def14a.htm
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
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):
[X] No
fee required
[ ]
Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
| (1) Title
of each class of securities to which transaction applies: |
|
| (2) Aggregate
number of securities to which transaction applies: |
|
|
(3)
Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule
|
|
0-11
(set forth the amount on which the filing fee is calculated and state how
it was determined):
|
|
|
| (4) Proposed
maximum aggregate value of transaction: |
|
| (5) Total
fee paid: |
|
[ ] Fee
paid previously with preliminary materials.
[ ] Check
box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2)
and identify
the
filing for which the offsetting fee was paid previously. Identify the previous
filing by registration
statement
number, or the Form or Schedule and the date of its filing.
| (1) Amount
Previously Paid: |
|
| (2) Form,
Schedule or Registration Statement No.: |
|
| (3) Filing
Party: |
|
| (4) Date
Filed: |
|
BIOSPECIFICS
TECHNOLOGIES CORP.
35
Wilbur Street
Lynbrook,
New York 11563
516-593-7000
August
14, 2008
Dear
Stockholder:
On behalf
of the Board of Directors of BioSpecifics Technologies Corp. (the “Company”), I
invite you to attend our 2008 Annual Meeting of Stockholders (the “2008 Annual
Meeting”). We hope you can join us. The 2008 Annual
Meeting will be held:
|
At:
|
Thelen
Reid Brown Raysman & Steiner LLP
|
|
|
875
Third Avenue, 10th
Floor
|
|
|
Conference
Room #1027
|
|
|
New
York, New York 10022
|
|
|
|
|
On:
|
Tuesday,
September 9, 2008
|
|
|
|
|
Time:
|
11:00
a.m., local time
|
The
Notice of the 2008 Annual Meeting and the Proxy Statement accompany this
letter. Copies of our 2007 Annual Report on Form 10KSB together with
quarterly reports on Form 10Q for the quarterly periods ended March 31, 2008 and
June 30, 2008 (each including the financial statements and financial statement
schedules, as filed with the Securities and Exchange Commission) are included
with the Notice.
At the
2008 Annual Meeting, we will report on important activities and accomplishments
of the Company and review the Company’s financial performance and business
operations. You will have an opportunity to ask questions and gain an
up-to-date perspective on the Company and its activities. You will
also have an opportunity to meet the directors of the Company.
As
discussed in the enclosed Proxy Statement, the 2008 Annual Meeting will also be
devoted to the election of directors, the ratification of the appointment of the
Company’s auditors and consideration of any other business matters properly
brought before the 2008 Annual Meeting.
We know
that many of our stockholders will be unable to attend the 2008 Annual Meeting
in person. We are soliciting proxies so that each stockholder has an
opportunity to vote on all matters that are scheduled to come before the
stockholders at the 2008 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 2008 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 BioSpecifics Technologies Corp. We
look forward to seeing you at our 2008 Annual Meeting.
If you
have any questions about the Proxy Statement, please contact me at (516)
593-7000.
|
Sincerely,
|
|
|
|
/s/
Thomas L. Wegman
|
|
Thomas
L. Wegman
|
|
President
|
BIOSPECIFICS
TECHNOLOGIES CORP.
NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS
September
9, 2008
To the
Stockholders of BIOSPECIFICS TECHNOLOGIES CORP.:
Notice is
hereby given that the 2008 Annual Meeting of Stockholders (the “2008 Annual
Meeting”) of BioSpecifics Technologies Corp., a Delaware corporation (the
“Company”), will be held on Tuesday, September 9, 2008, at 11:00 a.m., local
time, at the offices of Thelen Reid Brown Raysman & Steiner LLP, 875 Third
Avenue, 10th
Floor, New York, New York 10022 for the following purposes:
|
|
1.
|
To
elect two persons to the Board of Directors of the Company, each to serve
as specified in the attached Proxy Statement or until such person resigns,
is removed, or otherwise leaves
office;
|
|
|
2.
|
To
ratify the selection by the Audit Committee of Tabriztchi & Co., CPA,
P.C. as the Company’s independent registered public accounting firm for
the fiscal year ending December 31, 2008;
and
|
|
|
3.
|
To
transact such other business as may properly come before the 2008 Annual
Meeting or any adjournment thereof.
|
Only
stockholders of record at the close of business on July 23, 2008 are entitled to
this notice (this “Notice”) and to vote at the 2008 Annual Meeting and any
adjournment.
A Proxy
Statement describing the matters to be considered at the 2008 Annual Meeting is
attached to this Notice. Copies of our 2007 Annual Report on Form 10KSB together
with quarterly reports on Form 10Q for the quarters ended March 31, 2008 and
June 30, 2008 (each including the financial statements and financial statement
schedules, 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 you
plan to attend the meeting, please mark the accompanying proxy card in the space
provided and return it to us. This will assist us with meeting
preparations. If your shares are not registered in your own name and
you would like to attend the meeting, please ask the broker, trust, bank or
other nominee that holds your shares to provide you with evidence of your share
ownership. This will enable you to gain admission to the
meeting.
|
By
Order of the Board of Directors,
|
|
|
|
/s/
Thomas L. Wegman
|
|
Thomas
L. Wegman
|
|
President
|
BIOSPECIFICS
TECHNOLOGIES CORP.
35
Wilbur Street
Lynbrook,
New York 11563
This
Proxy Statement and the accompanying proxy are being furnished with respect to
the solicitation of proxies by the Board of Directors of BioSpecifics
Technologies Corp., a Delaware corporation (the “Company,” “BioSpecifics” or
“we”), for the 2008 Annual Meeting of Stockholders (the “2008 Annual
Meeting”). The 2008 Annual Meeting is to be held at 11:00 a.m., local
time, on Tuesday, September 9, 2008, and at any adjournment or adjournments
thereof, at the office of Thelen Reid Brown Raysman & Steiner LLP, 875 Third
Avenue, 10th
Floor, New York, New York, 10022.
The
approximate date on which the Proxy Statement and proxy card are intended to be
sent or given to stockholders is August 14, 2008.
The
purposes of the 2008 Annual Meeting are to seek stockholder approval of two
proposals: (i) electing two (2) directors to the board of directors of the
Company (the “Board” or “Board of Directors”) and (ii) ratifying the appointment
of the Company’s accountants for the fiscal year ending December 31,
2008.
Who
May Vote
Only
stockholders of record of our common stock, $0.001 par value (the “Common
Stock”), as of the close of business on July 23, 2008 (the “Record Date”) are
entitled to notice and to vote at the 2008 Annual Meeting and any adjournment or
adjournments thereof.
A list of
stockholders entitled to vote at the 2008 Annual Meeting will be available at
the 2008 Annual Meeting, and will also be available for ten (10) days prior to
the 2008 Annual Meeting, during office hours, at the executive offices of the
Company at 35 Wilbur Street, Lynbrook, New York, 11563, by contacting the
President of the Company.
The
presence at the 2008 Annual Meeting of a majority of the outstanding shares of
Common Stock as of the Record Date, in person or by proxy, is required for a
quorum. Should you submit a proxy, even though you abstain as to one
or more proposals, or you are present in person at the 2008 Annual Meeting, your
shares shall be counted for the purpose of determining if a quorum is
present.
Broker
“non-votes” are not included for the purposes of determining whether a quorum of
shares is present at the 2008 Annual Meeting. A broker “non-vote”
occurs when a nominee holder, such as a brokerage firm, bank or trust company,
holding shares of record for a beneficial owner does not vote on a particular
proposal because the nominee holder does not have discretionary voting power
with respect to that item and has not received voting instructions from the
beneficial owner.
As of the
Record Date, we had issued and outstanding 5,950,801 shares of Common
Stock. Each holder of Common Stock on the Record Date is entitled to
one vote for each share then held on all matters to be voted at the 2008 Annual
Meeting. No other class of voting securities was then
outstanding.
You
may vote by completing and signing the proxy card and mailing it in the enclosed
postage-paid envelope.
Complete
instructions are included on the proxy card. If your shares are held
through a broker, trust, bank or other nominee, you should refer to information
forwarded to you by such holder of record for your voting options. If
your shares are registered in the name of a bank or a brokerage, you may be
eligible to vote your shares electronically over the Internet or by
telephone. If your voting form does not reference Internet or
telephone voting information, please complete and return the accompanying paper
proxy card in the enclosed, self-addressed, postage paid envelope.
The
shares represented by any proxy duly given will be voted at the 2008 Annual
Meeting in accordance with the instructions of the stockholder. If no specific
instructions are given, the shares will be voted FOR the
election of the nominees for director set forth herein, and FOR ratification
of Tabriztchi & Co., CPA, P.C. as the Company’s independent registered
public accounting firm. In addition, if other matters come before the 2008
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. Under Proposal 1 (Election of Directors), the
two candidates for election as directors at the 2008 Annual Meeting are
uncontested. In uncontested elections, directors are elected by
majority of the votes cast at the meeting. Proposal 2 (Ratification
of Independent Auditors) requires the vote of a majority of the shares present
in person or by proxy at the 2008 Annual Meeting for
approval.
Shares which withhold votes or abstain from
voting as to a particular matter, and shares held in “street name” by brokers or
nominees who indicate on their proxies that they do not have discretionary
authority to vote such shares as to a particular matter, will not be counted as
votes in favor of such matter, and will also not be counted as shares voting on
such matter. Accordingly, withheld votes, abstentions and “broker
non-votes” will have no effect on the voting of matters (such as the election of
directors, and the ratification of the selection of the independent registered
public accounting firm) that require the affirmative vote of a plurality or a
majority of the votes cast or the shares voting on the
matter.
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
President at the address of our principal office set forth above in the Notice
to this Proxy Statement or your attendance and voting in person at the 2008
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
2008 Annual Meeting is postponed or adjourned for any reason, at any subsequent
reconvening of the 2008 Annual Meeting, all proxies will be voted in the same
manner as the proxies would have been voted at the original convening of the
2008 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 2008 Annual Meeting, to sign the proxy and return it promptly in the
enclosed envelope.
Solicitation
of Proxies
The
expenses of solicitation of proxies will be paid by the Company. We may solicit
proxies by mail, by phone through agents of the Company, or the officers and
employees of the Company, who will receive no extra compensation therefore, may
solicit proxies personally or by telephone. The Company may utilize
the services of a proxy solicitation Company to solicit proxies and the
estimated cost for such services are not anticipated to exceed $16,000. The
Company will also reimburse brokerage houses for
their expenses incurred in sending proxies
and proxy materials to the beneficial owners of shares held by
them.
Delivery
of Proxy Materials to Households
Only one
copy of the Company’s 2007 Annual Report on Form 10KSB together with quarterly
reports on Form 10Q for the quarters ended March 31, 2008 and June 30, 2008
(each including the financial statements and financial statement schedules, as
filed with the SEC) (together referred to as the “2007 Annual Report and 2008
Quarterly Reports”) and Proxy Statement for the 2008 Annual Meeting 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 2007 Annual Report and 2008 Quarterly Reports, this
Proxy Statement, or any future annual reports or proxy statements, please
contact Thomas L. Wegman, President, BioSpecifics Technologies Corp., 35 Wilbur
Street, Lynbrook, New York 11563, telephone number (516) 593-7000, and we will
promptly mail you copies.
Interest
of Officers and Directors in Matters to Be Acted Upon
None of
the Company’s officers or directors have any interest in any of the matters to
be acted upon, except to the extent that a director is named as a nominee for
election to the Board.
Directors
and Executive Officers
Set forth
below are the names of our current directors, officers and significant
employees, 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
L. WEGMAN. Mr. Wegman, age 53, has served as an officer of the Company
for more than 15 years. He is our current President and has served as our
President since October 17, 2005. Prior to such appointment he served as the
executive vice president of the Company. Effective in 1994, Mr. Wegman became a
director on the Board of the Company and has served as such since that time. He
has over 30 years of experience in the bio-pharmaceutical industry that
encompasses managing company operations and drug development, licensing, and
registration. From 1978 thru 1983, Mr. Wegman managed 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. Mr. Wegman is the son of our
former CEO and Chairman, Edwin H. Wegman, who passed away on February 16, 2007.
Mr. Wegman is the brother of Dr. Mark Wegman and the stepson of Toby Wegman,
both of whom are currently directors of the Company.
HENRY
MORGAN. Mr. Morgan, age 87, is currently a director on the Board and has
served as a director of the Company since 1990, with the exception of a few
interim months. He has been a practicing attorney for more than 50
years. Prior to his work as an attorney, he was employed in the
insurance industry as an auditor and agent. His law practice is in
the defense of corporations and individuals for claims asserted against them
that allege professional errors and omissions, defective products, insurance
coverage issues and employment related disputes. Mr. Morgan is a
member of the Essex County, New Jersey State and American Bar Associations, the
International Association of Defense Counsel and the Defense Research
Institute. He received his B.A. and J.D. degrees from Rutgers, The
State University of New Jersey.
DR.
PAUL GITMAN. Dr. Gitman, age 67, 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 and the American Board of Quality Assurance
and Utilization Review. Following 25 years in private medical
practice he joined the fulltime faculty of Long Island Jewish Medical Center
where he became Medical Director. In 2007, Dr Gitman was promoted to
Vice President of Medical Affairs for the North Shore Long Island Jewish Health
system. Dr. Gitman is currently an Associate Professor of Medicine at
Albert Einstein College of Medicine as well as the Vice Chairman of the Medical
Society of the State of New York’s Committee for Physician’s
Health. He has 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 both 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.
MICHAEL
SCHAMROTH. Mr. Schamroth, age 68, 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 the past 38
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.
TOBY
WEGMAN. Ms. Wegman, age 72, is currently a director on the
Board and has served as a director of the Company since June 25,
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 women’s apparel business and prior to that
managed a women’s retail clothing operation. She has also been
actively involved in the management of Edwin H. Wegman’s business interests and
finances for many years. Ms. Wegman is the step mother of Thomas L.
Wegman and Dr. Mark Wegman, both of whom are currently directors of the Company
and are nominated for re-election at the 2007 Annual Meeting. Ms.
Wegman is a member of the Lion of Judah, and a lifetime member of the National
Council of Jewish Women.
DR.
MARK
WEGMAN. Dr. Wegman, age 58, is currently a director on the
Board and has served as a director of the Company since June 25, 2007. He joined
International Business Machines (“IBM”) in 1975 where Dr. Wegman is currently
Head of Computer Science with world wide responsibilities in IBM’s eight
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 recently was named as an
IBM Fellow, which is IBM’s highest technical honor. 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. Dr. Wegman is the son of our former CEO and Chairman, Edwin
H. Wegman. Dr. Wegman is the brother of Thomas L. Wegman and the stepson of Toby
Wegman, both of whom are currently directors of the Company and are nominated
for re-election at the 2008 Annual Meeting.
EXECUTIVE
COMPENSATION
The
following table summarizes the annual compensation paid to our named executive
officers for the two years ended December 31, 2007 and 2006.
SUMMARY
COMPENSATION TABLE
|
Name
And Principal
Position
|
Year
|
Salary
($)
|
Stock
Awards
($)
|
Option
Awards ($) (2)
|
All
Other Compensation
($)
|
Total
($)
|
|
Thomas
L. Wegman
President, Principal Executive
Officer and Principal Financial Officer (1)
|
2007
|
250,000
|
0
|
41,918
|
3,578
(3)
|
295,496
|
|
|
2006
|
251,590
|
0
|
127,001
|
3,720
(3)
|
382,311
|
|
Edwin
H. Wegman
Former CEO and Chairman of the Board
(4)
|
2007
|
31,250
|
0
|
0
|
220,959
(5)
|
252,209
|
|
|
2006
|
401,422
|
0
|
63,540
|
16,898
(6)
|
481,860
|
|
Lawrence
Dobroff
Former
Chief Financial Officer
|
2007
|
91,318
(7)
|
0
|
0
|
0
|
|
|
|
2006
|
138,461
|
25,000
|
51,190
|
0
|
214,651
|
|
(1)
|
Thomas
L. Wegman also serves as the President of the Company’s wholly-owned
subsidiary, Advance Biofactures Corporation, for no additional
compensation.
|
|
(2)
|
Amounts
listed in this column reflect the compensation cost recognized for
financial statement purposes during 2007 and 2006 for the stock awards
held by the named executive officer calculated in accordance with
SFAS 123(R) and using a Black-Scholes valuation model. The
stock-based compensation expense recognized under SFAS No. 123(R) for
the years ended December 31, 2007 and 2006 was determined using the
Black-Scholes option valuation model. Option valuation models require the
input of subjective assumptions and these assumptions can vary over time.
The assumptions used were as follows: expected life of 5* years, risk free
interest rate of 5%, volatility of 128% and zero dividend
yield.
|
*
Expected life used in Black-Scholes valuation model was 2 years for Edwin H.
Wegman
|
(3)
|
Represents
incremental cost of vehicles leased by the
Company.
|
|
(4)
|
Upon
his death on February 16, 2007, Edwin H. Wegman ceased to be the CEO and
Chairman of the Board of the
Company.
|
|
(5)
|
On
February 20, 2007 at a special meeting of the Board, the Board, out of
generosity and affection, approved the payment to Toby Wegman, the wife of
Edwin H. Wegman, of $250,000 as a death benefit to recognize and honor
Edwin H. Wegman’s past service to the Company. This amount is
equal to the salary that Edwin H. Wegman would have received for a one
year period commencing on February 20, 2007, payable on the same
semi-monthly basis. In 2007, the Company paid to Toby Wegman $218,750 of
this amount. In addition, the Board approved the continuation of spousal
health benefits for Toby Wegman for a one year period commencing February
20, 2007, at the Company’s expense, which benefits amounted to $2,209
during 2007.
|
|
(6)
|
This
amount includes (i) $4,500, which represents the incremental cost of
Company’s used 1997 Cadillac Sedan, the title of which was transferred to
Edwin H. Wegman as additional compensation upon affirmation of approval by
the non-employee members of the Board, (ii) $7,875, which represents
compensation in 2006 for the value at the time of issuance of restricted
stock to an individual who provided personal services to Edwin H. Wegman,
(iii) $3,291 for personal legal services to Edwin H. Wegman which was paid
by the Company and (iv) $1,175 for the incremental cost of vehicles leased
by the Company.
|
|
(7)
|
On
May 7, 2007, the Board terminated Lawrence Dobroff’s employment with the
Company. This amount includes (i) $49,318, which represents the
base salary that Mr. Dobroff earned from January 1, 2007 through May 7,
2007 and (ii) $42,000, which represents the total value of his accrued
vacation time from January 1, 2007 through May 7,
2007.
|
Narrative
Disclosure to Summary Compensation Table
Thomas
L. Wegman
On
January 23, 2006, the Board awarded to Thomas L. Wegman options to purchase
100,000 shares of common stock at an exercise price of $1.00 per share (100% of
the closing sales price of the common stock on the grant date), which vested on
the grant date and expires ten years from the grant date.
On
September 6, 2006, the Board awarded a bonus stock option award to Thomas L.
Wegman in the form of options to purchase 25,000 shares of common stock in
recognition of his valued efforts in connection with the consummation of the
sale of the Company’s topical business to DFB Biotech, Inc. Each option vested
on the grant date, has an exercise price of $0.83 per share (100% of the closing
sales price of the common stock on the grant date), and expires ten years from
the grant date.
On
September 6, 2006, as an incentive for attaining certain goals for the Company,
the non-employee members of the Board granted to Thomas L. Wegman incentive
stock options to acquire 100,000 shares of common stock of the Company at an
exercise price equal to $0.83 per share (equal to 100% of the closing sales
price of the common stock on the grant date) and expiring ten years from the
grant date. The options are to vest in two installments if the Company achieves
certain objectives set by the Board, including the Company becoming current in
its SEC filings.
On
October 24, 2007, upon the Company becoming current in its SEC filings, 50,000
of the 100,000 options granted to Thomas L. Wegman on September 6, 2006,
vested. As of the date of this filing, the remaining 50,000
contingent options have not vested.
On August
5, 2008, the Board awarded contingent options to purchase 50,000 shares of
common stock to Thomas L. Wegman at an exercise price of $21.00 per share (100%
of the closing sales price of the common stock on the grant date), which shall
vest upon the achievement by the Company of certain goals set by the
Board. As of the date of this Proxy Statement, none of the 50,000
contingent options have vested.
On August
5, 2008 the Board approved up to $3,000 of reimbursement in legal fees incurred
by Thomas L. Wegman in connection with the negotiation of the Wegman Employment
Agreement (defined below).
Edwin
H. Wegman
On
January 23, 2006, the Board awarded to Edwin H. Wegman options to purchase
100,000 shares of common stock at an exercise price of $1.10 per share (as a
ten-percent stockholder of the Company, Edwin H. Wegman’s options have an
exercise price equal to 110% of the closing sales price of the common stock on
the date of grant and expire 5 years from the grant date).
On
February 16, 2007, Edwin H. Wegman, our Chief Executive Officer and Chairman of
the Board, passed away. On February 20, 2007, our Board appointed Thomas L.
Wegman, our President and son of Edwin H. Wegman, to also act as our Principal
Executive Officer. As of the date hereof, the Board has not appointed a new
Chief Executive Officer or Chairman of the Board.
Following
the death of Edwin H. Wegman on February 16, 2007, under the Company’s 2001
Employee Stock Option Plan, the Estate of Edwin H. Wegman was required to
exercise all options held by the estate by midnight on August 16, 2007 because
all options expire 6 months from the death of the option holder pursuant to the
terms of the 2001 Employee Stock Option Plan. At the request of the Estate of
Edwin H. Wegman, on July 30, 2007, the Board of Directors of the Company
extended the expiration dates of the two options to their original expiration
dates.
Lawrence
Dobroff
On
January 23, 2006, the Board awarded to Lawrence Dobroff options to purchase
25,000 shares of common stock at an exercise price of $1.00 per share (100% of
the closing sales price of the common stock on the grant date), which fully
vested on the grant date and expire ten years from the grant date.
On
September 6, 2006, the Board awarded a bonus stock option award to Lawrence
Dobroff in the form of options to purchase 15,000 shares of common stock, in
recognition of his valued efforts in connection with the consummation of the
sale of the Company’s topical business to DFB Biotech, Inc. Each option vested
on the grant date, has an exercise price of $0.83 per share (100% of the closing
sales price of the common stock on the grant date), and expires ten years from
the grant date.
On
September 6, 2006, the Board also authorized the payment to Lawrence Dobroff of
a cash bonus award of $40,000 payable upon the achievement of certain objectives
set by the Board. The cash bonus was never paid out because the objectives were
not met during Mr. Dobroff’s employment with the Company.
In
December 2004, Lawrence Dobroff was promoted to Chief Financial Officer (CFO)
and on a monthly basis received a stock grant based upon a set dollar limit of
$1,667 per month or $20,000 per year. This promotion in 2004 resulted in 19,413
shares being granted at various dates in 2006, 17,054 shares being granted at
various dates in 2005 and 958 shares in 2004. On December 4, 2006,
the Board authorized the termination of the yearly grant of $20,000 worth of
stock options to Mr. Dobroff. Effective January 1, 2007, Mr. Dobroff
received $20,000 in cash compensation in addition to his yearly salary in lieu
of the stock options.
On May 7,
2007, the Company terminated the employment of Mr. Dobroff, effective May 7,
2007. Effective the same date, we appointed Thomas L. Wegman, our President and
Principal Executive Officer to serve as our Principal Financial Officer for the
purpose of making the certifications required by the Sarbanes-Oxley Act of
2002.
Company
Agreements with Thomas L. Wegman
Change
of Control Agreement
On June
18, 2007, the Company entered into a Change of Control Agreement with Thomas L.
Wegman, who serves as a Director as well as the Company’s President (the “Wegman
Change of Control Agreement”). Pursuant to the terms of the Wegman
Change of Control Agreement, in the event that Mr. Wegman’s employment with the
Company is terminated by the Company without cause following a Change of Control
or if Mr. Wegman terminates his employment with the Company for Good Reason
following a Change of Control, each as described below, then (A) Mr. Wegman
shall receive a payment by the Company equal to one-twelfth (1/12th)
of his annual base salary at the time of such termination multiplied by twelve
(12) months, to be payable in one lump sum not later than thirty (30) days after
the date of termination of his employment with the Company; (B) until the
anniversary of such date of termination, Mr. Wegman shall be entitled to
participate in the Company’s medical, dental, and life insurance plans at no
greater cost than the cost he was paying immediately prior to the Change in
Control; (C) 100% of any options to purchase shares of common stock of the
Company 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 and (D) if, on the
date immediately preceding the effective date of such termination, Mr. Wegman
then holds shares of restricted stock, that were issued 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
Wegman Change of Control Agreement, a “Change of Control” shall mean 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 Securities Exchange Act of 1934), 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
Company’s 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 Company’s assets or
business.
|
Under the
Wegman Change of Control Agreement, “Good Reason” shall mean any of the
following involuntary circumstances:
|
|
·
|
assignment
to Mr. Wegman of any duties inconsistent in any material respect with his
position (including titles and reporting requirements), authority, duties
or responsibilities as contemplated by the job description of his
position, or any other action by the Company or its successor, which
results in a diminution in such position, authority, duties or
responsibilities, other than an isolated, insubstantial and inadvertent
action not taken in bad faith and which is remedied by the Company
promptly after receipt of written notice thereof given by Mr.
Wegman;
|
|
|
·
|
a
reduction in Mr. Wegman’s annual base salary (or an adverse change in the
form or timing of the payment thereof), other than an isolated,
insubstantial and inadvertent action not taken in bad faith and which is
remedied by the Company promptly after receipt of written notice thereof
|
|
|
·
|
given
by Mr. Wegman; or the elimination of or reduction of any benefit under any
bonus, incentive or other employee benefit plan in effect on the day
immediately preceding the Change in Control, without an economically
equivalent replacement, if Mr. Wegman was a participant or member of such
plan on the day immediately preceding the Change in
Control;
|
|
|
·
|
the
Company’s or its successor’s requiring Mr. Wegman (i) to be based at any
office or location more than 25 miles away from the office or location
where he was performing services immediately prior to the Change in
Control, or (ii) to relocate his or her personal residence, or (iii) the
Company’s requiring Mr. Wegman to travel on Company business to a
substantially greater extent than required immediately prior to the Change
in Control.
|
A copy of
the Wegman Change of Control Agreement was filed on Form 8-K with the SEC on
June 22, 2007. The foregoing descriptions of the Wegman Change of
Control Agreement do not purport to be complete and are qualified in their
entirety by reference to the full text of the agreement.
Executive
Employment Agreement
On August
5, 2008, the Company entered into an Executive Employment Agreement with Thomas
L. Wegman (the “Wegman Employment Agreement”). Under the Wegman Employment
Agreement, Mr. Wegman will serve as the President and Principal Executive
Officer of the Company for a two year period commencing on August 5, 2008. Upon
the expiration of the initial two year term, the Wegman Employment Agreement
will run 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. Mr. Wegman will earn a base
compensation equal to $250,000 per year and will receive an automobile allowance
of $350 per month, plus reimbursement of expenses incurred on the Company’s
behalf. Mr. Wegman will also be eligible to receive stock options, restricted
stock or other equity awards at the discretion of the Board or the Compensation
Committee.
If the
Company terminates Mr. Wegman’s employment without Cause (defined below) or 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 (a) the
average of Mr. Wegman’s annual base salary and bonuses paid by the Company to
Mr. Wegman over the five (5) years prior to the time of such termination,
multiplied by (b) three (3), payable not later than thirty (30) days after the
date of termination; (ii) continuation of his participation in the Company’s
benefit plans for eighteen (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 of the Company 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; and (iv) if,
on the date immediately preceding the effective date of such termination, Mr.
Wegman then holds shares of common stock of the Company that are subject to
restrictions on transfer (“Restricted Stock”) 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.
Wegman’s employment with the Company terminates voluntarily without Cause by Mr.
Wegman, for Cause by the Company or due to Mr. Wegman’s death or disability,
then Mr. Wegman is not entitled to any severance. Mr. Wegman’s
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 (A) the sum of all payments made by the
Company to or on behalf of Mr. Wegman as severance, multiplied by (B) a
fraction, the numerator of which is (1) the number of calendar months that
comprise Mr. Wegman’s Severance Period, less (2) the number of calendar months
elapsed from the date of Mr. Wegman’s 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. Wegman’s
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 Agreement;
(iv) a material breach of 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 (2)
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 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. Wegman’s termination (other
than less than 5% ownership of a public company); (iii) Mr. Wegman’s hiring,
directly or indirectly, any individual who was an employee or consultant of the
Company within the six (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 (6) month period prior to Mr. Wegman’s termination
of employment, to terminate or otherwise limit or reduce his or her relationship
with the Company.
A copy of
the Wegman Employment Agreement was filed on Form 8-K 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 the agreement.
|
|
Option
Awards
|
|
Name
|
Number
of Securities Underlying Unexercised Options Exercisable (#)
|
Number
of Securities Underlying Unexercised Options Unexercisable
(#)
|
Equity
Incentive Plan Awards: Number of Securities Underlying Unexercised
Unearned Options (#)
|
Option
Exercise Price ($)
|
Option
Expiration Date
|
|
Thomas
Wegman
President
|
1,500(1)
|
0
|
0
|
4.38
|
1/14/2008
|
|
1,800
|
0
|
0
|
4.25
|
10/12/2008
|
|
2,500
|
0
|
0
|
4.00
|
12/30/2008
|
|
20,000
|
0
|
0
|
3.00
|
7/12/2009
|
|
50,000
|
0
|
0
|
1.875
|
10/28/2009
|
|
20,000
|
0
|
0
|
1.00
|
12/26/2010
|
|
50,000
|
0
|
0
|
1.00
|
4/18/2011
|
|
45,000
|
0
|
0
|
1.00
|
9/29/2012
|
|
100,000
|
0
|
0
|
1.00
|
1/22/2016
|
|
50,000
|
50,000
|
50,000
|
.83
|
9/5/2016
|
|
25,000
|
0
|
0
|
.83
|
9/5/2016
|
|
Edwin
H. Wegman Former Chairman and CEO
(2)
|
39,000
|
0
|
0
|
1.00
|
9/29/2012
|
|
100,000
|
0
|
0
|
1.10
|
1/22/2011
|
|
Lawrence Dobroff
Former
CFO(3)
|
0
|
0
|
0
|
N/A
|
N/A
|
|
(1)
|
Thomas
L. Wegman’s option to purchase 1,500 shares expired on January 14, 2008.
Mr.
Wegman did not receive any value for such
expiration.
|
|
(2)
|
Upon
his death on February 16, 2007, Edwin H. Wegman ceased to be the Chairman
and CEO of the Company. On February 1, 2008 Toby Wegman and
Thomas L. Wegman, as co-executors of the estate of Edwin H. Wegman (the
“Estate”), exercised the two options owned by the Estate and then sold the
139,000 shares. Certain of the proceeds of this sale were used
to repay a loan owed by the Estate to
us.
|
|
(3)
|
On
May 7, 2007, the Board terminated Lawrence Dobroff’s employment with the
Company. Mr. Dobroff had no outstanding equity awards at year
end.
|
|
|
Director
Compensation
(1)
|
|
Name
|
Fees
Earned or Paid in Cash
($)
|
Option
Awards
($) (4)
|
All
Other Compensation
($)
|
Total
($)
|
|
Henry Morgan(2)
|
3,500
|
95,899
|
0
|
99,399
|
|
Dr. Paul Gitman(2)
|
3,500
|
95,899
|
0
|
99.399
|
|
Michael Schamroth(2)
|
1,500
|
95,899
|
0
|
97,399
|
|
Dr. Mark Wegman(3)
|
0
|
34,850
|
0
|
34,850
|
|
Toby Wegman(3)
|
0
|
34,850
|
0
|
34,850
|
|
(1)
|
Thomas
L. Wegman serves as our President and received no additional compensation
to serve on the Board as a director during
2007.
|
|
(2)
|
On
March 2, 2007, the Board awarded options to purchase 24,000 shares of
common stock to each independent director (Mr. Morgan, Dr. Gitman and Mr.
Schamroth) at an exercise price of $4.00 per share (100% of the closing
sales price of the common stock on the grant date), which vest over the
course of one year and expire ten years from the grant
date.
|
On
September 6, 2007, the Board awarded options to purchase 15,000 shares of common
stock to each independent director (Mr. Morgan, Dr. Gitman and Mr. Schamroth) at
an exercise price of $5.15 per share (100% of the closing sales price of the
common stock on the grant date), which vest over the course of one year and
expire ten years from the grant date.
|
|
As
of December 31, 2007, (i) Mr. Morgan had, in the aggregate, options to
purchase 139,425 shares of Company common stock of which 1,250 have not
yet vested (as of the date of this filing), (ii) Dr. Gitman had, in the
aggregate, options to purchase 139,425 shares of Company common stock of
which 1,250 have not yet vested (as of the date of this filing), (iii) Mr.
Schamroth had, in the aggregate, options to purchase 64,000 shares of
Company common stock, of which 1,250 have not yet vested (as of the date
of this filing).
|
On June
10, 2008, the Board made a one time grant of options to purchase 15,000 shares
of common stock to each independent director (Mr. Morgan, Dr. Gitman and Mr.
Schamroth) at an exercise price of $13.60 per share (100% of the closing sales
price of the common stock on the grant date), which vest over the course of one
year and expire ten years from the grant date. The options were
granted in order to recognize the service of the independent directors on the
Board on each of the Board’s three standing committees.
|
(3)
|
On
June 25, 2007, the Board awarded options to purchase 15,000 shares of
common stock to each of the then new directors (Dr. Mark Wegman and Toby
Wegman) at an exercise price of $4.60 per share (100% of the closing sales
price of the common stock on the grant date), which vest over the course
of one year and expire ten years from the grant
date.
|
|
|
As
of December 31, 2007, (i) Dr. Mark Wegman had, in the aggregate, options
to purchase 15,000 shares of Company common stock, which have all vested
and (ii) Toby Wegman had, in the aggregate, options to purchase 15,000
shares of Company common stock, which have all
vested.
|
On June
25, 2008, the Board awarded options to purchase 15,000 shares of common stock to
each of Dr. Mark Wegman and Toby Wegman at an exercise price of $17.00 per share
(100% of the closing sales price of the common stock on the grant date), which
vest over the course of one year and expire ten years from the grant
date.
|
(4)
|
Amounts
listed in this column reflect the compensation cost recognized for
financial statement purposes during 2007 and 2006 for the stock awards
held by the named executive officer calculated in accordance with
SFAS 123(R) and using a Black-Scholes valuation model. The
stock-based compensation expense recognized under SFAS No. 123(R) for
the years ended December 31, 2007 and 2006 was determined using the
Black-Scholes option valuation model. Option valuation models require the
input of subjective assumptions and these assumptions can vary over time.
The following assumptions were used for stock options granted March 2,
2007 and June 25, 2007: expected life of 5 years, risk free interest rate
of 5%, volatility of 128% and zero dividend yield. For stock options
granted on September 6, 2007, the assumptions used were as follows:
expected life, in years 5, risk free interest rate of 4.9%, volatility of
65% and zero dividend yield.
|
The
amounts listed in this column exclude (i) a one-time grant on June 10, 2008 to
each of the independent directors of 15,000 options, discussed in footnote (2)
above and (ii) the annual grant of 15,000 options to Dr. Mark Wegman and Toby
Wegman, discussed in footnote (3) above.
Narrative
Disclosure to Director Compensation Table
On
September 6, 2006, Thomas L. Wegman, as the sole disinterested director of the
Board, approved the following compensation for each of the then non-employee
members on the Board, Michael Schamroth, Dr. Paul Gitman and Henry Morgan: (a) a
$10,000 yearly retainer payable in arrears in December of each year commencing
in December 2007; (b) $1,500 for each meeting of the Board attended in person
and $500 for each meeting of the Board attended telephonically, effective
retroactively from January 1, 2006 and payable upon attendance of each meeting
going forward; and (c) 15,000 non-qualified stock options per year, vesting 1/12
per month during the applicable year with a grant date for 2006 of September 6,
2006, an exercise price of $0.83 per share (equal to 100% of the closing sales
price of the common stock on the grant date) and an expiration period of ten
years from the grant date. Prior to September 6, 2006, we had no
specific policy for compensating non-employee directors and the non-employee
directors had not received cash compensation since 2002 for serving on the
Company’s Board or its Committees.
On March
2, 2007, in lieu of the $10,000 yearly retainer and Board meeting attendance
fees described above, the Company granted to each of our then non-employee
directors, Henry Morgan, Dr. Paul Gitman and Michael Schamroth, a one-time grant
of options to purchase 24,000 shares of the Company. The 24,000
options vest monthly with respect to 1/12 of the total number of shares until
all of the shares underlying the options have vested. The exercise
price of the options is $4.00 per share (equal to 100% of the closing sales
price of the common stock on the grant date) and the options expire ten years
from the grant date.
In the
first quarter of 2007, the Company paid $1,200 to Morgan Melhuish Abrutyn, a law
firm in which Henry Morgan (director on the Board) is a named partner, for
services rendered to the Company.
On June
25, 2007, the Board (i) elected Toby Wegman to serve as a director of the third
class of the Board to fill the vacancy created by the death of Edwin H. Wegman,
our former CEO, Chairman and director. Toby Wegman is the widow of
the late Edwin H. Wegman, (ii) approved an increase in the size of the Board
from five to six directors by adding a second director to the third class of the
Board and (iii) elected Dr. Mark Wegman to fill the vacancy created by such
increase. Dr. Mark Wegman is the son of
the late
Edwin H. Wegman, the brother to our President and director, Thomas L. Wegman,
and a stepson of Toby Wegman. Additionally, on June 25, 2007, the Company
granted to Toby Wegman and Dr. Mark Wegman a nonqualified stock option to
purchase 15,000 shares of the Company’s common stock. The options
vest monthly with respect to 1/12 of the total number of shares, commencing on
the date of grant, and on each successive anniversary date until all of the
shares underlying the options have vested. The options granted to
Toby Wegman and Dr. Mark Wegman have an exercise price per share of $4.63 per
share (equal to 100% of the closing sales price of the common stock on the grant
date) and the options expire ten years from the grant date.
Current
Director Compensation Arrangements
As of the
date of this filing (and since March 2, 2007), our non-employee directors are
compensated by an annual grant of options to purchase 15,000 shares of common
stock, which vest 1/12 per month until fully vested. The annual grant
date for our independent directors, Henry Morgan, Dr. Paul Gitman and Michael
Schamroth is September 6 and for Dr. Mark Wegman and Toby Wegman, the annual
grant date is June 25. The options are granted at a price equal to
the fair market value of the stock on the date of grant and expire ten years
from the date of grant. Additionally, the Company reimburses all of
our non-employee directors for reasonable out-of-pocket expenses incurred in
connection with attendance and participation in Board and Committee
meetings.
Change
of Control Agreements for Independent Directors
On June
18, 2007, the Company entered into Change of Control Agreements with its
directors, Dr. Paul Gitman, Henry Morgan, Michael Schamroth (each a “Director
Change of Control Agreement”). Pursuant to the terms of the Director Change
of Control Agreement, in the event that the director’s service on the Board of
Directors of the Company is terminated pursuant to a transaction resulting in a
Change of Control, as described below, then (A) 100% of any options to purchase
shares of common stock of the Company 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 (B) if, on the date immediately preceding the effective date of
such termination, the Director then holds shares of common stock of the Company
that are subject to restrictions on transfer (“Restricted Stock”) 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 Agreement, a “Change of Control” shall mean 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 Securities Exchange Act of 1934), 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
Company’s 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 Company’s assets or
business.
|
A copy of
the Director Change of Control Agreement entered into by each Director was filed
on Form 8-K with the SEC on June 22, 2007. The foregoing descriptions
of the Director Change of Control Agreement do not purport to be complete and
are qualified in their entirety by reference to the full text of the
agreements.
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, July 23, 2008, by (i) each person known by us to
beneficially own more than 5% of our voting securities, (ii) each 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. 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
Beneficial
Owner
|
Number
of Shares Beneficially Owned
|
Percentage (1)
|
|
5%
or Greater Stockholders:
|
|
Estate
of Edwin H. Wegman
Co-executor
Toby Wegman
Co-executor
Thomas L. Wegman
35
Wilbur Street
Lynbrook,
New York 11563
|
1,400,179(2)
|
21.3%
|
|
Jeffrey
K. Vogel
1
Meadow Drive
Lawrence,
NY 11559
|
496,041(3)
|
7.6%
|
|
RA
Capital Management, LLC
RA
Capital Biotech Fund, L.P.
RA
Capital Biotech Fund, II, L.P.
Richard
H. Aldrich
Peter
Kolchinsky
|
440,393(11)
|
6.7%
|
|
Apis
Capital, LP
Apis
Capital (QP), LP
Apis
Capital Offshore, Ltd.
Apis
Global Deep Value, LP
Apis
Global Deep Value Offshore, Ltd.
Apis
Capital Advisors, LLC
Steven
A. Werber, Jr.
Daniel
J. Barker
|
296,805(12)
|
4.5%
|
|
|
|
|
|
Directors
and Named Executive Officers
|
|
|
|
Thomas
L. Wegman, President and Director
35
Wilbur Street
Lynbrook,
New York 11563
|
1,815,423(4)
|
27.7%
|
|
Dr.
Paul Gitman, Director
35
Wilbur Street
Lynbrook,
New York 11563
|
199,175(5)
|
3.0%
|
|
Henry
Morgan, Director
35
Wilbur Street
Lynbrook,
New York 11563
|
166,703(6)
|
2.5%
|
|
Michael
Schamroth, Director
35
Wilbur Street
Lynbrook,
New York 11563
|
87,750(7)
|
1.3%
|
|
Toby
Wegman, Director
35
Wilbur Street
Lynbrook,
New York 11563
|
1,417,679(8)
|
21.6%
|
|
Dr.
Mark Wegman, Director
35
Wilbur Street
Lynbrook,
New York 11563
|
58,994(9)
|
0.9%
|
|
All
Executive Officers and Directors as a Group (6 persons)
|
2,345,545(10)
|
35.7%
|
|
(1)
|
Based
on 5,950,801 shares of our common stock outstanding as of July 23, 2008
pursuant to Rule 13d-3(d)(1) under the Exchange
Act.
|
|
(2)
|
Includes
1,400,178 shares of common stock owned by The S.J. Wegman Company, a
partnership of which Edwin H. Wegman was the sole general partner. Upon
his death on February 16, 2007, The S.J. Wegman Company was legally
dissolved. It is our understanding that the shares held in the
name of SJW will be transferred to the Estate and subsequently to a trust
of which Toby Wegman and Irwin Steiner will be the
trustees. The shares beneficially owned by the Estate are
included in the number disclosed in this chart for Toby Wegman and Thomas
L. Wegman, the co-executors of the Estate. As disclosed in
their respective footnotes, the shares owned by the Estate are indirectly
held by each of the co-executors.
|
|
(3)
|
Includes
(i) 200,729 shares of common stock held directly by Jeffrey K. Vogel, the
sole shareholder and President of Bio Management Inc., which is the sole
general partner of Bio Partners LP and (ii) 295,312 shares of common stock
held directly by Bio Partners LP. The foregoing information is based
solely on Jeffrey K. Vogel’s Section 16 filings with the SEC without
independent verification. Jeffrey K. Vogel has informed us that
he is not required to aggregate shares of common stock that are held by
each of his brother and father. We take no position on his
statement and whether or not such holdings should be aggregated for
purposes of his Section 16 filings.
|
|
(4)
|
Includes
(i) 364,300 shares subject to stock options that are currently exercisable
or exercisable within 60 days of July 23, 2008, (ii) indirect ownership of
7,300 shares jointly held by Thomas L. Wegman’s wife and child and (iii)
indirect ownership of 1,400,179 shares beneficially owned by the Estate of
Edwin H. Wegman. Excludes 50,000 options which are contingent
and are currently not exercisable. Thomas L. Wegman is the son of Edwin H.
Wegman, the brother of Dr. Mark Wegman and step-son to Toby Wegman. He is
also the co-executor of the Estate of Edwin H.
Wegman.
|
|
(5)
|
Includes
(i) 143,175 shares subject to stock options that are currently exercisable
or exercisable within 60 days of July 23, 2008 and (ii) indirect ownership
of 7,500 shares held by Dr. Gitman's
wife.
|
|
(6)
|
Includes
143,175 shares subject to stock options that are currently exercisable or
exercisable within 60 days of July 23,
2008.
|
|
(7)
|
Includes
67,750 shares subject to stock options that are currently exercisable or
exercisable within 60 days of July 23,
2008.
|
|
(8)
|
Includes
(i) 17,500 shares subject to stock options that are currently exercisable
or exercisable within 60 days of July 23, 2008 and (ii) indirect ownership
of 1,400,179 shares beneficially owned by the Estate of Edwin H.
Wegman. Toby Wegman is the widow of Edwin H. Wegman and the
stepmother of Dr. Mark Wegman and Thomas L. Wegman. She is also
the co-executor of the Estate of Edwin H.
Wegman.
|
|
(9)
|
Includes
(i) 17,500 shares subject to stock options that are currently exercisable
or exercisable within 60 days of July 23, 2008 and (ii) 37,594 shares of
common stock held jointly by Dr. Mark Wegman and his
wife.
|
|
(10)
|
For
purposes of clarification, the 1,400,179 shares owned by the Estate of
Edwin H. Wegman (and indirectly owned by Toby Wegman and Thomas L. Wegman,
the co-executors of the Estate) have only been counted one time in
calculating the number of shares beneficially owned by all officers and
directors.
|
|
(11)
|
Includes
(i) 434,669 shares directly owned by RA Capital Biotech Fund, L.P. (“Fund
I”) and (ii) 5,724 shares directly owned by RA Capital Biotech Fund II,
L.P. (“Fund II”). RA Capital Management, LLC, as the sole
general partner of each of Fund I and Fund II, and Richard H. Aldrich and
Peter Kolchinsky as the managers of RA Capital Management, LLC, are each
deemed to beneficially own 440,393 shares. The six reporting
persons filed a joint statement on Schedule 13G in accordance with Rule
13d-1(k) under the Exchange Act on April 14, 2008. The
foregoing information is based solely on the reporting persons’ Schedule
13G filings with the SEC without independent
verification.
|
|
(12)
|
Includes
(i) 13,790 shares directly owned by Apis Capital, LP, a Delaware limited
partnership (“Apis Capital”), (ii) 18,220 shares directly owned by Apis
Capital (QP), LP, a Delaware limited partnership (“Apis QP”), (iii) 81,870
shares directly owned by Apis Capital Offshore, Ltd., a Cayman Islands
exempted company (“Apis Offshore”), (iv) 60,944 shares directly owned by
Apis Global Deep Value, LP, a Delaware limited partnership (“Apis Deep
Value”), (v) 121,981 shares directly owned by Apis Global Deep Value
Offshore, Ltd., a Cayman Islands exempted company (“Apis Deep Value
Offshore”, and together with Apis Capital, Apis QP, Apis Offshore and Apis
Deep Value, the “Funds”). Apis Capital Advisors, LLC, a
Delaware limited liability company (the “Investment Manager”), as the
general partner and/or investment manager of the Funds, and Steven A.
Werber, Jr. and Daniel J. Barker, as the Managing Members of the
Investment Manager and the Portfolio Managers of the Funds share voting
and dispositive power with respect to all of the shares directly owned by
the Funds. The eight reporting persons filed a joint statement
on Schedule 13G in accordance with Rule 13d-1(k) under the Exchange Act on
March 25, 2008. The foregoing information is based solely on
the reporting persons’ Schedule 13G filings with the SEC without
independent verification.
|
PROPOSAL
1
ELECTION
OF DIRECTORS
The
Board is responsible for establishing broad corporate policies and monitoring
the overall performance of the Company. It selects the Company’s
executive officers, delegates authority for the conduct of the Company’s
day-to-day operations to those officers, and monitors their
performance. Members of the Board are kept informed of the Company’s
business by participating in Board and Committee meetings, by reviewing analyses
and reports.
The
Board is divided into three classes, each of which serves for a term of three
years, with only one class of directors being elected in each
year. Each director holds office for the term for which elected as
specified in the table below and until his or her successor shall be elected and
shall qualify and be subject to such director’s earlier death, resignation or
removal. The term of office of the first class of directors,
presently consisting of Thomas L. Wegman and Dr. Paul A. Gitman is scheduled to
expire at the annual meeting for the year 2009; the term of office of the second
class of directors, presently consisting of Henry Morgan and Michael Schamroth
is scheduled to expire on the date of the annual meeting for the year 2010; and
the third class of directors, consisting of Toby Wegman and Dr. Mark Wegman will
expire at the 2008 Annual Meeting.
The
individuals who have been nominated for election to the Board at the 2008 Annual
Meeting are set forth below.
If,
as a result of circumstances not now known or foreseen, any of the nominees are
unavailable to serve as a nominee for the office of director at the time of the
2008 Annual Meeting, the holders of the proxies solicited by this 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
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 two (2) nominees for election as directors are
uncontested. In uncontested elections, directors are elected by
majority of the votes cast at the meeting. Shares which withhold
votes or abstain from voting as to a particular matter, and shares held in
“street name” by brokers or nominees who indicate on their proxies that they do
not have discretionary authority to vote such shares as to a particular matter,
will not be counted as votes in favor of such matter, and will also not be
counted as shares voting on such matter. Accordingly, withheld votes,
abstentions and “broker non-votes” will have no effect on the voting on matters
(such as the election of directors, and the ratification of the selection of the
independent registered public accounting firm) that require the affirmative vote
of a plurality or a majority of the votes cast or the shares voting on the
matter. Proxies
submitted on the accompanying proxy card will be voted for the election of the
nominees listed below, unless the proxy card is marked
otherwise.
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/s
|
Director
Since
|
|
Toby
Wegman
|
72
|
Director
|
June
25, 2007
|
|
Dr.
Mark Wegman
|
58
|
Director
|
June
25, 2007
|
For
information as to the shares of the Common Stock held by each of our nominees,
see “Securities Ownership of Certain Beneficial Owners and Management,” above
and for biographical summaries for each of our director nominees see “Directors
and Executive Officers” above.
All
directors will hold office for the terms indicated above under the heading
“Proposal 1 Election of Directors” or until their earlier death, resignation,
removal or disqualification, and until their respective successors are duly
elected and qualified. There are no arrangements or understandings
between the nominee, directors or executive officers and any other person
pursuant to which our nominee, directors or executive officers have been
selected for their respective positions. Thomas L. Wegman, and Dr.
Mark Wegman are brothers and Toby Wegman, their stepmother, is the widow of
Edwin H. Wegman, the father of Thomas L. Wegman and Dr. Mark
Wegman.
The
Board met eight times during the calendar year ended December 31, 2007. All
Board members were present, either in person or telephonically at all
meetings. Additionally, all Board members attended our 2007 Annual
Meeting, held on October 24, 2007.
COMMITTEES
OF THE BOARD OF DIRECTORS
Committees
and Meetings
Our
Board currently has three standing committees which, pursuant to delegated
authority, perform various duties on behalf of and report to the Board: (i)
Audit Committee, (ii) Compensation Committee and (iii) Nominating and Corporate
Governance Committee. The members of each committee are appointed by our
Board. From time to time, the Board may establish other
committees.
Audit
Committee and Audit Committee Financial Expert
The
Audit Committee is comprised of our independent directors, Dr. Paul Gitman,
Henry Morgan and Michael Schamroth. Dr. Paul Gitman serves as the Chairman of
the Audit Committee. The Audit Committee is governed by an Audit Committee
Charter, which was adopted by the Board on December 4, 2006 and was filed with
the SEC on September 28, 2007 as an appendix to our Proxy Statement in
connection with our 2007 annual meeting. The Audit Committee’s responsibilities
include: selecting our independent registered public accounting firm, reviewing
with the independent auditors firm the results of their audits, review with the
independent accountants and management our financial reporting and operating
controls and the scope of audits, reviewing our budgets and make recommendations
concerning our financial reporting, accounting practices and policies and
financial, accounting and operating controls and safeguards and reviewing
matters relating to the relationship between the Company and our auditors,
including the selection of and engagement fee for the independent registered
public accounting firm.
Our
Board has determined that it does not have a member of its Audit Committee that
qualifies as an “audit committee financial expert” as defined under Exchange Act
regulations. We believe that retaining an independent director who would qualify
as an “audit committee financial expert” would be overly costly and burdensome
and is not warranted in our current circumstances.
The
Audit Committee met six times during 2007.
Compensation
Committee
The
Compensation Committee is comprised of our independent directors, Michael
Schamroth, Dr. Paul Gitman and Henry Morgan. Henry Morgan serves as
the Chairman of the Compensation Committee. The Compensation Committee is
governed by a Compensation Committee Charter, which was adopted by the Board on
December 4, 2006 The Compensation Committee’s responsibilities include: reviewing and recommending
approval of the compensation of our executive officers, overseeing the
evaluation of our executive officers, reviewing and making recommendations to
the Board regarding incentive compensation and equity-based plans, administering
our stock option plans, and reviewing and making recommendations to the Board
regarding director compensation.
|
|
The
Compensation Committee met five times during
2007.
|
Nominating
and Governance Committee
The
Nominating and Corporate Governance Committee is comprised of our independent
directors, Michael Schamroth, Dr. Paul Gitman and Henry
Morgan. Michael Schamroth serves as the Chairman of the Nominating
and Corporate Governance Committee. The Nominating and Corporate
Governance Committee is governed by a Nominating and Corporate Governance
Committee Charter, which was adopted by the Board on April 7, 2008 and is
attached hereto as Appendix A. The Nominating and Corporate Governance
Committee’s 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 of the Board, developing and
recommending to the Board corporate
governance principles applicable to the Company and leading the Board in its
annual review of the Board’s performance.
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 Board’s 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 did not meet during
2007.
Family
Relationships
Edwin H.
Wegman, our former Chairman and CEO, was (i) the father of Thomas L. Wegman, a
current director and our current President, (ii) the father of Dr. Mark Wegman,
a current director nominated for reelection, and (iii) the husband of Toby
Wegman, a current director.
Code
of Business Conduct and Ethics
The
Company’s Amended and Restated Code of Business Conduct and Ethics (“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 “Investors—Corporate Governance.” We intend to post on our
website disclosures that are required by applicable law, SEC rules or OTCBB
listing standards concerning any amendment to, or waiver from, our Code of
Ethics.
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 of Directors is responsible for assisting the Board of
Directors in fulfilling its oversight responsibilities regarding the Company’s
financial accounting and reporting process, system of internal control, audit
process, and process for monitoring compliance with laws and regulations. The
Audit Committee operates pursuant to a written charter adopted by the Board. All
members of the Audit Committee are non-employee directors but no member of the
Audit Committee qualifies as an “audit committee financial expert” as defined in
Item 401(e) of Regulation S-B. Each member of the Audit Committee is
“independent” as the term is used in Item 7(d)(3)(iv) of Schedule 14A under the
Exchange Act.
Management
of the Company has the primary responsibility for the Company’s consolidated
financial statements as well as the Company’s financial reporting process,
accounting principles and internal controls. Tabriztchi & Co., CPA, P.C.,
the Company’s independent registered public accounting firm, is responsible for
performing an audit of the Company’s 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 Company’s internal control over
financial reporting.
In this
context, the Audit Committee has reviewed and discussed the audited financial
statements of Tabriztchi & Co., CPA, P.C. as of and for the year ended
December 31, 2007 with the Company’s management and the independent
registered public accounting firm. To ensure independence, the Audit Committee
met separately with Tabriztchi & Co., CPA, P.C. and members of 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). In
addition, the Audit Committee has 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
auditors their independence from the Company.
Based on
the reviews and discussions described above, the Audit Committee has recommended
to the Board of Directors the inclusion of the audited financial statements in
the Company’s Annual Report on Form 10-KSB for the fiscal year ended
December 31, 2007, for filing with the Securities and Exchange
Commission.
|
/s/
The Audit Committee
|
|
|
|
Dr.
Paul Gitman
|
|
Henry
Morgan
|
|
Michael
Schamroth
|
SECTION
16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section
16(a) of the Exchange Act, as amended, 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 furnished to us for the fiscal
year ended December 31, 2007, we have determined as follows: Thomas L. Wegman
was late in filing five transactions on Form 4, Dr. Paul Gitman, Michael
Schamroth, Henry Morgan and Dr. Mark Wegman were each late in filing one
transaction on Form 4, Toby Wegman was late in filing a Form 3 and three
transactions on Form 4 and the Estate of Edwin H. Wegman was late in filing a
Form 3 and two transactions on Form 4.
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
Until the
death of Edwin H. Wegman, our former Chairman and CEO, The S.J. Wegman Company,
of which Edwin H. Wegman was the sole general partner, owned Wilbur Street
Corporation (“WSC”), which has leased to us a building serving as a
manufacturing facility and headquarters in Lynbrook, New York for over 30 years.
The building also serves as our administrative headquarters. Edwin H. Wegman was
the President of WSC and the sole general partner of The S.J. Wegman Company, a
limited partnership. Upon his death on February 16, 2007, The S.J. Wegman
Company was legally dissolved. His death had no effect on the legal existence of
WSC. It is our understanding that WSC is currently owned by the
Estate and will be transferred to a trust. Our President, Thomas L.
Wegman, is the senior most officer of WSC.
In
January 1998, WSC and the Company entered into a triple net lease agreement that
provided for an annual rent starting at $125,000, which was to increase annually
by the amount of annual increase in the consumer price index for the greater New
York metropolitan region. The lease term was 7 years, expiring on January 31,
2005. Without Board approval, the lease was renewed (a related party
transaction) in July 2005 for an additional 5 years, expiring on June 30, 2010.
The extension of the lease may thus not be valid. The annual rent, effective
February 2006, is $150,000 ($10 per square foot) per annum. As part
of the agreement to sell our collagenase topical business to DFB in March 2006,
DFB agreed to sublease a part of our New York facility for a period of one year
for an all inclusive monthly payment of $15,500, which sublease expired on March
2, 2007. DFB extended its sublease until March 6, 2008 and paid
$16,500 per month during this extended lease period. In April 2008,
DFB renewed its sublease until March 3, 2009 and will pay $19,000 per month
during this renewal period. DFB may terminate its obligations under
the sublease upon 90 days written notice provided that such termination does not
occur prior to September 1, 2008. On July 29, 2008, DFB gave notice
that it would terminate its sublease obligations on October 31, 2008 in
accordance with the terms of the sublease agreement.
In
January 2007, we entered into amended and restated demand promissory notes with
each of Edwin H. Wegman and WSC reflecting the prior outstanding principal
amounts of the loans and compounded interest, which became the obligation of
Edwin H. Wegman’s estate upon his death on February 16, 2007. As of
December 31, 2007, the aggregate principal amounts, including compounded
interest, owed to the Company by Edwin H. Wegman and WSC were $1,108,088 and
$304,397, respectively. The loans were in the form of demand
promissory notes, bearing interest at a rate of 9% per
annum.
The
loans were secured by a pledge of 100% of the shares of the Company owned by The
S.J. Wegman Company. At December 31, 2007 the total number of shares
pledged, 1,843,327, had a current market value of $3.80 per
share. Upon Edwin H. Wegman’s death on February 16, 2007, The S.J.
Wegman Company was legally
dissolved. The dissolution of The S.J. Wegman Company constituted an
event of default under the above mentioned pledge agreement, which gave the
Board the right to vote the pledged shares. Notwithstanding the
dissolution of The S.J. Wegman Company, upon the death of Edwin H. Wegman, the
loan continued to be secured by The S.J. Wegman Company
pledge.
In
March 2007, in full repayment of the loan made by the
Company to WSC, WSC offset $304,397 in back rent due from the
Company in full repayment of the loan. On February
1, 2008, the demand promissory note was repaid in full by the Estate of Edwin H.
Wegman.
Board
Determination of Director Independence
Our securities are not
listed on a national securities exchange but we use the standards of
“independence” prescribed by rules set forth by the National Stock Market, Inc.
(“Nasdaq”). We have determined that our directors, Henry Morgan, Dr.
Paul Gitman and Michael Schamroth, all three of who serve as the sole members of
our Audit Committee, Compensation Committee and Nominating and Corporate
Governance Committee, qualify as “independent” under the Nasdaq rules but that
our remaining three directors, Thomas L. Wegman, Toby Wegman and Dr. Mark
Wegman, do not. The Nasdaq rules include a series of objective
tests that would not allow a director to be considered independent if the
director had certain employment, business or family relationships with the
Company. The Nasdaq independence definition includes a requirement
that the Board also review the relationship of each independent director to the
Company on a subjective basis. In accordance with that review, the Board has
made a subjective determination as to each independent director that no
relationships exist that, in the opinion of the Board, would interfere with the
exercise of independent judgment in carrying out the responsibilities of a
director. In making these determinations, the directors reviewed and discussed
information provided by the directors and the Company with regard to each
director’s business and personal activities as they may relate to the Company
and the Company’s management.
PROPOSAL
2
RATIFICATION
OF SELECTION OF INDEPENDENT AUDITORS
The
Audit Committee has selected Tabriztchi & Co., CPA, P.C. (“Tabriztchi”) to
serve as the independent registered public accounting firm of the Company for
the fiscal year ending December 31, 2008. Tabriztchi
was the Company’s independent registered public accounting for the
fiscal years ending December 31, 2007 and 2006.
We
are asking our stockholders to ratify the selection of Tabriztchi as our
independent registered public accounting firm. Although ratification
is not required by our bylaws or otherwise, the Board is submitting the
selection of Tabriztchi to our stockholders for ratification as a matter of good
corporate practice. In the event our stockholders fail to ratify the
appointment, the Audit Committee may reconsider this
appointment.
The
Company has been advised by Tabriztchi that neither the firm nor any of its
associates had any relationship with the Company other than the usual
relationship that exists between independent registered public accountant firms
and their clients during the last fiscal year. Representatives of
Tabriztchi will be available via teleconference during the 2008 Annual Meeting,
at which time they may make any statement they consider appropriate and will
respond to appropriate questions raised at the 2007 Annual
Meeting.
Independent
Registered Public Accounting Firm’s Fees
The
following is a summary of the fees billed to the Company by Tabriztchi &
Co., CPA, P.C. for professional services rendered for the fiscal years ended
December 31, 2007 and 2006, respectively:
|
|
|
2007
|
|
|
2006
|
|
|
|
|
|
|
|
|
|
|
Audit
fees(1)
|
|
$ |
50,000 |
|
|
$ |
60,651 |
|
|
Audit-related
fees
|
|
|
0 |
|
|
|
0 |
|
|
Tax
fees
|
|
|
0 |
|
|
|
0 |
|
|
All
other fees(2)
|
|
|
73,375 |
|
|
|
0 |
|
__________
|
(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-QSB and
services that are normally provided by the accountant in connection with
statutory and regulatory filings or
engagements.
|
|
(2)
|
Consists
of audit fees billed for professional services rendered by our principal
accountants for the re-audit of our 2003 annual consolidated financial
statements.
|
Pre-Approval
Policies and Procedures
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 Company’s
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 one of the pre-approval procedures 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.
The Board of Directors recommends a vote
FOR ratification of the selection of Tabriztchi & Co., CPA, P.C. as the
Company’s independent registered public accounting firm for the fiscal year
ending December 31, 2008.
GENERAL
At
the date of this Proxy Statement, management is not aware of any matters to be
presented for action at the meeting other than those described above. However,
if any other matters should come before the 2008 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.
STOCKHOLDER
COMMUNICATIONS
The
Company has a process for stockholders who wish to communicate with the Board of
Directors. Stockholders who wish to communicate with the Board may
write to it at the Company’s address given above. These
communications will be received by Thomas L. Wegman, President of the Company,
and will be presented to the Board.
STOCKHOLDER
PROPOSALS FOR THE 2009 ANNUAL MEETING
The
Company intends to move the date of its 2009 annual meeting forward by more than
30 days from the date of the 2008 Annual Meeting. The Company will
disclose to its stockholders the 2009 annual meeting date and the deadline for
stockholders to submit a proposal to be included in our proxy statement with
respect to the 2009 annual meeting at a later time.
Pursuant
to our bylaws, if our 2009 annual meeting of stockholders is not held on
September 9, 2009, stockholders desiring to submit a proposal for action or
nominate one or more persons for election as directors at the 2009 annual
meeting must submit a notice of the proposal, including the information required
by our bylaws to us not earlier than the 120th day prior to the 2009 annual
meeting of stockholders and not later than the close of business on the later of
(a) the 90th day prior to the 2009 annual meeting or (b) the fifth day
following the date on which notice of the date of the 2009 annual meeting is
first mailed to stockholders or otherwise publicly disclosed, whichever first
occurs. A proposal which is received after that date or which otherwise fails to
meet the requirements for stockholder proposals established by the SEC and our
bylaws will not be included. The submission of a stockholder proposal does not
guarantee that it will be included in the proxy statement.
All such
proposals and notices should be directed to the Thomas L. Wegman, our President,
at 35 Wilbur Street, Lynbrook, New York 11563.
OTHER
MATTERS
As of the
date of this Proxy Statement, the Board of Directors has no knowledge of any
business which will be presented for consideration at the 2008 Annual Meeting
other than the election of directors and the ratification of the appointment of
the accountants of the Company. Should any other matters be properly
presented, it is intended that the enclosed proxy card will be voted in
accordance with the best judgment of the persons voting the
proxies.
|
August
14, 2008
|
By
Order of the Board of Directors
|
|
|
|
|
|
/s/
Thomas L. Wegman
|
|
|
Thomas
L. Wegman, President
|
APPENDIX
A
BIOSPECIFICS
TECHNOLOGIES CORP.
NOMINATING
AND CORPORATE GOVERNANCE COMMITTEE CHARTER
ADOPTED
APRIL 7, 2008
Purposes
of Committee
The
purposes of the Nominating and Corporate Governance Committee (the “Committee”)
of the Board of Directors (the “Board”)
of BioSpecifics Technologies Corp. (the “Company”)
are: (1) to identify individuals qualified to become Board members,
and to recommend to the Board, the nominees for Director at the next Annual
Meeting of stockholders; (2) to recommend to the Board nominees for each
committee of the Board; (3) to develop and recommend to the Board corporate
governance principles applicable to the Company; and (4) to lead the Board in
its annual review of the Board’s performance.
Committee
Membership
The
Committee shall have two or more members, each of whom satisfies the
requirements for independence under applicable law and in accordance with the
Marketplace Rules of NASDAQ. Committee members shall serve at the
pleasure of the Board and for such term or terms as the Board may
determine.
Committee
Structure and Operations
The Board
shall designate one member of the Committee as its Chair. The
Committee shall meet at a time and place determined by the Board or the
Committee Chair. Additional meetings shall be held when deemed
necessary or desirable by a majority of the Committee or its
Chair. The Committee will meet periodically in executive session
without management present.
A
majority of the Committee members currently holding office constitutes a quorum
for the transaction of business. The Committee may take action only
upon the affirmative vote of a majority of the Committee members present at a
duly held meeting. The Committee may meet in person or
telephonically, and may act by unanimous written consent. The
Committee may invite such members of management to its meetings as it may deem
desirable or appropriate.
Committee
Duties
The
duties of the Committee are to:
|
1.
|
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 Board’s 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.
|
|
2.
|
Recommend
to the Board the committee structure of the Board and the composition and
membership of such committees and the designation of the Chairman of each
such committee.
|
|
3.
|
Review
and make recommendations to the Board concerning the composition,
organization and processes of the Board, including the function, size and
membership, including qualification therefor, of Board committees; and
policies relating to director tenure and
retirement.
|
|
4.
|
Develop
and recommend to the Board procedures for the performance evaluation of
the Board and its committees.
|
|
5.
|
Review
the corporate governance principles of the Company and recommend to the
Board any proposed changes it may deem
appropriate.
|
|
6.
|
Review
and assess the adequacy of this Charter, and recommend any amendments it
deems appropriate.
|
|
7.
|
Perform
such other activities consistent with this Charter as the Committee deems
necessary or appropriate.
|
Committee
Reports
The
Committee shall:
|
1.
|
Report
to the Board on a regular basis on the activities of the Committee and
make such recommendations with respect to the above matters as the
Committee may deem necessary or
appropriate.
|
|
2.
|
Annually
assess the performance of the Committee with respect to the duties and
responsibilities of the Committee as set forth in this
Charter.
|
Resources
and Authority of the Committee
The
Committee shall have the resources and funding necessary or appropriate for the
Committee to discharge its duties and responsibilities as set forth in this
Charter and as required by law or regulation. The Committee shall
have the authority to retain and terminate any search firm to be used to
identify director candidates and shall have the authority to approve the search
firm’s fees and other retention terms. The Committee shall also have
the authority to retain, discharge and approve fees and other terms for advice
and assistance from legal counsel and other independent experts or
advisors. The Committee may request any officer, director or employee
of the Company or the Company’s outside search firm, consultants or advisors to
attend a Committee meeting or meet with any Committee members.
BIOSPECIFICS
TECHNOLOGIES CORP.
ANNUAL
MEETING OF STOCKHOLDERS
TO
BE HELD ON SEPTEMBER 9, 200
This
Proxy is Solicited on Behalf of the Board of Directors
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 August 14, 2008, 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 Company’s Common Stock which the
undersigned is entitled to vote at the 2008 Annual Meeting of Stockholders to be
held on September 9, 2008, and at any adjournment or adjournments 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:
|
□
|
|
|
|
|
|
Toby
Wegman – Third Class – Term expires at 2011 Annual Stockholders
Meeting
|
|
|
|
|
|
Dr.
Mark Wegman – Third Class – Term expires at 2011 Annual
Stockholders Meeting
|
|
|
|
|
|
Withhold
authority for the following:
|
|
|
|
|
|
□ Toby
Wegman
|
|
|
□ Dr.
Mark Wegman
|
|
|
|
|
2.
|
Approve
the ratification of Tabriztchi & Co., CPA, P.C.
as the Company’s accountant for fiscal year
2008.
|
|
|
FOR
|
□
|
AGAINST
|
□
|
ABSTAIN
|
□
|
|
|
|
|
3.
|
In
their discretion, the proxies are authorized to vote upon such other
business as may properly come
before
the 2008
Annual Meeting, and any adjournment or adjournments
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 AND FOR
THE RATIFICATION OF THE SELECTION OF TABRIZTCHI & CO., CPA, P.C., AS THE
COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS. IN THEIR DIRECTION, 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 AUGUST 14, 2008 IS
UNABLE TO SERVE OR, FOR GOOD CAUSE, WILL NOT SERVE.
I
(we) acknowledge receipt of the Notice of 2008 Annual Meeting of
Stockholders and the Proxy Statement dated August 14, 2008, and the 2007 Annual
Report and 2008 Quarterly Reports 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.
|
Name
|
|
|
Name (if
joint)
|
|
|
|
Date
_____________, 2008
|
|
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.
|