UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC
20549
SCHEDULE 14A
(RULE
14A-101)
INFORMATION REQUIRED IN
PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the
Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ]
Confidential, For Use of the
Commission Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy
Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material under §240.14a -12
BIOSPECIFICS TECHNOLOGIES CORP.
(Name of Registrant as Specified in its Charter)
___________________________________________________________
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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[X]
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No fee required
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[ ]
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Fee computed on table below per
Exchange Act Rules 14a-6(i)(1) and 0-11.
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(1)
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Title of each class of securities to which transaction
applies:
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(2)
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Aggregate number of securities to which transaction
applies:
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(3)
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Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4)
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Proposed maximum aggregate value of
transaction:
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(5)
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Total fee paid:
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[ ]
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Fee paid previously with
preliminary materials.
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[ ]
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Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing by
registration statement number, or the Form or Schedule and the date of its
filing.
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(6)
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Amount Previously Paid:
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(7)
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Form, Schedule or Registration Statement No.:
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(8)
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Filing Party:
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(9)
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Date Filed:
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BIOSPECIFICS TECHNOLOGIES CORP.
35 WILBUR STREET
LYNBROOK, NEW YORK 11563
516-593-7000
April 27, 2018
Dear Stockholder:
On behalf of the Board of Directors of BioSpecifics
Technologies Corp. (the Company), I invite you to attend our 2018 Annual
Meeting of Stockholders (the 2018 Annual Meeting). The 2018 Annual Meeting
will be held on Thursday, June 14, 2018, at 11:00 a.m., Eastern Daylight Time,
at the offices of Morgan, Lewis & Bockius LLP, 101 Park Avenue, New York,
New York 10178.
The matters to be voted upon at the 2018 Annual Meeting are
listed in the Notice of the 2018 Annual Meeting and more fully described in the
proxy statement accompanying this letter (the Proxy Statement).
At the 2018 Annual Meeting, you will be provided an opportunity
to ask questions regarding the matters to be voted upon, gain an up-to-date
perspective on the Company and its activities, and meet the directors of the
Company.
We know that many of our Companys stockholders (each, a
Stockholder, and collectively, the Stockholders) will be unable to attend
the 2018 Annual Meeting in person. We, therefore, are soliciting proxies so that
each Stockholder has an opportunity to vote on the matters that are scheduled to
come before the Stockholders at the 2018 Annual Meeting. Whether or not you plan
to attend, please take the time now to read the Proxy Statement and vote and
submit your proxy by signing, dating and returning your proxy card promptly in
the enclosed postage-paid envelope. You may revoke your proxy at any time prior
to the time it is voted at the 2018 Annual Meeting. Regardless of the number of
Company shares you own, your presence in person or by proxy is important for
quorum purposes and your vote is important for proper corporate action.
Thank you for your continuing interest in the Company. We look
forward to seeing you at the 2018 Annual Meeting.
If you have any questions about the Proxy Statement, please
contact me at (516) 593-7000.
Sincerely,
/s/ Thomas Wegman
Thomas Wegman
President
BIOSPECIFICS TECHNOLOGIES CORP.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
JUNE 14,
2018
To the Stockholders of BIOSPECIFICS TECHNOLOGIES CORP.:
Notice is hereby given that the 2018 Annual Meeting of
Stockholders (the 2018 Annual Meeting) of BioSpecifics Technologies Corp., a
Delaware corporation (the Company), will be held on Thursday, June 14, 2018,
at 11:00 a.m., Eastern Daylight Time, at the offices of Morgan, Lewis &
Bockius LLP, 101 Park Avenue, New York, New York 10178 for the following
purposes:
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1.
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To elect Mr. Thomas Wegman and Dr. Paul Gitman to the
first class of directors of the Board of Directors of the Company, each to
serve for a three-year term as specified in the attached Proxy
Statement;
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2.
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To approve, on an advisory basis, the executive
compensation of the named executive officer as disclosed in the attached
Proxy Statement; and
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3.
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To ratify the appointment of EisnerAmper LLP as the
independent registered public accounting firm for the Company for the
fiscal year ending December 31, 2018.
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We will also consider and act upon such other business as may
properly come before the 2018 Annual Meeting or any adjournment thereof.
Our Board of Directors recommends that you vote
FOR
each of the nominees for the first class of directors (Proposal No. 1),
FOR
non-binding resolution to approve the compensation of the named executive
officer (Proposal No. 2), and
FOR
ratification of the independent
registered public accounting firm (Proposal No. 3).
Only the Companys stockholders of record at the close of
business on April 20, 2018 are entitled to this notice (this Notice) and to
vote at the 2018 Annual Meeting and any adjournment thereof.
A proxy statement more fully describing the matters to be
considered at the 2018 Annual Meeting (the Proxy Statement) is attached to
this Notice. Copies of our 2017 Annual Report on Form 10-K (including the
financial statements and schedules thereto, as filed with the Securities and
Exchange Commission) accompany this Notice, but are not deemed to be part of the
Proxy Statement.
It is important that your shares be represented at the
meeting. We urge you to review the attached Proxy Statement and, whether or not
you plan to attend the meeting in person, please vote your shares promptly by
completing, signing and returning the accompanying proxy card. You do not need
to affix postage to the enclosed reply envelope if you mail it within the United
States. If you attend the meeting, you may withdraw your proxy and vote your
shares personally.
If your shares are not registered in your own name and you
would like to attend the 2018 Annual Meeting, please ask the bank, broker or
other institution that holds your shares to provide you with evidence of your
share ownership. This will enable you to gain admission to the meeting.
All stockholders are extended an invitation to attend the
meeting.
By Order of the Board of Directors,
/s/ Thomas
Wegman
Thomas Wegman
President
April 27, 2018
1
Important Notice Regarding the Availability of Proxy
Materials for the Stockholder Meeting To Be Held on June 14, 2018
The Proxy Statement, Proxy Card and our 2017 Annual
Report on Form 10-K are available
at
http://www.materials.proxyvote.com/090931.
2
BIOSPECIFICS TECHNOLOGIES CORP.
35 WILBUR
STREET
LYNBROOK, NEW YORK 11563
________________
PROXY STATEMENT FOR THE 2018 ANNUAL MEETING OF
STOCKHOLDERS
To Be Held on Thursday, June 14, 2018 at 11:00 a.m.,
Eastern Daylight Time (EDT)
________________
This proxy statement (the Proxy Statement) and the
accompanying proxy card (the Proxy Card) are being furnished with respect to
the solicitation of proxies by the Board of Directors (the Board) of
BioSpecifics Technologies Corp., a Delaware corporation (the Company,
BioSpecifics or we), for the 2018 Annual Meeting of Stockholders (the 2018
Annual Meeting). The 2018 Annual Meeting will be held at 11:00 a.m., EDT, on
Thursday, June 14, 2018, and at any adjournment thereof, at the offices of
Morgan, Lewis & Bockius LLP, 101 Park Avenue, New York, New York 10178.
The approximate date on which the Proxy Statement and Proxy
Card are intended to be sent or given to the Companys stockholders (each a
Stockholder and collectively, the Stockholders) is May 1, 2018.
The purposes of the 2018 Annual Meeting are to seek Stockholder
approval of the following two proposals:
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(i)
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to elect Mr. Thomas Wegman and Dr. Paul Gitman to the
first class of directors to the Board, each for a three-year
term;
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(ii)
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to approve, on an advisory basis, the executive
compensation of the named executive officer as disclosed in the attached
Proxy Statement; and
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(iii)
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to ratify the appointment of EisnerAmper LLP as the
independent registered public accounting firm for the Company for the
fiscal year ending December 31, 2018.
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We will also consider and act upon any other matters that
properly come before the Annual Meeting or any adjournment or postponement
thereof.
Who May Vote
Stockholders of record of our common stock (the Common Stock)
as of the close of business on April 20, 2018 (the Record Date) are entitled
to notice and to vote at the 2018 Annual Meeting and any adjournment thereof. As
of the Record Date, we had issued and outstanding 7,199,233 shares of Common
Stock. We have no other securities entitled to vote at the 2018 Annual Meeting.
Each share of Common Stock is entitled to one vote on each matter. There is no
cumulative voting.
A list of Stockholders entitled to vote at the 2018 Annual
Meeting will be available at the 2018 Annual Meeting and will also be available
for ten (10) days prior to the 2018 Annual Meeting, during regular office hours,
at the executive offices of the Company, located at 35 Wilbur Street, Lynbrook,
New York 11563, by contacting the President of the Company.
The presence at the 2018 Annual Meeting of a majority of the
outstanding shares of Common Stock as of the Record Date, represented in person
or by proxy, is required for a quorum. Abstentions and broker non-votes, if
any, will be counted as present and entitled to vote for purposes of determining
whether a quorum is present for the transaction of business at such meeting.
Broker non-votes are shares represented at the 2018 Annual
Meeting held by brokers, bankers or other nominees (i.e., in street name) and
are not voted on a particular proposal because the nominee does not have
discretionary voting power with respect to that item and has not received
instructions from the beneficial owner. Generally, brokerage firms may vote to
ratify the selection of independent auditors and on other discretionary or
routine items. In contrast, brokerage firms may not vote to elect directors,
because those proposals are considered non-discretionary items. Accordingly,
if you do not instruct your broker how to vote your shares on
non-discretionary matters, your broker will not be permitted to vote your
shares on these matters. We refer to this as a broker non-vote.
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Method of Voting
If you were a record holder of shares of Common Stock on April
20, 2018, you may vote as follows:
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By Mail.
Complete and mail your Proxy Card in the
postage prepaid envelope you receive, and return the Proxy Card to
MacKenzie Partners, Inc., Proxy Tabulation, Madison Square Station, P.O.
Box 865, New York, NY 101160-1051. Complete instructions are included on
the Proxy Card. Your proxy will be voted in accordance with your
instructions. If you sign and return the enclosed Proxy Card, but do not
specify how you want your shares voted, they will be voted
FOR
each of the nominees for the first class of directors,
FOR
non-binding resolution to approve the compensation of the named
executive officer and
FOR
ratification of the independent
registered public accounting firm and will be voted according to the
discretion of the proxy holder named in the Proxy Card upon any other
business that may properly be brought before the meeting and at all
adjournments and postponements thereof.
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In Person at the Meeting.
If you attend the
meeting, be sure to bring a form of personal picture identification with
you. You may deliver your completed Proxy Card in person, or you may vote
by completing a ballot, which will be available at the meeting. Directions
to the 2018 Annual Meeting may be obtained by visiting
https://www.morganlewis.com/locations/new-york and clicking on
Directions beneath the address 101 Park Ave., New York, NY 10178-0060,
United States.
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If your shares of Common Stock are held in street name
through a bank, broker or other institution, then that bank, broker or other
institution is considered the holder of record of your shares, and you should
refer to information forwarded to you by such holder of record for your voting
options. You may vote as follows:
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By Internet or By Telephone.
You will receive instructions from your broker or other nominee if you
are permitted to vote by internet or telephone.
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By Mail.
You will receive instructions from your
broker or other nominee explaining how to vote your shares.
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In Person at the Meeting.
If you attend the
meeting, in addition to picture identification, you should: (1) bring an
account statement or a letter from the record holder indicating that you
owned the shares as of the Record Date,
and
(2) contact the broker
or other nominee who holds your shares to obtain a brokers Proxy Card and
bring it with you to the meeting. Directions to the 2018 Annual Meeting
may be obtained by visiting
https://www.morganlewis.com/locations/new-york
and clicking on
Directions beneath the address 101 Park Ave., New York, NY 101780060,
United States.
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Boards Recommendations
The Board recommends a vote:
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Proposal 1
:
FOR
the election of Mr.
Thomas Wegman and Dr. Paul Gitman to the first class of directors to the
Board, each for a three-year term.
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Proposal 2
:
FOR
the non-binding
resolution to approve the compensation of Thomas L. Wegman.
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Proposal 3
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FOR
ratification of the
appointment of EisnerAmper LLP as the Companys independent registered
public accounting firm for the fiscal year ending December 31, 2018.
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Required Vote
The shares of Common Stock represented by any proxy duly given
will be voted at the 2018 Annual Meeting in accordance with the instructions of
the Stockholder. If no specific instructions are given, the shares will be voted
FOR
each of the nominees for the first class of directors,
FOR
non-binding resolution to approve the compensation of the named executive
officer and
FOR
ratification of the independent registered public
accounting firm. In addition, if any other matters come before the 2018 Annual
Meeting, the persons named in the accompanying Proxy Card will vote in
accordance with their best judgment with respect to such matters. Each share of
Common Stock outstanding on the Record Date will be entitled to one vote on all
matters.
Required Vote - Election of Directors (Proposal No. 1).
Directors shall be elected by a plurality of the votes cast by Stockholders
present in person or represented by proxy at the 2018 Annual Meeting and
entitled to vote on the election of directors. This means that the two
individuals receiving the highest number of
FOR
votes will be elected
as directors. Abstentions and broker non-votes will not be treated as votes cast
for this purpose and, therefore, will not affect the outcome of the election.
Required Vote - Ratification of the Selection of Independent
Registered Public Accounting Firm (Proposal No. 3).
The affirmative vote of
a majority of shares of our Common Stock, present in person or represented by
proxy at the 2018 Annual Meeting and entitled to vote, is required to ratify the
appointment of our independent registered public accounting firm. An abstention
is treated as present and entitled to vote and therefore has the effect of a
vote against ratification of the independent registered public accounting
firm. Because the ratification of the independent registered public accounting
firm is a routine matter, a nominee holding shares in street name may vote on
this proposal in the absence of instructions from the beneficial owner.
The advisory vote on executive compensation is non-binding;
however, the Company will record the number of votes cast in favor of and
against this proposal and will report the voting results at the 2018 Annual
Meeting.
If there are insufficient votes to approve these proposals,
your proxy may be voted by the persons named in the Proxy Card to adjourn the
2018 Annual Meeting in order to solicit additional proxies in favor of the
approval of such proposals. If the 2018 Annual Meeting is adjourned or postponed
for any purpose, at any subsequent reconvening of the meeting, your proxy will
be voted in the same manner as it would have been voted at the original
convening of the 2018 Annual Meeting unless you withdraw or revoke your
proxy.
Revoking Your Proxy
Even if you execute a proxy, you retain the right to revoke it
and to change your vote by notifying us at any time before your proxy is voted.
Such revocation may be effected in writing by execution of a subsequently dated
proxy, or by a written notice of revocation, sent to the attention of the
Companys President at the address of our principal office set forth above, or
by your attendance and voting in person at the 2018 Annual Meeting. Unless so
revoked, the shares represented by proxies, if received in time, will be voted
in accordance with the directions given therein.
If the 2018 Annual Meeting is postponed or adjourned for any
reason, at any subsequent reconvening of the 2018 Annual Meeting, all proxies
will be voted in the same manner as the proxies would have been voted at the
original convening of the 2018 Annual Meeting (except for any proxies that have
at that time effectively been revoked or withdrawn).
You are requested, regardless of the number of shares you own
or your intention to attend the 2018 Annual Meeting, to sign and return the
Proxy Card in the enclosed envelope. You do not need to affix postage to the
enclosed reply envelope if you mail it within the United States.
Solicitation of Proxies
The expenses of solicitation of proxies will be paid by the
Company. We may solicit proxies by mail or by phone through agents of the
Company. Additionally, the officers and employees of the Company, who will
receive no extra compensation therefor, may solicit proxies personally, by
telephone, facsimile or mail. The Company plans to utilize MacKenzie Partners,
Inc. to solicit proxies and the estimated cost for such solicitation services is
anticipated to be approximately $30,000. The Company will also reimburse banks, brokers or other
institutions for their expenses incurred in sending proxies and proxy materials
to the beneficial owners of shares held by them.
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Dissenters Right of Appraisal
Under the Delaware General Corporation Law, Stockholders are
not entitled to any appraisal or similar rights of dissenters with respect to
any of the proposals to be acted upon at the 2018 Annual Meeting.
Delivery of Proxy Materials to Households
Only one copy of the Companys 2017 Annual Report on Form 10-K
(including the financial statements and schedules thereto) as filed with the
Securities and Exchange Commission (the SEC) (the 2017 Annual Report) and
the Proxy Statement will be delivered to an address where two or more
Stockholders reside unless we have received contrary instructions from a
Stockholder residing at such address. A separate Proxy Card will be delivered to
each Stockholder at the shared address.
If you are a Stockholder who lives at a shared address and you
would like additional copies of the 2017 Annual Report, the Proxy Statement, or
any future annual reports or proxy statements, please contact Thomas Wegman,
President, BioSpecifics Technologies Corp., 35 Wilbur Street, Lynbrook, New York
11563, telephone number (516) 593-7000, and we will promptly mail you copies.
The Proxy Statement and the 2017 Annual Report are also available at
http://www.materials.proxyvote.com/090931.
If you are receiving multiple
copies of the Proxy Statement and 2017 Annual Report at your household and wish
to receive only one, please contact Thomas Wegman at the mailing address or
phone number listed above.
6
Directors and Executive Officers
Set forth below are the names of our current directors and
officers, their ages, all positions and offices that they hold with us, the
period during which they have served as such, and their business experience
during at least the last five years.
THOMAS WEGMAN.
Mr. Wegman, age 63, has served as an
officer of the Company for more than 20 years. He is our current President and
has served as our President since October 2005 and as a director since 1994.
Prior to such appointment as President, he served as the Executive Vice
President of the Company. He has over 30 years of experience in the
biopharmaceutical industry that encompasses managing company operations and drug
development, licensing, and registration. Mr. Wegman has had experience managing
the production, marketing and foreign registration activities related to an
avian vaccine business. Mr. Wegman has been instrumental in licensing
technologies from universities for use by the Company. He is the author of a
number of U.S. and foreign patents in the life sciences field. Mr. Wegman
received his B.A. from Boston University in 1977. Mr. Wegman is the author of
the method of use patents for Dupuytrens disease and Peyronies disease. Total
revenue received from these indications is in excess of 800 million. Mr. Wegman
is the brother of Dr. Wegman and the stepson of Ms. Wegman, both of whom are
currently directors of the Company. Mr. Wegman has been nominated for
re-election at the 2018 Annual Meeting.
The Company believes that Mr.
Wegman is qualified to serve as a member of our Board because of his business
and professional experience.
DR. PAUL GITMAN.
Dr. Gitman, age 77, is currently a
director on the Board and has served as a director of the Company since 1990. He
is board certified by the American Board of Internal Medicine, the American
Board of Quality Assurance and Utilization Review and the American Board of
Medical Quality and is a Master in the American College of Physicians. Following
25 years in private medical practice he joined the fulltime faculty of Long
Island Jewish Medical Center where he was Medical Director and later Vice
President of Medical Affairs for the North Shore Long Island Jewish Health
System until 2009. Since that time, Dr. Gitman has been a consultant in Quality
Improvement. Dr. Gitman is currently an Associate Professor of Medicine at The
Hofstra North Shore LIJ School of Medicine. He is the immediate past Chairman of
the Medical Society of the State of New Yorks Committee for Physicians Health.
He served on the New York State Board of Medicine for 10 years and on various
New York State Committees and Task Forces. He is past President of The American
College of Medical Quality, the New York Chapter of the American College of
Physicians and the Medical Society of the County of Queens. Dr. Gitman received
his medical degree from Boston University School of Medicine. Dr. Gitman has
been nominated for re-election at the 2018 Annual Meeting.
The Company
believes that Dr. Gitman is qualified to serve as a member of our Board because
of his business and professional experience.
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MICHAEL SCHAMROTH.
Mr. Schamroth, age 78, is currently a
director on the Board and has served as a director of the Company since 2004. He
has been a partner of M. Schamroth & Sons in New York City for over 40
years. As a principal in this fourth-generation international diamond house, Mr.
Schamroth has extensive experience in dealing with all aspects of the trade,
from manufacturing to sales. He has been a member of the Diamond Manufacturers
and Importers Association since 1964, and has served on the Nominating and
Building Committees of the Diamond Dealers Club. In addition, Mr. Schamroth has
served as a member of the Board of South Nassau Communities Hospital since 1976,
the Board of the Winthrop-South Nassau University Health System since 1993 and
the Board of Sound Bank of North Carolina since 2002. He has been a member of
the Miami University Business Advisory Board since 1984 and served as its
Chairman from 1987-1988. He received his B.S. in Business from Miami University,
Oxford, Ohio. The Company believes that Mr. Schamroth is qualified to serve as a
member of our Board because of his business and professional experience.
DR. JYRKI MATTILA.
Dr. Mattila, age 63, joined as a
member of our Board in April 2015. Dr. Mattila has served as the Chief Business
Officer of Lipocine Inc. since May 2015. Previously, Dr. Mattila served as Chief
Business Officer at iCeutica Inc. Prior to joining iCeutica, from 2010 to 2013,
Dr. Mattila served as President and CEO of LZ Therapeutics, Inc. From February
2008 through March 2010, he worked at Auxilium Pharmaceuticals, Inc.
(Auxilium), serving as an Executive Vice President of Business Development,
Product Development and Technical Operations. From January 2005 to February
2008, he served as Executive Vice President of Business Development, Research
and Development and Technical Operations at Auxilium. From August 2003 to
January 2005 he served as Executive Vice President of Business Development at
Auxilium. From 1986 to July 2003, Dr. Mattila served in a series of positions at
Orion Corporation, including as President of Orion Pharma from 1996 to 2002.
During the past 5 years, he has served on the boards of Forendo Pharma Ltd.,
Hermo Pharma Ltd. and LZ Therapeutics, Inc., all privately-held pharmaceutical
companies. Dr. Mattila served as a director of Encorium Group Inc., a publicly
listed company, from November 1, 2006 to November 7, 2009. He received his M.D.
and Ph.D. in pharmacology from the University of Helsinki Medical School and his
M.B.A. from the Helsinki School of Economics. Dr. Mattila completed his
post-doctoral research fellowship at the University of Kansas Medical Center.
The Company believes that Dr. Mattila is qualified to serve as a member of our
Board because of his business and professional experience.
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DR. MARK WEGMAN.
Dr. Wegman, age 68, is currently a
director on the Board and has served as a director of the Company since June
2007. He joined International Business Machines (IBM) in 1975 where Dr. Wegman
is currently Chief Scientist Computing as a Service with worldwide
responsibilities in IBMs Research laboratories. Dr. Wegman is recognized for
his significant contributions to computer algorithms and compiler optimization
that have deeply influenced many areas of computer science and practice. This
work was recognized by the Special Interest Group On Programming Languages in
2006 with its Programming Languages Achievement Award. He is an IBM Fellow,
which is IBMs highest technical honor, and a Fellow of the ACM and the IEEE. He
is also a member of the National Academy of Engineering. Dr. Wegman is the
author of over 30 publications in the field of Computer Science. Dr. Wegman
received his doctorate in Computer Science from the University of California at
Berkeley and has been named a Distinguished Alumnus. Dr. Wegman is the son of
our former CEO and Chairman, Edwin H. Wegman. Dr. Wegman is the brother of
Thomas L. Wegman, a current director and President of the Company, and the
stepson of Toby Wegman, a current director of the Company. The Company believes
that Dr. Wegman is qualified to serve as a member of our Board because of his
business and professional experience.
TOBY WEGMAN.
Ms. Wegman, age 83, is currently a director
on the Board and has served as a director of the Company since June 2007. Ms.
Wegman is the widow of our former CEO and Chairman, Edwin H. Wegman. Ms. Wegman
has had a range of business-related work experiences. For five years she owned
and operated a womens apparel business and prior to that managed a womens
retail clothing operation. She had also been actively involved in the management
of Edwin H. Wegmans business interests and finances for many years. Ms. Wegman
is the stepmother of Thomas L. Wegman and Dr. Mark Wegman, both of whom are
currently directors of the Company. Ms. Wegman is a member of the Lion of Judah,
and a lifetime member of both the National Council of Jewish Women and HADASSAH.
The Company believes that Ms. Wegman is qualified to serve as a member of our
Board because of her business and professional experience.
JENNIFER CHAO.
Ms. Chao, age 48, joined as a member of
our Board in April 2015. She is a biotech industry expert and Advisory Analyst
with CoreStrategies Management, LLC, a strategic consulting firm she founded in
2008. Ms. Chao works integrally with senior managements and boards of directors
to provide transformational corporate and financial strategies for maximizing
core valuation, working as in-house investment banker and advisory analyst.
Previously, Ms. Chao was a Managing Director and Senior Lead Biotechnology
Securities Analyst with Deutsche Bank from 2004-2008 where her research coverage
spanned small, mid, and large-cap biotechnology companies. Her research forte
includes rare genetic diseases, cutting edge biotechnologies (diagnostic and
manufacturing), womens health, pulmonology, neurology, nephrology, oncology,
vaccines, cardiology, HIV/HCV, and osteoporosis. Ms. Chao is also a former
Managing Director and Senior Lead Biotechnology Analyst with RBC Capital Markets
and Vice President and Biotechnology Analyst with Leerink Swann & Co. She
received her B.A. majoring in Politics and Greek Classics from New York
University in 1992 and was a Research Fellow and recipient of the 1996/1997
Massachusetts General Hospital/Harvard Medical School Biomedical Research Career
Award. Ms. Chao has extensive experience understanding corporate finances and
analyzing and evaluating financial statements and financial and accounting
issues. As a leading securities analyst, she has extensively written and
published in-depth securities research and fundamentals valuation research. Her
research has served as a primary and secondary source for investment portfolio
managers, investment banking and the financial industry press. As part of her
duties as an analyst at CoreStrategies, Ms. Chao works closely with senior
management and boards, acting as in-house investment banker, negotiating
term-sheets and performing financial due diligence for acquisitions and
divestitures. As a former managing director and analyst at investment banks, she
vetted initial public offerings, follow-on offerings, private placements, PIPES
and private financings. Ms. Chao has familiarity with board and audit functions.
She held the following licenses, Series 7, 63, 86 and 87. Ms. Chao has extensive
knowledge and practice of valuation analysis and corporate vetting and is
proficient with GAAP and financial statement analysis. The Company believes that
Ms. Chao is qualified to serve as a member of our Board due to her in-depth
business and professional experience.
9
PROPOSAL NO. 1-- ELECTION OF DIRECTORS
The Board is responsible for establishing broad corporate
policies and monitoring the overall performance of the Company. It selects the
Companys executive officers, delegates authority for the conduct of the
Companys day-to-day operations to those officers, and monitors their
performance. Members of the Board are kept informed of the Companys business
by, among other things, participating in Board and Committee meetings and by
reviewing analyses and reports.
The Board is divided into three classes with only one class of
directors being elected in each year. The term of office of the first class of
directors, currently consisting of Mr. Thomas Wegman and Dr. Paul Gitman, is
scheduled to expire at the 2018 Annual Meeting; the term of office of the second
class of directors, currently consisting of Mr. Michael Schamroth and Dr. Jyrki
Mattila, is scheduled to expire on the date of the 2019 annual meeting (the
2019 Annual Meeting); and the third class of directors, currently consisting
of Dr. Mark Wegman, Ms. Toby Wegman and Ms. Jennifer Chao is scheduled to expire
on the date of the 2020 annual meeting. All directors will hold office for a
term of three years, or until their earlier death, resignation, removal or
disqualification and until their respective successors are duly elected and
qualified.
The individuals who have been nominated for election to the
Board at the 2018 Annual Meeting are set forth below. If, as a result of
circumstances not now known or foreseen, any nominee is unavailable to serve as
a nominee for the office of director at the time of the 2018 Annual Meeting, the
holders of the proxies solicited by the Proxy Statement may vote those proxies
either (i) for the election of a substitute nominee who will be designated by
the proxy holders or by the present members of the Board or (ii) for the balance
of the nominees, leaving a vacancy. Alternatively, the size of the Board may be
reduced accordingly. The Board has no reason to believe that any of the nominees
will be unwilling or unable to serve if elected as a director. The three
nominees for election as directors are uncontested.
The Board of Directors recommends a vote FOR the election
of the nominees listed below.
The names, positions with the Company and ages as of the Record
Date of the individuals who are our nominees for election as directors are:
Name
|
Age
|
Position
|
Director Since
|
|
|
|
|
Mr. Thomas Wegman
|
63
|
President, Director
|
1994
|
|
|
|
|
Dr. Paul Gitman
|
77
|
Director
|
1990
|
For information as to the shares of the Common Stock held by
each of our nominees, see Security Ownership of Certain Beneficial Owners and
Management, below and for biographical summaries for each of our director
nominees, see Directors and Executive Officers above.
There are no arrangements or understandings between the
nominees, directors or executive officers and any other person pursuant to which
our nominees, directors or executive officers have been selected for their
respective positions.
VOTE REQUIRED
A plurality of the votes cast at the meeting will be required
for the election of the director nominees to the first class of directors. The
two nominees for director with the highest number of affirmative votes will be
elected as directors. Broker non-votes and abstentions will not be treated as
votes cast for this purpose and, therefore, will not affect the outcome of the
election.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE
FOR EACH
OF THESE NOMINEES FOR DIRECTOR FOR THE FIRST CLASS OF
DIRECTORS.
(PROPOSAL NO. 1 ON YOUR PROXY CARD)
10
BOARD OF DIRECTORS AND COMMITTEES
Board Leadership Structure
The Board does not have a chairman or a lead independent
director. Additionally, the Board does not have a formal policy as to whether
the same person may serve as both the principal executive officer of the Company
and chairman and, in the event such person does serve in such a dual capacity,
whether a lead independent director should be designated by the Board for Board
leadership purposes. At the present time, the Board does not believe that such a
policy is necessary because it believes that the current Board membership,
together with the Companys management, possess the requisite leadership and
industry skills, expertise and experiences to effectively oversee the business
and affairs of the Company. Moreover, the Board prefers to retain the
flexibility to select the appropriate leadership structure for the Company based
upon the existence of various conditions, including, but not limited to,
business, financial or other market conditions affecting the Company at any
given time. Notwithstanding the foregoing, the independent directors of the
Board regularly participate in executive sessions outside of the presence of any
management directors or other members of the Companys management.
Risk Oversight
Generally, the Board, in its advisory capacity, and the
Companys management regularly review the Companys strategic plan which
includes, among other things, the various business, financial and other market
risks confronting, and opportunities available to, the Company at any given
time. Specifically, pursuant to the Companys Corporate Governance Guidelines,
the Board is charged with assessing major risks facing the Company and reviewing
options to mitigate such risks. The Board performs this oversight role by using
several different levels of review. In connection with its reviews of the
operations and corporate functions of the Company, the Board addresses the
primary risks associated with those operations and corporate functions. In
addition, the Board reviews the risks associated with the Companys business
strategies periodically throughout the year as part of its consideration of
undertaking any such business strategies.
The Board has delegated certain risk oversight responsibilities
to its committees (the Committees). Each of our Committees also oversees the
management of the Companys risk that falls within each Committees areas of
responsibility. In performing this function, each Committee has full access to
management, as well as the ability to engage advisors. For example, the Audit
Committee is required to regularly review and discuss with management the
Companys major financial risk exposures and the steps management has taken to
monitor and control such exposures. The Nominating and Corporate Governance
Committee is required to regularly review the corporate governance principles of
the Company and recommend to the Board any proposed changes it may deem
appropriate. The Compensation Committee considers risks related to the
attraction and retention of professional talent and the implementation and
administration of compensation and benefit plans affecting the Companys
employees. The Intellectual Property Committee, an informal committee of the
Board, considers risks related to the Companys intellectual property strategy,
which includes, among other things, the Companys intellectual property
development, maintenance, licensing, litigation, prosecution and protection
strategies. The Financial Modeling Committee, an informal committee of the
Board, deals with budgeting, forecasting and valuation and does not address
financial risk oversight which is the responsibility of the Audit Committee. The
Licensing Committee screens potential development opportunities and provides
briefings to the Board for final approval. All Committees are required, pursuant
to their respective charters, to report regularly to the Board. The activities
of the Audit, Nominating and Corporate Governance and Compensation Committees
are more fully described below.
Board Determination of Director Independence
Our securities are listed on the NASDAQ Global Market
(NASDAQ) and we use the standards of independence prescribed by rules set
forth by NASDAQ. Under NASDAQ rules, a majority of a listed companys board of
directors must be comprised of independent directors. In addition, NASDAQ rules
require that, subject to specified exceptions, each member of a listed companys
audit committee and compensation committee be independent and satisfy additional
independence criteria set forth in Rules 10A-3 and 10C-1, respectively, under
the Securities Exchange Act of 1934, as amended, (the Exchange Act). Under
NASDAQ rules, a director will only qualify as an independent director if, in
the opinion of that companys board of directors, that person does not have a
relationship that would interfere with the exercise of independent judgment in
carrying out the responsibilities of a director.
11
Based upon information requested from and provided by each
director concerning their background, employment and affiliations, including
family relationships, our Board has determined, upon the recommendation of our
Nominating and Corporate Governance Committee, that each of Dr. Jyrki Mattila,
Jennifer Chao, Dr. Paul Gitman and Michael Schamroth, has no relationship that
would interfere with the exercise of independent judgment in carrying out the
responsibilities of a director and is independent within the meaning of the
director independence standards of the NASDAQ rules and the SEC. Our Board, upon
recommendation of the Nominating and Corporate Governance Committee, has
determined that each of Thomas Wegman, Toby Wegman and Dr. Mark Wegman, do not
qualify as independent under the NASDAQ rules. Our Board has also determined
that each of the current members of our Audit Committee and our Compensation
Committee satisfies the independence standards for such committee established by
Rules 10A-3 and 10C-1 under the Exchange Act, the SEC rules and the NASDAQ
rules, as applicable, and that the current members of the Nominating and
Corporate Governance Committee are also independent. In making these
determinations, the directors reviewed and discussed information provided by the
directors and the Company with regard to each directors business and personal
activities as they may relate to the Company and the Companys management.
Board Meetings
The Board met 7 times during the calendar year ended December
31, 2017. Each of the directors attended at least 75% of the meetings of the
Board and the Committees on which he or she served during the year ended
December 31, 2017 (in each case, which were held during the period for which he
was a director and/or a member of the applicable Committee). All Board members
serving on the Board at such time attended our 2017 annual meeting of
stockholders held on June 14, 2017. The Company encourages its directors to
attend the annual meeting of Stockholders.
Executive sessions, or meetings of the independent directors
without management present, are held regularly. The independent directors met in
executive session during each regularly scheduled Board meeting during the year
ended December 31, 2017.
Committees and Committee Meetings
The Board has a standing Audit Committee, a Nominating and
Corporate Governance Committee, and Compensation Committee, each of which is
comprised solely of independent directors, and is described more fully below.
The members of each Committee are appointed by our Board. From time to time, the
Board may establish other committees. Below is a description of the three
principal Committees.
Audit Committee and Audit Committee Financial Expert
The Audit Committee is comprised of Dr. Gitman, Ms. Chao, Dr.
Mattila, and Mr. Schamroth. Dr. Gitman serves as the Chair of the Audit
Committee. The Audit Committee has determined that Ms. Chao is an audit
committee financial expert within the meaning of the SECs rules and
regulations and has the level of financial sophistication required by NASDAQ
Rule 5605(c)(2)(A). The Audit Committee believes that Ms. Chaos experience, as
discussed in her biography above, qualifies her as an audit committee financial
expert.
As noted above, the Audit Committee is governed by the Audit
Committee Charter. A copy of this Charter is available on our website at
www.biospecifics.com
under Investors Corporate
Governance. In addition to the risk oversight responsibilities discussed above,
the Audit Committees other responsibilities include: selecting our independent
registered public accounting firm; reviewing with the Companys independent
registered public accounting firm the procedures for and results of their
audits; reviewing with the independent accountants and management our financial
reporting, internal controls and internal audit procedures; reviewing and
approving related party transactions; and reviewing matters relating to the
relationship between the Company and our independent registered public
accounting firm, including the selection of and engagement fee for our
independent registered public accounting firm, and assessing the independence of
the independent registered public accounting firm. The Audit Committee has the
authority to engage independent legal, accounting and other advisers, as it
determines necessary to carry out its duties.
12
The Audit Committee met 4 times during 2017.
Compensation Committee
The Compensation Committee is comprised of Mr. Schamroth and
Drs. Gitman and Mattila. Dr. Mattila serves as the Chair of the Compensation
Committee. The Compensation Committee is governed by the Compensation Committee
Charter. A copy of this Charter is available on our website at
www.biospecifics.com
under Investor Relations Corporate
Governance. In addition to the risk oversight responsibilities discussed above,
the Compensation Committees other responsibilities include: reviewing and
approving and recommending to the Board for approval as appropriate, the
compensation of our executive officers following consideration of corporate
goals and objectives relevant to such executive officers; overseeing the
evaluation of the Companys senior executives; reviewing and making
recommendations to the Board regarding incentive compensation and equity-based
plans; and administering our stock option plans. The Compensation Committee has
the authority to retain compensation consultants and other outside advisors to
assist in the evaluation of executive officer compensation. The Compensation
Committee did not use or retain any compensation consultant during the year
ended December 31, 2017.
The Compensation Committee met 2 times during 2017.
Nominating and Corporate Governance Committee
The Nominating and Corporate Governance Committee is comprised
of Mr. Schamroth, Dr. Gitman, and Ms. Chao. Mr. Schamroth serves as the Chair of
the Nominating and Corporate Governance Committee. The Nominating and Corporate
Governance Committee is governed by the Nominating and Corporate Governance
Committee Charter. A copy of this Charter is available on our website at
www.biospecifics.com
under Investors Corporate
Governance. In addition to the risk oversight responsibilities discussed above,
the Nominating and Corporate Governance Committees other responsibilities
include: identifying individuals qualified to become Board members and to
recommend to the Board the nominees for director at annual meetings of
Stockholders; recommending to the Board nominees for each Committee; developing
and recommending to the Board corporate governance principles applicable to the
Company; and leading the Board in its annual review of the Boards
performance.
The Nominating and Corporate Governance Committee met 1 time
during 2017.
13
Polices Governing Director Nominations
Director Nomination Process
Our Board is responsible for selecting its own members. The
Board delegates the selection and nomination process to the Nominating and
Corporate Governance Committee, with the expectation that other members of the
Board, and of management, will be requested to take part in the process as
appropriate. The Nominating and Corporate Governance Committee makes
recommendations to the Board regarding the size and composition of the Board.
The Nominating and Corporate Governance Committee is responsible for ensuring
that the composition of the Board accurately reflects the needs of the Companys
business and, in furtherance of this goal, for proposing the addition of members
and the necessary resignation of members for purposes of obtaining the
appropriate members and skills. The Nominating and Corporate Governance
Committee recommends, and the Board nominates, candidates to stand for election
as directors.
Generally, our Nominating and Corporate Governance Committee
identifies candidates for director nominees in consultation with management,
through the use of other advisors, through the recommendations submitted by
Stockholders or through such other methods as the Nominating and Corporate
Governance Committee deems to be helpful to identify candidates. Once candidates
have been identified, our Nominating and Corporate Governance Committee confirms
that the candidates meet all of the minimum qualifications for director nominees
established by the Nominating and Corporate Governance Committee. The Nominating
and Corporate Governance Committee may gather information about the candidates
through interviews, detailed questionnaires, background checks or any other
means that the Nominating and Corporate Governance Committee deems to be
appropriate in the evaluation process. The Nominating and Corporate Governance
Committee then meets as a group to discuss and evaluate the qualifications and
skills of each candidate, both on an individual basis and taking into account
the overall composition and needs of the Board. Based on the results of the
evaluation process, the Nominating and Corporate Governance Committee recommends
candidates as director nominees for election to the Board for the Boards
approval.
Stockholders may also nominate persons to be elected as
directors. The Nominating and Corporate Governance Committee will consider
director candidates recommended by our Stockholders, in accordance with the
Companys bylaws. If a Stockholder wishes to nominate a person for election as
director, he or she must follow the procedures contained in our bylaws. In
evaluating candidates recommended by our Stockholders, the Nominating and
Corporate Governance Committee applies the same criteria set forth below under
Minimum Qualifications. To nominate a person to stand for election as a
director at the 2019 Annual Meeting of Stockholders, a Stockholder must provide
our Secretary with timely notice of the nomination. The procedures for Stockholder submission of a notice of
nomination of a person or persons as directors of the Company is set forth below
in
Requirements for Stockholders to Submit Nominees for Inclusion in our
Proxy Materials and Alternative Requirements for Stockholder Proposals to be
Considered for Inclusion in our Proxy Materials.
14
Qualifications
The Nominating and Corporate Governance Committee may receive
from Stockholders and others recommendations for nominees for election to the
Board and recommend to the Board candidates for Board membership for
consideration by the Stockholders at the annual meeting of Stockholders and
candidates for election to the Board at intervals between annual meetings. In
recommending candidates to the Board, the Committee shall take into
consideration the Boards criteria for selecting new directors, including but
not limited to, integrity, past achievements, judgment, intelligence, relevant
experience and the ability of the candidate to devote adequate time to Board
duties. The Nominating and Corporate Governance Committee does not assign
specific weights to particular criteria, and no particular criterion, including
diversity, is a prerequisite for any Board candidate. In order for the Board to
fulfill its responsibilities, our Nominating and Corporate Governance Committee
believes that the Board should include directors possessing a blend of
experience, knowledge and ability.
Family Relationships
Mr. Thomas Wegman, a current director and our current
President, and Dr. Mark Wegman, a current director, are brothers. Each of Mr.
Thomas Wegman and Dr. Mark Wegman are step sons of Ms. Toby Wegman, a current
director.
Mr. Thomas Wegman and Ms. Toby Wegman are the co-trustees of
the Edwin H. Wegman Marital Trust.
Compensation Committee Interlocks and Insider
Participation
During the year ended December 31, 2017, Dr. Jyrki Mattila, Dr.
Paul Gitman and Mr. Michael Schamroth each served as a member of the
Compensation Committee. None of the members of our Compensation Committee has,
at any time during the prior fiscal year, been one of our officers or employees.
None of the members of our Compensation Committee has formerly been one of our
officers or employees. None of our executive officers currently serves, or in
the past fiscal year has served, as a member of a board of directors or
compensation committee of any entity that has one or more executive officers
serving on our Board or Compensation Committee.
Code of Business Conduct and Ethics and Corporate Governance
Guidelines
The Companys Amended and Restated Code of Business Conduct and
Ethics (the Code of Ethics) applies to, among other persons, members of our
Board, our officers, contractors, consultants and advisors. A copy of our Code
of Ethics is available on our website at
www.biospecifics.com
under InvestorsCorporate Governance or by requesting a copy, free of
charge, in writing from our President at BioSpecifics Technologies Corp., 35
Wilbur Street, Lynbrook, NY 11563. We intend to post on our website any
amendment to, or waiver under, a provision of the Code of Ethics that applies to
certain of our executive officers within four business days following the date
of such amendment or waiver.
A copy of the Corporate Governance Guidelines may also be
accessed free of charge by visiting the website at
www.biospecifics.com
under InvestorsCorporate Governance
or by requesting a copy from our President at our principal executive offices
above.
15
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires our executive
officers, directors and persons who beneficially own more than ten percent of
our shares of Common Stock to file reports of their beneficial ownership and
changes in ownership (Forms 3, 4 and 5, and any amendment thereto) with the SEC.
Executive officers, directors, and greater-than-ten-percent holders are required
to furnish us with copies of all Section 16(a) forms they file.
Based solely upon a review of the Forms 3, 4, and 5, as
applicable, furnished to us for the fiscal year ended December 31, 2017, we have
determined that our executive officers, directors and greater-than-ten-percent
beneficial owners filed their beneficial ownership and change in ownership
reports with the SEC in a timely manner.
16
CERTAIN RELATIONSHIPS AND RELATED PERSONS TRANSACTIONS
Pre-Approval Policy Regarding Related Party Transactions
On December 8, 2015, the Board adopted a related party
transactions policy, pursuant to which the Audit Committee is charged with
reviewing and approving or disapproving of related party transactions. The
Related Party Transactions Policy supplements the provisions in the Companys
Code of Business Conduct and Ethics concerning potential conflict of interest
situations.
Subject to certain exceptions, including compensation
arrangements previously approved by the Companys Compensation Committee, this
written policy covers transactions or series of transactions in which the
Company or any subsidiary participates and a Related Party has or will have a
direct or indirect material interest. For purposes of this policy, a Related
Party is:
-
Each director and executive officer of the Company and any person who was
serving as a director and/or executive officer at any time since the beginning
of the Company's last fiscal year;
-
Any nominee for election as a director of the Company;
-
Any security holder who, at the time of the occurrence of the transaction,
owned beneficially or of record more than 5% of any class of the Company's
voting securities; and
-
Any immediate family member of any of the foregoing persons. An "immediate
family member" includes the spouse, parents, stepparents, children,
stepchildren, siblings, mothers- and fathers-in-law, sons- and
daughters-in-law, brothers- and sisters-in-law, and any person (other than a
tenant or employee) sharing the household of a director, executive officer,
director nominee or greater than 5% security holder of the Company.
Pursuant to the Related Party Transactions Policy, each Company
executive officer, director or nominee for director or any other officer or
employee who intends to cause the Company to enter into a related party
transaction must fully disclose to the Audit Committee all material facts
concerning a prospective transaction or arrangement involving the Company in
which such person may have an interest. The Audit Committee will review all
related party transactions and approve or disprove of such transactions in which
the amount exceeds $10,000 in advance of such transaction being given effect. If
a member of the Audit Committee is involved in the transaction, that member
shall not participate in determining whether the related party transaction shall
be approved or ratified by the Audit Committee; however, such person may be
counted in determining the presence of a quorum at a meeting of the Audit
Committee acting on the transaction. Annually, the Audit Committee will review
any previously approved or ratified related party transaction that is continuing
and determine based on then-existing facts and circumstances.
Before any related party transaction is approved, the following
factors are to be considered:
-
The position or relationship of the Related Party at or with the Company;
-
The materiality of the transaction to the Related Party and to the Company,
including the dollar value of the transaction;
-
The business purpose for and reasonableness of the transaction;
-
Whether the transaction is comparable to a transaction that could be
available on an arms-length basis;
-
Whether the transaction is in the ordinary course of the Company's business
and was proposed and considered in the ordinary course of business;
-
The effect of the transaction on the Company's business and operations,
including on the Company's internal control over financial reporting and
system of disclosure controls or procedures;
-
Whether the transaction would cause the Company to be in violation of
Nasdaq listing standards (or the listing standards of any other exchange or
market constituting the Companys primary trading market); and
-
Any additional conditions or controls (including reporting or review
requirements) that should be applied to such transaction.
17
Approval of a transaction under the policy will be granted only
if it is determined that, under all of the circumstances, the transaction is in
the best interests of the Company and only so long as those interests outweigh
any negative effects that may arise from permitting it to occur.
Review of Related Party Transactions
Engagement of Gibbons P.C.
The Company has engaged Gibbons P.C. (the Gibbons Law Firm)
as legal counsel for certain specific matters in 2015, 2016 and 2017. Mr. George
Gould, a former member of the Board who resigned from the Board effective
November 8, 2017, is Counsel at the Gibbons Law Firm. To date, the Gibbons Law
Firm has invoiced the Company less than $50,000 in the aggregate for services
rendered. As counsel to the Gibbons Law Firm, Mr. Gould had no financial
interest in any payments made by the Company to the Gibbons Law Firm.
18
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
Based on information publicly filed and provided to us by
certain holders, the following table shows the amount of our Common Stock
beneficially owned as of the close of business on the Record Date, April 20,
2018, by (i) each person known by us to beneficially own more than five percent
of our voting securities, (ii) each named executive officer, (iii) each of our
directors, and (iv) all of our executive officers and directors as a group.
Beneficial ownership is determined in accordance with the rules of the SEC and
generally includes voting or investment power with respect to securities. In
computing the number of shares beneficially owned by a person and the percentage
ownership of that person, shares of Common Stock that could be issued upon the
exercise of outstanding options and warrants held by that person that are
currently exercisable or exercisable within 60 days are considered outstanding.
As of the Record Date, we had 7,199,233 shares of Common Stock outstanding.
Unless otherwise stated in a footnote, each of the beneficial owners listed
below has direct ownership of and sole voting power and investment power with
respect to the shares of our Common Stock.
Name and Address of
|
Amount and Nature of
|
Percentage
|
Beneficial Owner
|
Beneficial Ownership
|
|
|
|
|
5% or Greater Stockholders:
|
|
|
|
|
|
Edwin H. Wegman Marital Trust
Co-trustee Toby Wegman
Co-trustee Thomas Wegman
35 Wilbur
Street
Lynbrook, NY 11563
|
949,973 (1)
|
12.92%
|
|
|
|
Jeffrey K. Vogel
1 Meadow Drive
Lawrence, NY 11559
|
508,656 (2)
|
6.92%
|
|
|
|
Renaissance Technologies Holding
Corporation
800 Third Avenue
New York, NY 10022
|
447,186 (3)
|
6.08%
|
|
|
|
Stonepine Capital Management, LLC
919
NW Bond Street, Suite 204
Bend, OR 97703
|
385,954 (4)
|
5.25%
|
|
|
|
Directors and Named Executive
Officers
|
|
|
|
|
|
Thomas Wegman, President and Director
35 Wilbur Street
Lynbrook, NY 11563
|
1,289,950 (5)
|
17.54%
|
|
|
|
Toby Wegman, Director
35 Wilbur Street
Lynbrook, NY 11563
|
949,973 (6)
|
12.92%
|
19
Name and Address of
|
Amount and Nature of
|
Percentage
|
Beneficial Owner
|
Beneficial Ownership
|
|
|
|
|
Michael Schamroth, Director
35 Wilbur
Street
Lynbrook, NY 11563
|
114,000 (7)
|
1.55%
|
|
|
|
Dr. Mark Wegman, Director
35 Wilbur
Street
Lynbrook, NY 11563
|
95,272 (8)
|
1.30%
|
|
|
|
Dr. Paul Gitman, Director
35 Wilbur
Street
Lynbrook, NY 11563
|
51,825 (9)
|
*0.70% (13)
|
|
|
|
Dr. Jyrki Mattila, Director
35 Wilbur
Street
Lynbrook, NY 11563
|
11,626 (10)
|
*0.16%
|
|
|
|
Jennifer Chao, Director
35 Wilbur
Street
Lynbrook, NY 11563
|
11,250 (11)
|
*0.15%
|
|
|
|
All Executive Officers and Directors as a
Group (7 persons)
|
1,573,923 (12)
|
21.40%
|
(1)
|
The shares of Common Stock beneficially owned by the
Edwin H. Wegman Marital Trust are included in the number disclosed in this
chart for Toby Wegman and Thomas Wegman, the co-trustees of the Edwin H.
Wegman Marital Trust. As disclosed in their respective footnotes, the
shares of Common Stock owned by the Edwin H. Wegman Marital Trust are
indirectly held by each of the trustees, who disclaim beneficial ownership
of the shares in the Edwin H. Wegman Marital Trust, except to the extent
of his or her pecuniary interest therein.
|
|
|
(2)
|
The foregoing information is based on the reporting
persons Form 4 filed with the SEC on December 22, 2015.
|
|
|
|
The foregoing information is based on the reporting
persons Schedule 13G filed with the SEC on February 14, 2018, which
reported sole voting power with respect to 411,186 shares of Common Stock,
sole dispositive power with respect
|
|
|
(3)
|
to 427,938 shares Common Stock and shared dispositive
power with respect to 19,248 shares of Common Stock. Renaissance
Technologies Holding Corporation is a parent holding company for
Renaissance Technologies LLC, a wholly-owned subsidiary that owns shares
of our Common Stock.
|
|
|
|
The foregoing information is based on the reporting
persons Schedule 13G/A filed with the SEC on February 13, 2018, which
reported sole voting power with respect to 385,954 shares of Common Stock
and sole dispositive power with
|
|
|
(4)
|
respect to 385,954 shares Common Stock. Stonepine Capital
Management, LLC is the general partner holding company for Stonepine
Capital L.P., a wholly-owned subsidiary that owns shares of our Common
Stock.
|
|
|
(5)
|
Includes (i) 50,000 shares of Common Stock subject to
stock options that are currently exercisable or exercisable within 60 days
of April 20, 2018, (ii) 8,778 shares of Common Stock held by Thomas Wegman
and his wife, as joint tenants, (iii) indirect ownership of 3,650 shares
of Common Stock held by Thomas Wegmans wife, Sandra Wegman, (iv) 277,549
shares of Common Stock held directly, and (v) indirect ownership of
949,973 shares of Common Stock beneficially owned by the Edwin H. Wegman
Marital Trust, for which he disclaims beneficial ownership except to the
extent of his pecuniary interest therein.
|
20
(6)
|
Includes indirect ownership of 949,973 shares of Common
Stock beneficially owned by the Edwin H. Wegman Marital Trust, for which
she disclaims beneficial ownership except to the extent of her pecuniary
interest therein.
|
|
|
(7)
|
Includes 45,000 shares of Common Stock subject to stock
options that are currently exercisable or exercisable within 60 days of
April 20, 2018.
|
|
|
(8)
|
Includes 30,000 shares of Common Stock subject to stock
options that are currently exercisable or exercisable within 60 days of
April 20, 2018.
|
|
|
(9)
|
All shares are held directly.
|
|
|
(10)
|
Includes (i) 11,250 shares of Common Stock subject to
stock options that are currently exercisable or exercisable within 60 days
of April 20, 2018, and (ii) 376 shares of Common Stock held directly by
Dr. Mattila.
|
|
|
(11)
|
Includes 11,250 shares of Common Stock subject to stock
options that are currently exercisable or exercisable within 60 days of
April 20, 2018.
|
|
|
(12)
|
For purposes of clarification, each of the 949,973 shares
of Common Stock owned by the Edwin H. Wegman Marital Trust (and indirectly
owned by Toby Wegman and Thomas Wegman, the co-trustees of the Edwin H.
Wegman Marital Trust) have only been counted one time in calculating the
number of shares of Common Stock beneficially owned by all executive
officers and directors.
|
|
|
(13)
|
An asterisk indicates less than 1%
ownership.
|
21
COMPENSATION COMMITTEE REPORT
The Compensation Committee has reviewed and discussed this
Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K
with the Companys management, and based upon such discussions, the Compensation
Committee recommended to the Board that this Compensation Discussion and
Analysis be included in the Proxy Statement.
/s/ The Compensation Committee
Dr. Jyrki Mattila, Chair
Dr. Paul
Gitman
Michael Schamroth
22
COMPENSATION DISCUSSION AND ANALYSIS
This section discusses the principles and policies underlying
our executive compensation program for our named executive officer, Thomas
Wegman, who serves as our President, Principal Executive Officer, Principal
Financial Officer and Principal Accounting Officer. Mr. Wegman is our sole
executive officer. The Compensation Committee oversees our executive
compensation programs and approves or makes recommendations to the Board for
approval where appropriate and required by the Compensation Committees charter.
In this role, the Compensation Committee reviews and approves all compensation
decisions relating to Mr. Wegman.
Objectives of the Companys Executive Compensation Programs
As determined by the Compensation Committee, the Companys
compensation programs for its officer are designed to achieve the following
objectives:
|
-
|
motivate our executive officer to achieve the Companys
annual and long-term corporate objectives and strategies;
|
|
-
|
provide compensation opportunities that are competitive
with similarly sized biotechnology companies;
|
|
-
|
align executive interests with those of our Stockholders;
and
|
|
-
|
attract and retain talented executives.
|
The Role of Stockholder Say-on-Pay Votes
The Compensation Committee has reviewed the results of the
Companys 2017 Annual Meeting held on June 14, 2017 (the 2017 Annual Meeting)
where the Stockholders of the Company approved, on an advisory basis, the
compensation of Mr. Wegman as disclosed in the proxy statement for the 2017
Annual Meeting. Over 75% of the votes cast voted in favor of the proposal. The
Compensation Committee believes this affirms our Stockholders support of the
Companys approach to executive compensation. Although the vote is non-binding,
the Compensation Committee considered the results of the vote in its review of
executive compensation and determined not to implement substantial changes to
our 2017 compensation program as a result of the say-on-pay vote. The
Compensation Committee will continue to consider the outcome of the Companys
say-on-pay vote when making future compensation decisions for the Companys
named executive officer. Previously, at the 2014 annual meeting, the
Stockholders of the Company, recommended, on an advisory basis, that future
advisory votes on the compensation of the Companys named executive officers be
held with a frequency of every three years. In connection with the 2017 Annual
Meeting, the Stockholders of the Company recommended, on an advisory basis, that
future advisory votes on the compensation of the Companys named executive
officers be held annually.
Elements of Executive Compensation
The Companys current executive compensation package for Mr.
Wegman focuses on a fixed base salary and limited perquisites that are
established pursuant to Mr. Wegmans employment agreement. Mr. Wegman also is
eligible to receive severance payments under certain circumstances, as further
described below. As more fully discussed below, Mr. Wegman is also eligible to
receive a cash bonus for fiscal year 2017 upon achievement of certain
performance-based goals. We utilize base salary to incentivize company and
individual performance in relation to competitive market conditions. Severance
and change in control benefits are used to help ensure we retain our executive
talent.
The Compensation Committee determines, in its sole discretion,
the appropriate components of Mr. Wegmans compensation package. Mr. Wegmans
overall compensation may increase or decrease year-to-year based upon, among
other things, his annual performance or changes in his responsibilities.
23
Base Salary
As described below, Mr. Wegman receives a base salary, the
terms of which are subject to his employment agreement. Adjustments to Mr.
Wegmans base salary may be based upon a number of factors, pursuant to the
Companys standard practices, including his seniority, scope of
responsibilities, individual performance, his contributions to the Company and
the Companys overall financial and stock price performance. The Compensation
Committee annually reviews Mr. Wegmans base salary and adjustments to his base
salary after considering his responsibilities, performance and contributions to
the Company and the Companys performance.
Employment Agreement; Base Salary; Cash Bonus; Termination
Payments
On August 5, 2008, the Company entered into an Executive
Employment Agreement with Mr. Wegman (the Wegman Employment Agreement).
Following the expiration of the initial two year term, the Wegman Employment
Agreement runs for successive one year terms until terminated by the Company or
Mr. Wegman at the end of the then-current term upon 90 days prior notice of the
termination to the other party. Initially, the Wegman Employment Agreement
provided that Mr. Wegman would earn a base salary equal to $250,000 per year and
receive an automobile allowance of $350 per month, plus reimbursement of
expenses incurred on the Companys behalf. On June 17, 2009, however, the
Companys Compensation Committee unanimously recommended to the Board, and the
Board approved and declared effective, an increase in Mr. Wegmans base salary
from $250,000 to $300,000 per year. Effective as of August 1, 2013, the
Companys Compensation Committee unanimously recommended to the Board, and the
Board approved, an increase in Mr. Wegmans base salary from $300,000 to
$350,000 per year. On January 19, 2016, the Companys Compensation Committee
approved an increase in Mr. Wegmans base salary from $350,000 to $400,000 per
year, applicable for the Companys 2016 fiscal year. On January 26, 2017, the
Companys Compensation Committee determined Mr. Wegmans base salary should
remain at $400,000 per year for the Companys 2017 fiscal year. On January 25,
2018, the Companys Compensation Committee determined Mr. Wegmans base salary
should remain at $400,000 per year for the Companys 2018 fiscal year.
Mr. Wegman did not receive a cash bonus in 2015. On January 19,
2016, the Companys Compensation Committee established a target bonus amount for
2016 for Mr. Wegman, to be 50% of his base salary (the Target Bonus). Payment
in full or in part of the Target Bonus is dependent upon Mr. Wegmans
achievement of certain performance-based goals, as determined by the Committee.
Also on January 26, 2017, the Companys Compensation Committee determined that,
based on the Committees analysis of Mr. Wegmans achievement of certain
performance-based goals for fiscal year 2016, Mr. Wegman was eligible to receive
$20,000. On January 25, 2018, the Companys Compensation Committee determined
that Mr. Wegman was not eligible to receive a cash bonus for the Companys 2017
fiscal year. Also on January 25, 2018, the Companys Compensation Committee
determined that Mr. Wegmans Target Bonus for the Companys 2018 fiscal year
will remain at 50% of Mr. Wegmans base salary.
Under the Wegman Employment Agreement, Mr. Wegman is also
eligible to receive stock options, restricted stock or other equity awards at
the discretion of the Board or the Compensation Committee. However, on June 17,
2010, the Board decided that, absent special circumstances, the Company would no
longer grant any new options to its directors, officers, employees or
consultants. Mr. Wegman did not receive any equity-based awards in 2017.
A copy of the Wegman Employment Agreement was filed as Exhibit
10.1 to a Current Report on Form 8-K filed with the SEC on August 8, 2008. The
foregoing descriptions of the Wegman Employment Agreement do not purport to be
complete and are qualified in their entirety by reference to the full text of
such agreement.
Performance-Based Stock Incentives
Mr. Wegman did not receive any performance-based stock
incentives in 2017. The Board may, upon the occurrence of special circumstances
as determined by the Board in its sole discretion, award qualified incentive
stock options or non-qualified stock options in accordance with the Companys
2001 Stock Option Plan, as amended and restated.
24
Other Executive Compensation Policies
Tax and Accounting Considerations
Section 162(m) of the Internal Revenue Code of 1986, as amended
(the Internal Revenue Code), generally disallows a tax deduction for
compensation in excess of $1.0 million paid to our named executive officer whose
compensation is required to be disclosed to our Stockholders under the Exchange
Act. Qualifying performance-based compensation is not subject to the deduction
limitation if specified requirements are met. The Company structures the
performance-based portion of any executive compensation package to comply with
exemptions in Section 162(m) so that the compensation remains tax deductible to
the Company. However, the Compensation Committee may recommend to the Board
compensation payments that do not comply with the exemptions in Section 162(m)
when it believes that such payments are appropriate to attract and retain
executive talent.
Nonqualified deferred compensation is required by Section
409A of the Internal Revenue Code to be paid under plans or arrangements that
satisfy certain statutory requirements regarding timing of deferral elections,
timing of payments and certain other matters. Employees and service providers
who receive compensation that fails to satisfy these requirements may be subject
to accelerated income tax liabilities, a 20% excise tax, penalties and interest
on their compensation under such plans. The Company designs and administers our
compensation and benefits plans and arrangements for all of our employees and
service providers, including our named executive officer, to keep them either
exempt from or in compliance with the requirements of Section 409A. Under the
Wegman Employment Agreement, any provision which causes Mr. Wegmans payments or
benefits to be paid thereunder to fail to comply with Section 409A of the
Internal Revenue Code is deemed to be null and void.
Sections 280G and 4999 of the Internal Revenue Code impose
certain adverse tax consequences on compensation treated as excess parachute
payments. An executive is treated as having received excess parachute payments
if such executive receives compensatory payments or benefits that are contingent
on a change in control, and the aggregate amount of such payments and benefits
equal or exceeds three times the executives base salary amount. The portion of
the payments and benefits in excess of one times base salary amount are treated
as excess parachute payments and are subject to a 20% excise tax, in addition to
any applicable federal income and employment taxes. Under the Wegman Employment
Agreement, however, the amount of any excess parachute payments shall be reduced
to the extent necessary so that no portion of the total benefits to be received
by Mr. Wegman is subject to the excise tax.
Deferred Compensation and Retirement Plans
The Company maintains a 401(k) plan, which is a broad-based
plan available to all employees. Otherwise, the Company does not have a deferred
compensation program, pension benefits, retirement plans or any post-retirement
healthcare plans.
Perquisites and Other Benefits
The perquisites received by Mr. Wegman are limited to a car
allowance, vacation and reimbursement for reasonable out-of-pocket expenses
incurred by Mr. Wegman in connection with the performance of his duties.
Role of Executive Officer in Determining Executive
Compensation
The Compensation Committee approves all compensation decisions
related to Mr. Wegman.
25
Stock Ownership Requirements and Hedging Policies
Currently, the Company does not have any formal stock ownership
requirements or any specific hedging policies related to stock ownership.
Benefits
Mr. Wegman is entitled to participate in the standard,
broad-based employee benefit plans maintained by the Company, including the
Companys health and dental insurance plans and its 401(k) plan.
Risk Considerations
The Compensation Committee annually evaluates whether there are
potential risks arising from the Companys compensation policies and practices.
Based on such evaluation, the Compensation Committee believes that the Companys
compensation policies and practices do not encourage executives to take
excessive risks because the various elements of the Companys executive
compensation policies and practices diversify the risks associated with any
single element of the executives compensation. Instead, the elements of the
Companys executive compensation policy are, collectively, designed to achieve
the Companys annual and long-term corporate objectives and strategies.
Pay Ratio Disclosure
In accordance with Item 402(u) of Regulation S-K, promulgated
by the Dodd-Frank Wall Street Reform Act and Consumer Protection Act of 2010
(the Dodd-Frank Act), we determined the ratio of the annual total compensation
of our Principal Executive Officer, Mr. Thomas Wegman, our President, relative
to the annual total compensation of our median employee.
The Company chose December 31, 2017, as the date for
establishing the employee population used in identifying the median employee. As
of that date, we had five employees based in the U.S. The Company identified the
median employee using gross earnings (unreduced by any pre-tax medical or other
benefits) as the consistently applied compensation measure. Permanent employees
who joined in 2017 were assumed to have worked for the entire year.
For purposes of reporting annual total compensation and the
ratio of annual total compensation of the President to the median employee, both
the President and median employees annual total compensation were calculated
consistent with the disclosure requirement of executive compensation under the
Summary Compensation Table.
After applying the methodology described above, our median
employee compensation using the Summary Compensation Table requirements was
$106,739. Our Presidents compensation in the Summary Compensation Table was
$403,608. Therefore, our CEO to median employee pay ratio is 4:1.
The pay ratio above represents the Companys reasonable
estimate calculated in a manner consistent with Item 402(u) of Regulation S-K
and applicable guidance. The rule and guidance provide significant flexibility
in how companies identify the median employee, and each company may use a
different methodology and make different assumptions particular to that company.
As a result, as the SEC explained when it adopted the rule, in considering the
pay-ratio disclosure, stockholders should keep in mind that the rule was not
designed to facilitate comparisons of pay ratios among different companies, even
companies within the same industry, but rather to allow stockholders to better
understand and assess each particular companys compensation practices and
pay-ratio disclosures.
26
SUMMARY COMPENSATION TABLE
The following table summarizes the annual compensation paid to
our named executive officer for the three fiscal years ended December 31, 2017,
2016 and 2015. The Summary Compensation Table excludes the following columns,
which were not part of Mr. Wegmans compensation for 2017, 2016 or 2015: Bonus,
Stock Awards, Option Awards, Non-Equity Incentive Plan Compensation, and Change
in Pension Value and Nonqualified Deferred Compensation Earnings.
Name And
|
Year
|
Salary
|
All Other
|
Total
|
Principal
|
|
($) (2)
|
Compensation
|
($)
|
Position
|
|
|
($)
|
|
Thomas Wegman
|
2017
|
400,000
|
3,068(3)
|
403,608
|
President, Principal
|
|
|
|
|
Executive Officer,
|
|
|
|
|
Principal Financial
|
|
|
|
|
Officer and Principal
|
|
|
|
|
Accounting Officer (1)
|
|
|
|
|
|
2016
|
400,000
|
23,885(3)(4)
|
423,885
|
|
2015
|
350,000
|
3,607(3)
|
353,607
|
(1)
|
Mr. Wegman also serves as the President of the Companys
wholly-owned subsidiary, Advance Biofactures Corporation, for no
additional compensation.
|
|
|
(2)
|
On January 26, 2017, the Companys Compensation Committee
established the annual base salary and target bonus amounts for 2017 for
Thomas L. Wegman, President of the Company. The Committee established that
Mr. Wegmans base salary amount for 2017 will be $400,000 (the Base
Salary) and that his target bonus amount for 2017 will be 50% of his Base
Salary (the Target Bonus).
|
|
|
(3)
|
Includes the cost of the vehicle leased by the Company
for use by Mr. Wegman.
|
|
|
(4)
|
On January 26, 2017, the Companys Compensation Committee
determined that Mr. Wegman was eligible to receive
$20,000.
|
27
GRANTS OF PLAN-BASED AWARDS
Mr. Wegman did not receive any awards pursuant to a Company
incentive plan during the fiscal year ended December 31, 2017.
Narrative Disclosure to Summary Compensation Table and
Grants of Plan-Based Awards
Thomas Wegman
All material factors necessary to an understanding of the
information disclosed in the above Summary Compensation Table are discussed in
the Compensation Discussion and Analysis section.
28
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END (2017)
The following table contains information concerning exercisable
stock options with respect to our Common Stock granted to Mr. Wegman that was
outstanding on December 31, 2017. The below table excludes the following
columns, which are not applicable based on award types currently outstanding:
Number of Securities Underlying Unexercised Options Unexercisable and Equity
Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned
Options
|
Option Awards
|
Name
|
Number of
Securities
Underlying
Unexercised
Options
(#) Exercisable
|
Option
Exercise
Price
($)
|
Option
Expiration
Date (1)
|
Thomas L. Wegman
President, Principal
Executive
Officer
and Principal Financial
Officer
|
50,000
|
21.00
|
08/03/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Each of these reported options is fully vested as of
December 31, 2017.
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE OF CONTROL
The Wegman Employment Agreement requires us to provide
compensation and/or other benefits to Mr. Wegman during his employment and in
the event of that executives termination of employment under certain
circumstances. Those arrangements are described in greater detail below.
Pursuant to the terms of the Wegman Employment Agreement, if
the Company terminates Mr. Wegmans employment without Cause (defined below) or
if Mr. Wegman resigns from his employment with the Company for Good Reason
(defined below), then Mr. Wegman is entitled to: (i) a lump sum payment equal to
the average of Mr. Wegmans annual base salary and bonuses paid by the Company
to Mr. Wegman over the five years prior to the time of such termination,
multiplied by three, payable not later than 30 days after the date of
termination; (ii) continuation of his participation in the Companys benefit
plans for 18 months following termination, at the highest level provided to Mr.
Wegman during the period immediately prior to the termination and at no greater
cost than the cost he was paying immediately prior to such termination; (iii)
100% of any options to purchase shares of Common Stock then held by Mr. Wegman,
which options are then subject to vesting, shall be accelerated and become fully
vested and exercisable on the date immediately preceding the effective date of
such termination (excluding options that would vest, if at all, upon the
attainment of performance goals or any criteria other than the passage of time
or continued performance of services by Mr. Wegman); and (iv) if, on the date
immediately preceding the effective date of such termination, Mr. Wegman then
holds shares of Common Stock that are subject to restrictions on transfer issued
to Mr. Wegman in a transaction other than pursuant to the exercise of a stock
option, then such restrictions shall expire in their entirety on the date
immediately preceding the date of termination and all of such shares of Common
Stock shall become transferable free of restriction, subject to the applicable
provisions of federal and state securities laws.
If Mr. Wegmans employment with the Company terminates
voluntarily without Cause (as defined below) by Mr. Wegman, for Cause by the
Company or due to Mr. Wegmans death or disability, then Mr. Wegman is not
entitled to any severance.
29
Mr. Wegmans receipt of any severance will be subject to him
signing and not revoking a customary release of claims. No severance will be
paid or provided until the release becomes effective and any period to revoke
the same has expired. In addition, if Mr. Wegman engages in Specified Conduct
(defined below) during the 12-month period following his termination (the
Severance Period) or has breached any other agreement with the Company
relating to nondisclosure of confidential information, in addition to other
remedies available to the Company, the Company may seek disgorgement from Mr.
Wegman of a sum equal to (i) the sum of all payments made by the Company to or
on behalf of Mr. Wegman as severance, multiplied by (ii) a fraction, the
numerator of which is (a) the number of calendar months that comprise Mr.
Wegmans Severance Period, less (b) the number of calendar months elapsed from
the date of Mr. Wegmans termination of employment to the date of such breach or
the first date Mr. Wegman engages in Specified Conduct, and the denominator of
which is the number of calendar months that comprise Mr. Wegmans Severance
Period
Under the Wegman Employment Agreement:
Cause means (i) a willful failure to carry out a proper
directive of the Board; (ii) a willful act of gross misconduct that injures the
Company; (iii) a material breach of the Wegman Employment Agreement; (iv) a
material breach of the Secrecy Agreement dated January 11, 2007 by and between
Mr. Wegman and the Company (the Secrecy Agreement); (v) a willful material
violation of federal or state laws which materially injures the Company; or (vi)
a conviction or plea of guilty or no contest to a felony involving moral
turpitude.
A termination by Mr. Wegman for Good Reason, means a
termination within two years or less following (i) a material reduction in his
base salary; (ii) a material reduction in his authority, duties, or
responsibilities; (iii) a material reduction in his superiors authority,
duties, or responsibilities; (iv) a material reduction in the budget over which
he has authority; (v) a material change in the geographic location where he must
perform services; or (vi) a material breach by the Company of the Wegman
Employment Agreement.
Specified Conduct means (i) unauthorized disclosure of
confidential information in violation of the Secrecy Agreement; (ii) engagement,
directly or indirectly, in any business that is competitive with the businesses
of Company at the time of Mr. Wegmans termination (other than less than 5%
ownership of a public company); (iii) Mr. Wegmans hiring, directly or
indirectly, any individual who was an employee or consultant of the Company
within the 6-month period prior to his termination of employment, or his
soliciting or inducing, directly or indirectly, any such individual to terminate
his or her employment or consultancy with the Company, unless such person was
previously terminated by the Company; or (iv) his solicitation, directly or
indirectly, of any individual who was partner, customer, or vendor of the
Company within the six-month period prior to Mr. Wegmans termination of
employment, to terminate or otherwise limit or reduce his or her relationship
with the Company.
30
The table below reflects the amount of compensation to be paid
to Mr. Wegman upon termination of his employment following: voluntary
resignation, involuntary termination without cause or voluntary termination for
Good Reason, involuntary termination for Cause, termination on death or
disability and termination following a change in control. The amounts shown
assume that such termination was effective on December 31, 2017 and thus include
amounts earned through such time and estimates of amounts that would be paid out
to the executive on his termination. The actual amount to be paid can only be
determined at the time of such executives termination.
The payments and benefits detailed in the table below are in
addition to any payments and benefits under our plans and arrangements that are
offered or provided generally to all salaried employees on a non-discriminatory
basis and any accumulated vested benefits for Mr. Wegman, including any stock
options vested as of December 31, 2017 (which are set forth in the Outstanding
Equity Awards at Fiscal Year-End Table (2017)).
|
Termination Reason
|
Name
|
Resignation
Without Good
Reason
($)
|
Termination
Without Cause
or
Resignation for
Good Reason
($)
|
Termination for
Cause
($)
|
Death/Disability
($)
|
Following a Change
in
Control
($)
|
Thomas Wegman
|
|
|
|
|
|
Cash Severance
|
-
|
$1,104,500
|
-
|
-
|
-
|
Continuation of
Benefits
|
-
|
$45,392
|
-
|
-
|
-
|
Value of
Accelerated
Options
|
-
|
-
|
-
|
-
|
-
|
Total
|
|
$1,149,892
|
|
|
|
31
DIRECTOR COMPENSATION
Overview of Director Compensation Program
Current Director Compensation Arrangements
The Companys current director compensation policy provides
that independent directors receive $45,000 annually for their service on the
Board, while non-independent, non-employee directors receive $22,000, except in
the case of Dr. Mark Wegman as set forth in the table below. Each non-employee
director also receives an additional $5,000 annually to the extent that such
non-employee director is a member of a formal or informal Committee and an
additional $5,000 annually to the extent that such non-employee director is a
chair of any such Committee. The Audit Committee Financial Expert also receives
an additional $10,000 annually for such service. The Intellectual Property
Committee IP Expert, if any, receives an additional $10,000 annually for such
service. Directors are also eligible to receive options under the Companys 2001
Stock Option Plan. However, in an effort to increase stockholder value, the
Company announced on June 17, 2010 that, absent special circumstances, the
Company would no longer grant any new options to, among others, its directors.
On April 22, 2015, in connection with their appointments to the Board, each of
Dr. Mattila and Ms. Chao received a stock option grant of 15,000 shares of
Common Stock. On March 15, 2018, in connection with their appointments to the
Boards Licensing Committee, each of Dr. Mattila and Ms. Chao received a stock
option grant of 15,000 shares of Common Stock.
Change of Control Agreements for Certain Independent
Directors
On June 18, 2007, the Company entered into Change of Control
Agreements with its directors, Paul Gitman, and Michael Schamroth; and on April
22, 2015, the Company entered into Change of Control Agreements with each of
Jennifer Chao and Jyrki Mattila (each agreement, a Director Change of Control
Agreement). Pursuant to the terms of the Director Change of Control Agreement,
in the event that the directors service on the Board is terminated pursuant to
a transaction resulting in a Change of Control, as defined below, then (i) 100%
of any options to purchase shares of Common Stock then held by the director,
which options are then subject to vesting, shall be accelerated and become fully
vested and exercisable on the date immediately preceding the effective date of
such termination and (ii) if, on the date immediately preceding the effective
date of such termination, the director then holds shares of Common Stock that
are subject to restrictions on transfer issued to the director in a transaction
other than pursuant to the exercise of a stock option, then, such restrictions
shall expire in their entirety on the date immediately preceding the date of
termination and all of such shares of Common Stock shall become transferable
free of restriction, subject to the applicable provisions of federal and state
securities laws.
Under the Director Change of Control Agreements, a Change of
Control means the occurrence of any one of the following:
-
the acquisition by any person (as such term is defined in Section
3(a)(9) of the Exchange Act), other than the Company or its affiliates, from
any party of an amount of the capital stock of the Company, so that such
person holds or controls 40% or more of the Companys capital stock; or
-
a merger or similar combination between the Company and another entity
after which 40% or more of the voting stock of the surviving corporation is
held by persons other than the Company or its affiliates; or
-
a merger or similar combination (other than with the Company) in which the
Company is not the surviving corporation; or
-
the sale of all or substantially all of the Companys assets or business.
A copy of the form of Director Change of Control Agreement was
filed as Exhibit 10.1 to the Current Report on Form 8-K filed with the SEC on
June 22, 2007. The foregoing descriptions of the Director Change of Control
Agreements do not purport to be complete and are qualified in their entirety by
reference to the full text of the agreements.
32
DIRECTOR COMPENSATION TABLE
The following table summarizes the annual compensation paid to
our directors for the fiscal year ended December 31, 2017. Mr. Wegman serves as
our President and received no additional compensation to serve on the Board as a
director during 2017.
Name
|
Fees Earned or
Paid in Cash
($)
(1)
|
Option Awards ($) (2)
|
Total
($)
|
|
|
|
|
Dr. Paul Gitman
|
65,000
|
--
|
65,000
|
Michael Schamroth
|
65,000
|
--
|
65,000
|
Dr. Mark Wegman
|
65,000
|
--
|
65,000
|
Toby Wegman
|
22,000
|
--
|
22,000
|
George Gould (3)
|
65,000
|
--
|
65,000
|
Dr. Jyrki Mattila
|
65,000
|
--
|
65,000
|
Ms. Jennifer Chao
|
65,000
|
--
|
65,000
|
(1)
|
Reflects the aggregate dollar amount of all fees earned
or paid in cash for services as a director, including committee
fees.
|
|
|
(2)
|
No options were granted during the year ended December
31, 2017.
|
|
|
(3)
|
Mr. George Gould resigned from the Board effective
November 8, 2017.
|
33
REPORT OF THE AUDIT COMMITTEE
The following Report of the Audit Committee does not
constitute soliciting material and should not be deemed filed or incorporated by
reference into any of our other filings under the Securities Act of 1933, as
amended, or the Exchange Act except to the extent we specifically incorporate
this Report by reference therein.
The Audit Committee of our Board is responsible for assisting
the Board in fulfilling its oversight responsibilities regarding the Companys
financial accounting and reporting processes, system of internal control, audit
process, and process for monitoring compliance with laws and regulations.
Management of the Company has the primary responsibility for
the Companys consolidated financial statements as well as the Companys
financial reporting process, accounting principles and internal controls.
EisnerAmper LLP, the Companys independent registered public accounting firm, is
responsible for performing an audit of the Companys consolidated financial
statements and internal control over financial reporting, and expressing an
opinion as to the conformity of such financial statements with generally
accepted accounting principles and the effectiveness of the Companys internal
control over financial reporting.
In this context, the Audit Committee reviewed and discussed the
audited financial statements of the Company as of and for the year ended
December 31, 2017 with the Companys management and the independent registered
public accounting firm. To ensure independence, the Audit Committee met
separately with EisnerAmper LLP and members of the Companys management. These
reviews included discussion with the independent registered public accounting
firm of matters required to be discussed pursuant to Statement on Auditing
Standards No. 61 (Communication with Audit Committees), as amended (AICPA,
Professional Standards
, Vol. 1, AU section 380), as adopted by the Public
Company Accounting Oversight Board in Rule 3200T. In addition, the Audit
Committee received the written disclosures and the letter from the independent
registered public accounting firm required by Independence Standards Board
Standard No. 1 (Independence Discussions with Audit Committees), as currently in
effect, and it has discussed with the independent registered accounting firm its
independence from the Company. Finally, in accordance with the Sarbanes Oxley
Act of 2002, Section 404, the Audit Committee received a positive attestation
and report from EisnerAmper LLP regarding the Companys internal financial
reporting controls.
Based on the reviews and discussions described above, the Audit
Committee recommended to the Board the inclusion of the audited financial
statements in the Companys Annual Report on Form 10-K for the fiscal year ended
December 31, 2017, for filing with the Securities and Exchange Commission.
/s/ The Audit Committee
Dr. Paul Gitman, Chair
Michael
Schamroth
Dr. Jyrki Mattila
Jennifer Chao
34
PROPOSAL 2ADVISORY VOTE ON EXECUTIVE COMPENSATION (SAY ON
PAY)
The Dodd-Frank Wall Street Reform and Consumer Protection Act
(Dodd-Frank Act) requires that our Stockholders have the opportunity to cast a
non-binding advisory vote to approve the compensation of our named executive
officer as disclosed in the Compensation Discussion and Analysis (CD&A),
tabular disclosures, and other narrative executive compensation disclosures in
the Proxy Statement.
As previously discussed in the CD&A, the Companys
compensation policies are designed to motivate our executive officers to achieve
the Companys annual and long-term corporate objectives and strategies, provide
compensation opportunities that are competitive with similarly sized
biotechnology companies, align executive interests with those of our
stockholders, and attract and retain talented executives. Moreover, the Board
believes that the elements underlying our compensation policies align executive
pay with the long-term interest of our Stockholders.
For the reasons stated, the Board recommends a vote FOR
the following non-binding resolution
:
RESOLVED, that the stockholders approve the current
compensation of Thomas L. Wegman, as disclosed in the Compensation Discussion
and Analysis, tabular disclosures, and other narrative executive compensation
disclosures in the Proxy Statement.
Although the vote is non-binding, the Compensation Committee,
along with the Board, will review the voting results. To the extent that there
is a significant negative vote, we will consult directly with the Stockholders
to better understand the concerns that influenced the vote. The Compensation
Committee, along with the Board, welcomes any constructive feedback obtained
through this process in making future compensation arrangements for the
Companys named executive officers.
In accordance with the Dodd-Frank Act, this vote does not
overrule any compensation decisions made by the Board, will not create or imply
any change to any fiduciary duties of the Board and will not restrict or limit
the ability of our Stockholders to make proposals for inclusion in proxy
materials related to executive compensation.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU
VOTE
FOR THE APPROVAL, ON AN ADVISORY BASIS,
OF THE CURRENT EXECUTIVE
COMPENSATION ARRANGEMENT OF THOMAS L. WEGMAN.
(PROPOSAL NO. 2 ON YOUR PROXY
CARD)
35
PROPOSAL NO. 3RATIFICATION OF SELECTION OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
We are asking our Stockholders to ratify the Audit Committees
selection of EisnerAmper LLP (EisnerAmper) as our independent registered
public accounting firm for the fiscal year ending December 31, 2018. EisnerAmper
has served as our independent registered public accounting firm since October
10, 2014. The services provided to us by EisnerAmper during 2017 are described
under Principal Accountant Fees and Services.
Although Stockholder ratification is not required by our bylaws
or otherwise, the Board believes it is advisable to provide Stockholders an
opportunity to ratify this selection and is submitting the selection of
EisnerAmper to our Stockholders for ratification as a matter of good corporate
practice. If the selection is not ratified, the Audit Committee will consider
whether it is appropriate to select another independent registered public
accounting firm, but is not required to do so. Even if the selection is
ratified, the Audit Committee in its discretion may select a different
registered public accounting firm at any time during the year if the Committee
determines that such a change would be in the best interests of the Company and
our Stockholders.
We expect that a representative of EisnerAmper will attend the
2018 Annual Meeting, either in person or via telephone, and the representative
will have an opportunity to make a statement if he or she so chooses. The
representative will also be available to respond to appropriate questions from
Stockholders.
The Audit Committee annually reviews the independent registered
public accounting firms independence, including reviewing all relationships
between the independent registered public accounting firm and us and any
disclosed relationships or services that may impact the objectivity and
independence of the independent registered public accounting firm, and the
independent registered public accounting firms performance.
Principal Accountant Fees and Services
We regularly review the services and fees of our independent
registered public accountants. These services and fees are also reviewed by the
Audit Committee on an annual basis. The following table shows the fees paid or
accrued by the Company for audit and other services provided by EisnerAmper for
2017 and 2016. The aggregate fees billed for the fiscal years ended December 31,
2017 and 2016 for each of the following categories of services are as
follows:
|
|
|
2017($)
|
|
|
2016($)
|
|
|
|
|
|
|
|
|
|
|
Audit fees(1)
|
|
173,200
|
|
|
162,700
|
|
|
Audit-related fees
|
|
-
|
|
|
-
|
|
|
Tax fees
|
|
-
|
|
|
-
|
|
|
All other fees
|
|
-
|
|
|
-
|
|
___________
(1) Consists of fees billed for the audit of
our annual financial statements, review of financial statements included in our
Quarterly Reports on Form 10-Q and services that are normally provided by the
accountant in connection with statutory and regulatory filings or
engagements.
The Audit Committee pre-approves all auditing services,
internal control related services and permitted non-audit services (including
the fees and terms thereof) to be performed by EisnerAmper, subject to the de
minimis exception for non-audit services that are approved by the Audit
Committee prior to the completion of an audit. The Audit Committee has adopted
policies and procedures relating to the approval of all audit and non-audit
services that are to be performed by the Companys independent registered public
accounting firm. This policy generally provides that the Company will not engage
its independent registered public accounting firm to render audit or non-audit
services unless the service is specifically approved in advance by the Audit
Committee or the engagement is entered into pursuant to the pre-approval
procedure described below.
From time to time, the Audit Committee may pre-approve
specified types of services that are expected to be provided to the Company by
its independent registered public accounting firm during the next 12 months. Any
such pre-approval is detailed as to the particular service or type of services
to be provided and is also generally subject to a maximum dollar amount.
36
VOTE REQUIRED
The affirmative vote of a majority of shares of our common
stock, present in person or represented by proxy at the 2018 Annual Meeting and
entitled to vote, is required to ratify the selection of our independent
registered public accountants.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU
VOTE
FOR THE RATIFICATION OF THE APPOINTMENT OF EISNERAMPER LLP AS THE
COMPANY'S
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM.
(PROPOSAL NO. 3
ON YOUR PROXY CARD)
37
GENERAL MATTERS
Availability of Certain Documents
A copy of our 2017 Annual Report on Form 10-K has been posted
on our website along with this Proxy Statement at http://biospecifics.com/ under
http://investors.biospecifics.com/index.php?s=127.
We will mail, without
charge, upon written request, a copy of our 2017 Annual Report on Form 10-K
excluding exhibits. Please send a written request to our President at:
BioSpecifics Technologies Corp.
35 Wilbur
Street
Lynbrook, New York 11563
Attention: President
Stockholder Communications
The Company has a process for Stockholders who wish to
communicate with the Board. Stockholders who wish to communicate with the Board
may write to the Board at the Companys address given above. These
communications will be received by Thomas Wegman, President of the Company, and
will be presented to the Board in Mr. Wegmans discretion.
Stockholder Proposals and Nominations for the 2019 Annual
Meeting
SEC Requirements for Stockholder Proposals to be Considered
for Inclusion in our Proxy Materials.
Pursuant to Rule 14a-8(e) of the Exchange Act, a Stockholder
may submit a proposal for inclusion in our Proxy Statement for the 2019 Annual
Meeting to Thomas Wegman, our President, at our principal executive offices, at
35 Wilbur Street, Lynbrook, New York 11563 no later than close of business on
December 30, 2018.
Requirements for Stockholders to Submit Nominees for
Inclusion in our Proxy Materials and Alternative Requirements for Stockholder
Proposals to be Considered for Inclusion in our Proxy Materials.
Pursuant to our bylaws, any Stockholder desiring to nominate
one or more persons for election as a director or directors of the Company at
the 2019 Annual Meeting or desiring to bring any other matter before the 2019
Annual Meeting must submit a notice of the proposal including the information
required by our bylaws to us between February 13, 2019 and March 15, 2019 or
else it will be considered untimely and ineligible to be properly brought before
the meeting. However, if our 2018 Annual Meeting of Stockholders is not held on
June 13, 2019, under our bylaws, this notice must be provided (a) not earlier
than the 120th day prior to the 2019 Annual Meeting, and (b) not later than (i)
the 90th day prior to the 2019 Annual Meeting and (ii) the fifth day following
the day on which notice of the date of the 2019 Annual Meeting is mailed or
public disclosure of the date of the 2019 Annual Meeting is made, whichever
first occurs.
A proposal which is received outside of the applicable time
period or which otherwise fails to meet the requirements for Stockholder
proposals established by the SEC and our bylaws will not be included. Notice of
a proposal to nominate one or more persons as a director of the Company must
provide the information required by Sections 1.11 and 2.15 of our bylaws with
respect to each nomination the Stockholder submits for inclusion in our proxy
materials for the 2019 Annual Meeting. Notice of all other proposals must
provide the information required by Section 1.11 of our bylaws. The submission
of a Stockholder proposal does not guarantee that it will be included in the
proxy statement. All notices should be submitted to Thomas Wegman, our
President, at our principal executive offices, at 35 Wilbur Street, Lynbrook,
New York 11563.
38
Other Matters
At the date of the Proxy Statement, management is not aware of
any matters to be presented for action at the 2018 Annual Meeting other than
those described above. However, if any other matters should properly come before
the 2018 Annual Meeting, it is the intention of the persons named in the
accompanying Proxy Card to vote such Proxy Card in accordance with their
judgment on such matters.
April 27, 2018
|
By Order of the Board of
|
|
Directors,
|
|
|
|
/s/
Thomas Wegman
|
|
Thomas Wegman, President
|
39
BIOSPECIFICS TECHNOLOGIES CORP.
ANNUAL MEETING OF
STOCKHOLDERS
TO BE HELD ON JUNE 14, 2018
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS
It is important that your shares be represented at the
meeting. Whether or not you plan to attend the meeting in person, please vote
your shares promptly by completing, signing and returning this Proxy Card. You
do not need to affix postage to the enclosed reply envelope if you mail it
within the United States. If you attend the meeting, you may withdraw your proxy
and vote your shares personally.
The undersigned stockholder of BioSpecifics Technologies Corp.,
a Delaware corporation (the Company), acknowledges receipt of the Notice of
Annual Meeting of Stockholders and Proxy Statement, dated April 27, 2018, and
hereby constitutes and appoints Thomas L. Wegman and Carl A. Valenstein, or
either of them acting singly in the absence of the other, with full power of
substitution in either of them, the proxies of the undersigned to vote with the
same force and effect as the undersigned all shares of the Companys Common
Stock which the undersigned is entitled to vote at the 2018 Annual Meeting of
Stockholders to be held on June 14, 2018, and at any adjournment thereof, hereby
revoking any proxy or proxies heretofore given and ratifying and confirming all
that said proxies may do or cause to be done by virtue thereof with respect to
the following matters:
The undersigned hereby instructs said proxies or their
substitutes:
|
1.
|
Elect as Directors the nominees listed below:
|
|
|
[ ]
|
Mr. Thomas Wegman
First Class Term expires at
2021 Annual Meeting of Stockholders
|
|
|
[ ]
|
Dr. Paul Gitman
First Class Term expires at
2021 Annual Meeting of Stockholders
|
|
|
Withhold authority for the following:
|
|
|
[ ]
|
Mr. Thomas Wegman
|
|
|
[ ]
|
Dr. Paul Gitman
|
|
|
|
|
|
2.
|
Approve the following non-binding resolution: RESOLVED,
that the stockholders approve the current compensation of Thomas L.
Wegman, as disclosed in the Compensation Discussion and Analysis, tabular
disclosures, and other narrative executive compensation disclosures in the
Proxy Statement.
|
|
|
For
|
Against
|
Abstain
|
|
|
[ ]
|
[ ]
|
[ ]
|
40
|
3.
|
To ratify the appointment of EisnerAmper LLP as the
independent registered public accounting firm for the Company for the
fiscal year ending December 31, 2018.
|
|
|
For
|
Against
|
Abstain
|
|
|
[ ]
|
[ ]
|
[ ]
|
In their discretion, the proxies are authorized to vote upon
such other business as may properly come before the 2018 Annual Meeting, and any
adjournment thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE
MANNER DIRECTED; IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR
ALL NOMINEES,
FOR
THE NON-BINDING
RESOLUTION TO APPROVE THE COMPENSATION OF THE NAMED EXECUTIVE OFFICER AND
FOR
RATIFICATION OF THE INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM. IN THEIR DISCRETION, THE PROXIES ARE ALSO AUTHORIZED TO VOTE
UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING, INCLUDING THE
ELECTION OF ANY PERSON TO THE BOARD OF DIRECTORS WHERE A NOMINEE NAMED IN THE
PROXY STATEMENT DATED APRIL 27, 2018 IS UNABLE TO SERVE OR, FOR GOOD CAUSE,
WILL NOT SERVE.
I (we) acknowledge receipt of the Notice of 2018 Annual Meeting
of Stockholders and the Proxy Statement dated April 27, 2018, and the 2017
Annual Report to Stockholders and ratify all that the proxies, or either of
them, or their substitutes may lawfully do or cause to be done by virtue hereof
and revoke all former proxies.
Please sign, date and mail this proxy immediately in the
enclosed envelope. You do not need to affix postage to the enclosed reply
envelope if you mail it within the United States.
|
Name
|
|
Name
(if joint)
|
|
Date _____________, 2018
|
|
Please sign your name exactly as it appears
hereon. When signing as attorney, executor, administrator, trustee or
guardian, please give your full title as it appears hereon. When signing
as joint tenants, all parties in the joint tenancy must sign. When a proxy
is given by a corporation, it should be signed by an authorized officer
and the corporate seal affixed. No postage is required if returned in the
enclosed envelope.
|
Important Notice Regarding Internet Availability of Proxy
Materials for the Annual Meeting:
The Notice, Proxy Statement, Proxy Card and our 2017 Annual
Report on Form 10-K are available at
http://www.materials.proxyvote.com/090931
.
41
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