UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
July 10, 2015
Date of Report (date of earliest event reported)
Sigma Designs, Inc.
(Exact name of Registrant as specified in its charter)
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California |
001-32207 |
94-2848099 |
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(State or other jurisdiction of incorporation or organization) |
(Commission File Number) |
(I.R.S. Employer
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1778 McCarthy Blvd
Milpitas, California 95035
(Address of principal executive offices)
(408) 262-9003
(Registrant’s telephone number, including area code)
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 5.02 . Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
(b) On July 10, 2015, Mark Bonney formally confirmed to Sigma Designs, Inc. (the “Company”) his decision not to stand for re-election to the Board of Directors (the “Board”) at the Company’s Annual Meeting of Shareholders to be held on August 20, 2015 (the “Annual Meeting”). Mr. Bonney will continue to serve as a director until the Annual Meeting.
(e) On July 10, 2015, the Compensation Committee of the Board completed its comprehensive review of the Company’s executive officer compensation policies and programs for fiscal 2016. This review consisted, among other things, of a review of the Company’s executive officer compensation philosophy, pay practices, the implementation of an executive incentive compensation plan, a review of market comparable data and the use of an independent compensation consultant. In connection with this review, the Compensation Committee approved the final form of executive severance agreement to be entered into with each of the Company’s named executive officers. In connection with this approval, the Compensation Committee approved the following severance and change in control benefits:
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For the Company’s Chief Executive Officer, the Company will pay 12 months of base salary and benefits, the payout of the eligible bonus amount in the fiscal year in which he is terminated and 12 months of accelerated vesting on all outstanding equity awards, if terminated under specific circumstances prior to a change in control. If the Company’s Chief Executive Officer is terminated under specified circumstance within 18 months following a change in control, then the Chief Executive Officer will be paid severance equal to 24 months of his base salary and benefits, the payout of two times the full eligible bonus amount in the fiscal year in which he is terminated and accelerated vesting in full of all outstanding equity awards. |
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For the Company’s Chief Financial Officer and its Senior Vice President, Chief Marketing and Sales Officer, the Company will pay six months of base salary and benefits, the payout of fifty percent (50%) of the eligible bonus amount in the fiscal year in which he is terminated and six months of accelerated vesting on all outstanding equity awards, if terminated under specific circumstances prior to a change in control. If the officer is terminated under specified circumstance within 18 months following a change in control, then such officer will be paid severance equal to 12 months of his base salary and benefits, the payout of the full eligible bonus amount in the fiscal year in which he is terminated and accelerated vesting in full of all outstanding equity awards. |
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The form of executive severance agreement is attached as Exhibit 10.1 hereto and incorporated herein by reference . |
In addition, the Compensation Committee approved equity incentive awards to our named executive officers that are intended to align their interests with those of our shareholders and as an incentive to help the Company retain the services of its named executive officers. As a result, all of the restricted stock unit awards vest over a four-year period, with one-fourth of the total number of shares vesting on the one-year anniversary from the vesting start date, and the remaining shares vesting in equal quarterly installments thereafter. The Compensation Committee approved a restricted stock unit award of 80,000 shares to the Company’s Chief Executive Officer and 27,000 shares to each of its Chief Financial Officer and Senior Vice President, Chief Marketing and Sales Officer.
Item 5.03 . Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year
On July 10, 2015, the Board approved an amendment to the By-Laws of the Company, which amendment shall become effective immediately following the completion of the Annual Meeting. The Company’s By-Laws contain provisions that address the process by which a shareholder may nominate an individual to stand for election to the Board of Directors at the Company’s Annual Meeting of Shareholders. In order to nominate a candidate for director, a shareholder must give timely notice in writing to the Secretary of the Company and otherwise comply with the provisions of the Company’s Bylaws. To be timely, the Company’s Bylaws currently in effect provide that the Company must have received the shareholder’s notice not later than the close of business on the 90th day nor earlier than the close of business on the 120th day prior to the meeting. The amendment to the By-Laws approved by our Board of Directors on July 10, 2015, which will become effective following the Annual Meeting, provides that in order to be timely, the Company must have received the shareholder’s notice no later than the close of business on the 90th day nor earlier than the close of business on the 120th day prior to the one-year anniversary of the annual meeting from the prior year; provided, however, that in the event that no annual meeting was held in the previous year or the date of the annual meeting has been changed by more than thirty days from the one-year anniversary of the date of the previous year’s meeting, notice by the shareholder to be timely must be so received not later than the close of business on the later of 120 days in advance of such meeting or 10 calendar days following the date on which public announcement of the date of the meeting is first made.
A copy of the Amendment to the By-laws of the Company is filed with this Form 8-K and attached hereto as Exhibit 3.1.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
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Exhibit No. |
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Exhibit Title or Description |
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3.1 |
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Amendment to By-Laws approved on July 10, 2015 and to become effective immediately following the Company’s Annual Meeting of Shareholders to be held on August 20, 2015. |
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10.1 |
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Form of Executive Severance Agreement. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized.
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Dated: July 16, 2015 |
SIGMA DESIGNS, INC. |
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By: |
/s/ Thinh Q. Tran |
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Thinh Q. Tran President and Chief Executive Officer (Principal Executive Officer) |
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EXHIBIT INDEX
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Exhibit No. |
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Exhibit Title or Description |
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3.1 |
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Amendment to By-Laws approved on July 10, 2015 and to become effective immediately following the Company’s Annual Meeting of Shareholders to be held on August 20, 2015. |
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10.1 |
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Form of Executive Severance Agreement. |
Exhibit 3.1
AMENDMENT TO BYLAWS OF SIGMA DESIGNS , INC.
Effective immediately following the Company’s Annual Meeting of Shareholders to be held in 2015, Article II, Section 2.14 of the By-Laws of Sigma Designs, Inc. (the “Company”) is amended by action approved by the Board of Directors of the Company at a meeting of the Board of Directors duly held on July 10, 2015, to read as follows:
“2.14 N otice of Nominations and Other Business
Nominations of persons for election to the Board of Directors of the corporation and the proposal of business to be considered by the shareholders may be made at any meeting of shareholders only (a) pursuant to the corporations notice of meeting, (b) by or at the direction of the Board of Directors or (c) by any shareholder of the corporation who was a shareholder of record at the time of giving of notice provided for in these by-laws, who is entitled to vote at the meeting and who complies with the notice procedures set forth in this Section 2.14. For nominations or other business to be properly brought before a shareholders meeting by a shareholder pursuant to clause (c) of the preceding sentence, the shareholder must have given timely notice thereof in writing to the Secretary of the corporation and such other business must otherwise be a proper matter for shareholder action. To be timely, a shareholder’s notice shall be delivered to the Secretary at the principal executive offices of the corporation not later than the close of business on the 90th day nor earlier than the close of business on the 120th day prior to the one-year anniversary of the annual meeting from the prior year; provided, however, that in the event that no annual meeting was held in the previous year or the date of the annual meeting has been changed by more than thirty days from the one-year anniversary of the date of the prior year’s meeting, notice by the shareholder to be timely must be so received not later than the close of business on the later of 120 days in advance of such meeting or 10 calendar days following the date on which public announcement of the date of the meeting is first made. Such shareholder’s notice shall set forth (a) as to each person whom the shareholder proposes to nominate for election or reelection as a director all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors in an election contest, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (or any successor thereto) and Rule 14a-11 thereunder (or any successor thereto) (including such person’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected); (b) as to any other business that the shareholder proposes to bring before the meeting, a brief description of the business desired to be brought before the meeting, the reasons for conducting such business at the meeting and any material interest in such business of such shareholder and the beneficial owner, if any, on whose behalf the proposal is made; and (c) as to the shareholder giving the notice and the beneficial owner, if any, on whose behalf the nomination or proposal is made (i) the name and address of such shareholder, as they appear on the corporation’s books, and of such beneficial owner, and (ii) the class and number of shares of the corporation which are owned beneficially and of record by such shareholder and such beneficial owner. Notwithstanding any provision herein to the contrary, no business shall be conducted at a shareholders meeting except in accordance with the procedures set forth in this Section 2.14.”
Exhibit 10.1
SIGMA DESIGNS, INC.
EXECUTIVE SEVERANCE AGREEMENT
This Executive Severance Agreement (this “Agreement”), is made and entered into effective as of _______ (the “Effective Date”), by and between _______ (the “Executive”) and Sigma Designs, Inc., a California corporation (the “Company”). Certain capitalized terms used in this Agreement are defined in Section 1 below.
RECITALS
A. The Compensation Committee (the “Committee”) of the Board of Directors of the Company (the “Board”) believes that the best interests of the Company and its shareholders will be served if the Executive is entitled to a severance benefit in the event Executive is subject to an involuntary termination and without cause.
B. The Committee also believes that in the event of a corporate transaction involving the Company it is in the best interests of the Company and its shareholders to provide Executive with an incentive to continue Executive’s employment without distraction and to maximize the value of the Company for the benefit of its shareholders.
AGREEMENT
In consideration of the mutual covenants herein contained and the continued employment of Executive by the Company, the parties agree as follows:
1. Definition of Terms . The following terms referred to in this Agreement shall have the following meanings:
(a) Cause . “Cause” shall mean (i) commission of a felony, an act involving moral turpitude, or an act constituting common law fraud, and which has a material adverse effect on the business or affairs of the Company or its affiliates or shareholders; (ii) intentional or willful misconduct or refusal to follow the lawful instructions of the Board; or (iii) intentional breach of Company confidential information obligations which has an adverse effect on the Company or its affiliates or shareholders. For these purposes, no act or failure to act shall be considered “intentional or willful” unless it is done, or omitted to be done, in bad faith without a reasonable belief that the action or omission is in the best interests of the Company, and no event under clause (ii) which is capable of being cured shall constitute Cause unless the Executive shall have failed to cure such event within thirty (30) days of receipt of written notice from the Company describing the nature of such event.
(b) Change of Control . “Change of Control” shall mean the occurrence of any of the following events:
(i) the closing of a sale by the Company of all or substantially all of the Company’s assets;
(ii) a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent directly or indirectly (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than fifty percent (50%) of the total voting power represented by the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation; or
(iii) any “person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended) becoming the “beneficial owner” (as defined in Rule 13d-3 under said Act), directly or indirectly, of securities of the Company representing thirty percent (30%) or more of the total voting power represented by the Company’s then outstanding voting securities.
Notwithstanding the foregoing, the term “Change of Control” shall not be deemed to have occurred if the Company files for bankruptcy protection, or if a petition for involuntary relief is filed against the Company.
(c) Involuntary Termination . “Involuntary Termination” shall mean:
(i) without Executive’s express written consent, a material reduction in Executive’s authority, duties or responsibilities relative to Executive’s authority, duties or responsibilities prior to such reduction; provided, however, that for this purpose, Executive’s authority, duties or responsibilities will not be deemed to be materially reduced if following a Change of Control where the Company becomes part of another business, the Executive’s functional authority, duties, and responsibilities on a subsidiary or divisional level are similar to those before the Change in Control;
(ii) without Executive’s express written consent, a material reduction by the Company of Executive’s base compensation;
(iii) without Executive’s express written consent, the relocation of Executive’s principal place of employment to a facility or a location more than thirty (30) miles from Executive’s current location;
(iv) any termination of Executive by the Company which is not effected for Cause; or
(v) the failure of the Company to obtain the assumption of this Agreement or any other agreement between the Company and Executive by any successors contemplated in Section 7 below.
A termination shall not be considered an “Involuntary Termination” unless Executive provides notice to the Company of the existence of the condition described in subsections (i), (ii) or (iii), or (v) above within ninety (90) days of the initial existence of such condition, and the Company fails to remedy the condition within thirty (30) days following the receipt of such notice. A termination due to death or disability shall not be considered an Involuntary Termination.
(d) Termination Date . “Termination Date” shall mean Executive’s “separation from service” within the meaning of that term under Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”).
2. At-Will Employment . The Company and Executive acknowledge that Executive’s employment is and shall continue to be at-will, as defined under applicable law.
3. Severance Benefits .
(a) Involuntary Termination . If Executive’s employment with the Company terminates as a result of an Involuntary Termination and Executive signs and does not revoke a standard release of claims with the Company in a form reasonably acceptable to the Company (the “Release”) which becomes effective and irrevocable no later than the 60 th day after the Termination Date, then Executive shall be entitled to the following severance benefits:
(i) An amount equal to ______ months of Executive’s annual base salary as in effect as of the Termination Date (prior to any reduction that constitutes grounds for Involuntary Termination), less applicable withholding, payable in a lump sum on the 60 th day following the Termination Date or with respect to any portion of the Severance Benefit which constitutes nonqualified deferred compensation under Section 409A of the Code the date provided in Section 6 (the appropriate payment date being the “Applicable Payment Date”) below. For purposes of this subsection (i), annual base salary shall be deemed to include (A) any commission payments received by Executive during the twelve (12) month period ending on the Termination Date) and (B) __% of the amount of Executive’s full target bonus for the fiscal year in which Involuntary Termination occurs; and
(ii) If Executive elects continuation coverage pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985 (as amended, “COBRA”), Company will reimburse Executive, or pay directly on Executive’s behalf an amount equal to the estimated group health continuation coverage premiums that would be charged for Executive and Executive’s eligible dependents under COBRA, determined as of the Termination Date, for coverage over a period equal to _______ months from the Termination Date, less applicable withholding, payable in a lump sum on the Applicable Payment Date; and
(iii) __________ percent (__%) acceleration of the vesting and exercisability or payment of all of Executive’s outstanding equity awards with respect to the common stock of the Company to the extent outstanding (provided that payment shall be made in compliance with Section 409A of the Code).
(b) Involuntary Termination in Connection with a Change in Control . If the Executive’s employment with the company terminates as a result of an Involuntary Termination on or within eighteen (18) months following a Change in Control then in addition to the Severance Benefits under Section 4(a), and conditioned on Executive providing the Release under Section 4(a), Executive shall receive (i) an additional ___________months of base salary and COBRA premiums, payable as provided in Section 4(a), and (ii) one hundred percent (100%) acceleration of the vesting and exercisability or payment of all of Executive’s outstanding equity awards with respect to the common stock of the Company or its successor, or the parent of either, to the extent outstanding, or of any deferred compensation into which Executive’s equity awards were converted upon the Change of Control (provided that payment shall be made in compliance with Section 409A of the Code). For purposes of this subsection (b), annual base salary shall be deemed to include (A) any commission payments received by Executive during the twelve (12) month period ending on the Termination Date) and (B) __% of the amount of Executive’s full target bonus for the fiscal year in which Involuntary Termination occurs.
(c) Accrued Wages and Vacation; Expenses . In addition to the severance benefits provided under Section 4(a) and/or 4(b) above: (i) the Company shall pay Executive any unpaid wages due for periods prior to the Termination Date; (ii) the Company shall pay Executive all of Executive’s accrued and unused vacation through the Termination Date; and (iii) following submission of proper expense reports by Executive, the Company shall reimburse Executive for all expenses reasonably and necessarily incurred by Executive in connection with the business of the Company prior to the Termination Date. These payments shall be made promptly upon termination and within the period of time mandated by law.
4. Limitation on Payments . In the event that the severance and other benefits provided for in this Agreement or otherwise payable to Executive (i) constitute “parachute payments” within the meaning of Section 280G of the Code and (ii) would be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then Executive’s benefits under this Agreement shall be either:
(a) delivered in full or
(b) delivered as to such lesser extent which would result in no portion of such benefits being subject to the Excise Tax,
whichever of the foregoing amounts, taking into account the applicable federal, state and local income taxes and the Excise Tax, results in the receipt by Executive on an after-tax basis, of the greatest amount of benefits, notwithstanding that all or some portion of such benefits may be taxable under Section 4999 of the Code.
Unless the Company and Executive otherwise agree in writing, any determination required under this Section 5 shall be made in writing by the Company’s independent public accountants (the “Accountants”), whose determination shall be conclusive and binding upon Executive and the Company for all purposes. For purposes of making the calculations required by this Section 5, the Accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of Sections 280G and 4999 of the Code. The Company and Executive shall furnish to the Accountants such information and documents as the Accountants may reasonably request in order to make a determination under this Section 5. The Company shall bear all costs the Accountants may reasonably incur in connection with any calculations contemplated by this Section 5. In the event that a reduction is required, the reduction shall be applied beginning with benefits which have the lowest present value to the Executive.
5. Section 409A; Delayed Commencement of Benefits . The parties intend that this Agreement shall be interpreted to comply with or be exempt from Section 409A of the Code, and the regulations and guidance promulgated thereunder to the extent applicable (collectively “Code Section 409A”), and all provisions of this Agreement shall be construed in a manner consistent with the requirements for avoiding taxes or penalties under Code Section 409A. If Executive is deemed to be a “specified employee” within the meaning of that term under Code Section 409A(a)(2)(B on the Termination Date, then with regard to any payment or the provision of any benefit that is considered nonqualified deferred compensation under Code Section 409A payable on account of Executive’s “separation from service” within the meaning of Code Section 409A, such payment or benefit shall be made or provided at the date which is the earlier of (i) the expiration of the six (6)-month period measured from the Termination Date, and (ii) the date of Executive’s death (the “Delay Period”). Upon the expiration of the Delay Period, all payments and benefits delayed pursuant to this Section 6 (whether they would have otherwise been payable in a single sum or in installments in the absence of such delay) shall be paid or reimbursed on the first business day following the expiration of the Delay Period to Executive in a lump sum with interest during the Delay Period at the prime rate, and any remaining payments and benefits due under this Agreement shall be paid or provided in accordance with the normal payment dates specified for them herein. For purposes of Code Section 409A, Executive’s right to receive any installment payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct payments.
6. Successors .
(a) Company’s Successors . Any successor to the Company (whether direct or indirect and whether by purchase, lease, merger, consolidation, liquidation or otherwise) to all or substantially all of the Company’s business and/or assets shall assume the Company’s obligations under this Agreement and agree expressly to perform the Company’s obligations under this Agreement in the same manner and to the same extent as the Company would be required to perform such obligations in the absence of a succession. For all purposes under this Agreement, the term “Company” shall include any successor to the Company’s business and/or assets which executes and delivers the assumption agreement described in this subsection (a) or which become bound by the terms of this Agreement by operation of law.
(b) Executive’s Successors . Executive shall not assign or transfer this Agreement or any right or obligation under this Agreement to any other person or entity. Notwithstanding the foregoing, the terms of this Agreement and all rights of Executive hereunder shall inure to the benefit of, and be enforceable by, Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.
7. Notices .
(a) General . Notices and all other communications contemplated by this Agreement shall be in writing and shall be deemed to have been duly given when personally delivered or when mailed by U.S. registered or certified mail, return receipt requested and postage prepaid. In the case of Executive, mailed notices shall be addressed to Executive at the home address which Executive most recently communicated to the Company in writing. In the case of the Company, mailed notices shall be addressed to its corporate headquarters, and all notices shall be directed to the attention of its Secretary.
(b) Notice of Termination . Any termination by the Company for Cause or by Executive as a result of an Involuntary Termination shall be communicated by a notice of termination to the other party hereto given in accordance with this Section 8. Such notice shall indicate the specific termination provision in this Agreement relied upon, shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination under the provision so indicated, and shall specify the Termination Date (which shall be not more than thirty (30) days after the giving of such notice). The failure by Executive to include in the notice any fact or circumstance which contributes to a showing of Involuntary Termination shall not waive any right of Executive hereunder or preclude Executive from asserting such fact or circumstance in enforcing Executive’s rights hereunder, subject to the requirements of Section 1(c).
8. Arbitration .
Any controversy involving the construction or application of any terms, covenants or conditions of this Agreement, or any claims arising out of any alleged breach of this Agreement, will be governed by the rules of the American Arbitration Association and submitted to and settled by final and binding arbitration in Santa Clara County, California, except that any alleged breach of Executive’s confidential information obligations shall not be submitted to arbitration and instead the Company may seek all legal and equitable remedies, including without limitation, injunctive relief.
9. Miscellaneous Provisions .
(a) No Duty to Mitigate . Executive shall not be required to mitigate the amount of any payment contemplated by this Agreement, nor shall any such payment be reduced by any earnings that Executive may receive from any other source.
(b) Waiver . No provision of this Agreement may be modified, waived or discharged unless the modification, waiver or discharge is agreed to in writing and signed by Executive and by an authorized officer of the Company (other than Executive). No waiver by either party of any breach of, or of compliance with, any condition or provision of this Agreement by the other party shall be considered a waiver of any other condition or provision or of the same condition or provision at another time.
(c) Integration . This Agreement represents the entire agreement and understanding between the parties with respect to the subject matter hereof, and supersedes all prior or contemporaneous agreements, whether written or oral, with respect thereto, including, without limitation.
(d) Choice of Law . The validity, interpretation, construction and performance of this Agreement shall be governed by the internal substantive laws, but not the conflicts of law rules, of the State of California.
(e) Severability . The invalidity or unenforceability of any provision or provisions of this Agreement shall not affect the validity or enforceability of any other provision hereof, which shall remain in full force and effect.
(f) Employment Taxes . All payments made pursuant to this Agreement shall be subject to withholding of applicable income and employment taxes.
(g) Counterparts . This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together will constitute one and the same instrument.
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IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case of the Company by its duly authorized officer or member of the Board of Directors, as of the day and year first above written.
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