UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section
14(a) of the Securities Exchange Act of 1934
Filed
by the Registrant
x
Filed
by a Party other than the Registrant
o
Check the appropriate box:
|
¨
|
Preliminary
Proxy Statement
|
|
o
|
Confidential,
for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
|
|
x
|
Definitive
Proxy Statement
|
|
o
|
Definitive
Additional Materials
|
|
o
|
Soliciting
Material under Rule 14a-12
|
|
Calmare
Therapeutics Incorporated
|
|
(Name
of Registrant as Specified In Its Charter)
|
N/A
(Name of Person(s) Filing Proxy Statement,
if other than the Registrant) Payment of Filing Fee (Check the appropriate box):
|
o
|
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:
|
|
o
|
Fee paid previously
with preliminary materials.
|
|
o
|
Check box if any
part of the fee is offset as provided by Exchange Act Rule 0-1 1(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.:
|
October 21, 2016
Dear Stockholder:
You are cordially invited to attend
an annual meeting of our stockholders on November 9, 2016, at 10 A.M, EST, at The Princeton Club, 15 West 43
rd
Street,
New York, New York 10036. Matters on which action will be taken at the meeting are explained in detail in the attached Notice
and Proxy Statement.
Our Annual Report for the year ended
December 31, 2015 on Form 10-K is available through our website at
http://www.calmaretherapeutics.com
under the heading
“Investors.” Additionally, a form of proxy card and information on how to vote by mail, through the Internet, or by
phone is included herein.
We sincerely hope that you will be
able to attend the meeting in person and we look forward to seeing you.
Whether or not you expect to be present at the meeting,
please promptly vote as your vote is important.
Instructions regarding the various methods of voting are contained on the
proxy card, including voting by mail, through the Internet, or by phone. If you attend the annual meeting, you may revoke your
proxy and vote your own shares.
I personally look forward to seeing
you at the annual meeting and sharing with you the progress we have made during 2016 and our plans for 2017.
|
|
Sincerely,
|
|
|
|
|
|
Calmare Therapeutics
Incorporated
|
|
|
|
|
|
/s/
Conrad Mir
|
|
|
Conrad Mir
|
|
|
President and
|
|
|
Chief Executive
Officer
|
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON NOVEMBER 9, 2016
To the stockholders of Calmare Therapeutics
Incorporated (“
CTI
” or the “
Company
”),
You are cordially invited to attend
an annual meeting of our stockholders on November 9, 2016, at 10:00 A.M. EST, at the Princeton Club, 15 West 43
rd
Street,
New York, New York 10036. Matters on which action will be taken at the meeting are explained in detail in the attached Notice
and Proxy Statement.
At the annual meeting you will be asked
to vote on the following matters:
|
|
·
|
Proposal
1
: To elect our Board to hold office until our 2017 annual meeting of stockholders
or until their respective successors have been duly elected and qualified;
|
|
|
·
|
Proposal
2
: To ratify the appointment of Mayer Hoffman McCann CPAs, the New York Practice
of Mayer Hoffman McCann P.C. as our independent registered public accounting firm for
the fiscal year ending December 31, 2016;
|
|
|
·
|
Proposal
3
: To amend our Certificate of Incorporation to authorize a new series of preferred
stock, designated as Series D Convertible Preferred Stock;
|
|
|
·
|
Proposal
4
: To approve the adoption of the 2016 Stock Option Plan.
|
You will also be asked to consider and act upon any other
business as may properly come before the annual meeting or any adjournments thereof.
The Board recommends that you vote
at the annual meeting “FOR” Proposals 1, 2, 3 and 4.
These items of business are more fully described in the proxy
statement that is attached to this Notice. The Board has fixed the close of business on October 7, 2016 as the “Record Date”
for determining the stockholders that are entitled to notice of and to vote at the annual meeting and any adjournments thereof.
A list of stockholders entitled to vote at the meeting will be available for examination for a period of ten days before the meeting
in person at our corporate offices in Fairfield, Connecticut, and also at the meeting. Stockholders may examine the list for purposes
related to the meeting.
It is important that your shares
are represented and voted at the meeting.
Y
ou can vote your shares by completing, signing, dating, and returning your completed
proxy card or vote by mail, over the Internet, or by phone by following the instructions included in the proxy statement. You
can revoke a proxy at any time prior to its exercise at the meeting by following the instructions in the proxy statement.
You may attend the annual meeting and
vote in person even if you have previously voted by proxy in one of the ways listed above. Your proxy is revocable in accordance
with the procedures set forth in the proxy statement.
|
|
By Order
of the Board of Directors
|
|
|
|
|
|
/s/
Conrad Mir
|
|
|
President and Chief
Executive Officer
|
|
|
|
|
October 21, 2016
|
|
TABLE OF CONTENTS
Stockholders Should Read the Entire
Proxy Statement Carefully Prior to Returning Their Proxies
PROXY STATEMENT
FOR
THE ANNUAL MEETING OF STOCKHOLDERS
General
The enclosed proxy is solicited on
behalf of the Board of Directors of Calmare Therapeutics Incorporated for use at our annual meeting of stockholders to be held
at the Princeton Club, 15 West 43
rd
Street, New York, New York, 10036, on November 9, 2016 at 10:00 A.M. EST. Voting
materials, including this proxy statement and the proxy card, are being delivered to all or our stockholders on or about October
21, 2016.
Questions and
Answers
Following are some commonly asked questions
raised by our stockholders and answers to each of those questions.
What may I vote on at the annual
meeting?
At the annual meeting, stockholders will consider and vote
upon the following matters:
|
·
|
Proposal
1
: To elect our Board to hold office until our 2017 annual meeting of stockholders or until their respective successors
have been duly elected and qualified;
|
|
·
|
Proposal
2
: To ratify the appointment of Mayer Hoffman McCann CPAs, the New York Practice of Mayer Hoffman McCann P.C. as our independent
registered public accounting firm for the fiscal year ending December 31, 2016;
|
|
|
|
|
·
|
Proposal
3
: To amend the Certificate of Incorporation to authorize a new series of preferred stock designated Series D Convertible
Preferred Stock;
|
|
|
|
|
·
|
Proposal
4
: To approve the adoption of the 2016 Stock Option Plan.
|
Stockholders will consider and act upon any other business
as may properly come before the annual meeting or any adjournments thereof.
How does the Board recommend
that I vote on the proposals?
The Board recommends a vote “
FOR
”
the election of each of the nominees identified below to our Board, “
FOR
” the proposal ratifying the appointment
of Mayer Hoffman McCann CPAs, the New York Practice of Mayer Hoffman McCann P.C., “
FOR
” the amendment to the
Certification of Incorporation to authorize a new series of preferred stock, and “
FOR
” the adoption of the
2016 Stock Option Plan.
How do I vote?
You can vote either in person at the
annual meeting or by proxy, by mail, by phone or over the Internet whether or not you attend the annual meeting. To obtain directions
to attend the annual meeting, please call (203) 368-6044. If your shares are registered directly in your name with our transfer
agent, American Stock Transfer & Trust Company, you are considered the stockholder of record with respect to those shares
and we are sending a Notice directly to you. As the stockholder of record, you have the right to vote in person at the annual
meeting. If you choose to do so, you may vote at the annual meeting using the ballot provided at the meeting.
Even if you plan
to attend the annual meeting in person, we recommend that you vote your shares in advance as described below so that your vote
will be counted if you later decide not to attend the annual meeting in person.
Most of our stockholders hold their
shares in street name through a stockbroker, bank or other nominee rather than directly in their own name. In that case, you are
considered the beneficial owner of shares held in street name and the Notice is being forwarded to you. As the beneficial owner,
you are also invited to attend the annual meeting. Because a beneficial owner is not the stockholder of record, you may not vote
these shares in person at the annual meeting unless you obtain a “legal proxy” from the stockbroker, trustee or nominee
that holds your shares, giving you the right to vote the shares at the meeting. You will need to contact your stockbroker, trustee
or nominee to obtain a legal proxy, and you will need to bring it to the annual meeting in order to vote in person.
You can vote by proxy in three ways:
|
|
·
|
By mail –
If you received your proxy materials by mail, you can vote by mail by using the enclosed proxy card;
|
|
|
·
|
By Internet –
You can vote by Internet by following the instructions on the Notice to access the proxy materials or on your proxy card if
you received your materials by mail; or
|
|
|
·
|
By phone –
You can vote by phone by following the instructions on the Notice to access the proxy materials or on your proxy card if you
received your materials by mail.
|
If you vote by proxy, your shares will
be voted at the annual meeting in the manner you indicate.
The Internet and phone voting system
for stockholders of record will close at 11:59 p.m. EDT on November 8, 2016. Please refer to the proxy card for details on all
methods of voting.
What happens if I do not give
specific voting instructions?
If you hold shares in your name and
you sign and return a proxy card without giving specific voting instructions, your shares will be voted as recommended by our
Board on all matters. If you hold your shares through a stockbroker, bank or other nominee and you do not provide instructions
on how to vote, your stockbroker or other nominee may exercise their discretionary voting power with respect to certain proposals
that are considered as “routine” matters. For example, Proposal 2 - ratification of the appointment of Mayer Hoffman
McCann CPAs, the New York Practice of Mayer Hoffman McCann P.C. as our independent registered public accounting firm is commonly
considered as a routine matter, and thus your stockbroker, bank or other nominee may exercise their discretionary voting power
with respect to Proposal 2.
If the organization that holds your shares does not receive instructions from you on how to vote
your shares on a non-routine matter, the organization that holds your shares will inform us that it does not have the authority
to vote on these matters with respect to your shares.
This is generally referred to as a “broker non-vote.” When
the vote is tabulated for any particular matter, broker non-votes will be counted for purposes of determining whether a quorum
is present, but will not otherwise be counted. In the absence of specific instructions from you, your broker does not have discretionary
authority to vote your shares with respect to Proposal 1 - the election of our Board, with respect to Proposal 3 - Approval of
Amendment to Articles of Incorporation to Authorize a new Series of Preferred Stock, or with respect to Proposal 4 – Approval
of the 2016 Stock Option Plan.
We encourage you to provide voting instructions to the organization that holds your shares by
carefully following the instructions provided in the notice.
What is the quorum requirement
for the annual meeting?
The Company’s bylaws provide
that the holders of a majority of the stock issued and outstanding and entitled to vote generally in the election of directors,
present in person or represented by proxy, shall constitute a quorum for the transaction of business at the Annual Meeting. Abstentions
and broker non-votes will be counted as present for the purpose of determining the presence of a quorum. On October 7, 2016, the
Record Date for determining which stockholders are entitled to vote, there were 28,787,831 shares of our common stock outstanding,
2,427 shares of Series A preferred stock issued and outstanding, and 375 shares of Series C convertible preferred stock, issued
and outstanding. Each share of common stock and Series A preferred stock entitles the holder to one vote on matters submitted
to a vote of our stockholders. Each share of Series C preferred stock entitles the holder to 1,000 votes on matters submitted
to a vote of our stockholders. A majority of our outstanding common shares as of the Record Date must be present at the annual
meeting, in person or represented by proxy, in order to hold the meeting and conduct business. This is called a quorum. Your shares
will be counted for purposes of determining if there is a quorum, even if you wish to abstain from voting on some or all matters
introduced at the annual meeting, if you are present and vote in person at the meeting or have properly submitted a proxy card
or voted by phone or by using the Internet.
How can I change my vote after
I return my proxy card?
You may revoke your proxy and change
your vote at any time before the final vote at the annual meeting. You may do this by signing a new proxy card with a later date,
by voting on a later date by using the Internet (only your latest Internet proxy submitted prior to the annual meeting will be
counted), or by attending the annual meeting and voting in person. However, your attendance at the annual meeting will not automatically
revoke your proxy unless you vote at the annual meeting or specifically request in writing that your prior proxy be revoked.
Is my vote confidential?
Proxy instructions, ballots and voting
tabulations that identify individual stockholders are handled in a manner that protects your voting privacy. Your vote will not
be disclosed either within our company or to third parties, except:
|
|
·
|
As
necessary to meet applicable legal requirements;
|
|
|
·
|
To
allow for the tabulation of votes and certification of the vote; and
|
|
|
·
|
To
facilitate a successful proxy solicitation.
|
Any written comments that a stockholder
might include on the proxy card will be forwarded to our management.
Where can I find the voting results
of the annual meeting?
The preliminary voting results will
be announced at the annual meeting. The final voting results will be tallied by our Inspector of Elections and reported in a Current
Report on Form 8-K which we will file with the SEC within four business days of the date of the annual meeting.
How can I obtain a separate set
of voting materials?
To reduce the expense of delivering
duplicate voting materials to our stockholders who may have more than one Calmare Therapeutics Incorporated stock account, we
are delivering only one Notice to certain stockholders who share an address, unless otherwise requested. If you share an address
with another stockholder and have received only one Notice, you may write or call us to request to receive a separate Notice.
Similarly, if you share an address with another stockholder and have received multiple copies of the Notice, you may write or
call us at the address and phone number below to request delivery of a single copy of this Notice. For future annual and/or annual
meetings, you may request separate Notices, or request that we send only one Notice to you if you are receiving multiple copies,
by writing or calling us at:
Calmare Therapeutics Incorporated
1375 Kings Highway, Suite 400
Fairfield, Connecticut 06824-5380
Tel: (203) 368-6044
What is the voting requirement
to approve the proposals?
The proposals to approve an amendment
to the Company’s Articles of Incorporation authorizing a new series of preferred stock and to adopt the 2016 Stock Option
Plan will be approved if there is a quorum and the votes cast “FOR” the proposal represent a majority of the shares
outstanding. The proposal to ratify the appointment of Mayer Hoffman McCann CPAs, the New York Practice of Mayer Hoffman McCann
P.C. as our independent registered public accounting firm will be approved if there is a quorum and the votes cast “FOR”
the proposal exceed those cast against the proposal.
The nominees for election to our Board
are elected by a plurality of all votes cast by holders of our Common Stock which are issued and outstanding and which are issuable
upon conversion of shares of our Preferred Stock, present at the annual meeting
,
in person or represented by proxy, and
entitled to vote on the election of directors. A nominee who receives a plurality means that he has received more votes than any
other nominee for the same director’s seat. Abstentions and broker non-votes will have no impact on the outcome of the vote
on the election of directors.
Abstentions and broker non-votes will
be treated as shares that are present, or represented and entitled to vote for purposes of determining the presence of a quorum
at the annual meeting. Abstentions will not be counted in determining the number of votes cast in connection with any matter presented
at the annual meeting. Broker non-votes will not be counted as a vote cast on any matter presented at the annual meeting.
Do I Have Dissenters’ (Appraisal)
Rights?
Appraisal rights are not available
to our shareholders with any of the proposals described above to be brought before the annual meeting of shareholders.
How can I obtain additional information
about the Company
?
We are subject to the informational
requirements of the Securities Exchange Act of 1934 (the “
Exchange Act
”), as amended, which requires
that we file reports, proxy statements and other information with the SEC. The SEC maintains a website that contains reports,
proxy and information statements and other information regarding companies, including Calmare Therapeutics Incorporated, that
file electronically with the SEC. The SEC's website address is www.sec.gov. In addition, our filings may be inspected and copied
at the public reference facilities of the SEC located at 100 F Street, N.E. Washington, DC 20549; and at the SEC's regional offices
at 233 Broadway, New York, NY 10279 and Citicorp Center, 500 West Madison Street, Room 1400, Chicago, IL 60661. Copies of the
material may also be obtained upon request and payment of the appropriate fee from the Public Reference Section of the SEC located
at 100 F Street, N.E., Washington, DC 20549.
Who Can Help
Answer Your Questions?
If you have any questions or need assistance
in voting your shares, you may seek answers to your questions by writing, calling, or emailing us at:
Calmare Therapeutics Incorporated
Attention: Thomas P. Richtarich, CFO
1375 Kings Highway, Suite 400
Fairfield, Connecticut 06824-5380
Tel: (203) 368-6044
Email: cti@calmaretherapeutics.com
PROPOSAL 1: TO
ELECT OUR BOARD TO HOLD OFFICE UNTIL OUR 2017 ANNUAL MEETING OF STOCKHOLDERS OR UNTIL THEIR RESPECTIVE SUCCESSORS HAVE BEEN DULY
ELECTED AND QUALIFIED
INFORMATION ABOUT
DIRECTOR NOMINEES
At the annual meeting, six directors
are to be elected. Each director is to hold office until the next annual meeting of shareholders or until his successor is elected
and qualified. Set forth below are descriptions of the backgrounds of the director nominees of the Company, their principal occupations
for the past five years, and the specific experience, qualifications and other attributes and skills that led the Board to determine
that such persons should be re-elected to serve on the Board.
Peter Brennan
,
CFA,
61,
has been a director of the company since June 2011. Mr. Brennan is a New York based investor who has worked over 30 years in the
investment management business as an analyst and portfolio manager. In 2004 he founded Damel Investors LLC, a private partnership
which invests in small technology companies. Mr. Brennan received his MBA from the University of Chicago in 1979 and his BA from
Haverford College in 1977. He is a member and past Chairman of the Corporate Governance Committee of the New York Society of Security
Analysts and received the 2001 Volunteer of the Year award from the NYSSA. Mr. Brennan was a member of the US Advocacy Committee
of the CFA Institute and was a founding member of the Capital Markets Policy Council of the CFA Institute for Market Integrity,
the global advocacy committee of the CFA Institute.
We believe Mr. Brennan’s qualifications
to serve on our Board of Directors include expertise in working with small medical device companies as well as his experience
in the investment community and as an investor in the pharmaceutical, medical device and health care industries.
VADM Robert T. Conway, Jr., USN,
Ret.,
66, has been a director of the company since October 2015. The Admiral is the President of R.T. Conway & Associates,
Inc. In this position, he provides strategic advice to senior business executives on, Change Management, Facilities and Infrastructure
Management, Renewable Energy, Information Technology, Alternative Energy Solutions, Maritime Operations, Navy and DOD Programs.
Previously, the Admiral served in the United States Navy from 1972 until his retirement in 2009 in various leadership positions
aboard USS
Vesole
(DD 878), USS
Towers
(DDG 9), USS
Bainbridge
(CGN 25), and USS
Gridley
(CG 21).
The Admiral commanded USS
John Young
(DD 973) and also commanded Destroyer Squadron 7 in San Diego; Naval Surface Group
Middle Pacific in Hawaii; and Plank Owner of the Navy’s first Expeditionary Strike Group: Expeditionary Strike Group One:
The
Peleliu
Strike Group.
Ashore,
the Admiral served on the Joint Chiefs of Staff in Washington, D.C., Bureau of Naval Personnel in Washington, D.C and later in
Millington, Tennessee, Operational Test and Evaluation Force Pacific I San Diego, Ca., ; Officer Candidate School in Newport,
RI; and Naval Facility Cape Hatteras, NC. The Admiral commanded Navy Region Pearl Harbor in Hawaii and Task Force Warrior in Norfolk,
VA. In the Admiral’s final assignment, the Admiral served as Commander, Navy Installations Command, Washington, D.C. The
Admiral graduated from St. Francis University, Loretto, Pa., received his master’s degree from Providence University in
Providence, RI, and is also a graduate of the Industrial College of the Armed Forces at the National Defense University in Washington,
D.C.
We believe the Admiral’s qualifications
to serve on our Board of Directors include his expertise and years of experience in high growth business development.
Rustin R. Howard,
59, has been
a director of the company since October 2007. Mr. Howard is the chairman of the Board of Directors of Deep Gulf, Inc., which builds
energy transportation systems and associated facilities to serve niche economies. Mr. Howard also serves on the Board of Directors
of Silver Bullet Technology, Inc. Silver Bullet, builds and sells software for the banking and payment processing industry. In
1990, he founded and served as Chief Executive Officer and Chairman of the Board of Directors of Phyton, Inc., the world leader
in the use of proprietary plant cell fermentation technology, that is used for production of paclitaxel, the active ingredient
of Bristol-Myers Squibb's (NYSE:BMY) multi-billion dollar anticancer drug, Taxol
®
. Phyton was sold to DFB Pharmaceuticals,
Inc. in 2003. Previously, Mr. Howard served as President and Chief Executive Officer of BioWorks Inc., a biotechnology company
he founded to develop, produce, and sell products that replace chemical pesticides. Mr. Howard earned his MBA from Cornell University's
Johnson Graduate School of Management, where he focused his studies on entrepreneurship, and managing innovation and technology.
We believe Mr. Howard’s qualifications
to serve on our Board of Directors include his expertise in biotechnology and product development as well as his experience in
technology and high-growth business development.
Conrad Mir
, age 48, has been
a director, President and Chief Executive Officer of the Company since October 2013. He has over twenty years of investment banking,
financial structuring, and corporate reengineering experience. He has served in various executive management roles and on the
Board of Directors of several companies in the biotechnology industry. From December 2012 until September 2013, Mr. Mir served
as the Chief Financial Officer of Pressure BioSciences, Inc., (OTCQB: PBIO), a sample preparation company advancing its proprietary
pressure cycling technology. From June 2011 until October 2012, Mr. Mir was Chairman and Chief Executive Officer of Genetic Immunity,
Inc., a plasmid, DNA company in the HIV space. From November 2008 until May 2011, Mr. Mir served as executive director of Advaxis,
Inc., (OTCQB: ADXS), a vaccine biotechnology company. Over the last ten years, he was responsible for raising more than $40 million
in growth capital and broadening corporate reach to new investors and current shareholders.
Mr. Mir has worked for several investment
banks including Sanford C. Bernstein, First Liberty Investment Group, and Nomura Securities International. He holds a BS/BA in
Economics and English with special concentrations in Mathematics and Physics from New York University.
We believe Mr. Mir’s qualifications
to serve on our Board of Directors include his proven track record in executive management in biotechnology and medical device
companies, capital raising, financial instrument structuring and corporate reengineering.
Carl D. O’Connell
, 53,
has been a director of the Company since January 2013, having served as its President and Chief Executive Officer from November
2012 to September 2013. Mr. O’Connell has 30 years of experience in the healthcare field and 20 years as a leader in the
medical device arena. Prior to joining the Company, Mr. O’Connell held executive positions for top global medical device
and Fortune 500 companies. He recently served as President and Chief Executive Officer for the US Healthcare Division MedSurg
for ITOCHU, a Japanese conglomerate, Vice President of Global Marketing for Stryker Spine, and President of Carl Zeiss Surgical,
the market leader in optical digital solutions for Neurosurgery, Spine, Ophthalmology, ENT and Dentistry.
We believe Mr. O’Connell’s
qualifications to serve on our Board of Directors include his proven track record in commercializing medical technologies as well
as building effective and profitable sales and distribution organizations.
LCDR Steven Roehrich, USN, Ret.
,
66 has been a director of the company since October 2015. Mr. Roehrich is Founder and Chief Executive Officer of Ready Room, a
group of Navy Admirals that own and operate light manufacturing companies. He currently serves as an advisor to top leaders at
Fortune 500 companies, middle market firms, and federal government departments where he helps them to adapt to changing global
market conditions, capitalize on new technologies, and improve growth and operating performance. Mr. Roehrich worked at Johnson
and Johnson (JNJ) as a corporate Vice President for Business Improvement, reporting to JNJ’s executive committee. He subsequently
was Revlon Corporation’s Senior Vice President for Business Improvement and a member of its Executive Committee.
Mr. Roehrich’s former board memberships
include NCR Corporation’s $2 billion Teradata CIO Informatics Group, Northwestern University Kellogg Graduate School of
Business Advisory Council, University of Pennsylvania’s Wharton Business School’s Industrial Council, and multiple
early stage bio-med and technology firms.
Prior to the private sector, the Commander
was a 21 year career United States Aviator (4300 flight hours), a Vietnam and Gulf War veteran, aerial combat instructor and Mission
Commander holding leadership roles in Navy squadrons and air-wings.
Mr. Roehrich holds a MS in Financial
Management from the US Naval Postgraduate School in Monterey, CA, a BA from Concordia College in Moorhead, MN, and Advanced Management
education from the Wharton School – University of Pennsylvania in Philadelphia, and completed US Naval Aviation Flight Training
in Pensacola, FL.
We believe Mr. Roehrich’s
qualifications to serve on our Board of Directors include his expertise in executive management in biotechnology companies and
high-growth business development.
Stanley K. Yarbro, Ph.D
., 66,
has been a director of the Company since March 2012. Dr. Yarbro has extensive experience in market development of high technology
solutions to a worldwide customer base. He retired as Executive Vice President, Worldwide Field Operations, for Varian Semiconductor
Equipment Associates, a position he had held since 2004. Prior to Varian, Dr. Yarbro served in various executive capacities at
KLA-Tencor Corporation in the semi-conductor industry. He currently serves as a director on the board of Carbon Design Innovations
and has previously served as a director on the boards of FSI International, Electrogas, Inc. and Molecular Imaging where he worked
closely with the organizations to develop and improve sales, product and marketing strategies.
Dr. Yarbro holds a Ph.D. in Analytical
Chemistry from Georgia Institute of Technology and a B.S.in Chemistry from Wake Forest University.
We believe Dr. Yarbro’s qualifications
to serve on our Board of Directors include his expertise in market development of high technology products and his years of experience
as a senior executive and director of various technological and pharmaceutical corporations.
Vote Required
The affirmative vote of a majority
of the shares our voting stock represented in person or by proxy at the Annual Meeting is necessary for the election of the individuals
named above. There is no cumulative voting in elections of directors. Unless otherwise specified, proxies will be voted in favor
of the seven nominees described above.
Recommendation
Our Board of Directors recommends that shareholders vote
FOR
the election of each of the individuals named above.
CORPORATE GOVERNANCE
CTI's Corporate Governance Principles,
Corporate Code of Conduct, the Committee Charters for the Audit Committee and the Nominating and Corporate Governance Committee
of the Board of Directors, the unofficial restated Certificate of Incorporation and the By-Laws are all available on our website
at
www.calmaretherapeutics.com/investors/governance.html
.
Board Meetings and Committees
The Board has three committees, with current membership
as follows:
|
Audit
Committee
|
|
Compensation
Committee
|
|
Nominating
and Corporate
Governance Committee
|
|
|
|
|
|
|
|
Stanley Yarbro,
Chairman
|
|
Carl O’Connell,
Chairman
|
|
Rustin Howard,
Chairman
|
|
|
|
|
|
|
|
Rustin Howard
|
|
Stanley Yarbro
|
|
Carl O’Connell
|
|
|
|
|
|
|
|
Steven Roehrich
|
|
Rustin Howard
|
|
Stanley Yarbro
|
During the fiscal year ended December
31, 2015, the board of directors met twice.
The Audit Committee held three meetings
during the fiscal year ended December 31, 2015. The Compensation Committee held one meeting in conjunction with Board Meetings
in 2015. The Nominating and Corporate Governance committee each held one meeting during fiscal year ended December 31, 2015. In
2015, all directors attended at least 75% of all meetings of the Board of Directors, and the committees on which they served after
becoming a member of the Board or Committee. We expect all directors to attend the next Annual Meeting barring unforeseen circumstances
or irresolvable conflicts.
Audit Committee
The function of the Audit Committee
is to assist the Board in fulfilling its responsibility to the shareholders relating to our corporate accounting matters, financial
reporting practices, and the quality and integrity of our financial reports. The Audit Committee’s purpose is to assist
the Board with overseeing:
|
|
·
|
the reliability
and integrity of our financial statements, accounting policies, internal controls and disclosure practices;
|
|
|
·
|
our compliance with
legal and regulatory requirements, including our disclosure controls and procedures;
|
|
|
·
|
our independent
auditor’s qualifications, engagement, compensation, and independence;
|
|
|
·
|
the performance
of our independent auditor; and
|
|
|
·
|
the production of
an annual report of the Audit Committee for inclusion in our annual proxy statement.
|
The Audit Committee is to be comprised
of not less than three independent directors. The Board has determined that each member of the Audit Committee is an independent
director in accordance with applicable legal or regulatory requirements. It has also determined that each member is financially
literate. Its members have identified Mr. Howard as an audit committee financial expert, as so defined by the US Securities and
Exchange Commission (the “
SEC
”).
Compensation Committee
The purpose of the Compensation Committee
is to:
|
|
·
|
review
and approve corporate goals and objectives relevant to CEO compensation, evaluate the CEO’s performance in light of
those goals and objectives, and determine and approve the CEO’s compensation level based on this evaluation;
|
|
|
·
|
review
and approve the compensation of our other officers based on recommendations from the CEO;
|
|
|
·
|
review,
approve and make recommendations to the Board with respect to incentive compensation plans or programs, or other equity-based
plans or programs, including but not limited to our Annual Incentive Plan, and our 401(k) Plan; and
|
|
|
·
|
produce
an annual report of the Compensation Committee on executive compensation for inclusion in our annual proxy statement.
|
The Compensation Committee is to be
comprised of not less than three of our independent directors. The Board has determined that each member of the Compensation Committee
is an independent director in accordance with applicable legal or regulatory requirements.
Nominating and Corporate Governance
Committee
The purpose of the Nominating Committee
is to:
|
|
·
|
identify
individuals qualified to become members of the Board, consistent with criteria approved by the Board;
|
|
|
·
|
recommend
to the Board, candidates for all directorships to be filled by the Board or our shareholders;
|
|
|
·
|
recommend
to the Board, and in consultation with the chairman, which member(s) can and may be appointed to committees of the Board and
the chairpersons thereof, including filling any vacancies;
|
|
|
·
|
develop
and recommend to the Board a set of corporate governance principles applicable to us;
|
|
|
·
|
oversee,
evaluate and monitor the Board and its individual members, and our corporate governance principles and procedures; and
|
|
|
·
|
fulfill
such other duties and responsibilities as may be set forth in its charter or assigned by the Board from time to time.
|
The Nominating Committee is to be comprised
of not less than three independent directors. The Board has determined that each member of the Nominating Committee is an independent
director in accordance with applicable legal or regulatory requirements.
The Nominating Committee will consider
nominees recommended by shareholders but have not designated any special procedures shareholders need to follow to submit those
recommendations. The Nominating Committee has not designated any such procedures because as discussed below under the heading
“Shareholder Communications to the Board,” shareholders are free to send written communications directly to the Board,
committees of the Board, and/or individual directors, at our corporate address in care of our Secretary.
Shareholder Communications to the
Board
Shareholders may send communications
in writing to the Board, committees of the Board, and/or to individual directors, at our corporate address in care of our Secretary.
Written communications addressed to the Board are reviewed by the Chairman of the Board for appropriate handling. Written communications
addressed to an individual Board member are forwarded to that person directly.
BENEFICIAL OWNERSHIP
OF SHARES
The following information indicates
the beneficial ownership of our stock by each director nominee, and by each person known to us to be the beneficial owner of more
than 5% of our outstanding stock. The indicated owners, which have sole voting and investment power, have furnished such information
to us as of October 7, 2016, except as otherwise indicated in the footnotes.
Names of Beneficial Owners
(and address, if ownership is more than 5%)
|
|
Amount
Beneficially
Owned
(1)
|
|
|
Percent
(%)
(2)
|
|
|
Director nominees
|
|
|
|
|
|
|
|
|
|
Peter Brennan
|
|
|
3,797,.096
|
(3)(4)
|
|
|
12.2
|
|
|
Robert T. Conway, Jr.
|
|
|
179,500
|
(3)(5)
|
|
|
*
|
|
|
Rustin Howard
|
|
|
128,676
|
(3)(6)
|
|
|
*
|
|
|
Conrad Mir
|
|
|
1,061,943
|
(3)(7)
|
|
|
3.6
|
|
|
Carl O’Connell
|
|
|
18,125
|
(3)(8)
|
|
|
*
|
|
|
Steven Roehrich
|
|
|
12,500
|
(3)(9)
|
|
|
*
|
|
|
Stan Yarbro
|
|
|
285,790
|
(3)(10)
|
|
|
1.0
|
|
|
|
|
|
|
|
|
|
|
|
|
Officers
|
|
|
|
|
|
|
|
|
|
Dr. Stephen J. D’Amato
|
|
|
120,000
|
(3)(11)
|
|
|
*
|
|
|
Dr. Christine Chansky
|
|
|
60,000
|
(3)(12)
|
|
|
*
|
|
|
Thomas P. Richtarich
|
|
|
60,000
|
(3)(13)
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
Director nominees and officers total:
|
|
|
5,723,820
|
|
|
|
17.5
|
|
|
|
|
|
|
|
|
|
|
|
|
Five percent beneficial owners
|
|
|
|
|
|
|
|
|
|
Joseph M Finley
(14)
|
|
|
|
|
|
|
|
|
|
Suite 2300, 150 South Fifth St., Minneapolis, MN 55402
|
|
|
3,408,700
|
|
|
|
11.6
|
|
|
|
|
|
|
|
|
|
|
|
|
Bard
Associates, Inc.
(15)
135
South LaSalle Street, Suite 3700 Chicago, IL 60603
|
|
|
3,750,025
|
|
|
|
12.5
|
|
|
|
|
|
|
|
|
|
|
|
|
William Austin Lewis
IV
(16)
|
|
|
|
|
|
|
|
|
|
500 5
th
Avenue, Suite 2240, New York, NY 10110
|
|
|
10,969,459
|
|
|
|
28.4
|
|
|
|
|
|
|
|
|
|
|
|
|
HK Opportunity Group,
LLC
(17)
|
|
|
|
|
|
|
|
|
|
1225 Johnson Ferry Rd., Suite 160, Marietta, GA 30068
|
|
|
7,058,824
|
|
|
|
19.7
|
|
|
|
|
|
|
|
|
|
|
|
|
Joseph J. Prischak
(18)
|
|
|
|
|
|
|
|
|
|
2425 W. 23
rd
St., Erie, PA 16506
|
|
|
6,565,412
|
|
|
|
18.6
|
|
* Less than 1%
(1)
Designated person or group has sole voting
and investment power.
(2)
Pursuant to SEC Rule 13d-3, amounts shown
include common shares that may be acquired by a person within 60 days of October 7, 2016. Therefore, the column titled “Percent
(%)” has been computed based on (a) 28,787,831 common shares actually outstanding as of October 7, 2016; and (b) solely
with respect to the person whose Rule 13d-3 Percentage Ownership of common shares is being computed, common shares that may be
acquired within 60 days of October 7, 2016 upon exercise of options, warrants and/or convertible debt held only by such person.
(3)
Persons listed below have the right to acquire
the listed number of shares upon exercise of stock options:
|
Name
|
|
Right
to Acquire
|
|
|
Peter Brennan
|
|
|
50,000
|
|
|
Robert T. Conway, Jr.
|
|
|
10,000
|
|
|
Rustin Howard
|
|
|
90,000
|
|
|
Conrad Mir
|
|
|
800,000
|
|
|
Carl O’Connell
|
|
|
22,500
|
|
|
Steven Roehrich
|
|
|
10,000
|
|
|
Stan Yarbro
|
|
|
50,000
|
|
|
Directors nominees total
|
|
|
1,032,500
|
|
|
|
|
|
|
|
|
Dr. Stephen J. D’Amato
|
|
|
120,000
|
|
|
Dr. Christine Chansky
|
|
|
60,000
|
|
|
Thomas P. Richtarich
|
|
|
60,000
|
|
|
Officers total (excluding Conrad Mir shown above)
|
|
|
240,000
|
|
(4)
Peter Brennan is the beneficial owner of
Damel Diversified LP, Damel Partners LP, and Lisl Brennan Family Trust 2005. Peter Brennan beneficially owns 1,417,115 shares
(including the 50,000 stock options referenced in footnote 3 above) and has the right to acquire an additional 2,379,981 shares
upon conversion of $2,498,980 of convertible debt.
(5)
Robert T. Conway, Jr. beneficially owns 12,500
shares (including the 10,000 stock options referenced in footnote 3 above) and has the right to acquire an additional 167,000
shares upon exercise of warrants.
(6)
Rustin Howard beneficially owns 38,676 shares
and has the right to acquire 90,000 shares upon exercise of stock options referenced in footnote 3 above.
(7)
Conrad Mir beneficially owns 261,943 shares
and has the right to acquire 800,000 shares upon exercise of stock options referenced in footnote 2 above.
(8)
Carl O’Connell beneficially owns 5,625
shares and has the right to acquire 22,500 shares upon exercise of stock options referenced in footnote 3 above.
(9)
Steven Roehrich beneficially owns 12,500
shares (including the 10,000 stock options referenced in footnote 3 above).
(10)
Stan Yarbro beneficially owns 190,742 shares
(including the 50,000 stock options referenced in footnote 3 above) and has the right to acquire an additional 95,238 shares upon
conversion of $100,000 of convertible debt.
(11)
Dr. Stephen J. D’Amato beneficially
owns 120,000 shares (including the 120,000 stock options referenced in footnote 3 above).
(12)
Dr. Christine Chansky beneficially owns
60,000 shares (including the 60,000 stock options referenced in footnote 3 above).
(13)
Thomas P. Richtarich beneficially owns 60,000
shares (including the 60,000 stock options referenced in footnote 3 above).
(14)
Joseph Finley beneficially owns 2,875,160
shares and has the right to acquire an additional 185,714 shares upon the exercise of stock warrants and 347,826 shares upon conversion
of $80,000 of convertible debt.
(15)
Information is based on a Schedule 13G filed
with the SEC on February 1, 2016. Bard Associates beneficially own 2,500,025 shares and has the right to acquire an additional
1,250,000 shares upon the exercise of stock warrants.
(16)
William Austin Lewis IV beneficially owns
1,067,500 shares and has the right to acquire 8,058,823 shares upon conversion of $1,752,941 of convertible debt and 1,843,136
shares upon the exercise of stock warrants.
(17)
HK Opportunity Group, LLC has the right
to acquire 3,529,412 shares upon conversion of $705,882 of convertible debt and 3,529,412 shares upon the exercise of stock warrants.
(18)
Joseph J. Prischak beneficially owns 36,000
shares and has the right to acquire 3,529,412 shares upon conversion of $705,882 of convertible debt and 3,000,000 shares upon
the exercise of stock warrants.
On October 7, 2016, the stock transfer
records maintained by us with respect to our Preferred Stock showed that the largest holder of Preferred Stock owned 500 shares;
the largest owner of Class C Convertible Preferred Stock owned 375 shares. No directors own Preferred Stock.
BENEFICIAL
OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires
our directors and officers, and persons who own more than five percent of the Common Stock to file reports of ownership and changes
in ownership with the SEC as per that appropriate SEC regulation(s) that require reporting persons to furnish us with copies of
all Section 16(a) forms they file.
Based solely on a review of copies
of such reports received or written representations from certain reporting persons, we do not believe all reporting persons complied
with all applicable reporting requirements.
DIRECTOR
COMPENSATION
Each of our non-employee directors
is paid an annual cash retainer of $10,000, paid quarterly in arrears, for their services to the Company. In addition, directors
are issued shares of common stock pursuant to our 1996 Directors Stock Participation Plan, as amended, and are granted stock options
to purchase common stock pursuant to our 2000 Directors Stock Option Plan, both as described below. In addition, the Chairman
of the Board, if a non-employee, is paid fees for the additional responsibilities and time commitments required of him. These
fees are equal to an additional $5,000 cash retainer, in addition to the amount noted above and an additional $500 for each Board
meeting attended.
Each non-employee director is also
paid $1,000 for each Board meeting attended and $500 for each committee meeting attended. All directors are reimbursed for out-of-pocket
expenses incurred to attend Board and committee meetings.
On the first business day of January,
each non-employee director who had been elected by the stockholders and had served at least one full year as a director was issued
a number of shares of common stock equal to the lesser of $15,000 divided by the per share fair market value of such stock on
the issuance date, or 2,500 shares. If a non-employee director were to leave the Board after serving at least one full year, but
prior to the January issuance date, we will issue shares of common stock to the director on a pro-rata basis up to the termination
date.
Non-employee directors were granted
10,000 fully vested, non-qualified stock options to purchase our common stock on the date the individual was first elected as
a director, whether by the stockholders or by the Board, and were granted 10,000 options on the first business day of January
thereafter, provided the individual was still a director. The stock options granted were at an exercise price not less than 100%
of the fair market value of the common stock at the grant date and had a term of five (5) years from date of grant; options granted
under earlier, now expired plans had ten year terms. If an individual’s directorship terminated because of death or permanent
disability, the stock options may be exercised within one year after termination. If the termination was for any other reason,
the stock options may be exercised within 180 days after termination. However, the Board had the discretion to amend previously
granted stock options to provide that such stock options may continue to be exercisable for specified additional periods following
termination. In no event may a stock option be exercised after the expiration of its term.
The following table summarizes the
total compensation awarded to, earned by or paid by us for services rendered during fiscal year ended December 31, 2015, to the
non-employee Board of Director members:
|
Name
|
|
Fees
Earned or
Paid
in Cash
(1)
|
|
|
Option
Awards
(2)
|
|
|
Other
Equity
Compensation
(3)
|
|
|
Total
|
|
|
Peter Brennan
(4)
|
|
$
|
18,000
|
|
|
$
|
1,427
|
|
|
$
|
475
|
|
|
$
|
19,902
|
|
|
Robert T. Conway, Jr.
|
|
$
|
3,500
|
|
|
$
|
1,427
|
|
|
$
|
475
|
|
|
$
|
5,402
|
|
|
Rustin Howard
|
|
$
|
15,000
|
|
|
$
|
1,427
|
|
|
$
|
475
|
|
|
$
|
16,902
|
|
|
Carl O’Connell
|
|
$
|
12,000
|
|
|
$
|
1,427
|
|
|
$
|
475
|
|
|
$
|
13,902
|
|
|
Steven Roehrich
|
|
$
|
10,000
|
|
|
$
|
1,427
|
|
|
$
|
475
|
|
|
$
|
11,902
|
|
|
Stan Yarbro, Ph.D.
|
|
$
|
21,400
|
|
|
$
|
1,427
|
|
|
$
|
475
|
|
|
$
|
23,302
|
|
(1)
In 2015, Mr. Roehrich received $10,000 in
cash. No other cash payments were made to Directors for fees during 2015.
(2)
Each director serving on January 2, 2016
received a stock option for 10,000 shares of common stock for services rendered during 2015 in August 2016 at $0.1427 per share
under the 2016 Stock Option Plan approved by the Board of Directors in August 2016. We estimated the fair value of stock awards
at $0.1427 per share using the Black-Scholes option valuation model with expected life of 5 years, risk free interest rate of
0.57%, volatility of 124.78% and dividend yield of 0.
(3)
Each director serving on January 2, 2016
received 2,500 shares of common stock for services rendered during 2015. The fair market value of the stock was $0.19 per share.
(4)
Mr. Brennan served as Chairman since May
of 2012.
Outstanding Equity Awards at October 7, 2016 to Non-Employee
Directors
|
Name
|
|
Number
of Securities Underlying
Unexercised Options
|
|
|
Option
Exercise
Price
|
|
|
Option
Expiration
Date
|
|
|
Peter Brennan
|
|
|
10,000
|
(3)
|
|
$
|
0.170
|
|
|
|
1/2/21
|
|
|
|
|
|
10,000
|
(2)
|
|
$
|
0.170
|
|
|
|
1/2/20
|
|
|
|
|
|
10,000
|
(2)
|
|
$
|
0.320
|
|
|
|
1/2/19
|
|
|
|
|
|
10,000
|
(2)
|
|
$
|
0.501
|
|
|
|
1/1/18
|
|
|
|
|
|
10,000
|
(2)
|
|
$
|
1.260
|
|
|
|
1/2/17
|
|
|
Robert T. Conway, Jr.
|
|
|
10,000
|
(3)
|
|
$
|
0.170
|
|
|
|
1/2/21
|
|
|
Rustin Howard
|
|
|
10,000
|
(3)
|
|
$
|
0.170
|
|
|
|
1/2/21
|
|
|
|
|
|
10,000
|
(2)
|
|
$
|
0.170
|
|
|
|
1/2/20
|
|
|
|
|
|
10,000
|
(2)
|
|
$
|
0.320
|
|
|
|
1/2/19
|
|
|
|
|
|
10,000
|
(2)
|
|
$
|
0.501
|
|
|
|
1/1/18
|
|
|
|
|
|
10,000
|
(2)
|
|
$
|
1.260
|
|
|
|
1/2/17
|
|
|
|
|
|
10,000
|
(1)
|
|
$
|
2.290
|
|
|
|
10/5/17
|
|
|
|
|
|
10,000
|
(1)
|
|
$
|
1.510
|
|
|
|
1/2/18
|
|
|
|
|
|
10,000
|
(1)
|
|
$
|
1.005
|
|
|
|
1/2/19
|
|
|
|
|
|
10,000
|
(1)
|
|
$
|
1.870
|
|
|
|
1/4/20
|
|
|
Carl O’Connell
|
|
|
10,000
|
(3)
|
|
$
|
0.170
|
|
|
|
1/2/21
|
|
|
|
|
|
10,000
|
(2)
|
|
$
|
0.170
|
|
|
|
1/2/20
|
|
|
|
|
|
2,500
|
(2)
|
|
$
|
0.320
|
|
|
|
1/2/19
|
|
|
Steven Roehrich
|
|
|
10,000
|
(3)
|
|
$
|
0.170
|
|
|
|
1/2/21
|
|
|
Stan Yarbro
|
|
|
10,000
|
(3)
|
|
$
|
0.170
|
|
|
|
1/2/21
|
|
|
|
|
|
10,000
|
(2)
|
|
$
|
0.170
|
|
|
|
1/2/20
|
|
|
|
|
|
10,000
|
(2)
|
|
$
|
0.320
|
|
|
|
1/2/19
|
|
|
|
|
|
10,000
|
(2)
|
|
$
|
0.501
|
|
|
|
1/1/18
|
|
|
|
|
|
10,000
|
(2)
|
|
$
|
1.130
|
|
|
|
2/28/17
|
|
(1)
These stock options were granted pursuant
to our 2000 Directors Stock Option Plan. The shares were vested immediately on issuance.
(2)
These stock options were granted pursuant
to our 2011 Employees’ Directors’ and Consultants’ Stock Option Plan. The shares were vested immediately on
issuance.
(3)
These stock options were granted pursuant
to our 2016 Stock Option Plan. The shares were vested immediately on issuance.
CERTAIN RELATIONSHIPS,
RELATED TRANSACTIONS, DIRECTOR INDEPENDENCE
Our Board of Directors determined that
when a director’s services are outside the normal duties of a director, we compensate the director at the rate of $1,000
per day, plus expenses, which is the same amount we pay a director for attending a one-day Board meeting. We classify these amounts
as consulting expenses, included in personnel and other direct expenses relating to revenues.
On October 15, 2015, the Company entered
into a consulting agreement with VADM Robert T. Conway, Jr., USN, Ret. (the “Admiral”), a member of the Company’s
Board of Directors. The agreement is for one year and includes compensation of a monthly retainer fee of $7,500 and a five year
warrant to purchase 167,000 shares of common stock of the Company, fully vested on the date of issuance, at a strike price of
$.60 per share with an aggregate estimate fair value of $33,734. As a result of this agreement, the Board of Directors has determined
that the Admiral is no longer an independent director of the Company.
Four of CTI’s Board Directors
- Howard, O’Connell, Roehrich, and Yarbro - are considered to be independent directors.
REPORT OF THE
COMPENSATION COMMITTEE
This report of the Compensation Committee
(the “
Committee
”) shall not be deemed incorporated by reference by any general statement incorporating
the Proxy Statement by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934 (collectively
the “
Acts
”), except to the extent that CTI specifically incorporates this information by reference,
and shall not otherwise be deemed filed under such Acts.
CTI's compensation program consists
of base salary, bonus, stock options, other incentive awards and other benefits, which the Committee generally reviews annually.
The Committee's overall philosophy is to align compensation with our business strategy and to support achievement of our long-term
goals. In order to attract and retain competent executives, we believe it is essential to maintain an executive compensation program
that provides overall compensation competitive with that paid to executives with comparable qualifications and experience.
We have reviewed and discussed with
management certain Executive Compensation and Compensation Discussion and Analysis provisions to be included in the Company’s
Annual Report on Form 10-K, filed pursuant to the Exchange Act, as amended (the “
Annual Report
”). Based
on the reviews and discussions referred to above, we recommended to the Board of Directors that the Executive Compensation and
Compensation Discussion and Analysis provisions referred to above be included in the Company's Annual Report.
Submitted by the Compensation Committee
of the Board of Directors
Carl O’Connell (Chairman)
Stan Yarbro
Steven Roehrich
REPORT OF THE
AUDIT COMMITTEE
The Audit Committee has reviewed and
discussed with management our audited financial statements as of and for the year ended December 31, 2015 as well as our Annual
Report on Form 10-K, prior to those reports being filed. The Audit Committee has reviewed and discussed with management our Quarterly
Reports on Form 10-Q for the year ended December 31, 2015, before those reports were filed.
The Audit Committee discussed with
our independent registered accountants, Mayer Hoffman McCann, CPA’s, the New York Practice of Mayer Hoffman McCann P.C.,
(“
MHM
”), the matters required to be discussed under the rules adopted by the Public Company Accounting Oversight
Board (“PCAOB”).
The Audit Committee received the written
disclosures from MHM required by the applicable requirements of the PCAOB concerning independence. The Audit Committee discussed
with MHM their independence from management and from CTI.
The Audit Committee discussed with
MHM the overall scope, plans and budget for its audit. In addition, the Audit Committee meets with MHM regularly, with or without
management present, to discuss the results of MHM’s examination, evaluation of CTI's internal controls, and the overall
quality of CTI’s financial reporting.
Based on the reviews and discussions
referred to above, the Audit Committee recommended to the Board of Directors that the audited financial statements as of and for
the years ended December 31, 2015 and 2014 be included in our Annual Report on Form 10-K for the year ended December 31, 2015.
Audit Committee:
Stan Yarbro (Chairman)
Rustin Howard
Steve Roehrich
EXECUTIVE OFFICERS
Listed below are the Company’s
Executive Officers and their respective backgrounds.
Conrad Mir
, 48
,
has been a director, President and Chief Executive Officer of the Company since October 2013. He has over twenty years of investment
banking, financial structuring, and corporate reengineering experience. He has served in various executive management roles and
on the Board of Directors of several companies in the biotechnology industry. From December 2012 until September 2013, Mr. Mir
served as the Chief Financial Officer of Pressure BioSciences, Inc., (OTCQB: PBIO), a sample preparation company advancing its
proprietary pressure cycling technology. From June 2011 until October 2012, Mr. Mir was Chairman and Chief Executive Officer of
Genetic Immunity, Inc., a plasmid, DNA company in the HIV space. From November 2008 until May 2011, Mr. Mir served as Executive
Director of Advaxis, Inc., (OTCQB: ADXS), a vaccine biotechnology company. Over the last ten years, he was responsible for raising
more than $40 million in growth capital and broadening corporate reach to new investors and current shareholders. Mr. Mir has
worked for several investment banks including Sanford C. Bernstein, First Liberty Investment Group, and Nomura Securities International.
He holds a BS/BA in Economics and English with special concentrations in Mathematics and Physics from New York University.
Thomas P. Richtarich,
64,
Chief Financial Officer, joined the Company in January 2016. Mr. Richtarich has held roles in corporate financial management
for public and privately held companies for over twenty years. Prior to joining CTI, Mr. Richtarich has run his own consulting
firm, serving as the Chief Financial Officer for his clients and providing assistance to clients in the areas of financial management,
strategic planning, capital fund raising, compensation/benefits, talent management and marketing. During 2014 through 2015, Mr.
Richtarich served as Director of Finance, Human Resources, and Administration and Chief Financial Officer of ReadMe Systems, Inc.,
a privately held company, where his efforts led to a revitalization of the company through capital raises and employee recruitment.
From 2009 through 2013, Mr. Richtarich served as Director – Human Resources and Administration and Corporate Secretary of
TranSwitch Corporation, a public company. During this tenure, Mr. Richtarich managed strategic restructuring, compliance with
SEC requirements, benefits programs, and talent acquisition. Mr. Richtarich began his professional career with Southern New England
Telephone in various positions in strategic planning, marketing and sales each providing him with progressively increasing management
and leadership responsibilities. Mr. Richtarich received his Bachelor of Arts in Political Science from Fairfield University and
his Master’s in Business Administration from the University of Connecticut Graduate School of Business.
Christine
Chansky, MD, JD, FCLM,
48,
Chief Regulatory Officer, joined the Company in January 2016.
Dr.
Chansky has been a licensed, practicing physician and attorney for over 20 years. She has a comprehensive background in global
regulatory affairs and regulatory law with a proven track of applying expertise in R&D, pharmacovigilance, regulatory, compliance,
clinical development and global medical affairs. Her multiple therapeutic expertise in immunotherapy, oncology, infectious disease
and hematology, has allowed her to leverage her extensive relationships with the U.S. Food and Drug Administration and resulted
in the successful submissions of over fifteen investigational new drug applications (IND's), new drug applications (NDA's), and
biologics license applications (BLA's). Prior to her new position with CTI, she served as Chief Regulatory Counsel and Chief Clinical
Officer for BioTest Pharmaceuticals where she was responsible for the development and review of all regulatory strategies, submissions
and compliance, clinical development plans, trial design, launch campaigns and educational materials. Contemporaneously, she was
the Medical Director of her private medical practice, Emergency Medical Care N.Y. & STAT Medical Associates in New York City.
Prior, she held senior executive regulatory positions in such notable companies as Aventis, Johnson & Johnson, Glaxo Wellcome
and Roche Holdings A.G. Dr. Chansky is a licensed medical doctor in New York and a licensed attorney in New Jersey. She was an
adjunct assistant professor of global regulatory affairs at Temple University, and is Board Certified as a Fellow of the American
College of Legal Medicine. She received her bachelor’s degree, magma cum laude, from Georgetown University, and her medical
degree from Georgetown University. Dr. Chansky received her law degree from Seton Hall University.
Stephen
J. D’Amato, MD, FACEP,
68,
Chief Medical Officer, joined the Company in September 2015.
Dr.
D’Amato has been practicing medicine in Rhode Island for 35 years. Over the past six years, he has been the foremost Calmare
®
Pain Therapy Device practitioner with over 1000 patients treated in his medical practice. His efforts with Calmare have
established new innovative ways of treating many different chronic pain diagnoses including Chemotherapy-induced Peripheral Neuropathy
(CIPN), Complex Regional Pain Syndrome (CRPS), Failed Back Surgery Syndrome (FBSS) and Phantom Limb Pain Syndrome. Dr. D’Amato
will oversee all medical treatment issues and research topics regarding Calmare, globally. Prior to Calmare, he was the medical
director and staff physician at North Providence Medical Services in North Providence, Rhode Island. During that time, he was
a Clinical Assistant Professor of Emergency Medicine at the Boston University School of Medicine, Roger Williams Medical Center
Campus in Providence, RI. He has been a member of the medical staff of St. Joseph Hospital’s Fatima Unit and Medical Director
of Mineral Spring Primary Care Associates, both in North Providence, RI. Dr. D’Amato received his medical degree from the
University of Padua – Italy in 1976. He is a licensed medical doctor in Rhode Island, Massachusetts and Florida. He attained
Fellow status after his first board certification process in Emergency Medicine, and was granted “lifelong status”
after his third certification as a Fellow of the American College of Emergency Physicians (FACEP). He is also a managing partner
of CALMARx Pain Relief, LLC, in West Warwick, RI.
EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
We have a standing Compensation Committee
on our Board. Our President, or in the absence of a President, our Chief Executive Officer, makes recommendations to the committee
as to employee benefit programs and officer and employee compensation. The Company’s compensation program consists of base
salary, bonus, stock options, other incentive awards and other benefits, which the Committee generally reviews annually. The Committee's
overall philosophy is to align compensation with our business strategy and to support achievement of our long-term goals. In order
to attract and retain competent executives, we believe it is essential to maintain an executive compensation program that provides
overall compensation competitive with that paid to executives with comparable qualifications and experience. The Committee annually
reviews all compensation plans to assure effectiveness and fiduciary responsibility.
Annual Base Salary.
The Company
provides officers and other employees with base salary to compensate them for services rendered during the fiscal year. Base salary
ranges for officers are determined for each executive based on his or her position and responsibility using a) market data, b)
an internal review of the executive’s compensation, both individually and relative to other executive officers, and c) the
individual performance of the executive.
Incentive Stock Options.
In
August 2016, the Board approved the 2016 Stock Option Plan. This Plan gives the Board the capability to promote high performance
and achievement of corporate goals by all employees, encourage the growth of shareholder value, and allow all employees to participate
in the long-term growth and profitability of the Company.
Annual Cash Bonus
. In addition
to the competitive annual base salary, we intend to reward executive officers each year for the achievement of specific goals,
which may be financial, operational or technological. We consider objectively measurable goals, such as obtaining new investment
capital, negotiating valuable contracts and achieving research and regulatory milestones, and more subjective goals, such as quality
of management performance and consistency of effort. CTI's objectives include operating, strategic and financial goals the board
considers critical to CTI’s overall goal of building shareholder value. Our recommendations for cash bonuses also take into
account CTI’s liquidity and capital resources in any given year.
In August 2015, the Compensation Committee
of the Board of Directors reviewed the performance of the Chief Executive Officer over the previous 12 months. Based on this performance,
the Committee recommended that the Board award the Chief Executive Officer 40% of the allowable bonus, which amounted to $53,000.
The Committee also recommended that the Board extend the contract of the Chief Executive Officer until September 30, 2016. Both
recommendations were approved by the Board.
Benefits
. The Company provides
executive officers with retirement and other personal benefits. These include medical, dental, vision, life, AD&D, short-term
disability and long-term disability insurance, as well as a Company sponsored 401(k) plan. The Committee believes that these benefits
are reasonable and consistent with its overall compensation program to better enable the Company to attract and retain superior
employees for all positions. Officers are eligible to receive the same health and welfare benefits that are generally available
to other employees and they contribute to their benefit premium on the same terms as other employees under the same plan and level
of coverage.
Assessment of Risk
. In the design
of executive compensation plans, the Committee considers the desired behavior the Committee wants to incent and how that behavior
relates to increasing shareholder value. The Committee does not feel that there are any compensation-related risks that are reasonably
likely to have a material effect on the Company.
The annual base salaries and annual
cash bonus targets for our current executive officers are shown in the table below.
|
Executive
Officer
|
|
Annual
Base Salary
|
|
|
Cash
Bonus Target
|
|
|
|
|
|
|
|
|
|
|
Conrad F. Mir
|
|
$
|
270,000
|
|
|
|
100
|
%
|
|
Thomas P. Richtarich
|
|
|
150,000
|
|
|
|
40
|
%
|
|
Christine Chansky
|
|
|
185,000
|
|
|
|
40
|
%
|
|
Stephen J. D’Amato
|
|
|
180,000
|
|
|
|
40
|
%
|
The following table summarizes the
total compensation awarded to, earned by or paid by us for services rendered by the 4 highest paid ($100,000 or more) employees
that served during the years ended December 31, 2015, December 31, 2014, and December 31, 2013.
|
Name
and Principal
Position
|
|
Year
ended
|
|
|
Salary
|
|
|
Bonus
|
|
|
Option
Awards
(5)
|
|
|
All
Other
Compensation
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conrad
F. Mir
(1)
|
|
|
12/31/2015
|
|
|
$
|
270,747
|
|
|
$
|
53,000
|
|
|
$
|
|
|
|
|
|
|
|
$
|
323,747
|
|
|
Director, President and
|
|
|
12/31/2014
|
|
|
$
|
270,000
|
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
$
|
270,000
|
|
|
Chief Executive Officer
|
|
|
12/31/2013
|
|
|
$
|
70,212
|
|
|
|
|
|
|
$
|
63,201
|
|
|
|
|
|
|
$
|
133,413
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ian
Rhodes
(2)
|
|
|
12/31/2015
|
|
|
$
|
146,689
|
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
$
|
146,689
|
|
|
Former Executive Vice
President
|
|
|
12/31/2014
|
|
|
$
|
83,077
|
|
|
|
|
|
|
$
|
99,600
|
|
|
|
|
|
|
$
|
182,677
|
|
|
and Chief Financial Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carl
D. O’Connell
(3)
Director,
former President and
Chief Executive Officer
|
|
|
12/31/2013
|
|
|
$
|
225,000
|
|
|
|
|
|
|
$
|
334,000
|
|
|
|
|
|
|
$
|
569,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Laurie
Murphy
(4)
Former
Accounting Manager
|
|
|
12/31/2013
|
|
|
$
|
100,400
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
100,400
|
|
|
|
(1)
|
Mr. Mir
joined the Company in September 2013.
|
|
|
(2)
|
Mr. Rhodes
joined the Company in May 2014 and resigned as Chief Financial Officer in January 2016.
|
|
|
(3)
|
Mr. O’Connell
joined the Company in November 2012 and resigned as President and Chief Executive Officer
in September 2013, but continued to serve on the Board.
|
|
|
(4)
|
Ms. Murphy
left the Company in January 2014.
|
|
|
(5)
|
The amounts
shown in this column indicate the grant date fair value of option awards granted in the
subject year computed in accordance with FASB ASC Topic 718. The assumptions made in
the valuation of these options can be found in Note 14 to our financial statements included
in our 2015 Form 10-K.
|
Grants of Plan-Based Awards
During the quarter ended March 31,
2013, the Company granted 1,000,000 options to Carl O’Connell. As approved by the Board of Directors, these options granted
were expected to vest over a four (4) year period, with 200,000 options vesting upon issuance. Upon his resignation on September
26, 2013, the 800,000 unvested options were forfeited. Additionally, the 200,000 vested options all expired 90 days from his resignation,
per the Option Agreement.
During the quarter ended December 31,
2013, the Company granted 1,000,000 options to Conrad Mir. As approved by the Board of Directors, these options vest over a four
(4) year period, with 200,000 options vested upon issuance.
During the quarter ended June 30, 2014,
the Company granted 300,000 options to Ian Rhodes. As approved by the Board of Directors, these options granted were expected
to vest over a four (4) year period, with 60,000 options vested upon issuance. Upon his resignation on January 8, 2016, the 180,000
unvested options were forfeited. Additionally, the 120,000 vested options all expired 90 days from his resignation, per the Option
Agreement.
Outstanding Equity Awards at December 31, 2015
|
Name
|
|
Number
of Securities
Underlying Unexercised
Options Exercisable
(1)
|
|
|
Number
of Securities
Underlying Unexercised
Options
Unexercisable
(1)
|
|
|
Option
Price
|
|
|
Option
Expiration Date
|
|
Conrad Mir
|
|
|
600,000
|
|
|
|
400,000
|
|
|
|
0.08
|
|
|
10/1/18
|
|
Ian Rhodes
|
|
|
120,000
|
|
|
|
180,000
|
|
|
|
0.41
|
|
|
5/22/19
|
(1)
Option awarded under the 2011 Employees’,
Directors’ and Consultants’ Stock Option Plan.
PROPOSAL 2: TO
RATIFY THE APPOINTMENT OF MAYER HOFFMAN MCCANN CPAS, THE NEW YORK PRACTICE OF MAYER HOFFMAN MCCANN, P.C. AS OUR INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDED DECEMBER 31, 2016
REGISTRANT’S
CERTIFYING ACCOUNTANT
Mayer Hoffman McCann CPAs, the New
York Practice of Mayer Hoffman McCann P.C. (“
MHM
”) have been the independent registered public accountants
for the company.
Fees Billed by Principal Accountants
– The
following table presents fees for professional services billed by MHM for the years ended December 31, 2015 and December 31, 2014:
|
|
|
Year
Ended
December 31, 2015
|
|
|
Year
Ended
December 31, 2014
|
|
|
Audit Fees
|
|
$
|
93,500
|
|
|
$
|
96,500
|
|
|
Tax Fees
|
|
|
-
|
|
|
|
-
|
|
|
Audit
Related Fees
(1)
|
|
|
-
|
|
|
|
-
|
|
|
All other fees
|
|
|
-
|
|
|
|
-
|
|
|
Total
|
|
$
|
93,500
|
|
|
$
|
96,500
|
|
(1)
Fees for S-1 and S-8 review.
MHM leases substantially all its personnel,
who work under the control of MHM shareholders, from wholly-owned subsidiaries of CBIZ, Inc., in an alternative practice structure.
Audit Committee Pre-Approval of Services of Principal
Accountants
The Audit Committee has the sole authority
and responsibility to select, evaluate, determine the compensation of, and, where appropriate, replace the independent auditor.
After determining that providing the non-audit services is compatible with maintaining the auditor’s independence, the Audit
Committee pre-approves all audits and permitted non-audit services to be performed by the independent auditor, except for de minimis
amounts. If it is not practical for the Audit Committee to meet to approve fees for permitted non-audit services, the Audit Committee
has authorized its Chairman, currently Mr. Yarbro, to approve them and to review such pre-approvals with the Audit Committee at
its next meeting.
Ratification of Selection of Independent Public Accountants
The persons named in the enclosed proxy
will vote to ratify the selection of MHM as independent public accountants for the year ending December 31, 2016, unless otherwise
directed by the shareholders. Shareholder ratification of MHM as the Company's independent public accountants is not required
by the Company's bylaw or otherwise. However, the Company is submitting selection of MHMto the shareholders for ratification as
a matter of good corporate practice. If the shareholders do not ratify the selection of MHMas the Company's independent public
accountants, the Audit Committee will reconsider the selection of such independent public accountants. If the selection is ratified,
the Audit Committee may, in its discretion, direct the appointment of different independent public accountants at any time during
the year if it determines that such a change would be in the best interest of the Company and its shareholders.
Vote Required
The affirmative vote of a majority
of the voting shares of stock present or represented by proxy at the Annual Meeting is necessary for the ratification of MHMas
independent public accountants for the fiscal year ended December 31, 2016.
Recommendation
The Board of Directors recommends that
shareholders vote
FOR
the ratification of MHMas independent public accountants for the fiscal year ended December 31, 2016.
PROPOSAL 3: TO
AMEND THE CERTIFICATE OF INCORPORATION TO AUTHORIZE A NEW SERIES OF CONVERTIBLE PREFERRED STOCK
The Board
has proposed an amendment to the certificate of incorporation to authorize a new series of preferred stock, designated Series
D Convertible Preferred Stock (the “New Series”). The “Certificate of the Designations, Preferences and Relative
Participating Optional and Other Special Rights and Qualifications, Limitations or Restrictions of Series D Convertible Preferred
Stock of Calmare Therapeutics Incorporated” is attached to this Proxy Statement as EXHIBIT A.
In summary,
this proposal authorizes a new series of preferred stock, designated Series D Convertible Preferred Stock, at a par value of $25.00
per share. Each holder of the New Series shall be entitled to receive, when, as and if declared by the Board, a semi-annual dividend
of $0.75 per whole share. Holders of the New Series shall not have any voting rights. Each share of the New Series shall be convertible
at any time into the Common Stock of the Company at the ratio of one hundred twenty-five (125) shares of Common Stock to one (1)
share of the New Series.
The Board believes it is in the best interest
of the Company for the stockholders to authorize the New Series in order to give the Company greater flexibility in considering
and planning for future potential business needs. Having the New Series available is important to our continued efforts to execute
our plan, including raising capital to support our business and converting some of our outstanding debt into equity. If the authorization
of this New Series is postponed until the foregoing specific needs arise, the delay and expense incident to obtaining approval
of the stockholders at that time could impair our ability to meet the objectives.
As of October 7, 2016, we had (i) 28,787,831
outstanding shares (ii) 2,593,500 shares potentially issuable for common stock options, (iii) 10,801,512 shares potentially issuable
for common stock warrants, (iv) 2,902,477 shares potentially issuable for conversion of Series C convertible preferred stock and
(v) 18,500,915 shares potentially issuable for conversion of convertible debt.
Other than those listed above, we currently
have no plan, commitment, arrangement, understanding or agreement, either oral or written, regarding the issuance of our common
stock subsequent to the proposed authorization of the New Series.
If this proposal is approved, the additional
authorized shares may be issued at the discretion of the Board without further stockholder action. The adoption of the amendment
would not have any immediate dilutive effect on the proportionate voting power or other rights of existing stockholders. However,
the conversion of shares of the New Series into common stock would reduce each stockholder’s proportionate interest in the
Company. The holders of any of the additional shares of common stock issued in the future would have the same rights and privileges
as the holders of the shares of common stock currently authorized and outstanding. Those rights do not include preemptive rights
with respect to the future issuance of any additional shares.
If the Certificate of Incorporation amendment
is approved, as soon as practicable after the 2016 Annual Meeting, we will file an amendment to the Certificate of Incorporation
with the office of the Secretary of State of Delaware to reflect new series of convertible preferred stock. Upon approval and
following such filing with the Secretary of State of Delaware, the Certificate of Incorporation amendment will become effective
on the date it is filed.
Vote Required to Approve the Increase in Authorized Common Shares
The affirmative vote of the holders of a majority
of the voting shares of stock outstanding and entitled to vote at the Annual Meeting is required to adopt and approve the amendment
to the Company’s Certificate of Incorporation to authorize the issuance of the Series D Convertible Preferred Stock.
Recommendation
The Board of Directors unanimously recommends
that you vote “
FOR
” Item 3, The Proposal to amend the Certificate of Incorporation to authorize a new series
of convertible preferred stock.
PROPOSAL 4: TO
APPROVE THE ADOPTION OF THE 2016 STOCK OPTION PLAN
The Board
has proposed a new stock option plan, designated the 2016 Stock Option Plan. The “2016 Stock Option Plan” is attached
to this Proxy Statement as EXHIBIT B.
In summary,
this proposal authorizes a new stock option plan for directors, employees and consultants. The 2011 Directors’, Employees’,
and Consultants’ Stock Option Plan expired on December 31, 2015. The 2016 Stock Option Plan authorizes the Board to issue
options to purchase up to Two Million, Five Hundred Thousand (2,500,000) shares of the Company’s common stock. The terms
of the 2016 Stock Option Plan are the same as the terms of the 2011 Directors’, Employees’, and Consultants’
Stock Option Plan.
The Board
believes it is in the best interest of the Company for the stockholders to approve the 2016 Stock Option Plan in order to enable
the Company to attract, retain and motivate its employees, directors and qualified consultants by providing for or increasing
the proprietary interests of such employees, directors and consultants in the Company through increased stock ownership.
Vote Required to Approve the Adoption of the 2016 Stock Option
Plan
The affirmative vote of the holders of a majority
of the voting shares of stock outstanding and entitled to vote at the Annual Meeting is required to adopt and approve the 2016
Stock Option Plan.
Recommendation
The Board of Directors unanimously recommends
that you vote “
FOR
” Item 4, The Proposal to approve the 2016 Stock Option Plan.
PROPOSALS OF
SHAREHOLDERS
Shareholders who wish to present proposals
under SEC Rule 14a-8 to be included in our Proxy Statement and form of proxy in connection with the November 2017 Annual Meeting
of Shareholders must submit those proposals so that we receive them no later than 120 days before the proxy availability date
of our Proxy Statement in connection with that meeting. If we meet this year's proxy availability date of October 21, 2016, we
must receive such proposals for next year's Annual Meeting no later than June 21, 2017.
Shareholders who wish to present matters
outside the processes of SEC Rule 14a-8 to be included in our Proxy Statement and form of proxy in connection with the November
2017 Annual Meeting of Shareholders must submit notice of those matters so that we receive them no later than 45 days before the
proxy availability date of our Proxy Statement in connection that meeting. If we meet this year's expected availability date of
October 21, 2016, we must receive notice of such matters for next year's Annual Meeting no later than August 28, 2017. Notice
received after August 28, 2017 will be untimely and subject to the discretionary authority described in the last sentence of this
Proxy Statement.
OTHER MATTERS
We will pay the cost of soliciting
proxies, including preparation, assembly, printing and mailing of the Notice of Internet Availability of Proxy Materials, and
any additional information furnished to shareholders. Arrangements will be made to furnish solicitation materials to brokerage
houses, custodians, nominees and other fiduciaries, holding in their names shares of common stock beneficially owned by others
to forward to such beneficial owners. We will reimburse these third-parties for reasonable out-of-pocket expenses. Solicitation
of proxies by mail may be supplemented by telephone, telegram, electronic transmission or personal solicitation by our directors,
officers or other regular employees of the Company. No additional compensation will be paid to directors, officers or other regular
employees for such services. We have retained Broadridge, located at 51 Mercedes Way, Edgewood, NY 11717, for an estimated fee
of $32,000, plus out of pocket expenses, to assist in distributing proxy materials and soliciting proxies.
Copies of our Annual Report on Form
10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, any amendments to those reports and any other reports filed
with or furnished to the SEC also are available on or through our website at
www.calmaretherapeutics.com
as soon
as reasonably practicable after they are filed with or furnished to the SEC.
Upon written request, we will provide
without charge (except for exhibits) to any shareholder of record or beneficial owner of our securities, a copy of our Annual
Report on Form 10-K filed with the SEC for the year ended December 31, 2015, including the financial statements and schedules
thereto. Exhibits to said report will be provided upon payment of fees limited to our reasonable expenses in furnishing such exhibits.
Written requests should be addressed to: Secretary, Calmare Therapeutics Incorporated, 1375 Kings Highway, Suite 400, Fairfield,
Connecticut, 06824.
Some brokers and other nominee record
holders may be participating in the practice of “householding” corporate communications to shareholders, such as proxy
statements and annual reports. This means that only one copy of this Proxy Statement, including the Notice of Internet Availability
of Proxy Materials, may have been sent to multiple shareholders in your household. We promptly will deliver a separate copy of
this Proxy Statement to you if you call or write us at the following address or phone number: Secretary, Calmare Therapeutics
Incorporated, 1375 Kings Highway, Suite 400, Fairfield, Connecticut, 06824-5380, telephone: (203) 368-6044. If in the future you
want to receive separate copies of our corporate communications to shareholders, such as the Notice of Internet Availability of
Proxy Materials, proxy statements and annual reports, or if you are receiving multiple copies and would like to receive only one
copy for your household, you should contact your broker or other nominee record holders, or you may contact us at the above address
and phone number.
The Board of Directors is not aware
of any matter that is to be presented for action at the meeting other than the matters set forth herein. Should any other matters
requiring a vote of the shareholders arise, the proxies in the enclosed form confer upon the person or persons entitled to vote
the shares represented by such proxies’ discretionary authority to vote the same in respect of any such other matters in
accordance with their best judgment in the interest of CTI.
|
|
By Order
of the Board of Directors,
|
|
|
|
|
|
Conrad Mir
|
|
|
President and Chief
Executive Officer
|
Dated: October 21, 2016
EXHIBIT
A
CERTIFICATE
OF THE DESIGNATIONS, PREFERENCES AND RELATIVE PARTICIPATING, OPTIONAL AND OTHER SPECIAL RIGHTS AND QUALIFICATIONS, LIMITATIONS
OR RESTRICTIONS OF SERIES D CONVERTIBLE PREFERRED STOCK OF CALMARE THERAPEUTICS INCORPORATED
Pursuant to Section
151 of the General Corporation Law of the State of Delaware, CALMARE THERAPEUTICS INCORPORATED, a corporation organized and existing
under the General Corporation Law of the State of Delaware, in accordance with the provisions of Section 103 thereof, DOES HEREBY
CERTIFY:
That, pursuant to
the authority conferred upon the Board of Directors (the "Board") of CALMARE THERAPEUTICS INCORPORATED (the "Company")
on August 8, 2016, adopted a resolution designating a new series of preferred stock as Series D Convertible Preferred Stock:
Section
1. Designation and Amount. The shares of such series shall be designated as "Series D Convertible Preferred Stock" and
the number of shares constituting such series shall be Five Hundred Thousand (500,000), par value $25.00 per share. Such number
of shares may be increased or decreased by resolution of the Board of Directors; provided, however, that no decrease shall reduce
the number of shares of Series D Convertible Preferred Stock to a number less than the number of shares then outstanding.
Section 2. Dividends and Distributions;
Security.
(a) Subject
to the superior rights of the holders of shares of any other series of Preferred Stock or other class of capital stock of the
Company ranking superior to the shares of Series D Convertible Preferred Stock with respect to dividends, the holders of shares
of Series D Convertible Preferred Stock shall be entitled to receive, when, as and if declared by the Board, out of the assets
of the Company legally available therefor, (1) Semi-annual dividends payable in cash on the last day of June and the last day
of December in each year, or such other dates as the Board shall approve (each such date being referred to herein as a "Semi-Annual
Dividend Payment Date"), commencing on the first Semi-Annual Dividend Payment Date after the first issuance of a share or
a fraction of a share of Series D Convertible Preferred Stock, in the amount of $0.75 per whole share (rounded to the nearest
cent). In addition, if the Company shall pay any dividend or make any distribution on the Common Stock payable in assets, securities
or other forms of noncash consideration (other than dividends or distributions solely in shares of Common Stock), then, in each
such case, the Company shall simultaneously pay or make on each outstanding whole share of Series D Convertible Preferred Stock
a dividend or distribution in like kind equal to the Formula Number then in effect
times such dividend or distribution
on each share of Common Stock. As used herein, the "Formula Number" shall be 25; provided, however, that, if at any
time after August 8, 2016, the Company shall (i) declare or pay any dividend on the Common Stock payable in shares of Common Stock
or make any distribution on the Common Stock in shares of Common Stock, (ii) subdivide (by a stock split or otherwise) the outstanding
shares of Common Stock into a larger number of shares of Common Stock or (iii) combine (by a reverse stock split or otherwise)
the outstanding shares of Common Stock into a smaller number of shares of Common Stock, then in each such event the Formula Number
shall be adjusted to a number determined by multiplying the Formula Number in effect immediately prior to such event by a fraction,
the numerator of which is the number of shares of Common Stock that are outstanding immediately after such event and the denominator
of which is the number of shares of Common Stock that are outstanding immediately prior to such event (and rounding the result
to the nearest whole number); and provided further that, if at any time after August 8, 2016, the Company shall issue any shares
of its capital stock in a merger, reclassification, or change of the outstanding shares of Common Stock, then in each such event
the Formula Number shall be appropriately adjusted to reflect such merger, reclassification or change so that each share of Preferred
Stock continues to be the economic equivalent of a Formula Number of shares of Common Stock prior to such merger, reclassification
or change.
(b) The
Company shall declare a cash dividend on the Series D Convertible Preferred Stock as provided in Section 2(a) immediately prior
to or at the same time it declares a cash dividend on the Common Stock; provided, however, that, in the event no cash dividend
shall have been declared on the Common Stock during the period between any Semi-Annual Dividend Payment Date and the next subsequent
Semi-Annual Dividend Payment Date or, with respect to the first Semi-Annual Dividend Payment Date, during the period between the
first issuance of any share or fraction of a share of Series D Convertible Preferred Stock, a dividend of $0.75 per whole share
on the Series D Convertible Preferred Stock shall nevertheless accrue on such subsequent Semi-Annual Dividend Payment Date or
the first Semi-Annual Dividend Payment Date, as the case may be. The Board may fix a record date for the determination of holders
of shares of Series D Convertible Preferred Stock entitled to receive a dividend or distribution declared thereon, which record
date shall be the same as the record date for any corresponding dividend or distribution on the Common Stock.
(d) So
long as any shares of Series D Convertible Preferred stock are outstanding, no dividends or other distributions shall be declared,
paid or distributed, or set aside for payment or distribution, on the Common Stock unless, in each case, the dividend required
by this Section 2 to be declared on the Series D Convertible Preferred Stock shall have been declared and set aside.
(e) The holders of shares of Series
D Convertible Preferred Stock shall not be entitled to receive any dividends or other distributions except as herein provided.
Section 3. Voting Rights.
The
holders of shares of Series D Convertible Preferred Stock shall not have any voting rights.
Section
4. Conversion. Each share of Series D Convertible Preferred Stock shall be convertible at any time by the holder thereof into
shares of Common Stock of the Company at a conversion price (the "Conversion Price") for each share of Common Stock
at a ratio of one (1) share of Series D Convertible Preferred Stock to one hundred twenty-five (125) shares of Common Stock based
on a $0.20 per common share basis, subject to adjustment for stock splits, stock dividends, recapitalizations, etc.
Section
5. Reacquired Shares. Any shares of Series D Convertible Preferred Stock purchased or otherwise acquired by the Corporation in
any manner whatsoever shall be retired and cancelled promptly after the acquisition thereof. All such shares shall upon their
cancellation become authorized but unissued shares of Preferred Stock and may be reissued as part of a new series of Preferred
Stock to be created by resolution or resolutions of the Board of Directors, subject to the conditions and restrictions on issuance
set forth herein.
Section
6. Liquidation, Dissolution on Winding Up. Upon any liquidation (voluntary or otherwise), dissolution or winding up of the Corporation,
the shares of Series D Convertible Preferred Stock shall be treated as an equivalent to the shares of Common Stock into which
they are then convertible.
Section
7. Consolidation, Merger, etc. In case the Corporation shall enter into any consolidation, merger, combination or other transaction
in which the shares of Common Stock are exchanged for or changed into other stock or securities, cash and/or any other property,
then in any such case the shares of Series D Convertible Preferred Stock shall at the same time be similarly exchanged or changed
in an amount per share (subject to the provision for adjustment hereinafter set forth) equal to the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may be, into which or for which each share of Common
Stock is changed or exchanged. If the Corporation shall at any time declare or pay any dividend on Common Stock payable in shares
of Common Stock, or effect a subdivision, combination or consolidation of the outstanding Common Stock (by reclassification or
otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock,
then in each such case the amount set forth in the preceding sentence with respect to the exchange or change of shares of Series
D Convertible Preferred Stock shall be adjusted by assuring that the percentage of the Company reflected by the common stock into
which the total shares of Series D Convertible Preferred Stock may be converted immediately prior to such event shall remain the
same percentage of the company immediately subsequent to such event.
EXHIBIT B
2016 STOCK OPTION
PLAN
Adoption of this
2016 Employees', Directors' and Consultants' Stock Option Plan (the “
Plan
”) by the Board of Directors authorizes
Calmare Therapeutics Incorporated to issue options to purchase up to TWO MILLION, FIVE HUNDRED THOUSAND (2,500,000) shares of
common stock. Terms are to be determined pursuant to option agreements extended to its Employees, Directors, and Consultants subject
to the following terms.
The purpose of
the Plan is to enable the Company to attract, retain and motivate its employees, directors and qualified consultants by providing
for or increasing the proprietary interests of such employees, directors and consultants in the Company through increased stock
ownership. The Plan provides for options which either
|
|
(a)
|
qualify
as incentive stock options (“
Incentive Options
”) within the meaning
of that term in Section 422 of the Internal Revenue Code of 1986, as amended, or
|
|
|
(b)
|
do
not so qualify under Section 422 of the Code (“
Non-statutory Options
”)
(collectively the “
Options
”). Any Option granted under this Plan will
be clearly identified at the time of grant as to whether it is intended to be either
an Incentive Option or a Non-statutory Option.
|
The following terms,
when appearing in the text of this Plan in capitalized form, will have the meanings set out below:
|
|
(a)
|
“Board”
means the Board of Directors of the Company.
|
|
|
(b)
|
“Code”
means the Internal Revenue Code of 1986, as heretofore or hereafter amended.
|
|
|
(c)
|
“Committee”
means the Compensation Committee which is appointed by the Board pursuant to Section
3 below and which has responsibility to administer the Plan.
|
|
|
(d)
|
“Company”
means Calmare Therapeutics Incorporated or any parent or “subsidiary corporation,”
as that term is defined by Section 424(f) of the Code, thereof, unless the context requires
it to be limited to Calmare Therapeutics Incorporated.
|
|
|
(e)
|
“Consultants”
means the class of persons consisting of individuals engaged by the Company by contract
or otherwise to provide services to the Company as the Committee shall so determine.
|
|
|
(f)
|
“Directors”
means the class of persons consisting of individuals elected to and actively serving
on the Company's Board of Directors.
|
|
|
(g)
|
“Disabled
Grantee”
means a Grantee who is disabled within the meaning of Section 422
(c)(6) of the Code.
|
|
|
(h)
|
“Employees”
means the class of employees consisting of individuals regularly employed by the
Company on a full-time salaried basis who are identified as key employees, or other such
employees as the Committee shall so determine.
|
|
|
(i)
|
“Executive
Officer”
means those individuals who, on the last day of the taxable year at
issue: (i) served as the Company’s chief executive officer (“
CEO
”
)
,
regardless of compensation level and (ii) the four most highly compensated executive
officers (other than the CEO) all as determined pursuant to Treasury Regulation 1.162-27
(c)(2).
|
|
|
(j)
|
“Fair
Market Value”
means, with respect to the common stock of the Company, the price
at which the stock would change hands between an informed, able and willing buyer and
seller, neither of which is under a compulsion to enter into the transaction. Fair Market
Value will be determined in good faith by the Committee in accordance with a valuation
method which is consistent with the guidelines set forth in Treasury Regulation 1.421-7
(e)(2) or any applicable regulations issued pursuant to Section 422(a) of the Code. Fair
Market Value will be determined without regard to any restriction other than a restriction
which, by its terms, will never lapse.
|
|
|
(k)
|
“Grantee”
means an eligible Employee, Director or Consultant under this Plan who has been granted
an Option.
|
|
|
(l)
|
“Incentive
Option”
means an Option that qualifies for the benefit described in Section
421 of the Code, by virtue of compliance with the provisions of Section 422 of the Code.
|
|
|
(m)
|
“Nonstatutory
Option”
means an Option that is not an Incentive Option.
|
|
|
(n)
|
“Option”
means a privilege granted to the Grantee by the Company that gives the Grantee the
right, but not the obligation, to buy Stock at an agreed-upon price within a certain
period of time.
|
|
|
(o)
|
“Option
Agreement”
means the agreement entered into between the Company and an individual
Grantee and specifying the terms and conditions of the Option granted to the Grantee,
which terms and conditions will recite or incorporate by reference: (i) the provisions
of this Plan which are not subject to variation; and (ii) the variable terms and conditions
of each Option granted hereunder which will apply to that Grantee.
|
|
|
(p)
|
“Optionee”
means a Grantee, and, under the appropriate circumstances, his guardian, representative,
heir, distributee, legatee or successor in interest, including any transferee.
|
|
|
(q)
|
“Stock”
means the Company's
common stock.
|
|
|
III.
|
Administration
of the Plan.
|
|
|
(a)
|
Committee
Membership.
The Committee shall be not less than two members and to the extent possible
shall be comprised solely of Non-employee Directors, as defined by Rule 16b-3(b)(3)(i)
of the Securities Exchange Act of 1934 (“
1934 Act
”), or any successor
definition adopted by the Securities and Exchange Commission, and who shall each also
qualify as an Outside Director for purposes of Section 162(m) of the Code. Any vacancy
occurring on the Committee may be filled by appointment by the Board. The Board at its
discretion may from time to time appoint members to the Committee in substitution of
members previously appointed, may remove members of the Committee and may fill vacancies,
however caused, in the Committee.
|
(b)
Committee
Procedures.
The Committee shall select one of its members as chairman and shall hold meetings at such times and places as
it may determine. A quorum of the Committee shall consist of a majority of its members, and the Committee may act by vote of a
majority of its members present at a meeting at which there is a quorum, or without a meeting by written consent signed by all
members of the Committee. If any powers of the Committee hereunder are limited or denied by the Board or under applicable law,
the same powers may be exercised by the Board.
|
|
(c)
|
Committee
Powers and Responsibilities.
The Committee will interpret the Plan, prescribe, amend
and rescind any rules or regulations necessary or appropriate for the administration
of the Plan, and make such other determinations and take such other actions it deems
necessary or advisable, except as otherwise expressly reserved for the Board. Subject
to the limitations imposed by the Board or under applicable law and the terms of the
Plan, the Committee may periodically determine which Employees, Directors, and/or Consultants
should receive Options under the Plan, whether the options shall be Incentive Options
or Non-statutory Options, the number of shares covered by such Options, the per share
purchase price for such shares, and the terms thereof, including but not limited to transferability
of such Options, and shall have full power to grant such Options. In making its determinations,
the Committee .shall consider, among other relevant factors, the importance of the duties
of the Grantee to the Company, his or her experience with the Company, and his or her
future value to the Company. All decisions, interpretations and other actions of the
Committee shall be final and binding on all Grantees, Optionees and all persons deriving
their rights from a Grantee or Optionee. No member of the Board or the Committee shall
be liable for any action taken or failed to be taken in good faith or for any determination
made pursuant to the Plan.
|
|
|
IV.
|
Stock
Subject to Plan.
|
This Plan authorizes
the Committee to grant Options to Employees, Directors and/or Consultants up to the aggregate amount of Two Million, Five Hundred
Thousand (2,500,000) shares of Stock, subject to eligibility and any limitations specified herein. Adjustment in the shares subject
to the Plan shall be made as provided in Section VIII. Any shares covered by an Option which, for any reason, expires, terminates
or is canceled may be re-optioned under the Plan. The Board has the authority to amend the Plan to add additional shares to the
amount of shares that may be granted under the Plan.
|
|
(a)
|
General Rule.
All Employees,
Directors and Consultants defined in Section 2(e) and 2(g) shall be eligible.
|
|
|
(b)
|
Ten
Percent (10%) Stockholders.
An Employee, Director or Consultant who owns more than
Ten Percent (10%) of the total combined voting power of all classes of outstanding Stock
shall not be eligible for designation as a Grantee of an Incentive Option unless:
|
|
|
1.
|
the exercise price for each share
of Stock subject to such Incentive Option is at least One Hundred Ten Percent (110%)
of the Fair Market Value of a share of Stock on the date of grant, and
|
|
|
2.
|
such
Incentive Option, by its terms, is not exercisable after the expiration of five (5) years
from the date of grant.
|
|
|
(c)
|
Attribution
Rules.
For purposes of Subsection (b) above, in determining stock ownership, an Employee,
Director or Consultant shall be deemed to possess the Stock owned, directly or indirectly,
by or for his brothers, sisters (whether by whole or half-blood), spouse, ancestors and
lineal descendants. Stock owned, directly or indirectly, by or for a corporation, partnership,
estate or trust shall be deemed to be owned proportionately by or for its stockholders,
partners or beneficiaries.
|
|
|
(d)
|
Outstanding
Stock.
For purposes of Subsection (b) above, “
Outstanding Stock
”
shall include all Stock actually issued and outstanding immediately after the grant.
Outstanding Stock shall not include shares authorized for issuance under outstanding
options held by the Employee, Director or Consultant, or by any other person.
|
|
|
(e)
|
Individual
Limits of Executive Officers.
Subject to the provisions of Section 9 hereof, the
number of option shares granted in a fiscal year to any Executive Officer shall not exceed
One Million (1,000,000) shares for the first fiscal year during which such person becomes
an Executive Officer and shall not exceed Five Hundred Thousand (500,000) shares for
any subsequent fiscal year during which such person serves as an Executive Officer.
|
|
|
(f)
|
Individual
Incentive Option Limitation.
The aggregate Fair Market Value of the stock for which
Incentive Options granted to any one eligible Employee, Director, or Consultant under
this Plan and under all incentive stock option plans of the Company, its parent(s) and
subsidiaries, may by their terms first become exercisable during any calendar year shall
not exceed One Hundred Thousand Dollars ($100,000) (the “
Restriction
”),
determining Fair Market Value of the stock subject to any Option as of the time that
Option is granted. If the date on which one or more Incentive Options could be first
exercised would be accelerated pursuant to any other provision of the Plan or any Stock
Option Agreement referred to in Section VI(a) below, or an amendment thereto, and the
acceleration of such exercise date would result in a violation of the Restriction set
forth in the preceding sentence, then notwithstanding any such other provision the exercise
date of such Incentive Options shall be accelerated only to the extent, if any, that
is permitted under Section 422 of the Code and the exercise date of the Incentive Options
with the lowest option prices shall be accelerated first. Any exercise date which cannot
be accelerated without violating the Restriction of this section shall nevertheless be
accelerated, and the portion of the Option becoming exercisable thereby shall be treated
as a Non-statutory Option.
|
|
|
VI.
|
Terms
and Conditions of All Options under the Plan.
|
|
|
(a)
|
Option
Agreement.
All Options granted under the Plan shall be evidenced by a written Option
Agreement and shall be subject to all applicable terms and conditions of the Plan and
may be subject to any other terms and conditions which are not inconsistent with the
Plan and which the Committee deems appropriate for inclusion in an Option Agreement.
|
|
|
(b)
|
Number
of Shares.
Each Option Agreement shall specify the number of shares of the Stock
each such Employee, Director or Consultant will be entitled to purchase pursuant to the
Option and shall provide for the adjustment of such number in accordance with Section
VIII. Each Option Agreement shall state the minimum number of shares which must be exercised
at any time, if any.
|
|
|
(c)
|
Nature
of Option
. Each Option Agreement shall specify the intended nature of the Option
as an Incentive Option, a Non-statutory Option or partly of each type.
|
|
|
(d)
|
Exercise
Price.
Each Option Agreement shall specify the exercise price. The exercise price
of either the Incentive Option or the Non-statutory Option shall not be less than one
hundred percent (100%) of the Fair Market Value of a share of Stock on the date of grant.
Subject to the foregoing, the exercise price under any Option shall be determined by
the Committee in its sole discretion. The exercise price shall be payable in the form
described in Section VII.
|
|
|
(e)
|
Term
of Option.
The Option Agreement shall specify the term of the Option. The term of
any Option granted under this Plan is subject to expiration, termination, and cancellation
as set forth within this Plan.
|
|
|
(f)
|
Exercisability.
Each Option Agreement shall specify the date when all or any installment of the Option
is to become exercisable. Such Option shall not be exercisable after the expiration of
such term which shall be fixed by the Committee, but in any event not later than ten
years from the date such Option is granted. Subject to the provisions of the Plan, the
Committee may grant Options which are vested, or which become vested upon the happening
of an event or events as specified by the Committee.
|
|
|
(g)
|
Withholding
Taxes.
Upon exercise of any Non-statutory Option (or any Incentive Option which is
treated as a Non-statutory Option because it fails to meet the requirements set forth
in the Code for Incentive Options), the Optionee must tender full payment to the Company
for any federal income tax withholding required under the Code in connection with such
exercise (“Withholding Tax”). If the Optionee fails to tender to the Company
the Withholding Tax, the Committee, at its discretion, shall withhold from the Optionee
any and all shares subject to such Option, and accordingly, subject to Withholding Tax
until such time as either of the following events has occurred:
|
|
|
1.
|
if the Optionee
is not an Employee, then the Optionee tenders a cash payment to the Company to pay the
Withholding Tax; or
|
|
|
2.
|
if the Optionee
is an Employee, the Company withholds an amount sufficient to pay the Withholding Tax
from the Optionee's wages.
|
|
|
(h)
|
Termination and Acceleration of
Options.
Upon termination of a Grantee, the treatment of outstanding Options is subject
to the following:
|
|
|
1.
|
Termination
without cause
:
|
|
|
|
(i)
Non-Disabled Grantee
.
If the employment of a Grantee who is not a Disabled Grantee is terminated without cause,
or such Grantee voluntarily quits or retires under any retirement plan of the Company,
any then outstanding and exercisable stock option held by such a Grantee shall be exercisable,
in accordance with the provisions of the Option Agreement, by such Grantee at any time
prior to the expiration date of such Option or within three months after the date of
termination of employment or service, whichever is the shorter period.
|
|
|
|
(ii)
Disabled Grantee
.
If the employment of a Grantee who is a Disabled Grantee is terminated without cause,
any then outstanding and exercisable Option held by such a Grantee shall be exercisable,
in accordance with the provisions of the Option Agreement, by such a Grantee at any time
prior to the expiration date of such Option or within one year after the date of such
termination of employment or service, whichever is the shorter period. Whether a Grantee
is a Disabled Grantee shall be determined in each case, in its discretion, by the Committee
and any such determination by the Committee shall be final and binding.
|
|
|
2.
|
Termination
for cause
:
|
|
|
|
If the Company terminates the employment
of a Grantee for cause, all outstanding stock options held by the Grantee at the time
of such termination shall automatically terminate unless the Committee notifies the Grantee
that his or her options will not terminate. A termination “for cause” shall
be defined under each written Option Agreement. The Company assumes no responsibility
and is under no obligation to notify a Permitted Transferee (as hereafter defined in
section XII) of early termination of an Option on account of a Grantee's termination
of employment. Whether termination of employment or other service is a termination “for
cause” shall be determined in each case, in its discretion, by the Committee and
any such determination by the Committee shall be final and binding.
|
|
|
|
Following the death of a Grantee during
employment, any Options outstanding and exercisable held by such Grantee at the time
of death shall be exercisable, in accordance with the provisions of the Option Agreement,
by the person or persons entitled to do so under the Will of the Grantee, or, if the
Grantee shall fail to make testamentary disposition of the stock option or shall die
intestate, by the legal representative of the Grantee at any time prior to the expiration
date of such Option or within one year after the date of death, whichever is the shorter
period.
|
The Committee
may grant Options, or amend Options previously granted, so that such Options continue to be exercisable up to ten years after
the date of grant irrespective of the termination of the Grantee's employment with the Company.
The Committee
may grant Options, or amend Options previously granted, so that such Options vest upon grant or become vested upon the happening
of an event or events specified by the Committee, although the exercise of such vested Options in the case of Incentive Options
more than three (3) months after termination of employment may convert such Options to Non-statutory Options with respect to the
income tax consequences of such exercise.
|
|
(a)
|
Cash.
Payment in cash in full for shares purchased under an Option shall be made in cash
(including check, bank draft or money order) or pursuant to a “cashless”
exercise provision, if any is available under the Option Agreement, at the time the Option
is exercised.
|
|
|
(b)
|
Stock.
In lieu of cash an Optionee may, with the consent of the Committee, make payment
for Stock purchased under an Option, in whole or in part, by tendering to the Company
in good form for transfer, shares of Stock valued at Fair Market Value on the date the
Option is exercised. Such shares will have been owned by the Optionee or the Optionee's
representative for the time specified by the Committee but in no case shall the Optionee
or his representative have held a beneficial interest in such tendered shares for a period
less than six months prior to the exercise of the Option. Cash proceeds from the sale
of Stock pursuant to Options granted under the Plan constitute general funds of the Company.
|
Changes or adjustments
in the Option price, number of shares subject to an Option or other specifics as the Committee should decide will be considered
or made pursuant to the following rules:
|
|
(a)
|
Upon
Changes in Stock.
If the outstanding Stock is increased or decreased, or is changed
into or exchanged for a different number or kinds of shares or securities, as a result
of one or more reorganizations, recapitalization, stock splits, reverse stock splits,
split-up, combination of shares, exchange of shares, change in corporate structure, or
otherwise, appropriate adjustments will be made in the exercise price and/ or the number
and/or kind of shares or securities for which Options may thereafter be granted under
this Plan and for which Options then outstanding under this Plan may thereafter be exercised.
The Committee will make such adjustments as it may deem fair, just and equitable to prevent
substantial dilution or enlargement of the rights granted to or available for Optionees.
No adjustment provided for in this Section VIII will require the Company to issue or
sell a fraction of a share or other security. Nothing in this Section will be construed
to require the Company to make any specific or formula adjustment.
|
|
|
(b)
|
Prohibited
Adjustment.
If any such adjustment provided for in this Section VIII requires the
approval of stockholders in order to enable the Company to grant or amend Options, then
no such adjustment will be made without the required stockholder approval. Notwithstanding
the foregoing, if the effect of any such adjustment would be to cause an Incentive Option
to fail to continue to qualify under Section 422 of the Code or to cause a modification,
extension or renewal of such stock option within the meaning described in Section 424
of the :ode, the Committee may elect that such adjustment not be made but rather shall
cause reasonable efforts to effect such other adjustment of each then outstanding Option
as the Committee, in its sole discretion, shall deem equitable and which will not result
in any disqualification, modification, extension or renewal (within the meaning of Section
424 of the Code) of such Incentive Option.
|
|
|
(c)
|
Further
Limitations.
Nothing in this Section will entitle the Optionee to adjustment of his
Option in the following circumstances:
|
|
|
(i)
|
The issuance
or sale of additional shares of the Stock, through public offering or otherwise;
|
|
|
(ii)
|
The issuance
or authorization of an additional class of capital stock of the Company;
|
|
|
(iii)
|
The conversion
of convertible preferred stock or debt of the Company into stock;
|
|
|
(iv)
|
The payment
of dividends except as provided in Section VIII (a).
|
The grant of an
Option shall not affect in any way the right or power of the Company to make adjustments, reclassifications, reorganizations,
or changes of its capital or business structure, to merge or consolidate or to dissolve, liquidate, sell or transfer all or part
of its business assets.
|
|
(a)
|
Compliance
with All Laws.
The Company will not be required to issue or deliver any certificates
for shares of Stock prior to the listing of any such Stock to be acquired pursuant to
the exercise of any Option on any stock exchange on which the Stock may then be listed
and the compliance with any registration requirements or qualification of such shares
under any federal securities laws, including without limitation the Securities Act of
1933, as amended (the “
1933 Act
”), the rules and regulations promulgated
thereunder, or state securities laws and regulations, the regulations of any stock exchange
or interdealer quotation system on which the Company's securities may then be listed,
and/or obtaining any ruling or waiver from any government body which the Company may,
in its sole discretion, determine to be necessary or advisable, or which, in the opinion
of counsel to the Company, is otherwise required.
|
|
|
(b)
|
Compliance
with Specific Code Provisions.
It is the intent of the Company that the Plan and
its administration conform strictly to the requirements of Section 422 of the Code with
respect to Incentive Options. Therefore, notwithstanding any other provision of this
Plan, nothing herein will contravene any requirement set forth in Section 422 of the
Code with respect to Incentive Options and if inconsistent provisions are otherwise found
herein, they will be deemed void and unenforceable or automatically amended to conform,
as the case may be.
|
|
|
(c)
|
Plan
Subject to Delaware Law.
All questions arising with respect to the provisions of
the Plan will be determined by application of the Code and the laws of the state of Delaware
except to the extent that Delaware laws are preempted by any federal law.
|
|
|
X.
|
Rights
as a Stockholder.
|
An Optionee shall
have no rights as a stockholder with respect to any Stock covered by his or her Option until the date of issuance of the stock
certificate to him or her after receipt of the consideration in full set forth in the Option Agreement. Except as provided in
Section VIII hereof, no adjustments will be made for
dividends, whether ordinary or extraordinary, whether in cash, securities,
or other property, or for distributions for which the record date is prior to the date on which the Option is exercised.
|
|
XI.
|
Restrictions
on Shares.
|
Prior to the issuance
or delivery of any shares of the Stock under the Plan, the person exercising the Option may be required to:
|
|
(a)
|
represent
and warrant that the shares of the Stock to be acquired upon exercise of the Option are
being acquired for investment for the account of such person and not with a view to resale
or other distribution thereof;
|
|
|
(b)
|
represent
and warrant that such person will not, directly or indirectly, sell, transfer, assign,
pledge, hypothecate or otherwise dispose of any such share unless the sale, transfer,
assignment, pledge, hypothecation or other disposition of the shares is pursuant to the
provisions of this Plan and effective registrations under the 1933 Act and any applicable
state or foreign securities laws or pursuant to appropriate exemptions from any such
registrations; and
|
|
|
(c)
|
execute
such further documents as may reasonably be required by the Committee upon exercise of
the Option or any part thereof, including but not limited to any stock restriction agreement
that the Committee may choose to require.
|
Nothing in this
Plan shall assure any Optionee that shares issuable under this Option are registered on a Form S-8 under the 1933 Act or on any
other Form. The certificate or certificates representing the shares of the Stock to be issued or delivered upon exercise of an
Option may bear a legend evidencing the foregoing and other legends required by any applicable securities laws. Furthermore, nothing
herein or any Option granted hereunder will require the Company to issue any Stock upon exercise of any Option if the issuance
would, in the opinion of counsel for the Company, constitute a violation of the 1933 Act, applicable state securities laws, or
any other applicable rule or regulation then in effect. The Company shall have no liability for failure to issue shares upon any
exercise of Options because of a delay pending the meeting of any such requirements.
The Committee shall
retain the authority and discretion to permit a Non-statutory Option, but in no case an Incentive Option, to be transferable as
long as such transfers are made only to one or more of the following: family members, limited to children of Grantee, spouse of
Grantee, or grandchildren of Grantee, or trusts for the benefit of Grantee and/or such family members (“
Permitted Transferee
”),
provided that such transfer is a bona fide gift and accordingly, the Grantee receives no consideration for the transfer, and that
the Options transferred continue to be subject to the same terms and conditions that were applicable to the Options immediately
prior to the transfer. Options are also subject to transfer by will or the laws of descent and distribution. Options granted pursuant
to this Plan shall not be otherwise transferred, assigned, pledged, hypothecated or disposed of in any way, whether by operation
of law or otherwise. A Permitted Transferee may not subsequently transfer an Option. The designation of a beneficiary shall not
constitute a transfer.
|
|
XIII.
|
No
Right to Continued Employment.
|
This Plan and any
Option granted under this Plan will not confer upon any Optionee any right with respect to continued employment or engagement
by the Company nor shall they alter, modify, limit or interfere with any right or privilege of the Company under any employment
agreement heretofore or hereafter executed with any Optionee, including the right to terminate any Optionee's employment or engagement
at any time for or without cause, to change his or her level of compensation or to change his or her responsibilities or position.
|
|
XIV.
|
Corporate
Reorganizations.
|
Upon the dissolution
or liquidation of the Company, or upon a reorganization, merger or consolidation of the Company as a result of which the outstanding
securities of the class then subject to Options hereunder are changed into or exchanged for cash or property or securities not
of the Company's issue, or upon a sale of substantially all the property of the Company to, or the acquisition of stock representing
more than Eighty Percent (80%) of the voting power of the stock of the Company then outstanding by another corporation or person,
the Plan will terminate and all Options will lapse. The result described above will not occur if provision is made in writing
in connection with such transaction for the continuance of the Plan and/or for the assumption of Options earlier granted, or the
substitution for such Options of Options covering the stock of a successor employer corporation, or a parent or a subsidiary thereof,
with appropriate adjustments as to the number and kind of shares and prices, in which event the Plan and Options theretofore granted
will continue in the manner and under the terms so provided. If the Plan and unexercised Options shall terminate pursuant to the
foregoing, all persons holding any unexercised portions of Options then outstanding shall have the right at such time prior to
the consummation of the transaction causing the termination as the Company shall designate, to exercise the unexercised portions
of their options, including the portions thereof which would but for this Section XIV not yet be exercisable.
|
|
XV.
|
Modification,
Extension and Renewal.
|
|
|
(a)
|
Options.
Subject to the conditions of and within the limitations prescribed in the Plan herein,
the Committee may modify, extend, cancel or renew outstanding Options. Notwithstanding
the foregoing, no modification will, without the prior written consent of the Optionee,
alter, impair or waive any rights or obligations associated with any Option earlier granted
under the Plan.
|
|
|
(b)
|
Plan.
The Board may at any time and from time to time interpret, amend or discontinue the Plan.
|
|
|
XVI.
|
Plan
Date and Duration.
|
The Plan shall
take effect on the date it is adopted by the Board. This Plan shall expire Ten (10) years from the date it is approved by the
Board.
Calmare Therapeutics (CE) (USOTC:CTTC)
Historical Stock Chart
From Mar 2024 to Apr 2024
Calmare Therapeutics (CE) (USOTC:CTTC)
Historical Stock Chart
From Apr 2023 to Apr 2024
