SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange
Act of 1934
(Amendment No. )
Filed by the Registrant [X]
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)
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11(c) or 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)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
................................................................................
2) Aggregate number of securities to which transaction applies:
................................................................................
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing
fee is calculated and state how it was determined):
................................................................................
4) Proposed maximum aggregate value of transaction:
................................................................................
5) Total fee paid:
................................................................................
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
................................................................................
2) Form, Schedule or Registration Statement No.:
................................................................................
3) Filing Party:
................................................................................
4) Date Filed:
................................................................................
<PAGE>
IMMUCELL CORPORATION
Notice of Annual Meeting of Stockholders
June 12, 1998
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 DoubleTree Hotel, 1230 Congress
Street, Portland, Maine on Friday, June 12, 1998 at 9:00 a.m. for the following
purposes:
1. To elect a Board of Directors to serve until the next Annual Meeting of
Stockholders and until their successors are elected and qualified.
2. To consider and act upon a proposal to approve an amendment to the
Company's 1989 Stock Option and Incentive Plan increasing the number
of shares of the Company's common stock reserved for issuance under
such Plan from 290,000 to 340,000 shares.
3. To take any other action which may properly come before the meeting,
or any adjournment thereof.
The Board of Directors has fixed the close of business on Friday, April
17, 1998, as the record date for the determination of stockholders entitled to
notice of, and to vote at, the meeting.
By Order of the Board of Directors
MICHAEL F. BRIGHAM, SECRETARY
April 20, 1998
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.
<PAGE>
IMMUCELL CORPORATION
56 Evergreen Drive
Portland, ME 04103
April 20, 1998
PROXY STATEMENT
1998 Annual Meeting of Stockholders
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 9:00 a.m. on Friday, June 12, 1998 at the DoubleTree
Hotel, 1230 Congress Street, 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 24, 1998. Stockholders
who execute proxies may revoke them at any time before exercise thereof. See
"OTHER MATTERS", below.
VOTING SECURITIES OUTSTANDING
Only stockholders of record at the close of business on April 17, 1998, the
record date, are entitled to notice of, and to vote at, the Annual Meeting and
at any adjournment thereof. As of such date, there were 2,428,884 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 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 inspector of election approved for the meeting.
With regard to the election of directors, votes may be cast in favor or
withheld; votes that are withheld from any nominee, as well as broker non-votes,
will not be counted in such nominee's favor. Abstentions may be specified on
the proposal to approve the amendment to the Company's 1989 Stock Option and
Incentive Plan, but not on the election of directors, and will be counted as
present for purposes of this item. Since the amendment to the 1989 Plan
requires the approval of the holders of a majority of the shares of the
Company's common stock represented at the meeting, abstentions will have the
effect of a negative vote. Broker non-votes on this item will be treated as
shares not voted and will have no effect on the vote.
ELECTION OF THE BOARD OF DIRECTORS (ITEM 1)
Each of the six persons listed below has been nominated to serve as a
director until the next Annual Meeting of the Stockholders and until his
successor is chosen and qualified. The nominees for directors 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 six
nominees receiving the largest number of votes cast will be elected. The
proxies in the enclosed form which are executed and returned will be voted
(unless otherwise directed) for the election as directors of the nominees
listed below:
ANTHONY B. CASHEN (Age: 62, Director Since: 1985) is a member of the
Executive and the Compensation and Stock Option Committees of the Company's
Board of Directors and is Senior Partner of LAI, an executive recruitment firm.
Prior to 1998 this firm was known as Lamalie Amrop International and prior to
1993 it was known as Lamalie Associates, Inc. which, in 1990, merged with
Flanagan & Webster, Inc. where Mr. Cashen was President. He is also a director
of LBO Capital Corporation, Ajay Sports, Inc. and Taconic Telephone
Corporation.
THOMAS C. HATCH (Age: 44, Officer Since: October 1991, Director Since:
August 1992) was elected President and Chief Executive Officer of the Company
in October 1991 and is a member of the Executive Committee of the Company's
Board of Directors. Prior to that, he served as Manager of Commercial
Development for the Company since May 1989. Prior to joining the Company, he
held various product management and sales positions in the Animal Health and
Crop Protection Chemical businesses of the American Cyanamid Company. Prior to
that, he had been an Economic Analyst with the U.S. Department of Agriculture
in Washington. Mr. Hatch earned his Masters in Business Administration from
the University of Virginia in 1984.
GEORGE W. MASTERS (Age: 57, Director Since: August 1992) has served as
the Chairman of the Board of Directors since July 1996 and is a member of the
Executive and the Nominating Committees of the Company's Board of Directors.
Mr. Masters retired from Seragen, Inc., a biotechnology company, in November
1996 where he held the positions of Vice-Chairman, President and Chief
Executive Officer. Mr. Masters currently serves as non-executive Chairman of
BioCatalyst Yorkton, Inc., a Canadian venture capital firm. From September
1991 until joining Seragen, he was President and Chief Executive Officer of
Verax Corporation, a privately held biotechnology company. From 1989 to 1991,
he was President and Chief Executive Officer of Hemosol, Inc., a
biopharmaceutical company where he continues his relationship as Vice-Chairman.
From 1985 to 1989, he was President of Immunomedics, Inc., a New Jersey-based
biopharmaceutical company. In addition, Mr. Masters spent almost twenty years
with Warner Lambert with his most senior position being Group President of the
worldwide diagnostics business. He currently serves on the Board of Directors
of CME Telemetrix where he is Vice-Chairman, Hemosol, Inc., Apollo
Biopharmaceutics, CompuCyte, Inc., BioCatalyst Yorkton, Inc., Intelligent
Medical Imaging and Xanthon. He is also on the Governing Body of the
Biotechnology Industry Organization and Chairman of the Maine Small Enterprise
Growth Fund.
WILLIAM H. MAXWELL, M.D. (Age: 59, Director Since: 1986) is a member of
the Compensation and Stock Option, the Audit and the Nominating Committees of
the Company's Board of Directors. He has been President of Maxwell, Roediger,
Knowland & Kluger, M.D., P.A. since its inception in 1978, working as an
otolaryngologist (head and neck surgeon). Dr. Maxwell is also the President
and Chief Executive Officer of the Medical Mutual Insurance Company of Maine, a
medical liability insurer.
JOHN R. MCKERNAN, JR. (Age: 48, Director since: 1995) is a member of
the Audit and Nominating Committees of the Company's Board of Directors. He is
currently Chairman and CEO of McKernan Enterprises, Inc., a consulting company,
and of Nottingham Equity, Inc., a merchant banking firm, and is Chairman of
Hathaway Holdings Corporation, a clothing manufacturer. Mr. McKernan also
serves on the Board of Trustees of the Bear Stearns Mutual Funds and on the
Board of Directors of Maine Education Services, International Management and
Development, Inc. and Columbia Partners, LLC. He completed his second four-
year term as Maine's 70th Governor in early 1995. Before his inauguration as
Governor in 1987, he represented Maine's First Congressional District for two
terms in the U.S. House of Representatives in Washington, D.C.
MITCHEL SAYARE, Ph.D. (Age: 50, Director Since: September 1994) is a
member of the Compensation and Stock Option and the Audit Committees of the
Company's Board of Directors. He joined ImmunoGen Inc., a biotechnology
company, ("ImmunoGen") in 1986 as President and Chief Executive Officer and is
currently ImmunoGen's Chairman and Chief Executive Officer. From 1982 to 1985
Dr. Sayare was Vice President of Development at Xenogen, Inc., a biotechnology
company, and from 1977 to 1982 he was Assistant Professor of Biochemistry at
the University of Connecticut. Dr. Sayare serves on the Board of Directors of
the Biotechnology Industry Organization ("BIO") and is BIO's Treasurer. He
also serves on the Board of Directors of Karamisu, Inc., Public Responsibility
in Medicine and the Aero Club of New England and is Vice Chairman of
Research!America.
There is no family relationship between any director or person nominated
or chosen by the Company to become a director.
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.
<PAGE>
THE BOARD OF DIRECTORS AND ITS COMMITTEES
The Board of Directors of the Company held five meetings during 1997 and
took action by unanimous written consent on one occasion. Each director
attended at least 75 percent of the Board meetings held during the period for
which he was a director. The Committees of the Board of Directors are the
Executive Committee, the Compensation and Stock Option Committee, the Audit
Committee and the Nominating Committee. Each director attended at least 75
percent of the aggregate number of committee meetings held during the period
for which he served on such committees, except for Mr. Cashen, who was not able
to attend one of the three 1997 meetings of the Compensation and Stock Option
Committee. Members of the Board will be elected at the first meeting of the
Board following this year's Annual Meeting to serve on the various committees
until the next Annual Meeting.
In the absence of actions by the full Board of Directors, the Executive
Committee may exercise, with certain limitations, all of the powers of the
Board in the management of the business and affairs of the Company. Its
members are: Messrs. Cashen, Hatch and Masters. The Executive Committee met
once during 1997. The Board's Compensation and Stock Option Committee reviews
and recommends salary, bonus and other benefits for designated members of
senior management and reviews and recommends new executive compensation or
benefit plans or policies to the Board and is responsible for administering the
Company's 1989 Stock Option and Incentive Plan and the 1995 Stock Option Plan
for Outside Directors. Its members are: Messrs. Cashen, Maxwell and Sayare.
The Compensation and Stock Option Committee held three meetings during 1997.
The Audit Committee recommends the engagement of the Company's independent
auditors, consults with such auditors with regard to audit plans, and reviews
the annual reports of the independent auditors as well as the adequacy of the
Company's internal operating procedures and controls. Its members are:
Messrs. Maxwell, McKernan and Sayare. The Audit Committee held two meetings
during 1997. The Nominating Committee recommends to the full Board the number
of directors to serve on the Board, the criteria for Board membership and
nominees for election to the Board. Its members are: Messrs. Masters,
Maxwell and McKernan. The Nominating Committee took action by unanimous
written consent on one occasion during 1997. The Nominating Committee will
consider nominees for director recommended by stockholders as part of the
Nominating Committee's periodic review of the size and composition of the
Board. Such recommendations may be sent to the Nominating Committee through
the Secretary of the Company.
Under the Company's By-laws, stockholders wishing to formally nominate a
person for election as a director at the annual meeting must notify the
Secretary of the Company in writing 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 by the stockholder must be received not later than
the close of business on the tenth day following the earlier of the day on
which notice of the date of the meeting was mailed or public disclosure was
made. Such notice must comply with the provisions set forth in the By-laws. A
copy of the relevant provisions of the By-laws will be sent to any stockholder
who requests it in writing. Such requests should be addressed to the Secretary
of the Company.
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 18, 1996, the Board of Directors appointed Mr.
Masters to serve the Company as Chairman of the Board of Directors. In
consideration of the services to be provided, the Board agreed to compensate
Mr. Masters at the rate of $1,000 per month and further agreed to grant him
7,500 stock options at the then current market price of $3.06 per share. In
connection therewith, Mr. Masters earned $12,000 in 1997. In accordance with
the Company's By-laws, it has always been the Company's policy to reimburse the
directors for out-of-pocket expenses, and effective July 23, 1990, the Company
adopted a policy to pay a per meeting fee of $750 to each non-employee director
for his attendance and service at each Board of Directors' meeting. Effective
June 2, 1994, the Company increased this fee to $1,000 per meeting. At times
when a director attends a part but not all of a meeting, his compensation is
reduced proportionately. Mr. Masters and Dr. Sayare each received $4,000, Mr.
McKernan received $3,750, Dr. Maxwell received $3,250 and Mr. Cashen received
$3,000 during 1997 for their attendance and services at regular meetings of the
Board of Directors. Additionally, Mr. Cashen received $1,000 for services on
the Executive Committee rendered for the Company at times other than during the
regular meetings of the Board of Directors.
<PAGE>
In February 1995, the Board of Directors adopted the 1995 Stock Option
Plan for Outside Directors (the "1995 Plan"), which was approved by the
stockholders in June 1995. Under the 1995 Plan, each director who was not an
employee of the Company on the date the 1995 Plan was adopted by the Board of
Directors (Messrs. Cashen, Masters, Maxwell and Sayare) was automatically
granted a non-qualified stock option to purchase 8,000 shares of common stock
at a purchase price of $1.25 per share, the fair market value on the day of the
grant. One non-employee director who was newly elected to the Board subsequent
to that date (Mr. McKernan) received an automatic grant of an option to
purchase 8,000 shares at a purchase price of $1.94 per share, the fair market
value on the day when such director was first elected to the Board by the
stockholders. For those outside directors who were serving as such when the
1995 Plan was adopted by the Board of Directors, each option became exercisable
as to one-half (1/2) of the shares subject to the option on June 28, 1996 and
thereafter as to the remaining one-half (1/2) of the shares after the first
business day after the 1997 Annual Meeting of Stockholders. For those
directors who are elected as such subsequent to when the 1995 Plan was adopted
by the Board of Directors each option shall become exercisable as to one-half
(1/2) of the shares subject to the option on the first business day after the
Annual Meeting of Stockholders subsequent to the Annual Meeting at which the
participant is first elected to the Board of Directors by the shareholders and
thereafter as to the remaining one-half (1/2) of the shares on the first
business day after the next Annual Meeting of Stockholders, providing service
by the holder thereof, as a director of the Company, since the date of the
grant of the option has been continuous. The 1995 Plan provides that all
options expire no later than five years from the date of grant. On March 31,
1997, options to purchase 4,000 shares of common stock under the 1995 Plan were
exercised by one director (Mr. Masters) at the exercise price of $1.25 per
share. The Board of Directors originally reserved 64,000 shares of common
stock for issuance under the 1995 Plan. As of April 9, 1998, options to
purchase an aggregate of 36,000 shares of common stock were outstanding, at
exercise prices ranging from $1.25 to $1.94 per share, and an additional 24,000
shares were reserved for future issuance.
The last sales price of the Company's common stock on April 9, 1998 as
reported by The Nasdaq SmallCap Market was $1.81.
EXECUTIVE OFFICERS
The Company's executive officers, who each hold office until the first
meeting of the Board of Directors following the next annual meeting of
stockholders of the Company and until his successor is chosen and qualified,
are as follows:
MICHAEL F. BRIGHAM (Age: 37, Officer Since: October 1991) was elected
Chief Financial Officer and Treasurer of the Company in October 1991 and was
appointed Secretary in December 1995. Prior to that, he served as Director of
Finance and Administration for the Company since September 1989. Mr. Brigham
serves on the Board of Directors of the Biotechnology Association of Maine and
of the Maine Center for Innovation in Biotechnology. 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.
JOSEPH H. CRABB, Ph.D. (Age 43, Officer Since: March 1996) was elected
Vice President of Research and Development of the Company in March 1996. Prior
to that, he served as Director of Research and Development for the Company.
Dr. Crabb currently holds a Clinical Assistant Professorship at Tufts
University School of Veterinary Medicine and serves on the American Water Works
Association's Research Foundation Project Advisory Committees 351 and 492.
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.
THOMAS C. HATCH Information concerning the background and experience of
Mr. Hatch and the period during which he has served in his current capacity is
set forth above under the caption "ELECTION OF THE BOARD OF DIRECTORS (ITEM
1)".
There is no family relationship between any executive officer or person
nominated or chosen by the Company to become an executive officer.
<PAGE>
EXECUTIVE COMPENSATION
The following table contains information as to the total compensation paid
by the Company for services rendered during each of the three fiscal years
ended December 31, 1997, 1996 and 1995 by the person who served as Chief
Executive Officer during fiscal year 1997 and each executive officer of the
Company that earned a total salary and bonus in excess of $100,000 during
fiscal year 1997.
<TABLE>
<CAPTION>
Summary Compensation Table
Annual Compensation Long-Term Compensation
------------------- ----------------------
Name and Securities
Principal Underlying
Position Year Salary($) Bonus($)(1) Options(#)(2)
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Michael F. Brigham 1997 89,958 15,759 5,436
Chief Financial Officer, 1996 84,409 -- 12,000
Treasurer and Secretary 1995 84,666 10,300 11,000
Joseph H. Crabb, Ph.D.(3) 1997 95,286 16,686 5,436
Vice President of Research 1996 85,443 -- 12,000
& Development 1995 84,702 16,480 31,000
Thomas C. Hatch 1997 118,569 20,765 --
President and 1996 111,309 -- 22,500
Chief Executive Officer 1995 112,219 27,295 500
(1) Bonus compensation is reported in this table in the year it is earned
regardless of the fiscal year in which it is paid.
(2) Reflects shares of common stock underlying options granted to the named
employee.
(3) The 1995 compensation was earned by Dr. Crabb prior to his being
appointed an executive officer of the Company in March 1996.
</TABLE>
The table below sets out information on option grants made in 1997 to the
executive officers listed in the Summary Compensation Table. No options were
granted to Mr. Hatch during 1997.
<TABLE>
<CAPTION>
Option Grants in Last Fiscal Year
Individual Grants
---------------------------------
% of
Number of Total Options
Securities Granted to
Underlying Employees Exercise
Options Granted in Fiscal Price Expiration
Name (#) Year ($/Sh) Date
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Michael F. Brigham (1) 5,436 11.2% $2.50 12/5/07
Joseph H. Crabb, Ph.D. (1) 5,436 11.2% $2.50 12/5/07
(1) One-third of these options become exercisable on December 5, 1998. An
additional one-third become exercisable on December 5, 1999, and the
remaining one-third become exercisable on December 5, 2000.
</TABLE>
<PAGE>
The table below sets out information on options exercised and outstanding
options held by the executive officers listed in the Summary Compensation
Table.
<TABLE>
<CAPTION>
Aggregated Option Exercises and Fiscal Year-End Option Value Table
Number of
Securities Value (1) of
Underlying Unexercised
Unexercised In-the-Money
Shares Options at FY- Options at
Acquired Value End (#) FY-End
on Exer- Realized ----------------- -----------------
Name cise (#) ($) Exer- Unexer- Exer- Unexer-
cisable cisable cisable cisable
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Michael F. Brigham -- -- 50,500 20,936 $ 54,500 $ 5,984
Joseph H. Crabb, Ph.D.-- -- 59,833 25,603 $ 50,802 $ 7,464
Thomas C. Hatch -- -- 184,966 6,034 $ 239,756 $ 2,953
(1) This value is calculated by determining the difference between the fair
market value (defined as the last sales price) of the Company's common
stock at fiscal year-end and the exercise price of the options.
</TABLE>
Employment Agreements
In November 1991, the Company entered into an employment agreement with
Mr. Brigham pursuant to which Mr. Brigham agreed to serve the Company as Chief
Financial Officer and Treasurer. Under the agreement, Mr. Brigham is entitled
to receive a minimum annual salary, subject to increases and bonus pay at the
discretion of the Compensation and Stock Option Committee of the Company's
Board of Directors. This minimum annual salary amount was increased from
$85,000 to $87,550 effective February 1997 and to $91,928 effective February
1998. Should the employment of Mr. Brigham be terminated for reasons other
than voluntary resignation or termination for just cause, as defined in the
agreement, Mr. Brigham is entitled to receive two months' salary, as well as
the associated regular employee benefits at the then prevailing levels.
In November 1991, the Company entered into an employment agreement with
Dr. Crabb pursuant to which Dr. Crabb agreed to serve the Company as Director
of Research and Development. In March 1996, the Board of Directors promoted
Dr. Crabb to the position of Vice President of Research and Development. Under
the agreement, Dr. Crabb is entitled to receive a minimum annual salary,
subject to increases and bonus pay at the discretion of the Compensation and
Stock Option Committee of the Company's Board of Directors. This minimum
annual salary amount was increased from $90,000 to $92,700 effective February
1997, and to $97,335 effective February 1998. Should the employment of Dr.
Crabb be terminated for reasons other than voluntary resignation or termination
for just cause, as defined in the agreement, Dr. Crabb is entitled to receive
four months' salary, as well as the associated regular employee benefits at the
then prevailing levels.
In November 1991, the Company entered into an employment agreement with
Mr. Hatch pursuant to which Mr. Hatch agreed to serve the Company as President
and Chief Executive Officer. Under the agreement, Mr. Hatch is entitled to
receive a minimum annual salary, subject to increases and bonus pay at the
discretion of the Compensation and Stock Option Committee of the Company's
Board of Directors. This minimum annual salary amount was increased from
$112,000 to $115,360 effective February 1997 and to $121,128 effective February
1998. Should the employment of Mr. Hatch be terminated for reasons other than
voluntary resignation or termination for just cause, as defined in the
agreement, Mr. Hatch is entitled to receive three months' salary, as well as
the associated regular employee benefits at the then prevailing levels.
Indemnification Agreements
The Company has entered into indemnification agreements with its
directors and executive officers in the form approved by the stockholders at
the 1989 Annual Meeting. The agreements include procedures for reimbursement
by the Company of liabilities and expenses which may be incurred in connection
with service as a director or officer. The Company also expects to enter into
indemnification agreements with individuals who become directors in the future,
as well as such officers of the Company as the Board of Directors may from time
to time determine.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information known to the Company
regarding beneficial ownership of the Company's common stock at April 9, 1998
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 executive officers named in
the Summary Compensation Table above and (iv) all directors and executive
officers of the Company as a group:
<TABLE>
<CAPTION>
Shares of the Percent of the
Company's Common Stock Company's Common Stock
Name of Beneficial Owner Beneficially Owned (1) Beneficially Owned
- --------------------------------------------------------------------------------
<S> <C> <C>
Michael F. Brigham (2)........ 86,776 3.5%
Anthony B. Cashen (3)......... 33,776 1.4%
Joseph H. Crabb, Ph.D(4)...... 67,273 2.7%
Thomas C. Hatch (5)........... 204,418 7.8%
George W. Masters (6)......... 43,726 1.8%
William H. Maxwell, M.D.(3)... 11,065 *
John R. McKernan, Jr.(3)...... 17,888 *
Mitchel Sayare, Ph.D. (3)..... 21,476 *
Directors and executive officers
as a Group (8 persons)(7)... 486,397 17.5%
Lindsay A. Rosenwald, M.D.(8). 258,300 10.6%
Jonathan E. Rothschild (9).... 127,200 5.2%
Frank E. Ruch, Jr., Ph.D.(10). 150,787 6.2%
</TABLE>
*Ownership percentage is less than 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 of this table.
(2) Includes 50,500 shares of common stock covered by stock options which are
currently exercisable and an additional 4,000 shares of common stock
covered by stock options which will become exercisable on June 5, 1998.
(3) Includes 8,000 shares of common stock covered by stock options which are
currently exercisable.
(4) Includes 59,833 shares of common stock covered by stock options which are
currently exercisable and an additional 4,000 shares of common stock
covered by stock options which will become exercisable on June 5, 1998.
(5) Includes 184,966 shares of common stock covered by stock options which
are currently exercisable and an additional 1,667 shares of common stock
covered by stock options which will become exercisable on June 5, 1998.
The address for Mr. Hatch is c/o ImmuCell Corporation, 56 Evergreen
Drive, Portland, ME 04103.
(6) Includes 6,500 shares of common stock covered by stock options which are
currently exercisable and 23,026 shares of common stock held by Patricia
A. Masters, the wife of George W. Masters.
(7) Includes 345,965 shares of common stock covered by stock options which
are currently exercisable.
(8) Based on information contained in Amendment No. 3 to Schedule 13D filed
with the Securities and Exchange Commission on or about March 30, 1998 on
behalf of each of Dr. Lindsay A. Rosenwald, Paramount Capital Asset
Management, Inc., Aries Domestic Fund, L.P. and The Aries Trust, in which
Dr. Rosenwald and Paramount Capital Asset Management, Inc. each reported
shared voting and dispositive power with respect to these 258,300 shares.
Aries Domestic Fund reported shared voting and dispositive power with
respect to 121,550 of such shares, and the Aries Trust reported shared
voting and dispositive power with respect to 136,750 of such shares. The
address of each of Dr. Rosenwald and Paramount Capital Asset Management,
Inc. is 787 Seventh Avenue New York, NY 10019.
(9) Includes 38,800 shares of common stock held by Arterio Inc., a corporation
owned solely by Mr. Rothschild and 5,300 shares of common stock held in
Arterio, Inc.'s Profit Sharing Plan. The address of Mr. Rothschild is
111 Briney Avenue #2509 Pompano Beach, FL 33062.
(10) The address of Dr. Ruch is 159 Foreside Road, Falmouth, ME 04105.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On December 31, 1997, the Company sold an aggregate of 80,820 shares of
common stock in a private placement transaction to seven individuals, including
certain directors and an executive officer of the Company, at a purchase price
of $2.32 per share, for an aggregate consideration of $187,502. The sales
were exempt from registration under the Securities Act of 1933, as amended
("Act"), pursuant to Rule 506 of Regulation D under the Act. The purchasers,
and the number of shares purchased by each such purchaser, were as follows:
John R. McKernan, Jr. (5,388 shares); F. Donald Brigham, Jr. (10,776 shares);
Mitchell Sayare (10,776 shares); Patricia A. Masters (10,776 shares); Michael
F. Brigham (10,776 shares); Anthony B. Cashen (10,776 shares) and Craig Howell
(21,552 shares). Messrs. McKernan, Sayare and Cashen are directors of the
Company, Ms. Masters is the wife of George W. Masters, also a director, Michael
F. Brigham is an executive officer of the Company and F. Donald Brigham, Jr. is
the father of Michael F. Brigham. The private placement transaction was
undertaken to ensure that the stockholders' equity of the Company as of
December 31, 1997 would be above the $2,000,000 minimum required by the Nasdaq
Small Cap Market for continued listing of the Company's common stock as of such
date.
APPROVAL OF AN AMENDMENT TO THE CORPORATION'S
1989 STOCK OPTION AND INCENTIVE PLAN (THE "1989 PLAN") (ITEM 2)
In March 1998, the Board of Directors approved an amendment to the 1989
Plan to increase the number of shares of the Company's common stock reserved
for issuance under the 1989 Plan by 50,000 shares from 290,000 to 340,000
shares, subject to approval by the stockholders of the Company. As of April 9,
1998, there were no shares of common stock available for grant under the 1989
Plan. Management believes that the reservation of 50,000 additional shares of
common stock for the 1989 Plan is advisable in order to effectively attract and
maintain key employees in the future.
In March 1989, the Board of Directors adopted the 1989 Stock Option and
Incentive Plan, which was approved by the stockholders in May 1989. In August
1992, the stockholders approved an amendment to the 1989 Plan increasing the
number of shares of the Company's common stock reserved for issuance under the
1989 Plan by 100,000 shares from 90,000 to 190,000 shares. In June 1994, the
stockholders approved a further amendment to the 1989 Plan increasing the
number of shares of the Company's common stock reserved for issuance under the
1989 Plan by 100,000 shares from 190,000 to 290,000 shares. Only employees
(including executive officers and employee directors) of the Company and such
other individuals providing services to the Company as selected by the
Compensation and Stock Option Committee of the Board of Directors (the
"Committee") are eligible to participate in the 1989 Plan. Currently,
approximately twenty-two (22) employees are eligible for participation. The
1989 Plan is intended to advance the Company's interests by encouraging certain
employees and other individuals providing services to the Company to own stock
in the Company and to remain employees or service providers of the Company.
The 1989 Plan allows for the granting of incentive stock options, nonqualified
stock options, and stock appreciation rights ("SARs").
The 1989 Plan is administered by the Committee. The Committee in its
discretion selects the key employees and other persons eligible to participate,
determines the terms of awards, interprets the 1989 Plan, and makes all other
determinations for administering the 1989 Plan.
The maximum number of shares of the Company's common stock that may
currently be issued pursuant to the 1989 Plan is 290,000 shares, subject to
change in the event of subsequent stock splits or other capital changes.
During 1997, options to purchase an aggregate of 48,667 shares of common stock
were granted to all employees and service providers as a group under the 1989
Plan at an average exercise price of $2.48 per share. As of April 9, 1998,
options to purchase 240,167 shares were outstanding under the 1989 Plan to 22
employees and service providers, of which options to purchase 130,630 shares
were exercisable. In addition, through April 9, 1998, options to purchase
49,833 shares have been exercised under the 1989 Plan.
During 1997, options to purchase an aggregate of 10,872 shares of common
stock were granted to executive officers (5,436 to Mr. Brigham and 5,436 to Dr.
Crabb) under the 1989 Plan at an exercise price of $2.50 per share, all of
which options are currently outstanding and not exercisable. As of April 9,
1998, options to purchase 41,000 shares were outstanding under the 1989 Plan to
Mr. Hatch, the Company's President and Chief Executive Officer, of which
options to purchase 34,966 shares were exercisable, and options to purchase
147,872 shares were outstanding under the 1989 Plan to the three executive
officers as a group, of which options to purchase 95,299 shares were
exercisable. As of April 9, 1998 options to purchase 7,500 shares were
outstanding under the 1989 Plan to Mr. Masters, Chairman of the Board of
Directors, of which options to purchase 2,500 shares were exercisable. No SARs
have been granted to date to any person under the 1989 Plan. The last sales
price of the Company's common stock on April 9, 1998 was $1.81 as quoted on The
Nasdaq SmallCap Market.
The 1989 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 may be granted as nonqualified Stock Options.
Incentive 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 10% stockholders). Nonqualified Stock Options will
be issued at an option price equal to no less than 85% of the fair market value
of the Company's common stock at the time the option is issued. Exercise of
Stock Options will be subject to terms and conditions set by the 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 Committee, shares of
common stock. The date of expiration of the stock option will be fixed by the
Committee, but may not be longer than ten years from the date of grant (five
years in the case of 10% stockholders). All Stock Options and related SAR's
will terminate on the earlier of their expiration date or one year following
termination of employment due to disability or death. Upon termination of
employment for any reason other than disability or death, all Stock Options and
related SARs will expire on the earlier of their expiration date or three
months following termination.
SAR's may be granted in conjunction with all or any part of any Stock
Option. SAR's entitle the holder of a Stock Option with respect to which SARs
are granted to surrender the Stock Option, or any applicable unexercised
portion thereof, and to receive the difference between (i) the fair market
value of the shares of common stock subject to the surrendered option at the
time the SARs are exercised and (ii) the option price of such shares. The
Company, at the sole discretion of the Board, will pay such difference either
by delivery of shares of common stock or cash or some combination of common
stock and cash. SARs may be exercised at such time or times and to the extent,
but only to the extent, that the related Stock Options may be exercised.
An optionee will not recognize income for Federal income tax purposes
upon the grant of an Incentive Stock Option. An optionee 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 will be included in income for purposes of the
alternative minimum tax to the extent provided by Section 56(b) (3) of the
Code. 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, mid or long-term capital gain
(depending on 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 of the 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 SAR, an optionee will recognize ordinary
compensation income in an amount equal to the cash received or the fair market
value of the common stock received.
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. To the extent that
an employee recognizes capital gain as described above, the Company will not be
entitled to any deduction for Federal income tax purposes.
The Board recommends that the shareholders vote FOR approval of the
amendment to the 1989 Plan. 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 the amendment to the 1989 Plan.
INTEREST OF CERTAIN PERSONS IN ITEM 2 ABOVE
The approval of the amendment to the 1989 Plan may benefit Mr. Brigham,
Dr. Crabb and Mr. Hatch, executive officers of the Company, because each of
them is eligible for grants under the 1989 Plan.
INFORMATION CONCERNING AUDITORS
The Board of Directors of the Company engaged Coopers & Lybrand L.L.P. as
the principal accountants to audit the Company's financial statements for each
of the fiscal years from 1993 through 1997. The foregoing decisions were
recommended by the Audit Committee of the Board of Directors and then approved
by the Board. The selection of the auditors to perform the 1998 audit is
expected to be made at the first Board meeting following the Annual Meeting on
June 12, 1998.
A representative of Coopers & Lybrand L.L.P. is expected to be present at
the Annual Meeting with an opportunity to make a statement if he desires to do
so and is expected to be available to respond to appropriate questions.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT OF 1934
Section 16 of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than ten percent of
a registered class of the Company's equity securities, to file with the
Securities and Exchange Commission 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 shareholders are
required by SEC regulation to furnish the Company with copies of all Section
16(a) forms 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 fiscal year ended December 31,
1997, all Section 16(a) filing requirements applicable to its officers,
directors and greater than ten-percent beneficial owners were complied with
except as follows: Forms 4 for the month of December 1997, reporting the sale
of 2,800 shares of the Company's common stock by the Aries Trust, a Cayman
Island Trust and the sale of 1,200 shares of the Company's common stock by the
Aries Domestic Fund, LP were filed on a delayed basis.
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 regular employees of the Company, without additional
compensation, may use their personal efforts, by telephone or otherwise, to
obtain proxies. The proxy materials are being mailed to shareholders of record
at the close of business on April 17, 1998.
STOCKHOLDER PROPOSALS FOR NEXT ANNUAL MEETING
Proposals of stockholders of the Company intended to be presented at the
1999 Annual Meeting of stockholders must be received by the Company at its
principal place of business no later than December 24, 1998 to be included in
the Company's proxy statement and form of proxy relating to that meeting.
Certified mail addressed to the Secretary of the Company is advised.
OTHER MATTERS
The management of the Company does not know of any matter not specifically
referred to above as to which any action is expected to be taken at the meeting.
However, if any matters other than those referred to above properly come 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.
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
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 Item 1 and FOR the approval of the amendment
to the 1989 Plan detailed in Item 2.
By Order of the Board of Directors
MICHAEL F. BRIGHAM, Secretary
April 20, 1998
A COPY OF THE COMPANY'S ANNUAL REPORT TO THE SECURITIES AND EXCHANGE COMMISSION
ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997, INCLUDING THE
FINANCIAL STATEMENTS, ENCLOSED INSIDE A DESCRIPTIVE POCKET COVER, WHICH SERVES
AS THE COMPANY'S 1997 ANNUAL REPORT, ACCOMPANIES THIS PROXY STATEMENT. COPIES
OF THE EXHIBITS TO THE 1997 FORM 10-K ARE AVAILABLE UPON WRITTEN REQUEST TO THE
FOLLOWING ADDRESS:
INVESTOR RELATIONS
IMMUCELL CORPORATION
56 EVERGREEN DRIVE
PORTLAND, ME 04103
<PAGE>
IMMUCELL CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS FOR THE ANNUAL MEETING OF
STOCKHOLDERS TO BE HELD ON JUNE 12, 1998
KNOW ALL MEN BY THESE PRESENTS, that the undersigned stockholder(s) of
ImmuCell Corporation (the "Company"), do(es) hereby appoint Messrs.
Michael F. Brigham and Thomas C. Hatch, and each of them, true and lawful
proxy or proxies, with full power of substitution in each, for and in the
name of the undersigned to vote all shares of common stock, par value $.10
per share, of the Company outstanding in the name of the undersigned at the
Annual Meeting of Stockholders of the Company to be held at the DoubleTree
Hotel, 1230 Congress Street, Portland, Maine on Friday, June 12, 1998 at
9:00 a.m. local time, and at any and all adjournments thereof, with all the
powers the undersigned would possess if personally present, hereby revoking
all previous proxies. This Proxy is revocable. The undersigned reserves
the right to attend and vote in person. The undersigned hereby
acknowledges receipt of the Notice of Annual Meeting of Stockholders dated
April 20, 1998, the Proxy Statement accompanying the Notice, and the
Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1997.
Said proxies are directed to vote as indicated on the following proposals:
1. ELECTION OF DIRECTORS:
Nominees: ANTHONY B. CASHEN, THOMAS C. HATCH, GEORGE W. MASTERS,
WILLIAM H. MAXWELL, JOHN R. MCKERNAN, JR. AND MITCHEL SAYARE
FOR all nominees listed above / /
WITHHOLD AUTHORITY to vote for all nominees listed above / /
FOR all nominees listed above except that authority is withheld to vote for
any nominee whose name is written on the line immediately below:
<PAGE>
2. To amend the Company's 1989 Stock Option and Incentive Plan to increase
the number of shares of the Company's common stock reserved for issuance
under such Plan from 290,000 to 340,000 shares.
FOR / / AGAINST / / ABSTAIN / /
3. OTHER MATTERS:
To vote with discretionary authority upon any other matters which may
properly come before the meeting or any adjournment thereof.
Each stockholder should specify by a mark in the appropriate box above how
he wishes his shares voted. Shares will be voted as specified. IF NO
SPECIFICATION IS MADE ABOVE, SHARES WILL BE VOTED FOR THE ELECTION OF THE
NOMINEES LISTED IN ITEM 1 ABOVE AND FOR THE AMENDMENT TO THE 1989 STOCK
OPTION AND INCENTIVE PLAN DESCRIBED IN ITEM 2 ABOVE.
PLEASE DATE, SIGN AND RETURN THIS PROXY IN THE REPLY ENVELOPE.
PLEASE CHECK HERE IF YOU ARE PLANNING TO ATTEND THE ANNUAL MEETING IN
PERSON. / /
Dated:............................. 1998
...................................
...................................
...................................
Signature(s) of Stockholder(s)
Note: Signature(s) should agree with the name(s) on the stock
certificates. Executors, administrators, trustees, guardians, etc. should
so indicate when signing.
IMMUCEL CORPORATION
PROXY STATEMENT
APPENDIX
<PAGE>
IMMUCELL CORPORATION
1989 STOCK OPTION AND INCENTIVE PLAN
I. GENERAL
1. PURPOSE. This 1989 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 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 425(a) of the Code. The terms "parent
corporation" and "subsidiary corporation" shall have the meanings
assigned to such terms by Section 425 of the Code.
(e) "Disability" means a permanent and total disability as defined in
Section 422A(c) (7) 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
closing 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 bid and asked prices of the
Shares are made available for publication by NASDAQ, the average
of closing bid and asked prices for the Shares on the date as of
which the determination is made (or if no such quotation occurred
on that date, on the next preceding date on which there was such
a quotation), 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.
(l) "Stock Appreciation Right" means a stock appreciation right
granted to a Participant pursuant to Section 3 of Part II or
Section 3 of Part III of this Plan.
3. ADMINISTRATION. This Plan shall be administered by a Stock Option
Committee appointed by the Board. The Committee shall consist of at
least three members of the Board, who are not at the time they
exercise discretion in administering the Plan eligible, and have not
within one year prior thereto been eligible, for selection as persons
to whom stock may be allocated or to whom stock options or stock
appreciation rights may be granted pursuant to the Plan or any other
plan of the Company Group entitling the participants therein to
acquire stock, stock options or stock appreciation rights of any
member of the Company Group. 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 and Stock Appreciation Rights; (ii) to determine the
time or times when Options and Stock Appreciation Rights shall be
granted and to determine the number of Shares subject to each Option
and Stock Appreciation Right; (iii) to grant Options with or without
related Stock Appreciation Rights; (iv) to determine whether Stock
Appreciation Rights shall be settled in cash, in Shares, or in a
combination of cash and Shares; (v) to accelerate or extend (except
for Incentive Stock Options) the date on which a previously granted
Option or Stock Appreciation Right may be exercised; (vi) to prescribe
the form of agreement evidencing Options and Stock Appreciation Rights
granted pursuant to this Plan; and (vii) to construe and interpret
this Plan and the agreements evidencing Options and Stock Appreciation
Rights 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
and Stock Appreciation Rights 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 (with or without related Stock
Appreciation Rights), a Nonqualified Stock Option (with or without
related Stock Appreciation Rights), or any combination thereof.
5. SHARES SUBJECT TO THIS PLAN. The Shares subject to Options and Stock
Appreciation Rights 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 forty thousand (340,000).
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 or
Stock Appreciation Rights. If a Stock Appreciation Right is exercised
in whole or in part, and, as a result, the related Nonqualified Stock
Option or Incentive Stock Option is canceled, to the extent of the
number of Shares with respect to which the Stock Appreciation Right
was exercised, such number of Shares shall not again be available for
the grant of Options or Stock Appreciation Rights.
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 422A 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.
(c) OPTION PERIOD.
(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 at the time of a subsequent grant of an
Incentive 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 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.
(ii) 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 three (3) months 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.
(iii)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.
(iv) 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.
(d) 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.
(e) SEPARATE AGREEMENTS. Nonqualified Options may not be granted in
the same agreement as an Incentive Stock Option.
3. STOCK APPRECIATION RIGHTS.
(a) GRANT. Stock Appreciation Rights related to all or any portion
of an Incentive Stock Option may be granted by the Committee to
any Participant in connection with the grant of an Incentive
Stock Option to such Participant. Each Stock Appreciation Right
shall be subject to such terms and conditions (which may include
limitations as to the time when such Stock Appreciation Right
becomes exercisable and when it ceases to be exercisable that are
more restrictive than the limitations on the exercise of the
Incentive Stock Option to which it relates) not inconsistent with
the provisions of this Part II as shall be determined by the
Committee and included in the agreement relating to such
Incentive Stock Option and Stock Appreciation Right, subject in
any event, however, to the following terms and conditions of this
Section 3.
(b) EXERCISE. No Stock Appreciation Right shall be exercisable after
the date the related Incentive Stock Option shall cease to be
exercisable, and no Stock Appreciation Right shall be exercisable
with respect to such related Incentive Stock Option or portion
thereof unless such Incentive Stock Option or portion thereof
shall itself be exercisable at that time. A Stock Appreciation
Right shall be exercised only upon surrender of the related
Incentive Stock Option or portion thereof in respect of which the
Stock Appreciation Right is then being exercised. A Stock
Appreciation Right related to an Incentive Stock Option shall be
exercisable only at a date when the then Fair Market Value of a
Share exceeds the option price per share specified in the related
Incentive Stock Option.
(c) AMOUNT OF PAYMENT. On exercise of a Stock Appreciation Right, a
Participant shall be entitled to receive an amount equal to the
product of (i) the amount by which the Fair Market Value of a
Share on the date of exercise of the Stock Appreciation Right
exceeds the option price per share specified in the related
Incentive Stock Option and (ii) the number of shares in respect
of which the Stock Appreciation Right shall have been exercised.
(d) FORM OF PAYMENT. The Committee shall have the sole discretion
either (i) to determine the form in which payment in settlement
of a Stock Appreciation Right will be made (i.e., cash, Shares or
any combination thereof), or (ii) to consent to or disapprove the
election by the Participant to receive cash in full or partial
settlement of a Stock Appreciation Right, such consent or
disapproval to be given at any time after the election to which
it relates. If settlement of a Stock Appreciation Right, or
portion thereof, is to be made in the form of Shares, the number
of Shares to be distributed shall be the largest whole number
obtained by dividing the cash sum otherwise distributable in
respect of such settlement by the Fair Market Value of a Share on
the date of exercise of the Stock Appreciation Right. The value
of any fractional Share shall be paid in cash.
(e) EFFECT OF EXERCISE OF RELATED OPTION. If the related Incentive
Stock Option is exercised in whole or in part, then the Stock
Appreciation Right with respect to the Shares purchased pursuant
to such exercise (but not with respect to any unpurchased Shares)
shall be terminated as of the date of exercise.
(f) NON-TRANSFERABILITY. A Stock Appreciation Right shall not be
transferable or assignable by the Participant other than by will
or by the laws of descent and distribution, shall not be
transferred other than together with the Incentive Stock Option
to which it relates, and shall be exercisable during the
Participant's lifetime only by the Participant.
(g) TERMINATION OF EMPLOYMENT. If the Participant ceases to be an
employee of any member of the Company Group for any reason, each
outstanding Stock Appreciation Right shall only be exercisable
for such period and to such extent as the related Incentive Stock
Option or portion thereof.
III. NONQUALIFIED STOCK OPTION PROVISIONS
1. 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 I to whom
Nonqualified Stock Options shall be granted and the number of Shares
subject to, and terms and conditions of, such Options.
2. 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 Board 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 Nonqualified 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
Nonqualified Stock Option shall be such price as the Committee,
in its discretion, shall establish, and the Committee may, in its
discretion, reduce the option price of such Option at any time
prior to the exercise of the Option; provided however, that the
option price may not be less than the greater of 85% of the Fair
Market Value of the Shares on the date the Nonqualified Stock
Option is granted or the par value, if any, of the Shares. 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.
(c) OPTION PERIOD.
(i) 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.
(ii) 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 three (3) months 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.
(iii)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.
(iv) 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.
(d) NON-TRANSFERABILITY. 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.
3. STOCK APPRECIATION RIGHTS.
(a) GRANT. Stock Appreciation Rights related to all or any portion
of a Nonqualified Stock Option may be granted by the Committee to
any Participant in connection with the grant of a Nonqualified
Stock Option or unexercised portion thereof held by the
Participant at any time and from time to time during the term
thereof. Each Stock Appreciation Right shall be subject to such
terms and conditions (which may include limitations as to the
time when such Stock Appreciation Right becomes exercisable and
when it ceases to be exercisable that are more restrictive than
the limitations on the exercise of the Nonqualified Stock Option
to which it relates) not inconsistent with the provisions of this
Part III as shall be determined by the Committee and included in
the agreement relating to such Nonqualified Stock Option and
Stock Appreciation Right, subject in any event, however, to the
following terms and conditions of this Section 3.
(b) EXERCISE. No Stock Appreciation Right shall be exercisable with
respect to such related Nonqualified Stock Option or portion
thereof unless such Nonqualified Stock Option or portion shall
itself be exercisable at that time. A Stock Appreciation Right
shall be exercised only upon surrender of the related
Nonqualified Stock Option or portion thereof in respect of which
the Stock Appreciation Right is then being exercised.
(c) AMOUNT OF PAYMENT. On exercise of a Stock Appreciation Right, a
Participant shall be entitled to receive an amount equal to the
product of (i) the amount by which the Fair Market Value of a
Share on the date of exercise of the Stock Appreciation Right
exceeds the option price per share specified in the related
Nonqualified Stock Option and (ii) the number of shares in
respect of which the Stock Appreciation Right shall have been
exercised.
(d) FORM OF PAYMENT. The Committee shall have the sole discretion
either (i) to determine the form in which payment in settlement
of a Stock Appreciation Right will be made (i.e., cash, Shares or
any combination thereof), or (ii) to consent to or disapprove the
election by the Participant to receive cash in full or partial
settlement of the Stock Appreciation Right, such consent or
disapproval to be given at any time after the election to which
it relates. If settlement of a Stock Appreciation Right, or
portion thereof, is to be made in the form of Shares, the number
of Shares to be distributed shall be the largest whole number
obtained by dividing the cash sum otherwise distributable in
respect of such settlement by the Fair Market Value of a Share on
the date of exercise of the Stock Appreciation Right. The value
of any fractional Share shall be paid in cash.
(e) EFFECT OF EXERCISE OF RELATED OPTION. If the related
Nonqualified Stock Option is exercised in whole or in part, then
the Stock Appreciation Right with respect to the Shares purchased
pursuant to such exercise (but not with respect to any
unpurchased Shares) shall be terminated as of the date of
exercise.
(f) NON-TRANSFERABILITY. A Stock Appreciation Right shall not be
transferable or assignable by the Participant other than by will
or the laws of descent and distribution, shall not be transferred
other than together with the Nonqualified Stock Option to which
it relates, and shall be exercisable during the Participant's
lifetime only by the Participant.
(g) TERMINATION. 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, each outstanding
Stock Appreciation Right shall be exercisable for such period and
to such extent as the related Nonqualified Stock Option or
portion thereof.
IV. MISCELLANEOUS
1. EFFECTIVE DATE. This Plan shall become effective on March 6, 1989
(the "Effective Date"), provided, however, that if the Plan is not
approved by the shareholders of the Company prior to the expiration of
the one year period commencing on the Effective Date, this Plan and
all Options and Stock Appreciation Rights granted hereunder shall be
null and void and shall be of no effect.
2. DURATION OF PROGRAM. 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 IV, termination of the Plan shall not affect any Options or
Stock Appreciation Rights previously granted, which such Options and
Stock Appreciation Rights shall remain in effect until exercised,
surrendered or cancelled, or until they have expired, all in
accordance with their terms.
3. CHANGES IN CAPITAL STRUCTURE, ETC. In the event of changes in the
outstanding common shares of the Company by reasons 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 and
Stock Appreciation Rights may be granted to any Participant shall be
correspondingly adjusted by the Committee. In addition, the Committee
shall make appropriate adjustments in the number of Shares as to which
outstanding Options, Stock Appreciation Rights, 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.
4. RIGHTS AS SHAREHOLDER. A Participant entitled to Shares as a result
of the exercise of an Option or Stock Appreciation Right shall not be
deemed for any purpose to be, or have rights as, a shareholder 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.
5. EXPENSES. The expenses of this Plan shall be paid by the Company.
6. WITHHOLDING. Any person exercising an Option or Stock Appreciation
Right shall be required to pay to the appropriate member of the
Company Group the amount of any taxes such member is required by law
to withhold with respect to the exercise of such Option or Stock
Appreciation Right. Such payment shall be due on the date such member
is required by law to withhold such taxes. Such payment may also be
made at the election of the optionee by the surrender of Shares then
owned by the optionee, or the withholding of Shares otherwise to be
issued to the optionee on exercise, in an amount that would satisfy
the withholding amount due. Any election so made by optionees subject
to Section 16(b) of the Securities Exchange Act of 1934, as amended
shall be in accordance with the requirements of Rule 16b-3(e) under
such Act and any interpretations thereof of the Securities and
Exchange Commission. The value of such Shares withheld or delivered
shall be equal to the Fair Market Value of such Shares on the date of
exercise. In the event that such payment is not made when due, the
Company shall have the right to deduct, to the extent permitted by
law, from any payment of any kind otherwise due to such person from
any member of the Company Group, all or part of the amount required to
be withheld (including cash payable in settlement of a Stock
Appreciation Right).
7. 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 or Stock Appreciation Right,
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.
8. 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.
9. AMENDMENT OF THE PLAN. The Board 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 (a) increase the number of Shares subject to this
Plan, (b) decrease the price at which Options may be granted, (c)
remove the administration of this Plan from the Committee, (d) modify
the requirements as to eligibility for a grant of an Option or Stock
Appreciation Right, or (e) materially increase the benefits accruing
to the Participants under this Plan. 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.
