA’s
executive officers and directors that no other such reports were required, SIGA
believes that during the fiscal year ended December 31, 2009, no director failed
to file on a timely basis a report relating to a transaction as required by
Section 16(a) of the Exchange Act, except that Dr. Weiner belatedly filed two
reports in connection with thirteen transactions involving the sale of shares of
common stock.
AVAILABILITY OF ANNUAL REPORT AND FORM 10-K TO
STOCKHOLDERS
SIGA’s Annual Report to Stockholders for the
year ended December 31, 2009 accompanies this proxy statement. SIGA will provide
to any stockholder, upon written request and without charge, a copy of its most
recent Annual Report on Form 10-K, including the financial statements, as filed
with the SEC. All requests for such reports should be directed to the Chief
Financial Officer, 35 East 62nd Street, New York, New
York 10065, telephone number (212) 672-9100.
OTHER MATTERS
At the date of this proxy statement,
management was not aware that any matters not referred to in this proxy
statement would be presented for action at the Annual Meeting. If any other
matters should come before the Annual Meeting, the persons named in the
accompanying proxy will have discretionary authority to vote all proxies in
accordance with their best judgment, unless otherwise restricted by
law.
48
“Householding” of Proxy
Materials
The SEC has adopted rules that permit
companies and intermediaries such as brokers to satisfy delivery requirements
for proxy statements with respect to two or more stockholders sharing the same
address by delivering a single proxy statement addressed to those stockholders.
This process, which is commonly referred to as “householding”, potentially
provides extra convenience for stockholders and cost savings for companies. We
and some brokers household proxy materials, delivering a single proxy statement
or annual report to multiple stockholders sharing an address, unless contrary
instructions have been received from the affected stockholders. Once you have
received notice from your broker or us that they or we will be householding
materials to your address, householding will continue until you are notified
otherwise or until you revoke your consent. If, at any time, you no longer wish
to participate in householding and would prefer to receive a separate proxy
statement or annual report, please notify us by sending a written request to
SIGA Technologies, Inc., 35 East 62nd Street, New York, New
York 10065 or by calling us at (212) 672-9100. You may also notify us to request
delivery of a single copy of our annual report or proxy statement if you
currently share an address with another stockholder and are receiving multiple
copies of our annual report or proxy statement.
| BY ORDER OF THE BOARD OF DIRECTORS |
| Ayelet Dugary |
| Secretary |
Dated:
April 12, 2010
49
ANNUAL MEETING OF STOCKHOLDERS OF
SIGA TECHNOLOGIES, INC.
SIGA TECHNOLOGIES, INC.
May 13,
2010
Directions to offices of Kramer Levin Naftalis
& Frankel LLP
By Air
There are three major airports in the metropolitan area: LaGuardia Airport (which is closest in the NYC Borough of Queens), John F. Kennedy International Airport (on Long Island) and Newark International Airport (in Newark, NJ). From each of these airports, you can take a taxi to and from the office.
There are three major airports in the metropolitan area: LaGuardia Airport (which is closest in the NYC Borough of Queens), John F. Kennedy International Airport (on Long Island) and Newark International Airport (in Newark, NJ). From each of these airports, you can take a taxi to and from the office.
From Penn Station (Hub for Long Island
Railroad, Amtrak and some NJ Transit Trains)
Walk north on Seventh Avenue to 45th Street and make a right onto 45th Street. Walk one avenue east to Avenue of the Americas (6th Avenue). 1177 Avenue of the Americas is on your near left corner of 45th.
Walk north on Seventh Avenue to 45th Street and make a right onto 45th Street. Walk one avenue east to Avenue of the Americas (6th Avenue). 1177 Avenue of the Americas is on your near left corner of 45th.
From Port Authority (Hub for NJ Transit Buses
and Some Out of Town Buses such as Greyhound)
Walk north on Eighth Avenue to 45th Street and make a right onto 45th Street. Walk three avenues east to Avenue of the Americas (6th Avenue). 1177 Avenue of the Americas is on your near left corner of 45th.
Walk north on Eighth Avenue to 45th Street and make a right onto 45th Street. Walk three avenues east to Avenue of the Americas (6th Avenue). 1177 Avenue of the Americas is on your near left corner of 45th.
From Grand Central Station (Hub for Metro
North - Connecticut and Westchester)
Walk west two and a half avenues up 42nd Street to Avenue of the Americas (6th Avenue). Make a right on 42nd Street and Avenue of the Americas. Walk three blocks north on Avenue of Americas to #1177.
Walk west two and a half avenues up 42nd Street to Avenue of the Americas (6th Avenue). Make a right on 42nd Street and Avenue of the Americas. Walk three blocks north on Avenue of Americas to #1177.
Nearest Subway Stations
The B, D, F and Q trains all go to 47th and 50th Streets/Rockefeller Center. The A, C, 7, 1, 2, 3, N, and R trains all go to 42nd Street/Times Square (Broadway and Seventh Avenues). The 4, 5, and 6 trains all go to Grand Central Terminal (42nd-45th Streets between Lexington and Madison Avenues).
The B, D, F and Q trains all go to 47th and 50th Streets/Rockefeller Center. The A, C, 7, 1, 2, 3, N, and R trains all go to 42nd Street/Times Square (Broadway and Seventh Avenues). The 4, 5, and 6 trains all go to Grand Central Terminal (42nd-45th Streets between Lexington and Madison Avenues).
Parking
The two nearest parking garages are the garage on 46th Street, between 7th Avenue and Avenue of the Americas (6th Avenue), right before the Muse Hotel, and the Grace Building Garage on 43rd Street and Avenue of the Americas.
The two nearest parking garages are the garage on 46th Street, between 7th Avenue and Avenue of the Americas (6th Avenue), right before the Muse Hotel, and the Grace Building Garage on 43rd Street and Avenue of the Americas.
The office is located
between 45th and 46th Streets. Reception is on the 29th Floor.
SIGA TECHNOLOGIES, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 13, 2010
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 13, 2010
The undersigned hereby appoints each of Eric
Rose and Ayelet Dugary as attorney and proxy of the undersigned, with full power
of substitution, to vote all of the shares of stock of SIGA Technologies, Inc.
which the undersigned may be entitled to vote at the Annual Meeting of
Stockholders of SIGA Technologies, Inc. to be held at the offices of Kramer
Levin Naftalis & Frankel LLP, 1177 Avenue of the Americas, 29th floor, New York, New
York 10036, on Thursday, May 13, 2010, at 10:00 a.m. (local time), and at any
and all postponements, continuations and adjournments thereof, with all powers
that the undersigned would possess if personally present, upon and in respect of
the following matters and in accordance with the following instructions, with
discretionary authority as to any and all other matters that may properly come
before the meeting.
UNLESS A CONTRARY DIRECTION IS INDICATED, THIS
PROXY WILL BE VOTED “FOR” ALL NOMINEES LISTED IN PROPOSAL NO. 1, “FOR” THE
RATIFICATION OF PRICEWATERHOUSECOOPERS LLP AS THE INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM OF SIGA TECHNOLOGIES, INC. FOR THE FISCAL YEAR ENDING DECEMBER
31, 2010, AND “FOR” THE ADOPTION OF THE SIGA TECHNOLOGIES, INC. 2010 STOCK
INCENTIVE PLAN, AS MORE SPECIFICALLY DESCRIBED IN THE PROXY STATEMENT. IF
SPECIFIC INSTRUCTIONS ARE INDICATED, THIS PROXY WILL BE VOTED IN ACCORDANCE
THEREWITH.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
“FOR” THE DIRECTOR NOMINEES LISTED BELOW, “FOR” THE
SELECTION OF PRICEWATERHOUSECOOPERS LLP AS THE INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM OF SIGA TECHNOLOGIES, INC. FOR THE FISCAL YEAR ENDING DECEMBER
31, 2010, AND “FOR” THE ADOPTION OF THE SIGA TECHNOLOGIES, INC. 2010 STOCK
INCENTIVE PLAN.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE
ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE:
x
| 1. | To elect ten directors. | ||||||||
| o | FOR ALL NOMINEES | ||||||||
| o | WITHHOLD AUTHORITY FOR ALL NOMINEES | ||||||||
| o | FOR ALL EXCEPT (See instructions below) | ||||||||
| NOMINEES: | ¡ | Eric A. Rose, M.D. | |||||||
| ¡ | James J. Antal | ||||||||
| ¡ | Michael J. Bayer | ||||||||
| ¡ | Thomas E. Constance | ||||||||
| ¡ | Steven L. Fasman | ||||||||
| ¡ | Scott M. Hammer, M.D. | ||||||||
| ¡ | Joseph W. Marshall, III | ||
| ¡ | Paul G. Savas | ||
| ¡ | Bruce Slovin | ||
| ¡ | Michael A. Weiner, M.D. |
|
INSTRUCTION: To withhold authority to vote for any
individual nominee(s), mark “FOR ALL EXCEPT” and fill in the circle next
to each nominee you wish to withhold, as shown here: l
|
||||
| 2. |
To ratify the
selection of PricewaterhouseCoopers LLP as the independent registered
public accounting firm of SIGA Technologies, Inc. for the fiscal year
ending December 31, 2010.
|
|||
| o FOR | o AGAINST | o ABSTAIN | ||
| 3. |
To adopt the
SIGA Technologies, Inc. 2010 Stock Incentive Plan.
|
|||
| o FOR | o AGAINST | o ABSTAIN | ||
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD
OF DIRECTORS. IT MAY BE REVOKED PRIOR TO ITS EXERCISE.
RECEIPT OF NOTICE OF THE ANNUAL MEETING AND
PROXY STATEMENT IS HEREBY ACKNOWLEDGED, AND THE TERMS OF THE NOTICE AND PROXY
STATEMENT ARE HEREBY INCORPORATED BY REFERENCE INTO THIS PROXY. THE UNDERSIGNED
HEREBY REVOKES ALL PROXIES HERETOFORE GIVEN FOR SAID MEETING OR ANY AND ALL
ADJOURNMENTS, POSTPONEMENTS AND CONTINUATIONS THEREOF.
PLEASE VOTE, DATE, SIGN AND PROMPTLY RETURN
THIS PROXY IN THE ENCLOSED RETURN ENVELOPE WHICH IS POSTAGE PREPAID IF MAILED IN
THE UNITED STATES.
To change the address
on your account, please check the box at right and indicate your new address in
the address space above. Please note that changes to the registered name(s) on
the account may not be submitted via this method. o
| Signature of Stockholder: | |||
| Date: | |||
| Signature of Stockholder: | |||
| Date: | |||
PLEASE SIGN EXACTLY
AS YOUR NAME APPEARS ON THIS PROXY. WHERE SHARES ARE HELD JOINTLY, EACH HOLDER
SHOULD SIGN. WHEN SIGNING AS EXECUTOR, ADMINISTRATOR, ATTORNEY-IN-FACT, TRUSTEE
OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH. IF SIGNER IS A CORPORATION, PLEASE
SIGN IN FULL CORPORATE NAME BY DULY AUTHORIZED OFFICER, GIVING FULL TITLE AS
SUCH. IF SIGNER IS A PARTNERSHIP, PLEASE SIGN IN FULL PARTNERSHIP NAME BY
AUTHORIZED PERSON.