UNITED STATES
SECURITY 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 [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[x] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant ss.240.14a-12
Samaritan Pharmaceuticals, Inc.
(Name of Registrant as Specified in Charter)
Name of Person(s) Filing Proxy Statement, if Other than the Registrant)
Payment of filing fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on the table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
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August 22, 2007
Dear Stockholders:
It is my pleasure to invite you to Samaritan Pharmaceuticals 2007 Annual Meeting
of Stockholders. We will hold the meeting on Tuesday, October 16, 2007, at 10
a.m. local time at the offices of Samaritan Therapeutics, 1000 de la Gauchetiere
West, Suite 2400, Montreal, Quebec, Canada H3B 4W5. During the annual meeting,
we will discuss each item of business described in the enclosed Notice of Annual
Meeting and Proxy Statement and afterwards take a tour of Samaritan Laboratories
new home at McGill University. Please notify us if you plan on touring Samaritan
Laboratories as we need to get security clearance ahead of time for entrance to
the McGill University Research Institute.
This booklet includes the Notice of Annual Meeting and Proxy Statement. The
Proxy Statement provides information about Samaritan in addition to describing
the business we will conduct at the meeting.
We hope you will be able to attend the annual meeting. Whether or not you expect
to attend, please vote your shares using any of the following methods: vote by
telephone or on the Internet, as described in the instructions you receive;
complete, sign and date the proxy card and return it in the prepaid envelope; or
vote in person at the meeting.
Sincerely,
Dr. Janet Greeson
Chairman of the Board,
Chief Executive Officer and President
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SAMARITAN PHARMACEUTICALS, INC.
101 CONVENTION CENTER DRIVE, SUITE 310
LAS VEGAS, NEVADA 89109
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD OCTOBER 16, 2007
The 2007 annual meeting (the "Annual Meeting") of the stockholders (the
"Stockholders") of Samaritan Pharmaceuticals Inc., a Nevada corporation (the
"Company"), will be held on Tuesday, October 16, 2007 at 10:00 a.m. Eastern
Standard Time at the offices of Samaritan Therapeutics, 1000 de la Gauchetiere
West, Suite 2400, Montreal, Quebec, Canada H3B 4W5, for the following purposes:
1. To elect four (4) directors to serve on the Company's Board of
Directors (the "Board") until their successors are elected and duly qualified;
2. To approve an amendment to the Company's Articles of Incorporation
to increase the number of authorized shares of Common Stock from 41,666,667
shares to 250,000,000;
3. To consider, approve and ratify the appointment of SHERB & CO., LLP
as our independent auditors for the fiscal year ending December 31, 2007;
4. To transact such other business as may properly come before the
meeting or any adjournment or postponement thereof.
The foregoing items of business are more fully described in the Proxy Statement
accompanying this Notice. The Board has fixed the close of business on August
29, 2007 as the Record Date for the determination of stockholders entitled to
notice of, and to vote at this Annual Meeting and at any continuation,
postponement or adjournment thereof.
By Order of the Board of Directors
/s/ Dr. Janet Greeson,
----------------------
Dr. Janet Greeson.
Chairman of the Board, Chief Executive Officer and President
Las Vegas, Nevada
August 22, 2007
--------------------------------------------------------------------------------
PLEASE SUBMIT A PROXY AS SOON AS POSSIBLE SO THAT YOUR SHARES CAN BE VOTED AT
THE ANNUAL MEETING IN ACCORDANCE WITH YOUR INSTRUCTIONS. FOR SPECIFIC
INSTRUCTIONS ON VOTING, PLEASE REFER TO THE INSTRUCTIONS ON THE PROXY CARD OR
THE INFORMATION FORWARDED BY YOUR BANK, BROKER OR OTHER HOLDER OF RECORD. EVEN
IF YOU HAVE VOTED YOUR PROXY, YOU MAY STILL VOTE IN PERSON IF YOU ATTEND THE
ANNUAL MEETING. PLEASE NOTE, HOWEVER, THAT IF YOUR SHARES ARE HELD ON RECORD BY
A BANK, BROKER OR OTHER NOMINEE AND YOU WISH TO VOTE IN PERSON AT THE ANNUAL
MEETING, YOU MUST OBTAIN A PROXY ISSUED IN YOUR NAME FROM SUCH BANK, BROKER OR
OTHER NOMINEE.
--------------------------------------------------------------------------------
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SAMARITAN PHARMACEUTICALS INC.
101 CONVENTION CENTER DRIVE, SUITE 310
LAS VEGAS, NEVADA 89109
PROXY STATEMENT
TABLE OF CONTENTS
Page
Information Concerning Voting And Solicitation...............................5-7
Proposal No. 1. Election of Directors.............. .......................8-11
Proposal No. 2. Amendment Of The Articles Of Incorporation
To Increase The Number Of Authorized Shares Of Common Stock................12-13
Proposal No. 3. Ratification of Selection of Independent
Registered Public Accountants..............................................13-16
Executive Officers and Key Employees..........................................17
Compensation Discussion and
Analysis...................................................................18-26
Security Ownership of Certain Beneficial Owners and Management ...............27
Transactions with Related Parties..........................................27-28
General.......................................................................28
Communications with the Board of Directors....................................28
Where You Can Find More Information...........................................28
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SAMARITAN PHARMACEUTICALS, INC.
101 CONVENTION CENTER DRIVE, SUITE 310
LAS VEGAS, NEVADA 89109
PROXY STATEMENT
The Board of Directors of Samaritan Pharmaceuticals, Inc. (the "Company") is
soliciting proxies to be voted at the Annual Meeting of Stockholders (the
"Annual Meeting") of the Company to be held on October 16, 2007, beginning at
10:00 a.m., local time, which will be held at the offices of Samaritan
Therapeutics, Inc., 1000 de la Gauchetiere West, Suite 2400, Montreal, Quebec
H3B 4W5, and any postponements or adjournments of the meeting. We intend to mail
a Notice of Internet Availability of Proxy Materials (sometimes referred to as
the "Notice") and to make this proxy statement available to our stockholders of
record entitled to vote at the Annual Meeting on or about September 5, 2007.
PROXY SOLICITATION AND VOTING INFORMATION
What is the purpose of the Annual Meeting?
At the Company's Annual Meeting, stockholders will act upon the matters outlined
on the Notice of Meeting on the cover page of this Proxy Statement which relates
to the election of four (4) directors to serve on the Company's Board, the
Amendment to our Articles of Incorporation to increase the number of authorized
shares of Common Stock to 250,000,000, and ratification of the appointment of
Sherb & Co., LLP as the Company's independent auditors for the fiscal year
ending December 31, 2007.
What is a Notice of Internet Availability of Proxy Materials?
In accordance with rules and regulations recently adopted by the Securities and
Exchange Commission, instead of mailing a printed copy of our proxy materials to
each stockholder of record, we may now furnish proxy materials, including this
Proxy Statement, the proxy card and the Company's Annual Report to Stockholders
for the fiscal year ended December 31, 2006 ("fiscal 2006"), to our stockholders
by providing access to such documents on the Internet. You will not receive
printed copies of the proxy materials unless you request them. Instead, the
Notice will instruct you as to how you may access and review all of the proxy
materials. The Notice also instructs you as to how you may submit your proxy on
the Internet. If you would like to receive a paper or e-mail copy of our proxy
materials, you should follow the instructions for requesting such materials
included in the Notice.
Who can attend the Annual Meeting?
All stockholders as of the Record Date, or their duly appointed proxies, may
attend the Annual Meeting. Registration will begin at 9:00 a.m., and seating
will begin immediately thereafter. If you attend, please note that you may be
asked to present valid picture identification, such as a driver's license or
passport. Please also note that if you hold your shares in "street name" (that
is, through a broker or other nominee), you will need to bring a copy of a
brokerage statement reflecting your stock ownership as of the Record Date and
check in at the registration desk at the Annual Meeting.
Who is entitled to vote?
Stockholders of record at the close of business on August 29, 2007 (the "Record
Date"), may vote at the Annual Meeting. Each share of the Company's Common
Stock, $.001 par value ("Common Stock") is entitled to one vote on each voting
matter.
What constitutes a quorum at the meeting?
A majority of the outstanding shares of the Company's Common Stock, represented
in person or by proxy, will constitute a quorum for transacting business. On the
Record Date, the outstanding shares of Common Stock were ______________.
If I am a stockholder of record of the Company's shares, how do I vote?
If you are a stockholder of record as of the Record Date, you may vote in person
at the Annual Meeting. We will give you a ballot when you arrive.
If you do not wish to vote in person or you will not be attending the Annual
Meeting, you may vote by proxy. You may vote by proxy over the Internet, over
the telephone or by mail. The procedures for voting by proxy are as follows:
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o To vote by proxy on the Internet, go to
http://www.stctransfer.com/indexs.html to complete an electronic proxy card.
o To vote by proxy using the enclosed proxy card (if you received a printed
copy of these proxy materials by mail), complete, sign and date your proxy card
and return it promptly in the envelope provided.
If you vote by proxy on the Internet, your vote must be received by 11:59 p.m.
Eastern Time on October 14, 2007 to be counted.
The Company is providing Internet proxy voting to allow you to vote your shares
on-line, with procedures designed to ensure the authenticity and correctness of
your proxy vote instructions. However, please be aware that you must bear any
costs associated with your Internet access, such as usage charges from Internet
access providers and telephone companies.
What if my shares are not registered directly in my name but are held in street
name?
If at the close of business on August 29, 2007 your shares were held in an
account at a brokerage firm, bank, dealer, or other similar organization, then
you are the beneficial owner of shares held in "street name," and the Notice is
being forwarded to you by that organization. The organization holding your
account is considered the stockholder of record for purposes of voting at the
annual meeting. As a beneficial owner, you have the right to direct that
organization on how to vote the shares in your account.
If I hold shares in street name, how do I vote?
If you are a beneficial owner of shares held in street name and you received a
printed copy of these proxy materials by mail, you should have received a proxy
card and voting instructions with these materials from the organization that is
the record owner of your shares rather than from the Company. You may complete
and mail that proxy card or you may vote by telephone or over the Internet as
instructed by that organization in the proxy card.
If you are a beneficial owner of shares held in street name and you received a
Notice by mail, you should follow the instructions included in the Notice to
view the proxy materials and transmit your voting instructions. For a beneficial
owner to vote in person at the annual meeting, you must obtain a valid proxy
from the record owner. To request the requisite proxy form, follow the
instructions provided by your broker or contact your broker.
What are broker non-votes?
Under the rules of various national and regional securities exchanges, brokers
may generally vote on routine matters, such as the election of directors and
ratification of the appointment of the Company's independent registered public
accounting firm, but cannot vote on non-routine matters unless they have
received voting instructions from the person for whom they are holding shares.
If your broker does not receive instructions from you on how to vote particular
shares on matters on which your broker does not have discretionary authority to
vote, your broker will return the proxy form to the Company, indicating that he
or she does not have the authority to vote on these matters. This is generally
referred to as a "broker non-vote" and will affect the outcome of the voting.
You are encouraged to provide directions to your broker as to how you want your
shares voted on all matters to be brought before the meeting. You should do this
by carefully following the instructions your broker gives you concerning its
procedures. This ensures that your shares will be voted at the annual meeting.
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What vote is required to approve matters at the Annual Meeting?
The election of directors at the Annual Meeting requires the affirmative vote of
a plurality of the votes cast at the meeting. That means that the nominees who
receive the highest number of vote totals for the number of vacancies to be
filled will be elected as directors. Therefore, a vote to withhold authority for
any nominee or the entire slate will not affect the outcome of the election
unless there are more nominees than there are vacancies to be filled.
In order to be approved, the proposal to increase the number of authorized
common shares, as well as any other matter that may be voted on at the meeting,
would require the affirmative vote of a majority of the shares of outstanding
Common Stock. As noted above, management of the Company is not aware at this
time of any matter that may be submitted to vote of the shareholders at the
annual meeting other than the election of directors, an increase in the number
of authorized common shares and the ratification of selection of independent
registered public accountants.
How are votes counted?
We will hold the Annual Meeting if holders of a majority of the shares of Common
Stock entitled to vote either sign and return their proxy cards or attend the
meeting. If you sign and return your proxy card, your shares will be counted to
determine whether we have a quorum even if you abstain or fail to vote on any of
the proposals listed on the proxy card.
If your shares are held in the name of a nominee, and you do not inform the
nominee by September 27, 2007 how to vote your shares (so-called "Broker
Non-Votes"), the nominee may vote them as it sees fit only on matters that are
determined to be routine, and not on any other proposal. Broker Non-Votes will
be counted as present to determine if a quorum exists but will not be counted as
present and entitled to vote on any non-routine proposal.
How can I revoke my proxy?
After you return a proxy, you may revoke it at any time before its use by
following the instructions provided in the Notice, or by (1) delivering a
written notice of revocation to Kristi Eads our Company's Corporate Secretary,
(2) submitting a properly executed, subsequently-dated proxy or (3) voting in
person at the annual meeting. We will honor the proxy card with the latest date.
Who pays for the costs of soliciting proxies?
The Company will be responsible for all costs of soliciting proxies, including
charges made by brokers and others holding Common Stock in their names or in the
names of nominees, for reasonable expenses incurred in sending proxy materials
to beneficial owners and obtaining their proxies. In addition to solicitation by
mail, directors, officers and employees of the Company may solicit proxies
personally and by telephone, all without extra compensation.
Stockholder proposals to be presented at next annual meeting.
In order for stockholder business to be included in the Company's proxy
statement for a meeting or properly brought before that meeting by a
stockholder, the stockholder must have given timely notice in writing to our
Corporate Secretary. A stockholder proposal for the 2008 annual meeting must be
received at the Company's principal executive offices at 101 Convention Center
Drive, Suite 310, Las Vegas, NV 89109 not later than February 28, 2008 to be
considered timely. Inclusion of stockholder proposals in the Company's proxy
statement for a meeting also requires satisfaction of certain conditions
established by the U.S. Securities and Exchange Commission ("SEC").
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PROPOSAL NO. 1: ELECTION OF DIRECTORS
General
The Company's Bylaws provide that our Board of Directors ("Board") shall consist
of eight (8) directors that shall be divided into three (3) classes. A single
class of directors shall be elected each year at the annual meeting, and each
director shall be elected to serve for a term ending on the date of the third
annual meeting of stockholders after his election and until his successor has
been elected and duly qualified, subject to any transition periods.
Four (4) directors in total are to be elected at the Annual Meeting. Three (3)
directors shall be elected to Class I and shall be elected to serve until the
2010 annual meeting. One (1) director is replacing a resigned director and shall
be elected for one year and then will come again before a vote as a Class III
director during the 2008 Annual Meeting. Each director elected shall serve until
his successor is elected and duly qualified. The Board has nominated three (3)
members to Class I and one (1) member into Class III, and in the event any
nominee is unable or unwilling to serve as a nominee, the proxies may be voted
for any substitute nominee designated by the present Board or the proxy holders
to fill such vacancy. Our Board has no reason to believe that the persons named
will be unable or unwilling to serve as nominees or as directors if elected.
Nominees as Class I Directors -- Terms Expire 2010
Dr. Janet R. Greeson. Dr. Greeson has worked with Samaritan since 1996 and has
served as the Company's CEO, President and Chairman of the Board since October
30, 2000 and has led the bold initiative that transformed Samaritan from a "one
drug" Company to an innovative "Pipeline" Biopharmaceutical Company. Dr. Greeson
is a successful healthcare professional with over two (2) decades of corporate
experience focused on emerging growth situations, leadership development, and
mergers and acquisitions. As CEO she has demonstrated a relentless perseverance
and determination to succeed in the face of unrelenting change. She is extremely
motivated and equipped to attack problems and seize realistic opportunities,
with capability, courage and confidence. Dr. Greeson is a co-inventor of
eighteen (18) patent applications.
She currently fulfills her altruistic energies with the Samaritan Innovative
Science Foundation. Dr. Greeson holds a BA, from Florida Technological
University in 1978; an MA from Rollins College in 1979; and a Ph.D. from
Columbia Pacific University in 1987.
Mr. Welter "Budd" Holden. Mr. Holden is a co-founder, has served as a director
since 1997, is the Chairman of the Nominating and Corporate Governance
Committee, and serves on the Compensation Committee. Mr. Holden has assisted the
Company in recruiting and networking patients for clinical trials. He is a
well-known designer who has consulted with the rich and famous throughout his
whole life. He is a renowned networker and has presented Samaritan to many of
his past clients and venture capital groups, including principals of
pharmaceutical companies. He is the Chairman of our Business Advisory Board and
acts as liaison to the Samaritan Innovative Science Foundation. He received his
B.A. in architectural and interior design from the Pratt Institute in New York,
New York.
Dr. Erasto R. C. Saldi. Dr. Saldi has served as a director of the Company since
2003. Currently, Dr. Saldi serves as the Company's Chief Medical Officer and
Clinical Study Director, overseeing the clinical site's Principal Investigators
that run the Company's FDA clinical trials. From 1999 to 2004, Dr. Saldi was the
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Medical Director of Fremont Medical Clinic, Desert Lane Care Center, and
Cheyenne Care Center, where he improved physician compliance and formulated
patient care protocols. From 1996 to 1997, he was Chief Resident, Internal
Medicine and from 1997 to 1998 he served as Assistant Clinical Professor,
Internal Medicine at the University of Nevada School of Medicine, Las Vegas,
Nevada. Dr. Saldi, as an Internist, has extensive experience as a Principal
Investigator and manager of clinical research trials.
Nominees as Class III Directors -- Terms Expire 2008
Dr. Julio L. Garcia. Dr. Garcia has served as a director of the Company since
2007. Dr. Garcia is Board Certified in Plastic Surgery by the American Board of
Plastic Surgeons and the American Board of Facial Plastic and Reconstructive
Surgery. He is a Fellow of the American College of Surgeons and also a member of
the American Society of Plastic Surgeons, American Academy of Cosmetic Surgery,
the American Society of Aesthetic Surgery and the American Society for Laser
Medicine and Surgery. For over 19 years, Dr. Garcia has provided aesthetic
surgical support to Las Vegas valley residents. He received his Doctor of
Medicine from the University of Illinois at Chicago, College of Medicine in 1983
and a Bachelor of Arts, Biology/Art History from the University of Evanston in
Illinois in 1979.
Required Vote
Unless otherwise instructed, the proxy holders will vote the proxies received by
them "FOR" the nominees named above. The four (4) candidates receiving the
highest number of affirmative votes of the shares represented and voting on this
particular matter at the Annual Meeting will be elected directors of the
Company, to serve their respective terms and until their successors have been
elected and duly qualified.
Recommendation of the Board
The Board recommends that the Stockholders vote "FOR" the election of the
nominees above.
Directors Continuing in Office until the 2008 Annual Meeting
Mr. H. Thomas Winn. Mr. Winn has served as a director since 1999 and is the
Chairman of the Audit Committee. He served as Chairman, President and CEO of
Nevada Gold & Casinos, Incorporated (AMEX:UWN) ("UWN") from 1999 until June
2007. Under Mr. Winn's leadership, UWN successfully concentrated on acquisition
and development of premier gaming and entertainment venture, and is currently
involved in nine (9) gaming projects in Colorado, California, New York and
Arizona. Since 1983, Mr. Winn has served as president of Aaminex Capital
Corporation, a financial consulting and venture capital firm.
Dr. Laurent Lecanu. Dr. Lecanu has served as a director since June 10, 2005. He
serves on the Nominating and Corporate Governance and Science and Technology
committees of Samaritan. Since July 2007, he is an Assistant Professor at The
Research Institute of the McGill University Health Centre; Department of
Biochemistry and Molecular Biology and between 2001 and 2007, was Associate
Professor at Georgetown University. Dr. Lecanu received his D.Pharm. in
pharmaceutical chemistry and his Ph.D. in neuropharmacology from the School of
Pharmaceutical and Biological Sciences at University of Paris (V), Paris,
France. Dr. Lecanu is also a former Intern of Paris Hospitals, France, where he
demonstrated excellence in the management and performance of clinical trials for
new medications.
Dr. Julio L. Garcia. Please see Section herein entitled "Proposal No. 1:
Election of Directors" for Dr. Garcia's biography.
9
Directors Continuing in Office until the 2009 Annual Meeting
Mr. Eugene J. Boyle. Eugene Boyle has served as Chief Financial Officer, Chief
Operations Officer, and a Director of Samaritan Pharmaceuticals since June 16,
2000. Mr. Boyle received a BSE in Computer Engineering and Applied Mathematics
from Tulane University, served in the US Navy as a Lt. during the Gulf War and
then went on to get his MBA from Babson College and JD from Concord University.
Mr. Boyle is a registered patent agent and admitted to practice before the
United States Patent and Trademark Office (USPTO) in all matters relating to
patents.
Ms. Cynthia C. Thompson. Ms. Thompson has been a director since March 31, 1999.
She is the Chairman of the Compensation Committee and serves on the Audit
Committee. Ms. Thompson founded Quest Entertainment, Inc., a gaming technology
company, in August of 2003 and serves as the Chairman of the Board and is the
President/Chief Executive Officer.
The Board of Directors and Committees
The Board held in person meetings, conference calls or unanimous consents thirty
(30) times during the fiscal year ended December 31, 2006, of which twenty-seven
(27) were unanimous actions adopted by the Board. All of our directors attended
one hundred percent (100%) of the aggregate of the total number of meetings of
the Board. The Company has formed, by determination of the Board, an Audit
Committee, with Mr. H. Thomas Winn as Chairman, who is an independent director
and a financial expert as used in Item 7(d)(3)(iv) of Schedule 14 A (240.14a-101
of this chapter) under the Exchange Act. The Audit Committee held four (4)
meetings during the fiscal year ended December 31, 2006. The Compensation
Committee, with Independent Director Ms. Cynthia C. Thompson as Chairman, held
two (2) meetings during the fiscal year ended December 31, 2006. The Nominating
Committee, with Independent Director Ms. Cynthia C. Thompson as Chairman held
one (1) meeting during the fiscal year ended December 31, 2006.
The Nominating Committee believes that members of the Board must possess certain
basic personal and professional qualities in order to properly discharge their
fiduciary duties to stockholders, provide effective oversight of the management
of the Company and monitor the Company's adherence to principles of sound
corporate governance. Board nominations must be selected by the Nomination
Committee, which is comprised solely of independent directors. Although there
are formal procedures for you to nominate persons to serve as directors, the
Board will consider recommendations from you, which should be addressed to
Samaritan Pharmaceuticals, Inc., 101 Convention Center Drive, Suite 310, Las
Vegas, Nevada 89109. Our officers are elected by our Board and serve until the
earlier of their resignation or removal, or until their successors have been
duly elected and qualified.
Committees of the Board of Directors
The Board of Directors has established four committees: an Audit Committee, a
Compensation Committee, a Nominating and Corporate Governance Committee, and
Scientific and Technology Advisory Committee. Each of these committees has two
or more members who serve at the discretion of the Board of Directors. The Audit
Committee has a written charter approved by the Board of Directors and can be
found under the "Investor Relations" section of our website at
www.samaritanpharma.com. The members of the committees are identified in the
paragraphs that follow.
Audit Committee. Thomas Winn (Chairman), Cynthia Thompson and Dr. Erasto Saldi
currently serve on the Audit Committee. Consistent with SEC rules regarding
auditor independence, the Audit Committee has responsibility for appointing,
setting compensation and overseeing the work of the independent registered
public accounting firm. In recognition of this responsibility, the Audit
10
Committee has established a policy to pre-approve all audit and permissible
non-audit services provided by the independent registered public accounting
firm.
Compensation Committee. Cynthia Thompson (Chairman), Welter "Budd" Holden, and
Dr. Erasto Saldi currently serve on the Compensation Committee. The Compensation
Committee administers our executive compensation program. Each member of the
Committee is a non-employee and an independent director. The Compensation
Committee is responsible for establishing salaries and administering the
incentive programs for our Chief Executive Officer and other executive officers.
The Compensation Committee has designed the Company's compensation program based
on the philosophy that all of our executives are important to our success, with
our executive officers setting the direction of our business and having overall
responsibility for our results. As with other pharmaceutical companies, we
operate in a highly competitive and difficult economic environment. Accordingly,
the Compensation Committee has structured the Company's compensation to
accomplish several goals: (a) to attract and retain very talented individuals,
(b) to reward creativity in maximizing business opportunities and (c) to enhance
stockholder value by achieving our short-term and long-term business objectives.
Nominating and Corporate Governance Committee. Welter "Budd" Holden (Chairman),
Dr. Erasto Saldi, and Dr. Laurent Lecanu currently serve on the Nominating
Committee. The nominating committee is responsible for overseeing corporate
governance matters, reviewing possible candidates for Board membership and
recommending nominees for election. The Committee is also responsible for
evaluating the function and performance of the Board and overseeing the process
for performance evaluation of the Committees of the Board. Additionally, the
Committee reviews the Company's management succession plans and executive
resources.
Science and Technology Advisory Committee. Dr. Erasto Saldi (Chairman), Dr.
Laurent Lecanu, and Dr. Vassilios Papadopoulos currently serve on the Science
and Technology Advisory Committee. It advises the Board on scientific matters
that include major internal projects, interaction with academic and other
outside research organizations, and the acquisition of technologies and
products.
Compliance with Section 16(a) of the Exchange Act
Section 16(a) of the Exchange Act requires our officers and directors, and
persons who own more than ten percent of a registered class of equity
securities, to file reports with the Securities and Exchange Commission
reflecting their initial position of ownership on Form 3 and changes in
ownership on Form 4 or Form 5. Based solely on a review of the copies of such
Forms received by us, we believe that, during the fiscal year ended December 31,
2006, all of our officers, directors and ten percent stockholders complied with
all applicable Section 16(a) filing requirements on a timely basis.
Standards of Business Conduct and Ethics
The Board has adopted Standards of Business Conduct and Ethics that are
applicable to all employees and directors, including our Chief Executive
Officer, Chief Financial Officer, other executive officers and senior financial
personnel. A copy of our Standards of Business Conduct and Ethics is available
on our website at www.samaritanpharma.com. Information on our website is not
incorporated by reference. We intend to post any waiver of, or material changes
to, these Standards, if any, to our website within four business days of such
event.
11
PROPOSAL NO. 2: AMEND THE ARTICLES OF INCORPORATION TO
INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK
Nevada law permits the Company to issue shares of Common Stock only to the
extent such shares have been authorized for issuance under its Articles of
Incorporation. Increasing the amount of authorized Common Stock will ensure that
sufficient shares will be available to raise additional capital through the sale
of equity securities, to acquire another company or its assets, to establish
strategic relationships, to provide equity incentives to employees, or for such
other corporate purposes that our Board determines are in the best interests of
the Company and its stockholders.
The Company currently has forty one million six hundred sixty six thousand six
hundred sixty seven (41,666,667) authorized shares of Common Stock, of which
twenty seven million seven hundred eleven thousand two hundred (27,711,200)
common shares issued and outstanding as of August 15, 2007 and five million
authorized shares of preferred stock, of which none are outstanding.
From time to time, the Company is approached to license complimentary
technology, acquire or merge with Companies with similar technologies. In
addition, the Company is occasionally presented larger in-licensing
opportunities which require large up front payments which normally correlates
with larger sales revenue. Since the Company would benefit with an associated
increase in sales and revenue, the company would like to be in position for such
an occurrence. While the Company has no immediate plans or proposals at this
time, the Board has determined that it is in the best interest of our
stockholders to pursue strategic acquisitions and alliances to acquire critical
mass and would like to take advantage of opportunities as they are presented.
Given the Company's present financial position, the Company believes it should
reserve a sufficient number of authorized shares to keep the Company liquid with
reserves of cash to execute its core business activities such as expensive
clinical trials. Therefore, the Company believes it must be able to issue shares
of our Common Stock in order to accomplish any value added significant strategic
merger/acquisition, in-licensing of approved products for sales and revenue or
licensing of complimentary technology. The Board believes that increasing the
number of our authorized shares of Common Stock to 250,000,000 will provide a
sufficient number of authorized shares of Common Stock for the foreseeable
future.
In addition, the Board believes that it is prudent to increase the authorized
number of shares of Common Stock to the proposed level in order to have a
sufficient number of shares of Common Stock to provide a reserve of shares
available for issuance to meet business needs as they may arise in the future.
Such business needs may include, without limitation, financings, acquisitions,
establishing strategic relationships with corporate partners, providing equity
incentive to employees, officers or directors, forward stock splits or similar
transactions.
Accordingly, our Board is requesting that the stockholders approve an amendment
to our Articles of Incorporation, under Section 78.390 of the Nevada General
Corporations Code, to increase of the number of authorized shares of Common
Stock to 250,000,000. Other than as set forth below, the board has no present
agreement or arrangement to issue any of the shares for which approval is
sought. If the amendment is approved by the stockholders, the Board does not
intend to solicit further stockholder approval prior to the issuance of any
additional shares of Common Stock, except as may be required by applicable law.
Purpose and Effect of the Amendment
The increase in authorized Common Stock will not have any immediate effect on
the rights of existing stockholders. The Board, however, will have the authority
to issue authorized Common Stock without further stockholder approval, except as
may be required by applicable law or the rules or regulations of any exchange or
market on which our class of Common Stock may trade. To the extent that
additional authorized shares are issued in the future, including the rescinded
shares discussed below, they may decrease your existing percentage equity
ownership of the Company.
12
The increase in the authorized number of shares of Common Stock and the
subsequent issuance of such shares could have the effect of delaying or
preventing a change in control of the Company such as a hostile takeover without
further action by the stockholders. Shares of authorized and unissued common
stock could, within the limits imposed by applicable law, be issued in one or
more transactions which would make a change in control of the Company more
difficult, and therefore a hostile takeover less likely. Any such issuance of
additional stock could have the effect of diluting the earnings per share and
book value per share of outstanding shares of Common Stock and such additional
shares could be used to dilute the stock ownership or voting rights of a person
seeking to obtain control of the Company.
The Board is not currently aware of any attempt to take over or acquire the
Company. While it may be deemed to have potential anti-takeover effects, the
proposed amendment to increase the authorized Common Stock is not prompted by
any specific effort or takeover threat currently perceived by management.
Article Subject to Amendment
If the proposed amendment is approved by the stockholders, the first paragraph
of Article FOURTH of the Company's Articles of Incorporation will be amended to
read as follows:
"FOURTH: The corporation is authorized to issue 250,000,000 shares, of
"Common Stock," $0.001 par value. The Board is hereby authorized to fix or alter
the rights, preferences, privileges and restrictions granted to or imposed upon
any series of Common Stock, and the number of shares constituting any such
series and the designation thereof, or any of them. The Board is also authorized
to increase or decrease the number of shares of any series, prior or subsequent
to the issue of that series, but not below the number of shares of such series
then outstanding. In case the number of shares of any series shall be so
decreased, the shares constituting such decrease shall resume the status which
they had prior to the adoption of the resolution originally fixing the number of
shares of such series."
Required Vote
The affirmative vote of a majority of the shares of outstanding Common Stock is
required for approval of this proposal. Abstentions and broker non-votes will be
counted as present for purposes of determining if a quorum is present.
Abstentions and broker non-votes will have the same effect as a negative vote on
this proposal.
Recommendation of the Board of Directors
Our Board unanimously recommends that the stockholders vote "FOR" the proposal
to amend the Articles of Incorporation to increase the number of authorized
shares of Common Stock to 250,000,000 shares.
PROPOSAL NO. 3: RATIFICATION OF APPOINTMENT OF AUDITORS
General
The Board, upon the recommendation of its Audit Committee, has ratified the
selection of SHERB & CO., LLP to serve as our independent registered public
accounting firm for the fiscal year ended December 31, 2007, subject to
ratification by our stockholders.
13
Representatives of SHERB & CO., LLP will be present at the Annual Meeting to
answer questions. They also will have the opportunity to make a statement if
they desire to do so.
We are asking our stockholders to ratify the selection of SHERB & CO., LLP as
our independent registered public accounting firm. Although ratification is not
required by our Bylaws or otherwise, the Board is submitting the selection of
SHERB & CO., LLP to our stockholders for ratification because we value our
stockholders' views on the Company's independent registered public accounting
firm and as a matter of good corporate practice. In the event that our
stockholders fail to ratify the selection, it will be considered as a direction
to the Board and the Audit Committee to consider the selection of a different
firm. Even if the selection is ratified, the Audit Committee in its discretion
may select a different independent registered public accounting firm, subject to
ratification by the Board, at any time during the year if it determines that
such a change would be in the best interests of the Company and our
stockholders.
Audit and Non-Audit Fees
The following table presents fees for professional audit services rendered by
SHERB & CO., LLP for the audit of the Company's annual financial statements for
the fiscal years ended December 31, 2006 and December 31, 2005, and fees billed
for other services rendered by SHERB & CO LLP during those periods:
2006 2005
------- -------
Audit fee: $45,000 $33,000
Audit-related fees: $ 15,000 $9,000
Tax fees: $ - $ -
All other fees: $ 4,025 $ 1,385
-------- --------
Total: $64,025 $43,385
Audit fees consisted principally of audit work performed on the consolidated
financial statements and internal control over financial reporting, as well as
work generally only the independent registered public accounting firm can
reasonably be expected to provide, such as statutory audits. The Company
generally does not engage SHERB & CO., LLP, for other services, other than Edgar
services.
Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit
Services of Independent Registered Public Accounting Firm
Consistent with SEC rules regarding auditor independence, the Audit Committee
has responsibility for appointing, setting compensation and overseeing the work
of the independent registered public accounting firm. In recognition of this
responsibility, the Audit Committee has established a policy to pre-approve all
audit and permissible non-audit services provided by the independent registered
public accounting firm.
Prior to engagement of the independent registered public accounting firm for the
next year's audit, management will submit a list of services and related fees
expected to be rendered during that year within each of categories of services
to the Audit Committee for approval.
14
Audit services include audit work performed on the financial statements and
internal control over financial reporting, as well as work that generally only
the independent registered public accounting firm can reasonably be expected to
provide, including comfort letters, statutory audits and discussions surrounding
the proper application of financial accounting and/or reporting standards.
Audit-Related services are for assurance and related services that are
traditionally performed by the independent registered public accounting firm,
including due diligence related to mergers and acquisitions, employee benefit
plan audits, and special procedures required to meet certain regulatory
requirements.
Tax services include all services, except those services specifically related to
the audit of the financial statements, performed by the independent registered
public accounting firm's tax personnel, including tax analysis; assisting with
coordination of execution of tax-related activities, primarily in the area of
corporate development; supporting other tax-related regulatory requirements; and
tax compliance and reporting.
All Other services are those services not captured in the audit, audit-related
or tax categories.
The Company generally does not request such services from the independent
registered public accounting firm. Prior to engagement, the Audit Committee
pre-approves independent public accounting firm services within each category
and the fees for each category are budgeted. The Audit Committee requires the
independent registered public accounting firm and management to report actual
fees versus the budget periodically throughout the year by category of service.
During the year, circumstances may arise when it may become necessary to engage
the independent registered public accounting firm for additional services not
contemplated in the original pre-approval categories. In those instances, the
Audit Committee requires specific pre-approval before engaging the independent
registered public accounting firm.
The Audit Committee may delegate pre-approval authority to one (1) or more of
its members. The member to whom such authority is delegated must report, for
informational purposes only, any pre-approval decisions to the Audit Committee
at its next scheduled meeting.
Audit Committee Report
The Audit Committee of the Board is composed of three (3) independent directors.
The Audit Committee operates under a written charter adopted by the Board and
attached as Exhibit A to the proxy statement filed with the SEC on April 3,
2001.
The Audit Committee is responsible for overseeing the Company's financial
reporting process on behalf of the Board. The members of the Audit Committee
consist of independent directors Mr. H. Thomas Winn, Ms. Cynthia C. Thompson and
Dr. Erasto Saldi. Each year, the Audit Committee recommends to the Board,
subject to stockholder ratification, the selection of the Company's independent
auditors.
Management is responsible for the Company's financial statements and the
financial reporting process, including internal controls. The independent
auditors are responsible for performing an independent audit of the Company's
consolidated financial statements in accordance with generally accepted auditing
standards and for issuing a report thereon. The Audit Committee's responsibility
is to monitor and oversee these processes.
In this context, the Audit Committee has met and held discussions with
management and SHERB & CO., LLP. Management represented to the Audit Committee
that the Company's consolidated financial statements were prepared in accordance
with generally accepted accounting principles, and the Audit Committee has
15
reviewed and discussed the consolidated financial statements with management and
the independent auditors. The Audit Committee discussed with SHERB & CO., LLP
the matters required to be discussed by Statement on Auditing Standards No.
61(Communication with Audit Committees). These matters included a discussion of
SHERB & CO., LLP's judgments about the quality (not just the acceptability) of
the Company's accounting principles as applied to financial reporting.
SHERB & CO., LLP also provided the Audit Committee with the written disclosures
and letter required by Independence Standards Board Standard No. 1 (Independence
Discussions with Audit Committees), and the Audit Committee discussed with SHERB
& CO., LLP that firm's independence. The Audit Committee further considered
whether the provision by SHERB & CO., LLP of the non-audit services described
elsewhere in this Proxy Statement is compatible with maintaining the auditors'
independence.
Based upon the Audit Committee's discussion with management and the independent
auditors and the Audit Committee's review of the representation of management
and the disclosures by the independent auditors to the Audit Committee, the
Audit Committee recommended to the Board that the Company's audited consolidated
financial statements be included in the Company's Annual Report on Form 10-K for
the year ended December 31, 2006, for filing with the SEC. The Audit Committee
and the Board have also recommended the selection of SHERB & CO., LLP as the
Company's independent auditors for 2007, subject to stockholder ratification.
The Audit Committee Report does not constitute soliciting material, and shall
not be deemed to be filed or incorporated by reference into any other Company
filing under the Securities Act of 1933, as amended, or the Exchange Act, except
to the extent that the Company specifically incorporates the Audit Committee
Report by reference therein.
The Audit Committee:
Mr. H. Thomas Winn (Chairman)
Ms. Cynthia C. Thompson
Dr. Erasto Saldi
Required Vote
The affirmative vote of a majority of the votes cast in person or by proxy at
the Annual Meeting will be required to ratify the appointment of SHERB & CO.,
LLP as our independent auditors for the fiscal year ending December 31, 2007.
Broker non-votes and abstentions are not treated as votes cast for this purpose
and have no effect on the outcome of the vote.
Recommendation of the Board of Directors
The Board unanimously recommends that the Stockholders vote "FOR" the
ratification of SHERB & CO., LLP as our independent registered public accounting
firm for 2007.
16
EXECUTIVE OFFICERS AND KEY EMPLOYEES
The following table sets forth the name, age and position of our executive
officers, directors, key employees and key consultants as of the date hereof:
Name Age Position(s) with Company
-------------------------- --- ---------------------------------------
Dr. Janet R. Greeson 64 CEO, President and Chairman of the Board
Mr. Eugene J. Boyle 42 CFO, COO and Director
Dr. Thomas Lang 55 Chief Drug Development Officer
Ms. Kristi C. Eads 37 VP Business Development, Corporate Sec.
Mr. George Weaver 42 Regulatory Affairs Officer
Dr. Vassilios Papadopoulos 46 Chief Scientist and Key Consultant
Dr. Christos Dakas 46 Managing Director, Samaritan Europe
Ms. Dianne Thompson 44 Comptroller
Mr. Eugene J. Boyle. Please see Section herein entitled "Proposal No. 1:
Election of Directors" for Mr.. Boyle's biography.
Dr. Christos Dakas, D.Pharm., Ph.D. Dr. Christos Dakas, joined Samaritan in June
2005 to oversee European operations, including Samaritan Ireland
Pharmaceuticals, Limited. Prior to joining Samaritan, Dr. Dakas had a successful
career in various executive positions with Gerolymatos, Genesis Pharma, and most
recently Arriani Pharmaceuticals. A pharmaceutical chemist by training with a
number of published papers, he holds degrees from the University of Toronto,
Kings College of University of London, and the University of Wales in Cardiff.
Ms. Kristi C. Eads. Kristi Eads, J.D., Vice President of Business Development,
joined Samaritan Pharmaceuticals in 2000, and has functioned as Vice President
of Samaritan since January of 2004. Ms. Eads works with Samaritan's business
development team to optimize Samaritan's licensing and partnering opportunities
by executing business development initiatives and assisting with strategic
planning. Ms. Eads obtained her juris doctorate from Concord University and has
a bachelor of arts from the University of Oregon.
Dr. Janet R. Greeson. Please see Section herein entitled "Proposal No. 1:
Election of Directors" for Dr. Greeson's biography.
Dr. Thomas Lang. Dr. Lang has served as the Chief Drug Development Officer for
Samaritan since 2004. Prior to joining the Company he was the former Vice
Chairman and President of Serono Inc., the U.S. Company of Serono, S.A. Dr. Lang
holds technical degrees in Chemistry and Pharmacy, an MBA degree, a Ph.D. degree
and is a registered pharmacist in the State of New Jersey.
Dr. Vassilios Papadopoulos, D.Pharm., Ph.D. Dr. Papadopoulos served as a
director from 2001 through June 2005 and currently serves as the Principal
Investigator for Samaritan Research Laboratories at Georgetown University. Dr.
Papadopoulos has over twenty (20) years of experience and over one hundred forty
(140) peer review article publications in the Biopharmaceutical field and
numerous patents in the field of steroid biosynthesis, Alzheimer's disease and
cancer. Dr. Papadopoulos has been appointed as the new Director of the Research
Institute of the McGill University Health Centre in Montreal, Canada. Dr.
Papadopoulos assumed his new role officially on July 1, 2007.
Dianne Thompson. Ms. Thompson is the Comptroller of Samaritan Pharmaceuticals,
and the Senior V.P. of Public Affairs & Development for the Samaritan Innovative
Science Foundation. Ms. Thompson received her BS in Business Administration and
Economics from Notre Dame De Namur University, Belmont, California, and her MBA
from Pepperdine University, Malibu, California. Ms. Thompson founded her own
business management consulting company in 1998 and has had a vast array of
clients in both the for-profit and nonprofit sectors.
Mr. George Weaver. Mr. Weaver has served as the Regulatory Affairs Officer for
Samaritan since 2003. Mr. Weaver majored in chemistry and minored in business
economics at UCLA. After working as an environmental toxicology consultant for
two (2) years, Mr. Weaver earned a Bachelor's of Science in Environmental
Engineering and assumed an appointed position as Chair of Industry Waste
Classification and Toxicology Focus Group under the California Department of
Toxic Substances Control Regulatory Structure Update.
17
COMPENSATION DISCUSSION AND ANALYSIS
Overview. The Compensation Committee administers our executive compensation
program. Each member of the Compensation Committee is a non-employee and an
independent director. The Compensation Committee is responsible for establishing
salaries, administering the incentive programs, and determining the total
compensation for our Chief Executive Officer and other executive officers. The
Compensation Committee seeks to achieve the following goals with the Company's
executive compensation programs: to attract, motivate and retain key executives
and to reward executives for value creation. The Compensation Committee seeks to
foster a performance-oriented environment by tying a significant portion of each
executive's cash and equity compensation to the achievement of performance
targets that are important to the Company and its stockholders. The Company's
executive compensation program has three principal elements: base salary, cash
bonuses and equity incentives under the Amended Samaritan Pharmaceuticals, Inc.
2001 Stock Incentive Plan and Samaritan Pharmaceuticals, Inc. 2005 Stock
Incentive Plan.
We conducted an annual benchmark review of the aggregate level of our executive
compensation, as well as the mix of elements used to compensate our executive
officers. This review is based on a survey of executive compensation, "BioWorld
Executive Compensation Report", conducted by an independent third party, Thomson
BioWorld.
Compensation Philosophy. The Compensation Committee has designed the Company's
compensation program based on the philosophy that all of our executives are
important to our success, with our executive officers setting the direction of
our business and having overall responsibility for our results. As with other
pharmaceutical companies, we operate in a highly competitive and difficult
economic environment. Accordingly, the Compensation Committee has structured the
Company's compensation to accomplish several goals: (a) to attract and retain
very talented individuals, (b) to reward creativity in maximizing business
opportunities and (c) to enhance stockholder value by achieving our short-term
and long-term business objectives.
Elements of Compensation
Executive compensation consists of the following elements:
Base Salary. The Compensation Committee considers peer data as well as
individual performance when approving base salaries for executive officers. The
Compensation Committee evaluates individual performance based on the achievement
of corporate or divisional operating goals and subjective criteria, as well as
the Chief Executive Officer's evaluation of the other executive officers. No
specific weight is assigned to any particular factor. Dr. Thomas Lang and Dr.
Christos Dakas each have employment agreements negotiated at arm's length with
the Compensation Committee, and each such agreement provides for a minimum
annual base salary. In setting base salaries, the Board has considered (a) the
contributions made by each executive to our Company, (b) compensation paid by
peer companies to their executive officers and (c) outside compensation reports.
In 2006, all executive officers received salary increases of approximately five
percent (5%) reflecting competitive trends, general economic conditions as well
as a number of factors relating to the particular individual, including the
performance of the individual executive, and level of experience, ability and
knowledge of the job.
18
Bonuses. The Compensation Committee has the authority to award discretionary
bonuses to our executive officers. The incentive bonuses are intended to
compensate officers for achieving financial and operational goals and for
achieving individual annual performance objectives. These objectives vary
depending on the individual executive, but relate generally to strategic factors
such as a) initial signing of an employment agreement; b) upon acceptance of
filing of a new drug application by the FDA; c) the FDA approval to move from
one phase to the next phase in the FDA application process; d) pharmaceutical
sales goals achieved e) completion of an in-licensing contract; f) completion of
an out-licensing contract; and g) increases in market capitalization. The
Compensation Committee did not award any cash bonuses to the executive officers
in 2006.
Long-Term Incentive Program. We believe that long-term performance is achieved
through an ownership culture that encourages such performance by our executive
officers through the use of stock and stock-based awards. Our stock compensation
plans have been established to provide certain of our employees, including our
executive officers, with incentives to help align those employees' interests
with the interests of stockholders. The Compensation Committee believes that the
use of stock and stock-based awards offers the best approach to achieving our
compensation goals. We have not adopted stock ownership guidelines and our stock
compensation plans have provided the principal method for our executive officers
to acquire equity or equity-linked interests in our Company. We believe that the
annual aggregate value of these awards should be set near competitive median
levels for comparable companies. However, due to the early stage of our
business, we expect to provide a greater portion of total compensation to our
executives through our stock compensation plans than through cash-based
compensation. The Compensation Committee makes stock awards to executive
officers and this type of award may occur in future years, based on the
Compensation Committee's assessment of the Company's needs and objectives, which
are as follows.
Stock Options. Our Compensation Committee is the administrator of our stock
option plans. Stock option grants are made at the commencement of employment
and, occasionally, following a significant change in job responsibilities or to
meet other special retention or performance objectives. The Plans are designed
to (a) reward executives for achieving long-term financial performance goals
over a three (3) year to ten (10) year period, (b) provide retention incentives
for executives and (c) tie a significant portion of an executive's total
compensation to our long-term performance. Periodic stock option grants are made
at the discretion of the Compensation Committee to eligible employee and, in
appropriate circumstances, the Compensation Committee considers the
recommendations of members of management, such as Dr. Janet Greeson, our Chief
Executive Officer, and Eugene Boyle, Chief Financial Officer. In 2006, certain
named executive officers were awarded stock options in the amounts indicated in
the sections entitled "Summary Compensation Table" and "Grants of Plan Based
Awards". The short and long-term compensation program includes stock options
granted under the Amended Samaritan Pharmaceuticals, Inc. 2001 Stock Incentive
Plan and the Samaritan Pharmaceuticals, Inc. 2005 Stock Incentive Plan
(together, the "Plans") as well as non-qualified stock options. Stock options
for our executive officers, key employees and key consultants are part of our
incentive program and link the enhancement of shareholder value directly to
their total compensation. The Compensation Committee determines the number of
stock options granted based upon several factors: (a) level of responsibility,
(b) expected contribution towards our performance and (c) total compensation
strategy for mix of base salary, short-term incentives and long-term incentives.
Our Plans authorize us to grant options to purchase shares of Common Stock to
our employees, directors and consultants. Stock options granted by us typically
have an exercise price equal to the fair market value of our Common Stock on the
day of grant, and typically vest twenty-five percent (25%) yearly, and generally
expire between three and ten years after the date of grant. Incentive stock
options also include certain other terms necessary to assure compliance with the
Internal Revenue Code of 1986, as amended.
19
Stock Appreciation Rights. Our Amended Samaritan Pharmaceuticals, Inc. 2001
Stock Incentive Plan and the Samaritan Pharmaceuticals, Inc. 2005 Stock
Incentive Plan authorizes us to grant stock appreciation rights, or SARs. A SAR
represents a right to receive the appreciation in value, if any, of our Common
Stock over the base value of the SAR. The base value of each SAR equals the
value of our Common Stock on the date the SAR is granted. Upon surrender of each
SAR, unless we elect to deliver Common Stock, we will pay an amount in cash
equal to the value of our Common Stock on the date of delivery over the base
price of the SAR. SARs typically vest based upon continued employment on a
pro-rata basis over a four-year period, and generally expire ten years after the
date of grant. Our Compensation Committee is the administrator of our stock
appreciation rights plan. To date, no SARs have been awarded to any of our
executive officers.
Restricted Stock Grants. Our Compensation Committee has and may in the future
elect to make grants of restricted stock to our executive officers.
Other Compensation. The amounts shown in the Summary Compensation Table under
the heading "Other Compensation" represent the value of Company matching
contributions to the executive officers' 401(k) accounts and the taxable value
of certain life insurance benefits. Executive officers did not receive any other
perquisites or other personal benefits or property.
Chief Executive Officer Compensation. The Compensation Committee uses the same
factors in determining the compensation of the Chief Executive Officer as it
does for the executive officers. The Chief Executive Officer's base salary for
Fiscal 2006 was $482,434, and as of December 31, 2006, the Chief Executive
Officer has accrued compensation of $335,846 which could be converted into
restricted shares, at the executive's option. The Chief Executive Officer
received other compensation as indicated in the Summary Compensation Table.
The Compensation Committee is mindful of the potential impact upon the Company
of Section 162(m) of the Code, which provides that compensation in excess of
$1,000,000 paid to the President and CEO or to any of the other four most highly
compensated executive officers of a public company will not be deductible for
federal income tax purposes unless such compensation satisfies one of the
enumerated exceptions set forth in Section 162(m) of the Code. The Compensation
Committee has reviewed our compensation plans and programs with regard to the
deduction limitation set forth in Section 162(m) of the Code. Based on this
review, the Compensation Committee anticipates that the annual bonus, long term
incentive plan bonus and gain, if any, recognized by our President and CEO and
named executive officers upon the exercise of stock options or SARS meet the
requirements for deductibility under Section 162(m) of the Code.
Compensation Committee Report
The Compensation Committee of the Board is composed of three (3) independent
directors. The Compensation Committee does not have a written charter. The
Compensation Committee is responsible for overseeing the Company's compensation
process on behalf of the Board. The members of the Compensation Committee
consist of independent directors Ms. Cynthia C. Thompson, Chairman, Welter
"Budd" Holden, and Dr. Erasto Saldi.
The Compensation Committee has reviewed and discussed this Compensation
Discussion & Analysis (CD&A) with management. Based on the review and
discussions, the Compensation Committee recommended to the Board that the CD&A
be included in the Company's Annual Report on Form 10-K for the year ended
December 31, 2006, for filing with the SEC and this Proxy Statement.
20
The foregoing report is provided by the following directors, who constitute the
Compensation Committee:
The Compensation Committee:
Ms. Cynthia C. Thompson (Chairman)
Mr. Welter "Budd" Holden
Dr. Erasto Saldi
Summary Compensation Table
Change
In
Pension
Value
and
Nonquali
fied
Non-Equity Deferred
Incentive Compens Other
Restricted Option Plan ation Compen-
Salary Bonus Stock Awards Awards(6) Compensation Earnings sation Total
Name And Principal Position Year $ $ $ $ $ $ $(7),(8) $
--------------------------- ---- ---------- ------- ------------ --------- ------------ ---------- -------- --------
Dr. Janet R. Greeson 2006 482,434 -0- -0- -0- -0- -0- 10,799 493,233
CEO, President and 2005 459,461 -0- -0- -0- -0- -0- 8,850 468,311
Chairman of the Board (1),
(2) 2004 437,582 -0- -0- -0- -0- -0- 19,559 457,141
Mr. Eugene J. Boyle 2006 321,622 -0- -0- -0- -0- -0- 9,213 330,835
CFO and COO (1), (3) 2005 306,307 -0- -0- -0- -0- -0- 6,857 313,164
2004 291,721 -0- -0- -0- -0- -0- 2,698 294,419
Dr. Thomas Lang 2006 324,188 -0- -0- -0- -0- -0- 15,190 339,378
Chief Drug Development 2005 308,750 -0- -0- -0- -0- -0- 11,190 319,940
Officer (4) 2004 173,538 -0- -0- -0- -0- -0- 3,742 177,280
Dr. Christos Dakas 2006 136,075 -0- -0- -0- -0- -0- 16,611 152,686
Managing Director - 2005 68,038 -0- -0- -0- -0- -0- 8,306 76,344
Samaritan Europe(5)
Mr. George Weaver(1) 2006 129,675 -0- -0- 10,428 -0- -0- 8,386 148,489
Regulatory Affairs 2005 123,500 -0- -0- -0- -0- -0- 6,283 129,783
2004 120,000 -0- -0- -0- -0- -0- 2,409 122,409
1) Accrued Compensation: The following executives have accrued
compensation as of December 31, 2006, Janet Greeson, $335,846, Eugene
Boyle, $170,506, George Weaver, $91,686 and Thomas Lang, $7,234. Each
executive has the option to convert their respective accrued
compensation into restricted shares. In 2006, George Weaver exercised
his option and the Board of Directors approved the conversion of
$15,000 into restricted shares. As of December 31, 2006, the restricted
shares have not been issued, since the Company was awaiting an
additional share application approval from the AMEX. Subsequently, the
shares were issued in the 1st Quarter 2007.
2) The Company and Dr. Greeson have entered into an employment agreement,
a copy of which is attached as Exhibit 10.9 to the Company's Quarterly
Report on Form 10-QSB as filed with the SEC on August 14, 2002. The
agreement filed on August 14, 2002 expired as of December 31, 2005.
3) The Company and Mr. Boyle have entered into an employment agreement, a
copy of which is attached as Exhibit 10.8 to the Company's Quarterly
Report on Form 10-QSB as filed with the SEC on August 14, 2002. The
agreement filed on August 14, 2002 expired as of December 31, 2005.
4) On June 1, 2004, the Company entered into an employment agreement with
Dr. Thomas Lang for a term of four (4) years. Dr. Lang is entitled to a
base salary of $300,000 per year which may be paid in stock pursuant to
a formula as set forth in the agreement. Dr. Lang is entitled to
21
receive bonus payments of $50,000 for each Investigational New Drug
Applications "granted" by the FDA. Dr. Lang has received a one-time
signing bonus of 16,667 options to purchase our Common Stock at $6.00
per share, such options to expire after three (3) years. Dr. Lang was
entitled to moving expenses up to $30,000. Dr. Lang shall receive a
grant of 200,000 options, one-quarter (1/4) of which shall vest each
year. The price of the options shall be $6.48 with a term of ten (10)
years. Upon termination of the employment agreement, such 200,000
options (vested and non-vested) shall expire within thirty (30) days
thereafter. Dr. Lang shall have the opportunity to participate in all
of the Company's qualified defined benefit and defined contribution
retirement plans (subject to eligibility requirements in such plans),
three (3) weeks paid vacation (and paid holidays observed by the
Company).
5) On June 29, 2005 the Company entered into an employment arrangement
with Christos Dakas to serve as the European Business Development and
Managing Director of Samaritan Pharmaceuticals S.A. in Greece, once
such entity is established ("Samaritan Pharmaceuticals Europe"). Dr.
Dakas shall receive a base salary of (Euro) 105,280 per year, a car
allowance equal to (Euro) 12,852 per year and a performance based bonus
to be awarded annually at the discretion of the CEO of the Company. Dr.
Dakas also is entitled to receive 16,667 Company stock options priced
at $2.94 which was one hundred ten percent (110%) of the market price
effective July 11, 2005 and said options expire after three (3) years,
or after thirty (30) days after Dr. Dakas leaves his employ with
Samaritan Pharmaceuticals Europe. Dr. Dakas is entitled to health
insurance and other benefit programs per Samaritan Pharmaceuticals
Europe. The amounts shown in this column cover amounts for the payment
of Medicare/Social Security taxes, life insurance premiums and life
annuity premiums for the benefit of the particular employee, and the
employers matching contribution to the particular employees 401(k).
6) Effective January 1, 2006, the Company has fully adopted the provisions
of SFAS No. 123R and related interpretations as provided by SAB 107. As
such, compensation cost is measured on the date of the grant as the
excess of the current market price of the underlying stock over the
exercise price. Such compensation amounts, if any, are amortized over
the respective vesting periods of the option grant. The Company applies
this statement prospectively. Had the Company applied this statement
retrospectively, the amount in this column for fiscal year 2005, Eugene
Boyle would have been $1,297,831, and Dr. Christos Dakas would have
been $14,320; the amount for fiscal year 2004, Dr. Janet Greeson would
have been $2,024,871, Eugene Boyle would been $912,069, Dr. Thomas Lang
would have been $1,114,625 and George Weaver would have been $5,660.
These amounts represent the estimated present value of these stock
options at the respective date of grant, calculated using the
Black-Scholes option pricing model, based on the following assumptions
used in developing the grant valuations: an volatility of 110% for
options granted for 2006; an average volatility of 41% for options
granted during 2005 and an average volatility of 82% for options
granted during 2004; a risk-free interest rate of 5% per year for
options granted in 2006, 2005 and 2004; and a dividend yield of 0% for
options granted in years 2006, 2005 and 2004. The actual value of the
options, if any, realized by an officer will depend on the extent to
which the market value of the Common Stock exceeds the exercise price
of the option on the date the option is exercised. Consequently, there
is no assurance that the value realized by an officer will be at or
near the value estimated above. These amounts should not be used to
predict stock performance.
7) The amounts shown in this column cover amounts for the payment of
medical and dental insurance, short and long term disability insurance,
Medicare/Social Security taxes, car allowances, life insurance
premiums, life annuity premiums and accidental death and dismemberment
insurance for the benefit of the particular employee, and the employers
matching contribution to the particular employees 401(k).
8) We adopted a tax-qualified employee savings and retirement plan, or
401(k) plan, covering our full-time employees located in the United
States. The 401(k) plan is intended to qualify under Section 401(k) of
the Internal Revenue Code of 1986, as amended (the "Code"), so that
contributions to the 401(k) plan by employees, and the investment
earnings thereon, are not taxable to employees until withdrawn from the
401(k) plan. Under the 401(k) plan, employees may elect to reduce their
current compensation up to the statutorily prescribed annual limit and
have the amount of such contribution contributed to the 401(k) plan.
The 401(k) plan does permit additional matching contributions to the
401(k) plan by us on behalf of participants in the 401(k).
Grants of Plan-Based Awards
Options to purchase 10,000 shares of the Company's Common Stock were granted
under the Option Plan to the executive officers named in the Summary
Compensation Table during fiscal 2006. The following table shows the number of
options granted and the exercise price per share.
22
Number of
Securities
Grant Underlying Exercise or Base
Name Date Options Price of Option Expiration Date
-------------------- ---------- ----------- ---------------- ---------------
Dr. Janet R. Greeson N/A -0- -0- -0-
Mr. Eugene J. Boyle N/A -0- -0- -0-
Mr. Thomas Lang N/A -0- -0- -0-
Dr. Christos Dakas N/A -0- -0- -0-
Mr. George Weaver (1) 12/15/2006 10,000 1.50 12/15/2011
1) In December 2006, the Compensation Committee evaluated George Weaver and
awarded 10,000 stock options which vest in equal quarterly installments
beginning on March 15, 2007. The Compensation Committee determines the number of
stock options granted based upon several factors: (a) level of responsibility,
(b) expected contribution towards our performance and (c) total compensation
strategy for mix of base salary, short-term incentives and long-term incentives.
Outstanding Equity Awards at Fiscal Year-End
The following table sets forth information with respect to the unexercised
options to purchase shares of the Company's Common Stock granted under the
Option Plan to the executive officers named in the Summary Compensation Table
and held by them at December 31, 2006.
---------------------------- ---------------- ------------------ ------------------ -----------------
Number of Number of
Securities Securities
Underlying Underlying
Unexercised Unexercised Option
Options Options # Option Exercise Expiration Date
Name # Exercisable Unexercisable Price
---------------------------- ---------------- ------------------ ------------------ -----------------
Janet Greeson 255,369 -0- 3.48 12/31/2011
---------------------------- ---------------- ------------------ ------------------ -----------------
255,369 -0- 3.48 01/02/2012
---------------------------- ---------------- ------------------ ------------------ -----------------
296,614 -0- 3.48 04/25/2012
---------------------------- ---------------- ------------------ ------------------ -----------------
430,373 -0- 3.48 01/15/2013
---------------------------- ---------------- ------------------ ------------------ -----------------
467,892 -0- 2.04 01/02/2014
---------------------------- ---------------- ------------------ ------------------ -----------------
241,035 -0- 3.48 01/02/2014
---------------------------- ---------------- ------------------ ------------------ -----------------
Eugene Boyle 127,685 -0- 3.48 12/31/2011
---------------------------- ---------------- ------------------ ------------------ -----------------
127,684 -0- 3.48 01/02/2012
---------------------------- ---------------- ------------------ ------------------ -----------------
74,154 -0- 3.48 04/25/2012
---------------------------- ---------------- ------------------ ------------------ -----------------
215,187 -0- 3.48 01/15/2013
---------------------------- ---------------- ------------------ ------------------ -----------------
265,015 -0- 2.04 01/02/2014
---------------------------- ---------------- ------------------ ------------------ -----------------
89,450 -0- 3.48 01/02/2014
---------------------------- ---------------- ------------------ ------------------ -----------------
440,182 -0- 5.58 01/05/2015
---------------------------- ---------------- ------------------ ------------------ -----------------
Thomas Lang 4,167 -0- 3.00 10/09/2008
---------------------------- ---------------- ------------------ ------------------ -----------------
10,000 10,000 6.48 06/01/2014
---------------------------- ---------------- ------------------ ------------------ -----------------
16,667 -0- 6.00 06/01/2007
---------------------------- ---------------- ------------------ ------------------ -----------------
Christos Dakas 16,667 -0- 2.94 07/11/2008
---------------------------- ---------------- ------------------ ------------------ -----------------
George Weaver 8,334 -0- 2.04 01/02/2014
---------------------------- ---------------- ------------------ ------------------ -----------------
This table reflects post reverse stock split numbers.
23
Option Exercises and Stock Vested
The following table sets forth information with respect to the option exercises
and stock vested as of December 31, 2006:
-------------------- ------------------------------------------- -------------------------------------
Name of Executive
Officer Option Awards Stock Awards
-------------------- ------------------------------------------- -------------------------------------
Number of
Number of Shares Shares
Number of Shares Acquired On Acquired Value Realized on
Acquired On Exercise Exercise on Vesting Exercise
# # $ $
-------------------- ------------------------ ------------------ ----------------- -------------------
Janet Greeson -0- -0- -0- -0-
-------------------- ------------------------ ------------------ ----------------- -------------------
Eugene Boyle -0- -0- -0- -0-
-------------------- ------------------------ ------------------ ----------------- -------------------
Thomas Lang -0- -0- -0- -0-
-------------------- ------------------------ ------------------ ----------------- -------------------
Christos Dakas -0- -0- -0- -0-
-------------------- ------------------------ ------------------ ----------------- -------------------
George Weaver -0- -0- -0- -0-
-------------------- ------------------------ ------------------ ----------------- -------------------
Retirement Plan Potential Annual Payments and Benefits
None of our named executives participate in or have account balances in
qualified or non-qualified defined benefit plans sponsored by us. The
Compensation Committee, which is solely comprised of "outside directors" as
defined for purposes of Section 162(m) of the Code, may elect to adopt qualified
or non-qualified defined benefit plans if the Compensation Committee determines
that doing so is in our best interests.
Nonqualified Defined Contribution and Other Deferred Compensation Plans
The Company has established "Rabbi Trust" agreements for the benefit of select
management and highly-compensated employees and has appointed a trustee that is
a non-director and officer providing for the payment out of the assets of the
Rabbi Trust agreements accrued under the Company's various employment agreements
and other employment arrangements as the Company may specify from time to time.
The Rabbi Trust agreements would become irrevocable upon a change of control of
Samaritan. The Company may make contributions to the Rabbi Trust agreements from
time to time, and additional funding may be required upon a change of control.
To the extent funded, the Rabbi Trust agreements are to be used, subject to
their terms and to the claims of the Company's general creditors in specified
circumstances, to make payments under the terms of the benefit plans, employment
agreements and other employment arrangements as the Company may specify from
time to time. To date, only restricted shares have been deferred into the
nonqualified deferred compensation plan, thus the plan will be settled in
restricted shares.
-------------------------- ------------------ ------------------ -------------- ------------------- ------------------
Executive Registrant Aggregate Aggregate Aggregate
Contributions in Contributions in Earnings in Withdrawals/ Balance at Last
Last FY Last FY Last FY Distributions (3) FYE (4)
Name $ $ $ $ $
-------------------------- ------------------ ------------------ -------------- ------------------- ------------------
Janet Greeson (1) -0- -0- -0- 540,000 1,952,687
-------------------------- ------------------ ------------------ -------------- ------------------- ------------------
Eugene Boyle (1) -0- -0- -0- -0- 2,294,289
Thomas Lang (1) -0- -0- -0- -0- -0-
-------------------------- ------------------ ------------------ -------------- ------------------- ------------------
Christos Dakas -0- -0- -0- -0- -0-
-------------------------- ------------------ ------------------ -------------- ------------------- ------------------
George Weaver (1) -0- -0- -0- -0- 141,775
-------------------------- ------------------ ------------------ -------------- ------------------- ------------------
Doug Bessert (1), (2) -0- -0- -0- 231,081 835,800
-------------------------- ------------------ ------------------ -------------- ------------------- ------------------
24
1) As of August 15, 2007, the Company has issued 3,806,652 shares into the
Rabbi Trust with the following credit allocation: Dr. Janet Greeson
1,549,752; Mr. Eugene J. Boyle 1,737,531; Dr. Vassilios Papadopoulos
249,641; Mr. George Weaver 150,020; Mr. Welter "Budd" Holden 86,373;
Ms. Cynthia C. Thompson 16,667; Mr. H. Thomas Winn 13,334; and Dr.
Erasto R. C. Saldi 3,334.
2) In February 2004, Doug Bessert, left the Company for personal reasons
and resigned as a Member of the Board of Directors on June 12, 2007.
Under his agreement, a voluntary resignation entitles him to retain all
benefits which vested prior to his voluntary resignation in accordance
with the rules and procedures then in effect with respect to vesting.
3) The $1.62 price per share of the Company's securities is the closing
market price as of October 17, 2006.
4) The $1.26 price per share of the Company's securities is the closing
market price as of December 29, 2006.
Discussion of Director Compensation
Directors who are employees of the Company do not receive additional
compensation for serving as directors. Each director who is not an employee of
the Company receives a grant of a non-qualified stock option to purchase 1,667
shares of our Common Stock, annually as compensation for his or her services as
a member of the Board. Non-employee directors receive no additional fee for
meetings of the Board attended in person by such director or for each telephone
meeting in which such director participates. Non-employee directors who serve on
a committee of the Board receive a grant of a non-qualified stock option to
purchase 1,667 shares of our Common Stock, annually as compensation for his or
her services as a member of such committee. Chairmen of the committees receive a
grant of a non-qualified stock options to purchase 3,334 shares of our Common
Stock annually as compensation for his or her services as a chairman of such
committee. All directors of the Company are reimbursed for out-of-pocket
expenses incurred in attending meetings of the Board or committees thereof, and
for other expenses incurred in their capacities as directors of the Company.
The following director compensation table sets forth the total annual
compensation paid or accrued by the Company to or for the account of each member
of the Board of the Company except the Chief Executive Officer, Dr. Janet
Greeson, and Chief Financial Officer, Mr. Eugene Boyle, who receive no
additional compensation in their individual capacity as Board members:
Director Compensation Table
---------------------------- ------------ ----------- ------------- ------------------ -------------------- -------------------
Fees
Earned or Non-Stock
Paid in Stock Option Incentive Plan All Other
Name Cash Awards Awards(1) Compensation Compensation Total
$ $ $ $ $ $
---------------------------- ------------ ----------- ------------- ------------------ -------------------- -------------------
Thomas Winn -0- -0- 16,240 -0- -0- 16,240
---------------------------- ------------ ----------- ------------- ------------------ -------------------- -------------------
Cynthia Thompson -0- -0- 24,360 -0- -0- 24,360
---------------------------- ------------ ----------- ------------- ------------------ -------------------- -------------------
Welter "Budd" Holden -0- -0- 16,240 -0- -0- 16,240
---------------------------- ------------ ----------- ------------- ------------------ -------------------- -------------------
Doug Bessert -0- -0- 6,090 -0- -0- 6,090
---------------------------- ------------ ----------- ------------- ------------------ -------------------- -------------------
Erasto Saldi -0- -0- 16,240 -0- -0- 16,240
---------------------------- ------------ ----------- ------------- ------------------ -------------------- -------------------
Laurent Lecanu -0- -0- 16,240 -0- -0- 16,240
---------------------------- ------------ ----------- ------------- ------------------ -------------------- -------------------
1) Effective January 1, 2006, the Company has fully adopted the provisions
of SFAS No. 123R and related interpretations as provided by SAB 107. As
such, compensation represents the estimated present value of these
stock options at the respective date of grant, calculated using the
Black-Scholes option pricing model, based on the following assumptions
used in developing the grant valuations an volatility of 98% for
options granted; a risk-free interest rate of 5% per year for options;
and a dividend yield of 0% for options granted in years 2006. The
actual value of the options, if any, realized by an officer will depend
on the extent to which the market value of the Common Stock exceeds the
exercise price of the option on the date the option is exercised.
Consequently, there is no assurance that the value realized by an
officer will be at or near the value estimated above. These amounts
should not be used to predict stock performance.
25
Change of Control Plan
On May 30, 2006 the Board approved and adopted the Change in Control Severance
Plan for Certain Covered Executives and Employees of Samaritan Pharmaceuticals
(the "Change in Control Plan"), effective May 30, 2006. The Change in Control
Plan is intended to help avoid the loss and distraction of certain key employees
of the Company in the event of a change in control. The Plan has an initial term
of three (3) years with automatic three-year extensions, unless terminated by
the Board at least six (6) months prior to the end of the then current term.
The Chief Executive Officer, Chief Financial Officer, Chief Operating Officer,
Senior Vice Presidents, Vice Presidents, and Directors are eligible to
participate in the Change in Control Plan, and the Board may designate other
employees of the Company as Plan participants. The Company shall pay or cause to
be paid to the participant a cash severance calculated based on a multiplier of
four (4) months of base salary for every year of service up to maximum in of
either twenty four (24) months or thirty six (36) months depending on the
participants job title or job category. The severance amount equals the
applicable multiplier times the sum of (A) the participant's highest annual rate
of base salary as reported on the participant's W-2 for employee or on the
participant's 1099 for directors within the thirty six (36) month period
immediately preceding the effective date of the change in control and (B) the
participant's maximum annual target bonus in effect upon the date of the change
in control under the Company's bonus plan or the Participant's actual earned
commission incentive for the last two quarters, which will be annualized, prior
to the change in Control, not to exceed the target at 100% of achievement as
defined in the Company's Sales Incentive Plan in effect upon the date of the
change in control.
The Change in Control Plan provides that, if, within three years following a
"change in control" (as defined in the Change in Control Plan), a Participant's
employment is terminated by the Company without "cause" (as defined in the
Change in Control Plan) or by the Participant for "good reason" (as defined in
the Change in Control Plan), the Participant is eligible for severance benefits
equal to a multiple of the sum of the Participant's base salary and the higher
of the Participant's target bonus opportunity during the year in which the
change in control occurs or his or her target bonus opportunity following the
change in control. Each Participant will also receive his or her salary through
the date of termination, a pro rata target bonus payment for the year in which
the termination occurs, a pro rata long-term incentive payment to the extent
provided in the Company's Long Term Incentive Plan, and any earned but unpaid
long-term incentive payments or annual bonuses. In the event that a Participant
becomes subject to an excise tax under section 280G of the Internal Revenue Code
of 1986, as amended, the Participant will generally be entitled to receive an
additional amount such that the Participant is placed in the same after-tax
position as if no excise tax had been imposed. The Change in Control Plan may be
amended by the Board at any time, except that no amendment that adversely
affects the rights or potential rights of a Participant will be effective in the
event that a change in control occurs within three (3) year of such amendment.
In the event the named executive officers were terminated without "cause" or
they terminated their employment for "good reason" following a change of
control, the named executive officers would receive the following severance
payments (based on current salary rates, the average bonuses of the named
executive officers for the last three fiscal years as the highest bonus and
additional retirement benefits). Assuming the employment of our executive
officers were to be terminated without cause (whether through constructive
termination or otherwise) on December 31, 2006, the following individuals would
be entitled to payments in the amounts set forth: Dr. Janet Greeson, $1,286,496;
Eugene Boyle, $643,248; Dr. Thomas Lang, $244,970; Dr. Christos Dakas, $68,037;
and George Weaver, $130,731. The foregoing does not include any amounts that
would be payable under the "gross-up" provisions of the change of control
employment agreements, or any amounts attributable to the accelerated vesting of
equity awards upon a change of control.
Equity Compensation Plan Information
Number Of
Securities To Weighted
Be Issued Upon Average
Exercise Of Exercise Price
Outstanding Of Outstanding Number Of
Options, Options, Securities
Warrants And Warrants Remaining For
Name Of Plan Rights And Rights FutureIssuance
---------------------------------------------------------------- ----------------- ---------------- -------------------
Equity compensation plans approved by security holders (1) (2) 4,286,443 $3.72 3,546,216
Equity compensation plans not approved by security holders (3) 4,849,149 $1.62 0
----------------- ---------------- -------------------
Total 9,135,593 3,546,216
================= ===================
1) The Amended Samaritan Pharmaceuticals, Inc. 2001 Stock Incentive Plan was
filed as Exhibit 4.2 to the Company's Quarterly Report on Form 10-QSB, as filed
with the SEC on August 16, 2004.
2) The Samaritan Pharmaceuticals, Inc. 2005 Stock Incentive Plan was filed with
the SEC on Schedule 14A as filed with the SEC on April 29, 2005.
3) The Company has entered into "Rabbi Trust" agreements to fund deferred
compensation benefits, with an institutional trustee providing for the payment
out of the assets of the trusts of benefits accrued under our various benefit
plans, employment agreements and other employment arrangements as the Company
specifies from time to time. To the extent not already irrevocable, the trusts
would become irrevocable upon a change of control of the Company. The Company
may contribute to the trusts from time to time, and additional funding could be
required upon a change of control. The Rabbi Trust agreements are subject to
their terms and to the claims of our general creditors in specified
circumstances, to make payments under the terms of the benefit plans, employment
agreements and other employment arrangements from time to times specified by the
Company.
26
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Beneficial ownership is determined in accordance with the rules of the SEC.
Except as indicated by footnote, to our knowledge, the persons named in the
table below have sole voting and investment power with respect to all shares of
Common Stock shown as beneficially owned by them. Options to purchase shares of
the our Common Stock that are exercisable within sixty (60) days of August 15,
2007 are deemed to be beneficially owned by the person holding such options for
the purpose of computing ownership of such person, but are not treated as
outstanding for the purpose of computing the ownership of any other person.
Applicable percentage of beneficial ownership is based on 27,711,200 shares of
Common Stock outstanding as of August 15, 2007.
The following table sets forth information we know with respect to the
beneficial ownership of our Common Stock as of August 15, 2007, for each person
or group of affiliated persons, whom we know to beneficially own more than 5% of
our Common Stock. The table also sets forth such information for our directors
and executive officers, individually and as a group. The address for each listed
stockholder is: c/o Samaritan Pharmaceuticals, Inc., 101 Convention Center
Drive, Suite 310, Las Vegas, Nevada 89109.
Percentage of
Total Number of Total
Number of Number of Options and Number of Shares
Shares Options Shares and Options
Beneficially Beneficially Beneficially Beneficially
Beneficial Owner Owned Owned Owned (1) Owned
-------------------------------------- --------------- -------------- -------------- -----------------
Dr. Janet R. Greeson 1,074,607 1,946,651 3,021,258 10.9%
Mr. Eugene J. Boyle 334,518 1,339,353 1,673,871 6%
Dr. Thomas Lang 17,858 220,834 238,692 *
Ms. Kristi C. Eads 57,500 10,000 67,500 *
Mr. George Weaver -0- 18,334 18,334 *
Dr. Laurent Lecanu 8,334 13,334 21,668 *
Mr. Douglas D. Bessert 809,310 5,000 814,310 2.9%
Dr. Erasto R.C. Saldi 7,730 13,334 21,064 *
Mr. Welter "Budd" Holden 439,192 13,334 452,526 1.6%
Mr. H. Thomas Winn 16,667 13,334 30,001 *
Ms. Cynthia C. Thompson 123,926 20,000 143,926 *
All Executive officers and directors
as a group (eleven persons) 2,889,642 3,613,508 6,503,150 21.4%
Dr. Vassilios Papadopoulos (2) 16,667 291,667 308,334 1.1%
Dr. Christos Dakas (3) -0- 16,667 16,667 *
*Less than one percent (1%)
1) If an officer or director had previously elected to exercise options or
deferred compensation through a program that involves the crediting of
deferred shares of the Company's Common Stock held pursuant to the
Trust under Samaritan Pharmaceuticals, Inc. Executive Benefit Plan (the
"Rabbi Trust") for distribution to the executive after termination of
employment, the shares were excluded from the above calculation. As of
August 15, 2007, the Company has issued 3,806,652 shares into the Rabbi
Trust with the following credit allocation: Dr. Janet Greeson
1,549,752; Mr. Eugene J. Boyle 1,737,531; Dr. Vassilios Papadopoulos
249,641; Mr. George Weaver 150,020; Mr. Welter "Budd" Holden 86,373;
Ms. Cynthia C. Thompson 16,667; Mr. H. Thomas Winn 13,334; and Dr.
Erasto R. C. Saldi 3,334.
2) Dr. Vassilios Papadopoulos is a key consultant for the Company and a
former officer and director. 3) Dr. Christos Dakas is an executive of
our subsidiary, Samaritan Europe.
TRANSACTIONS WITH RELATED PARTIES
Policies and Procedures for Approval of Related Person Transactions
Our policy and procedures with respect to any related person transaction between
the Company and any related person requiring disclosure under Item 404(a) of
Regulation S-K under the Securities Exchange Act of 1934, is that such
transaction is consummated only if the Audit Committee approves or ratifies such
transaction; the disinterested members of the Board approves or ratifies such
transaction; or the transaction involves compensation approved or ratified by
the Compensation Committee..
27
Indemnification Agreements
The Company has entered into indemnification agreements with each of its
directors and officers, indemnifying them against expenses, settlements,
judgments and fines incurred in connection with any threatened, pending or
completed action, suit, arbitration or proceeding, where the individual's
involvement is by reason of the fact that he or she is or was a director or
officer or served at our request as a director of another organization (except
that indemnification is not provided against judgments and fines in a derivative
suit unless permitted by Nevada law.) An individual may not be indemnified if he
or she is found not to have acted in good faith and in a manner he or she
reasonably believed to be in or not opposed to the best interests of Samaritan
Pharmaceuticals, except to the extent Nevada law shall permit broader
contractual indemnification. The indemnification agreements provide procedures,
presumptions and remedies designed to substantially strengthen the indemnity
rights beyond those provided by Samaritan Pharmaceutical's Certificate of
Incorporation and by Nevada law.
GENERAL
The Board knows of no other business, which will be presented at the Annual
Meeting. If any other business is properly brought before the Annual Meeting,
proxies in the enclosed form will be voted in respect thereof in accordance with
the judgments of the persons voting the proxies. It is important that the
proxies be returned promptly and that your shares are represented. You are urged
to sign, date and promptly return the enclosed proxy card in the enclosed
envelope.
COMMUNICATIONS WITH THE BOARD OF DIRECTORS
The Board maintains a process for stockholders to communicate with the Board.
Stockholders wishing to communicate with the Board or any individual director
must mail a communication addressed to the Board or the individual director, c/o
Samaritan Pharmaceuticals, 101 Convention Center Drive, Suite 310, Las Vegas, NV
89109. Any such communication must state the number of shares of Common Stock
beneficially owned by the stockholder making the communication. All of such
communications will be forwarded to the full Board of Directors or to any
individual director or directors to whom the communication is directed unless
the communication is clearly of a marketing nature or is unduly hostile,
threatening, illegal, or similarly inappropriate, in which case the Company has
the authority to discard the communication or take appropriate legal action
regarding the communication.
WHERE YOU CAN FIND MORE INFORMATION
We have filed an Annual Report on Form 10-K for the fiscal year ending December
31, 2006, with the SEC. You may obtain, free of charge, a copy of the Annual
Report by writing to our Corporate Secretary, Ms. Kristi Eads, c/o Samaritan
Pharmaceuticals, Inc., 101 Convention Center Drive, Suite 310, Las Vegas, Nevada
89109. Our Annual Report is also available through our website at
www.samaritanpharma.com.
The form of Proxy is attached as Appendix A to this Proxy Statement.
By Order of The Board of Directors
/s/ Dr. Janet Greeson,
-------------------------
Dr. Janet Greeson
Chairman of the Board
Chief Executive Officer
Dated: August 21, 2007
Las Vegas, Nevada
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE COMPLETE, SIGN,
DATE, AND PROMPTLY RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED ENVELOPE. YOU
MAY REVOKE YOUR PROXY AT ANY TIME PRIOR TO THE ANNUAL MEETING. IF YOU DECIDE TO
ATTEND THE ANNUAL MEETING AND WISH TO CHANGE YOUR PROXY VOTE, YOU MAY DO SO
AUTOMATICALLY BY VOTING IN PERSON AT THE MEETING.
THANK YOU FOR YOUR ATTENTION TO THIS MATTER. YOUR PROMPT RESPONSE WILL GREATLY
FACILITATE ARRANGEMENTS FOR THE ANNUAL MEETING.
28
Appendix A
Proxy Solicited on Behalf of the Board of Directors
Of Samaritan Pharmaceuticals, Inc. the Annual Meeting of Stockholders
To Be Held At 10:00 A.M. On October 16, 2007
The shareholder of Samaritan Pharmaceuticals, Inc. by signing this card hereby
appoints Dianne Thompson proxies for this card, with full power of substitution,
to vote on behalf of the shares of Common Stock of Samaritan Pharmaceutical,
Inc. that the shareholder is entitled to vote at the Annual Meeting of
Shareholders to be held on October 16, 2007, at 10:00 a.m. at the offices of
Samaritan Therapeutics, 1000 de la Gauchetiere West, Suite 2400, Montreal,
Quebec H3B 4W5 and any adjournments thereof. This Proxy, when properly executed,
will be voted by the Proxies in the manner designated below. If this Proxy is
returned signed but without a clear voting designation, the Proxies will vote
FOR Items 1, 2, and 3.
Reverse side
THIS PROXY WILL BE VOTED AS SPECIFIED ON THE REVERSE SIDE.
29
The Board of Directors recommends a vote FOR Items 1, 2 and 3.
1. Election of Directors:
[ ] FOR nominees listed below except as marked to the contrary below
[ ] WITHHOLD AUTHORITY to vote for all nominees listed below
Nominees: Janet Greeson, Ph.D., Welter "Budd" Holden, Erasto Saldi, M.D., and
Julio L. Garcia, M.D. and : TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL
NOMINEE, WRITE THAT NOMINEE'S NAME IN THE SPACE BELOW:
2. To amend the Articles of Incorporation to increase the number of authorized
shares of Common Stock;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Ratification of Sherb & Co. as independent auditors.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
Whether or not you plan to attend the Annual Meeting and regardless of the
number of shares you own, please date, sign and return this proxy card in the
enclosed envelope (which requires no postage if mailed in the United States).
IF NO SPECIFICATION IS MADE, THIS PROXY WILL BE VOTED FOR ALL NOMINEES FOR
DIRECTORS, FOR THE PROPOSALS TO APPROVE THE AMENDMENTS TO THE ARTICLES OF
INCORPORATION, , and RATIFICATION OF SHERB & CO. The undersigned hereby revokes
any proxy or proxies heretofore given to vote upon or act with respect to such
stock and hereby ratifies and confirms all that said proxies, their substitutes,
or any of them, may lawfully do by virtue hereof. THIS PROXY IS SOLICITED ON
BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY.
DATED:__________________________________________
________________________________________________
(Print Full Name of Stockholder
________________________________________________
(Signature of Stockholder)
________________________________________________
(Signature if held jointly)
Please date the proxy and sign your name exactly as it appears hereon. Where
there is more than one owner, each should sign. When signing as an attorney,
administrator, executor, guardian or trustee, please add your title as such. If
executed by a corporation, the proxy should be signed by a duly authorized
officer. Please sign the proxy and return it promptly whether or not you expect
to attend the meeting. You may nevertheless vote in person if you do attend.
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