UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________________
SCHEDULE 14A
PROXY STATEMENT PURSUANT
TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
__________________
Filed by the Registrant
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Preliminary Proxy Statement
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Definitive Proxy Statement
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Confidential, for Use of the Commission Only (as
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Definitive Additional Materials
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Soliciting Material Pursuant to sec.
240.14a-11(c) or sec. 240.14a-12
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ATOSSA GENETICS
INC.
(Name
of Registrant as Specified In Its Charter)
N/A
(Name
of Person(s) Filing Proxy Statement, if other than the
Registrant)
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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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107 Spring Street
Seattle, Washington 98104
NOTICE OF ANNUAL MEETING
OF STOCKHOLDERS
To Be Held on May 9, 2017
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of
Stockholders of Atossa Genetics Inc., a Delaware corporation (the
“
Company
”),
which will be held on May 9, 2017, at 1:00 p.m. local time, at 107
Spring Street, Seattle, Washington 98104. Only stockholders of
record who held common stock at the close of business on the record
date, April 6, 2017 (the “
Record
Date
”), may attend and vote at the Annual Meeting,
including any adjournment or postponement thereof.
At the Annual Meeting, you will be asked to consider and vote upon:
(1) the election of two Class II directors named in the Proxy
Statement; (2) the ratification of the selection of BDO USA LLP
(“
BDO
”)
as our independent registered public accounting firm for the fiscal
year ending December 31, 2017; (3) the approval to increase
authorized shares under the Atossa Genetics 2010 Stock Option and
Incentive Plan by 1,500,000 shares; and (4) the transaction of any
other business that may properly come before the meeting or any
adjournment thereof.
No other items of business are expected to be considered at the
meeting and no other director nominees will be entertained,
pursuant to the Company’s Bylaws. The enclosed Proxy
Statement more fully describes the details of the business to be
conducted at the Annual Meeting. After careful consideration, our
Board of Directors has unanimously approved the proposals and
recommends that you vote FOR each nominee and FOR each other
proposal. After reading the Proxy Statement, please mark, date, and
sign and return the enclosed proxy card in the accompanying reply
envelope to ensure receipt by our tabulator. YOUR SHARES CANNOT BE
VOTED UNLESS YOU SIGN, DATE AND RETURN THE ENCLOSED PROXY OR ATTEND
THE ANNUAL MEETING IN PERSON.
A copy of the Atossa Genetics Inc. 2016 Annual Report has been
mailed with this Proxy Statement to all stockholders entitled to
notice of and to vote at the annual meeting.
We look forward to seeing you at the Annual Meeting.
Sincerely,
Steven C. Quay, M.D., Ph.D.
Chairman of the Board, President and
Chief Executive Officer
April 7, 2017
WHETHER OR NOT YOU
EXPECT TO ATTEND THE MEETING, PLEASE MARK, DATE AND SIGN THE
ENCLOSED PROXY AND RETURN IT AT YOUR EARLIEST CONVENIENCE IN THE
ENCLOSED POSTAGE-PREPAID RETURN ENVELOPE. EVEN IF YOU HAVE VOTED BY
PROXY, YOU MAY STILL VOTE IN PERSON IF YOU ATTEND THE MEETING.
PLEASE NOTE, HOWEVER, THAT IF YOUR SHARES ARE HELD OF RECORD BY A
BROKER, BANK OR OTHER NOMINEE AND YOU WISH TO VOTE AT THE MEETING,
YOU MUST OBTAIN A PROXY CARD ISSUED IN YOUR NAME FROM THAT
INTERMEDIARY.
107 Spring Street
Seattle, Washington 98104
PROXY STATEMENT FOR
2017 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 9, 2017
GENERAL
INFORMATION
This Proxy Statement is furnished in connection with the
solicitation of proxies by the Board of Directors (the
“
Board
”)
of Atossa Genetics Inc. (“
Atossa
”
or the “
Company
”)
for use at the Company’s 2017 Annual Meeting of Stockholders,
to be held at 107 Spring Street, Seattle, Washington 98104, on May
9, 2017, at 1:00 p.m. local time. This Proxy Statement and the
accompanying form of proxy will be mailed to our stockholders on or
about April 10, 2017. Unless otherwise indicated herein, this Proxy
Statement speaks as of the close of business on April 6, 2017,
which is the record date for the annual meeting (the
“
Record
Date
”).
For a proxy to be effective, it must be properly executed and
received prior to the annual meeting. Each proxy properly tendered
will, unless otherwise directed by the stockholder, be voted for
the proposals and nominees described in this Proxy Statement and at
the discretion of the proxy holder(s) with regard to all other
matters that may properly come before the meeting.
The Company will pay all of the costs of soliciting proxies. We
will provide copies of this Proxy Statement, notice of annual
meeting and accompanying materials to brokerage firms, fiduciaries
and custodians for forwarding to beneficial owners and will
reimburse these persons for their costs of forwarding these
materials. Our directors, officers and employees may also solicit
proxies by telephone, facsimile, or personal solicitation; however,
we will not pay them additional compensation for any of these
services.
Only holders of record of our common stock (“
common
stock
”) at the close of business on the Record Date
are entitled to notice of and to vote at the annual meeting. On the
Record Date, there were a total of 9,650,237 shares of capital
stock issued and outstanding on an as-converted to common stock
basis, consisting of 6,008,913 shares of common stock and 2,731
shares of Series A Convertible Preferred Stock, which are
convertible into 3,641,324 shares of common stock. Each share of
common stock is entitled to one vote on all matters to be voted
upon at the annual meeting. Holders of common stock do not have the
right to cumulative voting in the election of directors. The
presence, in person or by proxy, of the holders of a majority of
the outstanding shares of common stock on the Record Date will
constitute a quorum for the transaction of business at the annual
meeting and any adjournment thereof. Our outstanding shares of
Series A Convertible Preferred Stock do not have voting rights.
Persons who hold shares of Atossa common stock directly on the
Record Date and not through a broker, bank or other financial
institution (“
record
holders
”) must return a proxy card or attend the
annual meeting in person in order to vote on the proposals. Persons
who hold shares of Atossa common stock indirectly on the Record
Date through a brokerage firm, bank or other financial institution
(“
beneficial
holders
”) must return a voting instruction form to
have their shares voted on their behalf. Brokerage firms, banks or
other financial institutions that do not receive voting
instructions from beneficial holders may either vote these shares
on behalf of the beneficial holders or return a proxy leaving these
shares un-voted (a “
broker
non-vote
”).
1
Abstentions and broker non-votes will be counted for the purpose of
determining the presence or absence of a quorum, but will not be
counted for the purpose of determining the number of votes cast on
a given proposal. The required vote for each of the proposals
expected to be acted upon at the annual meeting is described
below:
Proposal No. 1
— Election of directors.
Directors are elected by
a plurality, with the nominees obtaining the most votes being
elected. Because there is no minimum vote required, abstentions and
broker non-votes will be entirely excluded from the vote and will
have no effect on its outcome.
Proposal No. 2
— Ratification of selection of independent registered public
accounting firm.
This proposal must be approved by a
majority of the shares present in person or represented by proxy
and entitled to vote on the proposal. As a result, abstentions will
have the same effect as voting against the proposal and broker
non-votes will have no effect on the vote outcome.
Proposal No. 3
— Approval to increase the authorized shares under the 2010
Stock Option and Incentive plan by 1,500,000
shares.
This proposal must be approved by a majority of
the shares present in person or represented by proxy and entitled
to vote on the proposal. As a result, abstentions will have the
same effect as voting against the proposal and broker non-votes
will have no effect on the vote outcome.
We encourage you to vote by returning your proxy or voting
instruction form. By voting in advance of the meeting, this ensures
that your shares will be voted and reduces the likelihood that the
Company will be forced to incur additional expenses soliciting
proxies for the annual meeting. Any record holder of our common
stock may attend the annual meeting in person and may revoke the
enclosed form of proxy at any time by:
•
executing and delivering to the corporate Secretary a later-dated
proxy;
•
delivering a written revocation to the corporate Secretary before
the meeting; or
•
voting in person at the annual meeting.
Beneficial holders of our common stock who wish to change or revoke
their voting instructions should contact their brokerage firm, bank
or other financial institution for information on how to do so.
Beneficial holders who wish to attend the annual meeting and vote
in person should contact their brokerage firm, bank or other
financial institution holding shares of Atossa on their behalf in
order to obtain a “legal proxy,” which will allow them
to both attend the meeting and vote in person. Without a legal
proxy, beneficial holders cannot vote at the annual meeting because
their brokerage firm, bank or other financial institution may have
already voted or returned a broker non-vote on their behalf.
2
PROPOSAL NO.
1
ELECTION OF
DIRECTORS
The Certificate of Incorporation of the Company provides that the
Board is to be divided into three classes as nearly equal in number
as reasonably possible, with directors in each class serving
three-year terms. The total Board size is currently fixed at six
directors. Currently, the Class I directors (whose terms expire at
the 2019 annual meeting of stockholders) are Steven C. Quay, M.D.,
Ph.D., and Gregory L. Weaver. The Class II directors (whose terms
expire at the 2017 annual meeting of stockholders) are Stephen J.
Galli, M.D., and Richard I. Steinhart. The Class III directors
(whose terms expire at the 2018 annual meeting of stockholders) are
Shu-Chih Chen, Ph.D., and H. Lawrence Remmel, Esq. Class II
directors elected at the annual meeting will hold office until the
2020 annual meeting of stockholders and until their successors are
elected and qualified, unless they resign or their seats become
vacant due to death, removal, or other cause in accordance with the
Bylaws of the Company.
As described below, the Board has nominated Stephen J. Galli, M.D.,
and Richard I. Steinhart for reelection as Class II directors at
the annual meeting. Both nominees have indicated their willingness
to serve if elected. Should either of the nominees become
unavailable for election at the annual meeting, the persons named
on the enclosed proxy as proxy holders may vote all proxies given
in response to this solicitation for the election of a substitute
nominee chosen by the Board.
Nomination of
Directors
The Nominating and Governance Committee, which acts as the
Company’s nominating committee, reviews and recommends to the
Board potential nominees for election to the Board. In reviewing
potential nominees, the Nominating and Governance Committee
considers the qualifications of each potential nominee in light of
the Board’s existing and desired mix of experience and
expertise. Specifically, the Nominating and Governance Committee
considers each potential nominee’s personal and professional
ethics, integrity and values, business acumen, interest in the
Company and commitment to representing the long-term interests of
the stockholders. The Nominating and Governance Committee also
seeks to have a Board that encompasses a range of talents, ages,
skills, diversity, and expertise sufficient to provide sound and
prudent oversight with respect to the operations and interests of
the business. These criteria are set forth in our Corporate
Governance Guidelines, a copy of which is available on our website
at
www.atossagenetics.com
.
After reviewing the qualifications of potential Board candidates,
the Nominating and Governance Committee presents its
recommendations to the Board, which selects the final director
nominees. Upon the recommendation of the Nominating and Governance
Committee, the Board nominated Dr. Galli and Mr. Steinhart for
reelection as Class II directors. The Company did not pay any fees
to any third parties to identify or assist in identifying or
evaluating nominees for the annual meeting.
The Nominating and Governance Committee considers stockholder
nominees using the same criteria set forth above. Stockholders who
wish to present a potential nominee to the Nominating and
Governance Committee for consideration for election at a future
annual meeting of stockholders must provide the Nominating and
Governance Committee with notice of the nomination and certain
information regarding the candidate within the time periods set
forth below under the caption “Stockholder
Proposals.”
Although the Nominating and Governance Committee may consider
whether nominees assist in achieving a mix of Board members that
represents a diversity of background and experience, which is not
only limited to race, gender or national origin, we have no formal
policy regarding board diversity.
Nominees and Incumbent
Directors
The Nominating and Governance Committee has recommended, and the
Board has nominated, Dr. Galli and Mr. Steinhart to be reelected
Class II directors at the annual meeting. The following table sets
forth the following information for these nominees and the
Company’s continuing directors: the year each was first
elected a director of the Company; their respective ages as of the
date of filing of this Proxy Statement; the positions currently
held with the Company; the year their current term will expire; and
their current class.
3
Nominee/Director Name
and Year First Became a Director
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Position(s) with the Company
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Year
Current Term Expires
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Nominees for Class II
Directors:
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Stephen J. Galli, M.D. (2011)
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70
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Director
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2017
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II
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Richard I. Steinhart (2014)
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59
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Director
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2017
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II
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Continuing Directors:
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Shu-Chih Chen, Ph.D. (2009)
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55
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Director
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2018
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III
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H. Lawrence Remmel, Esq. (2012)
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65
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Director
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2018
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III
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Steven C. Quay, M.D., Ph.D. (2009)
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66
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Chairman of the Board of Directors, President
and Chief Executive Officer
|
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2019
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I
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Gregory L. Weaver (2013)
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60
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Director
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2019
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I
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Class II Directors
Nominated for Election
The following persons have been nominated by the Board to be
elected as Class II directors at the 2017 annual meeting.
Stephen J. Galli, M.D.
Dr. Galli has served as a
director of the Company since July 2011. Dr. Galli is a Professor
of Pathology and of Microbiology & Immunology and the Mary
Hewitt Loveless, M.D., Professor, Stanford University School of
Medicine, Stanford, California since February 1999. He served as
Chair of the Department of Pathology at Stanford University School
of Medicine from 1999 to 2016. Before joining Stanford, he was on
the faculty of Harvard Medical School. He holds 14 U.S. patents and
has over 400 publications. He is past president of the American
Society for Investigative Pathology and past president of the
Collegium Internationale Allergologicum. In addition to receiving
awards for his research, he was recognized with the 2010 Stanford
University President’s Award for Excellence through Diversity
for his recruitment and support of women and underrepresented
minorities at Stanford University. He received his B.A. degree in
biology, magna cum laude, from Harvard College in 1968 and his M.D.
degree from Harvard Medical School in 1973 and completed a
residency in anatomic pathology at the Massachusetts General
Hospital in 1977. Dr. Galli has been selected to serve on the
Company’s Board of Directors because of his qualifications as
a professor and physician, and his specialized expertise as a
pathologist.
Richard I. Steinhart.
Mr. Steinhart has served as a
director of the Company since March 2014. Mr. Steinhart is
currently the Vice President and CFO of Remedy Pharmaceuticals,
Inc. a privately held pharmaceuticals company a position he assumed
in October 2015. From January 2014 until he joined Remedy
Pharmaceuticals, Mr. Steinhart acted as an independent financial
consultant to the Biotechnology and Medical Device Industries. From
April 2006 to December 2013, Mr. Steinhart was an executive at MELA
Sciences, Inc., most recently serving as its Senior Vice President,
Chief Financial Officer, Treasurer and Secretary. From 1992 to
2006, Mr. Steinhart was Managing Director at Forest St. Capital/SAE
Ventures. Earlier, he served as Vice President and Chief Financial
Officer at Emisphere Technologies from 1991 to 1992 and as General
Partner and Chief Financial Officer of CW Group Inc. Mr. Steinhart
is a member of the Board of Directors of Actinium Pharmaceuticals
where he is Chairman of the Audit Committee and a member of the
Compensation Committee. From 2004 to 2012, Mr. Steinhart was a
member of the Board of Directors of Manhattan Pharmaceuticals and
was Chairman of the Audit Committee. Mr. Steinhart received his
B.B.A. and M.B.A. degrees from Pace University. Mr. Steinhart has
been selected to serve on the Company’s Board of Directors
because of his qualifications as a business executive and audit
committee financial expert, and his prior experience as a Chief
Financial Officer, director and committee member of public
companies.
Class III Directors
Continuing in Office Until 2018
Shu-Chih Chen, Ph.D.
Dr. Chen served as Chief
Scientific Officer of the Company since the Company was
incorporated in April 2009 through August 2014. Dr. Chen has served
as a director of the Company since April 2009. Prior to joining the
Company, Dr. Chen served as President of Ensisheim beginning in
2008, was founder and President of SC2Q Consulting Company from
2006 to 2008, and served as Head, Cell Biology, Nastech
Pharmaceutical Company, Inc. from 2002 to 2006. During 1995 and
1996, she was an Associate Professor at National Yang Ming
University, Taipei, Taiwan, and served as the principal
investigator of an NIH RO1 grant studying tumor suppression by gap
junction protein connexin 43 at the Department of Molecular
Medicine at Northwest Hospital before working in the research
department at Nastech Pharmaceutical Company. She is named as an
inventor on 18 patent applications related to cancer therapeutics.
Dr. Chen received her Ph.D. degree in microbiology and public
health from Michigan State University in 1992 and has published
extensively on Molecular Oncology.
4
She received her B.S. degree in medical technology from National
Yang Ming University, Taipei, Taiwan in 1984. Dr. Chen was selected
to serve on the Company’s Board of Directors because of her
role as a founder of the Company and her qualifications in medical
technology and as a professor and researcher in the field of cancer
therapeutics.
H. Lawrence Remmel,
Esq.
Mr.
Remmel has served as a director of the Company since February 2012.
He is currently a partner of the law firm Pryor Cashman LLP,
located in New York City, where he chairs the Banking and Finance
practice group. Mr. Remmel joined Pryor Cashman in 1988. His
practice includes corporate and banking financings, issues relating
to the Investment Company Act of 1940, and intellectual property
and licensing issues, in particular in the biotechnology and
biocosmeceutical areas. Mr. Remmel serves on the Board of Advisors
of CytoDel, LLC, an early stage bio-pharmaceutical company
developing products for bio-defense, neuronal drug delivery, and
musculoskeletal and aesthetic medicine. He was an associate of the
law firm Reboul, MacMurray, Hewitt, Maynard & Kristol from 1984
to 1988, and began his legal career at Carter, Ledyard &
Milburn, where he was an associate from 1979 to 1984. He was
admitted to the New York bar in 1980 and is a member of the New
York State Bar Association. He received his J.D. from the
Washington & Lee University School of Law in 1979 and his B.A.
from Princeton University in 1975. He currently is a doctoral
candidate in the Graduate School of Life Sciences of the University
of Utrecht, in the Department of Clinical and Translational
Oncology. Mr. Remmel has been selected to serve on the
Company’s Board of Directors because of his substantial
experience as a corporate attorney advising biotechnology companies
and his familiarity with the fiduciary duties and the regulatory
requirements affecting publicly traded companies.
Class I Directors
Continuing in Office Until 2019
Steven C. Quay, M.D., Ph.D.
Dr. Quay has served as
Chief Executive Officer, President and Chairman of the Board of
Directors of the Company since the Company was incorporated in
April 2009. Prior to his work at the Company, Dr. Quay served as
Chairman of the Board, President and Chief Executive Officer of
MDRNA, Inc., a biotechnology company focused on the development and
commercialization of RNAi-based therapeutic products, from August
2000 to May 2008, and as its Chief Scientific Officer until
November 30, 2008 (MDRNA, Inc. was formerly known as Nastech
Pharmaceutical Company Inc. and is currently known as Marina
Biotech, Inc.). From December 2008 to April 2009, Dr. Quay was
involved in acquiring the Company’s assets and preparing the
Company’s business plan. Dr. Quay is certified in Anatomic
Pathology with the American Board of Pathology, completed both an
internship and residency in anatomic pathology at Massachusetts
General Hospital, a Harvard Medical School teaching hospital, is a
former faculty member of the Department of Pathology, Stanford
University School of Medicine, and is a named inventor on 14 U.S.
and foreign patents covering the ForeCYTE Breast Aspirator.
Including the patents for the ForeCYTE Breast Aspirator, Dr. Quay
is a named inventor on 86 U.S. patents, 129 pending patent
applications and is a named inventor on patents covering five
pharmaceutical products that have been approved by the U.S. Food
and Drug Administration. Dr. Quay received an M.D. in 1977 and a
Ph.D. in 1975 from the University of Michigan Medical School. He
also received his B.A. degree in biology, chemistry and mathematics
from Western Michigan University in 1971. He was selected to serve
on the Company’s Board of Directors because of his role as a
founder of the Company and the inventor of the ForeCYTE Breast
Aspirator, as well as his qualifications as a physician and the
principal researcher overseeing the clinical and regulatory
development of the Company’s pharmaceutical programs.
Gregory L. Weaver.
Mr. Weaver has served as a director
of the Company since October 2013. Mr. Weaver currently serves as
Chief Financial Officer of ProMetic Life Science, a publicly traded
pharmaceutical company. From January to October 2015 he served as
Global Chief Financial Officer of Oryzon Genomics, an epigenetics
company. From August 2013 to October 2014, Mr. Weaver served as
Chief Financial Officer, Senior Vice President, Treasurer and
Corporate Secretary of Fibrocell Science, Inc., an autologous
cellular therapeutic company. From June 2011 to July 2013, Mr.
Weaver served as Chief Financial Officer and Senior Vice President
of Celsion Corp., an oncology drug development company. From
February 2009 to August 2010, Mr. Weaver served as Chief Financial
Officer and Senior Vice President of Poniard Pharmaceuticals, Inc.,
a drug development company. From April 2007 to December 2008, Mr.
Weaver served as Chief Financial Officer of Talyst, Inc., a
healthcare technology services company. Mr. Weaver received his
B.S. degree from Trinity University and his M.B.A. degree from
Boston College. Mr. Weaver has been selected to serve on the
Company’s Board of Directors because of his qualifications as
a business executive and audit committee financial expert, and his
current and prior experience as a Chief Financial Officer, director
and committee member of public companies.
5
Vote Required
The two nominees who receive the greatest number of affirmative
votes of the shares present in person or by proxy will be elected
as Class II directors. Any shares that are not voted, whether by
abstention, broker non-votes or otherwise, will not affect the
election of directors.
Holders of proxies solicited by this Proxy Statement will vote the
proxies received by them as directed on the proxy card or, if no
direction is made, then FOR the election of all nominees named in
this Proxy Statement.
THE BOARD OF DIRECTORS
RECOMMENDS A VOTE “FOR”
THE NOMINEES IDENTIFIED ABOVE.
6
PROPOSAL NO.
2
RATIFICATION OF
SELECTION OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
Our Audit Committee has selected BDO USA LLP (“
BDO
”)
as our independent registered public accounting firm for the fiscal
year ending December 31, 2017, and has further directed that we
submit the selection of BDO for ratification by our stockholders at
the annual meeting.
The Company is not required to submit the selection of our
independent registered public accounting firm for stockholder
approval. However, if the stockholders do not ratify this
selection, the Audit Committee will reconsider its selection of
BDO. Even if the selection is ratified, our Audit Committee may
direct the appointment of a different independent registered public
accounting firm at any time during the year if the Audit Committee
determines that the change would be in the best interests of the
Company.
The Audit Committee reviews and pre-approves all audit and
non-audit services performed by its independent registered public
accounting firm, as well as the fees charged for such services. All
fees incurred in fiscal 2016 for services rendered by BDO were
approved in accordance with these policies. In its review of
non-audit service fees, the Audit Committee considers, among other
things, the possible impact of the performance of such services on
the auditor’s independence. The Audit Committee has
determined that the non-audit services performed by BDO in the
fiscal year ended December 31, 2016 were compatible with
maintaining the auditor’s independence. Additional
information concerning the Audit Committee and its activities can
be found in the following sections of this Proxy Statement:
“Board Committees” and “Report of the Audit
Committee.”
BDO has audited our annual financial statements as of December 31,
2016 and 2015. Representatives of BDO are expected to be present at
the annual meeting in person or by telephone, will have the
opportunity to make a statement if they desire to do so and will be
available to respond to appropriate stockholder questions.
Fees for Independent
Registered Public Accounting Firm
The following is a summary of the fees billed to the Company by BDO
for professional independent audit services rendered for the fiscal
years ended December 31, 2016 and 2015. These fees are for work
invoiced in the fiscal years indicated.
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Audit Fees:
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Consists of fees billed for audit of our annual
financial statements and the review of the financial statements
included in our quarterly reports on Form 10-Q, and services that
are normally provided by BDO in connection with statutory and
regulatory filings or engagements for that fiscal year.
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$
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135,000
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$
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218,796
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Other Fees:
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|
|
|
|
|
|
Audit-Related Fees
|
|
$
|
29,583
|
|
|
—
|
Total All Fees
|
|
$
|
164,583
|
|
$
|
218,796
|
Vote Required
Ratification of the selection of the independent registered public
accounting firm requires the affirmative vote of a majority of the
shares present in person or represented by proxy and entitled to
vote on the proposal. Abstentions will have the same effect as
voting against the proposal. Because broker non-votes are not
counted as votes for or against this proposal, they will have no
effect on the outcome of the vote.
THE BOARD OF DIRECTORS
RECOMMENDS A VOTE “FOR” PROPOSAL NO. 2.
7
PROPOSAL NO.
3
TO INCREASE THE ATOSSA
GENETICS 2010 STOCK OPTION AND INCENTIVE PLAN
BY 1,500,000 IN AGGREGATE THE NUMBER OF SHARES
AUTHORIZED FOR ISSUANCE UNDER THE PLAN
At the Annual Meeting, you are being asked to approve an amendment
to increase the number of shares authorized for issuance under the
2010 Stock Option and Incentive Plan (the “
2010
Plan
”) by 1,500,000 shares to a total of 1,813,605
shares authorized for issuance under the Plan.
Initially, the total number of shares of common stock available for
issuance under the 2010 Plan was 66,667 shares (or 1,000,000 shares
prior to the reverse stock-split in August 2016). As of January 1,
2012 and each January 1 thereafter, the number of shares of common
stock reserved and available for issuance under the 2010 Plan has
been cumulatively increased by 4% of the number of shares of common
stock issued and outstanding on the immediately preceding December
31.
On April 6, 2017, the Board approved an amendment of the Plan,
subject to shareholder approval, to increase the number of shares
of common stock authorized for issuance under the Plan by 1,500,000
shares, to a total of 1,813,605 shares. The Board adopted this
amendment because it believes that:
•
additional shares are necessary to attract new employees and
executives;
•
additional shares are needed to further the goal of retaining and
motivating existing personnel; and
•
the issuance of options to employees is an integral component of
the Company’s compensation policy.
As of April 6, 2017, options covering 313,009 shares of common
stock with a weighted average exercise price of $18.75 and a
weighted average remaining term of 8.2 years were outstanding under
the 2010 Plan. There remained available for future grant 313,605
shares of common stock under the 2010 Plan as of April 6, 2017.
Assuming adoption of this Proposal No. 3, there will be a total of
approximately 1.8 million shares available for issuance under the
2010 Plan, which equals approximately 18% of the common stock
outstanding on April 6, 2017 including convertible preferred stock
on an as-converted basis. The Company plans to complete an
additional equity financing prior to the end of 2017 and it is
projected that upon completion of that financing, assuming a
dilutive affect similar to the April 3, 2017 financing of the
Company, the number of shares available for issuance under the 2010
Plan will equal approximately 7.3% of the outstanding common and
preferred stock of the Company.
Shares subject to outstanding awards may be returned to the 2010
Plan as a result of cancellations or expiration of awards.
Summary of the 2010
Plan
General.
The
purpose of the 2010 Plan is to enhance the long-term
stockholders’ value of the Company by offering opportunities
to eligible individuals to participate in the growth in value of
the equity of the Company. The 2010 Plan provides for the grant of
equity-based awards to employees, officers, non-employee directors
and other key persons providing services to the Company. Awards of
incentive options may be granted under the 2010 Plan until
September 2020. No other awards may be granted under the 2010 Plan
after the date that is 10 years from the date of stockholder
approval.
Plan
Administration
. The 2010 Plan may be administered by
the full Board or the Compensation Committee. It is the current
intention of the Company that the 2010 Plan be administered by the
Compensation Committee. The Compensation Committee has full power
to select, from among the individuals eligible for awards, the
individuals to whom awards will be granted, to make any combination
of awards to participants, and to determine the specific terms and
conditions of each award, subject to the provisions of the 2010
Plan. The Compensation Committee may delegate to our Chief
Executive Officer the authority to grant stock options to employees
who are not subject to the reporting and other provisions of
Section 16 of the Exchange Act and not subject to Section 162(m) of
the Code, subject to certain limitations and guidelines.
Eligibility
. Persons
eligible to participate in the 2010 Plan will be those full or
part-time officers, employees, non-employee directors and other key
persons (including consultants and prospective officers) of the
Company and its subsidiaries as selected from time to time by the
Compensation Committee in its discretion.
Plan
Limits
. Initially, the total number of shares of common
stock available for issuance under the 2010 Plan is 66,667 shares
(or 1,000,000 shares prior to the reverse stock-split in August
2016). As of January 1, 2012 and each January 1 thereafter, the
8
number of shares of common stock reserved and available for
issuance under the 2010 Plan will be cumulatively increased by 4%
of the number of shares of common stock issued and outstanding on
the immediately preceding December 31.
Stock
Options
. The 2010 Plan permits the granting of (i)
options to purchase common stock intended to qualify as incentive
stock options under Section 422 of the Code, and (ii) options that
do not so qualify. Options granted under the 2010 Plan will be
non-qualified options if they fail to qualify as incentive options
or exceed the annual limit on incentive stock options. Incentive
stock options may only be granted to employees of the Company and
its subsidiaries. Non-qualified options may be granted to any
persons eligible to receive incentive options and to non-employee
directors and key persons. The option exercise price of each option
will be determined by the Compensation Committee but may not be
less than 100% of the fair market value of the common stock on the
date of grant. Fair market value for this purpose will be the last
reported sale price of the shares of common stock on the NASDAQ
Capital Market on the date of grant. The exercise price of an
option may not be reduced after the date of the option grant, other
than to appropriately reflect changes in our capital structure.
The term of each option will be fixed by the Compensation Committee
and may not exceed 10 years from the date of grant. The
Compensation Committee will determine at what time or times each
option may be exercised. Options may be made exercisable in
installments and the exercisability of options may be accelerated
by the Compensation Committee. In general, unless otherwise
permitted by the Compensation Committee, no option granted under
the 2010 Plan is transferable by the optionee other than by will or
by the laws of descent and distribution, and options may be
exercised during the optionee’s lifetime only by the
optionee, or by the optionee’s legal representative or
guardian in the case of the optionee’s incapacity.
Upon exercise of options, the option exercise price must be paid in
full either in cash, by certified or bank check or other instrument
acceptable to the Compensation Committee or by delivery (or
attestation to the ownership) of shares of common stock that are
beneficially owned by the optionee for at least six months or were
purchased in the open market. Subject to applicable law, the
exercise price may also be delivered to the Company by a broker
pursuant to irrevocable instructions to the broker from the
optionee. In addition, the Compensation Committee may permit
non-qualified options to be exercised using a net exercise feature
which reduces the number of shares issued to the optionee by the
number of shares with a fair market value equal to the exercise
price.
To qualify as incentive options, options must meet additional
federal tax requirements, including a $100,000 limit on the value
of shares subject to incentive options that first become
exercisable by a participant in any one calendar year.
Stock Appreciation
Rights
. The Compensation Committee may award stock
appreciation rights subject to such conditions and restrictions as
the Compensation Committee may determine. Stock appreciation rights
entitle the recipient to shares of common stock equal to the value
of the appreciation in the stock price over the exercise price. The
exercise price is the fair market value of the common stock on the
date of grant. The term of a stock appreciation right will be fixed
by the Compensation Committee and may not exceed 10 years.
Restricted
Stock
. The Compensation Committee may award shares of
common stock to participants subject to such conditions and
restrictions as the Compensation Committee may determine. These
conditions and restrictions may include the achievement of certain
performance goals and/or continued employment with us through a
specified restricted period.
Restricted Stock
Shares
. The Compensation Committee may award restricted
stock shares to any participants. Restricted stock shares are
generally payable in the form of shares of common stock, although
restricted stock shares granted to the Chief Executive Officer may
be settled in cash. These shares may be subject to such conditions
and restrictions as the Compensation Committee may determine. These
conditions and restrictions may include the achievement of certain
performance goals (as summarized above) and/or continued employment
with the Company through a specified vesting period. In the
Compensation Committee’s sole discretion, it may permit a
participant to make an advance election to receive a portion of his
or her future cash compensation otherwise due in the form of a
restricted stock unit award, subject to the participant’s
compliance with the procedures established by the Compensation
Committee and requirements of Section 409A of the Code. During the
deferral period, the deferred stock awards may be credited with
dividend equivalent rights.
Adjustments for Stock
Dividends, Stock Splits, Etc.
The 2010 Plan requires
the Compensation Committee to make appropriate adjustments to the
number of shares of common stock that are subject to the 2010 Plan,
to certain limits in the 2010 Plan, and to any outstanding awards
to reflect stock dividends, stock splits, extraordinary cash
dividends and similar events.
Tax
Withholding
. Participants in the 2010 Plan are
responsible for the payment of any federal, state or local taxes
that the Company is required by law to withhold upon the exercise
of options or stock appreciation rights or vesting of other
awards.
9
Subject to approval by the Compensation Committee, participants may
elect to have the minimum tax withholding obligations satisfied by
authorizing the Company to withhold shares of common stock to be
issued pursuant to the exercise or vesting.
Amendments and
Termination
. The Board of Directors of the Company may
at any time amend or discontinue the 2010 Plan and the Compensation
Committee may at any time amend or cancel any outstanding award for
the purpose of satisfying changes in the law or for any other
lawful purpose. However, no such action may adversely affect any
rights under any outstanding award without the holder’s
consent. To the extent required under the NASDAQ Capital Market
rules, any amendments that materially change the terms of the 2010
Plan will be subject to approval by our stockholders. Amendments
shall also be subject to approval by our stockholders if and to the
extent determined by the Compensation Committee to be required by
the Code to preserve the qualified status of incentive options or
to ensure that compensation earned under the 2010 Plan qualifies as
performance-based compensation under Section 162(m) of the
Code.
Federal Income Tax Consequences of Options and Stock Awards under
the Plan
THE FOLLOWING IS A GENERAL SUMMARY OF THE TYPICAL FEDERAL INCOME
TAX CONSEQUENCES UNDER CURRENT LAW OF THE ISSUANCE AND EXERCISE OF
OPTIONS OR AWARDS OF RESTRICTED STOCK UNDER THE PLAN. IT DOES NOT
DESCRIBE STATE OR OTHER TAX CONSEQUENCES OF THE ISSUANCE AND
EXERCISE OF OPTIONS, GRANT OF RESTRICTED STOCK OR GRANT OF
RESTRICTED STOCK UNITS.
Options.
The
grant of an incentive stock option has no federal income tax effect
on the optionee. Upon exercise, the optionee does not recognize
income for “regular” tax purposes. However, the excess
of the fair market value of the stock subject to an option over the
exercise price of such option (the “option spread”) is
includible in the optionee’s “alternative minimum
taxable income” for purposes of the alternative minimum tax.
If the optionee does not dispose of the stock acquired upon
exercise of an incentive stock option until more than two years
after the option grant date and more than one year after exercise
of the option, any gain upon sale of the shares will be a long-term
capital gain. If shares are sold or otherwise disposed of before
both of these periods have expired (a “disqualifying
disposition”), the option spread at the time of exercise of
the option (but not more than the amount of the gain on the sale or
other disposition) is ordinary income in the year of such sale or
other disposition. If gain on a disqualifying disposition exceeds
the amount treated as ordinary income, the excess is taxable as
capital gain (which will be long-term capital gain if the shares
have been held more than one year after the date of exercise of the
option). The Company is not entitled to a federal income tax
deduction in connection with incentive stock options, except to the
extent that the optionee has taxable ordinary income on a
disqualifying disposition (unless limited by Section 162(m) of the
Internal Revenue Code).
The grant of a nonstatutory option has no federal income tax effect
on the optionee. Upon the exercise of a nonstatutory option, the
optionee has taxable ordinary income (and the Company is entitled
to a corresponding deduction unless limited by Section 162(m) of
the Internal Revenue Code) equal to the option spread on the date
of exercise. Upon the disposition of stock acquired upon exercise
of a nonstatutory option, the optionee recognizes either long-term
or short-term capital gain or loss, depending on how long such
stock was held, on any difference between the sale price and the
exercise price, to the extent not recognized as taxable income on
the date of exercise. The Company may allow nonstatutory options to
be transferred subject to conditions and restrictions imposed by
the Administrator; special tax rules may apply on such a
transfer.
In the case of both incentive stock options and nonstatutory
options, special federal income tax rules apply if the
Company’s common stock is used to pay all or part of the
option price.
Stock
Awards.
Upon receipt of a stock award, a recipient
generally has taxable income in the amount of the excess of the
then fair market value of the common stock over any consideration
paid for the common stock (the “spread”). However, if
the common stock is subject to a “substantial risk of
forfeiture” (such as a requirement that the recipient
continue in the employ of the Company) and the recipient does not
make an election under section 83(b) of the Internal Revenue Code,
the recipient will have taxable income upon the lapse of the risk
of forfeiture, rather than at receipt, in an amount equal to the
spread on the date of lapse. If the recipient is an employee of the
Company, the taxable income constitutes supplemental wages subject
to income and employment tax withholding, and the Company receives
a corresponding income tax deduction, unless limited by Section
162(m) of the Internal Revenue Code. If the recipient makes an
election under section 83(b) of the Internal Revenue Code, the
stock received by the recipient is valued as of the date of receipt
(without taking the restrictions into account) and the recipient
has taxable income equal to any excess of that value over the
amount he or she paid for the stock. The Company would again have a
deduction equal to the income to the recipient, unless limited by
Section 162(m) of the Internal Revenue Code. If the recipient makes
an election under section 83(b) of the Internal Revenue Code, the
consequences upon sale or disposition (other than through
forfeiture) of the shares awarded or sold generally are the same as
for common stock acquired under a nonstatutory option as described
above.
10
Restricted Stock
Units.
Upon receipt of a restricted stock unit, a
recipient will not recognize any taxable income. However, upon
vesting of a restricted stock unit and the delivery to the
recipient of the restricted stock units, the recipient generally
has taxable income in the amount of the excess of the then fair
market value of the common stock issued over any consideration paid
for the common stock (the “spread”).
If the recipient is subject to U.S. tax law and if allowed by the
Administrator, an eligible recipient may be allowed to elect to
defer the distribution of some or all of the restricted stock
units, thereby deferring the recipient’s recognition of
taxable income until the restricted stock units are delivered to
the recipient.
If the recipient is an employee of the Company, the taxable income
constitutes supplemental wages subject to income and employment tax
withholding, and the Company receives a corresponding income tax
deduction, unless limited by Section 162(m) of the Internal Revenue
Code. The Administrator, in its sole discretion and pursuant to
such procedures as it may specify from time to time, may permit
Awardee to satisfy such tax withholding obligation, in whole or in
part (without limitation) by (a) paying cash, (b) electing to have
the Company withhold otherwise deliverable shares of common stock
having a fair market value equal to the minimum amount required to
be withheld, (c) delivering to the Company already vested and owned
shares of common stock having a fair market value equal to the
amount required to be withheld, or (d) selling a sufficient number
of such shares of common stock otherwise deliverable to recipient
through such means as the Company may determine in its sole
discretion (whether through a broker or otherwise) equal to the
amount required to be withheld. To the extent determined
appropriate by the Company in its discretion, it will have the
right (but not the obligation) to satisfy any tax withholding
obligations by reducing the number of shares otherwise deliverable
to recipient.
The American Jobs Creation Act of 2004 added Section 409A to the
Internal Revenue Code, generally effective January 1, 2005. Section
409A covers most programs that defer the receipt of compensation to
a succeeding year. There are significant penalties placed on the
individual awardee for failure to comply with Section 409A.
However, it does not impact the Company’s ability to deduct
deferred compensation.
Section 409A does not apply to incentive stock options,
nonstatutory stock options that have an exercise price that is at
least equal to the grant date fair market value and restricted
stock provided there is no deferral of income beyond the vesting
date.
Limitation on
Deduction of Certain Compensation.
A publicly-held
corporation may not deduct compensation in excess of a certain
amount that is paid in any year to its Chief Executive Officer or
other four most highly compensated officers unless the compensation
constitutes “qualified performance-based” compensation
under Section 162(m) of the Internal Revenue Code. The Company
generally attempts to ensure that any awards under the Plan meet
these standards, but may not do so in every instance.
Accounting Treatment
The Company recognizes compensation expense based on the grant-date
fair value of awards granted under the Plan. The Company uses the
Black-Scholes option valuation model to determine the fair value of
the award, which is affected by the Company’s stock price and
the number of shares granted, as well as assumptions which include
the Company’s expected term of the award, the expected stock
price volatility, risk-free interest rate and expected dividends
over the expected term of the award. The expense associated with
each award will generally be recognized over the award’s
vesting period.
New Plan Benefits
As of the date hereof, no options or other stock awards have been
granted on the basis of the share increase for which shareholder
approval is sought under this Proposal 3. Accordingly, future
benefits or amounts received are not determinable. The following
table presents information with respect to stock awards and options
granted under the Plan to the named executive officers and named
groups during the year ended December 31, 2016.
|
|
|
|
Number of Shares Granted
(1)
|
Steven Quay President and Chief Executive
Officer
|
|
5/18/2016
|
|
37,945
|
Kyle Guse Chief Financial Officer, General
Counsel and Secretary
|
|
5/18/2016
|
|
72,667
|
11
Vote Required
Approval of the amendment to
the 2010 Plan requires the affirmative vote of a majority of the
shares present in person or represented by proxy and entitled to
vote on the proposal. Abstentions will have the same effect as
voting against the proposal. Because broker non-votes are not
counted as votes for or against this proposal, they will have no
effect on the outcome of the vote.
THE BOARD OF DIRECTORS
RECOMMENDS A VOTE “FOR” PROPOSAL NO. 3.
12
CORPORATE
GOVERNANCE
Director
Independence
We believe that the Company benefits from having a strong and
independent Board. For a director to be considered independent, the
Board must determine that the director does not have any direct or
indirect material relationship with the Company that would affect
his or her exercise of independent judgment. On an annual basis,
the Board reviews the independence of all directors under
guidelines established by NASDAQ and in light of each
director’s affiliations with the Company and members of
management, as well as significant holdings of Company securities.
This review considers all known relevant facts and circumstances in
making an independence determination. Based on this review, the
Board has made an affirmative determination that all directors,
other than Drs. Quay and Chen, are independent. It was determined
that Dr. Quay lacks independence because of his status as the
Company’s President and Chief Executive Officer and that Dr.
Chen lacks independence because of her marriage to Dr. Quay. The
independent board members meet regularly without the
non-independent members and without management.
Corporate Code of
Business Conduct and Ethics
We believe that our Board and committees, led by a group of strong
and independent directors, provide the necessary leadership, wisdom
and experience that the Company needs in making sound business
decisions. We have adopted a Code of Business Conduct and Ethics
that applies to all of our officers, directors and employees,
including our President and Chief Executive Officer, our Chief
Financial Officer and other employees who perform financial or
accounting functions. Our Corporate Code of Business Conduct and
Ethics helps clarify the operating standards and ethics that we
expect of all of our officers, directors and employees in making
and implementing those decisions. Waivers of our Corporate Code of
Business Conduct and Ethics may only be granted by the Board or the
Audit Committee and will be publicly announced promptly on our
website. In furthering our commitment to these principles, we
invite you to review our Corporate Code of Business Conduct and
Ethics located on our website at
www.atossagenetics.com
.
Stockholder
Communications
Generally, stockholders who have questions or concerns regarding
the Company should contact our Investor Relations representative at
(800) 351-3902. However, any stockholders who wish to address
questions regarding the business or affairs of the Company directly
with the Board, or any individual director, should direct his or
her questions in writing to the Chairman of the Board, Atossa
Genetics Inc., 107 Spring Street, Seattle, WA 98104. Upon receipt
of any such communications, the correspondence will be directed to
the appropriate person, including individual directors.
BOARD OF DIRECTORS AND
COMMITTEES
During fiscal 2016, our Board met six times. Each director attended
at least 75% of the aggregate of the meetings of the Board and
meetings of the committees of which he or she was a member in our
last fiscal year. During fiscal 2016, our Board had an Audit
Committee, a Compensation Committee, a Pricing Committee and a
Nominating and Governance Committee. All members of the Audit,
Compensation and Nominating and Governance Committees are
non-employee directors who are deemed independent.
Although the Company has no formal policies regarding director
attendance at annual meetings, it does expect that all members of
the Board will attend the 2017 annual meeting. All members of the
Board were present in person at the 2016 annual meeting.
Board Leadership
Structure and Risk Oversight
The Board currently combines the role of Chairman of the Board with
the role of Chief Executive Officer. The Board believes this
leadership model, together with four of the other five Board
members being independent, all key committees of the Board being
comprised solely of, and chaired by, independent directors, and the
Company’s established governance guidelines, provides an
effective leadership structure for the Company. Combining the
Chairman and Chief Executive Officer roles fosters clear
accountability, effective decision-making, and aligns corporate
strategy with the Company’s day-to-day operations. In
addition, to ensure effective independent oversight of the Company,
the Board holds meetings of the independent directors of the Board
at every meeting.
13
Dr. Quay has served as Chairman and Chief Executive Officer since
the Company was incorporated in April 2009. The independent
directors believe that because Dr. Quay manages the Company on a
day-to-day basis as Chief Executive Officer and President, his
direct involvement in the Company’s operations makes him
uniquely qualified to lead the Board in effective decision-making
and to efficiently align the Company’s day-to-day operations
with the Board’s objectives.
The Board has overall responsibility for the oversight of the
Company’s risk management process, which is designed to
support the achievement of organizational objectives, including
strategic objectives, to improve long-term organizational
performance and enhance shareholder value. Risk management includes
not only understanding company-specific risks and the steps
management implements to manage those risks, but also what level of
risk is acceptable and appropriate for the Company. Management is
responsible for establishing our business strategy, identifying and
assessing the related risks and implementing appropriate risk
management practices. The Board periodically reviews our business
strategy and management’s assessment of the related risk, and
discusses with management the appropriate level of risk for the
Company. The Board also delegates oversight to Board committees to
oversee selected elements of risk as set forth below.
Board
Committees
Audit
Committee.
As of the Record Date, the Audit Committee
was comprised of Messrs. Steinhart (Chairman), Weaver and Remmel.
The Audit Committee selects the Company’s independent
registered public accounting firm, approves its compensation,
oversees and evaluates the performance of the independent
registered public accounting firm, oversees the accounting and
financial reporting policies and internal control systems of the
Company, reviews the Company’s interim and annual financial
statements, independent registered public accounting firm reports
and management letters, and performs other duties, as specified in
the Audit Committee Charter, a copy of which is available on the
Company’s website at
www.atossagenetics.com.
Additionally, the Audit Committee is involved in the oversight of
the Company’s risk management through its review of policies
relating to risk assessment and management. The Audit Committee met
six times in fiscal 2016. All members of the Audit Committee
satisfy the current independence standards promulgated by NASDAQ
and the SEC and the Board has determined that Richard Steinhart and
Gregory Weaver each qualify as an “audit committee financial
expert,” as the SEC has defined that term in Item 407 of
Regulation S-K.
Compensation
Committee.
As of the Record Date, the Compensation
Committee was comprised of Messrs. Weaver (Chairman) and Steinhart,
and Dr. Galli. The Compensation Committee reviews and recommends
the compensation arrangements for management, or approves such
arrangements if so directed by the Board, establishes and reviews
general compensation policies, administers the Company’s
equity compensation plans and reviews and recommends to the Board
the compensation paid to non-employee directors for their service
on the Board. Our Chief Executive Officer makes recommendations to
the Compensation Committee regarding the corporate and individual
performance goals and objectives relevant to executive compensation
and executives’ performance in light of such goals and
objectives, and recommends other executives’ compensation
levels to the Compensation Committee based on such evaluations. The
Compensation Committee may delegate authority to grant awards under
our 2010 Stock Option and Incentive Plan to the Chief Executive
Officer but it has not historically done so. The Compensation
Committee considers these recommendations and then makes an
independent decision regarding officer compensation levels and
awards. The Chief Executive Officer is not present when his
compensation is evaluated. The Compensation Committee met two times
in fiscal 2016. A copy of the Compensation Committee Charter is
available on the Company’s website at
www.atossagenetics.com
.
All members of the Compensation Committee satisfy the current
NASDAQ independence standards.
Nominating and
Governance Committee.
As of the Record Date, the
Nominating and Governance Committee was comprised of Dr. Galli
(Chairman) and Mr. Remmel. The Nominating and Governance Committee
identifies and nominates candidates for election to the Board,
establishes policies under which stockholders may recommend a
candidate for consideration for nomination as a director, annually
reviews and evaluates the performance, operations, size and
composition of the Board and periodically assesses and reviews the
Company’s Corporate Governance Guidelines and recommends any
appropriate changes thereto. The Nominating and Governance
Committee met two times in fiscal 2016. A copy of the Corporate
Governance Committee Charter is available on our website at
www.atossagenetics.com
.
All members of the Corporate Governance Committee satisfy the
current NASDAQ independence standards.
14
EXECUTIVE OFFICERS AND
KEY EMPLOYEES
Our current and former executive officers and their respective ages
and positions as of the Record Date are set forth in the following
table. Biographical information regarding each executive officer
and key employee is set forth following the table. Biographical
information for Dr. Quay is set forth above under Proposal No. 1
(Election of Directors).
|
|
|
|
|
Executive Officers:
|
|
|
|
|
Steven C. Quay, M.D., Ph.D.
|
|
66
|
|
Chairman of the Board, President and Chief
Executive Officer
|
Kyle Guse, Esq., CPA
|
|
53
|
|
Chief Financial Officer, General Counsel and
Secretary
|
|
|
|
|
|
Former Executive Officers:
|
|
|
|
|
Scott Youmans
|
|
50
|
|
Chief Operating Officer
|
Kyle Guse, Esq.,
CPA.
Mr.
Guse has served as Chief Financial Officer, General Counsel and
Secretary since January 2013. His experience includes more than 20
years of counseling life sciences and other rapid growth companies
through all aspects of finance, corporate governance, securities
laws and commercialization. Mr. Guse has practiced law at several
of the largest international law firms, including from January 2012
through January 2013 as a partner at Baker Botts LLP and, prior to
that, from October 2007 to January 2012, as a partner at McDermott
Will & Emery LLP. Before working at McDermott Will & Emery,
Mr. Guse previously served as a partner at Heller Ehrman LLP. Mr.
Guse began his career as an accountant at Deloitte & Touche and
he is a licensed Certified Public Accountant in the State of
California. Mr. Guse earned a B.S. in business administration and
an M.B.A. from California State University, Sacramento, and a J.D.
from Santa Clara University School of Law.
Scott Youmans.
Mr. Youmans joined Atossa on September
1, 2014 and served as the Senior Vice President of Operations until
September 1, 2015, when he was promoted to the Chief Operating
Officer. Mr. Youmans resigned on February 12, 2016 to pursue other
career opportunities. Prior to joining Atossa, Mr. Youmans was the
Director of Engineering at Impel Neuropharma from February to
September 2014. He consulted for Bayer Interventional from December
2013 to February 2014. Before that he was VP of Engineering at
Pathway Medical Technologies from September 2000 to November 2013
when Pathway was acquired by Bayer Interventional. Mr. Youmans
brings 20 years of medical device development and manufacturing
experience in both U.S. and international markets. Throughout his
20 year career, he has focused on developing, manufacturing and
commercializing complex, innovative medical technologies in a wide
variety of clinical applications including: targeted drug delivery,
peripheral vascular atherectomy, coronary atherectomy,
thrombectomy, biopsy tools, and beating heart support. He brings
experience in rapid product iteration, design controls, continuous
improvement, supply chain development and management, product
life-cycle management, project management, pre-clinical studies,
clinical studies and clinical field support. Prior to joining
Atossa Genetics, Mr. Youmans directed the development of the
Precision Olfactory Device at Impel Neuropharma from February to
September 2014. From 2000 to 2013, Mr. Youmans led the development
of Pathway Medical’s Jetstream Atherectomy System and held
increasingly responsible roles, including VP of Engineering since
2003. Mr. Youmans holds a Bachelor of Science degree in
Manufacturing Engineering Technology from Western Washington
University.
15
BENEFICIAL OWNERS AND
MANAGEMENT
Based on information available
to us and filings with the SEC, the following table sets forth
certain information regarding the beneficial ownership (as defined
by Rule 13d-3 under the Securities Exchange Act of 1934) of our
outstanding common stock for (i) each of our directors, (ii) each
of our “named executive officers,” as defined in
Executive Compensation below, (iii) all of our directors and
executive officers as a group, and (iv) persons known to us to
beneficially hold more than 5% of our outstanding common stock. The
following information is presented as of April 6, 2017 or such
other date as may be reflected below.
Beneficial ownership and percentage ownership are determined in
accordance with the rules of the SEC and include voting or
investment power with respect to shares of stock. This information
does not necessarily indicate beneficial ownership for any other
purpose. Under these rules, shares of common stock issuable under
stock options or warrants that are exercisable within 60 days of
April 6, 2017 are deemed outstanding for the purpose of computing
the percentage ownership of the person holding the options or
warrant(s), but are not deemed outstanding for the purpose of
computing the percentage ownership of any other person. Unless
otherwise indicated below, the address of each person listed on the
table is c/o Atossa Genetics Inc., 107 Spring Street, Seattle,
Washington 98104.
|
|
Shares Beneficially Owned
|
|
|
|
|
|
Steven C. Quay, M.D., Ph.D.
(2)
|
|
378,707
|
|
3.9
|
%
|
Shu-Chih Chen, Ph.D.
(3)
|
|
305,037
|
|
3.2
|
%
|
Kyle Guse, Esq., CPA, Esq.
(8)
|
|
98,581
|
|
1.0
|
%
|
Stephen J. Galli, M.D.
(5)
|
|
25,306
|
|
*
|
|
Gregory L. Weaver
(4)
|
|
15,623
|
|
*
|
|
Scott Youmans
(9)
|
|
0
|
|
*
|
|
Richard I Steinhart
(6)
|
|
9,529
|
|
*
|
|
H. Lawrence Remmel, Esq.
(7)
|
|
626
|
|
*
|
|
All current executive officers and directors as
a group (8 persons)
|
|
543,522
|
|
5.6
|
%
|
16
CERTAIN RELATIONSHIPS
AND RELATED-PARTY TRANSACTIONS
Transactions with
Related Parties
Other than compensation arrangements described below under the
captions “Director Compensation” and “Executive
Compensation,” we are not a party to any transactions between
us and certain “related parties,” which are generally
considered to be our directors and executive officers, nominees for
director, holders of 5% or more of our outstanding common stock and
members of their immediate families.
Related-Party
Transaction Review and Approval
Related-party transactions that the Company is required to disclose
publicly under the federal securities laws will require prior
approval of the Company’s independent directors without the
participation of any director who may have a direct or indirect
interest in the transaction in question. Related parties include
directors, nominees for director, principal stockholders, executive
officers and members of their immediate families. For these
purposes, a “transaction” will include all financial
transactions, arrangements or relationships, ranging from extending
credit to the provision of goods and services for value and will
include any transaction with a company in which a director,
executive officer, immediate family member of a director or
executive officer, or principal stockholder (that is, any person
who beneficially owns five percent or more of any class of the
Company’s voting securities) has an interest by virtue of a
10% or greater equity interest. The Company’s policies and
procedures regarding related-party transactions are not expected to
be a part of a formal written policy, but rather, will represent a
course of practice determined to be appropriate by the Board of
Directors of the Company.
SECTION 16(A) BENEFICIAL
OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires our executive officers
and directors, and persons who own more than 10% of a registered
class of our equity securities, to file reports of beneficial
ownership and changes in beneficial ownership with the SEC.
Executive officers, directors and greater-than-10% stockholders are
required by SEC regulations to furnish us with copies of all
reports filed under Section 16(a). To the Company’s
knowledge, based solely on the review of copies of the reports
filed with the SEC, all reports required to be filed by our
executive officers, directors and greater-than-10% stockholders
were timely filed in fiscal 2016.
DIRECTOR
COMPENSATION
Non-employee director compensation is generally reviewed and set
annually at the Board meeting held in connection with the annual
stockholder meeting. The non-employee directors of the Company
received the following for services on the Board from May 2016
through May 2017:
•
upon joining the Board, an initial payment of $50,000 in cash;
•
an
annual cash payment of $40,000 for each board member; and
•
an
annual grant of options exercisable for 40,000 shares; however,
because all outstanding options were significantly underwater as of
the 2016 annual stockholder meeting, the Board instead granted
options to in an amount equal to the total number of shares
issuable upon exercise of all previously granted options to such
directors, vesting quarterly over one year.
In lieu of the above 40,000 share annual option grant, Dr.
Chen’s outstanding options granted to her during her service
as Chief Scientific Officer continue to vest and be exercisable
during her services as a member of the Board. Dr. Chen also
provided consulting services to the Company related to the
manufacturing of the Company’s endoxifen drug in Taiwan. The
Company paid $27,439 to Dr. Chen for such services in 2016.
In addition to the above, annual compensation for service on the
Audit Committee is $20,000 for the Chair and $15,000 for each
member, paid in cash quarterly. Annual compensation for service on
the Compensation Committee and Nominating and Governance Committee
is $15,000 for the Chair and $10, 000 for each member, paid in cash
quarterly. The independent board members are also reimbursed on a
case by case basis up to a pre-set limit for actual out of pocket
expenses for graduate level course work in fields related to the
business of the Company.
17
The employee directors receive no compensation for their board
service. Pursuant to the policies of Pryor Cashman, the law firm of
which Mr. Remmel is a partner, the compensation Mr. Remmel receives
for his services as a director (other than expense reimbursement)
is paid to the firm directly which cash fee was waived in 2016. All
directors receive reimbursement for reasonable travel expenses. The
following table sets forth information regarding compensation
earned by our non-employee directors during the fiscal year ended
December 31, 2016:
|
|
Fees
Earned or
Paid in Cash
|
|
Option Awards
Dollar Amount
(1)
|
|
Option Awards
Number of Shares
|
|
|
Shu-Chih Chen, Ph.D.
(2)
|
|
$
|
40,000
|
|
$
|
25,811
|
|
10,101
|
|
$
|
65,811
|
Stephen Galli, M.D.
|
|
$
|
65,000
|
|
$
|
27,657
|
|
12,065
|
|
$
|
92,657
|
H. Lawrence Remmel, Esq.
(3)
|
|
$
|
—
|
|
$
|
24,571
|
|
8,842
|
|
$
|
24,571
|
Gregory L. Weaver
|
|
$
|
70,000
|
|
$
|
23,267
|
|
7,479
|
|
$
|
93,267
|
Richard Steinhart
|
|
$
|
70,000
|
|
$
|
20,669
|
|
4,765
|
|
$
|
90,669
|
18
EXECUTIVE
COMPENSATION
Remuneration of
Officers
Our Compensation Committee is responsible for reviewing and
evaluating key executive employee base salaries, setting goals and
objectives for executive bonuses and administering benefit plans.
The Compensation Committee provides advice and recommendations to
our Board of Directors on such matters.
Summary Compensation
Table
The following table sets forth the compensation earned
by our President and Chief Executive Officer, Chief Financial
Officer, and former Chief Operating Officer (collectively, the
“
Named
Executive Officers
”), for fiscal years 2015 and
2016:
|
|
|
|
|
|
|
|
Nonequity Incentive Plan Compensation
|
|
All
Other Compensation
(2)
|
|
|
Steven C. Quay, M.D.,
Ph.D.
President and Chief
Executive Officer
|
|
2016
|
|
$
|
520,000
|
|
$
|
177,952
|
|
$
|
300,000
|
|
$
|
10,600
|
|
$
|
1,008,552
|
|
|
2015
|
|
$
|
520,000
|
|
$
|
437,577
|
|
$
|
208,000
|
|
$
|
10,600
|
|
$
|
1,176,177
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kyle Guse
Chief Financial
Officer, General
Counsel and Secretary
|
|
2016
|
|
$
|
364,000
|
|
$
|
415,582
|
|
$
|
170,000
|
|
$
|
10,600
|
|
$
|
950,582
|
|
|
2015
|
|
$
|
364,000
|
|
$
|
302,325
|
|
$
|
131,040
|
|
$
|
10,600
|
|
$
|
807,965
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Scott Youmans
(3)
Chief Operating
Officer
|
|
2016
|
|
$
|
34,280
|
|
|
—
|
|
$
|
104,292
|
|
|
—
|
|
$
|
138,572
|
|
|
2015
|
|
$
|
239,200
|
|
$
|
88,866
|
|
$
|
80,371
|
|
$
|
2,870
|
|
$
|
411,307
|
19
Outstanding Equity
Awards at Fiscal Year-End
The following table shows information regarding our outstanding
equity awards at December 31, 2016 for the Named Executive
Officers, all of which are subject to the terms and conditions of
the 2010 Plan which is described below:
|
|
|
|
Number of Securities Underlying Unexercised
Options (#) Exercisable
|
|
Number of Securities Underlying Unexercised
Options (#) Unexercisable
|
|
|
|
|
Steven Quay
|
|
3/11/2013
|
|
2,946
|
(1)
|
|
—
|
|
$
|
98.55
|
|
3/11/2023
|
President and Chief Executive
|
|
5/6/2014
|
|
10,283
|
(2)
|
|
6,384
|
|
$
|
18.30
|
|
5/06/2024
|
Officer
|
|
3/16/2015
|
|
8,023
|
(2)
|
|
10,310
|
|
$
|
28.20
|
|
5/16/2025
|
|
|
5/18/16
|
|
14,229
|
(3)
|
|
23,716
|
|
$
|
3.945
|
|
5/18/2026
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kyle Guse
|
|
1/4/2013
|
|
33,333
|
(4)
|
|
—
|
|
$
|
61.65
|
|
1/04/2023
|
Chief Financial Officer, General
|
|
6/4/2013
|
|
4,000
|
(1)
|
|
—
|
|
$
|
64.65
|
|
6/04/2023
|
Counsel and Secretary
|
|
1/8/2014
|
|
6,417
|
(2)
|
|
2,916
|
|
$
|
33.00
|
|
1/08/2024
|
|
|
5/6/2014
|
|
8,333
|
(2)
|
|
5,000
|
|
$
|
18.30
|
|
5/06/2024
|
|
|
3/16/2015
|
|
5,542
|
(2)
|
|
7,125
|
|
$
|
28.20
|
|
3/16/2025
|
|
|
5/18/16
|
|
4,833
|
(3)
|
|
67,834
|
|
$
|
3.945
|
|
5/18/2026
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Scott Youmans,
|
|
9/2/2014
|
|
7,500
|
(4)
|
|
5,833
|
|
$
|
27.90
|
|
9/02/2024
|
Chief Operating Officer
(5)
|
|
3/16/2015
|
|
1,057
|
(2)
|
|
1,359
|
|
$
|
22.56
|
|
3/16/2025
|
|
|
9/21/2015
|
|
208
|
(2)
|
|
3,125
|
|
$
|
11.40
|
|
1/01/2026
|
Employment
Agreements
Employment Agreement
with Steven Quay, M.D., Ph.D.
The Company has entered into an employment agreement with Dr. Quay
to act as the Company’s Chief Executive Officer. The
agreement provides for an initial base salary of $250,000, which
was subsequently increased to $500,000 for 2014 and $520,000 for
2015 and 2016, with an annual target bonus of up to 50% of Dr.
Quay’s then-current base salary, payable upon the achievement
of performance goals to be established annually by the Compensation
Committee. The goals for fiscal 2016 included raising at least $5
million in capital, initiating and continuing the fulvestrant
microcatheter Phase 2 study, effectively managing the intellectual
property licensing dispute with Besins Healthcare Luxembourg SARL
(“
Besins
”),
and developing one additional pharmaceutical candidate. In February
2017, the Compensation Committee reviewed the performance of Dr.
Quay for 2016 against these goals and determined that his bonus for
2016 would be 120% of potential, or $300,000.
Under his employment agreement, Dr. Quay received an option to
purchase up to 16,667 shares of common stock at an exercise price
of $75.00 per share, the fair market value of the common stock on
the date of grant, as determined by the Board of Directors.
One-quarter of the shares of common stock underlying the option, or
4,167 shares, vested on December 31, 2010, and the remaining 75%,
or 12,500 shares, vested in equal quarterly installments over the
next three years. The options were fully vested as of December 31,
2013 and subsequently expired unexercised on July 22, 2015.
20
During the employment term, the Company will make available to Dr.
Quay employee benefits provided to other key employees and officers
of the Company. To the extent these benefits are based on length of
service with the Company, Dr. Quay will receive full credit for
prior service with the Company. Participation in health,
hospitalization, disability, dental and other insurance plans that
the Company may have in effect for other executives, all of which
shall be paid for by the Company with contribution by Dr. Quay as
set for the other executives, as and if appropriate.
Dr. Quay has also agreed that, for the period commencing on the
date of his employment agreement with the Company and during the
term of his employment and for a period of 12 months following
voluntary termination of his employment with the Company that he
will not compete with the Company in the United States. The
employment agreement also contains provisions relating to
confidential information and assignment of inventions, which
require Dr. Quay to refrain from disclosing any proprietary
information and to assign to the Company any inventions which
directly concern the ForeCYTE Breast Aspirator, or future products,
research, or development, or which result from work they perform
for the Company or using its facilities.
Employment Agreement
with Kyle Guse
The Company has entered into an employment agreement with Mr. Guse
to act as the Company’s Chief Financial Officer, General
Counsel and Secretary. The agreement provides for an initial base
salary of $225,000, which has been increased to $364,000 for 2015
and 2016 and an annual target bonus of up to 45% of Mr.
Guse’s then-current base salary, payable upon the achievement
of performance goals to be established annually by the Compensation
Committee. The goals for fiscal 2016 included raising at least $5
million in capital, initiating and continuing the fulvestrant
microcatheter Phase 2 study, effectively managing the intellectual
property licensing dispute with Besins, and developing one
additional pharmaceutical candidate. In February 2017, the
Compensation Committee reviewed the performance of Mr. Guse for
2016 against these goals and determined that his bonus for 2016
would be 103% of potential, or $170,000.
Under his employment agreement, on January 4, 2014, Mr. Guse
received an option to purchase up to 33,333 shares of common stock
at an exercise price of $61.65 per share, the fair market value of
the common stock on the date of grant, as determined by the Board
of Directors. One-quarter of the shares of common stock underlying
the option, or 8,333 shares, vested on January 4, 2014, and the
remaining 75%, or 25,000 shares, vest in equal quarterly
installments over the next three years, so long as Mr. Guse remains
employed with the Company. In lieu of a cash signing and relocation
bonus payable to Mr. Guse under the terms of his employment
agreement, on June 4, 2013 he received a fully-vested option to
purchase 4,000 shares of common stock exercisable at $64.65 per
share, the fair value of the Company’s common stock on the
date of grant.
During the employment term, the Company will make available to Mr.
Guse employee benefits provided to other key employees and officers
of the Company. To the extent these benefits are based on length of
service with the Company, Mr. Guse will receive full credit for
prior service with the Company. Participation in health,
hospitalization, disability, dental and other insurance plans that
the Company may have in effect for other executives, all of which
shall be paid for by the Company with contribution by Mr. Guse as
set for the other executives, as and if appropriate.
Mr. Guse has also agreed that, for the period commencing on the
date of his employment agreement with the Company and during the
term of his employment and for a period of six months following
voluntary termination of his employment with the Company that he
will not compete with the Company in the United States.
Employment Agreement
with Scott Youmans
In connection with the hiring of Mr. Youmans, the Company entered
into an offer letter agreement which provides for an initial base
salary of $230,000, which was increased to $287,000 on September 1,
2015 when Mr. Youmans was promoted to the Chief Operating Officer
with a bonus of up to 25%. Mr. Youmans was also granted an option
to purchase 13,333 shares of common stock at $27.90 per share upon
joining Atossa and 3,333 at the time of his promotion at market
value of $11.40, the fair market value of the common stock on the
date of grant, as determined by the Board of Directors. The offer
letter agreement provides that Mr. Youmans will be offered
employment benefits similar to other members of management and that
he is terminable at will. His options will accelerate upon a change
of control. Mr. Youmans resigned as the Chief Operating Officer of
the Company on February 12, 2016. Based on the employment
separation agreement, Mr. Youmans received $23,920 in severance pay
and received one-half of his 2015 bonus of $40,186 in a lump sum
payment in February 2016 and the other one-half bonus of $40,186
will be paid in equal monthly payments over six months following
his departure and an extension to one year of the time by which Mr.
Youmans has the right to exercise stock options previously granted
to him.
21
Severance Benefits and
Change in Control Arrangements
The Company has agreed to provide the severance benefits and change
in control arrangements described below to its named executive
officers.
Dr. Steven
Quay
. Pursuant to his employment agreement, if (i) the
Company terminates the employment of Dr. Quay without cause, or
(ii) Dr. Quay terminates his employment for good reason, then Dr.
Quay will be entitled to receive all accrued but unpaid
compensation, plus a severance payment equal to 12 months of base
salary. In addition, upon such event, the vesting of all shares of
common stock underlying options then held by Dr. Quay will
accelerate, and the options will remain exercisable for the
remainder of their terms. The cash severance payment is required to
be paid in substantially equal installments over a period of six
months beginning on the Company’s first payroll date that
occurs following the 30
th
day after the effective date of termination of Dr. Quay’s
employment, subject to certain conditions. The Company will not be
required, however, to pay any severance pay for any period
following the termination date if Dr. Quay materially violates
certain provisions of his employment agreement and the violation is
not cured within 30 days following receipt of written notice from
the Company containing a description of the violation and a demand
for immediate cure.
In addition, under the terms of his employment agreement, in the
event of a “change in control” of the Company (as
defined in the employment agreement) during Dr. Quay’s
employment term, Dr. Quay will be entitled to receive a one-time
payment equal to 2.9 times his base salary, and the vesting of all
outstanding equity awards then held by Dr. Quay will accelerate
such that they are fully vested as of the date of the change in
control.
Kyle
Guse
. Pursuant to his employment agreement, if (i) the
Company terminates the employment of Mr. Guse without cause, or
(ii) Mr. Guse terminates his employment for good reason, then Mr.
Guse will be entitled to receive all accrued but unpaid
compensation including pro-rated bonus, plus a severance payment
equal to 12 months of base salary. In addition, upon such event,
the vesting of 50% of shares of common stock underlying unvested
options then held by Mr. Guse will accelerate, and the options will
remain exercisable for the remainder of their terms. The cash
severance payment is required to be paid in substantially equal
installments over a period of six months beginning on the
Company’s first payroll date that occurs following the
30
th
day after the effective date of termination of Mr. Guse’s
employment, subject to certain conditions. The Company will not be
required, however, to pay any severance pay for any period
following the termination date if Mr. Guse materially violates
certain provisions of his employment agreement and the violation is
not cured within 30 days following receipt of written notice from
the Company containing a description of the violation and a demand
for immediate cure.
In addition, under the terms of his employment agreement, in the
event of a “change in control” of the Company (as
defined in the employment agreement) during Mr. Guse’s
employment term, Mr. Guse will be entitled to receive a one-time
payment equal to two times his base salary, and the vesting of all
outstanding equity awards then held by Mr. Guse will accelerate
such that they are fully vested as of the date of the change in
control.
2010 Stock Option and
Incentive Plan
The Company’s 2010 Stock Option and Incentive Plan, or the
2010 Plan, provides for the grant of equity-based awards to
employees, officers, non-employee directors and other key persons
providing services to the Company. The 2010 Plan is summarized
under Proposal 3.
Other
Benefits
The Company offers health, dental, disability, 401(k) matching up
to 4% of salary (which became available in 2014) and life insurance
to its full-time employees.
22
Equity Compensation Plan
Information
The following table sets forth certain information, as of December
31, 2016, regarding the Company’s 2010 Plan, as well as other
stock options and warrants previously issued by the Company as
compensation for services.
|
|
Number of Securities
to be Issued
Upon Exercise of
Outstanding Options,
Warrants and Rights
|
|
Weighted-Average
Exercise Price of
Outstanding Options,
Warrants and Rights
|
|
Number of Securities
Remaining Available
for Future
Issuance
Under Equity
Compensation Plans
(Excluding Securities
Reflected in
First Column)
(1)
|
Equity compensation plans approved by security
holders
|
|
310,257
|
|
|
$
|
30.45
|
|
156,388
|
Equity compensation plans not approved by
security holders
|
|
68,667
|
(2)
|
|
$
|
50.10
|
|
—
|
Total
|
|
378,924
|
|
|
$
|
34.20
|
|
156,388
|
23
REPORT OF THE AUDIT
COMMITTEE
The Audit Committee evaluates auditor performance, manages
relations with the Company’s independent registered public
accounting firm, and evaluates policies and procedures relating to
internal control systems. The Audit Committee operates under a
written Audit Committee Charter that has been adopted by the Board,
a copy of which is available on the Company’s website at
www.atossagenetics.com
.
All members of the Audit Committee currently meet the independence
and qualification standards for Audit Committee membership set
forth in the listing standards provided by NASDAQ and the SEC.
No member of the Audit Committee is a professional accountant or
auditor. The members’ functions are not intended to duplicate
or to certify the activities of management and the independent
registered public accounting firm. The Audit Committee serves a
board-level oversight role in which it provides advice, counsel and
direction to management and the auditors on the basis of the
information it receives, discussions with management and the
auditors, and the experience of the Audit Committee’s members
in business, financial and accounting matters.
The Audit Committee oversees the Company’s financial
reporting process on behalf of the Board. The Company’s
management has the primary responsibility for the financial
statements and reporting process, including the Company’s
system of internal controls. In fulfilling its oversight
responsibilities, the Audit Committee reviewed with management the
audited financial statements included in the Annual Report on Form
10-K/A for the fiscal year ended December 31, 2016. This review
included a discussion of the quality and the acceptability of the
Company’s financial reporting, including the nature and
extent of disclosures in the financial statements and the
accompanying notes. The Audit Committee also reviewed the progress
and results of the testing of the design and effectiveness of its
internal controls over financial reporting pursuant to Section 404
of the Sarbanes-Oxley Act of 2002. The Audit Committee also
reviewed with the Company’s independent registered public
accounting firm, which is responsible for expressing an opinion on
the conformity of the audited financial statements with accounting
principles generally accepted in the United States of America,
their judgments as to the quality and the acceptability of the
Company’s financial reporting and discussed with the
independent auditors matters required to be discussed under Public
Company Accounting Oversight Board (PCAOB) Auditing Standard No.
16.
Communication with
Audit Committees
. The Audit Committee has received from the
independent auditors the written disclosures regarding the
auditor’s independence required by the PCAOB Rule 3526,
Communications with
Audit Committees Concerning Independence
. The Audit
Committee discussed with the independent registered public
accounting firm their independence from management and the Company,
including the matters required by the applicable rules of the
Public Company Accounting Oversight Board.
In addition to the matters specified above, the Audit Committee
discussed with the Company’s independent registered public
accounting firm the overall scope, plans and estimated costs of
their audit. The Committee met with the independent registered
public accounting firm periodically, with and without management
present, to discuss the results of the independent registered
public accounting firm’s examinations, the overall quality of
the Company’s financial reporting and the independent
registered public accounting firm’s reviews of the quarterly
financial statements, and drafts of the quarterly and annual
reports.
In reliance on the reviews and discussions referred to above, the
Audit Committee recommended to the Board of Directors that the
Company’s audited financial statements should be included in
the Company’s Annual Report on Form 10-K/A for the fiscal
year ended December 31, 2016.
Submitted by the Audit Committee of the Board of Directors
Richard I. Steinhart, Chairman
Gregory L. Weaver
H. Lawrence Remmel, Esq
24
OTHER
BUSINESS
We know of no other matters to be submitted to a vote of
stockholders at the annual meeting. If any other matter is properly
brought before the annual meeting or any adjournment thereof, it is
the intention of the persons named in the enclosed proxy to vote
the shares they represent in accordance with their judgment. In
order for any stockholder to nominate a candidate or to submit a
proposal for other business to be acted upon at a given annual
meeting, he or she must provide timely written notice to our
corporate Secretary in the form prescribed by our Bylaws, as
described below.
STOCKHOLDER
PROPOSALS
Stockholder proposals intended to be included in the 2018 annual
meeting proxy materials must be received by the Secretary of the
Company no later than December 16, 2017, or otherwise as permitted
by applicable law (the “
Proxy
Deadline
”). The form and substance of these proposals
must satisfy the requirements established by the Company’s
Bylaws and the SEC, and the timing for the submission of any such
proposals may be subject to change as a result of changes in SEC
rules and regulations.
Additionally, stockholders who intend to present a stockholder
proposal at the 2018 annual meeting must provide the Secretary of
the Company with written notice of the proposal between 90 and 120
days prior to the one-year anniversary date of the 2017 annual
meeting;
provided,
however
, that if the 2018 annual meeting date is advanced by
more than 30 days before or delayed by more than 60 days after the
one-year anniversary date of the 2017 annual meeting, then
stockholders must provide notice within time periods specified in
our Bylaws. Notice must be tendered in the proper form prescribed
by our Bylaws. Proposals not meeting the requirements set forth in
our Bylaws will not be entertained at the meeting.
Additionally, any stockholder seeking to recommend a director
candidate or any director candidate who wishes to be considered by
the Nominating and Governance Committee, the committee that
recommends a slate of nominees to the Board for election at each
annual meeting, must provide the Secretary of the Company with all
information relating to such nominee that is required to be
disclosed in proxy statements pursuant to Regulation 14A under the
Exchange Act (including such person’s written consent to
being named in the proxy statement as a nominee and to serving as a
director if elected). The Nominating and Governance Committee will
consider all director candidates who comply with these requirements
and will evaluate these candidates using the criteria described
above under the caption, “Nomination of Directors.”
Director candidates who are then approved by the Board will be
included in the Company’s Proxy Statement for that annual
meeting.
DELIVERY OF PROXY
MATERIALS
Our annual report to stockholders for the fiscal year ended
December 31, 2016, including audited financial statements,
accompanies this Proxy Statement. Copies of our Annual Report on
Form 10-K/A for fiscal 2016 are available from the Company without
charge upon written request of a stockholder. Copies of these
materials are also available online through the Securities and
Exchange Commission at
www.sec.gov
.
The Company may satisfy SEC rules regarding delivery of proxy
statements and annual reports by delivering a single proxy
statement and annual report to an address shared by two or more
Company stockholders. This delivery method can result in meaningful
cost savings for the Company. In order to take advantage of this
opportunity, the Company may deliver only one proxy statement and
annual report to multiple stockholders who share an address, unless
contrary instructions are received prior to the mailing date.
Similarly, if you share an address with another stockholder and
have received multiple copies of our proxy materials, you may write
or call us at the address and phone number below to request
delivery of a single copy of these materials in the future. We
undertake to deliver promptly upon written or oral request a
separate copy of the proxy statement and/or annual report, as
requested, to a stockholder at a shared address to which a single
copy of these documents was delivered. If you hold stock as a
record stockholder and prefer to receive separate copies of a proxy
statement or annual report either now or in the future, please
contact the Company’s Secretary at 107 Spring Street,
Seattle, Washington 98104 or by telephone at (800) 351-3902. If
your stock is held through a brokerage firm or bank and you prefer
to receive separate copies of a proxy statement or annual report
either now or in the future, please contact your brokerage firm or
bank.
25
AVAILABLE
INFORMATION
The Company is subject to the
informational requirements of the Securities Exchange Act of 1934,
as amended, and, in accordance therewith, files reports and other
information with the Securities and Exchange Commission (the
“
SEC
”).
Any interested party may inspect information filed by the Company,
without charge, at the public reference facilities of the SEC at
its principal office at 100 F. Street, N.E., Washington, D.C.
20549. Any interested party may obtain copies of all or any portion
of the information filed by the Company at prescribed rates from
the Public Reference Section of the SEC at its principal office at
100 F. Street, N.E., Washington, D.C. 20549. In addition, the SEC
maintains an Internet site that contains reports, proxy and
information statements and other information regarding the Company
and other registrants that file electronically with the SEC at
http://www.sec.gov
.
The Company’s common stock is listed on The NASDAQ Capital
Market and trades under the symbol “ATOS”.
EACH STOCKHOLDER IS
URGED TO COMPLETE, DATE, SIGN AND PROMPTLY RETURN THE
ENCLOSED PROXY.
26
ATOSSA GENETICS INC.
107 Spring Street
Seattle, Washington 98104
THIS PROXY IS SOLICITED
ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints Steven C. Quay,
M.D., Ph.D. and Kyle Guse, Esq., and each of them, his or her true
and lawful agents and proxies with full power of substitution in
each, to represent the undersigned at the Annual Meeting of
Stockholders of Atossa Genetics Inc. to be held at 107 Spring
Street, Seattle, Washington 98104, on Tuesday, May 9, 2017, at 1:00
p.m. local time, and at any adjournments thereof, and to vote as
designated.
This proxy, when properly executed, will be voted in the manner you
direct. If no direction is made, your proxy will be voted FOR the
proposals and nominees described in the enclosed Proxy Statement
and in the discretion of the proxy holders on all other matters
that may come before the meeting.
PLEASE MARK, SIGN, DATE
AND RETURN THIS PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
YOUR VOTE IS IMPORTANT!
PLEASE VOTE.
(Continued and to be
signed on the reverse side)
27
Proposal 1 Elect
Directors to Class II
º For All Nominees
|
|
º Withhold Authority
For All Nominees
|
|
º For All Except
(see instructions below)
|
|
|
|
|
|
Class II Nominees:
|
|
Stephen J. Galli, M.D. and
Richard I. Steinhart
|
|
|
INSTRUCTIONS: To
withhold authority to vote for any individual nominee(s), mark
“For All Except” and write the name(s) for which you
wish to withhold authority below.
Proposal 2 Ratify BDO
USA LLP as independent registered public accounting firm for the
fiscal year ending December 31, 2017
Vote For
|
|
Vote Against
|
|
Abstain
|
Proposal 3 Approve to
increase the authorized shares under the 2010 Stock Option and
Incentive Plan by 1,500,000 shares
Vote For
|
|
Vote Against
|
|
Abstain
|
and to vote on such other business as may properly come before the
meeting
Date:
Signature of Shareholder(s)
|
|
Signature of Shareholder(s
|
)
|
This Proxy must be signed exactly as the name appears herein. When
shares are held jointly, each holder should sign. When signing as
executor, administrator, attorney, trustee or guardian, please give
full title as such. If the signer is a corporation, please sign
full corporate name by duly authorized officer, giving full title
as such. If signer is a partnership, please sign in partnership
name by authorized person.
THANK YOU FOR
VOTING
28