UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A INFORMATION
Proxy
Statement Pursuant to Section 14(a) of the
Securities
Exchange Act of 1934
Filed by
the Registrant [X]
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Filed
by a Party other than the Registrant
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Check
the appropriate box:
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Preliminary
Proxy Statement
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Confidential, for Use of the
Commission Only (as permitted by Rule 14a-6(e)(2))
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[X]
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Definitive Proxy
Statement
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Definitive
Additional Materials
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Soliciting
Material under Rule 14a-12
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RAPTOR
PHARMACEUTICAL CORP.
(Name of
the Registrant as Specified in Its Charter)
(Name of
Person(s) Filing Proxy Statement, if other than the Registrant)
Payment
of Filing Fee (Check the appropriate box):
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[X]
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No
fee required.
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Fee
computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
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(1)
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Title
of each class of securities to which transaction applies:
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(2)
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Aggregate
number of securities to which transaction applies:
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(3)
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Per
unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
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(4)
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Proposed
maximum aggregate value of transaction:
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(5)
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Total
fee paid:
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Fee
paid previously with preliminary materials.
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Check
box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing:
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(1)
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Amount
Previously Paid:
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(2)
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Form,
Schedule or Registration Statement No.:
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(3)
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Filing
Party:
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(4)
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Date
Filed:
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Explanatory
Note
Raptor
Pharmaceutical Corp. (the “Company”) is filing this Amendment No. 1 to its
Definitive Proxy Statement (the “Amended Filing”) for the Company’s 2010 annual
meeting of stockholders to be held on March 9, 2010 to amend its Definitive
Proxy Statement (the “Original Filing”) for the annual meeting, as filed with
the Securities and Exchange Commission on February 5, 2010.
The
Company is filing this Amended Filing to correct the number of new shares of
common stock reserved for issuance under the Raptor Pharmaceutical Corp. 2010
Stock Incentive Plan (the “Plan”) and the number of shares of common stock
available for issuance under the Company’s existing incentive plans that are
being added to the reserve of shares that are authorized and available for
issuance pursuant to the Plan, as set forth under “Proposal No. 3: Approval of
the Raptor Pharmaceutical Corp. 2010 Stock Incentive Plan—Background” and
“—Summary” on page 17 and in Section 3(a) of the Plan attached as Appendix A to
the proxy statement. The total number of shares reserved for
issuance under the Plan is unchanged (3,000,000 shares).
For the
convenience of the reader, this Amended Filing sets forth the Original Filing in
its entirety. The sections of the Original Filing that were not
amended are unchanged and continue in full force and effect as originally
filed.
RAPTOR
PHARMACEUTICAL CORP.
9
Commercial Blvd.
Suite
200
Novato,
California 94949
(415) 382-8111
NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS
TO
BE HELD ON MARCH 9, 2010
Dear
Stockholders of Raptor Pharmaceutical Corp.:
On behalf
of the board of directors of Raptor Pharmaceutical Corp., a Delaware
corporation, we are pleased to deliver the accompanying proxy statement for our
annual meeting of stockholders to be held at 2:00 p.m., local time, on March 9,
2010 at our corporate offices at 9 Commercial Blvd., Suite 200, Novato,
California 94949, for the following purposes:
1. To
elect five directors to serve until our next annual meeting of stockholders or
until their respective successors are duly elected and qualified.
2. To
ratify the appointment by the audit committee of our board of directors of Burr,
Pilger & Mayer, LLP as our independent registered public accounting
firm for the fiscal year ending August 31, 2010.
3. To
approve the Raptor Pharmaceutical Corp. 2010 Stock Incentive Plan.
4. To
transact such other business as may properly come before the annual meeting or
any adjournment or postponement thereof.
The
foregoing matters are described more fully in the accompanying proxy
statement. Our board of directors has fixed February 1, 2010 as
the record date for the determination of stockholders entitled to notice of, and
to vote at, our annual meeting and any adjournment or postponement thereof. Only
holders of record of shares of our common stock at the close of business on the
record date are entitled to notice of, and to vote at, our annual
meeting. This notice is first being mailed to all stockholders of
record entitled to vote at our annual meeting on or about February 12,
2010.
YOUR
VOTE IS IMPORTANT. PLEASE READ THE PROXY STATEMENT
CAREFULLY. EVEN IF YOU PLAN TO ATTEND THE ANNUAL MEETING, WE REQUEST
THAT YOU COMPLETE, SIGN AND DATE THE ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE
AND RETURN IT IN THE ENCLOSED ENVELOPE TO ENSURE THAT YOUR SHARES ARE
REPRESENTED AT THE MEETING. AS INSTRUCTED ON THE PROXY CARD, THE ENVELOPE
REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. YOU MAY ALSO VOTE BY
TELEPHONE OR INTERNET, BY FOLLOWING THE INSTRUCTIONS ON THE PROXY CARD. IF YOU
VOTE BY TELEPHONE OR INTERNET, YOU DO NOT HAVE TO MAIL IN YOUR PROXY CARD.
VOTING IN ADVANCE BY MAIL, TELEPHONE OR INTERNET WILL NOT PREVENT YOU FROM
VOTING IN PERSON AT THE ANNUAL MEETING (AND VOTES CAST AT THE ANNUAL MEETING
WILL SUPERSEDE VOTES PREVIOUSLY SUBMITTED BY YOU), BUT IT WILL HELP TO ENSURE A
QUORUM AND AVOID ADDED COSTS.
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By
Order of the Board of Directors,
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Chief
Executive Officer and Director
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The
proxy statement and annual report to security holders are available at
https://materials.proxyvote.com/75382F
TABLE
OF CONTENTS
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GENERAL
INFORMATION
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1
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Purpose of the
Meeting
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1
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Record Date; Outstanding
Shares
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2
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Voting
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2
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Quorum; Required Vote;
Absentions; Broker Non-Votes
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4
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Expenses
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5
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How to Obtain Directions to
Location of Our Annual Meeting of Stockholders
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5
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Internet Availability of Proxy
Materials
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Note Regarding Our Recent
Merger
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6
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PROPOSAL
NO. 1: ELECTION OF DIRECTORS
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7
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Information about the
Nominees
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7
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Directors
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Meetings and Committees of the
Board of Directors
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8
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Audit
Committee
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9
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Compensation
Committee
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10
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Corporate Governance and
Nominating Committee
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10
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Independence of Our Board of
Directors
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11
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Director
Compensation
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11
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Code of
Ethics
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13
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Required
Vote
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13
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PROPOSAL
NO. 2: RATIFICATION OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING
FIRM
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14
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Required
Vote
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15
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PROPOSAL
NO. 3: APPROVAL OF THE RAPTOR PHARMACEUTICAL CORP. 2010
STOCK
INCENTIVE
PLAN
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17
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Background
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17
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Summary of the
Plan
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17
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Expected Tax
Consequences
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20
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Required
Vote
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MANAGEMENT
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Relationships Among Executive
Officers and Directors
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Executive Compensation and Option
Grants
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23
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Compensation Committee Interlocks
and Insider Participation
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REPORT
OF THE COMPENSATION COMMITTEE OF THE RAPTOR BOARD
OF
DIRECTORS
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CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
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Review Approval of Ratification
of Transactions with Related Persons
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The Company
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Raptor Pharmaceuticals
Corp.
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SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS, DIRECTORS
AND
MANAGEMENT
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REPORT
OF OUR AUDIT COMMITTEE
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43
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OTHER
MATTERS
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Section 16(a) Beneficial
Ownership Reporting Compliance
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Information on Our
Website
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Trademark
Notice
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Stockholder
Proposals
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Communication with our Board of
Directors
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Delivery of this Proxy Statement
to Multiple Stockholders with the Same Address
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RAPTOR
PHARMACEUTICAL CORP.
PROXY
STATEMENT
FOR
THE ANNUAL MEETING OF STOCKHOLDERS
TO
BE HELD ON MARCH 9, 2010
GENERAL
INFORMATION
This
proxy statement is being furnished to holders of common stock, par value $0.001
per share, of Raptor Pharmaceutical Corp., a Delaware corporation (unless the
context otherwise requires, references herein to “Raptor,” “the Company,” “we,”
“us” and “our” refer to Raptor Pharmaceutical Corp. together with its
subsidiaries), in connection with the solicitation of proxies by our board of
directors for use at our 2010 annual meeting of stockholders to be held on March
9, 2010, at 2:00 p.m. local time at our corporate offices located at 9
Commercial Blvd., Suite 200, Novato, California 94949, and at any adjournment or
postponement thereof, for the purposes set forth in the accompanying notice to
stockholders. The specific proposals are described in more detail in this proxy
statement. This proxy statement, the notice to stockholders, the accompanying
form of proxy card and our annual report to stockholders are first being mailed
to stockholders of record as of the close of business on February 1, 2010, the
record date for the annual meeting, on or about February 12, 2010.
By
properly completing and returning your proxy card, you will appoint Christopher
M. Starr, Ph. D. and Kim R. Tsuchimoto as your proxies at the annual meeting.
Your proxies will vote your shares as you instruct. If you sign and return your
proxy card but fail to instruct how to vote your shares, Dr. Starr or Ms.
Tsuchimoto will vote your shares “FOR” the slate of directors
nominated by our board of directors unless the authority to vote for the
election of any such nominee is withheld, and if no contrary instructions are
given, “FOR” the
appointment of Burr, Pilger & Mayer, LLP as our independent registered
public accounting firm for the fiscal year ending August 31, 2010 and “FOR” the approval of the
Raptor Pharmaceutical Corp. 2010 Stock Incentive Plan. This way your shares will
be voted whether or not you attend. We recommend that you vote by proxy in
advance of the annual meeting even if you plan to attend just in case your plans
change and you are unable to attend.
The board
of directors does not know of any matters to be presented at the annual meeting
other than those listed on the notice to stockholders and described in this
proxy statement. If another matter is properly brought before the meeting or any
adjournment or postponement thereof, your proxies will vote your shares in
accordance with their judgment if you have competed your proxy card and
authorized them to do so.
The board
of directors encourages you to attend the annual meeting in person. If you
decide to change your vote, you may revoke your proxy any time before your vote
is cast at the annual meeting by (i) giving written notice of revocation to our
Corporate Secretary, (ii) submitting a signed proxy card bearing a date later
than the date of the prior proxy card, or (iii) attending the annual meeting and
voting in person. Attendance at the annual meeting will not, in
itself, constitute revocation of your proxy.
Our
principal executive offices are located at 9 Commercial Blvd., Suite 200,
Novato, California 94949 and our telephone number is (415) 382-8111 or toll free
in the U.S. and Canada only (877) RAPTOR9 (877-727-8679).
Purpose
of the Meeting
At our
2010 annual meeting, stockholders will be asked to consider and vote upon the
following matters:
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1.
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Proposal No. 1 – to elect five directors to
serve until our next annual meeting of stockholders or until their
respective successors are duly elected and qualified;
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2.
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Proposal No. 2 – to ratify the appointment
by the audit committee of our board of directors of Burr,
Pilger & Mayer, LLP as our independent registered public
accounting firm for the fiscal year ending August 31,
2010;
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3.
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Proposal No. 3 - to approve the Raptor
Pharmaceutical Corp. 2010 Stock Incentive Plan; and
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4.
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to
transact such other business as may properly come before the annual
meeting or any adjournment or postponement
thereof.
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1
Record
Date; Outstanding Shares
Who
is entitled to vote?
Only
stockholders of record at the close of business on February 1, 2010 are entitled
to notice of and to vote at the annual meeting and any adjournment thereof. Such
stockholders are entitled to cast one vote, in person or by proxy, for each
share of common stock outstanding in his, her or its name on the books of the
Company as of the record date on all matters properly submitted for the vote of
stockholders at the annual meeting. The authorized capital stock of the Company
consists of: (i) One Hundred Fifty Million (150,000,000) shares of common stock,
of which 22,455,365 shares were issued and outstanding as of the close of
business on the record date, and (ii) Fifteen Million (15,000,000) shares of
preferred stock, par value $0.001 per share, of the Company, none of which were
issued and outstanding as of the close of business on the record date. For
information regarding security ownership by management and by the beneficial
owners of more than 5% of our common stock, see the section of this proxy
statement entitled “Security Ownership of Certain Beneficial Owners, Directors
and Management.”
Voting
Most
stockholders have three options for submitting their votes prior to the annual
meeting: (1) via the Internet, (2) by telephone or (3) by mail. If your proxy
card allows for Internet voting and you have Internet access, the Company
encourages you to record your vote on the Internet. It is convenient, and it
saves the Company significant postage and processing costs. In addition, when
voting via the Internet or by telephone prior to the meeting date, your vote is
recorded immediately, and there is no risk that postal delays will cause your
vote to arrive late and therefore not be counted.
How do I vote if I am a registered
stockholder?
You may vote by mail.
If you are a registered stockholder (that is, if you hold your shares of common
stock directly and not in street name), you may vote by mail by completing,
signing and dating the enclosed proxy card and returning it in the enclosed
postage prepaid envelope. Your shares will then be voted at the annual meeting
in accordance with your instructions.
You may vote via the
Internet. Go to the web address http://www.proxyvote.com and follow the
instructions for Internet voting shown on the proxy card mailed to
you.
You may vote by
telephone. Call toll-free 1-800-PROXIES (1-800-776-9437) from
a touch tone telephone and follow the instructions for telephone voting shown on
the proxy card mailed to you.
You may vote in person at
the annual meeting. If you are a registered stockholder and attend the
annual meeting (please bring a valid, government-issued photo identification,
such as a driver’s license or a passport to authenticate your identity and for
entrance to the annual meeting), you may deliver your completed proxy card in
person. If you attend the annual meeting, you may also submit your vote in
person, and any previous votes that were submitted by you will be superseded by
the vote that you cast at the annual meeting.
Am
I entitled to vote if my shares are held in “street name”?
Yes, if a
bank or brokerage firm holds your shares of common stock in “street name” for
you, you are considered the “beneficial owner” of such shares. If your shares
are held in “street name,” these proxy materials are being forwarded to you by
your bank or brokerage firm (the “record holder”), along with a voting
instruction card. As the beneficial owner, you have the right to direct the
record holder how to vote your shares, and the record holder is required to vote
your shares in accordance with your instructions. Brokers holding shares of
common stock in “street name” who are members of a stock exchange are required
by the rules of the exchange to transmit this proxy statement to the beneficial
owner of the shares of common stock and to solicit voting instructions with
respect to the matters submitted to the stockholders.
How
do I vote if I hold my shares in “street name”?
If you
are a beneficial owner of shares of common stock registered in the name of your
broker, bank, or other agent, you should have received a voting card and voting
instructions with these proxy materials from that organization (rather than from
the Company). Your broker, bank, or other agent may permit you to vote your
shares electronically, by telephone, or on the Internet. A large number of banks
and brokerage firms participate in programs that offer telephone and Internet
voting options. If your shares are held in an
2
account
at a bank or brokerage firm that participates in such a program, you may vote
those shares electronically by telephone or on the Internet by following the
instructions set forth on the voting form provided to you by your bank or
brokerage firm.
These
Internet and telephone voting procedures are designed to authenticate
stockholders’ identities, allow stockholders to vote their shares and confirm
that stockholders’ votes have been recorded properly. Stockholders voting via
either telephone or the Internet should understand that there may be costs
associated with electronic access, such as usage charges from Internet access
providers and telephone companies, that must be borne by the stockholder using
such services. Also, please be aware that the Company is not involved in the
operation of these voting procedures and cannot take responsibility for any
access, Internet or telephone service interruptions that may occur or any
inaccuracies, erroneous or incomplete information that may appear.
What if I do not provide voting
instructions for my shares of common stock on my proxy card or, with respect to
such shares held in “street name,” to my bank, brokerage firm, or other
agent?
All
shares entitled to vote and represented by properly executed proxy cards
received prior to the annual meeting, and not revoked, will be voted at the
annual meeting in accordance with the instructions indicated on those proxy
cards.
If
no instructions are indicated on a properly executed proxy card, the shares
represented by that proxy card will be voted: “FOR” the election of the
director nominees unless the authority to vote for the election of any such
nominee is withheld, if no contrary instructions are given, “FOR” ratification of the
appointment of Burr, Pilger & Mayer, LLP as our independent registered
public accounting firm for the fiscal year ending August 31, 2010 and “FOR” the approval of the
Raptor Pharmaceutical Corp. 2010 Stock Incentive Plan. If any other matters are
properly presented for consideration at the annual meeting, including, among
other things, consideration of a motion to adjourn the annual meeting to another
time or place (including, without limitation, for the purpose of soliciting
additional proxies), the persons named as proxies in the enclosed proxy card and
acting thereunder will have discretion to vote on those matters in accordance
with their best judgment, and authority to do so is included in the
proxy.
If you do
not give instructions to your bank, brokerage firm, or other agent, by the date
specified in the statement accompanying such material, it will nevertheless be
entitled to vote your shares of common stock in its discretion on “routine
matters” and may give or authorize the giving of a proxy to vote the shares of
common stock in its discretion on such matters. The ratification of
independent public accountants is generally a routine matter whereas the
election of directors and action with respect to incentive plans are not
considered routine matters. Absent your instructions, the record
holder will not be permitted to vote your shares on non-routine matters, which
are referred to as “broker non-votes,” including any non-routine matters
properly brought before the annual meeting. Broker non-votes (shares held by
brokers that do not have discretionary authority to vote on the matter and have
not received voting instructions from their clients) are not counted or deemed
to be present or represented for the purpose of determining whether stockholders
have approved that proposal.
Who can attend the annual
meeting?
Only
stockholders eligible to vote or their authorized representatives will be
admitted to the annual meeting. If you plan on voting at the annual meeting, you
must bring a valid, government-issued photo identification, such as a driver’s
license or a passport, to authenticate your identity.
May
I attend the annual meeting if I hold my shares in “street name”?
As the
beneficial owner of shares, you are invited to attend the annual meeting. If
your shares are held in “street name” (i.e., you are not a registered holder)
and you wish to attend the annual meeting and/or vote in person, you must bring
your broker or bank voter instruction card and a proxy, executed in your favor,
from the record holder of your shares. In addition, you must bring a valid,
government-issued photo identification, such as a driver’s license or a
passport, to authenticate your identity.
Can
I change my vote after I submit my proxy card?
Yes, you
may revoke your proxy given pursuant to this solicitation and change your vote
any time before
your shares are voted at the annual meeting:
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if
you are a registered stockholder, by filing a written notice of revocation
bearing a later date than the previously submitted proxy card with our
Corporate Secretary before the taking of the vote at the annual
meeting;
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by
duly executing and submitting a later dated, properly completed proxy card
relating to the same shares and delivering it to our Corporate Secretary
before the taking of the vote at the annual meeting; or
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by
attending the annual meeting and voting in person (attendance at the
annual meeting will not in and of itself constitute a revocation of a
proxy).
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Any
written notice of revocation or subsequently submitted proxy card must be
received by our Corporate Secretary prior to the taking of the vote at the
annual meeting. Such written notice of revocation or subsequently submitted
proxy card should be hand delivered to our Corporate Secretary or should be sent
so as to be delivered to Raptor Pharmaceutical Corp., 9 Commercial Blvd., Suite
200, Novato, California 94949, Attention: Corporate Secretary. Stockholders
whose shares are held in “street name” should consult with their broker or
nominee concerning the method for revoking their proxy.
Who
will count the votes?
Our
transfer agent, American Stock Transfer & Trust, will tabulate and certify
the votes. Our Corporate Secretary will serve as the inspector of election at
the annual meeting.
How
does the board of directors recommend that I vote on the proposals?
Our board
of directors recommends that you vote “FOR” each proposal described
in this proxy statement.
Will
any other business be conducted at the meeting?
We do not
currently anticipate that any other matters will be raised at the annual
meeting. If any other matter properly comes before the stockholders for a vote
at the annual meeting, however, your proxy (one of the individuals named on your
proxy card) will vote your shares in accordance with his or her best judgment if
you so authorize.
Quorum;
Required Vote; Abstentions; Broker Non-Votes
How many shares must be present to
hold the meeting?
Holders
of a majority of the outstanding shares of common stock issued and outstanding
as of the record date and entitled to vote at the annual meeting, present either
in person or by proxy, constitutes a quorum and must be present at annual
meeting in order for the transaction of business. Stockholders are counted as
present at the meeting if they (1) are present in person or (2) have properly
submitted a proxy card or voted by telephone or by using the Internet. Proxies
received but marked as abstentions or treated as broker non-votes will be
included in the calculation of the number of shares of common stock considered
to be present at the meeting for purposes of establishing a quorum.
Under the
General Corporation Law of the State of Delaware, a vote withheld, an abstaining
vote and a broker “non-vote” are counted as present and entitled to vote and
are, therefore, included for purposes of determining whether a quorum is present
at the annual meeting. A broker “non-vote” occurs when a broker or nominee
holding shares for a beneficial owner does not vote on a particular proposal
because the nominee does not have discretionary voting power with respect to
that item and has not received instructions from the beneficial
owner.
What
if a quorum is not present at the meeting?
If the
shares of common stock present or represented at the annual meeting do not
constitute the required quorum, the holders of a majority of the shares entitled
to vote at the annual meeting who are present in person or represented by proxy
may adjourn the annual meeting until a quorum is present or represented. The
time and place of the adjourned annual meeting will be announced at the time the
adjournment is taken, and no other notice may be given.
4
How
many votes are required to elect the director nominees (Proposal
1)?
The
affirmative vote of a plurality of the votes duly cast is required to elect the
five nominees as directors. This means that the five nominees will be elected if
they receive more affirmative votes than any other person. If you vote
“WITHHELD” with respect to one or more nominees, your shares will not be voted
with respect to the person or persons indicated, although they will be counted
for purposes of determining whether there is a quorum.
What
happens if a nominee is unable to stand for election?
If a
nominee is unable to stand for election, our board of directors may either
reduce the number of directors to be elected or select a substitute nominee. If
a substitute nominee is selected, the proxy holder will vote your shares for the
substitute nominee, unless you have withheld authority. Each nominee
for election has agreed to serve if elected, and we have no reason to believe
that any nominee will be unavailable to serve.
How many votes are required to
approve the ratification of the appointment of Burr, Pilger & Mayer, LLP as
the Company’s independent registered public accounting firm for the fiscal year
ending August 31, 2010 (Proposal 2)?
The
affirmative vote of a majority of the shares voted at the annual meeting at
which a quorum is present is required to approve the ratification of the
appointment of Burr, Pilger & Mayer, LLP as our independent registered
public accounting firm for the fiscal year
ending August 31, 2010.
How
many votes are required to approve the adoption of the Raptor Pharmaceutical
Corp. 2010 Stock Incentive Plan (Proposal 3)?
The
affirmative vote of a majority of the shares voted at the annual meeting at
which a quorum is present is required to approve the adoption of the Raptor
Pharmaceutical Corp. 2010 Stock Incentive Plan.
How
will abstentions and broker non-votes be treated?
An
abstaining vote is deemed to be a “vote cast” and has the same effect as a vote
cast against approval of a proposal requiring approval by a majority of the
shares voted. Shares voting “abstain” have no effect on the election of
directors. For the proposal to ratify the independent registered public
accounting firm (Proposal 2) and the proposal to approve the Raptor
Pharmaceutical Corp. 2010 Stock Incentive Plan (Proposal 3), abstentions are
treated as shares present or represented and voting, so abstaining has the same
effect as a negative vote. Broker “non-votes” will be treated as shares present
for quorum purposes but are not deemed to be “votes cast.” As a result, broker
“non-votes” are not included in the tabulation of the voting results on the
election of directors or proposals requiring approval of a majority of the
shares voted and, therefore, do not have the effect of votes in opposition in
such tabulations.
Expenses
The
Company is making this solicitation and will bear the cost of the solicitation
of proxies, including the charges and expenses of brokerage firms and others of
forwarding solicitation material to beneficial owners of common stock. In
addition to the use of mails, proxies may be solicited by our directors,
officers and other regular employees in person or by telephone, facsimile and
e-mail. No additional compensation will be paid to directors, officers or other
regular employees for such services. We may also hire a proxy solicitation
company to assist us in the distribution of proxy materials and the
solicitations of proxies.
How
to Obtain Directions to Location of Our Annual Meeting of
Stockholders
Our
annual meeting is being held at the time and place set forth above under the
heading “General Information.” If you would like to attend the annual
meeting to vote your shares in person, you can obtain directions to the annual
meeting on our website www.raptorpharma.com under the heading “About Raptor -
Contact.”
Internet
Availability of Proxy Materials
The
notice of meeting, this proxy statement, the proxy card and our annual report to
stockholders are available at https://materials.proxyvote.com/75382F.
5
Note
Regarding Our Recent Merger
On
September 29, 2009, on the terms and subject to the conditions set forth in the
Agreement and Plan of Merger and Reorganization, dated as of July 29, 2009, by
and among the Company (formerly known as TorreyPines Therapeutics, Inc.), ECP
Acquisition, Inc., a wholly-owned subsidiary of the Company (herein referred to
as Merger Sub), and Raptor Pharmaceuticals Corp. (herein referred to as RPC),
pursuant to a stock-for-stock reverse triangular merger (herein referred to as
the Merger), Merger Sub was merged with and into RPC and RPC survived as a
wholly-owned subsidiary of the Company. Immediately prior to the Merger and in
connection therewith, the Company effected a 1-for-17 reverse stock split of its
common stock and changed its corporate name from “TorreyPines Therapeutics,
Inc.” to “Raptor Pharmaceutical Corp.” All share numbers
included in this proxy statement are expressed on a post-split basis unless
otherwise indicated.
Immediately
following the effective time of the Merger, the stockholders of RPC (as of
immediately prior to the Merger) owned approximately 95% of the Company’s
outstanding common stock and the stockholders of the Company (as of immediately
prior to the Merger) owned approximately 5% of the Company’s outstanding common
stock. The Merger constituted a change in control of the
Company.
RPC,
the Company’s wholly-owned subsidiary, was the “accounting acquirer,” and for
accounting purposes, the Company was deemed to have been “acquired” in the
Merger. In connection with the Merger, the Company’s fiscal year end
changed from December 31 to August 31 to coincide with the fiscal year end of
RPC. Accordingly, the information in this proxy statement with
respect to the Company’s most recently completed fiscal year refers to the
period from January 1, 2009 through August 31, 2009.
The board
of directors and officers that managed and operated RPC immediately prior to the
effective time of the Merger became the Company’s board of directors and
officers. Additionally, following the effective time of the Merger,
the business conducted by RPC immediately prior to the effective time of the
Merger became primarily the business conducted by the Company.
6
Information
about the Nominees
Your vote
is requested in favor of five directors to serve until the next annual meeting
of stockholders and until their successors are elected and qualified or their
earlier resignation, removal, disqualification or death. Each of the nominees is
currently a director of the Company and each of their terms expires at this
annual meeting.
Raptor’s
bylaws provide that the number of directors shall be determined from time to
time by the board of directors, but may not be less than one. Raptor’s board of
directors currently consists of five persons.
Directors
typically are elected for a period of one year and thereafter serve until the
next annual meeting at which their successors are duly elected by our
stockholders. Each nominee for election has agreed to serve if
elected, and we have no reason to believe that any nominee will be unavailable
to serve. If any nominee is unable or declines to serve as a director at the
time of the annual meeting, the proxies named in the proxy card will vote for a
nominee designated by the present board of directors to fill the vacancy. Unless
otherwise instructed, the proxies named in the proxy card will vote all of the
shares for which they hold proxies “FOR” the nominees named
below.
Directors
The
following table sets forth the name, age and position of each of our directors
as of the date of this proxy statement.
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Position(s)
Held
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Name
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Age
|
|
|
with
the Company
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Christopher
M. Starr, Ph.D.
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57
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Chief
Executive Officer and Director
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Raymond
W. Anderson (1)(2)(3)
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67
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Director
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Erich
Sager
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52
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Director
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Richard
L. Franklin, M.D., Ph.D.
(1)(2)
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64
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Director
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Llew
Keltner, M.D., Ph.D.
(1)(2)(3)
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59
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Director
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(1)
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Member
of the Corporate Governance and Nominating Committee.
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(2)
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Member
of the Audit Committee.
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(3)
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Member
of the Compensation Committee.
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All of
the current members of our board of directors were appointed in connection with
the consummation of the Merger in September 2009. Prior to the
Merger, Drs. Starr and Franklin, and Messrs. Anderson and Sager served on the
board of directors of RPC.
Business
Experience and Directorships
The
following describes the background of our directors.
Christopher M. Starr, Ph.D.
Dr. Starr has served as the Chief Executive Officer and a director of Raptor
Pharmaceutical Corp. since September 2009. Dr. Starr was a
co-founder of RPC and has served as the Chief Executive Officer, President and
director thereof since its inception in 2006. Dr. Starr has served as Chief
Executive Officer of our wholly owned subsidiary, Raptor Pharmaceutical Inc.,
since its inception in September 2005. Dr. Starr co-founded BioMarin
Pharmaceutical Inc., or BioMarin, in 1997 where he last served as Senior Vice
President and Chief Scientific Officer prior to joining the Company in 2006. As
Senior Vice President at BioMarin, Dr. Starr was responsible for managing a
Scientific Operations team of 181 research, process development, manufacturing
and quality personnel through the successful development of commercial
manufacturing processes for its enzyme replacement products, and supervised the
cGMP design, construction and licensing of BioMarin’s proprietary biological
manufacturing facility. From 1991 to 1998, Dr. Starr supervised research
and commercial programs at BioMarin’s predecessor company, Glyko, Inc., where he
served as Vice President of Research and Development. Prior to his tenure at
Glyko, Inc., Dr. Starr was a National Research Council Associate at the
National Institutes of Health. Dr. Starr earned a B.S. from Syracuse
University and a Ph.D. in Biochemistry and Molecular Biology from the State
University of New York Health Science Center, in Syracuse, New
York.
Raymond W. Anderson.
Mr. Anderson has served as a director of Raptor Pharmaceutical Corp. since
September 2009 and as a director of RPC since May 2006. Mr. Anderson has worked
at Dow Pharmaceutical Sciences, Inc. (a wholly owned subsidiary of
7
Valeant
Pharmaceuticals International) since 2003, has been its Managing Director since
August 2009 and was previously its Chief Financial Officer and Vice
President, Finance and Administration. Mr. Anderson has more than
30 years of healthcare industry experience, primarily focused in financial
management within the biopharmaceutical sector. Prior to joining Dow in 2003, he
was Chief Financial Officer for Transurgical, Inc., a private medical technology
company. Prior to that, Mr. Anderson served as Chief Operating Officer and
Chief Financial Officer at BioMarin from June 1998 to January 2002.
Prior to June 1998, Mr. Anderson held similar executive-level
positions with other biopharmaceutical companies including Syntex, Chiron,
Glycomed and Fusion Medical Technologies. Mr. Anderson holds an M.B.A. from
Harvard University, an M.S. in Administration from George Washington University
and a B.S. in Engineering from the United States Military Academy.
Erich Sager. Mr. Sager
has served as a director of Raptor Pharmaceutical Corp. since September 2009 and
as a director of RPC since May 2006. He is a founding partner of Limetree
Capital SA, a Swiss-based investment banking boutique. Mr. Sager also
serves as Chairman and member of the board of directors at Calltrade Carrier
Services AG, a European wholesale phone operator, and has held such position
since 2004. He is also a current board member of Zecotek Medical Systems Inc.
and Pulse Capital Corp. Mr. Sager served on the board of directors of
BioMarin from November 1997 to March 2006 and as Chairman of LaMont
Asset Management SA, a private investment management firm, from
September 1996 until August 2004. Mr. Sager has held the position
of Senior Vice President, Head of the Private Banking for Dresdner Bank
(Switzerland) Ltd., Vice President, Private Banking, Head of the German Desk for
Deutsche Bank (Switzerland) Ltd., and various positions at banks in Switzerland.
Mr. Sager received a business degree from the School of Economics and
Business Administration, Zurich, Switzerland.
Richard L. Franklin, M.D.,
Ph.D. Dr. Franklin has served as a director of Raptor Pharmaceutical
Corp. since September 2009 and as a director of RPC since
July 2008. Dr. Franklin has served as Chairman of the board of
directors of SyntheMed, Inc., a biomaterials company engaged in the development
and commercialization of medical devices, since June 2003 and as a director
of SyntheMed, Inc., since December 2000. Since September 2002,
Dr. Franklin has been Chairman of DMS Data Systems, an internet-based
information services company. Dr. Franklin has served as the Chief
Executive Officer and Director of Tarix Pharmaceuticals, a drug development
company, since 2004 and as Chairman of Pathfinder, LLC, a regenerative medicine
company, since 2009. From May 1996 to September 2002,
Dr. Franklin had been Chief Executive of Phairson, Ltd., a medical product
development company. From January 1991 to May 1996, Dr. Franklin
was founder and principal of Richard Franklin & Associates and from
January 1988 to December 1990, Dr. Franklin was with Boston
Capital Group, both of which are consulting firms to the healthcare industry.
From July 1986 to December 1987, Dr. Franklin was head of
Healthcare Corporate Finance at Tucker Anthony, an investment banking firm. Dr.
Franklin received an M.A. in Mathematics from University of Wisconsin, a Ph.D.
in Mathematics from Brandeis University and an M.D. from Boston University
School of Medicine.
Llew Keltner, M.D.,
Ph.D. Dr. Keltner has served as a director of Raptor
Pharmaceutical Corp. since September 2009. Dr. Keltner is currently
Chief Executive Officer and President of Light Sciences Oncology, a
privately-held biotechnology company developing a late stage, light-activated
therapy for hepatocellular cancer and other solid tumors. He is also Chief
Executive Officer of EPISTAT, an international healthcare technology transfer,
corporate risk management and healthcare strategy company that he founded in
1972. From 1997 to 2004, Dr. Keltner was Chief Executive Officer of
Metastat, a development-stage biotech company focused on cancer
metastasis. Dr. Keltner holds positions on the boards of Infostat,
Oregon Life Sciences, and Goodwell Technologies. He is a previous director on
the boards of Light Sciences Corporation, Vital Choice, Thesis Technologies,
Oread Companies, and MannKind Corporation. He has also been a scientific
advisory board member at Lifetime Corporation, ASB Meditest, Oread Laboratories,
Hall-Kimbrell, and aai Pharma. He is currently a member of the American Society
of Clinical Oncology, American Medical Association, International Association of
Tumor Marker Oncology, American Association of Clinical Chemistry, and Drug
Information Association. Dr. Keltner received an M.S. in Epidemiology
and Biostatistics; Ph.D. in Biomedical Informatics and M.D. from Case Western
Reserve University in Cleveland, Ohio. Dr. Keltner has also authored several
research publications.
Meetings
and Committees of the Board of Directors
The
Company
As of
August 31, 2009, the Company’s board of directors consisted of Dr. Peter Davis,
Dr. Steven Ferris, Mr. Steven Ratoff and Ms. Evelyn Graham. Jean
Deleage, Patrick Van Benden and Jason Fisherman resigned from the Company’s
board of directors on May 27, 2009, May 29, 2009 and June 12, 2009,
respectively. During the eight months ended August 31, 2009, the
Company’s directors attended at least 75% of (a) the total number of
meetings of the board of directors and (b) the total number of meetings of
all committees of the board of directors on which he or she served.
We do not
have a formal policy requiring the members of our board of directors to attend
our annual meetings of stockholders; however, it is anticipated that most of the
directors will attend the annual meeting. None of the Company’s
directors attended the 2009 annual meeting of stockholders.
8
There are
no arrangements between any director of the Company or executive officer and any
other person pursuant to which the director or officer is to be selected as
such. There is no family relationship between our directors, executive officers
or the director nominees.
Our board
of directors has an Audit Committee, a Compensation Committee and a Nominating
and Corporate Governance Committee. The function, composition and number of
meetings of each of these committees are described below.
Raptor
Pharmaceuticals Corp.
During
the fiscal year ended August 31, 2009, the board of directors of RPC met eight
times, took action by written consent three times and took action by written
consent regarding the approval of stock options two times. During the
fiscal year ended August 31, 2009, each director of RPC attended at least 75% of
(a) the total number of meetings of the board of directors and (b) the
total number of meetings of all committees of the board of directors on which he
served. One of RPC’s directors attended RPC’s 2009 annual meeting of
stockholders.
Audit Committee
The
Company
The audit
committee of our board of directors, herein referred to as the Audit Committee,
has been established in accordance with Section 3(a)(58)(A) of the
Securities Exchange Act of 1934, as amended, herein referred to as Exchange
Act. The Audit Committee is responsible for overseeing our
accounting and financial reporting processes. In such capacity, our
Audit Committee (a) has sole authority to appoint, replace and compensate
our independent registered public accounting firm and is directly responsible
for oversight of its work; (b) approves all audit fees and terms, as well
as any permitted non-audit services performed by our independent registered
public accounting firm; (c) meets and discusses directly with our independent
registered public accounting firm its audit work and related matters;
(d) oversees and performs investigations with respect to our internal and
external auditing procedures, including the receipt, retention and treatment of
complaints received by us regarding accounting, internal accounting controls or
auditing matters and the confidential and anonymous submission by employees of
concerns regarding questionable accounting or auditing matters and (e)
undertakes such other activities as the Audit Committee deems necessary or
advisable and as may be required by applicable law. The Audit Committee’s
charter can be found in the “Corporate Governance” section of our website at
www.raptorpharma.com.
As of the
date of this proxy statement, the Audit Committee consisted of Mr. Anderson
(Chairman) and Drs. Franklin and Keltner. Mr. Anderson has been
designated as the “audit committee financial expert” as defined by the
regulations promulgated by the U.S. Securities and Exchange Commission, herein
referred to as the SEC.
Dr. Peter
Davis, Dr. Steven Ferris and Mr. Steven Ratoff each served on the Audit
Committee during the eight months ended August 31, 2009, with Dr. Davis
serving as chairman. The board of directors determined that Dr. Davis
and Mr. Ratoff were audit committee financial experts as defined by the
regulations promulgated by the SEC and that as of August 31, 2009, all members
of the Audit Committee were independent as currently defined in Rule
5605(c)(2)(A)(i) and (ii) of the Nasdaq listing standards and as defined by Rule
10A-3 of the Exchange Act.
Raptor
Pharmaceuticals Corp.
During
the fiscal year ended August 31, 2009, the audit committee of RPC consisted of
the following two members: Mr. Anderson (Chairman) and
Mr. Sager. RPC’s board of directors determined that
Mr. Anderson, the Chairman of the audit committee of RPC was, as of
August 31, 2009, “independent” as that term is defined by Rule 10A-3
of the Exchange Act. Mr. Sager was deemed not “independent” as
defined by Rule 10A-3 of the Exchange Act due to the placement agent fees earned
by Limetree Capital, of which Mr. Sager is a founding partner, in connection
with RPC’s private placements of common stock and warrants conducted in May/June
2008 and August 2009. For more information, see “Certain Relationships and
Related Transactions” elsewhere in this proxy statement.
During
the fiscal year ended August 31, 2009, the audit committee of RPC met four
times. The charter of the audit committee of RPC was posted on its
website during the fiscal year ended August 31, 2009 and through the date of the
Merger.
9
Compensation Committee
The
Company
The
compensation committee of our board of directors, herein referred to as the
Compensation Committee, reviews, adopts and oversees our compensation strategy,
policies, plans and programs, including (a) the establishment of corporate and
individual performance objectives relevant to the compensation of our executive
officers, directors and other senior management and evaluation of performance,
(b) the review and approval of the terms of employment or service, including
severance and change in control arrangements, of our Chief Executive Officer and
the other executive officers, (c) the review and recommendation to the board of
directors the compensation plans and programs advisable for the Company,
including the type and amount of compensation to be paid or awarded to
directors; and (d) the administration of our equity compensation plans, pension
and profit-sharing plans, deferred compensation plans and other similar plan and
programs.
The
Compensation Committee also reviews with management our Compensation Discussion
and Analysis and considers whether to recommend that it be included in proxy
statements and other filings.
The
Compensation Committee’s charter can be found in the “Corporate Governance”
section of our website at www.raptorpharma.com. As of the date of
this proxy statement, the Compensation Committee consisted of Mr. Anderson
(Chairman) and Dr. Keltner.
During
the eight months ended August 31, 2009, the Compensation Committee consisted of
Mr. Ratoff, Dr. Fisherman, who resigned from the Company’s board of
directors effective June 12, 2009, and Mr. Van Beneden, who resigned
from the Company’s board of directors effective May 29, 2009. During the
eight months ended August 31, 2009, the Compensation Committee did not meet and
did not take action by written consent.
Raptor
Pharmaceuticals Corp.
During
the fiscal year ended August 31, 2009, the compensation committee of RPC
consisted of the following two members: Mr. Sager (Chairman) and
Mr. Anderson. As of August 31, 2009, Messrs. Sager and Anderson were
non-employee directors and Mr. Anderson was considered to be
independent. During the fiscal year ended August 31, 2009, the
compensation committee of RPC did not meet and did not take action by written
consent, however, during such period, certain actions with respect to the
compensation of RPC’s executive officers and management were taken either at a
meeting or by written consent of the full board of directors, with
Dr. Starr abstaining from the discussions and actions with respect to his
own salary. The charter of the compensation committee of RPC was
posted on its website during the fiscal year ended August 31, 2009 and through
the date of the Merger.
Corporate Governance and Nominating
Committee
The
Company
The
corporate governance and nominating committee of our board of directors, herein
referred to as the Nominating Committee, has authority to review the
qualifications of, interview and nominate candidates for election to our board
of directors as well as develop a set of corporate governance principles
for the Company. The primary functions of our Nominating Committee
are to (a) recruit, review and nominate candidates for election to our board of
directors, (b) monitor and make recommendations regarding committee functions,
contributions and composition, (c) develop the criteria and qualifications for
membership on our board of directors, and (d) provide oversight on all aspects
of the Company’s corporate governance functions.
The
Nominating Committee develops the credentials and characteristics required of
our board of directors and committee nominees in light of the composition of our
board of directors and committees thereof, our business, operations, applicable
legal and listing requirements, and other factors they consider relevant. The
Nominating Committee may identify other candidates, if necessary, through
recommendations from our directors, management, employees, the stockholder
nomination process, or outside consultants. The Nominating Committee
will review candidates in the same manner regardless of the source of the
recommendation. For membership on our board of directors, the Nominating
Committee takes into consideration applicable laws and regulations, diversity,
age, skills, experience, integrity, ability to make independent analytical
inquiries, understanding of our business and business environment, willingness
to devote adequate time and effort to our board of directors’ responsibilities
and other relevant factors, including experience in the biotechnology and
pharmaceutical industries. The Nominating Committee’s charter can be
found in the “Corporate Governance” section of our website at
www.raptorpharma.com.
As of the
date of this proxy statement, the Nominating Committee consisted of Dr. Keltner
(Chairman), Dr. Franklin and Mr.
Anderson.
10
During
the eight months ended August 31, 2009, the Nominating Committee consisted of
Mr. Steven Ratoff, Dr. Deleage, who resigned from the Company’s board of
directors effective May 27, 2009, and Dr. Davis. During the
eight months ended August 31, 2009, the Nominating Committee did not meet and
did not take action by written consent.
Raptor
Pharmaceuticals Corp.
During
the fiscal year ended August 31, 2009, the nominating and corporate governance
committee of RPC consisted of the following members: Mr. Sager,
Mr. Anderson, Dr. Franklin and Dr. Starr. During the fiscal year
ended August 31, 2009, the nominating and corporate governance committee of RPC
did not formally meet and did not take action by written consent. In
September 2009, upon recommendation from Dr. Starr, the remaining three
directors (Mr. Sager, Dr. Franklin and Mr. Anderson) individually met with Dr.
Keltner in order to determine the suitability of Dr. Keltner for joining the
Company’s board of directors in order to fulfill the Company’s post-merger
corporate governance commitments and Nasdaq listing
requirements. After several discussions with Dr. Keltner and amongst
the members of RPC’s board of directors prior to Dr. Keltner’s appointment, the
board determined that, based upon Dr. Keltner’s experience in the healthcare
industry, it was in the best interest of the Company and its stockholders to
appoint Dr. Keltner to the Company’s board of directors following the
Merger.
The
Company
Our board
of directors has determined that all current members of our board of directors
are independent (as independence is currently defined in Rule 5605(a)(2) of the
Nasdaq listing standards), except for Dr. Starr and Mr. Sager.
Our board
of directors has determined that as of August 31, 2009, all members of the board
of directors as that time were independent (as independence is currently defined
in Rule 5605(a)(2) of the Nasdaq listing standards) except for Ms.
Graham.
Raptor
Pharmaceuticals Corp.
During
the fiscal year ended August 31, 2009, two of the four members of the board of
directors of RPC were independent (Mr. Anderson and Dr. Franklin) and except for
Mr. Sager, all of the members of the audit committee of RPC were
independent.
Director
Compensation
The Company
Effective
October 1, 2009, the Company’s non-employee directors receive the following
compensation: $60,000 cash compensation annually paid quarterly in
arrears to the Chairman of the board and $40,000 cash compensation annually paid
quarterly in arrears to all other non-employee directors. No cash
compensation is paid to our Chief Executive Officer for his services as a member
of our board of directors. No formal plan exists regarding non-cash
compensation to our non-employee directors at this time, but it is anticipated
that a plan will be implemented over the next 12 months.
With
respect to the eight months ended August 31, 2009, the Company’s non-employee
directors received as compensation:
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•
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an
annual retainer of $20,000 payable on the date of the annual meeting of
the Company’s stockholders;
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•
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an
additional annual retainer of $20,000 for the Chairman of the Board
payable on the date of the annual meeting of the Company’s
stockholders;
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•
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an
annual $10,000 retainer for service as the Audit Committee chair payable
on the date of the annual meeting of the Company’s
stockholders;
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•
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an
annual $10,000 retainer for service as the Compensation Committee chair
payable on the date of the annual meeting of the Company’s
stockholders;
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•
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an
annual $3,000 retainer for service as the Corporate Governance and
Nominating Committee chair payable on the date of the annual meeting of
the Company’s
stockholders;
11
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•
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$1,500
per board meeting attended in person or telephonically;
and
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•
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$1,000
per meeting of the Audit Committee, Compensation Committee or
Nominating Committee attended in person or
telephonically.
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In
addition to the cash compensation set forth above, on the date of each annual
meeting of stockholders, each continuing non-employee director was entitled to
receive an annual stock option grant for 10,000 shares of our common stock which
would fully vest on the one year anniversary of the grant date. Each
non-employee director who first becomes a director of the Company was entitled
to receive an initial stock option grant for 20,000 shares which would vest over
four years in equal monthly installments. Stock options granted to non-employee
directors, if any, have an exercise price equal to the closing price of the
Company’s common stock on the date of grant as reported by
Nasdaq. Non-employee directors were also reimbursed for reasonable
out-of-pocket expenses incurred in attending board meetings and committee
meetings.
During
the eight months ended August 31, 2009, the Company’s non-employee directors
were paid the following cash compensation: Mr. Ratoff, $16,750; Dr.
Davis, $15,750; and Dr. Ferris, $15,750. No stock options were
granted to any non-employee directors during the eight months ended August 31,
2009.
Raptor
Pharmaceuticals Corp.
Upon
joining RPC’s board of directors on May 26, 2006, Mr. Anderson and
Mr. Sager were granted stock options to purchase 500,000 shares and
1,000,000 shares, respectively, of common stock of RPC at respective exercise
prices of $0.60 per share. Such stock options vested 6/36ths on
the six month anniversary of such grant and 1/36th per
month thereafter and expire ten years from grant date. Due to the Merger, the
options to purchase 500,000 shares and 1,000,000 shares, respectively, of common
stock of RPC described above were exchanged for options to purchase 116,562
shares and 233,124 shares, respectively, of our common stock at respective
exercise prices of $2.57 per share. Upon joining the board of directors of RPC
on July 10, 2008, Dr. Franklin was granted stock options to purchase
150,000 shares of common stock of RPC at an exercise price of $0.52 per share,
which vests 6/48ths on
the six-month anniversary of such grant and 1/48th per
month thereafter and expires ten years from grant date. Due to the Merger, the
options to purchase 150,000 shares of common stock of RPC described above were
exchanged for options to purchase 34,969 shares of our common stock at an
exercise price of $2.23 per share.
In
addition, at the discretion of the stock option committee of RPC’s board of
directors, each non-employee director of RPC was entitled to receive options to
purchase 100,000 shares of the company’s common stock for each subsequent year
of service on the company’s board of directors. Such options are
generally granted at fair market value one day preceding the grant date, vest
6/48ths on
the six month anniversary of the grant date and 1/48th per
month thereafter and expire ten years from grant date. RPC made these
grants to Mr. Anderson and Mr. Sager with respect to its fiscal year
ended August 31, 2007, on June 14, 2007 at a per share exercise price
of $0.60. No such annual grants were approved for the fiscal year
ended August 31, 2009 or the fiscal year ended August 31, 2008. If
such annual grants were approved, due to the Merger, any such outstanding
options to purchase shares of common stock of RPC would have been exchanged (on
a converted basis) for options to purchase shares of our common
stock. In the case of options to purchase 100,000 shares of our
common stock, such options would have been converted into options to purchase
23,313 shares of our common stock. On a converted basis, due to the
Merger, such outstanding options of Messrs. Anderson and Sager to purchase
shares of common stock of RPC were exchanged for options to purchase 23,313
shares of our common stock at an exercise price of $2.57 per share.
The
following table sets forth the total compensation paid by RPC to each of its
non-employee directors during the fiscal year ended August 31, 2009.
Dr. Starr, who was an employee of RPC, did not receive additional
compensation for his service as a director. Dr. Keltner was appointed
to the board of directors of Raptor Pharmaceutical Corp. immediately following
the Merger on September 30, 2009 and was granted stock options to purchase up to
34,968 of our shares at an exercise price of $3.30 per share, which vest 6/48ths
on March 30, 2010 and 1/48th per
month thereafter, with an expiry of ten years. Dr. Keltner’s annual
compensation for his services as a director is $40,000.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees
Earned or Paid
|
|
|
|
|
|
|
|
|
|
Name
|
|
in
Cash ($)
|
|
|
Option
Awards ($)(1)
|
|
|
Total($)
|
|
|
|
Raymond
W. Anderson (2)
|
|
|
40,000
|
|
|
|
60,583
|
|
|
|
100,583
|
|
|
|
Erich
Sager (3)
|
|
|
60,000
|
|
|
|
111,281
|
|
|
|
171,281
|
|
|
|
Richard
L. Franklin, M.D. Ph.D.
(4)
|
|
|
40,000
|
|
|
|
14,751
|
|
|
|
54,751
|
|
|
|
|
|
12
|
|
|
|
|
|
(1)
|
|
Amounts
shown do not reflect compensation actually received by a director, but
reflect the dollar amount compensation cost recognized by the Company for
financial statement reporting purposes (disregarding an estimate of
forfeitures related to service-based vesting conditions) for the fiscal
year ended August 31, 2009, in accordance with Financial Accounting
Standards Board Accounting Standards Codification Topic 718, Compensation—Stock
Compensation, herein referred to as ASC Topic 718, and thus may
include amounts from awards granted in and prior to the fiscal year ended
August 31, 2009. The assumptions underlying the calculations pursuant to
ASC Topic 718 are set forth under Note 8 of the Notes to Consolidated
Financial Statements, beginning on page 66 of RPC’s Annual Report on Form
10-K for the fiscal year ended August 31, 2009 filed with the SEC on
October 28, 2009.
|
|
|
|
|
|
(2)
|
|
Mr. Anderson
had 139,875 options outstanding as of August 31, 2009, of which
129,189 were exercisable.
|
|
|
|
|
|
(3)
|
|
Mr. Sager
had 256,437 options outstanding as of August 31, 2009, of which
245,751 were exercisable.
|
|
|
|
|
|
(4)
|
|
Dr. Franklin
had 34,969 options outstanding as of August 31, 2009, of which 9,470
were exercisable.
|
The Company has adopted a Code of
Business Conduct and Ethics, which is applicable to our directors and employees,
including our principal executive officer, principal financial officer,
principal accounting officer or controller or persons performing similar
functions. Our Code of Ethics is posted on the Corporate Governance section of
our website at www.raptorpharma.com.
Required
Vote
The
affirmative vote of a plurality of the voting power of the shares present in
person or represented by proxy at our annual meeting is required for the
election of the five nominees. This means that each of the five nominees will be
elected if they receive more affirmative votes than any other
person.
OUR
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE “FOR” EACH
OF THE NOMINEES FOR DIRECTOR.
13
Our Audit
Committee has appointed the firm of Burr, Pilger & Mayer, LLP, an
independent registered public accounting firm, to serve as our independent
registered public accounting firm for our fiscal year ending August 31, 2010 and
our board of directors recommends the stockholders vote for ratification of that
appointment.
Burr,
Pilger & Mayer, LLP served as the independent registered public
accounting firm of RPC, the acquirer for accounting purposes in the Merger,
during its fiscal year ended August 31, 2009 and served as RPC’s independent
auditor since June 14, 2006. In connection with the consummation of
the Merger, on September 29, 2009, the Company’s board of directors engaged
Burr, Pilger & Mayer, LLP as the Company’s independent registered public
accounting firm for the fiscal year ending August 31, 2010. A
representative of Burr, Pilger & Mayer, LLP is expected to be present
at the annual meeting, with the opportunity to make a statement should the
representative desire to do so, and be available to respond to appropriate
questions.
Ernst &
Young LLP served as the independent registered public accounting firm of the
Company for its fiscal year ended December 31, 2008. In connection
with the consummation of the Merger, on September 29, 2009, the Company’s board
of directors approved the dismissal of Ernst & Young LLP (herein referred to
as E&Y) as the Company’s independent registered public accounting
firm. In addition, in connection with the Merger, the Company’s
fiscal year end changed from December 31 to August 31 to coincide with the
fiscal year end of RPC.
The audit report of E&Y with
respect to the Company’s fiscal year ended December 31, 2008 did not contain an
adverse opinion or a disclaimer of opinion and was not qualified or modified as
to uncertainty, audit scope or accounting principle, except that the audit
report included an uncertainty paragraph raising substantial doubt about the
Company’s ability to continue as a going concern. The audit report of E&Y
with respect to the Company’s fiscal year ended December 31, 2007 did not
contain an adverse opinion or a disclaimer of opinion and was not qualified or
modified as to uncertainty, audit scope or accounting principles, except that
the report contained an explanatory paragraph stating that as disclosed in Note
1 to the consolidated financial statements, effective January 1, 2006, the
Company adopted Statement of Financial Accounting Standards No. 123R Share-Based
Payment. During the Company’s past two fiscal years ended December
31, 2008 and 2007, and during the subsequent interim period through September
29, 2009, there was no disagreement (as defined in Item 304(a)(1)(iv) of
Regulation S-K and the related instructions to Item 304 of Regulation S-K)
between the Company and E&Y on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedure which
disagreements, if not resolved to E&Y’s satisfaction, would have caused
E&Y to make reference to the subject matter of the disagreement in
connection with its reports on the financial statements of the Company for such
fiscal years, and, for the same periods, the Company did not require external
audit of their internal controls over financial reporting and there were no
reportable events as described in Item 304(a)(1)(v) of Regulation
S-K. The Company has furnished to E&Y the foregoing disclosure
regarding the change in the Company’s registered independent public accounting
firm.
Our Audit Committee appoints our
independent registered public accounting firm annually and our board of
directors subsequently requests ratification of such appointment by the
stockholders at our annual meeting. Our Audit Committee reviews and approves in
advance the scope of the audit, the types of non-audit services that we will
need and the estimated fees for the following fiscal year. Our Audit Committee
also reviews and approves any non-audit services provided by our independent
registered public accounting firm to ensure that any such services will not
impair the independence of the independent registered public accounting firm. To
the extent that our management believes that a new service or the expansion of a
current service provided by our independent registered public accounting firm is
necessary, such new or expanded service is presented to our Audit Committee or
one of its members for review and approval.
Before
making its selection, our Audit Committee carefully considered Burr,
Pilger & Mayer, LLP’s qualifications as our independent registered
public accounting firm, which included a review of Burr, Pilger &
Mayer, LLP’s performance in prior years as RPC’s independent auditor, as well as
its reputation for integrity and competence in the fields of accounting and
auditing. Our Audit Committee expressed its satisfaction with Burr,
Pilger & Mayer, LLP in these respects.
Stockholder
ratification of our Audit Committee’s selection of Burr, Pilger &
Mayer, LLP as our independent registered public accounting firm is not required
by law, our bylaws or other legal requirement. However, our board of directors
is submitting our Audit Committee’s selection of Burr, Pilger & Mayer,
LLP to our stockholders for ratification as a matter of good corporate
governance. If our stockholders fail to ratify the selection, our Audit
Committee will reconsider whether or not to retain that firm. Even if the
selection is ratified, our 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 our and our
stockholders’ best interests.
14
The
following table presents the aggregate fees billed for professional services
rendered by Burr, Pilger & Mayer LLP to RPC during its fiscal years
ended August 31, 2009 and 2008. Other than as set forth below, no professional
services were rendered nor were any fees billed by Burr, Pilger &
Mayer, LLP to RPC during its fiscal years ended August 31, 2009 and
2008.
|
|
|
Fiscal
Year
|
|
|
Fiscal
Year
|
|
|
|
|
Ended
|
|
|
Ended
|
|
|
Description
of Services
|
|
August
31,
|
|
|
August
31,
|
|
|
Provided
by Burr, Pilger &Mayer LLP
|
|
2009
|
|
|
2008
|
|
|
Audit
Fees
|
|
$
|
115,440
|
|
|
$
|
96,720
|
|
|
Audit Related Fees:
These services relate to assurance and related services reasonably related
to the performance of the audit or review of financial statements not
included above.
|
|
|
56,703
|
|
|
|
41,798
|
|
|
Tax Compliance Fees:
These services relate to the preparation of federal, state and foreign tax
returns and other filings.
|
|
|
16,130
|
|
|
|
4,980
|
|
|
Tax Consulting and Advisory
Services: These services primarily relate to the area of tax
strategy and minimizing Federal, state, local and foreign
taxes.
|
|
|
|
|
|
|
|
|
|
All
Other Fees
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100% of
the above services and estimates of the expected fees were reviewed and approved
by the audit committee of RPC before the respective services were
rendered.
The
following table presents the aggregate fees billed for professional services
rendered by E&Y to the Company during the eight months ended August 31, 2009
and the year ended December 31, 2008. Other than as set forth below, no
professional services were rendered nor were any fees billed by E&Y to the
Company during the eight months ended August 31, 2009 and year ended December
31, 2008.
|
|
|
Eight
Months Year
|
|
|
Year
|
|
|
|
|
Ended
|
|
|
Ended
|
|
|
Description
of Services
|
|
August
31,
|
|
|
December
31,
|
|
|
Ernst
& Young LLP
|
|
2009
|
|
|
2008
|
|
|
Audit
Fees
|
|
$
|
28,000
|
|
|
$
|
223,000
|
|
|
Audit
Related Fees
|
|
|
19,600(1)
|
|
|
|
—
|
|
|
Tax
Fees
|
|
|
—
|
|
|
|
—
|
|
|
All
Other Fees
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
(1)
|
Fees
relate to services performed in connection with the Company’s preparation
and filing of a Registration Statement on Form S-4 in August
2009.
|
|
The Audit
Committee has adopted a policy and procedures for the pre-approval of audit and
non-audit services rendered by the Company’s independent registered public
accounting firm. The policy generally pre-approves specified services in the
defined categories of audit services, audit-related services, and tax services
up to specified amounts. Pre-approval may also be given as part of the Audit
Committee’s approval of the scope of the engagement of the independent
registered public accounting firm or on an individual explicit case-by-case
basis before the independent registered public accounting firm is engaged to
provide each service. The pre-approval of services may be delegated to one or
more of the Audit Committee’s members, but the decision must be reported to the
full Audit Committee at its next scheduled meeting. All of the audit,
audit-related and tax fees incurred during the eight months ended August 31,
2009 and the year ended December 31, 2008 were approved in accordance with our
pre-approval policies and procedure
The Audit
Committee has considered the nature and amount of the fees billed by Burr,
Pilger & Mayer LLP to RPC and believes that the provision of the services
for activities unrelated to the audit is compatible with maintaining Burr,
Pilger & Mayer LLP’s independence.
Ratification
of the appointment of Burr, Pilger & Mayer, LLP as our independent
registered public accounting firm for the fiscal year ending August 31, 2010
requires the affirmative vote of a majority of the shares voted at the annual
meeting at which a quorum is present.
15
OUR BOARD OF DIRECTORS UNANIMOUSLY
RECOMMENDS THAT THE STOCKHOLDERS VOTE “FOR” THE RATIFICATION OF BURR,
PILGER & MAYER LLP AS OUR INDEPENDENT PUBLIC ACCOUNTING FIRM FOR THE
FISCAL YEAR ENDING AUGUST 31, 2010.
16
PROPOSAL
NO. 3: APPROVAL OF THE RAPTOR PHARMACEUTICAL CORP. 2010 STOCK INCENTIVE
PLAN
On
February 2, 2010, our board of directors adopted, subject to stockholder
approval at this annual meeting, the Raptor Pharmaceutical Corp. 2010 Stock
Incentive Plan, or the Plan. Below is a summary of the principal provisions of
the Plan and its operation. A copy of the Plan is set forth in full in Appendix A to this proxy
statement, and the following description of the Plan is qualified in its
entirety by reference to Appendix A.
Background
Our board
of directors is proposing that the Plan be approved by our stockholders at the
annual meeting to enable us to design appropriate awards and
incentives. The amount and nature of the proposed awards under the
Plan have not yet been determined, although the Plan permits grants of options,
and restricted shares or units.
The board
of directors believes that the Plan is an important factor in attracting,
retaining and motivating employees, independent contractors, consultants, and
directors of the Company and its affiliates. The board of directors believes
that the Company needs the flexibility both to have an increased reserve of
common shares available for future equity-based awards, and to make future
awards in a form other than options on shares.
The Plan
will reserve 2,600,000 new shares of common stock for future awards to
employees, consultants, agents, and directors. In addition, 400,000
shares of common stock currently available for award under (i) the Raptor
Pharmaceuticals Corp. 2006 Equity Incentive Plan, as amended, which was assumed
by the Company in connection with the Merger, (ii) the TorreyPines 2006 Equity
Incentive Plan and (iii) the Company’s 2000 Stock Option Plan (formerly the
Axonyx 2000 Stock Option Plan) (herein referred to collectively as the Former
Plans), will, as explained below, be added to the reserve of shares that are
authorized and available for issuance pursuant to the Plan, for a total of
3,000,000 shares of common stock. The board of directors recognizes
the need for this future reserve because approximately 400,000 shares remain
available for awards, in the aggregate, under the Former Plans. The
Plan has a ten year term and is intended to supplement the Company’s cash
compensation incentives resulting in potentially less cash expenditures for
salaries, bonuses and director and consultant compensation. Further,
the Company may in the future make acquisitions resulting in the hiring of
additional employees. Stockholder approval of the Plan will enable
the Company to make awards that qualify as performance-based compensation that
is exempt from the deduction limitation set forth under Section 162(m) of the
Internal Revenue Code of 1986, as amended, or the Code. Subject to certain
exceptions, Section 162(m) of the Code generally limits the corporate income tax
deductions to $1,000,000 annually for compensation paid to each of the Chief
Executive Officer and the other four highest paid executive officers of the
Company.
If the
Plan is approved by our stockholders, the board of directors intends to cause
the shares of common stock that will become available for issuance to be
registered on a Form S-8 registration statement to be filed with the SEC at the
Company’s expense. In addition, if the Plan is approved by our
stockholders, no additional grants will be made under the Former
Plans.
Summary
of the Plan
The
following summary is not intended to be complete and reference should be made to
Appendix A for a
complete statement of the terms and provisions of the
Plan. Capitalized terms used in this summary and not otherwise
defined will have the meanings ascribed to such terms in the Plan.
Purpose. The
purpose of the Plan is to attract, retain and motivate select employees,
independent contractors, consultants and directors of the Company and its
affiliates, herein collectively referred to Eligible Persons, and to provide
incentives and rewards for superior performance.
Shares Subject to the
Plan. The Plan provides that no more than 3,000,000 shares of
common stock may be issued pursuant to Awards under the Plan, which includes the
400,000 shares currently available for issuance under the Former Plans (which
will cease to be available for issuance under the Former Plans, if the Plan is
approved). These shares shall be authorized but unissued shares, or
shares that the Company has reacquired or otherwise holds in treasury or in a
trust. The number of shares available for Awards, as well as the
terms of outstanding Awards, are subject to adjustment as provided in the Plan
for share splits, share dividends, recapitalizations and other similar
events. Shares of common stock that are subject to any Award that
expires, or is forfeited, cancelled or becomes unexercisable will again be
available for subsequent Awards, except as prohibited by law.
Administration. Either
the board of directors or a committee appointed thereby will administer the
Plan. The board of directors and any committee exercising discretion
under the Plan from time to time are referred to as the
“Committee.” The board of directors
17
may at
any time appoint additional members to the Committee, remove and replace members
of the Committee with or without cause, and fill vacancies on the
Committee. With respect to decisions involving persons who are
reporting persons pursuant to Rule 16b-3 of the Exchange Act, the Committee is
to consist of two or more directors who are disinterested within the meaning of
Rule 16b-3. With respect to decisions involving an Award intended to satisfy the
requirements of Section 162(m) of the Code, the Committee is to consist of two
or more directors who are “outside directors” for purposes of that Code section.
The Committee may delegate administrative functions to individuals who are
reporting persons for purposes of Rule 16b-3 of the Exchange Act, officers or
employees of the Company or its affiliates. To the extent permitted
by law, the Committee may authorize one or more persons who are reporting
persons for purposes of Rule 16b-3 under the Exchange Act (or other officers) to
make Awards to Eligible Persons who are not reporting persons for purposes of
Rule 16b-3 under the Exchange Act (or other officers whom the Company has
specifically authorized to make Awards).
Subject
to the terms of the Plan, the Committee has express authority to determine the
Eligible Persons who will receive Awards, the number of shares of common stock
or units to be covered by each Award, and the terms and conditions of
Awards. The Committee has broad discretion to prescribe, amend, and
rescind rules relating to the Plan and its administration, to interpret and
construe the Plan and the terms of all Award agreements, and to take all actions
necessary or advisable to administer the Plan. Within the limits of
the Plan, the Committee may accelerate the vesting of any Award and may modify,
replace, cancel or renew them, subject to stockholder approval to the extent
required by Plan terms.
The Plan
provides that the Company and its affiliates will, to the extent permitted by
law, indemnify members of the Committee and their delegates against any claims,
liabilities or costs arising from the good faith performance of their duties
under the Plan. The Plan releases these individuals from liability
for good faith actions associated with the Plan’s administration.
Eligibility. The
Committee may grant options that are intended to qualify as incentive share
options, or ISOs, only to employees, and may grant all other Awards to Eligible
Persons. The Plan and the discussion below use the term “Participant”
to refer to an Eligible Person who has received an Award. The Plan
provides that no Participant may receive Options that relate to more than 16.77%
of the total number of Shares reserved for Awards under the Plan. As
of February 1, 2010, substantially all of the 12 employees (including officers)
of the Company and its affiliates and all of the Company’s non-employee
directors would have been eligible to participate in the Plan.
Options. Options
granted under the Plan provide Participants with the right to purchase shares of
common stock at a predetermined exercise price. The Committee may
grant options that are intended to qualify as ISOs or options that are not
intended to so qualify, or Non-ISOs. The Plan also provides that ISO
treatment may not be available for options that become first exercisable in any
calendar year to the extent the value of the underlying shares that are the
subject of the option exceed $100,000 (based upon the fair market value of the
shares of common stock on the option grant date).
Exercise Price for
Options. The exercise price of ISOs and Non-ISOs may not be
less than 100% of the fair market value on the grant date of the shares of
common stock subject to the Award (110% of fair market value for ISOs granted to
employees who, at the time of grant, own more than 10% of the Company’s
outstanding shares of common stock). As of February 2, 2010, the
closing price per share of the Company’s common stock on the Nasdaq Capital
Market was $2.49 per share.
Exercise of
Options. To the extent exercisable in accordance with the
agreement granting them, an option may be exercised in whole or in part, and
from time to time during its term, subject to earlier termination relating to a
holder’s termination of employment or service. With respect to
options, the Committee has the discretion to accept payment of the exercise
price in the form or combination of cash or check in U.S.
dollars. The Committee also has the discretion to accept any method
of payment the Committee decides is acceptable. The term over which Participants
may exercise options may not exceed ten years from the date of grant (five years
in the case of ISOs granted to employees who, at the time of grant, own more
than 10% of the Company’s outstanding shares of common stock).
Subject
to the terms of the agreement evidencing an option grant, the option may be
exercised during the six-month period after the optionee retires, during the
one-year period after the optionee’s termination of service due to death or
permanent disability, during the 90-day period after the optionee’s termination
of service for reasons other than Cause, Retirement, Disability or Death (but in
no case later than the termination date of the option). The agreements
evidencing the grant of an option may, in the discretion of the Committee, set
forth additional or different terms and conditions applicable to such option
upon a termination or change in status of the employment or service of the
option holder. Options may not be exercised after a termination for
“Cause,” as defined in the Plan.
Restricted Shares and Restricted
Units. Under the Plan, the Committee may grant restricted
shares that are forfeitable until certain vesting requirements are met and may
grant restricted share units which represent the right to receive shares of
common stock
18
after
certain vesting requirements are met. For restricted Awards, the Plan
provides the Committee with discretion to determine the terms and conditions
under which a Participant’s interest in such Awards becomes vested.
Cash
dividends generally will be paid to restricted stockholders once their shares
vest. Other adjustments will normally not be made to Awards on account of cash
dividends.
Recoupment of
Awards. Unless otherwise provided in an agreement granting an
Award, and to the extent permitted by Applicable Law, the Committee may in its
sole and absolute discretion, without obtaining the approval or consent of the
Company’s stockholders or of any Participant, require that a Participant
reimburse the Company for all or any portion of any Awards granted under the
Plan or may require the termination or rescission of, or the recapture
associated with any Award, if and to the extent (i) the granting, vesting or
payment of the Award was predicated on the achievement of certain financial
results that were subsequently the subject of a material financial restatement,
(ii) the Participant either benefited from a calculation that later proves to be
materially inaccurate or the Participant engaged in fraud or misconduct that
caused the need for a material financial restatement by the Company, and (iii) a
lower granting, vesting, or payment of such Award would have occurred based upon
the conduct described in clause (ii) above.
Income Tax
Withholding. As a condition for the issuance of shares
pursuant to Awards, the Plan requires satisfaction of any applicable federal,
state, local, or foreign withholding tax obligations that may arise in
connection with the award or the issuance of shares.
Transferability. Awards
may not be sold, pledged, assigned, hypothecated, transferred or disposed of
other than by will or the laws of descent and distribution, except to the extent
the Committee permits lifetime transfers in the form of Non-ISOs or Restricted
Shares to charitable institutions, certain family members or related trusts or
otherwise.
Certain Corporate
Transactions. The Committee shall equitably adjust the number
of shares covered by each outstanding Award, and the number of shares that have
been authorized for issuance under the Plan but as to which no Awards have yet
been granted or that have been returned to the Plan upon cancellation,
forfeiture or expiration of an Award, as well as the price per share covered by
each such outstanding Award, to reflect any increase or decrease in the number
of issued shares resulting from a share split, reverse share split, share
dividend, combination, recapitalization or reclassification of the shares, or
any other increase or decrease in the number of issued shares effected without
receipt of consideration by the Company. In the event of any such
transaction or event, the Committee may provide in substitution for any or all
outstanding Options under the Plan such alternative consideration (including
securities of any surviving entity) as it may in good faith determine to be
equitable under the circumstances and may require in connection therewith the
surrender of all Options so replaced. In any case, such substitution
of securities will not require the consent of any person who is granted Options
pursuant to the Plan.
In
addition, in the event of a Change in Control (as defined in the Plan), the
Committee may at any time in its sole and absolute discretion and authority,
without obtaining the approval or consent of the Company’s stockholders or any
Participant with respect to his or her outstanding Awards (except to the extent
an Award provides otherwise), take one or more of the following actions: (a)
arrange for or otherwise provide that each outstanding Award will be assumed or
substituted with a substantially equivalent award by a successor corporation or
a parent or subsidiary of such successor corporation; (b) accelerate the vesting
of Awards so that Awards shall vest (and, to the extent applicable, become
exercisable) as to the shares that otherwise would have been unvested and
provide that repurchase rights of the Company with respect to shares issued
pursuant to an Award shall lapse as to the shares subject to such repurchase;
(c) arrange or otherwise provide for payment of cash or other consideration to
Participants in exchange for the satisfaction and cancellation of outstanding
Awards; or (d) terminate all or some Awards upon the consummation of the
transaction, provided that the Committee may in its sole discretion provide for
vesting of all or some outstanding Awards in full as of a date immediately prior
to consummation of the Change in Control. To the extent that an Award
is not exercised prior to consummation of a transaction in which the Award is
not being assumed or substituted, such Award shall terminate upon such
consummation. The Committee may also make such other modifications,
adjustments or amendments to outstanding Awards or to the Plan as the Committee
deems necessary or appropriate, subject to the terms of the Plan.
Finally,
if the Company dissolves or liquidates, all Awards will terminate immediately
prior to such dissolution or liquidation, subject to the ability of the board of
directors to exercise any discretion that it may exercise in the case of a
Change in Control.
Term of the 2010 Plan; Amendments or
Termination. The term of the Plan is 10 years from February 2,
2010, the date it was approved by our board of directors. The board
of directors may from time to time, amend, alter, suspend, discontinue or
terminate the Plan; provided that no amendment, suspension or termination of the
Plan shall materially and adversely affect Awards already granted (with such an
affect being presumed to arise from a modification that would trigger a
violation of Section 409A of the Code) unless (i) it relates to an adjustment
pursuant to certain transactions that change the Company’s capitalization, (ii)
it is otherwise mutually
19
agreed
between the Participant and the Committee, or (iii) the Committee determines in
good faith, before a Change in Control, that the modification is not materially
adverse to the Participant. Furthermore, neither the Company nor the
Committee shall, without stockholder approval, allow for a repricing within the
meaning of the federal securities laws applicable to proxy statement disclosures
or provide for the cancellation of an outstanding Option whose exercise price is
greater than Fair Market Value at the time of cancellation for the purpose of
reissuing the Option to the Participant at a lower exercise price or granting a
replacement Award of a different type.
Expected Tax
Consequences
The
following is a brief summary of certain tax consequences of certain transactions
under the Plan. This summary is not intended to be complete and does
not describe state or local tax consequences.
U.S. Federal Income Tax
Consequences. Under the Code, the Company will generally be
entitled to a deduction for federal income tax purposes at the same time and in
the same amount as the ordinary income that Participants recognize pursuant to
Awards (subject to the Participant’s overall compensation being reasonable, and
to the discussion below with respect to Code Section 162(m)). For
Participants, the expected U.S. federal income tax consequences of Awards are as
follows:
Non-ISOs. A
Participant will not recognize income at the time a Non-ISO is
granted. At the time a Non-ISO is exercised, the Participant will
recognize ordinary income in an amount equal to the excess of (a) the fair
market value of the shares of common stock issued to the Participant on the
exercise date, over (b) the exercise price paid for the shares. At
the time of sale of shares acquired pursuant to the exercise of a Non-ISO, the
appreciation (or depreciation) in value of the shares after the date of exercise
will be treated either as short-term or long-term capital gain (or loss)
depending on how long the shares have been held.
ISOs. A
Participant will not recognize income upon the grant of an ISO. There
are generally no tax consequences to the Participant upon exercise of an ISO
(except the amount by which the fair market value of the shares at the time of
exercise exceeds the option exercise price is a tax preference item possibly
giving rise to an alternative minimum tax), provided it is exercised no later
than three months following the Participant’s termination of employment as an
employee. If the shares of common stock are not disposed of within
two years from the date the ISO was granted or within one year after the ISO was
exercised, any gain realized upon the subsequent disposition of the shares will
be characterized as long-term capital gain and any loss will be characterized as
long-term capital loss. If either of these holding period
requirements are not met, then a “disqualifying disposition” occurs and (a) the
Participant recognizes ordinary income gain in the amount by which the fair
market value of the shares at the time of exercise exceeded the exercise price
for the ISO and (b) any remaining amount realized on disposition (except for
certain “wash” sales, gifts or sales to related persons) will be characterized
as capital gain or loss.
Restricted Shares and Restricted
Share Units. In general, a Participant will not recognize
income at the time of grant of restricted shares and restricted share units
unless the Participant elects to accelerate income taxation to the date of the
Award. In this event, a Participant would recognize ordinary income
equal to the excess of the market value of the restricted shares over any amount
the Participant pays for them (in which case subsequent gain or loss would be
capital in nature). In the absence of an election to accelerate
income taxation to the date of an Award, a Participant must recognize taxable
compensation income equal to the value of any cash or shares of common stock
that the Participant receives when the Award vests.
Special Tax
Provisions. Under certain circumstances, the accelerated
vesting, cash-out or accelerated lapse of restrictions on Awards in connection
with a change in control of the Company might be deemed an “excess parachute
payment” for purposes of the golden parachute tax provisions of Code Section
280G, and the Participant may be subject to a 20% excise tax and the Company may
be denied a tax deduction. Furthermore, the Company may not be able
to deduct the aggregate compensation in excess of $1,000,000 attributable to
Awards that are not “performance-based” within the meaning of Code Section
162(m) in certain circumstances.
Income Taxes and Deferred
Compensation. Except as expressly provided in a written
agreement between the Company and a Participant, the Plan provides that
participants are solely responsible and liable for the satisfaction of all taxes
and penalties that may arise in connection with Awards (including any taxes
arising under Section 409A of the Code), and that the Company will not have any
obligation to indemnify or otherwise hold any Participant harmless from any or
all of such taxes. Nevertheless, the Plan authorizes the Committee to
unilaterally modify the Plan and any Award in a manner that conforms to the
requirements of Section 409A of the Code.
General Tax Law
Considerations. The preceding paragraphs are intended to be
merely a summary of certain important tax law consequences concerning a grant of
options under the Plan and the disposition of shares issued thereunder in
existence as of the date
20
of this
proxy statement. Special rules may apply to the Company’s officers,
directors or holders of greater than ten percent of the Company’s common
stock. Participants in the Plan should review the current tax
treatment with their individual tax advisors at the time of grant, exercise or
any other transaction relating to an Award or the underlying
shares.
New Plan
Benefits. The Committee will grant Awards under the Plan at
its discretion. Consequently, it is not possible to determine at this
time the amount or dollar value of Awards to be provided under the Plan, other
than to note that the Committee has not granted Awards that are contingent upon
the approval of the Plan as of February 2, 2010, but expects that it likely will
do so.
Required
Vote
Approval
of the Raptor Pharmaceutical Corp. 2010 Stock Incentive Plan requires the
affirmative vote of a majority of the shares voted at the annual meeting at
which a quorum is present.
OUR
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE “FOR” THE
APPROVAL OF THE RAPTOR PHARMACEUTICAL CORP. 2010 STOCK INCENTIVE
PLAN.
21
MANAGEMENT
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Position(s)
Held
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Name
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Age
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with
the Company
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Todd
C. Zankel, Ph.D.
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46
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Chief
Scientific Officer, Raptor Pharmaceutical Corp. and Raptor Pharmaceuticals
Corp.
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Thomas
(Ted) E. Daley
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46
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President,
Raptor Therapeutics Inc. (f/k/a Bennu Pharmaceuticals
Inc.)
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Patrice
P. Rioux, M.D., Ph.D.
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58
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Chief
Medical Officer, Raptor Therapeutics Inc. (f/k/a Bennu Pharmaceuticals
Inc.)
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Kim
R. Tsuchimoto, C.P.A.
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46
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Chief
Financial Officer, Treasurer and Secretary, Raptor Pharmaceutical Corp.
and Raptor Pharmaceuticals Corp.
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The
following describes the background of our executive officers.
Todd C. Zankel Ph.D. As of September 29, 2009,
Dr. Zankel was appointed our Chief Scientific Officer. Prior to that,
Dr. Zankel was a co-founder and has been Chief Scientific Officer of our
wholly owned subsidiaries, Raptor Pharmaceutical Inc. and Raptor Pharmaceuticals
Corp., since their inception in 2006. From 1997 to 2005, Dr. Zankel served
as a Senior Director of Research at BioMarin. Prior to 1997, Dr. Zankel was
a fellow for the National Institutes of Health at the Plant Gene Expression
Center in Berkeley, California and at the Swiss Institute of Technology in
Zurich, Switzerland. Dr. Zankel has been the author of a number of
peer-reviewed articles in a variety of scientific areas. Dr. Zankel earned
a B.A. from Reed College in Portland, Oregon and a Ph.D. from Columbia
University.
Thomas (Ted) E. Daley. As of
September 29, 2009, Mr. Daley joined us as President and a board member of
Raptor Therapeutics Inc. (f/k/a Bennu Pharmaceuticals Inc.), a wholly-owned
indirect subsidiary acquired in the Merger. Mr. Daley joined Raptor
Therapeutics Inc. following the acquisition by it of Convivia, Inc., which
Mr. Daley founded. Mr. Daley was co-founder, VP business development
and chief operating officer of Instill Corporation, a leading electronic
commerce services provider to the US foodservice industry. Between 1993 and 2001
Mr. Daley helped raise over $50 million in venture capital and build
Instill to a 150+ person operation with a nationwide customer base. After
leaving Instill, from 2001 and 2007, Mr. Daley served in executive and
consulting roles to a number of technology startup companies including
MetricStream, Inc., PartsRiver and Certicom Security. Prior to that time,
Mr. Daley worked in operations management for Anheuser-Busch, Inc., and
consulted to Gordon Biersch Brewing Company and Lion Breweries (New Zealand).
Mr. Daley received a BS in Fermentation Science from University of
California at Davis, and an MBA from Stanford University.
Patrice P. Rioux, M.D., Ph.D.
As of September 29, 2009, Dr. Rioux joined us as Chief Medical Officer of Raptor
Therapeutics Inc. (f/k/a Bennu Pharmaceuticals Inc.), a wholly-owned indirect
subsidiary acquired in the Merger. Prior to joining Raptor Therapeutics Inc. in
April 2009, from November 2008 until March 2009, Dr. Rioux
served as Chief Medical Officer of FerroKin Biosciences, an early-stage
developer of iron chelator for treatment of anemias. From May 2005 to
October 2008, he was Chief Medical Officer and Vice President
Clinical/Regulatory for Edison Pharmaceuticals, which focused on developing
drugs to treat inherited and acquired energy impairment diseases. From
January 2004 through March 2006, Dr. Rioux was an independent
clinical operations consultant. Dr. Rioux’ three-decade career includes
positions at Repligen Corp., Arrow International, Variagenics, Inc., Biogen and
GRP (Groupement de Recherche en Pharmacologie). From 1975 to 1995,
Dr. Rioux was a researcher in Clinical Research and Epidemiology at INSERM
(Institut National de la Sante et de la Recherche Medicale), a French
organization that supports national research in the medical field. Educated in
France, Dr. Rioux has an M.D., a Ph.D. in Mathematical Statistics, and a
Masters degree in Pharmacology.
Kim R. Tsuchimoto, C.P.A. As
of September 29, 2009, Ms. Tsuchimoto was appointed our Chief Financial Officer,
Treasurer and Secretary. Prior to that Ms. Tsuchimoto has served
as the Chief Financial Officer, Treasurer and Secretary of our wholly owned
subsidiaries, Raptor Pharmaceutical Inc. and Raptor Pharmaceuticals Corp., since
their respective inceptions in 2006. Prior to this, Ms. Tsuchimoto served
as Interim Controller at International Microcomputer Software, Inc., a software
and Internet content company,
22
from
October 2005 to March 2006. From June 2005 to August 2005,
Ms. Tsuchimoto served as Assistant Vice President, Controller at
SpatiaLight Inc., a high technology company. From February 1997 to
June 2005, Ms. Tsuchimoto served at BioMarin and its predecessor
company, Glyko, Inc., most recently as Vice President, Treasurer for two years,
Vice President, Controller for two years and prior to that, as Controller. Prior
to her employment at BioMarin, Ms. Tsuchimoto served as Controller of a
marketing consulting firm and an international venture capital firm and worked
as a staff accountant in a local public accounting firm. Ms. Tsuchimoto is
an inactive licensed California Certified Public Accountant and holds a B.S. in
Business Administration with an emphasis in Accounting from San Francisco State
University.
Relationships
Among Executive Officers and Directors
Our
executive officers are elected by our board of directors on an annual basis and
serve until their successors have been duly elected and qualified. There are no
family relationships among any of our directors or executive officers.
This
section includes executive compensation information regarding the
Company. In addition, due to the fact that the Merger was consummated
in September 2009, we have also included information with respect to the
executive compensation of RPC.
Compensation
Discussion and Analysis
Overview
The
Compensation Committee of our board of directors has overall responsibility for
the compensation program for our executive officers. Specifically, our
Compensation Committee establishes policies and otherwise discharges the
responsibilities of our board of directors with respect to the compensation of
our executive officers, senior management, and our other employees. In
evaluating executive officer pay, the Compensation Committee may retain the
services of an independent compensation consultant or research firm and consider
recommendations from the chief executive officer and persons serving in
supervisory positions over a particular officer or executive officer with
respect to goals and compensation of the other executive officers. The executive
officers are not present or involved in deliberations concerning their
compensation. Our Compensation Committee assesses the information it receives in
accordance with its business judgment. All decisions with respect to executive
compensation, other than compensation for our Chief Executive Officer, are first
approved by our Compensation Committee and then submitted, together with the
Compensation Committee’s recommendations, to our full board of directors for
final approval. Compensation of our Chief Executive Officer is generally
approved only by our Compensation Committee.
We choose
to pay the various elements of compensation discussed in order to attract and
retain the necessary executive talent, reward annual performance and provide
incentive for primarily long-term strategic goals, while considering short-term
performance.
Elements
of compensation for our executives generally include:
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•
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base
salary (typically subject to upward adjustment annually based on inflation
factors, industry competitive salary levels, and individual
performance);
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•
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401(k)
plan contributions; and
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•
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health,
disability and life insurance.
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We
believe that the compensation of our executives should reflect their success in
attaining key objectives and individual factors. The key objectives include:
(1) establishing and executing on program milestones within planned
budgetary expenditures; (2) securing adequate funds to achieve program
objectives and to maintain our solvency and moderate financial risk;
(3) meeting or exceeding program timelines and milestones;
(4) expanding our preclinical product pipeline through creation of novel
proprietary products or by utilization of technology, or acquiring or
in-licensing new pre-clinical or clinical products and technology;
(5) creating corporate
23
partnerships,
contracts, collaborations and out-licensing product technologies to achieve
strategic objectives; (6) submitting and receiving satisfactory results of
regulatory submissions; (7) establishing long-term competitive advantages, which
leads to attaining an increased market price for our stock; (8) asset
growth; and (9) developing a strong intellectual property position, which
enhances the value of our product candidates and technologies.
The key
individual factors for each executive include: (1) the value of their
unique skills and capabilities to support our long-term performance;
(2) performance of their management responsibilities; (3) whether an
increase in responsibility or change in title is warranted; (4) leadership
qualities; (5) business responsibilities; (6) current compensation
arrangements, especially in comparison to the compensation of other executives
in similar positions in competitive companies within our industry;
(7) short- and long-term potential to enhance stockholder value; and
(8) contribution as a member of the executive management team.
Our
allocation between long-term and currently paid compensation is intended to
ensure adequate base compensation to attract and retain personnel, while
providing incentives to maximize long-term value for us and our stockholders. We
provide cash compensation in the form of base salary and annual, discretionary
cash bonuses to reward performance against pre-set written goals and objectives.
We provide non-cash compensation to reward performance against specific
objectives and long-term strategic goals.
The
compensation package for the Company’s executive officers for the eight months
ended August 31, 2009 ranged from 82% to 75% in cash compensation and 18% to 25%
in non-cash compensation, including benefits and equity-related
awards. We believe that this ratio is competitive within the
marketplace for companies at our stage of development and appropriate to fulfill
our stated policies. The compensation package for the executive
officers of RPC for its fiscal year ended August 31, 2009 ranged from 100% to
90% in cash compensation and 0% to 10% in non-cash compensation, including
benefits and equity-related awards.
Elements
of Compensation
Base
Salary
The
Company
Base
salaries for the Company’s executives are established based on the particular
scope of each executive’s responsibilities as well as their qualifications,
experience and performance, taking into account competitive market compensation
paid by other companies in our peer group for individuals with similar
responsibilities. Base salaries are reviewed annually, and additionally may be
adjusted from time to time to realign salaries with market levels after taking
into account individual responsibilities, performance and experience. The
Compensation Committee intends to conduct an annual review of base salaries, and
the overall compensation package, each year toward the end of our fiscal
year.
During
the months of November and December 2008 and January 2009, the Compensation
Committee, along with the Company’s board of directors, had numerous informal
discussions regarding the appropriate compensation packages for the Company’s
executives. The Compensation Committee, in conjunction with the Company’s board
of directors, determined that given the Company’s financial constraints there
would be no salary adjustment for 2009 and no bonuses paid for
2009.
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Annual
Base Salary*
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Evelyn
A. Graham
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Former
Chief Executive Officer of TorreyPines Therapeutics, Inc., Currently
President of TPTX, Inc., our wholly-owned subsidiary
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$350,000
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Craig
A. Johnson
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Former
Chief Financial Officer of TorreyPines Therapeutics, Inc., Currently Vice
President, Finance of TPTX, Inc., our wholly-owned
subsidiary
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$282,000
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Paul
R. Schneider
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Former
VP, General Counsel of TorreyPines Therapeutics, Inc., Currently VP,
General Counsel of TPTX, Inc., our wholly-owned subsidiary
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$217,700
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*Pursuant
to the Merger Agreement, three former officers of the Company retained
positions at TPTX, Inc., a wholly-owned subsidiary of Raptor
Pharmaceutical Corp., for a transition period ending on February 28, 2010,
during which time such former officers continue to provide services to us
with a focus on raising funds in our wholly-owned subsidiary to enable us
to continue the development of NGX 426 and
tezampanel.
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24
Raptor Pharmaceuticals
Corp.
The compensation committee of RPC
established base salary compensation for its executive officers for the fiscal
year ended August 31, 2009 taking into account: (1) the officer’s equity
interest in RPC; (2) RPC’s status as an early-stage development company;
(3) competitive levels of compensation; and (4) RPC’s ability to pay
at this stage of its funding cycle. RPC’s compensation committee considered
individual performance and salaries paid to executive officers of other
biotechnology companies similar in size, stage of development and other
characteristics. In making its recommendations, RPC’s compensation committee
took into account recommendations submitted by persons serving in a supervisory
position over a particular executive officer. In July 2008, RPC’s
compensation committee hired an outside consultant to review its executive
compensation and compensation for positions in which it was recruiting in order
to offer a competitive compensation package to new employees and in an effort to
compensate its executives closer to competitive levels. The outside consultant
utilized a well-established industry salary survey and benchmarked RPC’s
executive salaries with salaries of companies of similar size and located in the
San Francisco Bay Area. Due to the significant differences between market rates
and executive base salaries for the fiscal year ended August 31, 2007, RPC’s
compensation committee recommended a pro rata three-step increase (over three
years) for Dr. Starr, its Chief Executive Officer, and a pro rata two-step
increase (over two years) for Dr. Zankel, Ms. Tsuchimoto and
Mr. Daley.
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Annual
Base Salary
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Christopher
M. Starr, Ph.D.
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Chief
Executive Officer, President and Director of Raptor Pharmaceuticals
Corp.
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$213,610*
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Todd
C. Zankel, Ph.D.
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Chief
Scientific Officer of Raptor Pharmaceuticals Corp.
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$192,300*
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Kim
R. Tsuchimoto, C.P.A.
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Chief
Financial Officer, Secretary and Treasurer of Raptor Pharmaceuticals
Corp.
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$208,401*
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Ted
Daley
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President,
Raptor Therapeutics Inc. (f/k/a Bennu Pharmaceuticals
Inc.)
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$208,401*
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Patrice
P. Rioux., M.D., Ph.D.
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Chief
Medical Officer, Raptor Therapeutics Inc.
(f/k/a
Bennu Pharmaceuticals Inc.)
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$280,000**
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*
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Based
on input from the outside consultant hired in July 2008, the
recommendation by RPC’s compensation committee and approval of RPC’s full
board of directors (other than Dr. Starr with respect to his own
salary), these salaries became effective July 10, 2008. As of the
date of this proxy statement, in order to preserve cash, the second step
of the salary increases described above has not been
implemented.
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**
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Dr. Rioux’s
employment commenced on April 15,
2009.
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Bonus
and Other Non-Equity Incentive Plan Compensation
The
Company
Discretionary
annual cash bonuses are a means of rewarding individuals based on achievement of
annual corporate and individual goals. The Compensation Committee has the
authority to award discretionary annual cash bonuses to our
executives. Due to the Company’s cash constraints, no cash bonuses
were paid during the eight months ended August 31, 2009.
Raptor
Pharmaceuticals Corp.
Given
RPC’s stage of development and its desire to conserve cash, during the fiscal
year ended August 31, 2009, RPC limited awarding cash bonuses to its executive
officers and did not provide for other non-equity incentive plan compensation as
bonuses. During the fiscal year ended August 31, 2009, pursuant to his
employment agreement and an asset purchase agreement between RPC’s clinical
subsidiary and Mr. Daley regarding the purchase of the Convivia assets,
Mr. Daley received the following: in September 2008 a cash bonus of
$10,000 for reaching his one-year anniversary and in October 2008,
Mr. Daley received a bonus of 100,000 shares of RPC’s common stock valued
at $27,000 and a cash bonus of $30,000 related to the achievement of a clinical
milestone. Due to the Merger, the 100,000 shares of RPC’s common stock described
in the immediately preceding sentence were exchanged for 23,312 shares of our
common stock.
Pursuant
to Dr. Rioux’s offer letter from RPC executed in April 2009,
Dr. Rioux is eligible for bonus stock options exercisable for up to 50,000
shares of RPC’s common stock if the following milestones are achieved during his
employment: RPC’s achievement of a successful pilot clinical trial of DR
Cysteamine in cystinosis; first patient dosed in a pivotal clinical trial of DR
Cysteamine in
25
cystinosis;
RPC’s filing of a New Drug Application for DR Cysteamine in cystinosis; and
marketing approval of DR Cysteamine in cystinosis. To-date none of these
milestones have been achieved and no bonuses have been granted to
Dr. Rioux. Due to the Merger, the eligibility described above is now for
bonus stock options exercisable for up to 11,656 shares of our common
stock.
All of
RPC’s executive officers are eligible for annual and discretionary cash and
stock option bonuses pursuant to their employment agreements.
Stock
Option and Equity Incentive Programs
The
Company
Long-term
equity incentive awards are a means of encouraging executive ownership of our
common stock, promoting executive retention, and providing a focus on long-term
corporate goals as well as increased stockholder value. The Compensation
Committee approves equity incentive award grants at year end following an
increase in responsibilities by an executive.
In
December 2006, the Compensation Committee developed a three year equity
award plan that would result in fair and equitable level of ownership in the
Company by the senior executives should the Company be successful in achieving
its long-term goals. The Compensation Committee’s plan involved the use of both
stock option grants, which vest over time, and restricted stock units that vest
based on corporate and individual performance. In order to provide a significant
incentive to our executives at a reasonable cost, the Compensation Committee
determined that a substantial portion of the equity awards to be issued in the
three-year plan would be granted in 2006, with vesting periods that extend over
four years. During the eight months ended August 31, 2009, the
Company’s issuances of long-term equity awards were based upon this
plan. The plan was terminated subsequent to the consummation of the
Merger.
Stock Options. Stock options
granted by the Company have an exercise price equal to the fair market value of
the Company’s common stock on the day of grant, typically vest over a four-year
period with 25% vesting 12 months after the vesting commencement date and the
remainder vesting ratably each month thereafter based upon continued employment,
and generally expire ten years after the date of grant. Incentive stock options
also include certain other terms necessary to assure compliance with the
Code. Subject to stockholder approval of the Raptor Pharmaceutical
Corp. 2010 Stock Incentive Plan, the Company intends to grant, in general,
options that vest over four years with 6/48ths vesting upon the six month
anniversary of the date of grant and 1/48th per
month thereafter with a 10 month expiry.
Restricted Stock and Restricted
Stock Units. The Company’s plans authorized it to grant restricted stock
and restricted stock units. Restricted stock units vest on the
attainment of a specified milestone or time period. Once the restricted stock
unit has vested, the executive has the ability to obtain shares of our common
stock.
In
determining the number of stock options and restricted stock units to be granted
to executives, the Compensation Committee took into account the individual’s
position, scope of responsibility, qualifications and experience, ability to
affect stockholder value, historic and recent performance, existing vested and
unvested awards, and the value of stock options in relation to the other
elements of the individual executive’s total compensation package. In order to
control overall stockholder dilution, the Compensation Committee also evaluated
the aggregate outstanding stock options to all employees in relation to those
granted to executives when determining the number of options and restricted
stock units that should be granted.
2009 Equity Awards. During
the eight months ended August 31, 2009, our executives were awarded stock
options in the amounts indicated in the section entitled “Grants of Plan-Based
Awards.” These awards were granted as a means of promoting executive retention
and focus on near-term corporate goals.
All
outstanding options issued pursuant to the Company’s 2006 Equity Incentive Plan
became fully vested in connection with the Merger.
Raptor
Pharmaceuticals Corp.
RPC
believes that equity grants provided its executive officers with a strong link
to RPC’s long-term performance, created an ownership culture, and closely
aligned the interests of its executive officers with the interests of its
stockholders. Because of the direct relationship between the value of an option
and the market price of RPC’s common stock, RPC believes that granting stock
options was the best method of motivating the executive officers to manage RPC
in a manner that was consistent with its stockholders and its
26
interests.
In addition, RPC believes that the vesting feature of its equity grants aids
officer retention because this feature provides an incentive to its executive
officers to remain in its employ during the vesting period. In determining the
size of equity grants to its executive officers, RPC’s compensation committee
considered company-level performance, the applicable executive officer’s
performance, the period during which an executive officer has been in a key
position with us, the amount of equity previously awarded to or owned by the
applicable executive officer, the vesting of such awards, the number of shares
available under RPC’s 2006 Equity Incentive Plan and the recommendations of
management and any other consultants or advisors with whom RPC’s compensation
committee chose to consult.
In
general, stock options were granted under RPC’s 2006 Equity Incentive Plan as an
incentive to aid in the retention of RPC’s executive officers and to align their
interests with those of RPC’s stockholders.
During
the fiscal year ended August 31, 2009, RPC did not have any formal plan
requiring it to grant, or not to grant, equity compensation on specified dates.
With respect to newly hired executives, RPC’s practice is typically to consider
stock option grants upon initial drafting of the executive’s employment
agreement followed by its stock option committee’s unanimous written consent
approving such stock option grant. The stock option exercise price is based on
the closing price the day preceding the later of stock option committee approval
or the executive’s first day of employment.
In
April 2009, pursuant to his employment agreement, RPC issued to
Dr. Rioux initial employment stock options to purchase 150,000 shares of
RPC’s common stock at an exercise price of $0.20 per share which vests 6/48ths on
the six-month anniversary of the grant date and 1/48th per
month thereafter and expire ten years from the grant date. No other stock
options were granted to the executive officers or members of the board of
directors of RPC during the fiscal year ended August 31, 2009. The options that
were granted to officers are set forth in the “Grants of Plan-Based Awards”
table below. All options granted to officers are intended to be qualified stock
options as defined under Section 422 of the Code to the extent possible.
Due to the Merger, the options to purchase 150,000 shares of common stock of RPC
described above were exchanged for options to purchase 34,969 shares of our
common stock at $0.85 per share.
Perquisites
The
Company
Broad-based
benefit plans are an integral component of competitive executive compensation
packages. Benefits include a 401(k) savings plan, health benefits such as
medical and dental plans, and disability and life insurance benefits. The
Company has no structured perquisite benefits, and does not provide any deferred
compensation programs or supplemental pensions to any executives. In its
discretion, the Compensation Committee may revise, amend or add to the
executive’s benefits if it deems it advisable.
Raptor
Pharmaceuticals Corp
During RPC’s fiscal year ended August
31, 2009, RPC’s executives did not receive any perquisites and were not entitled
to benefits that are not otherwise available to all of its employees. In this
regard, it should be noted that RPC did not provide pension arrangements,
post-retirement health coverage or similar benefits for its executives or
employees.
Defined
Contribution Plan
The
Company
Prior to
the Merger, the Company maintained a qualified retirement plan pursuant to Code
Section 401(k) covering substantially all employees, herein referred to as the
401(k) plan. The 401(k) plan allowed employees to make voluntary contributions.
The assets of the 401(k) plan were held in trust for participants and are
distributed upon the retirement, disability, death or other termination of
employment of the participant. The Company’s 401(k) plan was
terminated in connection with the consummation of the Merger.
Employees
who participated in the 401(k) plan were permitted to contribute to their 401(k)
account up to the maximum amount that varies annually in accordance with the
Code. The Company also made available to 401(k) plan participants the ability to
direct the investment of their 401(k) accounts in a well-balanced spectrum of
various investment funds.
27
Raptor Pharmaceuticals
Corp.
RPC maintains a qualified
retirement plan pursuant to Code Section 401(k) covering substantially all
employees, subject to certain minimum age and service requirements, herein
referred to as RPC’s 401(k) plan. RPC’s 401(k) plan allows employees to make
voluntary contributions. The assets of the 401(k) plan are held in trust for
participants and are distributed upon the retirement, disability, death or other
termination of employment of the participant. The RPC 401(k) plan
remained outstanding following consummation of the Merger.
Employees who participate in RPC’s
401(k) plan may contribute to their 401(k) account up to the maximum amount that
varies annually in accordance with the Code. RPC also makes available to 401(k)
plan participants the ability to direct the investment of their 401(k) accounts
in a well-balanced spectrum of various investment funds.
At RPC’s discretion, it provides for a
401(k) matching in the amount of 100% of the first 3% of employee deferral and
50% of the next 2% of employee deferral, in compliance with the Internal Revenue
Service’s Safe Harbor rules. As of March 28, 2009, in order to preserve
cash, RPC discontinued matching 401(k) for all of its employees.
Employment
Agreements
The
Company
Employment
Agreement with Ms. Graham
The
Company entered into an employment agreement with Ms. Graham on
December 14, 2006 which was amended and restated on September 1, 2008
in connection with Ms. Graham being appointed acting Chief Executive
Officer. On February 3, 2009 the Company entered into an amendment to such
amended and restated employment agreement extending the time of severance
payments to twelve (12) months following a change in control.
Ms. Graham’s employment agreement provided for an initial annual base
salary of not less than $350,000 and provided that she will be eligible to earn
an annual bonus for 2008 in an amount up to 150% of her target bonus of 45% of
her annual base salary, as determined by the board of directors.
Pursuant
to the terms of Ms. Graham’s employment agreement, in the event that
Ms. Graham’s employment was terminated without cause or was terminated
(either by the Company without cause or by her for good reason) three
(3) months prior to or twelve (12) months after a change in control,
Ms. Graham would have been entitled to continue to receive for twelve
months following the date of her termination or resignation (a) her base
salary and (b) an amount equal to one-twelfth of the greater of
(i) the average of the three annual bonuses paid to Ms. Graham by the
Company prior to the date of termination or resignation, (ii) the last
annual bonus paid to Ms. Graham by the Company prior to the date of
termination or resignation, or (iii) if the termination occurred within the
first 12 months following October 3, 2008, 45% of her base salary, which
payments would have been without reduction by any amount of Ms. Graham’s
earnings from any other employment during the 12-month severance period.
Additionally, under those circumstances, the vesting of each of
Ms. Graham’s equity awards would have been treated as if Ms. Graham
had completed an additional 12 months of service immediately before the date on
which her employment was terminated or she resigned. Ms. Graham’s execution
of a release in favor of the Company was a condition to the receipt of these
severance benefits, and she agreed to a non-solicitation obligation and to
confidentiality and assignment of inventions obligations in connection with her
employment agreement.
Under the
agreement, a change in control was deemed to have occurred under any of the
following circumstances, subject to certain exceptions and limitations:
(i) a person becomes the owner of 50% or more of the Company’s voting
power; (ii) the composition of the Company’s board of directors changed
over a period of 24 consecutive months or less in a way that resulted in a
majority of the Company’s board of directors (rounded up to the next whole
number) ceasing, by reason of one or more proxy contests for the election of
directors, to be comprised of individuals who either (A) had been directors
continuously since the beginning of the period or (B) had been elected or
nominated for election as directors during the period by at least two-thirds of
the directors described in clause (A) who were still in office at the time
the election or nomination was approved by the board of directors;
(iii) (A) a merger or consolidation occurred in which the Company is
not the surviving entity, or (B) any reverse merger occurred in which the
Company is not the surviving entity, or (C) any merger involving one of the
Company’s subsidiaries occurred in which the Company is a surviving entity, but
in each case, in which holders of our outstanding voting securities immediately
prior to such transaction, as such, did not hold, immediately following such
transaction, securities possessing 50% or more of the total combined voting
power of the surviving entity’s outstanding securities (in the case of clause
(A)) or our outstanding voting securities (in the case of clauses (B) and
(C)); or (iv) all or substantially all of our assets were sold of
transferred other than in connection with an internal reorganization or our
complete liquidation (other than a liquidation of us into a wholly-owned
subsidiary).
28
In September 2009, pursuant to the
Merger Agreement, Ms. Graham executed a second amendment and restatement of her
employment agreement which superseded her prior employment
agreement. Ms. Graham’s second amended and restated employment
agreement provides for a base salary of $29,167 per month through February 28,
2010 and eliminates the change in control provision described
above. The agreement also provides that prior to February 28, 2010,
if the Company enters into any of the following transactions, as approved by our
board of directors: (i) sell any equity securities of TPTX, Inc. to a third
party and the proceeds from such sale are used primarily for the development of
NGX426, (ii) complete a change of control transaction of 50% or more of TPTX,
Inc. or (iii) enter into a partnership, option, or similar arrangement for the
development of NGX426 and is for aggregate cash consideration (net of all costs
and expenses associated with the sale) received by us on or before February 28,
2010 of not less than $10 million, then promptly following the closing of the
sale, (A) we shall pay in cash consideration to Ms. Graham an amount equal to
(x) 3.0% of the aggregate cash consideration (net of all costs and expenses
associated with the sale) received by us in the sale multiplied by (y) 41%, and
(B) we shall pay the value in our restricted common stock to Ms. Graham an
amount equal to (a) 2.0% of the aggregate cash consideration (net of all costs
and expenses associated with the sale) received by the Company in the sale
multiplied by (b) 41%.
Employment
Agreement with Mr. Johnson
The
Company entered into an employment agreement with Mr. Johnson on
December 14, 2006 which was amended and restated on November 12, 2008
to comply with Section 409A of the Code and the final regulations issued
thereunder. On February 3, 2009, the Company entered into an amendment to
such amended and restated employment agreement extending the time of severance
payments to twelve (12) months following a change in control.
Mr. Johnson’s employment agreement provided for an initial annual base
salary of not less than $282,000 and provides that he would have been eligible
to earn an annual bonus for 2008 in an amount up to 150% of his target bonus of
35% of his annual base salary, as determined by the board of
directors.
Pursuant
to the terms of Mr. Johnson’s employment agreement, in the event that
Mr. Johnson’s employment was terminated without cause or was terminated
(either by the Company without cause or by him for good reason) three
(3) months prior to or twelve (12) months after a change in control,
Mr. Johnson would have been entitled to continue to receive for twelve
months following the date of his termination or resignation (a) his base
salary and (b) an amount equal to one-twelfth of the greater of
(i) the average of the three annual bonuses paid to Mr. Johnson by the
Company prior to the date of termination or resignation, (ii) the last
annual bonus paid to Mr. Johnson by the Company prior to the date of
termination or resignation, or (iii) if the termination occurs within the
first 12 months following November 12, 2008, 35% of his base salary, which
payments would have been without reduction by any amount of Mr. Johnson’s
earnings from any other employment during the 12-month severance period.
Additionally, under those circumstances, the vesting of each of
Mr. Johnson’s equity awards would have been treated as if Mr. Johnson
had completed an additional 12 months of service immediately before the date on
which his employment was terminated or he resigned. Mr. Johnson’s execution
of a release in favor of the Company was a condition to the receipt of these
severance benefits, and he agreed to a non-solicitation obligation and to
confidentiality and assignment of inventions obligations in connection with his
employment agreement. The definition of change in control in Mr. Johnson’s
employment agreement is the same as in Ms. Graham’s employment
agreement.
In September 2009, pursuant to the
Merger Agreement, Mr. Johnson executed a second amendment and restatement of his
employment agreement which superseded his prior employment
agreement. Mr. Johnson’s second amended and restated employment
agreement provides for a base salary of $23,500 per month through February 28,
2010 and eliminates the change in control provision described
above. The agreement also provides that prior to February 28, 2010,
if we enter into any of the following transactions, as approved by our board of
directors: (i) sell any equity securities of TPTX, Inc. to a third party and the
proceeds from such sale are used primarily for the development of NGX426, (ii)
complete a change of control transaction of 50% or more of TPTX, Inc. or (iii)
enter into a partnership, option, or similar arrangement for the development of
NGX426 and is for aggregate cash consideration (net of all costs and expenses
associated with the sale) received by us on or before February 28, 2010 of not
less than $10 million, then promptly following the closing of the sale, (A) we
shall pay in cash consideration to Mr. Johnson an amount equal to (x) 3.0% of
the aggregate cash consideration (net of all costs and expenses associated with
the sale) received by us in the sale multiplied by (y) 33%, and (B) we shall pay
the value in our restricted common stock to Mr. Johnson an amount equal to (x)
2.0% of the aggregate cash consideration (net of all costs and expenses
associated with the sale) received by the Company in the sale multiplied by (y)
33%.
Employment Agreement with
Mr. Schneider
The
Company entered into an employment agreement with Mr. Schneider on
February 1, 2007 which was amended and restated on November 12, 2008
to comply with Section 409A of the Code and the final regulations issued
thereunder. On February 3, 2009, the Company entered into an amendment to
such amended and restated employment agreement extending the time of severance
payments to twelve (12) months following a change in control.
Mr. Schneider’s employment agreement provides for an initial annual base
salary
29
of not
less than $217,700 and provided that he would be eligible to earn an annual
bonus for 2008 in an amount up to 150% of his target bonus of 25% of his annual
base salary, as determined by the board of directors.
Pursuant
to the terms of Mr. Schneider’s employment agreement, in the event that
Mr. Schneider’s employment was terminated without cause or was terminated
(either by the Company without cause or by him with good reason) three months
prior to or twelve (12) months after a change in control,
Mr. Schneider resigned for good reason, Mr. Schneider would have been
entitled to continue to receive for twelve months following the date of his
termination or resignation (a) his base salary and (b) an amount equal
to one-twelfth of the greater of (i) the average of the three annual
bonuses paid to Mr. Schneider by the Company prior to the date of
termination or resignation, (ii) the last annual bonus paid to
Mr. Schneider by the Company prior to the date of termination or
resignation, or (iii) if the termination occurs within the first 12 months
following November 12, 2008, 25% of his base salary, which payments would
have been without reduction by any amount of Mr. Schneider’s earnings from
any other employment during the 12-month severance period. Additionally, under
those circumstances, the vesting of each of Mr. Schneider’s equity awards
would have been treated as if Mr. Schneider had completed an additional 12
months of service immediately before the date on which his employment was
terminated or he resigned. Mr. Schneider’s execution of a release in favor
of the Company was a condition to the receipt of these severance benefits, and
he agreed to a non-solicitation obligation and to confidentiality and assignment
of inventions obligations in connection with his employment agreement. The
definition of change in control in Mr. Schneider’s employment agreement is
the same as in Ms. Graham’s employment agreement.
In
September 2009, pursuant to the Merger Agreement, Mr. Schneider executed a
second amendment and restatement of his employment agreement which superseded
his prior employment agreement. Mr. Schneider’s second amended and
restated employment agreement provides for a base salary of $18,142 per month
through February 28, 2010 and eliminates the change in control provision
described above. The agreement also provides that prior to February
28, 2010, if we enter into any of the following transactions, as approved by our
board of directors: (i) sell any equity securities of TPTX, Inc. to a
third party and the proceeds from such sale are used primarily for the
development of NGX426, (ii) complete a change of control transaction of 50% or
more of TPTX, Inc. or (iii) enter into a partnership, option, or similar
arrangement for the development of NGX426 and is for aggregate cash
consideration (net of all costs and expenses associated with the sale) received
by us on or before February 28, 2010 of not less than $10 million, then promptly
following the closing of the sale, (A) we shall pay in cash consideration to Mr.
Schneider an amount equal to (x) 3.0% of the aggregate cash consideration (net
of all costs and expenses associated with the sale) received by us in the sale
multiplied by (y) 26%, and (B) we shall pay the value in our restricted common
stock to Mr. Schneider an amount equal to (x) 2.0% of the aggregate cash
consideration (net of all costs and expenses associated with the sale) received
by the Company in the sale multiplied by (y) 26%.
Raptor
Pharmaceuticals Corp.
Drs. Starr
and Zankel and Ms. Tsuchimoto entered into employment agreements with our
wholly owned subsidiaries, Raptor Pharmaceutical Inc. and Raptor Pharmaceuticals
Corp., in May 2006. The employment agreements described below
remain operative following the consummation of the Merger.
Each
employment agreement has an initial term of three years commencing on
May 1, 2006 in the case of Dr. Starr and Ms. Tsuchimoto and
May 15, 2006 in the case of Dr. Zankel, and will automatically renew
for additional one year periods unless either party under such agreement
notifies the other that the term will not be extended. Under their agreements,
each officer is entitled to an annual salary ($150,000 each for Drs. Starr
and Zankel and $160,000 for Ms. Tsuchimoto), the amount of which may be
increased from time to time in the discretion of the board of directors, and
stock options to purchase 250,000 shares of our common stock, which vested over
three years with a six month cliff vest. Due to the Merger, the 250,000 shares
of RPC’s common stock described in the immediately preceding sentence were
exchanged for 58,281 shares of our common stock. Officers’
annual salaries are subject to annual review and potential increase by our board
of directors. In addition, they are each eligible to receive annual bonuses in
cash or stock options as awarded by our board of directors, at its
discretion.
On
September 7, 2007, RPC’s wholly-owned subsidiary, Raptor Therapeutics Inc.,
entered into an employment agreement with Ted Daley for a term of 18 months
which will automatically renew for additional one year periods unless either
party under such agreement notifies the other that the term will not be
extended. Under Mr. Daley’s agreement, Mr. Daley is entitled to an
annual salary of $150,000 and stock options to purchase 150,000 shares of RPC’s
common stock at an exercise price of $0.52 per share, which vest over four years
with a six month cliff vest. Due to the Merger, the options to purchase 150,000
shares of RPC’s common stock described in the immediately preceding sentence
were exchanged for options to purchase 34,969 shares of our common stock at
an
30
exercise
price of $2.23 per share. In August 2008, RPC’s compensation committee
recommended, and its full board of directors approved, a stock option grant to
Mr. Daley for the purchase of 100,000 shares of RPC’s common stock at an
exercise price of $0.44 per share, which vests 6/48ths upon the six-month
anniversary of the grant date and 1/48th per month thereafter and expires ten
years from the grant date. Due to the Merger, the options to purchase 100,000
shares of RPC’s common stock described in the immediately preceding sentence
were exchanged for options to purchase 23,313 shares of our common stock at
$1.88 per share. Mr. Daley’s 2008 stock options were granted in order to
increase his initial employment stock option grant to be equal to the stock
option grants of RPC’s other executive officers. Mr. Daley’s annual salary
is subject to annual review and potential increase by our board of directors. In
addition, Mr. Daley is eligible to receive certain bonuses in cash and
stock options based on triggering events related to the successful development
of our ConviviaTM
product development program.
Each of
Drs. Starr’s and Zankel’s, Ms. Tsuchimoto’s and Mr. Daley’s respective
employment agreements were amended effective as of January 1, 2009 for
purposes of bringing such employment agreements into compliance with the
applicable provisions of Section 409A of the Code and the Treasury
Regulations and interpretive guidance issued thereunder. In April 2009, RPC
executed an employment offer to Dr. Rioux with an annual base salary of
$280,000.
A
description of the terms of these agreements, including post-employment payments
and triggers, is included in the section titled “Executive Payments Upon
Termination.”
For
further detail please refer to the officers’ respective employment agreements
filed by RPC as exhibits 10.5, 10.6 and 10.7 to RPC’s Current Report on Form
8-K, which was filed with the SEC on May 26, 2006, exhibits 10.1, 10.3, 10.4 and
10.7 to RPC’s Current Report on Form 8-K, which was filed with the SEC on
January 5, 2009, exhibit 10.1 to RPC’s Form 10-QSB, which was filed with
the SEC on January 14, 2008, and exhibit 10.9 to RPC’s Current Report on
Form 8-K, which was filed with the SEC on April 14, 2009.
Equity
Incentive Plan
The
Company
For a
description of the Company’s equity incentive plan and grants made thereunder,
please see “Stock Option and Equity Incentive Programs” above.
Raptor
Pharmaceuticals Corp.
In
May 2006, the stockholders of RPC approved its 2006 Equity Incentive Plan.
The 2006 Equity Incentive Plan life is ten years and allows for the granting of
options to employees, directors and consultants. Typical option grants are for
ten years with exercise prices at or above market price based on the last
closing price as of the date prior to the grant date and vest over four years as
follows: 6/48ths on the six-month anniversary of the date of grant and 1/48ths
per month thereafter. The 2006 Equity Incentive Plan was assumed by
the Company in connection with the consummation of the Merger.
Accounting
and Tax Considerations
The
Company selects and implements its various elements of compensation for their
ability to help the Company achieve its performance and retention goals and not
based solely on any unique or preferential financial accounting treatment. In
this regard, Section 162(m) of the Code generally sets a limit of
$1.0 million on the amount of annual compensation (other than certain
enumerated categories of performance-based compensation) that the Company may
deduct for federal income tax purposes with respect to its executive officers
(other than its chief financial officers) listed in the “Summary Compensation
Table” below. Compensation realized upon the exercise of stock options is
considered performance based if, among other requirements, the plan pursuant to
which the options are granted have been approved by the Company’s stockholders
and have a limit on the total number of shares that may be covered by options
issued to any plan participant in any specified period.
Stock
options granted under the Company’s 2006 Equity Incentive Plan and its other
stock option plans are considered performance based. Therefore, any compensation
realized upon the exercise of stock options granted under such plans will be
excluded from the deductibility limits of Section 162(m) of the Code. While
the Company has not adopted a policy requiring that all compensation be
deductible, it considered the consequences of Section 162(m) of the Code in
designing its compensation practices.
Generally,
the exercise of an incentive stock option does not trigger any recognition of
income or gain to the holder but may be subject to Alternative Minimum Tax. If
the stock is held until at least one year after the date of exercise (or two
years from the date the option is granted, whichever is later), all of the gain
on the sale of the stock, when recognized for income tax purposes, will
be
31
capital
gain, rather than ordinary income, to the recipient. Consequently, neither RPC
nor the Company received tax deductions. For stock options that do not qualify
as incentive stock options, RPC was not and the Company is not entitled to tax
deductions in the year in which the stock options are exercised equal to the
spread between the exercise price and the fair market value of the stock on the
exercise date. The holders of the non-qualified stock options are generally
taxed on this same amount in the year of exercise. If the holder of an incentive
stock option exercises their options and sells the stock received from such
exercise before the one year holding period or before two years from grant date,
this is known as a disqualifying disposition, which will be subject to ordinary
income tax for the option holder and would be tax deductible to RPC or the
Company.
Stock
Ownership Guidelines
Although
the Company has not adopted any stock ownership guidelines, the Company believes
that its compensation of executive officers, which includes the use of stock
options, results in an alignment of interest between these individuals and the
Company’s stockholders.
Benchmarking
and Consultants
The
Compensation Committees reviews the history of all the elements of each
executive officer’s total compensation over the Company’s short history and
compares the compensation of the executive officers with that of the executive
officers in an appropriate market comparison group comprised of other
biotechnology companies similar in size, stage of development and other
characteristics.
Named Executive Officer
Compensation
The
Company
Summary
Compensation Table
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Name and
Principal Position
|
|
Year*
|
|
Salary
($)
|
|
Bonus
($)
|
|
Stock
Awards
(1)($)
|
|
|
Option
Awards
(1)($)
|
|
Non-Equity
Incentive
Plan
Compensation
(2)($)
|
|
All Other
Compensation
($)
|
|
|
Total
($)
|
|
Evelyn
A. Graham
|
|
2009
|
|
$
|
266,987
|
|
—
|
|
$
|
—
|
|
|
$
|
77,327
|
|
$
|
—
|
|
$
|
1,056
|
|
|
$
|
345,370
|
|
Former
Chief Executive Officer, Currently President of TPTX, Inc., our
wholly-owned subsidiary
|
|
2008
|
|
|
304,667
|
|
—
|
|
|
34,270
|
|
|
|
45,206
|
|
|
—
|
|
|
—
|
|
|
|
384,143
|
|
|
|
2007
|
|
|
271,200
|
|
—
|
|
|
34,175
|
|
|
|
40,418
|
|
|
69,200
|
|
|
—
|
|
|
|
414,993
|
|
|
|
|
|
|
|
|
|
|
|
Craig
A. Johnson
|
|
2009
|
|
|
215,115
|
|
—
|
|
|
—
|
|
|
|
68,801
|
|
|
—
|
|
|
225
|
|
|
|
284,141
|
|
Former
Chief Financial Officer, Currently Vice President, Finance of TPTX, Inc.,
our wholly-owned subsidiary
|
|
2008
|
|
|
282,000
|
|
—
|
|
|
34,270
|
|
|
|
44,214
|
|
|
—
|
|
|
—
|
|
|
|
360,484
|
|
|
|
2007
|
|
|
271,200
|
|
—
|
|
|
34,175
|
|
|
|
40,431
|
|
|
69,200
|
|
|
—
|
|
|
|
415,006
|
|
|
|
|
|
|
|
|
|
|
|
Paul
R. Schneider
|
|
2009
|
|
|
157,902
|
|
—
|
|
|
—
|
|
|
|
89,464
|
|
|
—
|
|
|
121
|
|
|
|
247,487
|
|
Former
VP, General Counsel, Currently VP, General Counsel of TPTX, Inc., our
wholly-owned subsidiary(2)
|
|
2008
|
|
|
217,700
|
|
—
|
|
|
1,007
|
|
|
|
75,208
|
|
|
—
|
|
|
—
|
|
|
|
293,915
|
|
* 2007
and 2008 represents the fiscal years ended December 31, 2007 and 2008,
respectively. 2009 represents the period from January 1, 2009
to August 31, 2009, which is the Company’s new fiscal year
end.
|
|
(1) The
amounts shown reflect the dollar amount recognized for financial statement
reporting purposes for the years ended December 31, 2007 and 2008 and
for the eight months ended August 31, 2009, in accordance with ASC Topic
718 of restricted stock units granted pursuant to the Company’s 2006
Equity Incentive Plan or stock option grants pursuant to both the 2000
Stock Option Plan and the 2006 Equity Incentive Plan and thus may include
amounts from restricted stock units or stock options granted in and prior
to 2009, 2008, and 2007, respectively. Assumptions used in the calculation
of these amounts are included in the footnotes of the consolidated
Financial Statements included in Part IV, Item 15, of the Company’s
Annual Report on Form 10-K filed with the SEC in March
2009.
|
|
(2) Mr.
Schneider was not a named executive officer in 2007.
32
|
Raptor
Pharmaceuticals Corp.
Summary
Compensation Table
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|
|
|
|
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|
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|
|
|
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Change
in
|
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Pension
|
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Fiscal
|
|
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|
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Non-equity
|
|
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Value
and
|
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|
|
|
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|
|
|
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|
Year
|
|
|
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|
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Stock
|
|
|
Option
|
|
|
Incentive
Plan
|
|
|
NQDC
|
|
|
All
Other
|
|
|
|
|
|
|
|
|
(ending
|
|
|
Salary
|
|
|
Bonus
|
|
|
Awards
|
|
|
Awards
|
|
|
Compensation
|
|
|
Earnings
|
|
|
Compensation
|
|
|
Total
|
|
|
|
Name
and Principal Position
|
|
August
31)
|
|
|
$(1)
|
|
|
$
|
|
|
$
|
|
|
$(2)
|
|
|
$
|
|
|
$
|
|
|
$(3)
|
|
|
$
|
|
|
|
Christopher
M. Starr, Ph.D.
|
|
|
2009
|
|
|
|
213,610
|
|
|
|
—
|
|
|
|
—
|
|
|
|
27,883
|
|
|
|
—
|
|
|
|
—
|
|
|
|
6,399
|
|
|
|
247,892
|
|
|
|
Chief
Executive Officer
|
|
|
2008
|
|
|
|
156,116
|
|
|
|
—
|
|
|
|
—
|
|
|
|
42,864
|
|
|
|
—
|
|
|
|
—
|
|
|
|
7,188
|
|
|
|
206,168
|
|
|
|
and
Director
|
|
|
2007
|
|
|
|
150,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
40,612
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2,789
|
|
|
|
193,401
|
|
|
|
Todd
C. Zankel, Ph.D.
|
|
|
2009
|
|
|
|
192,300
|
|
|
|
—
|
|
|
|
—
|
|
|
|
27,883
|
|
|
|
—
|
|
|
|
—
|
|
|
|
5,758
|
|
|
|
225,941
|
|
|
|
Chief
Scientific
|
|
|
2008
|
|
|
|
154,067
|
|
|
|
—
|
|
|
|
—
|
|
|
|
42,864
|
|
|
|
—
|
|
|
|
—
|
|
|
|
7,106
|
|
|
|
204,037
|
|
|
|
Officer
|
|
|
2007
|
|
|
|
150,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
40,612
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2,789
|
|
|
|
193,401
|
|
|
|
Kim
R. Tsuchimoto, C.P.A.
|
|
|
2009
|
|
|
|
208,401
|
|
|
|
—
|
|
|
|
—
|
|
|
|
33,256
|
|
|
|
—
|
|
|
|
—
|
|
|
|
6,149
|
|
|
|
247,806
|
|
|
|
Chief
Financial Officer,
|
|
|
2008
|
|
|
|
179,115
|
|
|
|
—
|
|
|
|
—
|
|
|
|
47,881
|
|
|
|
—
|
|
|
|
—
|
|
|
|
8,171
|
|
|
|
235,167
|
|
|
|
Secretary,
And
|
|
|
2007
|
|
|
|
163,333
|
|
|
|
25,000
|
|
|
|
—
|
|
|
|
38,739
|
|
|
|
—
|
|
|
|
—
|
|
|
|
4,098
|
|
|
|
231,170
|
|
|
|
Treasurer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ted
Daley,
|
|
|
2009
|
|
|
|
208,401
|
|
|
|
40,000
|
|
|
|
27,000
|
|
|
|
22,077
|
|
|
|
—
|
|
|
|
—
|
|
|
|
7,806
|
|
|
|
238,284
|
|
|
|
President,
Raptor
|
|
|
2008
|
|
|
|
146,962
|
|
|
|
40,000
|
|
|
|
56,000
|
|
|
|
14,594
|
|
|
|
—
|
|
|
|
—
|
|
|
|
7,866
|
|
|
|
265,422
|
|
|
|
Therapeutics
Inc. (f/k/a
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bennu
Pharmaceuticals Inc.)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Patrice
P. Rioux, M.D., Ph.D.
|
|
|
2009
|
|
|
|
94,759
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,696
|
|
|
|
—
|
|
|
|
—
|
|
|
|
419
|
|
|
|
96,874
|
|
|
|
Chief
Medical Officer, Raptor
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Therapeutics
Inc. (f/k/a Bennu Pharmaceuticals Inc.)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Dr. Starr
and Ms. Tsuchimoto’s full time employment commenced on May 1, 2006 at
an annual base salary of $150,000 and $160,000, respectively.
Ms. Tsuchimoto’s annual base salary increased to $176,000 in
June 2007 and to $208,401 in July 2008. Dr. Starr’s salary
increased to $213,610 in July 2008. Dr. Zankel’s full time
employment commenced on May 15, 2006 at an annual base salary of
$150,000 which increased to $192,300 in July 2008. Mr. Daley’s
full-time employment commenced on September 10, 2007 at an annual
base salary of $150,000, which increased to $208,401 in July 2008.
Dr. Rioux’s full time employment commenced on April 15, 2009 at
an annual base salary of $280,000.
|
|
|
|
|
|
|
|
(2)
|
|
This
column represents the dollar amount recognized for financial statement
reporting purposes with respect to the fiscal years ended August 31, 2009,
2008 and 2007 for the fair value of the stock options granted to each of
RPC’s named executive officers since inception, in accordance with ASC
Topic 718. The amounts shown exclude the impact of estimated forfeitures
related to service-based vesting conditions. For additional information on
the valuation assumptions with respect to the fiscal years ended August
31, 2008 and 2007 grants, please refer to the notes in the financial
statements included in RPC’s annual report on Form 10-K filed with the SEC
on October 28, 2009. These amounts reflect RPC’s accounting expense
for these awards, and do not correspond to the actual value that will be
recognized by the named executive officers. In May 2006,
Drs. Starr and Zankel and Ms. Tsuchimoto were granted stock
options to purchase 250,000 shares of RPC’s common stock at an exercise
price of $0.66 per share for Drs. Starr and Zankel and $0.60 per
share for Ms. Tsuchimoto. The options vested 6/36
ths on the six month anniversary of the grant date and 1/36
th per month thereafter and expire 10 years from grant date.
Due to the Merger, the options to purchase 250,000 shares of RPC’s common
stock described above were exchanged for options to purchase 58,281 shares
of our common stock at respective exercise prices of $2.83 per share for
Drs. Starr and Zankel and $2.57 per share for
Ms. Tsuchimoto.
|
|
|
|
|
|
|
|
(3)
|
|
All
Other Compensation includes 401(k) matching funded by RPC through
March 28, 2009, at which time such matching was discontinued, and
life insurance premiums paid by RPC where the executive is the
beneficiary.
|
Stock
Option Grants and Exercises During the Fiscal Year Ended August 31,
2009
Grants
of Plan-Based Awards Table
The
following table sets forth information concerning stock option grants made
during the fiscal year ended August 31, 2009 to the Company’s executive officers
named in the “Summary Compensation Table” above. The fair value information in
the far right
33
column is
for illustration purposes only and is not intended to predict the future price
of the Company’s common stock. The actual future value of such stock options
will depend on the market value of the Company’s common stock.
The
Company
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All
Other
|
|
|
All
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
Options
|
|
|
Exercise
|
|
|
Grant
|
|
|
|
|
|
Estimated
|
|
|
Estimated
|
|
|
Awards:
|
|
|
Awards:
|
|
|
or
Base
|
|
|
Date
|
|
|
|
|
|
Future
Payouts
|
|
|
Future
Payouts
|
|
|
Number
|
|
|
Number
of
|
|
|
Price
of
|
|
|
Fair
|
|
|
|
|
|
Under
Non-Equity
|
|
|
Under
Equity
|
|
|
of
Shares
|
|
|
Securities
|
|
|
Option
|
|
|
Value
of
|
|
|
|
|
|
Incentive
Plan Awards
|
|
|
Incentive
Plan Awards
|
|
|
of
Stock
|
|
|
Underlying
|
|
|
Awards
|
|
|
Option
|
|
|
|
Grant
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
or
Units
|
|
|
Options
(#)
|
|
|
|
|
|
Awards
|
|
|
Name
|
Date
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
(#)
|
|
|
(1)
|
|
|
($/Sh)(2)
|
|
|
($)
(3)
|
|
|
Evelyn
A. Graham
|
|
2/3/2009
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
17,464
|
|
|
|
3.91
|
|
|
|
47,190
|
|
Craig
A. Johnson
|
|
2/3/2009
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
14,705
|
|
|
|
3.91
|
|
|
|
39,325
|
|
Paul
R. Schneider
|
|
2/3/2009
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
14,705
|
|
|
|
3.91
|
|
|
|
39,325
|
|
|
(1) This
column represents the dollar amount recognized for financial statement
reporting purposes with respect to the eight months ended August 31, 2009
for the fair value of the stock options granted to each of the Company’s
named executive officers in the eight months ended August 31, 2009 in
accordance with ASC Topic 718. These amounts reflect the Company’s
accounting expense for these awards, and do not correspond to the actual
value that will be recognized by the named executive
officers. All outstanding options issued pursuant to the
Company’s 2006 Equity Incentive Plan became fully vested in connection
with the Merger.
|
Raptor
Pharmaceuticals Corp.
The
following table sets forth information concerning stock option grants made
during the fiscal year ended August 31, 2009 to RPC’s executive officers named
in the “Summary Compensation Table” above. The fair value information in the far
right column is for illustration purposes only and is not intended to predict
the future price of the Company’s common stock. The actual future value of such
stock options will depend on the market value of the Company’s common
stock.
Grants
of Plan-Based Awards Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All
Other
|
|
|
All
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
Options
|
|
|
Exercise
|
|
|
Grant
|
|
|
|
|
|
|
|
|
|
Estimated
|
|
|
Estimated
|
|
|
Awards:
|
|
|
Awards:
|
|
|
or
Base
|
|
|
Date
|
|
|
|
|
|
|
|
|
|
Future
Payouts
|
|
|
Future
Payouts
|
|
|
Number
|
|
|
Number
of
|
|
|
Price
of
|
|
|
Fair
|
|
|
|
|
|
|
|
|
|
Under
Non-Equity
|
|
|
Under
Equity
|
|
|
of
Shares
|
|
|
Securities
|
|
|
Option
|
|
|
Value
of
|
|
|
|
|
|
|
|
|
|
Incentive
Plan Awards
|
|
|
Incentive
Plan Awards
|
|
|
of
Stock
|
|
|
Underlying
|
|
|
Awards
|
|
|
Option
|
|
|
|
|
|
Grant
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
or
Units
|
|
|
Options
(#)
|
|
|
|
|
|
Awards
|
|
|
|
Name
|
|
Date
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
(#)
|
|
|
(1)
|
|
|
($/Sh)(2)
|
|
|
($)
(3)
|
|
|
|
Patrice
P. Rioux, M.D., Ph.D.
|
|
|
4/16/09
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
34,969
|
|
|
|
0.85
|
|
|
|
1,696
|
|
|
|
|
|
|
|
|
|
(1)
|
|
These
stock options vest 6/48ths
on the six-month anniversary of the grant date and 1/48th
per month thereafter. The options expire 10 years from grant date.
The original stock options described under this column were originally
exercisable for 150,000 shares of RPC’s common stock at an exercise price
of $0.20 per share. Due to the Merger, such original options to purchase
150,000 shares of RPC’s common stock were exchanged for options to
purchase 34,969 shares of our common stock at $0.85 per
share.
|
|
|
|
|
|
|
|
(2)
|
|
This
column shows the exercise price for the stock options granted, which was
the closing price of RPC’s common stock one day preceding the stock option
grant date. As described in the immediately preceding footnote, the
original stock options were exercisable at $0.20 per
share.
|
|
|
|
|
|
|
|
(3)
|
|
This
column represents the dollar amount recognized for financial statement
reporting purposes with respect to RPC’s fiscal year ended August 31, 2009
for the fair value of the stock options granted to each of the named
executive officers in the fiscal year ended August 31, 2009 in accordance
with ASC Topic 718. The amounts shown exclude the impact of estimated
forfeitures related to service-based vesting conditions. These amounts
reflect RPC’s accounting expense for these awards, and do not correspond
to the actual value that will be recognized by the named executive
officers.
|
34
Outstanding Equity Awards at
August 31, 2009
The
Company
The
following table sets forth certain information with respect to outstanding stock
option awards of the executive officers of the Company as of the end of the
Company’s fiscal year ended August 31, 2009. All outstanding options
issued pursuant to the Company’s 2006 Equity Incentive Plan became fully vested
in connection with the Merger in September 2009.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
|
|
|
Option
Exercise
Price
($)
|
|
Option
Expiration
Date
|
|
Equity Incentive Plan
Awards: Number of
Unearned Shares,
Units or Other Rights
That Have Not Vested
(#)
|
|
|
Equity Incentive Plan
Awards: Market or
Payout Value of
Unearned Shares,
Units or Other Rights
That Have Not Vested
($)
|
|
Evelyn
A. Graham
|
|
477
|
|
—
|
|
|
21.08
|
|
2/04/2014
|
|
—
|
|
|
—
|
|
|
|
1,910
|
|
—
|
|
|
21.08
|
|
6/12/2015
|
|
—
|
|
|
—
|
|
|
|
980
|
|
490
|
|
|
108.29
|
|
12/13/2016
|
|
—
|
|
|
—
|
|
|
|
208
|
|
292
|
|
|
49.30
|
|
12/05/2017
|
|
—
|
|
|
—
|
|
|
|
7,353
|
|
10,294
|
|
|
4.59
|
|
10/14/2018
|
|
—
|
|
|
—
|
|
|
|
17,646
|
|
—
|
|
|
3.91
|
|
2/22/2019
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Craig
A. Johnson
|
|
477
|
|
—
|
|
|
21.08
|
|
2/04/2014
|
|
—
|
|
|
—
|
|
|
|
1,910
|
|
—
|
|
|
21.08
|
|
6/12/2015
|
|
—
|
|
|
—
|
|
|
|
980
|
|
490
|
|
|
108.29
|
|
12/13/2016
|
|
—
|
|
|
—
|
|
|
|
208
|
|
292
|
|
|
49.30
|
|
12/05/2017
|
|
—
|
|
|
—
|
|
|
|
6,127
|
|
8,578
|
|
|
4.59
|
|
10/14/2018
|
|
—
|
|
|
—
|
|
|
|
14,705
|
|
—
|
|
|
3.91
|
|
2/22/2019
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paul
R. Schneider
|
|
2,022
|
|
1,212
|
|
|
132.09
|
|
1/31/2017
|
|
—
|
|
|
—
|
|
|
|
120
|
|
166
|
|
|
49.30
|
|
12/05/2017
|
|
—
|
|
|
—
|
|
|
|
2,940
|
|
4,118
|
|
|
4.59
|
|
10/14/2018
|
|
—
|
|
|
—
|
|
|
|
14,705
|
|
—
|
|
|
3.91
|
|
2/22/2019
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Raptor
Pharmaceuticals Corp.
The
following table sets forth certain information with respect to outstanding stock
option awards of RPC’s executive officers for the fiscal year ended August 31,
2009.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option
Awards
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
Plan
|
|
|
|
|
|
|
|
|
|
Number
of
|
|
Awards:
|
|
|
|
|
|
|
|
Number
of
|
|
Securities
|
|
Number
of
|
|
|
|
|
|
|
|
Securities
|
|
Underlying
|
|
Securities
|
|
|
|
|
|
|
|
Underlying
|
|
Unexercised
|
|
Underlying
|
|
|
|
|
|
|
|
Unexercised
|
|
Options
|
|
Unexercised
|
|
Option
|
|
Option
|
|
|
|
Options
|
|
Unexercisable
|
|
Unearned
|
|
Exercise
|
|
Expiration
|
|
Name
|
|
Exercisable
(#)
|
|
(#)
|
|
Options
(#)
|
|
Price
($)
|
|
Date
|
|
Christopher
M. Starr, Ph.D.
|
|
58,281
(1)
|
|
—
|
|
—
|
|
2.83
(1)
|
|
5/26/2016
|
|
Todd
C. Zankel, Ph.D.
|
|
58,281
(1)
|
|
—
|
|
—
|
|
2.83
(1)
|
|
5/26/2016
|
|
Kim
R. Tsuchimoto, C.P.A.
|
|
58,281
(1)
|
|
—
|
|
—
|
|
2.57
(1)
|
|
5/26/2016
|
|
|
|
3,788
(2)
|
|
3,260
|
|
—
|
|
2.57
(2)
|
|
6/14/2017
|
|
|
|
6,314
(2)
|
|
5,343
|
|
—
|
|
2.57
(2)
|
|
6/14/2017
|
|
Ted
Daley
|
|
16,755
(2)
|
|
18,214
|
|
—
|
|
2.23
(2)
|
|
9/10/2017
|
|
|
|
5,828
(2)
|
|
17,485
|
|
—
|
|
1.88
(2)
|
|
8/12/2018
|
|
Patrice
P. Rioux, M.D., Ph.D.
|
|
0
(2)
|
|
34,969
|
35
|
—
|
|
0.85
(2)
|
|
4/16/2019
|
|
|
|
|
|
(1)
|
|
Stock
options vest 6/36ths
on the six month anniversary of grant date and 1/36th
per month thereafter.
|
|
|
|
|
|
(2)
|
|
Stock
options vest 6/48ths
on the six month anniversary of grant date and 1/48th
per month thereafter.
|
Option
Exercises
There
were no option exercises by executive officers of RPC or the Company during the
fiscal year ended August 31, 2009 or the eight months ended August 31, 2009,
respectively.
Post-Employment
Compensation
The
Company
Change in
control arrangements are designed to retain executives and provide continuity of
management in the event of a change in control. The Company’s former Chief
Executive Officer, its former Chief Financial Officer and its former Vice
President and General Counsel were parties to employment agreements which
included change in control provisions; however, such employment agreements were
amended and restated in connection with the consummation of the Merger to, among
other things, eliminate the change in control provisions. These agreements are
described in more detail elsewhere in this proxy statement, including the
section titled “Elements of Compensation – The Company – Base Salary” and
“Executive Payments Upon Termination – The Company.”
Raptor
Pharmaceuticals Corp.
Employment
Agreements
Drs. Starr
and Zankel and Ms. Tsuchimoto entered into employment agreements with our
wholly owned subsidiaries, Raptor Pharmaceutical Inc. and Raptor Pharmaceuticals
Corp., in May 2006. On September 29, 2009, the closing date of the Merger,
each employment agreement discussed below was assume by us. Each
employment agreement has an initial term of three years commencing on
May 1, 2006 in the case of Dr. Starr and Ms. Tsuchimoto and
May 15, 2006 in the case of Dr. Zankel, and will automatically renew
for additional one year periods unless either party under such agreement
notifies the other that the term will not be extended. Under their agreements,
each officer is entitled to an annual salary ($150,000 each for Drs. Starr
and Zankel and $160,000 for Ms. Tsuchimoto), the amount of which may be
increased from time to time in the discretion of our board of directors, and
stock options to purchase 250,000 shares of RPC’s common stock, which vested
over three years with a six month cliff vest. Due to the Merger, the 250,000
shares of RPC’s common stock described in the immediately preceding sentence
were exchanged for 58,281 shares of our common stock. Officers’
annual salaries are subject to annual review and potential increase by our board
of directors. In addition, they are each eligible to receive annual bonuses in
cash or stock options as awarded by our board of directors, at its discretion.
On September 7, 2007, our wholly-owned subsidiary, Raptor Therapeutics
Inc., entered into an employment agreement with Ted Daley for a term of 18
months and will automatically renew for additional one year periods unless
either party under such agreement notifies the other that the term will not be
extended. Under Mr. Daley’s agreement, Mr. Daley is entitled to an annual
salary of $150,000 and stock options to purchase 150,000 shares of RPC’s common
stock, which vest over four years with a six month cliff vest. Due to the
Merger, the options to purchase 150,000 shares of RPC’s common stock described
in the immediately preceding sentence were exchanged for options to purchase
34,969 shares of our common stock. In August 2008, RPC’s
Compensation Committee recommended, and its full board of directors approved, a
stock option grant to Mr. Daley for the purchase of 100,000 shares of RPC’s
common stock at an exercise price of $0.44 per share, which vests 6/48ths upon
the six-month anniversary of the grant date and 1/48th per month thereafter and
expires ten years from the grant date. Due to the Merger, the options to
purchase 100,000 shares of RPC’s common stock described in the immediately
preceding sentence were exchanged for options to purchase 23,313 shares of our
common stock. at $1.88 per share. Mr. Daley’s 2008 stock option was granted
in order to increase his initial employment stock option grant to be equal to
the stock option grants of RPC’s other executive officers. Mr. Daley’s
annual salary is subject to annual review and potential increase by our board of
directors. In addition, Mr. Daley is eligible to receive certain bonuses in
cash and stock options based on triggering events related to the successful
development of our Convivia TM
product development program. Each of Drs. Starr’s and Zankel’s,
Ms. Tsuchimoto’s and Mr. Daley’s respective employment agreements were
amended effective as of January 1, 2009 for purposes of bringing such
employment agreements into compliance with the applicable provisions of
Section 409A of the Code and the Treasury Regulations and interpretive
guidance issued thereunder. In April 2009, RPC executed an employment offer
to Dr. Rioux with an annual base salary of $280,000.
Except
for Dr. Rioux and Mr. Daley, if any officer’s employment is constructively
terminated or terminated by us without cause, including in the event of a change
of control, then such officer will be entitled to continue to receive his or her
base salary, bonuses and other benefits for a period of 12 months from the
date of termination. If Dr. Rioux’s or Mr. Daley’s employment is
constructively
36
terminated
or terminated by us without cause, including in the event of a change of
control, then he will be entitled to continue to receive his or her base salary
and other certain benefits for a period of 6 months from the date of
termination.
Except
for Dr. Rioux, if any officer’s employment is terminated for cause, by
death or due to a voluntary termination, we shall pay to such officer, or in the
case of termination due to death, his or her estate, the compensation and
benefits payable through the date of termination.
Except
for Dr. Rioux, if any officer’s employment is terminated due to disability,
we shall pay to such officer the compensation and benefits payable through the
date of termination and shall continue to pay such officer salary and a prorated
bonus for three months following such termination, at the end of which time such
officer shall receive short-term and eventually long-term disability benefits
pursuant to our current disability insurance plans.
Executive
Payments Upon Termination
The
Company
In
September 2009, the Company entered into a second amendment and restatement of
employment agreements for Ms. Graham, Mr. Johnson and Mr. Schneider as former
executive officers of the Company, which agreements continue their base salary
during a transition period ending on February 28, 2010. The Company
is obligated to provide health insurance benefits to the three such former
executives until August 31, 2010.
Raptor
Pharmaceuticals Corp.
The
following table quantifies the amounts that we would owe each of our executive
officers upon each of the termination triggers discussed above under
“Post-Employment Compensation—Raptor Pharmaceuticals Corp.”:
Christopher
M. Starr, Ph.D.
Chief
Executive Officer, President and Director
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Without
Cause
|
|
|
CIC
Whether
|
|
|
Executive
Benefits and Payments
|
|
|
|
|
|
|
|
|
|
or
Constructive
|
|
|
or
Not Services
|
|
|
Upon
Termination
|
|
Disability
|
|
|
Death
|
|
|
Termination
|
|
|
are
Terminated (1)
|
|
|
Severance
Payments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base
Salary
|
|
$
|
53,403
|
(3)
|
|
$
|
—
|
|
|
$
|
213,610
|
(2)
|
|
$
|
213,610
|
(2)
|
|
Short-Term
Incentive
|
|
|
—
|
(4)
|
|
|
—
|
(4)
|
|
|
—
|
(5)
|
|
|
—
|
(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
of Unvested Equity Awards and Accelerated Vesting Stock
Options
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
53,403
|
|
|
$
|
—
|
|
|
$
|
213,610
|
|
|
$
|
213,610
|
|
|
|
|
|
|
(1)
|
|
“CIC”
means change in control, as defined in the officer’s employment
agreement.
|
|
|
|
|
|
(2)
|
|
12 months
base salary.
|
|
|
|
|
|
(3)
|
|
3 months
base salary.
|
|
|
|
|
|
(4)
|
|
Pro
rata bonus.
|
|
|
|
|
|
(5)
|
|
Full
cash bonus otherwise payable.
|
|
|
|
|
|
(6)
|
|
Vesting
of all stock options granted in accordance with ASC Topic 718. The amount
shown excludes the impact of estimated forfeitures related to
service-based vesting conditions. This amount reflects our accounting
expense for these awards, and does not correspond to the actual value that
will be recognized by the officer.
|
37
Todd
C. Zankel, Ph.D.
Chief
Scientific Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
CIC
Whether
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Without
Cause
|
|
|
or
Not Services
|
|
|
|
Executive
Benefits and Payments
|
|
|
|
|
|
|
|
|
|
or
Constructive
|
|
|
are
|
|
|
|
Upon
Termination
|
|
Disability
|
|
|
Death
|
|
|
Termination
|
|
|
Terminated
(1)
|
|
|
|
Severance
Payments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base
Salary
|
|
$
|
48,075
|
(3)
|
|
$
|
—
|
|
|
$
|
192,300
|
(2)
|
|
$
|
192,300
|
(2)
|
|
|
Short-Term
Incentive
|
|
|
—
|
(4)
|
|
|
—
|
(4)
|
|
|
—
|
(5)
|
|
|
—
|
(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
of Unvested Equity Awards and Accelerated Vesting Stock
Options
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
48,075
|
|
|
$
|
—
|
|
|
$
|
192,300
|
|
|
$
|
192,300
|
|
|
|
|
|
|
|
(1)
|
|
“CIC”
means change in control, as defined n the officer’s employment
agreement.
|
|
|
|
|
|
(2)
|
|
12 months
base salary.
|
|
|
|
|
|
(3)
|
|
3 months
base salary.
|
|
|
|
|
|
(4)
|
|
Pro
rata bonus.
|
|
|
|
|
|
(5)
|
|
Full
cash bonus otherwise payable.
|
|
|
|
|
|
(6)
|
|
Vesting
of all stock options granted in accordance with ASC Topic 718. The amount
shown excludes the impact of estimated forfeitures related to
service-based vesting conditions. This amount reflects our accounting
expense for these awards, and does not correspond to the actual value that
will be recognized by the officer.
|
Kim
R. Tsuchimoto, C.P.A.
Chief
Financial Officer, Secretary and Treasurer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive
Benefits and
|
|
|
|
|
|
|
|
|
|
Without
Cause
|
|
|
CIC
Whether or
|
|
|
Payments
Upon
|
|
|
|
|
|
|
|
|
|
or
Constructive
|
|
|
Not
Services are
|
|
|
Termination
|
|
Disability
|
|
|
Death
|
|
|
Termination
|
|
|
Terminated
(1)
|
|
|
Severance
Payments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base
Salary
|
|
$
|
52,100
|
(3)
|
|
|
—
|
|
|
$
|
208,401
|
(2)
|
|
$
|
208,401
|
(2)
|
|
Short-Term
Incentive
|
|
|
—
|
(4)
|
|
|
—
|
(4)
|
|
|
—
|
(5)
|
|
|
—
|
(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
of Unvested Equity Awards and Accelerated Vesting Stock
Options
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
15,003
|
(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
52,100
|
|
|
$
|
—
|
|
|
$
|
208,401
|
|
|
$
|
223,404
|
|
|
|
|
|
|
(1)
|
|
“CIC”
means change in control, as defined in the officer’s employment
agreement.
|
|
|
|
|
|
(2)
|
|
12 months
base salary.
|
|
|
|
|
|
(3)
|
|
3 months
base salary.
|
|
|
|
|
|
(4)
|
|
Pro
rata bonus.
|
|
|
|
|
|
(5)
|
|
Full
cash bonus otherwise payable.
|
|
|
|
|
|
(6)
|
|
Vesting
of all stock options granted in accordance with ASC Topic 718. The amount
shown excludes the impact of estimated forfeitures related to
service-based vesting conditions. This amount reflects our accounting
expense for these awards, and does not correspond to the actual value that
will be recognized by the officer.
|
38
Ted
Daley,
President, Raptor Therapeutics
Inc. (f/k/a Bennu Pharmaceuticals Inc.)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
Executive
Benefits and
|
|
|
|
|
|
|
|
|
|
Without
Cause
|
|
|
CIC
Whether or
|
|
|
Payments
Upon
|
|
|
|
|
|
|
|
|
|
or
Constructive
|
|
|
Not
Services are
|
|
|
Termination
|
|
Disability
|
|
|
Death
|
|
|
Termination
|
|
|
Terminated
(1)
|
|
|
Severance
Payments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base
Salary
|
|
$
|
52,100
|
(3)
|
|
$
|
—
|
|
|
$
|
104,200
|
(2)
|
|
$
|
104,200
|
(2)
|
|
Short-Term
Incentive
|
|
|
—
|
(4)
|
|
|
—
|
(4)
|
|
|
—
|
(5)
|
|
|
—
|
(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
of Unvested Equity Awards and Accelerated Vesting Stock
Options
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
25,554
|
(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
52,100
|
|
|
$
|
—
|
|
|
$
|
104,200
|
|
|
$
|
129,754
|
|
|
|
|
|
|
(1)
|
|
“CIC”
means change in control, as defined in the officer’s employment
agreement.
|
|
|
|
|
|
(2)
|
|
6 months
base salary.
|
|
|
|
|
|
(3)
|
|
3 months
base salary.
|
|
|
|
|
|
(4)
|
|
Pro
rata bonus.
|
|
|
|
|
|
(5)
|
|
Full
cash bonus otherwise payable.
|
|
|
|
|
|
(6)
|
|
Vesting
of all stock options granted in accordance with ASC Topic 718. The amount
shown excludes the impact of estimated forfeitures related to
service-based vesting conditions. This amount reflects our accounting
expense for these awards, and does not correspond to the actual value that
will be recognized by the officer.
|
Patrice
P. Rioux, M.D., Ph.D.
Chief
Medical Officer, Raptor Therapeutics Inc. (f/k/a Bennu Pharmaceuticals
Inc.)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
Executive
Benefits and
|
|
|
|
|
|
|
|
|
|
Without
Cause
|
|
|
CIC
Whether or
|
|
|
|
Payments
Upon
|
|
|
|
|
|
|
|
|
|
or
Constructive
|
|
|
Not
Services are
|
|
|
|
Termination
|
|
Disability
|
|
|
Death
|
|
|
Termination
|
|
|
Terminated
(1)
|
|
|
|
Severance
Payments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base
Salary
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
140,000
|
(2)
|
|
$
|
140,000
|
(2)
|
|
|
Short-Term
Incentive
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
of Unvested Equity Awards and Accelerated Vesting Stock
Options
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
27,118
|
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
140,000
|
|
|
$
|
167,118
|
|
|
|
|
|
|
|
(1)
|
|
“CIC”
means change in control, as defined in the officer’s employment
agreement.
|
|
|
|
|
|
(2)
|
|
6 months
base salary.
|
|
|
|
|
|
(3)
|
|
Vesting
of all stock options granted in accordance with ASC Topic 718. The amount
shown excludes the impact of estimated forfeitures related to
service-based vesting conditions. This amount reflects our accounting
expense for these awards, and does not correspond to the actual value that
will be recognized by the officer.
|
Compensation
Committee Interlocks and Insider Participation
The
Company
No member
of the Compensation Committee has served as one of its officers or employees at
any time. None of the Company’s executive officers serves, or has served during
the last fiscal year, as a member of the compensation committee or a member of
the
39
board of
directors of any other company that has an executive officer serving as a member
of the Compensation Committee or the Company’s board of directors.
Raptor
Pharmaceuticals Corp.
All
compensation decisions made during the fiscal year ended August 31, 2009 were
made by RPC’s full board of directors (other than Dr. Starr with respect to
his own salary), with respect to RPC’s Chief Executive Officer, executive
officers and other officers. The members of RPC’s Compensation Committee during
the fiscal year ended August 31, 2009 were Mr. Anderson and Mr. Sager,
none of whom were officers or employees of RPC or any of our subsidiaries during
the fiscal year ended August 31, 2009 or in any prior year. During the fiscal
year ended August 31, 2009, none of RPC’s executive officers served as a member
of the board or compensation committee of any other company that has an
executive officer serving as a member of RPC’s board of directors or
compensation committee.
The
Compensation Committee has reviewed and discussed the preceding Compensation
Discussion and Analyses of the Company and Raptor Pharmaceutical Corp. with the
Company’s management and, based on such review and discussions, the Compensation
Committee recommended to the board of directors that the Compensation Discussion
and Analyses be included in this proxy statement.
|
|
Raymond
W. Anderson, Chair
|
|
|
Llew
Keltner, M.D., Ph.D.
|
40
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
As
provided in the charter of the Audit Committee, it is our policy that we will
not enter into any transactions required to be disclosed under Item 404 of
Regulation S-K promulgated by the SEC unless the Audit Committee or another
independent body of our board of directors first reviews and approves the
transactions. The Audit Committee is required to review on an on-going basis,
and pre-approve all related party transactions before they are entered into,
including those transaction that are required to be disclosed under
Item 404 of Regulation S-K. If such transaction relates to
compensation, it must be approved by the Compensation Committee as well. Related
party transactions involving a director must also be approved by the
disinterested members of the board of directors. It is the responsibility of our
employees and directors to disclose any significant financial interest in a
transaction between the Company and a third party, including an indirect
interest. All related party transactions shall be disclosed in our filings with
the SEC as required under SEC rules.
In
addition, pursuant to our Code of Business Conduct and Ethics, all employees,
officers and directors of ours and our subsidiaries are prohibited from engaging
in any relationship or financial interest that is an actual or potential
conflict of interest with us without approval. Employees, officers and directors
are required to provide written disclosure to the Chief Executive Officer as
soon as they have any knowledge of a transaction or proposed transaction with an
outside individual, business or other organization that would create a conflict
of interest or the appearance of one.
The
Company
The
Company has entered into indemnity agreements with certain of its officers and
directors which provide, among other things, that the Company will indemnify
such officer or director, under the circumstances and to the extent provided for
therein, for expenses, damages, judgments, fines and settlements he or she may
be required to pay in actions or proceedings which he or she is or may be made a
party by reason of his or her position as a director, officer or other agent of
the Company, and otherwise to the fullest extent permitted under Delaware law
and our Bylaws.
Raptor
Pharmaceuticals Corp.
Pursuant
to the terms of an asset purchase agreement, RPC and its wholly-owned
subsidiary, Raptor Therapeutics Inc. (f/k/a Bennu Pharmaceuticals Inc.)
purchased certain assets of Convivia, Inc., which was as of such time a
wholly-owned by Ted Daley (currently the President of Raptor Therapeutics Inc.
(f/k/a Bennu Pharmaceuticals Inc.)). To date, in aggregate Mr. Daley has
received 93,248 shares of common stock of RPC and $80,000 in cash bonuses and
may receive additional common stock and cash bonuses based on the successful
development of RPC’s Convivia development program. Mr. Daley was hired to
develop the Convivia product candidate along with other clinical-stage programs
at Raptor Therapeutics Inc. (f/k/a Bennu Pharmaceuticals Inc.).
With
respect to RPC’s August 2009 private placement, Limetree Capital was issued
warrants to purchase 556,500 shares of RPC’s common stock at an exercise price
of $0.35 per share and cash commissions of $59,360. Erich Sager, formerly a
member of RPC’s board of directors, serves on the board of directors of Limetree
Capital and is a founding partner thereof. Due to the Merger, the
warrants to purchase 556,500 shares of RPC’s common stock at an exercise price
of $0.35 per share described above were exchanged for warrants to purchase
129,733 shares of our common stock at an exercise price of $1.50 per
share.
In the
ordinary course of business, RPC’s officers loaned money to RPC by paying travel
expenses and equipment and other costs from their personal funds on behalf of
RPC. RPC promptly reimbursed the officers.
41
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS, DIRECTORS AND MANAGEMENT
The
following table sets forth, as of January 29, 2010, each beneficial owner (or
group of affiliated beneficial owners) of more than five percent (5%) of any
class of voting securities of the Company, each named executive officer of the
Company as of the end of the fiscal year ended August 31, 2009, each director of
the Company and all executive officers and directors of the Company as a group.
Except as otherwise indicated, each listed stockholder directly owned his or her
shares and had sole voting and investment power. Unless otherwise noted, the
address for each person listed below is Raptor Pharmaceutical Corp., 9
Commercial Blvd., Suite 200, Novato, CA 94949.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage
of
|
|
|
|
|
|
Number
of Shares
|
|
|
|
|
|
|
Outstanding
|
|
|
|
|
|
of
Common Stock
|
|
|
Number
of Shares
|
|
|
Shares
|
|
|
|
Name
of Beneficial Owner and
|
|
Beneficially
|
|
|
Subject
to Options/
|
|
|
of
Common
|
|
|
|
Address
|
|
Owned
|
|
|
Warrants
(1)
|
|
|
Stock
(2)
|
|
|
|
Aran
Asset Management SA (3)
|
|
|
4,608,499
|
|
|
|
734,339
|
|
|
|
19.8
|
%
|
|
|
Ayer
Capital Management, LP (4)
|
|
|
1,172,085
|
|
|
|
750,000
|
|
|
|
5.2
|
%
|
|
|
Christopher
M. Starr, Ph.D.
|
|
|
757,650
|
|
|
|
58,281
|
|
|
|
3.3
|
%
|
|
|
Todd
C. Zankel, Ph.D.
|
|
|
757,650
|
|
|
|
58,281
|
|
|
|
3.3
|
%
|
|
|
Erich
Sager
|
|
|
484,605
|
|
|
|
249,151
|
|
|
|
2.1
|
%
|
|
|
Ted
Daley
|
|
|
124,330
|
|
|
|
31,082
|
|
|
|
*
|
|
|
|
Kim
R. Tsuchimoto, C.P.A.
|
|
|
71,102
|
|
|
|
70,520
|
|
|
|
*
|
|
|
|
Patrice
P. Rioux, M.D, Ph.D.
|
|
|
8,013
|
|
|
|
8,013
|
|
|
|
*
|
|
|
|
Raymond
W. Anderson
|
|
|
132,589
|
|
|
|
132,589
|
|
|
|
*
|
|
|
|
Richard
L. Franklin, M.D., Ph.D.
|
|
|
14,570
|
|
|
|
14,570
|
|
|
|
*
|
|
|
|
Evelyn
A. Graham
|
|
|
41,560
|
|
|
|
39,650
|
|
|
|
*
|
|
|
|
Craig
A. Johnson
|
|
|
35,586
|
|
|
|
33,676
|
|
|
|
*
|
**
|
|
|
Paul
R. Schneider
|
|
|
25,283
|
|
|
|
25,283
|
|
|
|
*
|
|
|
|
All
executive officers and directors as a group (8 persons)
|
|
|
2,350,509
|
|
|
|
622,487
|
|
|
|
10.4
|
%
|
|
|
|
|
|
|
*
|
|
Less
than one percent.
|
|
|
|
|
|
(1)
|
|
Beneficial
ownership is determined in accordance with SEC rules and generally
includes voting or investment power with respect to securities. Shares of
common stock subject to options, warrants and convertible preferred stock
currently exercisable or convertible, or exercisable or convertible within
sixty (60) days of January 29, 2010, are counted as outstanding for
computing the percentage held by each person holding such options or
warrants but are not counted as outstanding for computing the percentage
of any other person.
|
|
|
|
|
|
(2)
|
|
Based
on 22,455,365 shares outstanding as of January 29,
2010.
|
|
|
|
|
|
(3)
|
|
The
address for this entity is Bahnhofplatz, P.O. Box 4010, 6304 Zug,
Switzerland. Aran Asset Management disclaims beneficial ownership of the
shares registered in its name on behalf of its clients. The
Chairman and CEO of Aran Asset Management SA is Michael C. Thalmann who
disclaims beneficial ownership of these shares except to the extent of his
pecuniary interest therein.
|
|
|
|
|
|
(4)
|
|
The
address for this entity is 230 California Street, Suite 600, San
Francisco, CA 94111. 750,000 warrants to purchase shares of
common stock are exercisable only to the extent that the number of shares
beneficially held by Ayer Capital Management, LP does not exceed 4.99% of
the outstanding common stock of the
Company.
|
42
The
members of our Audit Committee have been appointed by our board of directors.
Our Audit Committee is governed by its charter, which has been approved and
adopted by our board of directors and which will be reviewed and reassessed
annually by our Audit Committee.
Our Audit
Committee has determined that the Company’s audit committee and the audit
committee of RPC fulfilled their respective responsibilities under their
respective charters for the eight months ended August 31, 2009 and the fiscal
year ended August 31, 2009, respectively. During the fiscal year ended August
31, 2009, the audit committee of RPC was comprised of two directors,
Mr. Anderson and Mr. Sager.
The
following Audit Committee Report does not constitute soliciting material and
shall not be deemed filed or incorporated by reference into any other Raptor
filing under the Securities Act of 1933, as amended, or under the Exchange Act,
except to the extent we specifically incorporate this Audit Committee Report by
reference therein.
Our Audit
Committee assists our board of directors in fulfilling its oversight
responsibilities by reviewing (i) the financial reports and other financial
information provided by the Company to any governmental body or to the public,
(ii) the Company’s systems of internal controls regarding finance,
accounting, legal compliance and ethics and (iii) the Company’s auditing,
accounting and financial reporting processes. It is not the responsibility of
our Audit Committee to determine that the Company’s financial statements are
complete and accurate, are presented in accordance with accounting principles
generally accepted in the United States or present fairly the results of
operations of the Company for the periods presented or that the Company
maintains appropriate internal controls. Nor is it the duty of our Audit
Committee to determine that the audit of the Company’s financial statements have
been carried out in accordance with generally accepted auditing standards or
that the Company’s independent registered public accounting firm is
independent.
In this
context, our Audit Committee hereby reports as follows:
|
|
•
|
|
We
have reviewed and discussed the audited financial statements of RPC as of
and for its fiscal year ended August 31, 2009 with management and the
independent registered public accounting
firm.
|
|
|
•
|
|
The
Audit Committee discussed with the independent registered public
accounting firm the matters required to be discussed by Statement on
Auditing Standards No. 61, as amended (“Communication with Audit
Committees”), as adopted by the Public Company Accounting Oversight Board
in Rule 3200T.
|
|
|
•
|
|
The
Audit Committee received from the independent registered public accounting
firm the written disclosures and letter required by the Public Company
Accounting Oversight Board regarding the independent accountant’s
communications with the Audit Committee concerning independence, and the
Audit Committee discussed with the independent registered public
accounting firm the independence of the independent registered public
accounting firm.
|
Based
upon the review and discussion referred to in paragraphs (1) through
(3) above, we recommended to the board of directors, and the board of
directors has approved, that the audited financial statements of RPC for its
fiscal year ended August 31, 2009 be included in RPC’s Annual Report on
Form 10-K for the fiscal year ended August 31, 2009 and in our annual report to
stockholders. Our Audit Committee also has recommended, and the board of
directors also has approved, subject to stockholder ratification, the
appointment of Burr, Pilger & Mayer, LLP as our independent registered
public accounting firm for our fiscal year ending August 31,
2010.
|
|
Raymond
W. Anderson (Chair)
|
|
|
Richard
L. Franklin, M.D., Ph.D.
|
|
|
Llew
Keltner, M.D., Ph.D.
|
43
We
file annual, quarterly and current reports, proxy statements and other
information with the SEC. You may read and copy any reports, statements or other
information that we file at the SEC’s Public Reference Room at 100 F Street,
N.E., Washington, D.C. 20549 on official business days during the hours of 10:00
a.m. to 3:00 p.m. Please call the SEC at 1-800-SEC-0330 for further information
on the Public Reference Room. Our SEC filings are also available to the public
from commercial document retrieval services and on the website maintained by the
SEC at http://www.sec.gov. Reports, proxy statements and other information
concerning us also may be inspected at the offices of the Financial Industry
Regulatory Authority, Inc., Listing Section, 1735 K Street, Washington,
D.C. 20006. You may also obtain free copies of the documents that we file with
the SEC by going to the Investors and Media section of our website,
www.raptorpharma.com.
The Company will provide without
charge to each person solicited upon the written request of any such person,
a copy of the Company’s
annual report to
stockholders. If you would like to
request a copy of the annual report to stockholders or copies of the documents
that we file with the SEC, please send a request in writing to the following
address or call the following telephone number:
|
|
|
Raptor
Pharmaceutical Corp.
9
Commercial Blvd., Suite 200
Novato
CA 94949
(415)
382-1390
Attention:
Corporate Secretary
|
You
should rely only on the information contained in this proxy statement to vote
your shares at our annual meeting. We have not authorized anyone to provide you
with information that differs from that contained in this proxy statement. This
proxy statement is dated February 2, 2010. You should not assume that the
information contained in this proxy statement is accurate as of any date other
than that date.
The
Company
Section 16(a)
of the Exchange Act requires our directors, executive officers and 10%
stockholders to file reports of ownership and reports of changes in ownership of
our common stock and other equity securities with the SEC. Directors,
executive officers and 10% stockholders of a registered class of equity
securities are required to furnish us with copies of all Section 16(a) forms
they file.
To our
knowledge, based solely on a review of the copies of such reports furnished to
the Company and written representations that no other reports were required,
during the fiscal year ended August 31, 2009, all
Section 16(a) filing requirements applicable to its officers,
directors and greater than 10% beneficial owners were complied
with.
Raptor
Pharmaceuticals Corp.
Based on
a review of the copies of such reports furnished to RPC, except with respect to
Aran Asset Management SA, which did not to our knowledge filed any Section 16(a)
forms with respect to RPC, we believe that during the fiscal year ended August
31, 2009, the directors, executive officers and 10% stockholders of RPC timely
filed all Section 16(a) reports applicable to them.
Information
on Our Website
Information
on our website is not part of this proxy statement and you should not rely on
that information in deciding whether to approve any of the proposals described
in this proxy statement, unless that information is also in this proxy
statement.
Raptor,
the Raptor logos and all other Raptor product and service names are registered
trademarks or trademarks of Raptor in the United States and in other select
countries. “ ® ” and “™” indicate U.S. registration and U.S. trademark,
respectively. Other third-party logos and product/trade names are registered
trademarks or trade names of their respective companies.
44
Stockholder
Proposals
In order
for a stockholder to submit a proposal to be considered at the Company’s 2011
annual meeting of stockholders (including director nominations), (i) the
stockholder must have given timely notice thereof in writing to the Corporate
Secretary, (ii) the business must be a proper matter for stockholder action
under the Delaware General Corporation Law, (iii) if the stockholder intends to
solicit proxies from stockholders with respect to such proposal, such
stockholder has delivered a proxy statement and form of proxy to holders of at
least the number of shares required under applicable law to approve such
proposal and has included copies of such materials with the notice delivered to
the Company, and (iv) if the stockholder desires that the proposal be included
in the proxy statement to be prepared by the Company in connection with the
annual meeting, the stockholder must not have solicited proxies sufficient to
have required it to deliver to the Company a notice stating that it intends to
solicit proxies from stockholders. The notice delivered by the
stockholder must comply with the requirements set forth in the Company’s bylaws,
as amended, and must be delivered to the Corporate Secretary at the Company’s
principal executive offices not later than the close of business on the 90th day
nor earlier than the close of business on the 120th day prior to the anniversary
of the date of the 2010 annual meeting. However, if the date of the
2011 annual meeting of stockholders is advanced more than 30 days prior to or
delayed more than 30 days after the anniversary of the date of the 2010 annual
meeting, then notice must be delivered not earlier than the close of business on
the 120th day prior to the anniversary of the date of 2010 annual meeting and
not later than the close of business on the 90th day prior to the anniversary of
the date of 2010 annual meeting or the 10th day following the day on which
public announcement of the date of the 2011 annual meeting is first made.
Proposals to be included in next year’s proxy statement prepared by the Company
must comply with certain rules and regulations promulgated by the SEC and the
procedures set forth in the Company’s bylaws, as amended.
Our board
of directors has provided a procedure for stockholders or other persons to send
written communications to our board of directors, our board of directors’
committees or any of the directors, including complaints to our Audit Committee
regarding accounting, internal accounting controls, or auditing matters.
Stockholders may send written communications to the board of directors, the
appropriate committee or any of the directors by certified mail only, c/o Audit
Committee Chairman, Raptor Pharmaceutical Corp., 9 Commercial Blvd., Suite 200,
Novato, California 94949. All such written communications will be compiled by
the Chairman of the Audit Committee and submitted to our board of directors, a
committee of our board of directors or the individual director(s), as
appropriate, within a reasonable period of time. These communications will be
retained with our corporate records.
The SEC
has adopted rules that permit companies and intermediaries (e.g., brokers)
to satisfy the delivery requirements for proxy materials with respect to two or
more stockholders sharing the same address by delivering a single set of proxy
materials addressed to those stockholders. This process, which is commonly
referred to as “householding,” potentially means extra convenience for
stockholders and cost savings for companies.
A single
set of proxy materials will be delivered to multiple stockholders sharing an
address unless contrary instructions have been received from the affected
stockholders. Once you have received notice from your broker that it will be
“householding” communications to your address, “householding” will continue
until you are notified otherwise or until you notify your broker or Raptor that
you no longer wish to participate in “householding.” If, at any time, you no
longer wish to participate in “householding” and would prefer to receive
separate proxy materials in the future, you may (1) notify your broker,
(2) direct your written request to: Corporate Secretary, Raptor
Pharmaceutical Corp., 9 Commercial Blvd., Suite 200, Novato, California 94949,
or (3) contact our Chief Financial Officer, Kim R. Tsuchimoto, at
(415) 382-1390. Upon a written or oral request to the address or telephone
number above, we will promptly deliver a separate set of proxy materials to a
stockholder at a shared address to which a single copy of the documents was
delivered. Our stockholders who currently receive multiple copies of the proxy
materials at their address and would like to request “householding” of their
communications should contact their broker.
45
APPENDIX
A
Raptor
Pharmaceutical Corp. 2010 Stock Incentive Plan
RAPTOR
PHARMACEUTICAL CORP.
2010
STOCK INCENTIVE PLAN
————————————————
Plan
Document
————————————————
1. Introduction.
(a) Purpose. Raptor
Pharmaceutical Corp. (the “Company”)
hereby establishes this equity-based incentive compensation plan to be known as
the Raptor Pharmaceutical Corp. 2010 Stock Incentive Plan (the “Plan”),
for the following purposes: (i) to enhance the Company’s ability to
attract highly qualified personnel; (ii) to strengthen its retention
capabilities; (iii) to enhance the long-term performance and competitiveness of
the Company; and (iv) to align the interests of Plan participants with those of
the Company’s stockholders.
(b) Definitions. Terms
that begin with an initial capital letter in the Plan and any Appendices have
the defined meaning set forth in Appendix I or elsewhere in
this Plan, in either case unless the context of their use clearly indicates a
different meaning.
(c) Effective
Date. This Plan shall become effective on February 2, 2010
(the “Effective
Date”); provided
that the Plan and any Award made before stockholder approval of the Plan shall
be contingent on its approval by a vote of a
majority of the votes cast at a duly held meeting of the Company’s stockholders
(or by such other stockholder vote that the Committee determines to be
sufficient for the issuance of Shares and Awards according to the Company’s
governing documents and Applicable Law).
(d) Effect on Other Plans, Awards, and
Arrangements. Once approved by the Company’s stockholders
pursuant to Section 1(c), this Plan will supersede all stock plans of the
Company such that no future awards will occur except under this
Plan. New awards may occur with respect to Shares subject to awards
forfeited under superseded plans. Notwithstanding the foregoing,
effective upon stockholder approval of this Plan, no further awards of any kind
shall occur under the 2006 Equity Incentive Plan (formerly the Raptor
Pharmaceuticals Corp.’s 2006 Equity Incentive Plan, as amended), which was
assumed by the Company, and any Shares that are currently reserved for awards
under such plan, the 2006 Equity Incentive Plan (formerly the TorreyPines 2006
Equity Incentive Plan), or the 2000 Stock Option Plan (formerly the Axonyx 2000
Stock Option Plan), as well as any Shares that in the future would have become
available for awards under those plans shall be added to the reserve of Shares
that are authorized and available for issuance pursuant to this
Plan.
(e) Appendices. Incorporated
by reference and thereby part of the Plan are the terms set forth in the
following appendices:
|
Appendix
I
|
Definitions
|
|
Appendix
II
|
Special
Sub-Plan for Non-U.S.-Based Eligible Employees
|
2. Types of
Awards. The Plan permits the granting of the following types
of Awards according to the Sections of the Plan listed here:
|
Section
5
|
Stock
Options
|
|
Section
6
|
Restricted
Shares and Restricted Share Units
(“RSUs”)
|
3. Shares
Available for Awards.
(a) Generally. Subject
to Section 9 below, a total of 3,000,000 Shares shall be available for issuance
under the Plan, which includes the 400,000 Shares that were available for
issuance under the three plans identified in Section 1(d) as of February 1,
2010, all of which may be used for any form of Award under the
Plan. The Shares deliverable pursuant to Awards shall be authorized
but unissued Shares, or Shares that the Company otherwise holds in treasury or
in trust.
(b) Replenishment; Counting of
Shares. Any Shares reserved for Plan Awards will again be
available for future Awards if the Shares for any reason will never be issued to
a Participant or Beneficiary pursuant to an Award (for example, due to its
settlement in cash rather than in Shares, or the Award’s forfeiture,
cancellation, expiration, or net settlement without the issuance of
Shares). Further, and to the extent permitted under Applicable Law,
the maximum number of Shares available for delivery under the Plan shall not be
reduced by any Shares issued under the Plan through the settlement, assumption,
or substitution of outstanding awards or obligations to grant future awards as a
condition of the Company’s or an Affiliate’s acquiring another
entity. On the other hand, Shares that a Person owns and tenders in
payment of all or part of the exercise price of an Award or in satisfaction of
applicable Withholding Taxes shall not increase the number of Shares available
for future issuance under the Plan.
(c) ISO Share
Reserve. The number of Shares that are available for ISO
Awards shall not exceed the total number set forth in Section 3(a) above (as
adjusted pursuant to Section 9 of the Plan, and as determined in accordance with
Code Section 422).
4. Eligibility.
(a) General
Rule. Subject to the express provisions of the Plan, the
Committee shall determine from the class of Eligible Persons those Persons to
whom Awards may be granted. Each Award shall be evidenced by an Award
Agreement that sets forth its Grant Date and all other terms and conditions of
the Award, that is signed on behalf of the Company (or delivered by an
authorized agent through an electronic medium), and that, if required by the
Committee, is signed by the Eligible Person as an acceptance of the
Award. The grant of an Award shall not obligate the Company or any
Affiliate to continue the employment or service of any Eligible Person, or to
provide any future Awards or other remuneration at any time
thereafter.
(b) Award Limits per
Person. During the term of the Plan, no Participant may
receive Awards that relate to more than 500,000 Shares per year.
(a) Grants. Subject to the special
rules for ISOs set forth in the next paragraph, the Committee may grant Options
to Eligible Persons pursuant to Award Agreements setting forth terms and
conditions that are not inconsistent with the Plan, that may be immediately
exercisable or that may become exercisable in whole or in part based on future
events or conditions, that may include vesting or other requirements for the
right to exercise the Option, and that may differ for any reason between
Eligible Persons or classes of Eligible Persons; provided
in all instances that:
|
(i)
|
the
exercise price for Shares subject to purchase through exercise of an
Option shall not be less than 100% of the Fair Market Value of the
underlying Shares on the Grant Date;
and
|
|
(ii)
|
no
Option shall be exercisable for a term ending more than ten years after
its Grant Date.
|
(b) Special ISO
Provisions. The following provisions shall control any grants
of Options that are denominated as ISOs.
|
(i)
|
Eligibility. The
Committee may grant ISOs only to Employees (including officers who are
Employees) of the Company or an Affiliate that is a “parent corporation”
or “subsidiary corporation” within the meaning of Code Section
424.
|
|
(ii)
|
Documentation. Each
Option that is intended to be an ISO must be designated in the Award
Agreement as an ISO; provided
that any Option designated as an ISO will be a Non-ISO to the extent the
Option fails to meet the requirements of Code Section 422. In
the case of an ISO, the Committee shall determine on the Grant Date the
acceptable methods of paying the exercise price for Shares, and it shall
be included in the applicable Award
Agreement.
|
|
(iii)
|
$100,000
Limit. To the extent that the aggregate Fair Market
Value of Shares with respect to which ISOs first become exercisable by a
Participant in any calendar year (under this Plan and any other plan of
the Company or any Affiliate) exceeds U.S. $100,000, such excess Options
shall be treated as Non-ISOs. For purposes of determining
whether the U.S. $100,000 limit is exceeded, the Fair Market Value of the
Shares subject to an ISO shall be determined as of the Grant
Date. In reducing the number of Options treated as ISOs to meet
the U.S. $100,000 limit, the most recently granted Options shall be
reduced first. In the event that Code Section 422 is amended to
alter the limitation set forth therein, the limitation of this paragraph
shall be automatically adjusted
accordingly.
|
|
(iv)
|
Grants to 10%
Holders. In the case of an ISO granted to an Employee
who is a Ten Percent Holder on the Grant Date, the ISO’s term shall not
exceed five years from the Grant Date, and the exercise price shall be at
least 110% of the Fair Market Value of the underlying Shares on the Grant
Date. In the event that Code Section 422 is amended to alter
the limitations set forth therein, the limitation of this paragraph shall
be automatically adjusted
accordingly.
|
|
(v)
|
Substitution of
Options. In the event the Company or an Affiliate
acquires (whether by purchase, merger, or otherwise) all or substantially
all of the outstanding capital stock or assets of another corporation, or
in the event of any reorganization or other transaction qualifying under
Code Section 424, the Committee may, in accordance with the provisions of
that Section, substitute ISOs for ISOs previously granted under the plan
of the acquired company; provided
(A) the excess of the aggregate Fair Market Value of the Shares subject to
an ISO immediately after the substitution over the aggregate exercise
price of such Shares is not more than the similar excess immediately
before such substitution, and (B) the new ISO does not give additional
benefits to the Participant, including any extension of the exercise
period.
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|
(vi)
|
Notice of
Disqualifying Dispositions. By executing an ISO Award
Agreement, each Participant agrees to notify the Company in writing
immediately after the Participant sells, transfers, or otherwise disposes
of any Shares acquired through exercise of the ISO, if such disposition
occurs within the earlier of (A) two years of the Grant Date, or (B) one
year after the exercise of the ISO being exercised. Each
Participant further agrees to provide any information about a disposition
of Shares as may be requested by the Company to assist it in complying
with any applicable tax laws.
|
(c) Method of
Exercise. Each Option may be exercised, in whole or in part
(provided
that the Company shall not be required to issue fractional Shares) at any time
and from time to time prior to its expiration, but only pursuant to the terms of
the applicable Award Agreement, and subject to the times, circumstances, and
conditions for exercise contained in the applicable Award
Agreement. To the extent that Options are exercised, they shall be
exercised with respect to the first-vested Options, unless expressly provided
otherwise in the documents evidencing the exercise. Exercise shall
occur by delivery of both written notice of exercise to the secretary of the
Company, and payment of the full exercise price for the Shares being
purchased. Unless the Committee determines otherwise, the methods of
payment that the Committee may in its discretion accept or commit to accept in
an Award Agreement include:
(i) Cash;
(ii) Certified
check, wire transfer, or equivalent; or
(iii) Any
combination of the foregoing methods of payment.
The
Company shall not be required to deliver Shares pursuant to the exercise of an
Option until the Company has received sufficient funds to cover the full
exercise price due and all applicable Withholding Taxes required by reason of
such exercise.
No
Participant who is a Director or an “executive officer” of the Company within
the meaning of Section 13(k) of the Exchange Act shall be permitted to make
payment with respect to any Awards granted under the Plan, or continue any
extension of credit with respect to such payment with a loan from the Company or
a loan arranged by the Company in violation of Section 13(k) of the Exchange
Act.
(d) Termination of Continuous
Service. The Committee may establish and set forth in the
applicable Award Agreement the terms and conditions on which an Option shall
remain exercisable, if at all, following termination of a Participant’s
Continuous Service. The Committee may waive or modify these
provisions at any time. To the extent that a Participant is not
entitled to exercise an Option at the date of his or her termination of
Continuous Service, or if the Participant (or other Person entitled to exercise
the Option) does not exercise the Option to the extent so entitled within the
time specified in the Award Agreement or below (as applicable), the Option shall
terminate, and the Shares underlying the unexercised portion of the Option shall
revert to the Plan and become available for future Awards.
The
following provisions shall apply to the extent an Award Agreement does not
specify contrary terms and conditions upon which an Option shall terminate when
there is a termination of a Participant’s Continuous Service:
|
Reason
for Terminating Continuous Service
|
Option
Termination Date
|
|
(I)
By the Company for Cause, or what would have been Cause if the Company had
known all of the relevant facts.
|
Termination
of the Participant’s Continuous Service, or when Cause first existed if
earlier.
|
|
(II)
Participant is Disabled.
|
Within
one year after termination of the Participant’s Continuous
Service.
|
|
(III)
Retirement of the Participant.
|
Within
six months after termination of the Participant’s Continuous
Service.
|
|
(IV)
Death of the Participant during Continuous Service or within 90 days
thereafter.
|
Within
one year
after termination of the Participant’s Continuous
Service.
|
|
(V)
Other than due to Cause or the Participant’s Disability, Retirement, or
Death.
|
Within
90 days after termination of the Participant’s Continuous
Service.
|
If there is a Securities and Exchange
Commission blackout period (or a Committee-imposed blackout period) that
prohibits the buying or selling of Shares during any part of the ten-day period
before the expiration of any Option based on the termination of a Participant’s
Continuous Service (as described above), the period for exercising the Options
shall be extended until ten days beyond when such blackout period
ends. Notwithstanding any provision hereof or within an Award
Agreement, no Option shall ever be exercisable after the expiration date of its
original term as set forth in the Award Agreement.
|
6.
|
Restricted
Shares and RSUs.
|
(a) Grant. The Committee may grant
Restricted Share and RSU Awards to Eligible Persons, in all cases pursuant to
Award Agreements setting forth terms and conditions that are not inconsistent
with the Plan. The Committee shall establish as to each Restricted
Share or RSU Award the number of Shares deliverable or subject to the Award
(which number may be determined by a written formula), and the period or periods
of time (the “Restriction
Period”) at the end of which all or some restrictions specified in the
Award Agreement shall lapse, and the Participant shall receive unrestricted
Shares (or cash to the extent provided in the Award Agreement) in settlement of
the Award. Such restrictions may include, without limitation,
restrictions concerning voting rights and transferability, and such restrictions
may lapse separately or in combination at such times and pursuant to such
circumstances or based on such criteria as selected by the Committee, including,
without limitation, criteria based on the Participant’s duration of employment,
directorship, or consultancy with the Company, individual, group, or divisional
performance criteria, Company performance, or other criteria selected by the
Committee. The Committee may make Restricted Share and RSU Awards
with or without the requirement for payment of cash or other
consideration.
(b) Vesting and Forfeiture. The Committee shall set
forth, in an Award Agreement granting Restricted Shares or RSUs, the terms and
conditions under which the Participant’s interest in the Restricted Shares or
the Shares subject to RSUs will become vested and
non-forfeitable. Except as set forth in the applicable Award
Agreement or as the Committee otherwise determines, upon termination of a
Participant’s Continuous Service for any reason, the Participant shall forfeit
his or her Restricted Shares and RSUs to the extent the Participant’s interest
therein has not vested on or before such termination date; provided
that, if a Participant purchases Restricted Shares and forfeits them for any
reason, the Company shall return the purchase price to the Participant to the
extent either set forth in an Award Agreement or required by Applicable
Laws.
(c) Certificates for Restricted
Shares. Unless otherwise
provided in an Award Agreement, the Company shall hold certificates representing
Restricted Shares and dividends (whether in Shares or cash) that accrue with
respect to them until the restrictions lapse, and the Participant shall provide
the Company with appropriate stock powers endorsed in blank. The
Participant’s failure to provide such stock powers within ten days after a
written request from the Company shall entitle the Committee to unilaterally
declare a forfeiture of all or some of the Participant’s Restricted
Shares.
(d) Section 83(b)
Elections. A Participant may make an election under Code
Section 83(b) (“Section
83(b) Election”) with respect to Restricted Shares. A
Participant who has received RSUs may, within ten days after receiving the RSU
Award, provide the Committee with a written notice of his or her desire to make
a Section 83(b) Election with respect to the Shares subject to such
RSUs. The Committee may in its discretion convert the Participant’s
RSUs into Restricted Shares, on a one-for-one basis, in full satisfaction of the
Participant’s RSU Award. The Participant may then make a Section
83(b) Election with respect to those Restricted Shares; provided
that the Participant’s Section 83(b) Election will be invalid if not filed with
the Company and the appropriate U.S. tax authorities within 30 days after the
Grant Date of the RSUs replaced by the Restricted Shares.
(e) Issuance of Shares Upon
Vesting. As soon as practicable after vesting of a
Participant’s Restricted Shares (or of the right to receive Shares underlying
RSUs), the Company shall deliver to the Participant, free from vesting
restrictions, one Share for each surrendered and vested Restricted Share (or
deliver one Share free of the vesting restriction for each vested RSU), unless
an Award Agreement provides otherwise and subject to Section 7 regarding
Withholding Taxes. No fractional Shares shall be distributed, and
cash shall be paid in lieu thereof.
7. Taxes;
Withholding.
(a) General
Rule. Participants are solely responsible and liable for the
satisfaction of all taxes and penalties that may arise in connection with
Awards, and neither the Company, any Affiliate, nor any of their employees,
directors, or agents shall have any obligation to mitigate, indemnify, or to
otherwise hold any Participant harmless from any or all of such
taxes. The Company’s obligation to deliver Shares (or to pay cash) to
Participants pursuant to Awards is at all times subject to their prior or
coincident satisfaction of all required Withholding Taxes. Except to
the extent otherwise either provided in an Award Agreement or thereafter
authorized by the Committee, the Company or any Affiliate may, but is not
obligated to, satisfy required Withholding Taxes that the Participant has not
otherwise arranged to settle before the due date thereof:
|
(i)
|
first
from withholding the cash otherwise payable to the Participant pursuant to
the Award;
|
|
(ii)
|
then
by withholding and canceling the Participant’s rights with respect to a
number of Shares that (A) would otherwise have been delivered to the
Participant pursuant to the Award, and (B) have an aggregate Fair Market
Value equal to the Withholding Taxes (such withheld Shares to be valued on
the basis of the aggregate Fair Market Value thereof on the date of the
withholding); and
|
|
(iii)
|
finally,
withholding the cash otherwise payable to the Participant by the
Company.
|
The
number of Shares withheld and canceled to pay a Participant’s Withholding Taxes
will be rounded up to the nearest whole Share sufficient to satisfy such taxes,
with cash being paid to the Participant in an amount equal to the amount by
which the Fair Market Value of such Shares exceeds the Withholding
Taxes.
(b) U.S. Code Section
409A. To the extent that the Committee determines that any
Award granted under the Plan is subject to Code Section 409A, the Award
Agreement evidencing such Award shall incorporate the terms and conditions
required by Code Section 409A. To the extent applicable, the Plan and
Award Agreements shall be interpreted in accordance with Code Section 409A and
Department of Treasury regulations and other interpretive guidance issued
thereunder, including, without limitation, any such regulations or other
guidance that may be issued after the Effective Date. Notwithstanding
any provision of the Plan to the contrary, the Committee may adopt such
amendments to the Plan and the applicable Award Agreement or adopt other
policies and procedures (including amendments, policies, and procedures with
retroactive effect), or take any other actions, that the Committee determines
are necessary or appropriate (i) to exempt the Award from Code Section 409A
and/or preserve the intended tax treatment of the benefits provided with respect
to the Award, or (ii) to comply with the requirements of Code Section 409A and
related Department of Treasury guidance and thereby avoid the application of any
penalty taxes under such Section.
(c) Unfunded Tax
Status. The Plan is intended to be an “unfunded” plan for
incentive compensation. With respect to any payments not yet made to
a Person pursuant to an Award, nothing contained in the Plan or any Award
Agreement shall give the Person any rights that are greater than those of a
general creditor of the Company or any Affiliate, and a Participant’s rights
under the Plan at all times constitute an unsecured claim against the general
assets of the Company for the collection of benefits as they come
due. Neither the Participant nor the Participant’s duly authorized
transferee or Beneficiaries shall have
any claim against or rights in any specific assets, Shares, or other funds of
the Company.
8. Non-Transferability
of Awards.
(a) General. Except as
set forth in this Section, or as otherwise approved by the Committee, Awards may
not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any
manner other than by will or by the laws of descent or
distribution. The designation of a death Beneficiary by a Participant
will not constitute a transfer. An Award may be exercised, during the
lifetime of the holder of an Award, only by such holder, by the duly authorized
legal representative of a holder who is Disabled, or by a transferee permitted
by this Section.
(b) Limited Transferability
Rights. Unless an Award
Agreement provides otherwise, the Committee may in its discretion permit
individuals to transfer Awards, other than ISOs, on such terms and conditions as
the Committee deems appropriate, either (i) by instrument to the Participant’s
“Immediate Family” (as defined below), (ii) by instrument to an inter vivos or testamentary
trust (or other entity) in which the Award is to be passed to the Participant’s
designated beneficiaries, or (iii) by gift to charitable
institutions. Any transferee of the Participant’s rights shall
succeed and be subject to all of the terms of the applicable Award Agreement and
the Plan. “Immediate
Family” means any child, stepchild, grandchild, parent, stepparent,
grandparent, spouse, domestic partner, former spouse, former domestic partner,
sibling, niece, nephew, mother-in-law, father-in-law, son-in-law,
daughter-in-law, brother-in-law, or sister-in-law, and shall include adoptive
relationships.
(c) Death. In the
event of the death of a Participant, any outstanding Awards issued to the
Participant shall automatically be transferred to the Participant’s Beneficiary
(or, if no Beneficiary is designated or surviving, to the Person or Persons to
whom the Participant’s rights under the Award pass by will or the laws of
descent and distribution).
|
9.
|
Change
in Capital Structure; Change in Control; Etc.
|
(a) Changes in
Capitalization. The Committee shall
equitably adjust the number of Shares covered by each outstanding Award, and the
number of Shares that have been authorized for issuance under the Plan but as to
which no Awards have yet been granted or that have been returned to the Plan
upon cancellation, forfeiture, or expiration of an Award, as well as the
exercise or other price per Share covered by each such outstanding Award, to
reflect any increase or decrease in the number of issued Shares resulting from a
stock-split, reverse stock-split, stock dividend, combination, recapitalization,
or reclassification of the Shares, merger, consolidation, change in form of
organization, or any other increase or decrease in the number of issued Shares
effected without receipt of consideration by the Company. In the
event of any such transaction or event, the Committee may provide in
substitution for any or all outstanding Awards such alternative consideration
(including cash or securities of any surviving entity) as it may in good faith
determine to be equitable under the circumstances and may require in connection
therewith the surrender of all Awards so replaced. In any case, such
substitution of cash or securities shall not require the consent of any Person
who is granted Awards pursuant to the Plan. Except as expressly
provided herein, or in an Award Agreement, if the Company issues for
consideration shares of stock of any class or securities convertible into shares
of stock of any class, the issuance shall not affect, and no adjustment by
reason thereof shall be required to be made with respect to, the number or price
of Shares subject to any Award.
(b) Dissolution or
Liquidation. In the event of the dissolution or liquidation of
the Company other than as part of a Change of Control, each Award will terminate
immediately prior to the consummation of such dissolution or liquidation,
subject to the ability of the Committee to exercise any discretion authorized in
the case of a Change in Control.
(c) Change in Control. In the event of a
Change in Control but subject to the terms of any Award Agreements or
employment-related agreements between the Company or any Affiliates and any
Participant, each outstanding Award shall be assumed or a substantially
equivalent award shall be substituted by the surviving or successor company or a
parent or subsidiary of such successor company (in each case, the “Successor
Company”) upon consummation of the
transaction. Notwithstanding the foregoing, instead of having
outstanding Awards be assumed or replaced with equivalent awards by the
Successor Company, the Committee may in its sole and absolute discretion and
authority, without obtaining the approval or consent of the Company’s
stockholders or any Participant with respect to his or her outstanding Awards,
take one or more of the following actions (with respect to any or all of the
Awards, and with discretion to differentiate between individual Participants and
Awards for any reason):
(i) accelerate
the vesting of Awards so that Awards shall vest (and, to the extent applicable,
become exercisable) as to the Shares that otherwise would have been unvested and
provide that repurchase rights of the Company with respect to Shares issued
pursuant to an Award shall lapse as to the Shares subject to such repurchase
right;
(ii) arrange
or otherwise provide for the payment of cash or other consideration to
Participants in exchange for the satisfaction and cancellation of outstanding
Awards (with the Committee determining the amount payable to each Participant
based on the Fair Market Value, on the date of the Change in Control, of the
Award being canceled, based on any reasonable valuation method selected by the
Committee, which amount may be adjusted downward to the extent the Committee
reasonably determines required by Section 409A);
(iii) terminate
all or some Awards upon the consummation of the transaction; provided
that the Committee shall provide for vesting of such Awards in full as of a date
immediately prior to consummation of the Change in Control. To the
extent that an Award is not exercised prior to consummation of a transaction in
which the Award is not being assumed or substituted, such Award shall terminate
upon such consummation;
(iv) make such
other modifications, adjustments, or amendments to outstanding Awards or this
Plan as the Committee deems necessary or appropriate, subject, however, to the
terms of this Section 9.
10. Recoupment
of Awards. Unless otherwise
specifically provided in an Award Agreement, and to the extent permitted by
Applicable Law, the Committee may in its sole and absolute discretion, without
obtaining the approval or consent of the Company’s stockholders or of any
Participant, require that any Participant reimburse the Company for all or any
portion of any Awards granted under this Plan (“Reimbursement”),
terminate any outstanding, unexercised, unexpired, unpaid, or deferred Awards
(“Termination”),
rescind any exercise, payment, or delivery pursuant to the Award (“Rescission”),
or recapture any Shares (whether restricted or unrestricted) or proceeds from
the Participant’s sale of Shares issued pursuant to the Award (“Recapture”),
if and to the extent:
(a) the
granting, vesting, or payment of such Award was predicated upon the achievement
of certain financial results that were subsequently the subject of a material
financial restatement;
(b) in the
Committee’s view the Participant either benefited from a calculation that later
proves to be materially inaccurate, or engaged in fraud or misconduct that
caused or partially caused the need for a material financial restatement by the
Company or any Affiliate; and
(c) a lower
granting, vesting, or payment of such Award would have occurred based upon the
conduct described in clause (b) of this Section.
In each
instance, the Committee will, to the extent practicable and allowable under
Applicable Laws, require Reimbursement, Termination, or Rescission of, or
Recapture relating to, any such Award granted to a Participant; provided
that the Company will not seek Reimbursement, Termination, or Rescission of, or
Recapture relating to, any such Awards that were paid or vested more than three
years prior to the first date of the applicable restatement period.
11. Relationship
to Other Benefits. No payment pursuant to the Plan shall be
taken into account in determining any benefits under any pension, retirement,
savings, profit sharing, group insurance, welfare, or other benefit plan of the
Company or any Affiliate except to the extent otherwise expressly provided in
writing in such other plan or an agreement thereunder.
12. Administration
of the Plan. The Committee shall
administer the Plan in accordance with its terms; provided
that the Board may always act as the Committee on any matter. The
Committee shall hold meetings at such times and places as it may determine and
shall make such rules and regulations for the conduct of its business as it
deems advisable. In the absence of a duly appointed Committee, the
Board shall function as the Committee for all purposes of the Plan.
(a) Committee
Composition. The Board shall appoint the members of the
Committee if other than the Board. If and to the extent permitted by
Applicable Law, the Committee may authorize one or more executive officers to
make Awards to Eligible Persons other than themselves. The Board may
at any time appoint additional members to the Committee, remove and replace
members of the Committee with or without Cause, and fill vacancies on the
Committee however caused.
(b) Powers of the
Committee. Subject to the provisions of the Plan, the
Committee shall have the authority, in its sole discretion:
(i) to grant
Awards and to determine Eligible Persons to whom Awards shall be granted from
time to time, and the number of Shares, units, or dollars to be covered by each
Award;
(ii) to
determine, from time to time, the Fair Market Value of Shares;
(iii) to
determine, and to set forth in Award Agreements, the terms and conditions of all
Awards, including any applicable exercise or purchase price, the installments
and conditions under which an Award shall become vested (which may be based on
performance), terminated, expired, canceled, or replaced, and the circumstances
for vesting acceleration or waiver of forfeiture restrictions, and other
restrictions and limitations;
(iv) to
approve the forms of Award Agreements and all other documents, notices, and
certificates in connection therewith which need not be identical either as to
type of Award or among Participants;
(v) to
construe and interpret the terms of the Plan and any Award Agreement, to
determine the meaning of their terms, and to prescribe, amend, and rescind rules
and procedures relating to the Plan and its administration;
(vi) to the
extent consistent with the purposes of the Plan and without amending the Plan,
to modify, to cancel, or to waive the Company’s rights with respect to any
Awards, to adjust or to modify Award Agreements for changes in Applicable Law,
and to recognize differences in foreign law, tax policies, or
customs;
(vii) to
require, as a condition precedent to the grant, vesting, exercise, settlement,
and/or issuance of Shares pursuant to any Award, that a Participant agree to
execute a general release of claims (in any form that the Committee may require,
in its sole discretion, which form may include any other provisions, e.g., confidentiality and
restrictions on competition, that are found in general claims release agreements
that the Company utilizes or expects to utilize);
(viii) in the
event that the Company establishes, for itself or using the services of a third
party, an automated system for the documentation, granting, settlement, or
exercise of Award, such as a system using an Internet website or interactive
voice response, to implement paperless documentation, granting, settlement, or
exercise of Awards by a Participant may be permitted through the use of such an
automated system; and
(ix) to make
all interpretations and to take all other actions that the Committee may
consider necessary or advisable to administer the Plan or to effectuate its
purposes.
Subject
to Applicable Law and the restrictions set forth in the Plan, the Committee may
delegate administrative functions to individuals who are Directors or
Employees.
(c) Local Law Adjustments and
Sub-plans. To facilitate the making of any grant of an Award
under this Plan, the Committee may adopt rules and provide for such special
terms for Awards to Participants who are foreign nationals or who are employed
by the Company or any Affiliate outside of the United States of America as the
Committee may consider necessary or appropriate to accommodate differences in
local law, tax policy, or custom. Without limiting the foregoing, the
Company is specifically authorized to adopt rules and procedures regarding the
conversion of local currency, taxes, withholding procedures, and handling of
stock certificates which vary with the customs and requirements of particular
countries. The Company may adopt sub-plans and establish escrow
accounts and trusts, and settle Awards in cash in lieu of Shares, as may be
appropriate, required, or applicable to particular locations and
countries.
(d) Action by
Committee. Unless otherwise established by the Board or in any
charter of the Committee, a majority of the Committee shall constitute a quorum
and the acts of a majority of the members present at any meeting at which a
quorum is present, and acts approved in writing by all members of the Committee
in lieu of a meeting, shall be deemed the acts of the Committee. Each
member of the Committee is entitled to, in good faith, rely or act upon any
report or other information furnished to that member by an officer or other
Employee of the Company or any Affiliate, the Company’s independent certified
public accountants, or any executive compensation consultant or other
professional retained by the Company to assist in the administration of the
Plan.
(e) Deference to Committee
Determinations. The Committee shall have the discretion to
interpret or construe ambiguous, unclear, or implied (but omitted) terms in any
fashion it deems to be appropriate in its sole discretion, and to make any
findings of fact needed in the administration of the Plan or Award
Agreements. The Committee’s prior exercise of its discretionary
authority shall not obligate it to exercise its authority in a like fashion
thereafter. The Committee’s interpretation and construction of any
provision of the Plan, or of any Award or Award Agreement, and all
determinations the Committee makes pursuant to the Plan shall be final, binding,
and conclusive. The validity of any such interpretation,
construction, decision, or finding of fact shall not be given de novo review if
challenged in court, by arbitration, or in any other forum, and shall be upheld
unless clearly made in bad faith or materially affected by fraud.
(f) No Liability;
Indemnification. Neither the Board nor any Committee member,
nor any Person acting at the direction of the Board or the Committee, shall be
liable for any act, omission, interpretation, construction, or determination
made in good faith with respect to the Plan, any Award, or any Award
Agreement. The Company and its Affiliates shall pay or reimburse any
member of the Committee, as well as any Director, Employee, or Consultant who in
good faith takes action on behalf of the Plan, for all expenses incurred with
respect to the Plan, and to the full extent allowable under Applicable Law shall
indemnify each and every one of them for any claims, liabilities, and costs
(including reasonable attorneys’ fees) arising out of their good faith
performance of duties on behalf of the Plan. The Company and its
Affiliates may, but shall not be required to, obtain liability insurance for
this purpose.
(g) Expenses. The expenses of
administering the Plan shall be borne jointly and severally by the Company and
its Affiliates.
13. Modification
of Awards and Substitution of Options. Within the limitations
of the Plan, the Committee may modify an Award to accelerate the rate at which
an Option may be exercised, to accelerate the vesting of any Award, to extend or
renew outstanding Awards, to accept the cancellation of outstanding Awards to
the extent not previously exercised, or to make any change that the Plan would
permit for a new Award. However, except in connection with a Change
in Control or as approved by the Company’s stockholders for any period during
which it is subject to the reporting requirements of the Exchange Act, the
Committee may not cancel an outstanding Option whose exercise price is greater
than Fair Market Value at the time of cancellation for the purpose of reissuing
the Option to the Participant at a lower exercise price, or granting a
replacement award of a different type, or otherwise allowing for a “repricing”
within the meaning of applicable federal securities
laws. Notwithstanding the foregoing, no modification of an
outstanding Award may materially and adversely affect a Participant’s rights
thereunder unless either (i) the Participant provides written consent to the
modification, or (ii) before a Change in Control, the Committee determines in
good faith that the modification is not materially adverse to the Participant;
provided,
however, that no action pursuant to Section 9 shall be considered to
materially or adversely affect Participant’s rights.
14. Plan
Amendment and Termination. The Board may amend or terminate
the Plan as it shall deem advisable; provided
that no change shall be made that increases the total number of Shares reserved
for issuance pursuant to Awards (except pursuant to Section 9 above) unless such
change is authorized by the stockholders of the Company. A
termination or amendment of the Plan shall not materially and adversely affect a
Participant’s vested rights under an Award previously granted to him or her,
unless the Participant consents in writing to such termination or
amendment. Notwithstanding the foregoing, the Committee may amend the
Plan to comply with changes in tax or securities laws or regulations, or in the
interpretation thereof. Furthermore, neither the Company nor the
Committee shall, without stockholder approval, either (a) allow for a
“repricing” within the meaning of federal securities laws applicable to proxy
statement disclosures, or (b) cancel an outstanding Option whose exercise price
is greater than Fair Market Value at the time of cancellation for the purpose of
reissuing the Option to the Participant at a lower exercise price or granting a
replacement award of a different type.
15. Term of
Plan. If not sooner terminated by the Board, this Plan shall
terminate at the close of business on the date ten years after its Effective
Date. No Awards shall be made under the Plan after its
termination.
16. Governing
Law. The
terms of this Plan shall be governed by the laws of the State of Delaware,
within the United States of America, without regard to the State’s conflict of
laws rules.
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17.
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Laws
and Regulations.
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(a) General Rules. This Plan, the granting
of Awards, the exercise of Options, and the obligations of the Company hereunder
(including those to pay cash or to deliver, sell, or accept the surrender of any
of its Shares or other securities) shall be subject to all Applicable
Law. In the event that any Shares are not registered under any
Applicable Law prior to the required delivery of them pursuant to Awards, the
Company may require, as a condition to their issuance or delivery, that the
Persons to whom the Shares are to be issued or delivered make any written
representations and warranties (such as that such Shares are being acquired by
the Participant for investment for the Participant’s own account and not with a
view to, for resale in connection with, or with an intent of participating
directly or indirectly in, any distribution of such Shares) that the Committee
may reasonably require, and the Committee may in its sole discretion include a
legend to such effect on the certificates representing any Shares issued or
delivered pursuant to the Plan.
(b) Blackout Periods. Notwithstanding any
contrary terms within the Plan or any Award Agreement, the Committee shall have
the absolute discretion to impose a “blackout” period on the exercise of any
Option, as well as the settlement of any Award, with respect to any or all
Participants (including those whose Continuous Service has ended) to the extent
that the Committee determines that doing so is either desirable or required in
order to comply with applicable securities laws.
18. No
Stockholder Rights. Neither a
Participant nor any transferee or Beneficiary of a Participant shall have any
rights as a stockholder of the Company with respect to any Shares underlying any
Award until the date of issuance of a share certificate to such Participant,
transferee, or Beneficiary for such Shares in accordance with the Company’s
governing instruments and Applicable Law. Prior to the issuance of
Shares or Restricted Shares pursuant to an Award, a Participant shall not have
the right to vote or to receive dividends or any other rights as a stockholder
with respect to the Shares underlying the Award (unless otherwise provided in
the Award Agreement for Restricted Shares), notwithstanding its exercise in the
case of Options. No adjustment will be made for a dividend or other
right that is determined based on a record date prior to the date the stock
certificate is issued, except as otherwise specifically provided for in this
Plan or an Award Agreement.
___________________
Appendix
I: Definitions
___________________
As used
in the Plan, the following terms have the meanings indicated when they begin
with initial capital letters within the Plan:
“Affiliate”
means, with respect to any Person, any other Person that directly or indirectly
controls or is controlled by or under common control with such
Person. For the purposes of this definition, “control,” when used
with respect to any Person, means the possession, direct or indirect, of the
power to direct or cause the direction of the management and policies of such
Person or the power to elect directors, whether through the ownership of voting
securities, by contract or otherwise; and the terms “affiliated,” “controlling,”
and “controlled” have meanings correlative to the foregoing.
“Applicable
Law” means the legal requirements relating to the administration of
options and share-based plans under any applicable laws of the United States,
any other country, and any provincial, state, or local subdivision, any
applicable stock exchange or automated quotation system rules or regulations, as
such laws, rules, regulations, and requirements shall be in place from time to
time.
“Award”
means any award made pursuant to the Plan, including awards made in the form of
an Option, a Restricted Share, an RSU, or any combination thereof, whether
alternative or cumulative.
“Award
Agreement” means any written document setting forth the terms of an Award
that has been authorized by the Committee. The Committee shall
determine the form or forms of documents to be used, and may change them from
time to time for any reason.
“Beneficiary”
means the person or entity designated by the Participant, in a form approved by
the Company, to exercise the Participant’s rights with respect to an Award or
receive payment or settlement under an Award after the Participant’s
death.
“Board”
means the Board of Directors of the Company.
“Cause”
will have the meaning set forth in any unexpired employment agreement between
the Company and the Participant. In the absence of such an agreement,
“Cause” will exist if the Participant is terminated from employment or other
service with the Company or an Affiliate for any of the following
reasons: (i) the Participant’s willful failure to substantially
perform his or her material duties and responsibilities to the Company or
deliberate violation of a material Company policy; (ii) the Participant’s
commission of any material act or acts of fraud, embezzlement, dishonesty, or
other willful misconduct; (iii) the Participant’s material unauthorized use or
disclosure of any proprietary information or trade secrets of the Company or any
other party to whom the Participant owes an obligation of nondisclosure as a
result of his or her relationship with the Company; or (iv) Participant’s
willful and material breach of any of his or her material obligations under any
written agreement or covenant with the Company. The foregoing
definition does not in any way limit the Company’s ability to terminate a
Participant’s employment or consulting relationship at any time, and the term
“Company” will be interpreted herein to include any Affiliate or successor
thereto, if appropriate. Furthermore, a Participant’s Continuous
Service shall be deemed to have terminated for Cause within the meaning hereof
if, at any time (whether before, on, or after termination of the Participant’s
Continuous Service), facts or circumstances are discovered that would have
justified a termination for Cause.
“Change in
Control” means any of the following:
(i) Acquisition of Controlling
Interest. Any Person (other than Persons who are Employees at
any time more than one year before a transaction) becomes the Beneficial Owner
(within the meaning of Rule 13d-3 promulgated under the Exchange Act), directly
or indirectly, of securities of the Company representing 50% or more of the
combined voting power of the Company’s then-outstanding
securities. In applying the preceding sentence, (a) securities
acquired directly from the Company or its Affiliates by or for the Person shall
not be taken into account, and (b) an agreement to vote securities shall be
disregarded unless its ultimate purpose is to cause what would otherwise be
Change in Control, as reasonably determined by the Board.
(ii) Merger. The
Company consummates a merger, or consolidation of the Company with any other
corporation unless: (a) the voting securities of the Company
outstanding immediately before the merger or consolidation would continue to
represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity) at least 50% of the combined voting power of
the voting securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation; and (b) no Person (other
than Persons who are Employees at any time more than one year before a
transaction) becomes the Beneficial Owner, directly or indirectly, of securities
of the Company representing 50% or more of the combined voting power of the
Company’s then-outstanding securities.
(iii) Sale of
Assets. The sale or disposition by the Company of all, or
substantially all, of the Company’s assets.
(iv) Liquidation or
Dissolution. The stockholders of the Company approve a plan or
proposal for liquidation or dissolution of the Company.
Notwithstanding
the foregoing, a “Change in Control” shall not be deemed to have occurred by
virtue of the consummation of any transaction or series of integrated
transactions immediately following which the record holders of the common stock
of the Company immediately prior to such transaction or series of transactions
continue to have substantially the same proportionate ownership in an entity
that owns all or substantially all of the assets of the Company immediately
following such transaction or series of transactions.
“Code”
means the Internal Revenue Code of 1986, as amended.
“Committee”
means the Board or, to the extent the Board delegates its responsibilities under
the Plan to the Compensation Committee of the Board (“Compensation
Committee”), the Compensation Committee or its successor; provided
that the term “Committee” means (i) the Board when acting at any time in
lieu of the Committee, (ii) with respect to any decision involving an Award
intended to satisfy the requirements of Code Section 162(m), a committee
consisting of two or more Directors of the Company who are “outside directors”
within the meaning of Code Section 162(m), and (iii) with respect to any
decision relating to a Reporting Person, a committee consisting solely of two or
more Directors who are disinterested within the meaning of Rule
16b-3.
“Company”
means Raptor Pharmaceutical Corp., a Delaware corporation; provided
that, in the event the Company reincorporates to another jurisdiction, all
references to the term “Company” shall refer to the Company in such new
jurisdiction.
“Company
Stock” means common stock, $0.001 par value, of the
Company. In the event of a change in the capital structure of the
Company affecting the common stock (as provided in Section 9), the Shares
resulting from such a change in the common stock shall be deemed to be Company
Stock within the meaning of the Plan.
“Consultant”
means any person (other than an Employee or Director), including an advisor, who
is engaged by the Company or any Affiliate to render services to the Company or
any Affiliate.
“Continuous
Service” means a Participant’s period of service in the absence of any
interruption or termination, as an Employee, Independent Contractor, Director,
or Consultant. Continuous Service shall not be considered interrupted
in the case of: (i) sick leave; (ii) military leave; (iii) any other
leave of absence approved by the Committee, provided
that such leave is for a period of not more than 90 days, unless reemployment
upon the expiration of such leave is guaranteed by contract or statute, or
unless provided otherwise pursuant to a Plan rule adopted by the Committee from
time to time; (iv) changes in status from Director to advisory director or
emeritus status; or (v) transfers between locations of the Company or between
the Company and its Affiliates. Changes in status between service as
an Employee, Independent Contractor, Director, and a Consultant will not
constitute an interruption of Continuous Service if the individual continues to
perform bona fide services for the Company. The Committee shall have
the discretion to determine whether and to what extent the vesting of any Awards
shall be tolled during any paid or unpaid leave of absence; provided,
however, that in the absence of such determination, vesting for all
Awards shall be tolled during any such unpaid leave (but not for a paid
leave).
“Director”
means a member of the Board, or a member of the board of directors of an
Affiliate.
“Disabled”
means (i) for an ISO, that the Participant is disabled within the meaning of
Code Section 22(e)(3), and (ii) for other Awards, a condition under which the
Participant:
(a) is
unable to engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment that can be expected to result in
death or can be expected to last for a continuous period of not less than 12
months; or
(b) by
reason of any medically determinable physical or mental impairment that can be
expected to result in death or can be expected to last for a continuous period
of not less than 12 months, received income replacement benefits for a period of
not less than three months under an accident or health plan covering Employees
of the Company.
“Eligible
Person” means any Consultant, Director, Independent Contractor, or
Employee and includes non-Employees to whom an offer of employment has been or
is being extended.
“Employee”
means any person whom the Company or any Affiliate classifies as an employee
(including an officer) for employment tax purposes, whether or not that
classification is correct. The payment by the Company of a director’s
fee to a Director shall not be sufficient to constitute “employment” of such
Director by the Company.
“Exchange
Act” means the Securities Exchange Act of 1934, as amended.
“Fair
Market Value” means the fair market value of the Company Stock as of such
date based on the then-prevailing prices of the Company Stock on the New York
Stock Exchange, the American Stock Exchange, NASDAQ, or such other stocks
exchange as the Company Stock is then listed for trading (and, if none, as
determined by the Committee in good faith based on relevant facts and
circumstances).
“Grant
Date” means the later of (i) the date designated as the “Grant Date”
within an Award Agreement, and (ii) date on which the Committee determines the
key terms of an Award; provided
that as soon as reasonably practical thereafter the Committee both notifies the
Eligible Person of the Award and enters into an Award Agreement with the
Eligible Person.
“Incentive
Stock Option” (or “ISO”)
means, an Option that qualifies for favorable income tax treatment under Code
Section 422.
“Independent
Contractor” means any service
provider to the Company or an Affiliate who is classified by the Company or an
Affiliate as an independent contractor.
“Non-ISO”
means an Option not intended to qualify as an Incentive Stock Option, as
designated in the applicable Award Agreement.
“Option”
means a right to purchase Company Stock granted under the Plan, at a price
determined in accordance with the Plan.
“Participant”
means any Eligible Person who holds an outstanding Award.
“Person”
means any natural person, association, trust, business trust, cooperative,
corporation, general partnership, joint venture, joint-stock company, limited
partnership, limited liability company, real estate investment trust, regulatory
body, governmental agency or instrumentality, unincorporated organization, or
organizational entity.
“Plan”
means this Raptor Pharmaceutical Corp. 2010 Stock Incentive Plan.
“Reporting
Person” means an Employee, Independent Contractor, Director, or
Consultant who is subject to the reporting requirements set forth under Rule
16b-3.
“Restricted
Share” means a Share of Company Stock awarded with restrictions imposed
under Section 6.
“Restricted
Share Unit” or “RSU”
means a right granted to a Participant to receive Shares or cash upon the lapse
of restrictions imposed under Section 6.
“Retirement”
means a Participant’s termination of employment after the age of 60 if the
Participant has completed at least five continuous years of service with the
Company or a Company Affiliate as of the Participant’s termination of
employment.
“Rule
16b-3” means Rule 16b-3 promulgated under the Exchange Act, as amended
from time to time, or any successor provision.
“Share”
means a share of Common Stock of the Company, as adjusted in accordance with
Section 9 of the Plan.
“Ten
Percent Holder” means a person who owns (within the meaning of Code
Section 422) stock representing more than ten percent (10%) of the combined
voting power of all classes of stock of the Company.
“Withholding
Taxes” means the aggregate minimum amount of federal, state, local, and
foreign income, payroll, and other taxes that the Company and any Affiliates are
required to withhold in connection with any Award.
RAPTOR
PHARMACEUTICAL CORP.
2010
STOCK INCENTIVE PLAN
_______________________
Appendix
II: ____ Sub-Plan
_______________________
This
Appendix II applies to any Awards that are made to Eligible Persons who are
residents of ___________ and who are or may become subject to its tax laws
(i.e., income tax and/or social security tax) as a result of Awards granted
under the Raptor Pharmaceutical Corp. 2010 Stock Incentive Plan (the “Plan”). Terms
herein that begin with initial capital letters have the special definition set
forth in the Plan.
This
Appendix II shall be read in conjunction with the Plan and is subject to the
terms and conditions of the Plan; provided
that, to the extent that the terms and conditions of the Plan differ from or
conflict with the terms of this Appendix II, the following terms of this
Appendix II shall prevail:
1. ______________________.
RAPTOR
PHARMACEUTICAL CORP.
ANNUAL
MEETING PROXY CARD
THIS
PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF RAPTOR PHARMACEUTICAL CORP. FOR
THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MARCH 9, 2010
The undersigned, having read the Notice of Annual Meeting of Stockholders and the
Proxy Statement dated February 4, 2010, receipt of which are hereby acknowledged,
hereby
appoints Christopher M. Starr, Ph.D., and Kim R. Tsuchimoto and each of them,
with
power to act without the other and with power of substitution, as proxies and attorneys-in-
fact and
hereby authorizes them to represent and vote as provided on the other side, all
the
shares of Raptor Pharmaceutical Corp. ("Raptor") common stock that the undersigned is
entitled
to vote at Raptor's
Annual Meeting of Stockholders on March 9, 2010, at 2:00 p.m.
(Pacific) at
Raptor's
corporate offices at 9 Commercial Blvd., Suite 200, Novato, CA 94949, and at any
continuation,
adjournment
or postponement thereof.
(Continued
and to be signed on the reverse side.)
ANNUAL MEETING OF STOCKHOLDERS OF
RAPTOR PHARMACEUTICAL CORP.
March
9, 2010
PROXY VOTING INSTRUCTIONS
INTERNET - Access “www.voteproxy.com” and follow the
on-screen
instructions. Have your proxy card available when you
access
the web page, and use the Company Number and Account
Number
shown on your proxy card.
TELEPHONE - Call toll-free 1-800-PROXIES (1-800-776-9437) in the
United States or 1-718-921-8500 from foreign countries
from any touch-tone telephone and follow the
instructions. Have your proxy
card available when you call and use the Company Number and
Account Number shown on your proxy card.
Vote
online/phone until 11:59 PM EST the day before the meeting.
MAIL - Sign, date and mail your proxy card in the envelope
provided as soon as possible.
IN PERSON - You may vote your shares in person by attending
the Annual Meeting.
COMPANY
NUMBER
ACCOUNT
NUMBER
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NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIAL: The Notice of
Meeting, proxy statement, proxy card and annual report to stockholders are
available at https://materials.proxyvote.com/75382F
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