UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A
Proxy
Statement Pursuant to Section 14(a) of the Securities
Exchange
Act of 1934
(Amendment
No. )
Filed
by the Registrant ☒
Filed
by a Party other than the Registrant ☐
Check
the appropriate box:
☐
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 to Section 240.14a-12
IMMUCELL
CORPORATION
(Name
of Registrant as Specified In Its Charter)
(Name
of Person(s) Filing Proxy Statement, if other than the Registrant)
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of Filing Fee (Check the appropriate box):
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No
fee required.
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Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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of each class of securities to which transaction applies:
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_____________________________________________________________
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2)
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Aggregate
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_____________________________________________________________
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Per
unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
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_____________________________________________________________
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4)
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Proposed
maximum aggregate value of transaction:
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Total
fee paid:
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fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of
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ImmuCell
Corporation
Notice
of Annual Meeting of Stockholders
June
14, 2017
To
the Stockholders of ImmuCell Corporation:
NOTICE
IS HEREBY GIVEN that the Annual Meeting of Stockholders of ImmuCell Corporation (the Company) will be held at the Company’s
principal place of business at 56 Evergreen Drive in Portland, Maine on Wednesday, June 14, 2017 at 3:00 p.m. for the following
purposes:
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1.
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Election
of Directors:
To elect a Board of Directors to serve until the next Annual Meeting
of Stockholders and until their successors are elected and qualified (Proposal One);
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2.
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Advisory
Vote to Approve Executive Compensation:
To consider a nonbinding advisory resolution
on the Company’s executive compensation program (Proposal Two);
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3.
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Approval
of the 2017 Stock Option and Incentive Plan:
To consider and act upon a proposal
to approve the Company’s 2017 Stock Option and Incentive Plan (Proposal Three).
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4.
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Ratification
of the Appointment of the Independent Registered Public Accounting Firm:
To ratify
the selection by the Audit Committee of the Board of Directors of RSM US LLP as our Independent
Registered Public Accounting Firm for the year ending December 31, 2017 (Proposal Four);
and
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5.
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Other
Business:
To conduct such other business as may properly come before the Annual Meeting
or any adjournments or postponements thereof, including approving any such adjournment
or postponement, if necessary.
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The
Board of Directors has fixed the close of business on Tuesday, April 18, 2017, as the record date for the determination of stockholders
entitled to notice of, and to vote at, the meeting.
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By
Order of the Board of Directors
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/s/
Michael F. Brigham
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Michael
F. Brigham,
Secretary
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April
28, 2017
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WHETHER
OR NOT YOU EXPECT TO ATTEND THE MEETING IN PERSON, PLEASE COMPLETE, DATE AND SIGN THE ACCOMPANYING PROXY CARD AND RETURN IT PROMPTLY
IN THE ENVELOPE ENCLOSED FOR THAT PURPOSE. THE GIVING OF SUCH PROXY WILL NOT AFFECT YOUR RIGHT TO VOTE IN PERSON IF YOU ATTEND
THE MEETING IN PERSON.
ImmuCell
Corporation
56
Evergreen Drive
Portland,
ME 04103
April
28, 2017
PROXY
STATEMENT
2017
Annual Meeting of Stockholder
s
This
Proxy Statement is furnished in connection with the solicitation by the Board of Directors of ImmuCell Corporation (the Company),
a Delaware corporation, of proxies to be voted at the Annual Meeting of Stockholders of the Company to be held at 3:00 p.m. on
Wednesday, June 14, 2017 at the Company’s principal place of business at 56 Evergreen Drive in Portland, Maine, and any
and all adjournments thereof, for the purposes set forth in the accompanying Notice of Annual Meeting of Stockholders. This Proxy
Statement and the enclosed proxy card are first being given or sent to stockholders on or about April 28, 2017. Stockholders who
execute proxies may revoke them at any time before exercise thereof.
VOTING
OF OUTSTANDING COMMON STOCK
Only
stockholders of record at the close of business on Tuesday, April 18, 2017, the record date, are entitled to notice of, and to
vote at, the Annual Meeting of Stockholders and at any adjournments thereof. As of such date, there were 4,848,390 shares of common
stock of the Company issued and outstanding. Each share is entitled to one vote with respect to all matters to be acted upon at
the meeting. The holders of one-third of the shares of the Company’s common stock outstanding and entitled to vote, represented
at the meeting in person or by proxy, shall constitute a quorum for the transaction of business. Votes cast in person or by proxy
at the meeting will be tabulated by the voting inspector appointed for the meeting.
Our
Board of Directors is asking for your proxy. Giving us your proxy means that you authorize the persons named in this proxy to
vote your shares at the Annual Meeting in the manner that you direct, or if you do not direct us, in the manner as recommended
by the Board of Directors in this proxy statement. You can vote for the director nominees or withhold your vote for one or all
nominees. You also can vote for or against the other proposals or abstain from voting. If you request a proxy card, and return
your signed proxy card, but do not give voting instructions, the shares represented by that proxy will be voted
FOR
each proposal.
With
regard to the election of directors (Proposal One), votes may be cast in favor or withheld. The nominees for director receiving
a plurality of the votes cast by the holders of the common stock represented at the meeting in person or by proxy will be elected.
This means that the eight nominees receiving the largest number of votes cast will be elected.
With
respect to Proposal Two, we are providing you with the opportunity to vote to approve, on an advisory, nonbinding basis, the compensation
of the four executive officers named in the “
SUMMARY COMPENSATION TABLE
” under “
EXECUTIVE COMPENSATON
”,
as disclosed in this Proxy Statement in accordance with the rules of the Securities and Exchange Commission (SEC). This proposal,
which is commonly referred to as “say-on-pay”, is required by the Dodd-Frank Wall Street Reform and Consumer Protection
Act of 2010, which added Section 14A to the Securities Exchange Act of 1934 (Exchange Act). Proposal Two is nonbinding. With respect
to Proposal Three, we are providing you with the opportunity to approve the 2017 Stock Option and Incentive Plan. With respect
to Proposal Four, we are providing you with the opportunity to ratify the appointment of our Independent Registered Public Accounting
Firm. The affirmative vote of the holders of a majority of the shares of the Company’s common stock represented at the meeting
is required to approve Proposal Two and Proposal Three and to ratify Proposal Four. Abstentions and votes against may be specified
on the three proposals. Since the approval of Proposal Two and Proposal Three and the ratification of Proposal Four require the
approval of the holders of a majority of the shares of the Company’s common stock represented at the meeting, abstentions,
broker non-votes and votes against will have the effect of a negative vote.
Approximately
1,600 of our stockholders hold their shares through a stockbroker, bank, trustee, or other nominee (Beneficial Owner), and approximately
800 of our stockholders hold their shares directly in their own name (Stockholder of Record). As summarized below, there are some
distinctions between shares held beneficially and those owned of record.
Beneficial
Owner
: If your shares are held in a stock brokerage account, by a bank, broker, trustee, or other nominee, you are considered
the beneficial owner of shares held in street name and these proxy materials are being made available to you through your bank,
broker, trustee, or nominee, who is considered the stockholder of record of those shares. As the beneficial owner, you have the
right to direct your bank, broker, trustee, or nominee on how to vote and you are also invited to attend the meeting. Your bank,
broker, trustee, or nominee is obligated to provide you with voting instructions for use in instructing the bank, broker, trustee,
or nominee how to vote these shares. However, since you are not the stockholder of record, you may not vote these shares in person
at the meeting unless you have a proxy from the bank, broker, trustee or nominee that holds the shares giving you the right as
beneficial owner to vote your shares at the meeting. If you do not give instructions to your bank or brokerage firm, it will not
be allowed to vote your shares with respect to certain “non-discretionary” proposals, but it will be able to vote
your shares with respect to certain “discretionary” proposals. For example, the election of directors (Proposal One),
the advisory vote to approve executive compensation (Proposal Two) and the vote to approve the 2017 Stock Option and Incentive
Plan (Proposal Three) are considered to be “non-discretionary” proposals on which banks and brokerage firms may not
vote without instructions from the beneficial owner. “Broker non-votes” for “non-discretionary” proposals
are votes with respect to shares that are held in “street name” by a bank or brokerage firm that indicates on its
proxy that it does not have discretionary authority to vote on a particular matter. The ratification of the appointment of our
Independent Registered Public Accounting Firm (Proposal Four) is considered to be a “discretionary” proposal on which
banks and brokerage firms may vote without instructions from the beneficial owner.
Stockholder
of Record
: If your shares are registered directly in your name with ImmuCell’s transfer agent, American Stock Transfer
& Trust Company, you are considered the stockholder of record of those shares and these proxy materials are being made available
directly to you by the Company. As the stockholder of record, you have the right to grant your voting proxy directly to the Company
or to vote in person at the meeting.
The
preliminary voting results will be announced at the meeting. The final voting results will be tallied by the voting inspector
and reported in a Current Report on Form 8-K, which will be filed with the SEC within four business days after the meeting.
EXPENSES
AND SOLICITATION
The
cost of preparing, assembling, and mailing the proxy material and of reimbursing brokers, nominees and fiduciaries for the out-of-pocket
and clerical expenses of transmitting copies of the proxy material to the beneficial owners of shares held of record by such persons
will be borne by the Company. Although the Company reserves the right to do so, the Company does not currently intend to solicit
proxies otherwise than by use of the mail, but certain officers and employees and advisors of the Company, without additional
compensation, may use their personal efforts, by telephone or otherwise, to obtain proxies.
STOCKHOLDER
PROPOSALS, DIRECTOR NOMINATIONS AND COMMUNICATIONS
Proposals
(other than director nominations, which are addressed in the following paragraph) of stockholders of the Company intended to be
presented at the 2018 Annual Meeting of Stockholders must be received by the Company at its principal place of business no later
than December 30, 2017 (which date is 120 days prior to the first anniversary of when the 2017 Proxy Statement is first mailed
to stockholders) to be eligible for possible inclusion in the Company’s Proxy Statement and form of proxy relating to the
2018 meeting. Certified mail addressed to the Secretary of the Company is advised. No such proposals were received by the Company
by December 30, 2016 for inclusion in the Company’s Proxy Statement and form of proxy relating to the 2017 Annual Meeting
of Stockholders.
The
Nominating Committee of the Board of Directors will consider nominees for director recommended by stockholders, applying the same
evaluation standards as it would apply to candidates identified by management, other members of the Board of Directors or the
Nominating Committee. Recommendations for director nominees may be sent to the Nominating Committee through the Secretary of the
Company. Under the advance notice provisions in the Company’s By-laws, stockholders intending to formally nominate a person
for election as a director at the Annual Meeting, as distinguished from recommending a candidate to the Nominating Committee,
must notify the Secretary of the Company in writing of this intent not less than 60 nor more than 90 days prior to the first anniversary
of the preceding year’s Annual Meeting. If the date of the Annual Meeting is changed by more than 30 days from such anniversary
date, the notice from the stockholder must be received not later than the close of business on the tenth day following the day
on which notice of the date of such Annual Meeting was mailed to stockholders. Such notice must comply with the provisions set
forth in the By-laws.
For
nominations of candidates recommended by stockholders for election as directors to have been considered at the 2017 Annual Meeting
of Stockholders, notice must have been received by the Secretary of the Company no earlier than March 16, 2017 and no later than
April 17, 2017, and meet other requirements set forth in the By-laws. No such nominations were received. A copy of the relevant
provisions of the By-laws will be sent to any stockholder who requests these in writing. Such requests should be addressed to
the Secretary of the Company.
Stockholders
that wish to send communications to the Board of Directors for any reason may do so by mail sent to ImmuCell Corporation, 56 Evergreen
Drive, Portland, Maine 04103, Attention: Secretary. The Secretary is responsible for bringing any such communications to the attention
of the full Board of Directors at its next regularly scheduled meeting, which is generally quarterly. Additionally, after adjournment
of the formal business matters at each year’s Annual Meeting, there is an opportunity for stockholders to communicate directly
with the Company’s management and directors. The Company encourages its directors to attend the Annual Meeting of Stockholders
in person. All directors did attend the 2016 Annual Meeting of Stockholders.
All
shares represented by proxies in the form enclosed herewith will be voted at the meeting and adjournments thereof in accordance
with the terms of such proxies and the pertinent statements included herein relative to the exercise of the power granted by said
proxies, provided such proxies appear to be valid and executed by stockholders of record entitled to vote thereat and have not
previously been revoked. A proxy may be revoked at any time prior to its exercise by the filing with the Secretary of the Company
of an instrument revoking such proxy or a duly executed proxy bearing a later date. A stockholder’s proxy will not be voted
if the stockholder attends the meeting and elects to vote in person. Where the person solicited specifies in his, her or its proxy
a choice with respect to any matter to be acted upon, the shares will be voted in accordance with the specification so made. If
a stockholder fails to so specify with respect to such proposals, the proxy will be voted
FOR
the election of the
nominees listed in Proposal One,
FOR
the advisory vote to approve executive compensation outlined in Proposal Two,
FOR
the approval of the 2017 Stock Option and Incentive Plan outlined in Proposal Three and
FOR
the
ratification of the appointment of the Independent Registered Public Accounting Firm described in Proposal Four.
LEADERSHIP
STRUCTURE OF THE BOARD OF DIRECTORS
With
approval from the Board of Directors, the Compensation and Stock Option Committee determined that the title of President and CEO
should be given to an individual not being the same person holding the title of Chair. The objective of this policy is to avoid
a concentration of authority in any one person. Mr. Michael F. Brigham has served as President and CEO since February 2000. Dr.
Joseph H. Crabb has served as Vice President and Chief Scientific Officer since December 1998, and he also served as Chair of
the Board of Directors from June 2009 to February 2013. Effective February 2013 with compensation retroactive to January 1, 2013,
Dr. David S. Tomsche has served as Chair of the Board of Directors. Before June 2009, the position of Chair had been vacant. It
is the policy of the Board of Directors to have a meeting without the presence of the executive officers each time that the board
or any of its committees meets to assure that candid discussions of business matters are conducted with and without the influence
of the executive officers.
THE
BOARD OF DIRECTORS AND ITS COMMITTEES
During
the year ended December 31, 2016, the Board of Directors of the Company held four regular meetings and two special meetings, and
took action by unanimous written consent seven times. The committees of the Board of Directors are the Audit Committee, the Compensation
and Stock Option Committee and the Nominating Committee. During the year ended December 31, 2016, each director attended at least
75 percent of the aggregate of (i) the total number of meetings of the Board of Directors and (ii) the total number of meetings
held by all committees of the board on which he or she served (during the periods that he or she served). The board has not set
a formal policy for required meeting attendance. A high level of attendance and participation is expected, and to date directors
have fulfilled this expectation. At the first meeting of the board following this year’s Annual Meeting, directors will
be elected to serve on the various board committees until the next Annual Meeting and until their successors are elected.
The
board has established an Audit Committee for the purpose of overseeing the accounting and financial reporting processes of the
Company and the audits and reviews of its financial statements. The Audit Committee engages the Company’s Independent Registered
Public Accounting Firm, consults with such auditors with regard to audit plans, reviews the annual reports of the independent
auditors, oversees the adequacy of the Company’s internal operating procedures and controls, meets with management and the
auditors to review quarterly and annual financial results, authorizes the public release of press releases covering financial
results, reviews and authorizes quarterly and annual reports filed with the SEC and otherwise oversees compliance with certain
legal, ethical and regulatory matters. The development and manufacture of products with scientifically-proven efficacy and with
and without regulatory approval is subject to considerable risk. The Audit Committee takes the lead on oversight of credit, liquidity
and operational risk, but the entire board, in conjunction with the executive officers, is very involved with reviewing Audit
Committee recommendations and making independent assessments of risks in all areas of the Company’s business. The Company
does not have a specific risk management department, but the Company’s Director of Finance and Administration and its President
and CEO manage and contract for the Company’s insurance coverages in consultation with outside experts, in addition to identifying,
managing and monitoring risk in areas not specifically covered by insurance. The Director of Finance and Administration reports
to the President and CEO, who reports to the board. The Committee’s members are Mr. Cunningham, Mr. Rothschild and Mr. Wainman.
Mr. Wainman serves as Chair of the Audit Committee. All members of the Audit Committee meet the heightened independence requirements
for audit committees under applicable NASDAQ Stock Market rules. The Audit Committee held nine meetings during the year ended
December 31, 2016. The Audit Committee Report can be found on page 18 of this Proxy Statement, and the “Charter and Powers
of the Audit Committee” has been posted on the Company’s web-site (http://immucell.com/wp-content/uploads/charter.pdf).
The
board has established a Compensation and Stock Option Committee (Compensation Committee) for the purpose of reviewing and recommending
salary, bonus and other benefits for executive officers and directors of the Company. The Compensation Committee is responsible
for administering the Company’s 2000 Stock Option and Incentive Plan and the 2010 Stock Option and Incentive Plan. The Compensation
Committee would also be responsible for administering the 2017 Stock Option and Incentive Plan if such plan is approved by stockholders.
The Compensation Committee’s members are Dr. Rhodes and Mr. Rothschild, both of whom are independent directors. Dr. Rhodes
serves as Chair of the Compensation Committee. The Compensation Committee held six meetings and took action by unanimous written
consent once during the year ended December 31, 2016. The Compensation Committee does not have a charter but instead operates
within the authority provided by the Company’s By-laws and authorizing resolutions adopted by the board. Its recommendations
on executive and director compensation are subject to review and final approval by the Board of Directors, a majority of whose
members are independent directors. The Company’s President and CEO provides the Compensation Committee with recommendations
relevant to a determination of executive and director compensation, but he does not participate in votes of the Compensation Committee
or the board in this regard. In recent years, the Compensation Committee has not retained or relied upon outside consultants to
assist in its determination of executive or director compensation.
The
board has established a Nominating Committee for the purpose of recommending to the full board the number of directors to serve
on the board, criteria for board membership and nominees for election to the board. In doing so, the Nominating Committee considers
the integrity and relevant business experience of each nominee. All nominees included on this year’s proxy card were recommended
by the Nominating Committee and then approved by a vote of the board. The Nominating Committee values diversity, believing that
the Company benefits from decision making that includes a range of opinions, viewpoints and experience. For instance, the Nominating
Committee would not want a board comprised only of directors having principally financial expertise or only of directors whose
principal experience is in the dairy and beef industries. Likewise, the Nominating Committee believes that a board consisting
of all men or all women would not be as strong as a gender-diverse board. While there is always room for improvement, the Nominating
Committee believes that it has made substantial progress towards achieving these goals. The Committee’s members are Mr.
Cunningham and Dr. Tomsche, both of whom are independent directors. Mr. Cunningham serves as Chair of the Nominating Committee.
The Nominating Committee held one meeting during the year ended December 31, 2016. Provisions for stockholders to nominate candidates
for election as directors are described above under the caption, “
STOCKHOLDER PROPOSALS, DIRECTOR NOMINATIONS AND COMMUNICATIONS
”.
Upon recommendation of the Nominating Committee, the Board of Directors adopted a charter for the Nominating Committee in December
2012. This charter sets forth the policy to be utilized by the Nominating Committee in considering nominees identified by management
to serve as directors for the Company. The Nominating Committee applies the same evaluation standards in considering nominees
for director recommended by stockholders.
DIRECTOR
COMPENSATION
The
following table contains information as to the compensation paid by the Company to its non-executive directors for services rendered
during the year ended December 31, 2016:
Name
|
|
Fees
Earned or
Paid in
Cash
|
|
|
Option
Awards
|
|
|
All Other Compensation
|
|
|
Total
|
|
David S. Cunningham
|
|
$
|
20,000
|
|
|
$
|
0
|
|
|
$
|
28,100
|
(1)
|
|
$
|
48,100
|
|
Linda Rhodes, V.M.D., Ph.D.
|
|
$
|
20,000
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
20,000
|
|
Jonathan E. Rothschild
|
|
$
|
20,000
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
20,000
|
|
David S. Tomsche, D.V.M.
|
|
$
|
32,000
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
32,000
|
|
Paul R. Wainman
|
|
$
|
20,000
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
20,000
|
|
(1)
This amount represents gains recognized on the exercise of stock options.
Officers
of the Company who are also directors do not receive additional compensation for attendance at Board of Directors’ meetings
or committee meetings. Effective July 1, 2015, the annual fee paid to non-employee directors was increased from $16,000 to $20,000
(payable in four equal installments in advance to each non-employee director serving as a director as of the first day of each
quarter). No increase in this fee has been made since then. Effective July 1, 2017, the annual fee is expected to increase from
$20,000 to $24,000 (payable in four equal installments in advance to each non-employee director serving as a director as of the
first day of each quarter). Effective January 1, 2013, the additional compensation for the Chair of the Board of Directors was
set at $12,000 per year (payable in four equal installments in advance as of the first day of each quarter).
At
the time first appointed to the board, Mr. Cunningham and Mr. Wainman were each granted a non-qualified stock option to purchase
15,000 shares of common stock under the 2010 Stock Option and Incentive Plan. The options were granted on terms similar to those
previously granted to other directors under the 2000 Outside Director Plan, which plan expired in June 2005. Mr. Cunningham’s
option had an exercise price equal to the fair market value of the common stock on the grant date, October 12, 2011 ($5.75 per
share), vested on October 12, 2014 and was exercised during the third quarter of 2016. Mr. Wainman’s option has an exercise
price equal to the fair market value of the common stock on the grant date, March 31, 2014 ($4.80 per share), and vested on March
31, 2017. This option expires if not exercised by March 30, 2019 or, if earlier, within one month (twelve months in the case of
death or disability) after termination of service as a director.
INDEMNIFICATION
AGREEMENTS
The
Company has entered into indemnification agreements with its directors and executive officers in substantially the form approved
by the stockholders at the 1989 Annual Meeting, as recently updated. The agreements include procedures for reimbursement by the
Company of certain liabilities and expenses which may be incurred in connection with service as a director or executive officer.
The Company expects to enter into indemnification agreements with individuals who become directors in the future, as well as such
executive officers of the Company as the Board of Directors may from time to time determine.
EXECUTIVE
COMPENSATION
Under
the By-laws, executive officers are elected by the Board of Directors at its first meeting following each Annual Meeting of Stockholders
of the Company, and each serves for a one-year term and until his or her successor is chosen and qualified. The Company has four
executive officers, as follows:
MICHAEL
F. BRIGHAM:
Information concerning the background and experience of Mr. Brigham and the period during which he has served
in his current capacity is set forth below under the caption
“ELECTION OF THE BOARD OF DIRECTORS (Proposal One)”
.
BOBBI
JO BROCKMANN:
Information concerning the background and experience of Ms. Brockmann and the period during which she has served
in her current capacity is set forth below under the caption,
“ELECTION OF THE BOARD OF DIRECTORS (Proposal One)”
.
JOSEPH
H. CRABB, Ph.D.:
Information concerning the background and experience of Dr. Crabb and the period during which he has served
in his current capacity is set forth below under the caption
“ELECTION OF THE BOARD OF DIRECTORS (Proposal One)”
.
ELIZABETH
L. WILLIAMS
: Ms. Williams joined the Company during the second quarter of 2016 as Vice President of Manufacturing Operations.
Previously, she led the U.S. Region for Zoetis as Vice President, Global Manufacturing and Supply. Prior to that, she held multiple
Site Leader positions at Pfizer Animal Health facilities in Lincoln, Nebraska (2008-2011), Conshohocken, Pennsylvania (2006-2008)
and Lee’s Summit, Missouri (2003-2006). She led the manufacturing organization (1999-2003) and the Process and Product Development
group (1995-1999), achieving registration, approval and successful scale-up of five new products at the Lee’s Summit facility.
She earned her Masters of Business Administration from Rockhurst University in Kansas City, Missouri and her Bachelor’s
degree in Biology from the University of Missouri.
SUMMARY
COMPENSATION TABLE
The
following table contains information as to the total compensation paid by the Company to its executive officers for services rendered
during the years ended December 31, 2016 and 2015:
Name and Principal Position
|
|
Year
|
|
|
Salary
|
|
|
Bonus
|
|
|
Option
Awards
|
|
|
All Other
Compensation
(1)
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael F. Brigham
|
|
|
2016
|
|
|
$
|
285,075
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
25,679
|
|
|
$
|
310,754
|
|
President, Chief Executive Officer,
Treasurer and Secretary
|
|
|
2015
|
|
|
$
|
271,500
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
23,881
|
|
|
$
|
295,381
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bobbi Jo Brockmann
|
|
|
2016
|
|
|
$
|
203,625
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
12,597
|
|
|
$
|
216,222
|
|
Vice President of Sales and Marketing
|
|
|
2015
|
|
|
$
|
192,692
|
|
|
$
|
0
|
|
|
$
|
35,700
|
|
|
$
|
10,870
|
|
|
$
|
239,262
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joseph H. Crabb, Ph.D.
|
|
|
2016
|
|
|
$
|
54,615
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
2,185
|
|
|
$
|
56,800
|
|
Vice President and Chief Scientific Officer
|
|
|
2015
|
|
|
$
|
89,308
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
3,572
|
|
|
$
|
92,880
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Elizabeth L. Williams
|
|
|
2016
|
|
|
$
|
149,808
|
|
|
$
|
0
|
|
|
$
|
100,000
|
|
|
$
|
49,872
|
|
|
$
|
299,680
|
|
Vice President of Manufacturing Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
This
amount includes Company-paid contributions to a 401(k) Plan, health insurance premiums and life insurance premiums that are
available to all employees of similar employment status, if elected. For Ms. Brockmann, this amount also includes the personal
use of a Company-owned vehicle. This amount also includes relocation expenses for Ms. Williams.
|
Generally
effective on or about February 1
st
of each year, annual salaries and bonuses for these named executive officers are
determined in the discretion of the Compensation and Stock Option Committee. Effective February 7, 2015, the annual salary for
Mr. Brigham was increased by 5% to $273,000. Effective February 6, 2016, this annual salary for Mr. Brigham was increased by 5%
to $286,650. Effective February 4, 2017, this annual salary amount for Mr. Brigham was increased by 5% to $300,983. Effective
February 7, 2015, the annual salary for Ms. Brockmann was increased by 11.4% to $195,000. Effective February 6, 2016, this annual
salary for Ms. Brockman was increased by 5% to $204,750. Effective February 4, 2017, this annual salary amount for Ms. Brockmann
was increased by 12.3% to $230,000. Effective January 10, 2015, the annual salary for Dr. Crabb was increased to $90,000. Effective
February 6, 2016, this annual salary for Dr. Crabb was decreased to $50,000, reflecting Dr. Crabb’s decision to reduce his
time commitment to the Company. Effective April 4, 2016, Ms. Williams joined the Company at an initial annual salary amount of
$205,000. Effective February 4, 2017, this annual salary amount was increased by 4.9% to $215,000. Effective December 1, 2015
through November 30, 2017, the Company contributes $14,045 per year towards the cost of family health insurance coverage for all
full-time employees electing this coverage. Mr. Brigham elected this option. Effective December 1, 2015 through November 30, 2017,
the Company offers $2,800 per year to all employees that show proof of health insurance coverage elsewhere. Ms. Brockmann elected
this option. Effective December 1, 2015 through November 30, 2017, the Company contributes $9,909 per year towards the cost of
employee and spouse health insurance coverage for all full-time employees electing this coverage. Ms. Williams elected this coverage.
The Company makes no contribution towards the cost of health insurance coverage for part-time employees, although all part-time
employees working at least 10 hours per week may buy into the Company’s group coverage on a pre-tax basis. Dr. Crabb elected
this option.
EMPLOYMENT
AGREEMENTS
Effective
March 26, 2010, both Mr. Brigham and Dr. Crabb entered into amendments to their employment agreements that superseded and replaced
in their entirety previous employment agreements. By waiving rights to contractual employment, these named executive officers
agreed to serve the Company in “at will” capacities on such terms as the Board of Directors may from time to time
determine, subject to termination by the Board of Directors at any time with or without cause and without a contractual right
to severance compensation. Under these contract amendments, Mr. Brigham continues to serve the Company as President and CEO, and
Dr. Crabb continues to serve the Company as Vice President and Chief Scientific Officer. Effective March 6, 2017, the Company
entered into Incentive Compensation Agreements with Ms. Brockmann and Ms. Williams. Ms. Brockmann’s contract provides for
the potential to earn up to $30,000 per year if certain objectives pertaining to
First Defense®
sales growth are achieved
and up to $100,000 if certain objectives pertaining to
Mast Out®
sales are achieved within approximately eighteen months
of product approval. Ms. William’s contract provides for the potential to earn $100,000 if regulatory approval of
Mast
Out®
is achieved by December 31, 2019 or $50,000 if regulatory approval of
Mast Out®
is achieved by December
31, 2020.
OUTSTANDING
EQUITY AWARDS
Stock
options are the only outstanding form of equity awards to the Company’s employees and directors. The following table contains
information on stock options held by the Company’s executive officers that were outstanding as of December 31, 2016:
|
|
|
|
Name
|
|
Number of
Shares
Underlying
Unexercised
Options -
Exercisable
|
|
|
Number of
Shares
Underlying Unexercised
Options -
Unexercisable
|
|
|
Option
Exercise
Price
|
|
|
Grant
Date
(1)
|
|
Expiration
Date
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael F. Brigham
|
|
|
1,000
|
|
|
|
0
|
|
|
$
|
5.25
|
|
|
3/19/2007
|
|
3/18/2017
|
|
|
|
47,500
|
|
|
|
0
|
|
|
$
|
1.70
|
|
|
1/09/2009
|
|
1/08/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bobbi Jo Brockmann
|
|
|
5,000
|
|
|
|
0
|
|
|
$
|
3.65
|
|
|
1/04/2010
|
|
1/03/2020
|
|
|
|
5,000
|
|
|
|
0
|
|
|
$
|
3.99
|
|
|
2/08/2010
|
|
2/07/2020
|
|
|
|
10,000
|
|
|
|
0
|
|
|
$
|
3.15
|
|
|
12/15/2010
|
|
12/14/2020
|
|
|
|
5,000
|
|
|
|
0
|
|
|
$
|
5.75
|
|
|
10/12/2011
|
|
10/11/2021
|
|
|
|
0
|
|
|
|
10,000
|
|
|
$
|
7.54
|
|
|
12/16/2015
|
|
12/15/2025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joseph H. Crabb, Ph.D.
|
|
|
1,000
|
|
|
|
0
|
|
|
$
|
5.25
|
|
|
3/19/2007
|
|
3/18/2017
|
|
|
|
47,500
|
|
|
|
0
|
|
|
$
|
1.70
|
|
|
1/09/2009
|
|
1/08/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Elizabeth L. Williams
|
|
|
0
|
|
|
|
25,000
|
|
|
$
|
6.70
|
|
|
4/04/2016
|
|
4/03/2026
|
(1)
|
These
stock options became/become exercisable three years after the date of grant.
|
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
AND
RELATED STOCKHOLDER MATTERS
The
following table sets forth certain information known to the Company regarding beneficial ownership of the Company’s common
stock as of April 19, 2017 of (i) each person known to the Company to be the beneficial owner of more than five percent of the
Company’s common stock, (ii) each of the Company’s directors and nominees, (iii) each of the Company’s employees
named in the “
SUMMARY COMPENSATION TABLE
” above and (iv) all directors and certain key employees of the Company
as a group:
Name of Beneficial Owner
|
|
Shares of the
Company’s Common Stock
Beneficially Owned (1)
|
|
|
Percent of the
Company’s Common Stock
Beneficially Owned
|
|
Norman H. and Brian Pessin
|
|
|
520,000
|
|
|
|
10.7
|
%
|
Jonathan E. Rothschild (2)
|
|
|
510,158
|
|
|
|
10.5
|
%
|
Michael F. Brigham (3)
|
|
|
204,752
|
|
|
|
4.2
|
%
|
Joseph H . Crabb, Ph.D. (4)
|
|
|
152,611
|
|
|
|
3.1
|
%
|
David S. Tomsche D.V.M. (5)
|
|
|
72,789
|
|
|
|
1.5
|
%
|
Bobbi Jo Brockmann (6)
|
|
|
26,055
|
|
|
|
0.5
|
%
|
Paul R. Wainman (7)
|
|
|
17,000
|
|
|
|
0.3
|
%
|
David S. Cunningham
|
|
|
12,070
|
|
|
|
0.2
|
%
|
Linda Rhodes, V.M.D., Ph.D. (8)
|
|
|
7,157
|
|
|
|
0.1
|
%
|
Elizabeth L. Williams (9)
|
|
|
0
|
|
|
|
0.0
|
%
|
Directors and named executive officers as a group (9 persons) (10)
|
|
|
1,002,592
|
|
|
|
20.1
|
%
|
|
(1)
|
The
persons named in the table have sole voting and investment power with respect to all shares of common stock shown to be beneficially
owned by them, subject to the information contained in the footnotes to this table. The figures in the table include shares
of common stock covered by stock options which are currently exercisable or will become exercisable within 60 days of the
date of this Proxy Statement.
|
|
(2)
|
This
figure includes 226,416 shares of common stock held by Arterio Inc., a corporation owned solely by Mr. Rothschild. The address
of Mr. Rothschild is c/o Arterio, Inc., 1061-B Shary Circle, Concord, CA 94518.
|
|
(3)
|
This
figure includes options to acquire 47,500 shares of common stock, which are currently exercisable and are priced in accordance
with the details provided in the “
OUTSTANDING EQUITY AWARDS
” table. Mr. Brigham’s address is c/o
ImmuCell Corporation, 56 Evergreen Drive, Portland, ME 04103.
|
|
(4)
|
This
figure includes options to acquire 47,500 shares of common stock, which are currently exercisable and are priced in accordance
with the details provided in the “
OUTSTANDING EQUITY AWARDS
” table and 105,111 shares of common stock held
jointly with Dr. Crabb’s wife. Dr. Crabb’s address is c/o ImmuCell Corporation, 56 Evergreen Drive, Portland,
ME 04103.
|
|
(5)
|
This
figure includes 2,322 shares of common stock held by immediate family members of Dr. Tomsche.
|
|
(6)
|
This
figure includes options to acquire 25,000 shares of common stock, which are currently exercisable. These options are priced
and have vested in accordance with the details provided in the “
OUTSTANDING EQUITY AWARDS
” table.
|
|
(7)
|
Mr.
Wainman holds options to acquire 15,000 shares of common stock at $4.80 per share, which became exercisable on March 31, 2017.
|
|
(8)
|
This
figure includes 1,009 shares of common stock held by an immediate family member of Dr. Rhodes, to which Dr. Rhodes disclaims
beneficial ownership.
|
|
(9)
|
Ms.
Williams holds options that are described in the “
OUTSTANDING EQUITY AWARDS
” table.
|
|
(10)
|
This
figure includes 135,000 shares of common stock covered by stock options, which are currently exercisable.
|
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
Dr.
David S. Tomsche (Chair of our Board of Directors) is a controlling owner of Leedstone Inc. (formerly Stearns Veterinary Outlet,
Inc.), a domestic distributor of ImmuCell products (
First Defense®
,
Wipe Out® Dairy Wipes
, and
CMT
)
and of J-t Enterprises of Melrose, Inc., an exporter. His affiliated companies purchased $551,020 and $573,165 of products from
ImmuCell during the years ended December 31, 2016 and 2015, respectively, on terms consistent with those offered to other distributors
of similar status. We made marketing-related payments of $5,286 and $3,222 to these affiliate companies during the years ended
December 31, 2016 and 2015, respectively. Our accounts receivable (subject to standard and customary payment terms) due from these
affiliated companies aggregated $3,221 and $36,528 as of December 31, 2016 and 2015, respectively.
The
President and CEO of the Company is responsible for reviewing related party transactions. To assist with this process, each director
is asked to complete an annual questionnaire covering transactions of this nature and other related matters. Regardless of dollar
value, all related party transactions are reviewed with the relevant director and with the entire Board of Directors, if necessary.
ELECTION
OF THE BOARD OF DIRECTORS (Proposal One)
Each
of the eight persons listed below has been nominated to serve as a director until the next Annual Meeting of Stockholders and
until his or her successor is chosen and qualified. Proxies in the enclosed form which are executed and returned will be voted
(unless otherwise directed)
FOR
election as directors of the nominees listed below:
MICHAEL
F. BRIGHAM
Age:
56
Officer
since: October 1991
Director
since: March 1999
|
Mr.
Brigham was appointed to serve as President and Chief Executive Officer in February 2000, while maintaining the titles of
Treasurer and Secretary, and was appointed to serve as a Director of the Company in March 1999. He previously had
been elected Vice President of the Company in December 1998 and had served as Chief Financial Officer since October 1991. He
has served as Secretary since December 1995 and as Treasurer since October 1991. Prior to that, he served as Director
of Finance and Administration since originally joining the Company in September 1989. Mr. Brigham has been a member
of the Board of Directors of the United Way of York County since 2012, serving as its Treasurer until June 2016 and is presently
Vice Chair of the Board of Directors and Chair of the Governance Committee. Mr. Brigham served as the Treasurer
of the Board of Trustees of the Kennebunk Free Library from 2005 to 2011. He re-joined the Finance Committee of
the library in 2012. Prior to joining the Company, he was employed as an audit manager for the public accounting
firm of Ernst & Young. Mr. Brigham earned his Masters in Business Administration from New York University in
1989.
|
BOBBI
JO BROCKMANN
Age:
40
Officer
since: February 2015
Director
since: March 2017
|
Ms.
Brockmann was appointed to the Board of Directors in March 2017 and was promoted to Vice President of Sales and Marketing
in February 2015. She joined the Company as Director of Sales and Marketing in January 2010. Prior to that, she had been employed
as Director of Sales since May 2008 and Sales Manager from February 2004 to April 2008 at APC, Inc. of Ankeny, Iowa, a developer
and marketer of functional protein products for animal health and nutrition. Prior to that, she held other sales and marketing
positions at APC, W & G Marketing Company, Inc. of Ames, Iowa, The Council for Agricultural Science and Technology of
Ames, Iowa and Meyocks Group Advertising of West Des Moines, Iowa after graduating from Iowa State University.
|
|
|
JOSEPH
H. CRABB, Ph.D.
Age:
62
Officer
since: March 1996
Director
since: March 2001
|
Dr.
Crabb served as Chair of the Board of Directors from June 2009 to February 2013. He was appointed a Director of the Company
in March 2001, having previously served in that capacity during the period from March 1999 until February 2000. Before that,
he was elected Vice President of the Company in December 1998, while maintaining the title of Chief Scientific Officer. He
has served as Chief Scientific Officer since September 1998. Prior to that, he served as Vice President of Research and Development
since March 1996. Prior to that, he served as Director of Research and Development and Senior Scientist since originally joining
the Company in November 1988. Concurrent with his employment, he has served on national study sections and advisory panels,
served as a peer reviewer, and held several adjunct faculty positions. Prior to joining the Company in 1988, Dr. Crabb earned
his Ph.D. in Biochemistry from Dartmouth Medical School and completed postdoctoral studies in microbial pathogenesis at Harvard
Medical School, where he also served on the faculty.
|
|
|
DAVID
S. CUNNINGHAM
Age:
51
Director
since: September 2011
|
Mr.
Cunningham is a member of the Audit Committee and the Nominating Committee of the Board of Directors. He has been Chief Operating
Officer of Axxiom Consulting LLC (which firm has no direct or indirect material interest in the transactions of Axxiom LLC,
which firm has been engaged to provide consulting services to the Company) since January 2013. He was President and CEO of
Teva Animal Health from May 2009 through December 2012. He was Vice President of Agri Laboratories, Ltd. of St Joseph, Missouri
from 2003 to November 2008. Prior to that, he held several management related positions with Boehringer Ingelheim Vetmedica,
Inc. and Hoechst-Roussel Agri-Vet from 1990 to 2003.
|
LINDA
RHODES, V.M.D., Ph.D
Age:
67
Director
since: August 2005
|
Dr.
Rhodes is Chair of the Compensation and Stock Option Committee of the Board of Directors. She retired from her position as
Chief Scientific Officer (CSO) of Aratana Therapeutics, a public animal health company that is developing and commercializing
pet therapeutics (Aratana), on May 15, 2016. Dr. Rhodes served as a member of Aratana’s Board of Directors from February
2011 to March 2014. Prior to her role as CSO, she served as CEO of the company from February 2011 through September 2012.
From 2001 to 2010, she was a founding partner and Vice President of AlcheraBio, LLC, an animal health consulting and contract
research firm, which firm was acquired in October 2008 by Argenta, a New Zealand animal health formulations and contract manufacturing
organization (operating as AlcheraBio in the United States). She is an adjunct professor for the Graduate School of Animal
Science at Rutgers University and is a member of the Board of Directors of the Alliance for Contraception in Cats and Dogs
(a non-profit organization). From 1998 to 2001, she was a Director of Development Projects and New Technology Assessment at
Merial Ltd. Prior to that, she held various research positions at Merck Research Laboratories and Sterling Drug Company. She
held several teaching positions and worked as a bovine veterinarian in private practice. She earned her Ph.D. in Physiology/Immunology
from Cornell University and her V.M.D. from the Pennsylvania School of Veterinary Medicine.
|
JONATHAN
E. ROTHSCHILD
Age:
63
Director
since: April 2001
|
Mr.
Rothschild is a member of the Audit Committee and the Compensation and Stock Option Committee of the Board of Directors. Since
1981, he has been President and CEO of Arterio, Inc., of Concord, California, a vitamin and supplement company that does business
as Ecological Formulas. Mr. Rothschild served on the Board of Directors of CCA Industries, Inc. of East Rutherford, New Jersey
(a developer and marketer of health and beauty products) from August 2012 through December 2014. He served as a director of
the Anne Frank Center USA, a not-for-profit organization, from 1994 to 2017. He served as a director and Chief Financial Officer
of Cistron Biotechnology from 1999 until it was acquired by Celltech, PLC in November 2000.
|
|
|
David
S. Tomsche, D.V.M.
Age:
60
Director
since: December 2006
|
Dr.
Tomsche was appointed to serve as Chair of the Board of Directors in February 2013 and is a member of the Nominating Committee
of the Board of Directors and serves as Chair of that committee. He served on the Audit Committee from February 25, 2014 through
March 31, 2014. He is a large animal veterinarian and owner of Leedstone Inc. (formerly Stearns Veterinary Outlet, Inc., an
animal health distribution and milking system installation company) and of J-t Enterprises of Melrose, Inc., an exporter of
ImmuCell products. He served as a director of VetPharm, Inc., an animal health products distributor, from 1995 until the company
was sold in 2007. He also is a dairy producer. He obtained his degrees from the University of Minnesota.
|
|
|
PAUL
R. WAINMAN
Age:
52
Director
since: March 2014
|
Mr.
Wainman was appointed to the Board of Directors on March 31, 2014 and is a member of the Audit Committee and serves as Chair
of that committee. He qualifies to serve as a “financial expert” given his background in accounting and finance.
Mr. Wainman has served as Chief Financial Officer of Hancock Lumber since February 2016. From April 2015 until February 2016,
he was a business strategy and financial consultant specializing in the paper and greeting card industry. Prior to that, he
was President of Kleinfeld Paper of Billerica, Massachusetts, a personalized wedding stationery company, from September 2013
until April 2015. From 2005 to 2012, he was President and CEO of William Arthur, Inc., a division of Hallmark Cards,
located in Kennebunk, Maine where he led a 275-employee manufacturer of luxury stationery products. Prior to that, he served
another division of Hallmark Cards as CFO and COO from 1998 to 2004. Mr. Wainman serves as a member of the Board of Directors
of the Education Foundation of the Kennebunks and Arundel. He obtained a degree in Accounting and Financial Control from Sheffield
City University in England and qualified as a Chartered Accountant of England and Wales in 1990.
|
Each
of these individuals brings distinct skills, perspectives and attributes to the Board of Directors. Mr. Brigham is an executive
officer who has been employed by the Company since 1989 and has a financial and accounting background. Ms. Brockmann is an executive
officer who has been employed by the Company since 2010 and has extensive experience in the sales and marketing of products to
the dairy and beef industries. Dr. Crabb is an executive officer who has been employed by the Company since 1988 and has a strong
technical/scientific background. Mr. Cunningham is the Chief Operating Officer of an animal health consulting business and brings
to the board substantial expertise in our industry. Dr. Rhodes was a practicing large animal veterinarian earlier in her career
and is recently retired from serving as the CSO of a public company (NASDAQ: PETX) that is developing and commercializing new
drugs for companion animals until May 15, 2016. Mr. Rothschild owns approximately 10.5% of the Company’s common stock and
has experience owning and operating small businesses in the health and nutritional sector. Dr. Tomsche is a veterinarian and owner
of a distribution outlet of products and services for animals, as well as an investor in and owner of dairy farms, and brings
to the board substantial expertise in our industry. Mr. Wainman has extensive managerial and financial training and expertise.
There
is no family relationship between any executive officer, director, or person nominated or chosen by the Company to become a director.
Except for Mr. Brigham, Ms. Brockmann and Dr. Crabb (each of whom are Company employees), each of the Company’s existing
directors or nominees qualifies as an “independent director” as defined under applicable NASDAQ Stock Market rules.
In evaluating the independence of directors, the board did consider the matters described above under the caption “
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS”
. If any of the individuals named above should not be available for election
as contemplated, it is the intention of the persons named in the proxy to vote for such other person or persons as management
may recommend. Management has no reason to believe any nominees will be unavailable. Any vacancies that may occur during the year
may be filled by the Board of Directors to serve until the next Annual Meeting.
The
Board of Directors recommends that you vote
FOR
the election of the eight nominees listed above.
ADVISORY
VOTE TO APPROVE EXECUTIVE COMPENSATION (Proposal Two)
As
required by Section 14A of the Exchange Act, which was enacted pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection
Act of 2010, we are asking our stockholders to approve, on an advisory (nonbinding) basis, the compensation of our named executive
officers, as disclosed in this proxy statement pursuant to the compensation disclosure rules of the SEC. This proposal is commonly
referred to as "say-on-pay." We currently present such proposal to our stockholders on an annual basis, which is more
often than is required.
We
maintain a simple executive compensation program that consists almost entirely of base salary and periodic stock option grants,
with the possibility of annual discretionary bonuses. No annual discretionary bonus has been awarded to these named executive
officers by the Company since 2007. These elements of compensation have been selected by the Compensation and Stock Option Committee
(Compensation Committee) because the Compensation Committee believes that they effectively achieve the fundamental goals of our
compensation program, which are to attract, motivate, retain and reward exceptionally talented executives; to align executive
interests and stockholder interests through an appropriate mix of long-term and short-term incentives; and to maximize the financial
efficiency of the program from risk, tax, accounting, and cash flow perspectives.
Except
as described below and under “
EMPLOYMENT AGREEMENTS
”, the Company does not provide any compensation or benefit
plans to these named executive officers that are not also available to other employees. The Company differentiates among key employees
primarily based on size of base salary. Annual compensation decisions for the named executive officers are made by the Compensation
Committee based on performance and market-related factors.
Features
of our compensation program for the named executive officers include the following:
|
●
|
A
majority of total compensation is fixed, but is regularly reviewed and evaluated based on both long-term and short-term corporate
performance.
|
|
●
|
During
2016, the Company entered into incentive compensation agreements with Ms. Brockmann and Ms. Williams linking their total compensation
to certain sales and regulatory approval objectives.
|
|
●
|
Equity
awards, which consist of stock options, generally vest after a three-year period. The Compensation Committee believes that
this aligns interests of key employees and stockholders.
|
|
●
|
From
time to time, the Compensation Committee reviews compensation against a peer group (companies of similar size and structure)
to ensure that our total compensation is both competitive and appropriate.
|
|
●
|
The
Compensation Committee annually reviews risk associated with our compensation program to ensure that our program does not
create incentives that would encourage subjecting the Company to risks that are reasonably likely to have a material adverse
effect on the Company.
|
We
are asking our stockholders to indicate their support for the compensation as described in this proxy statement. This vote is
not intended to address any specific item of compensation, but rather the overall compensation of the named executive officers
and the philosophy, policies and practices described in this proxy statement. Our Board of Directors is asking stockholders to
approve a nonbinding advisory vote on the following resolution:
RESOLVED,
that the compensation paid to the named executive officers of the Company, as disclosed pursuant to Item 402 of Regulation S-K,
including the “
SUMMARY COMPENSATON TABLE
” and “
OUTSTANDING EQUITY AWARDS
” table, is hereby
approved.
As
an advisory vote, this proposal is not binding. The outcome of this advisory vote does not overrule any decision by the Company
or the Board of Directors (or any committee thereof), create or imply any change to the fiduciary duties of the Company or the
Board of Directors (or any committee thereof), or create or imply any additional fiduciary duties for the Company or the Board
of Directors (or any committee thereof). However, our Compensation Committee and Board of Directors value the opinions expressed
by our stockholders in their vote on this proposal and will consider the outcome of the vote when making future compensation decisions
for these key employees.
The
Board of Directors recommends that you vote
FOR
the approval of the advisory resolution on compensation for the
named executive officers.
VOTE
TO APPROVE THE 2017 STOCK OPTION AND INCENTIVE PLAN (Proposal Three)
Effective
March 29, 2017, upon recommendation of the Compensation and Stock Option Committee (the Compensation Committee) and subject to
the approval of the Company’s stockholders, the Board of Directors approved the 2017 Stock Option and Incentive Plan (the
2017 Plan), a copy of which is attached as Exhibit A to this Proxy Statement. The 2017 Plan is intended to supplement the Company’s
2010 Stock Option and Incentive Plan (the 2010 Plan), which expires in June of 2020. No further grants of stock options could
be made under the 2010 Plan after that date. As of April 19, 2017, there were 32,500 shares available for new stock option grants
under the 2010 Plan. Unless sooner terminated, the 2017 Plan terminates on June 14, 2027. A summary of the essential features
is provided below but is qualified in its entirety by reference to the full text of the 2017 Plan.
As
was the case with the 2010 Plan, the purpose of the 2017 plan is to advance the interests of the Company by providing certain
of its employees and certain other individuals providing services to the Company with an additional incentive, encouraging stock
ownership by such individuals, increasing their interest in the success of the Company and encouraging them to remain employees
of the Company or service providers for the Company.
The
2017 Plan is administered by the Compensation Committee, which in its discretion selects the key employees and other persons eligible
to participate, determines the terms of awards, interprets the 2017 Plan, and makes all other determinations for administering
the 2017 Plan. The maximum number of shares of the Company’s common stock that may be issued pursuant to the 2017 Plan is
300,000 shares, subject to increase in the event of subsequent stock splits or other capital changes. The 2017 Plan allows for
granting of both incentive stock options and nonqualified stock options (Stock Options). As of April 19, 2017, no Stock Options
had been granted under the 2017 Plan. Any grants that are made prior to stockholder approval of the 2017 Plan will be made subject
to stockholder approval of the 2017 Plan and cannot be exercised and will expire worthless if such approval is not obtained.
The
2017 Plan provides that certain of the Stock Options are intended to qualify as “Incentive Stock Options” within the
meaning of Section 422 of the Code. Other Stock Options will be granted as nonqualified stock options. In all cases, Stock Options
will be issued at an option price no less than the fair market value of the Company’s common stock on the date of grant
(110% of fair market value in the case of grantees who are 10% or greater stockholders). Exercise of Stock Options will be subject
to terms and conditions set by the Compensation Committee and set forth in the instrument evidencing the Stock Option. Stock Options
may be exercised with either cash or, in the discretion of the Compensation Committee, shares of common stock. The date of expiration
of the Stock Option will be fixed by the Compensation Committee, but may not be longer than ten years from the date of grant (five
years in the case of outside directors or 10% or greater stockholders). Such determinations by the Compensation Committee may
be on a case-by-case basis. All Stock Options will terminate on the earlier of their expiration date or one year following termination
of employment or service to the Company due to disability or death. Upon termination of employment or service to the Company for
any reason other than disability or death, all Stock Options will expire on the earlier of their expiration date or one month
following termination.
An
optionee will not recognize income for Federal income tax purposes upon the grant of an Incentive Stock Option. An optionee generally
will also not recognize income upon the exercise of an Incentive Stock Option; however, the difference between the option price
and the fair market value of the stock acquired on the date of exercise is an item of tax preference for purposes of the alternative
minimum tax. If no disposition of the stock acquired upon the exercise of the Incentive Stock Option occurs until after more than
two years after the Incentive Stock Option was granted and more than one year after the transfer of such stock to the optionee,
any gain or loss recognized upon such disposition will be treated as long-term capital gain or loss.
The
disposition of the stock acquired upon the exercise of an Incentive Stock Option within two years after the Incentive Stock Option
was granted or within one year after the transfer of the stock to the optionee will be a disqualifying disposition, and the optionee
will generally recognize (i) ordinary compensation income for Federal income tax purposes in an amount equal to the excess of
the fair market value on the date of exercise of the stock acquired over the option price and (ii) short or long-term capital
gain (depending upon how long the stock was held) to the extent the stock is disposed of in a sale or taxable exchange at a price
in excess of the value of such stock on the date of exercise. If the amount realized by the optionee upon such a disposition is
less than the value of the stock on the date of exercise, then the amount of income realized will be all compensation income and
will be limited to the excess amount realized on the sale or exchange over the option price of the stock.
As
is the case with an Incentive Stock Option, an optionee will not recognize income for Federal income tax purposes upon the grant
of a nonqualified stock option. However, upon the exercise of a nonqualified stock option, an optionee will generally recognize
ordinary compensation income in an amount equal to the excess of the fair market value of the common stock on the date of exercise
over the option price. Any gain or loss recognized by the optionee on the subsequent disposition of the stock will be capital
gain or loss.
Upon
the exercise of a non-qualified stock option, the Company will be entitled to a deduction for Federal income tax purposes at the
same time and in the same amount as an optionee is required to recognize ordinary compensation income as described above.
New
Plan Benefits
As
described above, the selection of the employees of the Company who will receive grants under the 2017 Plan is to be determined
by the Compensation Committee at its discretion. Therefore, it is not possible to predict the amounts that will be received by
or allocated to particular individuals or groups of employees under the 2017 Plan. The following information describes activity
under the 2010 Plan. During 2015, options to purchase an aggregate of 6,000 shares were granted to six employees who are not executive
officers as a group and 2,000 options were exercised by two such employees. During 2015, options to purchase an aggregate of 10,000
shares were granted to one executive officer. During 2016, options to purchase an aggregate of 21,000 shares were granted to twenty-one
employees who are not executive officers as a group and 1,000 options were exercised by one such employee. During 2016, options
to purchase an aggregate of 25,000 shares were granted to one executive officer and 15,000 shares were exercised by one director.
From January 1, 2017 through April 19, 2017, options to purchase an aggregate of 78,000 shares were granted to forty-one employees
who are not executive officers as a group. During this period, options to purchase an aggregate of 46,000 shares were granted
to four executive officers. Since inception of the 2010 Plan, the aggregate of 20,000 options have been exercised. As of April
19, 2017, 247,500 options were outstanding.
The
Board of Directors recommends that you vote
FOR
the proposal to approve the 2017 Stock Option and Incentive Plan.
RATIFICATION
OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM (Proposal Four)
The
Audit Committee has appointed RSM US LP to serve as our Independent Registered Public Accounting Firm for the year ending December
31, 2017. This decision was ratified by the Board of Directors. RSM US LP had previously audited the Company’s financial
statements for the year ended December 31, 2016.
Although
stockholder approval of the Audit Committee’s selection of RSM US LP is not required by law, the Board of Directors believes
that it is advisable to give stockholders an opportunity to ratify this selection. A representative of RSM US LP is expected to
be present at the Annual Meeting with an opportunity to make a statement if he or she desires to do so and is expected to be available
to respond to appropriate questions. If this proposal is not approved at the Annual Meeting, the Audit Committee will reconsider
its selection of RSM US LP. Even if the appointment is ratified, the Audit Committee, in its discretion, can direct the appointment
of a different firm at any time during the year if the Audit Committee determines that such a change would be in the Company’s
and the stockholders’ best interests.
INFORMATION
CONCERNING INDEPENDENT REGISTERED ACCOUNTING FIRM
On
March 2, 2016, Baker Newman & Noyes, LLC informed the Company that it would decline to propose to audit the Company’s
financial statements for the year ending December 31, 2016. Baker Newman & Noyes, LLC had previously audited the Company’s
financial statements for the years ended December 31, 2015, 2014 and 2013. Baker Newman & Noyes, LLC performed the review
of the Company’s financial statements for the three-month period ended March 31, 2016. The Audit Committee’s engagement
of this firm was made in accordance with procedures contemplated in the Committee’s charter.
The
report of Baker Newman & Noyes, LLC on the Company’s financial statements for the three years ended December 31, 2015
contained no adverse opinion or disclaimer of opinion and was not qualified or modified as to uncertainty, audit scope or accounting
principles. In connection with that firm’s audits of financial statements for the three years ended December 31, 2015, there
were no disagreements between the Company and Baker Newman & Noyes, LLC on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope and procedures, which disagreements, if not resolved to the satisfaction of
Baker Newman & Noyes, LLC, would have caused Baker Newman & Noyes, LLC to make reference to the subject matter of the
disagreements in their report on the Company’s financial statements for such years.
On
May 20, 2016, the Audit Committee engaged RSM US LP to audit the Company’s financial statements for the year ending December
31, 2016. This decision was ratified by the Board of Directors. The Audit Committee’s engagement of this firm was made in
accordance with procedures contemplated in the Committee’s charter.
The
report of RSM US LP on the financial statements for the year ended December 31, 2016 contained no adverse opinion or disclaimer
of opinion and was not qualified or modified as to uncertainty, audit scope or accounting principles. In connection with that
firm’s audit of the Company’s financial statements for the year ended December 31, 2016, there were no disagreements
between the Company and RSM US LP on any matter of accounting principles or practices, financial statement disclosure, or auditing
scope and procedures, which disagreements, if not resolved to the satisfaction of RSM US LP, would have caused RSM US LP to make
reference to the subject matter of the disagreements in their report on the Company’s financial statements for such year.
The
Board of Directors recommends that you vote
FOR
the ratification of our Independent Registered Public Accounting
Firm for the year ending December 31, 2017.
Principal
Accounting Fees and Services
Set
forth below is a summary of the fees incurred for services rendered by the Company’s Independent Registered Public Accounting
Firms, which was RSM US LP for the year ended December 31, 2016 and Baker Newman & Noyes, LLC, for the year ended December
31, 2015 and for the three-month period ended March 31, 2016.
|
|
2016
|
|
|
2015
|
|
Audit Fees (1)
|
|
$
|
142,869
|
|
|
$
|
62,700
|
|
Audit-Related Fees (2)
|
|
|
25,997
|
|
|
|
4,410
|
|
Tax Fees (3)
|
|
|
14,925
|
|
|
|
8,500
|
|
Total
|
|
$
|
183,791
|
|
|
$
|
75,610
|
|
|
(1)
|
These
fees include charges by the auditors for their reviews of quarterly financial statements included in the Company’s Quarterly
Reports on Form 10-Q for the first three quarters of each year and their audits of the annual financial statements included
in the Company’s Annual Reports on Form 10-K, and incidental expenses.
|
|
(2)
|
In
2016 and 2015, these fees were related to the preparation of our Registration Statement on Form S-3.
|
|
(3)
|
The
Tax Fees for 2016 represent the agreed upon contract amount to review the quarterly tax provisions and assist with the preparation
of the tax returns for the year ended December 31, 2016, which work is expected to be completed and paid for in 2017. The
Tax Fees for 2015 represent the agreed upon contract amount to review the quarterly tax provisions and assist with the preparation
of the tax returns for the year ended December 31, 2015, which work was completed and paid for in 2016.
|
Pre-Approval
Policy
In
accordance with the procedures set forth in its charter, the Audit Committee pre-approves all auditing services and permitted
non-audit services (including the fees and terms of those services) to be performed for the Company by its Independent Registered
Public Accounting Firm. Such approval may be accomplished by approving the terms of the engagement prior to the engagement of
the Independent Registered Public Accounting Firm with respect to such services or by establishing detailed pre-approval policies
and procedures to govern such engagement. The Audit Committee authorizes management to spend up to $5,000 per year for services
that are not anticipated at the time of the engagement, provided that the Audit Committee is promptly informed of such services.
Audit
Committee Financial Expert
Pursuant
to Section 306 of the Sarbanes-Oxley Act of 2002 and Item 407 of Regulation S-K promulgated by the SEC, the Company is required
to disclose whether it has at least one “Financial Expert” serving on its Audit Committee and if so, the name of the
expert and whether the expert is independent of management. A company that does not have an Audit Committee Financial Expert must
disclose this fact and explain why it has no such expert. Mr. Paul Wainman, who joined our Board of Directors on March 31, 2014
and currently serves as Chair of the Audit Committee, meets the SEC’s definition of a financial expert. It is the opinion
of the Company’s Board of Directors that the Company addresses its audit functions with a depth of penetration and rigor
that meets the intent of the requirements of the Sarbanes-Oxley Act for the following reasons:
|
●
|
All
members of the Audit Committee of the Company are independent Directors, as defined by the SEC and NASDAQ.
|
|
●
|
The
three members of the Audit Committee have knowledge of accounting for both their own businesses as well as for the Company.
The three members of the Audit Committee have considerable experience operating a publicly-held animal health company, his
own vitamin and nutrition company and a for-profit, privately-held commercial enterprise, respectively.
|
|
●
|
Internal
audit work of the Company is performed by its Director of Finance and Administration, Accounting Associate and Office Manager.
|
|
●
|
The
Company also continuously reviews, at its own initiative, the expertise of the members of its Board of Directors and its Audit
Committee.
|
AUDIT
COMMITTEE REPORT
The
Audit Committee of the Board of Directors reviews the financial reporting process, the system of internal controls, the audit
process and the process for monitoring compliance with certain applicable laws and regulations. The Audit Committee is responsible
for selecting and hiring the Independent Registered Public Accounting Firm and meets with those accountants (in person or by telephone)
before each quarterly press release concerning the Company’s financial results. The Audit Committee approves the public
disclosure and filing with the SEC of the related press releases. After reviewing the quarterly and annual reports that are prepared
by management, the Audit Committee authorizes the filing of such reports with the SEC. All members of the Audit Committee meet
the heightened independence requirements for audit committees under applicable NASDAQ Stock Market rules. Mr. Rothschild has served
as a member of the Audit Committee since 2008. Mr. Wainman joined the Audit Committee effective March 31, 2014 and serves as its
Chair. Mr. Cunningham joined the Audit Committee as of July 2014. The Audit Committee currently operates under a charter adopted
by the board in 2004. The Company has a January 1st to December 31st fiscal year. The Audit Committee met nine times during 2016.
The
Audit Committee has reviewed the Company’s audited financial statements for the year ended December 31, 2016 and discussed
such statements with management and RSM US LP, the Company’s independent registered public accounting firm for 2016. The
Audit Committee has discussed with RSM US LP various communications that RSM US LP is required to provide to the Audit Committee
including the matters required to be discussed by Public Company Accounting Oversight Board (PCAOB) Auditing Standards No. 16
(Communication with Audit Committees). The Audit Committee received from RSM US LP the written disclosures and the letter required
by applicable requirements of the PCAOB concerning independence and has discussed the auditor’s independence with them.
Based
on the review and discussions noted above, the Audit Committee recommended to the board that the Company’s audited financial
statements be included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016 and be filed
with the SEC.
This
report of the Audit Committee shall not be deemed incorporated by reference by any general statement incorporating this proxy
statement by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as
amended, except to the extent that the Company specifically incorporates this information by reference and shall not otherwise
be deemed filed under such Acts.
Submitted
by:
Audit
Committee
David
S. Cunningham
Jonathan
E. Rothschild
Paul
R. Wainman, Chair
CODE
OF BUSINESS CONDUCT AND ETHICS
In
December 2003, the Board of Directors of the Company adopted a Code of Business Conduct and Ethics that applies to all employees
of the Company including the Company’s President and CEO and Director of Finance and Administration. This Code is a set
of written standards that are designed to deter wrongdoing and to promote: (i) honest and ethical conduct, (ii) full, fair, accurate,
timely and understandable disclosure in reports filed with the SEC, (iii) compliance with acceptable laws, (iv) prompt internal
reporting of violations of the Code and (v) accountability for adherence to the Code. On March 19, 2014, the Board of Directors
approved several minor revisions to this Code. This Code has been posted on the Company’s web-site (http://immucell.com/wp-content/uploads/2014-Code-of-Business-Conduct-and-Ethics-revision.pdf)
and was filed as Exhibit 14 to the Company’s Current Report on Form 8-K dated March 20, 2014. The Company will mail a copy
of its Code of Business Conduct and Ethics to any interested party without charge, upon request. Such requests may be made by
mail to the Company’s Secretary at ImmuCell Corporation, 56 Evergreen Drive, Portland, Maine 04103.
SECTION
16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section
16 of the Securities Exchange Act of 1934 requires the Company’s directors, executive officers and persons who own more
than ten percent of a registered class of the Company’s equity securities, to file with the SEC initial reports of ownership
and reports of changes in ownership of common stock and other equity securities of the Company. Officers, directors and greater
than ten percent stockholders are required by SEC regulation to furnish the Company with copies of all Section 16(a) reports they
file. To the best of the Company’s knowledge, based solely on review of the copies of such reports furnished to the Company
and written representations that no other reports were required, during the year ended December 31, 2016, the Company’s
directors, executive officers and greater than ten percent beneficial owners complied on a timely basis with all applicable Section
16(a) filing requirements.
OTHER
BUSINESS
The
management of the Company does not know of any business not specifically referred to above as to which any action is expected
to be taken at the meeting. However, if any business other than those items referred to above properly comes before the meeting,
it is the intention of the persons named in the enclosed form of proxy to vote such proxy in accordance with their judgment on
such matters.
|
By
Order of the Board of Directors
|
|
|
|
/s/
Michael F. Brigham
|
|
Michael
F. Brigham,
Secretary
|
|
April
28, 2017
|
A
COPY OF THE COMPANY’S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2016 WHICH INCLUDES THE COMPANY’S
FINANCIAL STATEMENTS, ACCOMPANIES THIS PROXY STATEMENT. COPIES OF THE EXHIBITS TO THE 2016 ANNUAL REPORT ON FORM 10-K ARE AVAILABLE
UPON WRITTEN REQUEST TO THE FOLLOWING ADDRESS: INVESTOR RELATIONS, IMMUCELL CORPORATION, 56 EVERGREEN DRIVE, PORTLAND, ME 04103.
EXHIBIT
A
2017
STOCK OPTION AND INCENTIVE PLAN
I.
GENERAL
|
1.
|
Purpose
.
This 2017 Stock Option and Incentive Plan (the Plan) of ImmuCell Corporation (the Company)
is intended to advance the interests of the Company by providing certain of its employees
and certain other individuals providing services to the Company with an additional incentive,
encouraging stock ownership by such individuals, increasing their proprietary interest
in the success of the Company and encouraging them to remain employees of the Company
or service providers for the Company.
|
|
2.
|
Definitions
.
Whenever used herein, the following terms shall have the meanings set forth below:
|
|
(a)
|
“Board”
means the Board of Directors of the Company.
|
|
(b)
|
“Code”
means the Internal Revenue Code of 1986, as it may be amended from time to time.
|
|
(c)
|
“Committee”
means the Compensation and Stock Option Committee appointed by the Board to administer
this Plan pursuant to Section 3 hereof.
|
|
(d)
|
“Company
Group” means the Company, a parent corporation or subsidiary corporation of the
Company, or a corporation, or a parent corporation or subsidiary corporation of such
corporation, issuing or assuming an Option in a transaction of the type described in
Section 424(a) of the Code. The terms “parent corporation” and “subsidiary
corporation” shall have the meanings assigned to such terms by Section 424 of the
Code.
|
|
(e)
|
“Disability”
means a permanent and total disability as defined in Section 22(e)(3) of the Code.
|
|
(f)
|
“Fair
Market Value” means, if Shares are traded on a national exchange, the mean between
the high and low sales prices for the Shares on the date on which the determination is
made (or if no sales occurred on that date, on the next preceding date on which there
was such a sale), or, if sales prices of Shares are made available for publication by
the National Association of Securities Dealers Automated Quotation System (“NASDAQ”),
the last sales price on the date on which such determination is made (or if no sales
occurred on that date, on the next preceding date on which there was such a sale), or
if no such prices are available, the fair market value as determined by rules to be adopted
by the Committee.
|
|
(g)
|
“Incentive
Stock Option” means an Option granted pursuant to the Incentive Stock Option provisions
as set forth in Part II of this Plan.
|
|
(h)
|
“Nonqualified
Stock Option” means an Option granted pursuant to the Nonqualified Stock Option
provisions as set forth in Part III of this Plan
|
|
(i)
|
“Option”
means an option to purchase shares under this Plan.
|
|
(j)
|
“Participant”
means an individual to whom an Option is granted under this Plan.
|
|
(k)
|
“Shares”
means shares of the Company’s common stock
|
|
3.
|
Administration
.
This Plan shall be administered by a Compensation and Stock Option Committee consisting
of at least two members appointed by the Board. The members of the Committee shall at
all times be: (i) “outside directors” as such term is defined in Treas. Reg.
§ 1.162-27(e)(3) (or any successor regulation); and (ii) “non-employee directors”
within the meaning of Rule 16b-3 (or any successor rule) under the Securities Exchange
Act of 1934, as amended, as such terms are interpreted from time to time. The Board,
at its pleasure, may remove members from or add members to the Committee. A majority
of Committee members shall constitute a quorum of members, and the actions of the majority
shall be final and binding on the whole Committee.
|
In
addition to the other powers granted to the Committee under this Plan, the Committee shall have the power, subject to the terms
of this Plan: (i) to determine which of the eligible individuals shall be granted Options; (ii) to determine the time or times
when Options shall be granted and to determine the number of Shares subject to each Option; (iii) to accelerate or extend (except
for Incentive Stock Options) the date on which a previously granted Option may be exercised, provided that such extension shall
not extend the option beyond ten (10) years; (iv) to prescribe the form of agreement evidencing Options granted pursuant to this
Plan; and (v) to construe and interpret this Plan and the agreements evidencing Options granted pursuant to this Plan, and to
make all other determinations and take all other actions necessary or advisable for the administration of this Plan.
|
4.
|
Eligibility
.
The individuals who shall be eligible to receive Options shall be such employees employed
by a member of the Company Group and such other individuals providing services to a member
of the Company Group as shall be selected by the Committee; provided, however, that only
employees employed by a member of the Company Group shall be eligible to receive Incentive
Stock Options. Participants chosen to participate under this Plan may be granted an Incentive
Stock Option, a Nonqualified Stock Option, or any combination thereof.
|
|
5.
|
Shares
Subject to This Plan
. The Shares subject to Options shall be either authorized and
unissued Shares or Treasury Shares. The aggregate number of Shares which may be issued
pursuant to this Plan shall be three hundred thousand (300,000). Except as provided below,
if an Option shall expire and terminate for any reason, in whole or in part, without
being exercised, the number of Shares as to which such expired or terminated Option shall
not have been exercised may again become available for the grant of Options. The maximum
number of shares with respect to which Options may be granted to any employee shall be
limited to one hundred thousand (100,000) shares in any calendar year. Any or all Options
granted hereunder may be Incentive Stock Options or Nonqualified Stock Options, subject
to the criteria applicable thereto.
|
|
6.
|
No Tandem Options
. There shall be no terms and conditions under an
Option which provide that the exercise of an Incentive Stock Option reduces the number of shares for which a Nonqualified Stock
Option may be exercised; and there shall be no terms and conditions under an Option which provide that the exercise of a Nonqualified
Stock Option reduces the number of Shares for which an Incentive Stock Option may be exercised.
|
II.
INCENTIVE STOCK OPTION PROVISIONS
|
1.
|
Grant
of Incentive Stock Options.
Subject to the provisions of this Part II, the Committee
shall from time to time determine those individuals eligible pursuant to Section 4 of
Part I to whom Incentive Stock Options shall be granted and the number of Shares subject
to, and terms and conditions of, such Options. The aggregate Fair Market Value (determined
as of the date of grant) of shares with respect to which incentive stock options (as
defined in Section 422 of the Code) are exercisable for the first time by an individual
in a calendar year (under all plans of the Company Group) shall not exceed $100,000.
Anything herein to the contrary notwithstanding, no Incentive Stock Option shall be granted
to an employee if, at the time the Incentive Stock Option is granted, such employee owns
stock possessing more than 10% of the total combined voting power of all classes of stock
of any member of the Company Group unless the option price is at least 110% of the Fair
Market Value of the Shares subject to the Incentive Stock Option at the time the Incentive
Stock Option is granted and the Incentive Stock Option is not exercisable after the expiration
of five (5) years from the date the Incentive Stock Option is granted.
|
|
|
|
|
2.
|
Terms
and Conditions of Incentive Stock Options.
Each Incentive Stock Option shall be evidenced
by an option agreement which shall be in such form as the Committee shall from time to
time approve, and which shall comply with and be subject to the following terms and conditions:
|
|
(a)
|
Number
of Shares
. Each Incentive Stock Option agreement shall state the number of shares
covered by the agreement.
|
|
(b)
|
Option
Price and Method of Payment
. The option price of each Incentive Stock Option shall
be no less than the Fair Market Value of the Shares on the date the Incentive Stock Option
is granted. The option price shall be payable on exercise of the Option (i) in cash or
by certified check, bank draft or postal or express money order, (ii) in the discretion
of the Committee, by the surrender of Shares then owned by the Participant, or (iii)
in the discretion of the Committee, partially in accordance with clause (i) and partially
in accordance with clause (ii) of this Section 2(b). Shares so surrendered in accordance
with clause (ii) or (iii) shall be valued at the Fair Market Value thereof on the date
of exercise, surrender of such Shares to be evidenced by delivery of the certificate(s)
representing such Shares in such manner, and endorsed in such form, or accompanied by
stock powers endorsed in such form, as the Committee may determine.
|
|
(i)
|
General
.
The period during which an Incentive Stock Option shall be exercisable shall not exceed
ten (10) years from the date such Incentive Stock Option is granted; provided, however,
that such Option may be sooner terminated in accordance with the provisions of this Section
2(c) . Subject to the foregoing, the Committee may establish a period or periods with
respect to all or any part of the Incentive Stock Option during which such Option may
not be exercised and accelerate the right of the Participant to exercise all or any part
of the Incentive Stock Option not then exercisable. The number of Shares which may be
purchased at any one time shall be 100 Shares, a multiple thereof or the total number
at the time purchasable under the Incentive Stock Option.
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(ii)
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Termination
of Employment
. If the Participant ceases to be an employee of any member of the Company
Group for any reason other than Disability or death, any then outstanding Incentive Stock
Option held by the Participant shall terminate on the earlier of the date on which such
Option would otherwise expire or one (1) month after such termination of employment,
and such Option shall be exercisable, prior to its termination, to the extent it was
exercisable as of the date of termination of employment.
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(iii)
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Disability
.
If a Participant’s employment is terminated by reason of Disability, any then outstanding
Incentive Stock Option held by the Participant shall terminate on the earlier of the
date on which such Option would otherwise expire or one (1) year after such termination
of employment, and such Option shall be exercisable, prior to its termination, to the
extent it was exercisable as of the date of termination of employment.
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(iv)
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Death
.
If a Participant’s employment is terminated by death, the representative of the
Participant’s estate or beneficiaries thereof to whom the Option has been transferred
shall have the right during the one (1) year period following the date of the Participant’s
death to exercise any then outstanding Incentive Stock Options in whole or in part. The
number of Shares in respect of which an Incentive Stock Option may be exercised after
a Participant’s death shall be the number of Shares in respect of which such Option
could be exercised as of the date of the Participant’s death. In no event may the
period for exercising an Incentive Stock Option extend beyond the date on which such
Option would otherwise expire.
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(d)
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Non-transferability
.
An Incentive Stock Option shall not be transferable or assignable by the Participant
other than by will or the laws of descent and distribution and shall be exercisable during
the Participant’s lifetime only by the Participant.
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(e)
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Separate
Agreements
. Nonqualified Options may not be granted in the same agreement as an Incentive
Stock Option.
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III.
Nonqualified stock option provisions
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1.
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Grant
of Nonqualified Stock Options
. Subject to the provisions of this Part III, the Committee
shall from time to time determine those individuals eligible pursuant to Section 4 of
Part 1 to whom Nonqualified Stock Options shall be granted and the number of Shares subject
to, and terms and conditions of, such Options.
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2.
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Terms
and Conditions of Nonqualified Stock Options
. Each Nonqualified Stock Option shall
be evidenced by an option agreement which shall be in such form as the Committee shall
from time to time approve, and which shall comply with and be subject to the following
terms and conditions:
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(a)
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Number
of Shares
. Each Nonqualified Stock Option agreement shall state the number of Shares
covered by the agreement
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(b)
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Option
Price and Method of Payment
. The option price of each Nonqualified Stock Option shall
be no less than the Fair Market Value of the Shares on the date the Nonqualified Stock
Option is granted. The option price shall be payable on exercise of the Option (i) in
cash or by certified check, bank draft or postal or express money order, (ii) in the
discretion of the Committee, by the surrender of Shares then owned by the Participant,
or (iii) in the discretion of the Committee, partially in accordance with clause (i)
or (iii) shall be valued at the Fair Market Value thereof on the date of exercise, surrender
of such Shares to be evidenced by delivery of the certificate(s) representing such Shares
in such manner, and endorsed in such form, or accompanied by stock powers endorsed in
such form, as the Committee may determine.
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(i)
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General
.
The period during which a Nonqualified Stock Option shall be exercisable shall not exceed
ten (10) years from the date such Nonqualified Stock Option is granted; provided, however,
that such Option may be sooner terminated in accordance with the Provisions of this Section
2(c). Subject to the foregoing, the Committee may establish a period or periods with
respect to all or any part of the Nonqualified Stock Option during which such Option
may not be exercised and at the time of a subsequent grant of a Nonqualified Stock Option
or, at such longer time as the Committee may determine, accelerate the right of the Participant
to exercise all or any part of the Nonqualified Stock Option not then exercisable. The
number of Shares which may be purchased at any one time shall be 100 Shares, a multiple
thereof or the total number at the time purchasable under the Nonqualified Stock Option.
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(ii)
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Termination
of Employment
. If the Participant ceases to be an employee of any member of the Company
Group or ceases to perform services for any member of the Company Group for any reason
other than Disability or death, any outstanding Nonqualified Stock Option held by the
Participant shall terminate on the earlier of the date on which such Option would otherwise
expire or one (1) month after such termination of employment or the provision of services,
and such Option shall be exercisable, prior to its termination, to the extent it was
exercisable as of the date of termination of employment or the date on which services
ceased to be performed.
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(iii)
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Disability
.
If a Participant’s employment or provision of services is terminated by Disability,
any then outstanding Nonqualified Stock Option held by the Participant shall terminate
on the earlier of the date on which such Option would otherwise expire or one (1) year
after such termination of employment or the provision of services, and such Option shall
be exercisable, prior to its termination, to the extent it was exercisable as of the
date of termination of employment or the date on which services ceased to be performed.
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(iv)
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Death
.
If a Participant’s employment or provision of services is terminated by death,
the representative of the Participant’s estate or beneficiaries thereof to whom
the Option has been transferred shall have the right during the one (1) year period following
the date of the Participant’s death to exercise any then outstanding Nonqualified
Stock Options in whole or in part. The number of Shares in respect to which a Nonqualified
Stock Option may be exercised after a Participant’s death shall be the number of
Shares in respect of which such Option could be exercised as of the date of the Participant’s
death. In no event may the period for exercising a Nonqualified Stock Option extend beyond
the date on which such Option would otherwise expire.
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(d)
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Non-transferability
.
Unless otherwise provided by the Committee, a Nonqualified Stock Option shall not be
transferable or assignable by the Participant other than by will or the laws of descent
and distribution, and shall be exercisable during the Participant’s lifetime only
by the Participant.
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IV.
MISCELLANEOUS
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1.
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Effective
Date
. This Plan shall become effective on March 29, 2017 (the “Effective Date”),
provided, however, that if the Plan is not approved by the stockholders of the Company
prior to the expiration of the one year period commencing on the Effective Date, this
Plan and all Options granted hereunder shall be null and void and shall be of no effect.
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2.
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Duration
of Plan
. Unless sooner terminated, the Plan shall remain in effect for a period of
ten years after the Effective Date and shall thereafter terminate. No Incentive Stock
Options or Nonqualified Stock Options may be granted after the termination of this Plan;
provided however, that except as otherwise provided in Section 1 of this Part III, termination
of the Plan shall not affect any Options previously granted, which Options and shall
remain in effect until exercised, surrendered or cancelled, or until they have expired,
all in accordance with their terms.
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3.
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Changes
in Capital Structure, etc.
In the event of changes in the outstanding common shares
of the Company by reason of stock dividends, stock splits, recapitalizations, mergers,
consolidations, combinations or exchange of shares, separations, reorganizations, or
liquidations, the number of Shares available under the Plan in the aggregate and the
maximum number of Shares as to which Options may be granted to any Participant shall
be correspondingly adjusted by the Committee. The Committee shall make appropriate adjustments
in the number of Shares as to which outstanding Options, or portions thereof then unexercised,
shall relate, to the end that the Participant’s proportionate interest shall be
maintained as before the occurrence of such events; such adjustment shall be made without
change in the total price applicable to the unexercised portion of Options and with a
corresponding adjustment in the Option price per Share. In addition, if the Company is
to be consolidated with or acquired by another entity in a merger, sale of all or substantially
all of the Company’s assets or otherwise, the Committee or the Board of Directors
of any entity assuming the obligations of the Company hereunder, may, as to outstanding
Options either (i) provide that such Options shall be assumed, or equivalent options
shall be substituted, by the acquiring or successor corporation (or an affiliate thereof),
(ii) upon written notice to the optionees, provide that all Options must be exercised,
to the extent then exercisable, within a specified number of days of the date of such
notice, at the end of which period the Options shall terminate, or (iii) terminate all
Options in exchange for a cash payment equal to the excess of the Fair Market Value of
the Shares subject to such Options (to the extent then exercisable) over the exercise
price thereof.
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4.
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Rights
as Stockholder
. A Participant entitled to Shares as a result of the exercise of an
Option shall not be deemed for any purpose to be, or have rights as, a stockholder of
the Company by virtue of such exercise, except to the extent a stock certificate is issued
therefor and then only from the date such certificate is issued. No adjustments shall
be made for dividends or distributions or other rights for which the record date is prior
to the date such stock certificate is issued.
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5.
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Expenses
.
The expenses of this Plan shall be paid by the Company.
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6.
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Withholding
.
Any person exercising an Option must pay, when due, any taxes such person is required
by law to pay with respect to the exercise of such Option. Such payment shall be due
on the date such person is required by law to pay such taxes.
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7.
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Compliance
with Applicable Law
. Notwithstanding anything herein to the contrary, the Company
shall not be obligated to cause to be issued or delivered any certificates evidencing
Shares to be delivered pursuant to the exercise of an Option, unless and until the Company
is advised by its counsel that the issuance and delivery of such certificates is in compliance
with all applicable laws and regulations of governmental authority. The Company shall
in no event be obligated to register any securities pursuant to the Securities Act of
1933 (as now in effect or as hereafter amended) or to take any other action in order
to cause the issuance and delivery of such certificates to comply with any such law or
regulation. The Committee may require, as a condition of the issuance and delivery of
such certificates and in order to ensure compliance with such laws and regulations, that
the Participant make such covenants, agreements and representations as the Committee,
in its sole discretion, deems necessary or desirable.
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8.
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Application
of Funds
. Any cash proceeds received by the Company from the sale of Shares pursuant
to Options will be used for general corporate purposes.
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9.
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Amendment
of the Plan
. The Committee may from time to time suspend or discontinue this Plan
or revise or amend it in any respect whatsoever except that, without approval of the
shareholders, no such revision or amendment shall make any changes requiring stockholder
approval under Sections 162(m) or 422 of the Code and no changes shall be made to the
Plan which shall make the Plan subject to the provisions of Section 409A of the Code.
No such suspension, discontinuance, revision or amendment shall in any manner affect
any grant theretofore made without the consent of the Participant or the transferee of
the Participant, unless necessary to comply with applicable law.
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10.
|
Section
409A Compliance
. To the extent that any provision of this Plan violates Section 409A
of the Code, such provision shall be deemed inoperative and the remaining provisions
of the Plan shall continue to be fully effective.
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