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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______ to ______
0-15507
(Commission file number)
IMMUCELL CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 01-0382980
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
56 Evergreen Drive, Portland, Maine 04103
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (207) 878-2770
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
Common Stock, par value $.10 per share Boston Stock Exchange
Common Stock Purchase Rights Boston Stock Exchange
Securities registered pursuant to Section 12 (g) of the Act:
Common Stock par value $.10 per share
(Title of class)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. [ ]
The aggregate market value of the Common Stock held by non-affiliates of the
Registrant at March 22, 1996 was approximately $10,171,000.
The number of shares of the Registrant's Common Stock outstanding at March 22,
1996 was 2,291,981.
Documents incorporated by reference: Portions of the Registrant's 1996 Proxy
Statement to be filed in connection with the Annual Meeting of shareholders are
incorporated by reference to Part III hereof.
TABLE OF CONTENTS
PART I
ITEM 1. Business
.....................................................1
ITEM 2. Properties
...................................................7
ITEM 3. Legal Proceedings
............................................7
ITEM 4. Submission of Matters to a Vote of Security Holders ............7
PART I
I
ITEM 5. Market for Registrant's Common Equity and Related
Stockholder Matters
..........................................8
ITEM 6. Selected Financial Data
......................................8
ITEM 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations
....................................9
ITEM 8. Financial Statements and Supplementary Data
.................13
ITEM 9. Changes in and Disagreements with Accountants on
Accounting
and Financial Disclosure
....................................13
PART III
ITEM 10. Directors and Executive Officers of the Registrant
..........13
ITEM 11. Executive Compensation
......................................14
ITEM 12. Security Ownership of Certain Beneficial Owners and
Management.....................................................14
ITEM 13. Certain Relationships and Related Transactions
..............14
PART IV
ITEM 14. Exhibits, Financial Statement Schedules and Reports on
Form 8-K .....................................................14
SIGNATURES
PART I
ITEM I - BUSINESS
GENERAL
ImmuCell Corporation (the "Company") is a biotechnology company that
primarily develops, manufactures and markets milk-derived passive antibody
products to prevent and/or treat gastrointestinal infections in both humans and
animals. Using its core technology, the Company has developed proprietary
methods for the production of commercial quantities of pathogen-specific
antibodies from cows' milk. FIRST DEFENSE{R}, which has been approved by the
United States Department of Agriculture ("USDA"), is the first product using
this technology to be commercialized by the Company. Currently, this product
is the only USDA-licensed, bivalent (effective on combatting two different
infectious agents) scours preventive product in capsule form available on the
market. The Company is investing in research and development that could lead
to the commercialization of new products incorporating these proprietary
methods for the prevention and/or treatment of gastrointestinal infections in
humans.
From its inception in 1982, the Company has engaged in the research and
development of both infectious disease diagnostic tests and products for
therapeutic and preventive uses against certain infectious diseases in
animals and humans. Since 1991, this product development effort has focused
more principally on gastrointestinal diseases. Recently, the Company
has diversified its product development pipeline in two significant ways.
First, the Company has utilized the knowledge gained developing a passive
antibody product to treat or prevent a gastrointestinal infection caused by
CRYPTOSPORIDIUM PARVUM to develop a method to detect the presence of this
dangerous parasite in public water supplies. The Company intends to begin beta
testing in 1996 to evaluate the performance of the method under actual field
conditions. Secondly, the Company has utilized both its expertise in
processing proteins from cows' milk and its exclusive world-wide license to
certain purification technology to develop a process to separate specialty
proteins from cheese whey.
With a 9% increase in product sales to nearly $4,400,000, the Company
reported a small profit for the year ended December 31, 1995. Research and
development expenditures amounting to 32% of total revenues in 1995 limited the
amount of the 1995 profit. For the Company to benefit from the growth that
successful introduction of new products may create, the Company intends to
further increase its investment in research and development, which investment
could lead to a loss in 1996, which loss can be funded from cash reserves. In
addition, the Company intends to actively pursue funding from corporate
partners and government grants to help pay for research and development
projects in 1996 and beyond. The amount of the 1996 profit or loss can not be
accurately predicted because of uncertainties in obtaining corporate partner
funding and grants.
CORE TECHNOLOGY - PASSIVE IMMUNOPREVENTION
Enteric infections (infections of the gastrointestinal, or GI, tract)
often result from the unchecked growth of pathogenic microorganisms that enter
the body orally. It is possible to augment the gut-associated immune system by
supplying adequate amounts of the desired protective antibodies by oral
feeding. These externally supplied antibodies function in the GI tract,
offering passive protection from the invading pathogen and thereby augmenting
intestinal secretory immunity. ImmuCell's core technology is directed toward
the efficient production and formulation of such antibodies used to prevent
and/or treat disease. The Company's business strategy is to commercialize
applications of this technology for a portfolio of specifically targeted
antibody products derived from cows' milk.
Orally administered bovine antibodies have been shown to be effective
in preventing disease in numerous studies and can be formulated either as
traditional biologicals or as food additives. Since they are derived from
milk, these products are non-toxic and are inherently safe. In addition, these
products can be produced economically at a commercial scale. The Company
believes that these features could facilitate acceptance of products targeted
at both human and animal health care markets.
When humans or animals are infected by microorganisms such as bacteria,
viruses or parasites, specific cells of the immune system (T-cells and B-cells)
are activated to eliminate the invading pathogen. Antibodies, which are
protein products of specifically activated B-cells, serve as a front line of
immune defense against infectious diseases. Present in a variety of body
fluids including blood, milk, saliva and intestinal fluids, antibodies are
highly selective in recognizing structural components or antigens present on
foreign microbes. Through attachment to various microbial antigens, antibodies
serve to block infectious invasion and to mark their targets for removal by
cellular elements of the immune system. This ability of antibodies to
specifically recognize and bind with antigens is the basis of the
immunochemical technology employed by the Company.
Passive immune protection is a natural biological phenomenon: all
mammals provide antibodies to their young during nursing. These orally
supplied antibodies are contained in the "natural" food of newborns - mothers'
milk. The presence of certain antibodies can be increased in response to an
immunization with a specific vaccine. The Company has developed an expertise
in developing proprietary vaccines. These custom vaccines are used in the
Company's proprietary hyperimmunization programs of its donor cows. The
Company's disease-prevention technology utilizes antibodies, produced by such
vaccinated cows and isolated from their milk, that are delivered orally to
prevent several diseases.
Once the body has "learned" to make specific antibodies, it is, to a
certain degree, prepared to provide protection against subsequent infection by
the original microbe or pathogen. This is why mature, healthy humans and
animals can produce antibodies to these disease-causing organisms. However,
sometimes the body is unable to produce the antibodies necessary to
"neutralize" an infectious pathogen, leaving the body susceptible to disease
caused by that pathogen. This occurs in: 1) newborn animals and humans whose
immune systems are not fully functional, 2) adults whose immune systems are
under stress or have been damaged or destroyed by disease (immunocompromised)
and 3) adults who have never been exposed to a particular pathogen through
natural infection or vaccination. For example, newborn calves that do not
receive maternal colostrum (first milk) do not have antibodies to protect
themselves. Additionally, persons with nonfunctional immune systems are at
risk from a variety of common pathogens to which they cannot mount an immune
response, as are travelers to geographic areas where new microbial pathogens
are encountered.
RESEARCH AND DEVELOPMENT
The Company's research and development activities are aimed
primarily at the development of new commercial products, incorporating the
Company's proprietary technology and manufacturing methods, for the prevention
of gastrointestinal diseases in humans. See "PRIMARY PRODUCTS UNDER
DEVELOPMENT", below. The Company's research and development activities
are conducted internally and through contracts with third parties depending
upon the availability of staff, the technical skills required, the nature of
the particular project and other considerations. As additional opportunities to
commercialize the Company's immunochemistry technology become apparent, the
Company may begin new research and development projects. The Company
spent approximately $1,578,000, $1,366,000 and $879,000 on research and
development activities during the years ended December 31, 1995, 1994 and 1993,
respectively. These expenditures were in part supported by collaborative
research and development revenue and grant income totaling approximately
$587,000, $454,000 and $441,000 during the years ended December 31, 1995, 1994
and 1993, respectively.
The Company has often sought out partners to fund research and
development activities on certain projects which are of interest to the Company
in exchange for distribution rights to those products. The Company has derived
significant revenues from such collaborative research and development
contracts. The Company maintains relationships with several scientific
consultants that have particular expertise in the areas targeted by the
Company.
PRIMARY PRODUCTS UNDER DEVELOPMENT
The Company currently has five primary products under development.
These products are as follows:
1) In 1990, ImmuCell initiated development of a bovine-derived specific
polyclonal antibody product, named CRYPTOGAM{TM}, for the treatment of
cryptosporidiosis in AIDS patients. The Company estimates that at least
10,000 U.S. AIDS patients contract this disease annually. There is currently
no therapy available to treat or prevent this disease. The Company obtained
U.S. Food and Drug Administration ("FDA") approval of an Investigational New
Drug ("IND") application to further pursue research on cryptosporidiosis in
humans in 1991. Subsequent to the approval of the IND application, CRYPTOGAM
was granted Orphan Drug designation from the FDA. This designation provides
certain market protection for the first product approved by the FDA for a
particular indication. From 1992 to 1995, a significant portion of the
development costs for this product was underwritten by a former corporate
partner in return for marketing rights. In May 1995, in connection with a
restructuring of its business operations, this former partner ceased further
funding of the Company's development efforts and in connection therewith the
Company reacquired the world-wide marketing rights to this product. As is the
case with FIRST DEFENSE{R}, CRYPTOGAM is produced from hyperimmunized cows'
colostrum.
In 1993, the Company completed analysis of a Phase I/II clinical trial
of CRYPTOGAM in AIDS patients with cryptosporidiosis. The results of this
therapeutic study indicated that: 1) the drug was safe and well-tolerated and
2) the patients experienced significant reductions in overall parasite counts
and 3) despite a positive safety profile and the positive microbiological
activity described above, there was no significant improvement in clinical
symptoms (principally diarrhea). In 1994, enrollment in a second Phase I/II
therapeutic clinical trial was completed showing similar results. Although
statistically significant clinical benefit was not observed in these
therapeutic clinical trials, the Company decided to proceed with a Phase
I/II prophylactic clinical trial examining the ability of CRYPTOGAM to prevent
cryptosporidiosis infection. The Company has committed to internally fund and
expects to complete this Phase I/II prophylactic study by the middle of 1996.
In March 1996, the Company entered into an agreement with the Center
for Special Immunology, Inc. of Fort Lauderdale, Florida ("CSI") to further
test CRYPTOGAM. Under this agreement, the Company will manufacture the
material required to conduct Phase II and Phase III clinical trials, and CSI
has agreed to conduct the ongoing trials at its expense in return for a royalty
on future sales of the product.
2) Under an approved IND, the Company completed a successful Phase I/II
clinical trial of its second passive antibody product TRAVELGAM{TM} in June
1995. TRAVELGAM is intended to prevent diarrhea caused by enterotoxigenic E.
COLI (commonly known as Travelers' Diarrhea). Unlike FIRST DEFENSE and
CRYPTOGAM, which are produced from hyperimmunized cows' colostrum, this product
is produced from hyperimmunized cows' milk. (See Item 1 - "BUSINESS -
DEVELOPMENT OF LOWER COST MANUFACTURING PROCESS"). The Company intends to
fund additional Phase I/II trials of TRAVELGAM in 1996 to optimize the dose
size and delivery aspects of the product. Funding from a corporate partner or
other source must be secured before a larger Phase III trial can be initiated
in 1997.
Since 1990, the Company has obtained four Phase I Small Business
Innovation Research ("SBIR") grants from the National Institutes of Health
("NIH"), two Phase II SBIR grants from the NIH and one State grant from the
Maine Center for Innovation in Biomedical Technology. The grants provide
aggregate funding of approximately $1,205,000 to support these two passive
antibody research programs. Approximately $931,000 of this grant income was
earned in 1995 and prior. The remaining $274,000 is expected to be earned in
1996.
3) The Company's third passive antibody product for humans,
DIFFGAM{TM}, is intended to prevent CLOSTRIDIUM DIFFICILE associated colon
diseases that commonly result from oral antibiotic use. DIFFGAM is in pre-
clinical development. The Company intends to file an IND by early 1997 to
initiate a clinical trial of this product.
4) As the result of certain scientific knowledge gained under the
CRYPTOSPORIDIUM PARVUM research programs described above, the Company is
collaborating with Membrex, Inc. of Fairfield, New Jersey to evaluate the
feasibility of combining certain detection technology developed by the Company
with certain concentrating technology owned by Membrex into a commercial
test to detect CRYPTOSPORIDIUM PARVUM oocysts and other microorganisms in
water. The Company and Membrex are in the process of initiating beta site, or
field, testing of this product at several sites, including large municipal
water utilities. If the results of the beta site testing are positive,
marketing of this product could begin in late 1996 or early 1997.
5) The Company and a dairy processing partner have installed a pilot
plant to determine the economics of producing specialty proteins, such as
lactoferrin, from cheese whey. Lactoferrin is an iron-binding protein that,
among several applications, can be used in infant formula and certain
cosmetics. The centerpiece of the Company's efforts to purify these specialty
proteins is a purification system to which the Company holds a license for
milk and whey protein applications. The Company completed preliminary testing
of this system in 1993 and performed further testing in a pilot plant in 1994
and into early 1995. The manufacturing process may be used to produce a range
of specialty proteins from cheese whey that may have commercial utility
for certain food ingredient and other applications.
DEVELOPMENT OF LOWER COST MANUFACTURING PROCESS
The Company believes that products developed to prevent GI diseases
will be more price sensitive than products developed to treat these diseases.
Additionally, in today's changing health care environment, cost containment is
becoming a more important issue. In response, the Company has invested funds
to develop a new purification process to allow the Company to harvest
antibodies from a cow's entire lactation cycle, as opposed to only from the
cow's first milk, or colostrum. Although colostrum is very rich in antibodies,
it contains less than 20% of the total antibodies produced by a cow per
lactation cycle. Although antibody concentrations are much lower in milk, more
total antibodies are available in milk than in colostrum. The Company believes
the milk purification process, allowing the Company to harvest antibodies from
the entire lactation cycle, has created a significant product cost advantage.
DAIRY AND BEEF ANIMAL HEALTH PRODUCTS
In 1991, the Company launched FIRST DEFENSE{R } which is manufactured
by the Company from cows' colostrum using the Company's proprietary vaccine and
processing technology. The target disease, "calf scours", is seasonal, with
the highest incidence in the winter calving months. This diarrheal disease
causes dehydration in newborn calves and often leads to serious sickness and
even death.
In 1988, the Company obtained an exclusive world-wide license to
purchase from Kamar, Inc. of Steamboat Springs, Colorado ("Kamar") and to
market and sell an animal health care product known as the KAMAR HEATMOUNT
DETECTOR. This product is used to detect the physical mounting of bovines for
the determination of standing heat, and is sold primarily to dairy farmers. In
December 1993, the Company entered into a renewal of its service and license
agreement effective through December 31, 1999 with Kamar whereby Kamar will
continue to provide the Company warehousing, distribution and certain other
services and the Company will continue to market the KAMAR HEATMOUNT DETECTOR
under an exclusive world-wide license. The renewal agreement is cancelable by
either party upon twelve months written notice. Continuation of this license
is an important element of the Company's strategy to maintain and grow animal
health product sales.
The Company also markets the following animal health care products: 1)
RPT and ACCUFIRM, tradenames for a milk progesterone test used by dairy farmers
to monitor the reproductive status of their cows, 2) RJT, used in the
detection of MYCOBACTERIUM PARATUBERCULOSIS infections (Johne's Disease) in
cattle, and 3) RMT, which identifies mastitis-causing bacteria in cows. Sales
of these products have been limited since their commercial introductions.
These products are not a significant focus of the Company's future.
While the Company continues its efforts with internally and externally
funded product development programs, the Company is also actively seeking to
license-in new products and technologies.
HUMAN DISEASE DIAGNOSTIC PRODUCTS
As an extension of its expertise with infectious diseases, the Company
manufactures immunodiagnostic reagents for certain human infectious disease
diagnostic products. Pursuant to a royalty-bearing license, the Company
manufactures and sells specific antibody-based immunoreagents used for: 1) the
diagnosis of group A streptococcal infections, a bacterial infection
which causes "strep throat" and 2) the detection of bacterial infections that
cause sepsis and meningitis in newborn infants (group B STREPTOCOCCUS).
MARKETING AND SALES
Like many small manufacturers, the Company sells its animal health
products through large and well known distributors. The manner in which the
Company's products are marketed and distributed depends in large measure upon
the nature of the particular product, its intended users and the country where
it is sold. The distribution channel selected is intended to address
the particular characteristics of the marketplace for a given product. For
example, FIRST DEFENSE{R} is sold through major veterinarian distributors while
the KAMAR HEATMOUNT DETECTOR is sold through bovine semen distributors.
Separate agreements have been entered into for sales through these distribution
channels. ImmuCell and its marketing subsidiary, the Kamar Marketing Group,
Inc., currently have two employees engaged in direct marketing and sales.
FOREIGN SALES
Foreign sales represented approximately 20%, 21% and 21% of the
Company's total revenues for the years ended December 31, 1995, 1994 and 1993,
respectively. The majority of these foreign sales were to European countries,
Australia and New Zealand. It is anticipated that a significant amount of the
Company's future sales will continue to be made outside of the United States.
The Company currently prices most of its products in United States
dollars. An increase in the value of the dollar in any foreign country in
which the Company's products are sold may have the effect of increasing the
local price of such products, thereby leading to a reduction in demand.
Similarly, to the extent that the value of the dollar may decline with respect
to a foreign currency, the Company's competitive position may be enhanced.
COMPETITION
The Company's competition in the animal and human health care markets
includes other biotechnology companies, major pharmaceutical firms and food and
chemical companies. Many of these competitors have substantially greater
financial, marketing, manufacturing and human resources and more extensive
research and development facilities than the Company. Many of these
competitors may develop technologies and/or products which are superior to
those of the Company, or may be more successful in developing production
capability or in obtaining certain regulatory approvals. At least two
companies, Biomune and GalaGen, are developing colostrum-derived or milk-
derived antibody products for preventing cryptosporidiosis; GalaGen is also
developing a product designed to prevent C. DIFFICILE infections. The Company
believes that its competitive position will be highly influenced by its ability
to attract and retain key scientific and managerial personnel, to develop
proprietary technologies and products, to obtain USDA or FDA approval for new
products, and to raise adequate levels of capital to fund its activities.
The Company believes that FIRST DEFENSE{R} offers two significant
competitive advantages over other products in the market: 1) its capsule form,
which requires no refrigeration, provides ease of administration by the farmer,
and 2) competitive products currently on the market provide protection against
the leading cause of calf scours, while FIRST DEFENSE provides this protection
and additional protection against the second leading cause of the disease.
The Company believes that supplies and raw materials for the production
of its products are readily available from a number of vendors and farms. It
is the Company's policy to maintain several sources of supply for the
components used in the Company's products.
The Company currently competes on the basis of product performance,
price and distribution capability. The Company has expanded and continues to
seek to expand its network of independent distributors to improve its
competitive position.
PATENTS AND PROPRIETARY INFORMATION
The Company has three patent applications pending with the U.S.
Patent and Trademark Office. The first covers certain aspects of the Company's
proprietary manufacturing process to separate antibodies from cows' milk. The
second covers the method used to detect CRYPTOSPORIDIUM PARVUM in drinking
water supplies. The third covers certain elements of the Company's
TRAVELGAM{TM} product.
The use of a chemical, known as chitosan, to separate proteins
from cows' milk is the subject matter of one or more patents owned or
controlled by the Wisconsin Alumni Research Foundation. A purification system
used by the Company to manufacture specialty proteins from cows' milk is the
subject matter of one or more patents owned or controlled by Advanced
Separations Technologies, Inc. The Company has licensed exclusive rights to
use both of these patented technologies for its milk-based product
applications. The Company has also obtained license rights to certain cloned
antigens of CRYPTOSPORIDIUM PARVUM, for which a patent application has been
filed by the licensor. The method developed by the Company to detect
CRYPTOSPORIDIUM PARVUM in water supplies includes certain technology developed
by Membrex, Inc., which is the subject of several issued patents. Going
forward, the Company may file additional patent applications for certain
products under development. There can be no assurance that patents will be
issued with respect to any pending or future applications.
In some cases, the Company has chosen and may choose in the
future not to seek patent protection for certain products or processes.
Instead, the Company has sought and may seek in the future to maintain the
confidentiality of any relevant proprietary technology. Reliance upon trade
secret, rather than patent protection, may cause the Company to be vulnerable
to competitors who successfully replicate the Company's manufacturing
techniques and processes. Additionally, there can be no assurance that others
may not independently develop similar trade secrets or technology or obtain
access to the Company's unpatented trade secrets or proprietary technology.
This is particularly true if the Company enters into joint ventures or other
arrangements with respect to its products, including the manufacture thereof.
All of ImmuCell's employees are required to execute nondisclosure and invention
assignment agreements designed to protect the Company's rights in its
proprietary products.
Other companies may have filed patent applications and may have
been issued patents to products and to technologies potentially useful to the
Company or necessary to commercialize its products or achieve its business
goals. There can be no assurance that the Company will be able to obtain
licenses of such patents on terms acceptable to the Company.
TRADEMARKS
The Company has registered certain trademarks with the U.S.
Patent and Trademark Office in connection with the marketing of its products.
The Company has obtained registration of the trademark, FIRST DEFENSE{R}, for
one of its animal health products. The Company intends to use the following
marks in conjunction with the marketing of the human health products:
CRYPTOGAM{TM}, TRAVELGAM{TM} and DIFFGAM{TM}.
GOVERNMENT REGULATION
The manufacture and sale of some of the Company's animal health care
products within the United States is regulated by the USDA. The manufacture
and marketing of disease treatment and prevention products for human medical
applications within the United States is subject to regulation by the FDA.
Comparable agencies exist in foreign countries and foreign sales of the
Company's products will be subject to regulation by such agencies. Many states
(including Maine where the Company's laboratory and production facilities are
located) have laws regulating the production, sale, distribution or use of
biological products, and the Company may have to obtain approvals from
regulatory authorities in states in which it proposes to sell its products.
Depending upon the product and its applications, obtaining USDA and other
regulatory approvals may be a relatively brief and inexpensive procedure or it
may involve extensive clinical tests, incurring significant expenses and an
approval process of several years' duration.
The Company has received USDA approval for FIRST DEFENSE{R} (its
scours preventive product), RMT (its bovine mastitis confirmatory diagnostic
test) and RJT (its Johne's Disease diagnostic test). Two of the Company's new
products under development, CRYPTOGAM{TM} (to prevent and/or treat
cryptosporidiosis in AIDS patients) and TRAVELGAM{TM} (to prevent diarrhea in
travelerS), are in FDA Phase I/II clinical trials under approved
Investigational New Drug applications. The Company believes that it is in
compliance with current USDA and FDA regulatory requirements relating to the
Company's business and products.
PRODUCT LIABILITY
The manufacture and marketing of certain of the Company's
products entails a risk of product liability. The Company's current exposure
to product liability is mitigated to some extent by the fact that the Company's
current products have heretofore been principally directed towards the animal
health care market. The Company has maintained product liability insurance in
an amount which it believes is adequate to cover its potential exposure in this
area.
EMPLOYEES
The Company and its wholly-owned subsidiary, the Kamar Marketing
Group, Inc., currently employ the full-time equivalent of approximately twenty-
four employees. Ten employees are engaged in research and development
activities, seven in manufacturing, five in finance and administration, and two
in marketing and sales. The Company is not a party to any collective
bargaining agreement and considers its employee relations to be excellent.
ITEM 2 - PROPERTIES
In November 1993, the Company purchased the 10,000 square foot
office and laboratory building that it had been renting at 56 Evergreen Drive
in Portland, Maine for $350,000. The Company financed the acquisition through
an $85,000 cash payment, a $220,000 first mortgage loan from a bank and a
$45,000 second mortgage loan from the seller. The Company uses the space for
its office and laboratory needs. In the purchase of the building, the Company
assumed a lease to a tenant to approximately 3,720 of the 10,000 square feet.
The Company received annual income of rent and taxes aggregating approximately
$21,000 through October 1995 under this lease agreement.
The Company leases 3,500 square feet of manufacturing and
warehouse space in a building located at 987 Riverside Street in Portland,
Maine. This lease expires in March 1996. The Company's obligation to pay rent
and taxes under the lease totals approximately $24,000 per year. This facility
has been approved by the USDA for manufacture of FIRST DEFENSE{R}.
The Company intends to consolidate its manufacturing and
warehouse operations into the current office and laboratory building that it
owns at 56 Evergreen Drive in March 1996. Facility modifications necessary to
complete this consolidation are expected to cost approximately $200,000.
The Company also maintains certain animals, primarily cows, through
contractual relationships with several farms. The Company believes that these
facilities are adequate for all current and projected needs.
ITEM 3 - LEGAL PROCEEDINGS
None
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
PART II
ITEM 5 - MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
The Company's common stock trades on The Nasdaq SmallCap Market
tier of The Nasdaq Stock Market under the symbol: ICCC. Additionally, as of
April 1994, the Company's common stock was registered for trading on the Boston
Stock Exchange under the symbol: IMU. No dividends have been declared or
paid on the common stock since its inception, and the Company does not
contemplate the payment of cash dividends in the foreseeable future.
The following table sets forth the high and low sales price information
for ImmuCell's common stock as reported by The Nasdaq Stock Market during the
period January 1, 1994 through December 31, 1995:
1995 1994
1st Qtr. 2nd Qtr. 3rd Qtr. 4th Qtr. 1st Qtr. 2nd Qtr. 3rd Qtr. 4th Qtr.
High $1.44 $2.19 $2.75 $2.63 $2.13 $2.38 $2.38 $1.56
Low $1.03 $1.28 $1.75 $1.59 $1.63 $1.88 $1.31 $1.00
Such over-the-counter market quotations reflect inter-dealer prices,
without retail mark-up, mark-down or commission. As of March 22, 1996, the
Company had 8,000,000 ($.10 per share par value) common shares authorized and
2,291,981 common shares outstanding, and there were approximately 1,800
shareholders of record. The mean between the bid and asked prices of
the Company's common stock on March 22, 1996, as quoted on The Nasdaq Stock
Market, was $4.53 and the last sales price of the Company's common stock on
March 22, 1996 was $4.44.
ITEM 6 - SELECTED FINANCIAL DATA
The selected financial data set forth below has been derived
from the audited financial statements of the Company. The information should
be read in conjunction with the audited financial statements and related notes
appearing elsewhere in this Form 10-K.
Year Ended December 31,
1995 1994 1993 1992 1991
Statement of Operations Data:
Total Revenues $4,937,529 $4,438,747 $3,941,342 $3,078,497 $2,116,991
Product Sales 4,350,340 3,984,942 3,400,342 2,642,426 2,092,521
Research & Development
Expenses 1,578,145 1,366,294 879,181 505,521 728,073
Net Profit (Loss) 29,811 (148,266) (22,008) (239,507) (1,365,630)
Per Common Share:
Net Profit (Loss) .01 (.06) (.01) (.11) (.69)
Stockholders' Equity .83 .82 .89 .79 .74
Cash Dividend -- -- -- -- --
Balance Sheet Data:
Total Assets 3,234,426 3,074,649 3,126,244 2,301,347 2,162,808
Cash, Cash Equivalents
and Short term
Investments 1,550,011 1,295,246 1,459,510 1,116,905 962,671
Current Liabilities 720,767 569,377 444,034 467,372 689,326
Net Working Capital 1,849,580 1,727,525 2,160,300 1,619,305 1,040,539
Long Term Debt
Obligations 608,343 629,767 349,868 -- --
Stockholders' Equity $1,905,316 $1,875,505 $2,332,342 $1,833,975 $1,473,482
ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Results of Operations
FISCAL 1995 COMPARED TO FISCAL 1994
Total revenues for the year ended December 31, 1995 of $4,938,000
increased by $499,000 (11%) from $4,439,000 in 1994. Product sales for the
year ended December 31, 1995 of $4,350,000 were $365,000 (9%) greater than the
product sales recorded in 1994. While product selling prices have generally
increased in line with inflation, the increase in total product sales
is principally due to an increased volume of product sold.
Sales of the KAMAR HEATMOUNT DETECTOR totaled approximately $2,058,000
(47% of total product sales) for the year ended December 31, 1995 as compared
to approximately $2,146,000 (54% of total product sales) for the year ended
December 31, 1994. Royalties paid to Kamar, Inc. of Steamboat Springs,
Colorado on these sales equaled approximately $178,000 and $192,000 for 1995
and 1994, respectively. The Company owns an exclusive world-wide license from
Kamar, Inc. to sell this product through December 31, 1999, which license is
cancelable by either party upon twelve months written notice. (See Item
1 - "BUSINESS - DAIRY AND BEEF ANIMAL HEALTH PRODUCTS").
Sales of FIRST DEFENSE{R} totaled approximately $1,603,000 (37% of
total product sales) for the twelve months ended December 31, 1995 as compared
to approximately $1,298,000 (33% of total product sales) for the twelve months
ended December 31, 1994. The Company obtained USDA approval to sell this
product in September 1991. The sales of this product are seasonal with highest
sales expected in the winter months. (See Item 1 - "BUSINESS - DAIRY AND BEEF
ANIMAL HEALTH PRODUCTS).
Sales of the Company's human infectious disease diagnostic reagents
increased to approximately $553,000 (13% of total product sales) for the year
ended December 31, 1995 from approximately $367,000 (9% of total product
sales) for the year ended December 31, 1994.
Collaborative research and development revenue decreased to
approximately $10,000 (less than 1% of total revenues) in 1995 as compared to
$250,000 (6% of total revenues) in 1994. The 1995 revenue supported a small
portion of the Company's effort to purify specialty proteins from cheese whey.
The 1994 revenue contributed to the funding of the Company's research
program intended to develop a passive antibody product to prevent
cryptosporidiosis in AIDS patients.
Grant income increased to approximately $577,000 (12% of total
revenues) in 1995 as compared to $204,000 in 1994 principally as the result of
revenue recognized under two federal government research grants obtained by the
Company in 1994. These two grants provide aggregate funding of $935,000 over
two years. Funding aggregating $273,000 under these two grants will be
recognized as the work is completed in 1996. The first grant is intended to
partially fund development of a recombinant vaccine to CRYPTOSPORIDIUM PARVUM
for animals and humans, utilizing several cloned antigens of CRYPTOSPORIDIUM
PARVUM to which the Company holds an exclusive world-wide license from the
Regents of the University of California. The second grant supports further
research and development of ImmuCell's passive antibody product to prevent
and/or treat cryptosporidiosis in AIDS patients. The 1995 grant income was
also increased due to the receipt of a $100,000 federal government research
grant to support an epidemiology study related to the Company's passive
antibody product to prevent Travelers' Diarrhea. (See Item 1 - "BUSINESS -
PRIMARY PRODUCTS UNDER DEVELOPMENT").
Interest and other income exceeded interest expense by approximately
$33,000 in 1995 as compared to a $27,000 excess in 1994. Other income is
comprised primarily of rental income for space leased to a tenant in the
building that the Company owns. Interest expense increased as the result of
additional interest expense incurred under a $500,000 bank note entered into in
October 1994 and a $200,000 bank note entered into in September 1995.
Product costs as a percentage of product sales decreased to 45% in 1995
from 49% in 1994. The Company expects its product sales mix to continue to
shift to more internally developed products which tend to have higher gross
margin percentages than licensed-in products and expects to achieve incremental
efficiencies in the manufacturing processes, as it continues to implement
process development improvements. The increase in sales of human infectious
disease diagnostic reagents also contributed to the improved gross margin, as
the gross margin experienced on these reagents is better than the gross margin
on the Company's animal health products.
The Company increased its expenditures for research and development to
approximately $1,578,000 in 1995 as compared to $1,366,000 in 1994. Research
and development expenses exceeded collaborative research and development
revenue and grant income by approximately $991,000 in 1995 and by $912,000 in
1994. The 1995 spending on research and development aggregated 32% of total
revenues as compared to 31% in 1994.
The primary focus of the Company's research and development programs is
on the development of passive antibody products to prevent gastrointestinal
diseases. The Company has one product, CRYPTOGAM{TM}, in clinical trials to
prevent and/or treat cryptosporidiosis in AIDS patients and a second product,
TRAVELGAM{TM}, in clinical trials to prevent diarrhea caused by E. COLI
(commonly known as Travelers' Diarrhea). The Company intends to file an
Investigational New Drug ("IND") application by early 1997 for a third product,
DIFFGAM{TM}, to prevent CLOSTRIDIUM DIFFICILE associated colon diseases that
commonly occur after broad spectrum antibiotic usage. (See Item 1 - "BUSINESS
- - PRIMARY PRODUCTS UNDER DEVELOPMENT"). The Company has also invested in the
development of a test intended to detect the presence of CRYPTOSPORIDIUM PARVUM
in drinking water. Additionally, the Company has conducted significant
development of a milk purification process that may have commercial utility for
certain food ingredient applications.
Research and development expenses that are not supported by an outside
source of revenue are the primary cause of the Company's limited profit in 1995
and operating losses in prior years. The Company believes that a net operating
loss may be incurred in 1996 and that this expected loss can be funded
internally. The Company believes that advancing its research and development
programs and incurring the resulting loss is necessary to create value in its
product portfolio by performing early stage validation of its technology.
However, for product development to proceed into more expensive clinical trials
in 1997, potential partners or new sources of capital would be required to fund
much of the continued research and development expenses.
Sales and marketing expenses increased by $44,000 (a 6%
increase) to $766,000 (18% of total product sales) in 1995 from $721,000 (18%
of total product sales) in 1994. The Company continues to leverage its small
sales force through wholesale distribution channels. General and
administrative expenses were approximately $640,000 in 1995 as compared to
$567,000 in 1994. The Company has continued its efforts to control its general
and administrative expenses while incurring all the necessary expenses
associated with being a publicly held company.
FISCAL 1994 COMPARED TO FISCAL 1993
Total revenues for the year ended December 31, 1994 of $4,439,000
increased by $497,000 (13%) from $3,941,000 in 1993. Product sales for the
year ended December 31, 1994 of $3,985,000 were $585,000 (17%) greater than the
product sales recorded in 1993. While product selling prices have generally
increased in line with inflation, the increase in total product sales
is principally due to an increased volume of product sold.
Sales of the KAMAR HEATMOUNT DETECTOR totaled approximately $2,146,000
(54% of total product sales) for the year ended December 31, 1994 as compared
to approximately $1,949,000 (57% of total product sales) for the year ended
December 31, 1993. Royalties paid to Kamar, Inc. of Steamboat Springs,
Colorado on these sales equaled approximately $192,000 and $160,000 for 1994
and 1993, respectively. The Company owns an exclusive world-wide license from
Kamar, Inc. to sell this product through December 31, 1999, which license is
cancelable by either party upon twelve months written notice. (See Item
1 - "BUSINESS - MARKETING AND SALES").
Sales of FIRST DEFENSE{R} totaled approximately $1,298,000 (33% of
total product sales) for the twelve months ended December 31, 1994 as compared
to approximately $1,164,000 (34% of total product sales) for the twelve months
ended December 31, 1993. The Company obtained USDA approval to sell this
product in September 1991. The sales of this product are seasonal with highest
sales expected in the winter months. (See Item 1 - "DAIRY AND BEEF ANIMAL
HEALTH PRODUCTS").
Sales of the Company's human infectious disease diagnostic
reagents increased to approximately $367,000 (9% of total product sales) for
the year ended December 31, 1994 from approximately $102,000 (3% of total
product sales) for the year ended December 31, 1993.
Collaborative research and development revenue decreased to
approximately $250,000 (6% of total revenues) in 1994 as compared to $435,000
(11% of total revenues) in 1993. All of this revenue except for $175,000 in
1993 contributed to the funding of the Company's research program intended to
develop a passive antibody product to prevent cryptosporidiosis in AIDS
patients. The $175,000 in 1993 revenue went towards the development of a test
kit to diagnose candidiasis, a human fungal disease, which development work has
been terminated by the Company.
Grant income increased to approximately $204,000 (5% of total revenues)
in 1994 as compared to $6,000 in 1993 principally as the result of revenue
recognized under two federal government research grants obtained by the Company
in 1994. These two grants provide aggregate funding of $954,000 over two
years. Funding aggregating $756,000 under these two grants will be recognized
as the work is completed in 1995 and into 1996. The first grant is intended to
partially fund development of a recombinant vaccine to CRYPTOSPORIDIUM PARVUM
for animals and humans, utilizing several cloned antigens of CRYPTOSPORIDIUM
PARVUM to which the Company holds an exclusive world-wide license from the
Regents of the University of California. The second grant supports further
research and development of ImmuCell's passive antibody product to prevent
cryptosporidiosis in AIDS patients. (See Item 1 - "BUSINESS - PRIMARY PRODUCTS
UNDER DEVELOPMENT").
Total revenues in 1993 included $100,000 in income from the licensing
of technology to a third party. No comparable sale was made in 1994.
Interest and other income exceeded interest expense by approximately
$27,000 in 1994 as compared to a $29,000 excess in 1993. Other income
increased primarily as the result of the receipt of rental income for a full
twelve months in 1994 for space leased to a tenant in the building that the
Company purchased in November 1993. Interest expense increased accordingly
due to the related mortgage interest for the full twelve months in 1994 and as
the result of additional interest expense incurred under a $500,000 bank note
entered into in October 1994.
Product costs as a percentage of product sales decreased to 49% in 1994
from 53% in 1993. The Company expects its product sales mix to continue to
shift to more internally developed products which tend to have higher gross
margin percentages than licensed-in products and expects to achieve incremental
efficiencies in the manufacturing processes, as it continues to implement
process development improvements. The increase in sales of human infectious
disease diagnostic reagents also contributed to the improved gross margin, as
the gross margin experienced on these reagents is better than the gross margin
on the Company's animal health products.
The Company increased its expenditures for research and development to
approximately $1,366,000 in 1994 as compared to $879,000 in 1993. Increased
grant income partially funded this increase in research and development
expenses. Research and development expenses exceeded collaborative research
and development revenue and grant income by approximately $912,000 in 1994 and
$438,000 in 1993.
The primary focus of the Company's research and development programs is
on the development of passive antibody products to prevent gastrointestinal
diseases. The Company has one product, CRYPTOGAM{TM}, in clinical trials to
prevent cryptosporidiosis in AIDS patients. The Company intends to file an
Investigational New Drug ("IND") application in 1995 for a milk-derived passive
antibody product to prevent diarrhea caused by E. COLI (commonly known as
Travelers' Diarrhea). In 1996, the Company expects to file an additional IND
for a product to prevent CLOSTRIDIUM DIFFICILE associated colon diseases that
commonly occur after broad spectrum antibiotic usage over a prolonged period of
time. (See Item 1 - "BUSINESS - PRIMARY PRODUCTS UNDER DEVELOPMENT").
Additionally, the Company has conducted significant development of a milk
purification process that may lead to a new lower cost manufacturing process
for these gastrointestinal disease prevention products and that may also have
commercial utility for certain food ingredient applications.
Research and development expenses that are not supported by an outside
source of revenue are the primary cause of the Company's net operating loss.
The Company believes that its net operating loss may increase in 1995 and that
this expected loss can be funded internally. The Company believes that
advancing its research and development programs and incurring the resulting
loss is necessary to create value in its product portfolio by performing early
stage validation of its technology. However, for product development to
proceed into more expensive clinical trials in 1996, potential partners or new
sources of capital would be required to fund much of the continued research and
development expenses.
General and administrative expenses were approximately $567,000 in 1994
as compared to $530,000 in 1993 and $601,000 in 1992. The Company has
continued its efforts to control its general and administrative expenses while
incurring all the necessary expenses associated with being a publicly held
company. Sales and marketing expenses were reduced by $59,000 (an 8% decrease)
to $721,000 (18% of total product sales) in 1994 from $780,000 (23% of total
product sales) in 1993. The Company continues to leverage its small sales
force through wholesale distribution channels.
FINANCIAL POSITION, LIQUIDITY AND CAPITAL RESOURCES
The Company's total assets increased to $3,234,000 at December 31, 1995
from $3,075,000 at December 31, 1994. The Company's cash balance as of
December 31, 1995 increased to $1,550,000 from $1,295,000 at December 31, 1994.
Net working capital increased by 7% to $1,850,000 at December 31, 1995 from
$1,728,000 at December 31, 1994. Stockholders' equity at December 31, 1995 of
$1,905,000 increased from $1,876,000 at December 31, 1994.
As is the case with most early stage biotechnology companies, the
Company funds a large portion of its research and development expenses through
strategic alliances with corporate partners and equity financing with the
prospect of becoming profitable if products can be successfully commercialized.
The size of the Company's research and development programs and the speed at
which they are funded is, in large part, determined by the level of financing
completed. However, during the year ended December 31, 1995, the gross margin
from product sales was sufficient to contribute $988,000 to the research and
development programs after covering all general, sales and administrative
expenses. This $988,000 contribution compares favorably to a $737,000
contribution in 1994, a $287,000 contribution in 1993 and a $190,000 deficit
in 1992. This growing contribution from the operating (non-research and
development) side of the Company's business allows the Company to be less
dependent on raising capital in the equity markets to fund its ongoing
operations.
Long term debt decreased from $630,000 at December 31, 1994 to $608,000
at December 31, 1995. The current portion of these long term debt obligations
increased from $114,000 at December 31, 1994 to $169,000 at December 31, 1995.
As of December 31, 1995, this current and long term debt was comprised of: 1)
$212,000 under a $220,000 mortgage from a bank on the Company's office and
laboratory facility that was purchased by the Company in November 1993, 2)
$375,000 under a four year $500,000 note payable to a bank that was entered
into in October of 1994 and 3) $190,000 under a four year $200,000 note
payable to a bank that was entered into in September 1995. The mortgage bears
interest at the rate of 9.5% per year and is amortized over twenty years with a
balloon payment of approximately $183,000 due in November 2000. The $500,000
bank note bears interest at the rate of 10.27% per year and is being amortized
in full over four years. The $200,000 bank note bears interest at the rate of
9.62% per year and is being amortized in full over four years. The Company is
obligated to make monthly principal and interest payments aggregating $19,833
under the mortgage and the bank notes.
In connection with the consolidation of the Company's operations into
the building that it owns, the Company has committed to incur approximately
$200,000 in building improvement and modification costs. Additionally, the
Company has entered into purchase commitments for certain manufacturing and
research
equipment aggregating approximately $200,000. Management believes that its
current cash and investments balance will be sufficient to meet its operating
and capital requirements in 1996. Management intends to keep expenditure
levels in the appropriate relation to the amount of equity raised, expected
revenues and the resulting amount of available cash.
FORWARD LOOKING STATEMENTS
This document contains certain forward looking statements; there can be
no assurance that actual results will not differ materially from those
projected or suggested in such statements as a result of various factors
including, but not limited to, the risk factors discussed below. The Company
is heavily dependent on the successful development of new products for its
future growth. These new products have the potential to make the Company
significantly more profitable than it currently is. Retail markets for
the human applications of the Company's passive antibody products that are
currently in clinical trials have been estimated at between $50,000,000 to
$150,000,000 and the market for the passive antibody product not yet in
clinical trials has been estimated at approximately twice that size. (See Item
1 - "BUSINESS - PRIMARY PRODUCTS UNDER DEVELOPMENT). If clinical trials are
successful, sales would not be expected to begin until 1998 or 1999, due to the
complex regulatory process required to obtain approval of these products. If
the products are successfully developed, the Company intends to enter into
marketing alliances with corporate partners to achieve its sales in these
markets. The market for: 1) the Company's water test under development has
been estimated up to $20,000,000 and 2) the first specialty protein being
derived by the Company from cheese whey has been estimated at $2,000,000.
(See Item 1 - "BUSINESS - PRIMARY PRODUCTS UNDER DEVELOPMENT"). Working with
partners on both of these products, the Company has retained 50% ownership of
each of these products. If further development proves positive, sales of these
two products may begin by 1997.
RISK FACTORS
The development of these new products is subject to financial,
efficacy, regulatory and market risks. There can be no assurance that the
Company will be able to finance the development of these new product
opportunities nor that, if financed, the new products will be found to be
efficacious and gain the appropriate regulatory approval. Furthermore, if
regulatory approval is obtained, there can be no assurance that the market
estimates will prove to be accurate or that market acceptance at a profitable
price level can be achieved or that the products can be profitably
manufactured.
EFFECTS OF INFLATION AND INTEREST RATES
The Company believes that neither inflation nor interest rates have had
a significant effect on revenues and expenses.
ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements of the Company, together with the notes
thereto and the report of the accountants thereon, are set forth on Pages F-1
through F-13 at the end of this report.
ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable
PART III
ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
(A) Information with respect to the Company's directors is incorporated
herein by reference to the section of the Company's 1996 Proxy Statement titled
"Election of the Board of Directors", which is intended to be filed with the
Securities and Exchange Commission within 120 days after the end of the
Company's fiscal year.
(B) The Company's executive officers are as follows:
MICHAEL F. BRIGHAM (Age: 35, Officer Since: October 1991) was elected Chief
Financial Officer and Treasurer of the Company in October 1991 and was
appointed Secretary in December 1995. Prior to that, he served as Director of
Finance and Administration for the Company since September 1989. Prior to
joining the Company, he was employed as an audit manager for the public
accounting firm of Ernst & Young. Mr. Brigham earned his Masters in Business
Administration from New York University in 1989.
JOSEPH H. CRABB, PH.D. (Age: 41, Officer Since: March 1996) was elected Vice
President of Research and Development of the Company in March 1996. Prior to
that, he served as Director of Research and Development for the Company. Prior
to joining the Company in 1988, Dr. Crabb earned his Ph.D. in Biochemistry from
Dartmouth Medical School and completed postdoctoral studies in microbial
pathogenesis at Harvard Medical School, where he also served on the faculty.
THOMAS C. HATCH (Age: 42, Officer Since: October 1991, Director Since: August
1992) was elected President and Chief Executive Officer of the Company in
October 1991 and is a member of the Executive Committee of the Company's Board
of Directors. Prior to that, he served as Manager of Commercial Development
for the Company since May 1989. Prior to joining the Company, he held various
product management and sales positions in the Animal Health and Crop Protection
Chemical businesses of the American Cyanamid Company. Prior to that, he had
been an Economic Analyst with the U.S. Department of Agriculture in Washington.
Mr. Hatch earned his Masters in Business Administration from the University of
Virginia in 1984.
There is no family relationship between any director, executive
officer, or person nominated or chosen by the Company to become a director or
executive officer.
ITEM 11 - EXECUTIVE COMPENSATION
Information regarding cash compensation paid to executive officers of
the Company is incorporated herein by reference to the section of the Company's
1996 Proxy Statement titled "Executive Compensation", which is intended to be
filed with the Securities and Exchange Commission within 120 days after the end
of the Company's fiscal year.
ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information regarding ownership of the Company's common stock by
certain owners and management is incorporated herein by reference to the
section of the Company's 1996 Proxy Statement titled "Security Ownership of
Certain Beneficial Owners and Management", which is intended to be filed with
the Securities and Exchange Commission within 120 days after the end of
the Company's fiscal year.
ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information regarding certain relationships and related transactions is
incorporated herein by reference to the section of the Company's 1996 Proxy
Statement titled "Certain Relationships and Related Transactions", which is
intended to be filed with the Securities and Exchange Commission within 120
days after the end of the Company's fiscal year.
PART IV
ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(A) Exhibits
3.1 Certificate of Incorporation of the Registrant (incorporated by
reference to Exhibit 3.1 of the Company's 1987 Registration
Statement Number 33-12722 on Form S-1 as filed with the
Commission).
3.2 Certificate of Amendment to the Company's Certificate of
Incorporation (incorporated by reference to Exhibit 4.1 to the
Company's quarterly report on Form 10-Q for the three months
ended June 30, 1990).
3.3 Bylaws of the Registrant as amended.
3.4 Certificate of Amendment to the Company's Certificate of
Incorporation effective August 24, 1992 (incorporated by
reference to Exhibit 3.4 of the Registrant's Annual Report on
Form 10-K for the fiscal year ended December 31, 1992).
4.1 Specimen of the Company's Common Stock Certificate (incorporated
by reference to Exhibit 4.1 to the Company's quarterly report on
Form 10-Q for the three months ended September 30, 1990).
4.2 $220,000 Note payable to Peoples Heritage Bank dated November 3,
1993 (incorporated by reference to Exhibit 4.1 to the
Registrant's Current Report on Form 8-K dated November 4, 1993).
4.3 Mortgage deed, Security Agreement and Financing Statement dated
November 3, 1993 in favor of Peoples Heritage Bank (incorporated
by reference to Exhibit 4.3 to the Registrant's Current Report
on Form 8-K dated November 4, 1993).
4.4 $500,000 Commercial Note to Peoples Heritage Bank dated October
7, 1994 (incorporated by reference to Exhibit 4.1 to the
Registrant's Quarterly Report on Form 10-Q for the three months
ended September 30, 1994).
4.5 Security Agreement dated October 7, 1994 in favor of Peoples
Heritage Bank (incorporated by reference to Exhibit 4.2
to the Registrant's Quarterly Report on Form 10-Q for the three
months ended September 30, 1994).
4.6 $200,000 Commercial Note payable to Peoples Heritage Bank dated
September 28, 1995 (incorporated by reference to Exhibit 4.1 to the
Registrant's Quarterly Report on Form 10-Q for the three months
ended September 30, 1995).
4.7 Security Agreement dated September 28, 1995 in favor of Peoples
Heritage Bank (incorporated by reference to Exhibit 4.2 to the
Registrant's Quarterly Report on Form 10-Q for the three months
ended September 30, 1995).
4.8 Rights Agreement dated as of September 5, 1995, between the
Registrant and American Stock Transfer and Trust Co., as Rights
Agent, which includes as Exhibit A thereto the form of Right
Certificate and as Exhibit B thereto the Summary of Rights to
Purchase Common Stock (incorporated by reference to Exhibit 4.1 to
the Registrant's Current Report on Form 8-K dated September 5,
1995).
10.1{+} 1989 Stock Option and Incentive Plan of the Registrant
(incorporated by reference to Exhibit 10.27 to the Registrant's
Annual Report on Form 10-K for the fiscal year ended December 31,
1989).
10.2{+} Form of Incentive Stock Option Agreement (incorporated by reference to
Exhibit 10.28 to the Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1989).
10.3{+} 1990 Stock Option Plan for Outside Directors (incorporated by
reference to Exhibit 10.29 to the Registrant's Annual Report on Form
10-K for the fiscal year ended December 31, 1989).
10.4{+} Form of Stock Option Agreement for Outside Directors (incorporated by
reference to Exhibit 10.30 to the Registrant's Annual Report on Form
10-K for the fiscal year ended December 31, 1989).
10.5{+} Form of Indemnification Agreement entered into with each of the
Company's directors and officers (incorporated by reference to Exhibit
10.32 to the Registrant's Annual Report on Form 10-K for the fiscal year
ended December 31, 1989).
10.6* Technology Purchase and Supply Agreement effective December 15, 1990
between the Registrant and Hybritech, Inc., 11095 Torreyana Road, San
Diego, California 92121 (incorporated by reference to Exhibit 10.31 to
the Registrant's Annual Report on Form 10-K for the fiscal year ended
December 31, 1990).
10.7{+} Employment Agreement dated November 1991 between the Registrant and
Michael F. Brigham (incorporated by reference to Exhibit 10.37 to the
Registrant's Annual Report on Form 10-K for the fiscal year ended
December 31, 1991).
10.8{+} Employment Agreement dated November 1991 between the
Registrant and Thomas C. Hatch (incorporated by reference to
Exhibit 10.38 to the Registrant's Annual Report on
Form 10-K for the fiscal year ended December 31, 1991).
10.9 Lease dated September 1, 1992 between Young's Electric, Inc., as
Lessor, and the Registrant, as Lessee, for the premises located at 987
Riverside Street, Portland, Maine (incorporated by reference to Exhibit
10.20 to the Registrant's Annual Report on Form 10-K for the fiscal
year ended December 31, 1992).
10.10 First Amendment to Technology Purchase and Supply Agreement
between Hybritech Incorporated and the Registrant effective December
23, 1992 (incorporated by reference to Exhibit 10.24 to the
Registrant's Annual Report on Form 10-K for the fiscal year ended
December 31, 1992).
10.11{+}Amendment, dated April 1992, to Employment Agreement dated
November 1991, between the Registrant and Michael F. Brigham
(incorporated by reference to Exhibit 10.26 to the Registrant's
Annual Report on Form 10-K for the fiscal year ended December
31, 1992).
10.12{+}Amendment, dated April 1992, to Employment Agreement dated
November 1991, between the Registrant and Thomas C. Hatch
(incorporated by reference to Exhibit 10.29 to the Registrant's
Annual Report on Form 10-K for the fiscal year ended December
31, 1992).
10.13 License and Supply Agreement between Bio-Vac, Inc. and the
Registrant dated June 15, 1993 (incorporated by reference
to Exhibit 10.25 to the Registrant's Annual Report on Form 10-K
for the fiscal year ended December 31, 1993).
10.14** ImmuCell - Advanced Separation Technologies, Inc. Agreement for
exclusivity in protein separation of milk or whey proteins, dated
August 30, 1993 (incorporated by reference to Exhibit 10.27 to the
Registrant's Annual Report on Form 10-K for the fiscal year ended
December 31, 1993).
10.15 Distribution and Licensing Agreement between Kamar, Inc. and the
Registrant dated December 3, 1993 (incorporated by reference to Exhibit
10.30 to the Registrant's Annual Report on Form 10-K for the fiscal
year ended December 31, 1993).
10.16 Second Amendment to Technology Purchase and Supply Agreement between
Hybritech Incorporated and the Registrant effective December 15, 1993
(incorporated by reference to Exhibit 10.31 to the Registrant's Annual
Report on Form 10-K for the fiscal year ended December 31, 1993).
10.17 Amendment No. 1 to Agreement for Exclusivity between Advanced
Separation Technologies, Inc. and the Registrant dated January 14, 1994
(incorporated by reference to Exhibit 10.33 to the Registrant's Annual
Report on Form 10-K for the fiscal year ended December 31, 1993).
10.18***Exclusive License Agreement between The Regents of the University of
California of Alameda, California and the Registrant dated February 23,
1994 (incorporated by reference to Exhibit 10.1 to the Registrant's
Quarterly Report on Form 10-Q for the three months ended
March 31, 1994).
10.19* Technology Purchase and Sale Renewal Agreement effective February 17,
1995 between the Registrant and Hybritech, Inc., 8958 Terman Court,
San Diego, California 92121 (incorporated by reference to Exhibit 10.24
to the Registrant's Annual Report on Form 10-K for the fiscal year
ended December 31, 1994).
10.20 Non-qualified Stock Option Agreement dated November 10, 1994 between
the Registrant and Redwood MicroCap Fund, Inc (incorporated by
reference to Exhibit 10.25 to the Registrant's Annual Report on Form
10-K for the fiscal year ended December 31, 1994).
10.21 Amendment No. 2 to Agreement for Exclusivity between Advanced
Separation Technologies, Inc. and the Registrant dated December 16,
1994 (incorporated by reference to Exhibit 10.26 to the Registrant's
Annual Report on Form 10-K for the fiscal year ended December 31,
1994).
10.22****License Agreement between Registrant and Wisconsin Alumni Research
Foundation effective March 1, 1995 (incorporated by reference to
Exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q for the
three months ended March 31, 1995).
10.23 1995 Stock Option Plan for Outside Directors (incorporated by reference
to Exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q for
the three months ended June 30, 1995).
10.24 Form of Stock Option Agreement (incorporated by reference to Exhibit
10.2 to the Registrant's Quarterly Report on Form 10-Q for the three
months ended June 30, 1995).
10.25 Research Agreement dated April 19, 1995 between the Registrant and
Membrex, Inc. of Fairfield, New Jersey (incorporated by reference to
Exhibit 10.3 to the Registrant's Quarterly Report on Form 10-Q for the
three months ended June 30, 1995).
10.26 Term Letter dated April 19, 1995 between the Registrant and Membrex,
Inc. of Fairfield, New Jersey (incorporated by reference to Exhibit
10.4 to the Registrant's Quarterly Report on Form 10-Q for the three
months ended June 30, 1995).
10.27 Amendment No. 3 to Agreement for Exclusivity between Advanced
Separation Technologies, Inc. and the Registrant dated May 3, 1995
(incorporated by reference to Exhibit 10.5 to the Registrant's
Quarterly Report on Form 10-Q for the three months ended June 30,
1995).
10.28 Amendment No. 4 to Agreement for Exclusivity between Advanced
Separation Technologies, Inc. and the Registrant dated November 15,
1995.
10.29 Option Agreement dated November 22, 1995 between the Registrant and
Agri-Mark, Inc. of Methuen, Massachusetts.
10.30{+ }Employment Agreement dated November 1991 between the Registrant and
Joseph H Crabb.
10.31{+}Amendment, dated March 1992, to Employment Agreement dated November
1991, between the Registrant and Joseph H. Crabb.
10.32{+}Amendment, dated April 1992, to Employment Agreement dated November
1991, between the Registrant and Joseph H. Crabb.
21.1 Subsidiaries of the Registrant (incorporated by reference to
Exhibit 22.1 to the Registrant's Annual Report on Form 10-K
for the fiscal year ended December 31, 1990).
27.1 Financial Data Schedule.
*Confidential Treatment as to certain portions obtained effective until
December 14, 2002. The copy filed as an exhibit omits the information subject
to the Confidential Treatment.
**Confidential Treatment as to certain portions obtained effective
until December 31, 2000. The copy filed as an exhibit omits the information
subject to the Confidential Treatment.
***Confidential Treatment as to certain portions obtained effective
until March 31, 1999. The copy filed as an exhibit omits the information
subject to the Confidential Treatment.
****Confidential Treatment as to certain portions has been requested
effective until March 1, 2005. The copy filed as an exhibit omits the
information subject to the confidentiality request.
+ Management contract or compensatory plan or arrangement.
(B) INDEX TO FINANCIAL STATEMENT SCHEDULES
Report of Coopers & Lybrand L.L.P., Independent Accountants F-1
Consolidated Balance Sheets - December 31, 1995 and 1994 F-2
to F-3
Consolidated Statements of Operations for the years endedF-4
December 31, 1995, 1994 and 1993
Consolidated Statements of Stockholders' Equity for the yearsF-5
ended December 31, 1995, 1994 and 1993
Consolidated Statements of Cash Flows for the years endedF-6
December 31, 1995, 1994 and 1993
Notes to Consolidated Financial Statements
F-7 to F-13
All financial statement schedules have been omitted as they are not required,
are not applicable, or the information is included in the consolidated
financial statements or otherwise.
(C) REPORTS ON 8-K
None
REPORT OF INDEPENDENT ACCOUNTANTS
Board of Directors
ImmuCell Corporation
We have audited the accompanying consolidated balance sheets of ImmuCell
Corporation and Subsidiary as of December 31, 1995 and 1994, and the related
consolidated statements of operations, stockholders' equity, and cash flows for
each of the three years in the period ended December 31, 1995. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
ImmuCell Corporation and Subsidiary as of December 31, 1995 and 1994 and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1995 in conformity with generally
accepted accounting principles.
/s/ Coopers & Lybrand
Portland, Maine
February 9, 1996
IMMUCELL CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1995 AND 1994
ASSETS
1995 1994
_______________________
CURRENT ASSETS:
Cash and cash equivalents $1,550,011 $1,295,246
Accounts receivable, net of allowance
for doubtful accounts of $51,000 and
$53,000 at December 31, 1995 and 1994,
respectively 357,533 401,179
Inventories 636,203 565,531
Prepaid expenses and accrued interest 26,600 34,946
_______________________
Total current assets 2,570,347 2,296,902
EQUIPMENT, BUILDING AND
IMPROVEMENTS, at cost:
Laboratory equipment 844,254 959,869
Building and improvements 431,114 426,228
Office furniture and equipment 77,312 130,133
Land 50,000 50,000
_______________________
1,402,680 1,566,230
Less-Accumulated depreciation 740,751 798,785
_______________________
Net equipment, building and
improvements 661,929 767,445
OTHER ASSETS 2,150 10,302
_______________________
TOTAL ASSETS $3,234,426 $3,074,649
=======================
The accompanying notes are an integral part of the financial
statements.
IMMUCELL CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1995 AND 1994
LIABILITIES AND STOCKHOLDERS' EQUITY
1995 1994
________________________
CURRENT LIABILITIES:
Accrued expenses $ 250,412 $ 248,281
Accounts payable 236,471 158,866
Current portion of long term debt 168,884 113,528
Deferred income 65,000 48,702
________________________
Total current liabilities 720,767 569,377
LONG TERM DEBT:
Notes payable 401,055 375,013
Mortgage loans 207,288 254,754
________________________
Total long term debt 608,343 629,767
COMMITMENTS AND CONTINGENT LIABILITIES
STOCKHOLDERS' EQUITY:
Common stock, Par value - $.10 per share
Authorized-8,000,000
Issued-2,681,579 shares at
December 31, 1995 and 1994 268,159 268,159
Capital in excess of par value 8,105,448 8,105,448
Accumulated deficit (5,881,556) (5,911,367)
________________________
2,492,051 2,462,240
Treasury stock, at cost-389,598 shares
at December 31, 1995 and 1994 (586,735) (586,735)
________________________
Total stockholders' equity 1,905,316 1,875,505
________________________
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $3,234,426 $3,074,649
========================
The accompanying notes are an integral part of the financial
statements.
IMMUCELL CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31,
1995 1994 1993
_______________________________________
REVENUES:
Product sales $4,350,340 $3,984,942 $3,400,342
Collaborative research
and development revenue 10,000 250,000 435,000
Grant income 577,189 203,805 6,000
Revenue from technology
license -- -- 100,000
_______________________________________
Total revenues 4,937,529 4,438,747 3,941,342
COSTS AND EXPENSES:
Product costs 1,957,095 1,959,653 1,803,490
Research and development
expenses 1,578,145 1,366,294 879,181
Sales and marketing
expenses 765,761 721,378 780,162
General and administrative
expenses 639,810 567,063 529,755
_______________________________________
Total costs and expenses 4,940,811 4,614,388 3,992,588
Interest and other income 105,624 72,012 34,975
Interest expense (72,531) (44,637) (5,737)
_______________________________________
Net interest and other 33,093 27,375 29,238
_______________________________________
NET PROFIT (LOSS) $ 29,811 $ (148,266) $ (22,008)
=======================================
NET PROFIT (LOSS)
PER COMMON SHARE $ .01 $ (.06) $ (.01)
=======================================
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 2,291,981 2,612,294 2,337,722
=======================================
The accompanying notes are an integral part of the financial
statements.
IMMUCELL CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
Common Stock
$.10 Par Value Capital in Treasury Stock Total
- ------------------ Excess of Accumulated ---------------- Stockholders'
Shares Amount Par Value Deficit Shares Amount Equity
BALANCE,
December 31, 1992 2,381,579 $238,159 $7,615,073 $(5,741,093) 46,741 $(278,164) $1,833,975
Issuance of
common stock 300,000 30,000 490,375 -- -- -- 520,375
Net loss -- -- -- (22,008) -- -- (22,008)
________________________________________________________________________________
BALANCE,
December 31, 1993 2,681,579 268,159 8,105,448 (5,763,101) 46,741 (278,164) 2,332,342
Acquisition of
treasury stock -- -- -- -- 342,857 (308,571) (308,571)
Net loss -- -- -- (148,266) -- -- (148,266)
________________________________________________________________________________
BALANCE,
December 31, 1994 2,681,579 268,159 8,105,448 (5,911,367) 389,598 (586,735) 1,875,505
Net profit -- -- -- 29,811 -- -- 29,811
BALANCE,
December 31, 1995 2,681,579 $268,159 $8,105,448 $(5,881,556) 389,598 $(586,735) $1,905,316
===============================================================================
The accompanying notes are an integral part of the financial statements.
IMMUCELL CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31,
1995 1994 1993
___________________________________
CASH FLOWS FROM OPERATING ACTIVITIES:
Net profit (loss) $ 29,811 $ (148,266) $ (22,008)
Adjustments to reconcile net
profit (loss) to net cash
provided by (used for)
operating activities-
Depreciation and amortization 182,834 169,502 97,353
Changes in:
Accounts receivable 43,646 (33,463) (142,186)
Inventories (70,672) (98,311) 247,376
Prepaid expenses and accrued
interest 8,346 (10,058) 4,758
Accounts payable 77,605 (43,861) 608
Accrued expenses and deferred
income 26,447 80,486 (56,773)
Net cash provided by (used
for) operating activities 298,017 (83,971) 129,128
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of equipment, building
and improvements, net (77,318) (417,187) (408,151)
Decrease (Increase) in other assets 8,152 (8,152) 3,558
Net cash used for investing
activities (69,166) (425,339) (404,593)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from debt obligations 200,000 530,000 355,000
Payments of debt obligations (166,068) (141,275) (430)
Proceeds from sale of common stock -- 285,000 277,500
Stock issuance costs (8,018) (20,108) (14,000)
Acquisition of treasury stock -- (308,571) --
Net cash provided by financing
activities 25,914 345,046 618,070
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 254,765 (164,264) 342,605
BEGINNING CASH AND CASH
EQUIVALENTS 1,295,246 1,459,510 1,116,905
ENDING CASH AND CASH
EQUIVALENTS $1,550,011 $1,295,246 $1,459,510
===================================
CASH PAID FOR INTEREST $ 73,945 $ 40,290 $ 3,697
===================================
The accompanying notes are an integral part of the financial statements.
IMMUCELL CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) BUSINESS OPERATIONS
ImmuCell Corporation (the "Company") is a biotechnology company that
primarily develops, manufactures and markets milk-derived passive antibody
products to prevent and/or treat gastrointestinal infections in both humans
and animals.
The Company was originally incorporated in Maine in 1982 and reincorporated in
Delaware in March 1987. In May 1987, the Company raised approximately
$5,300,000 in net proceeds from its initial public offering. In September
1992, the Company raised $600,000 from the sale of 342,857 shares of the
Company's common stock, which shares were repurchased by the Company for the
aggregate consideration of $308,571 in December 1994 (see Note 6(a)). In
December 1993, the Company sold 300,000 shares of common stock for $562,500 to
an investment group lead by the Redwood MicroCap Fund of Colorado Springs,
Colorado.
The Company is subject to certain risks associated with its stage of
development including dependence on key individuals, competition from other
larger companies, the successful marketing of existing products and the
development of additional commercially viable products.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(A) CONSOLIDATION PRINCIPLES
The consolidated financial statements of the Company include the
accounts of the Company and its wholly-owned subsidiary, the Kamar Marketing
Group, Inc. All intercompany accounts and transactions have been eliminated
in consolidation. Certain amounts in the 1993 financial statements have been
reclassified to conform with the 1995 and 1994 financial statement
presentation.
(B) CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investment instruments
purchased with an original maturity of three months or less to be cash
equivalents.
(C) INVENTORIES
Inventories include raw materials, work-in-process and finished goods and
are recorded at the lower of standard cost which approximates cost on the
first-in, first-out method or market (net realizable value). Work-in-
process and finished goods inventories include materials, labor and
manufacturing overhead.
Inventories consist of the following:
December 31,
1995 1994
Raw materials $ 69,297 $ 38,575
Work-in-process 513,956 451,137
Finished goods 52,950 75,819
--------- ---------
$636,203 $565,531
========= =========
(D) EQUIPMENT, BUILDING AND IMPROVEMENTS
The Company provides for depreciation and amortization on the straight-
line method by charges to operations in amounts estimated to allocate the cost
of the assets over their estimated useful lives, generally equal to five to ten
years for equipment and ten years for building improvements. The cost of the
building is being depreciated over 30 years.
(E) REVENUE RECOGNITION
Revenues related to the sale of manufactured products are recorded at
the time of shipment to the customer. Collaborative research and development
revenue and income on government research grants is recognized under the
percentage-of-completion method. Percentages of completion are determined by
relating the actual cost of work performed to date to the estimated total cost
that the Company is obligated to incur under the applicable agreement.
Indirect costs which are billed to the government are subject to their review.
All related research and development costs are expensed as incurred, as are all
patent costs.
(F) NET PROFIT (LOSS) PER COMMON SHARE
The 1994 and prior net losses per common share have been computed by
dividing the net loss by the weighted average number of common shares
outstanding during the year. Common stock equivalents outstanding have not
been included in the computation, as the effect would be antidilutive, thereby
decreasing the net loss per common share. The 1995 net profit per common share
has been computed by dividing the net profit by the weighted average
number of common shares outstanding during the year. The effect of including
common stock equivalents outstanding in this computation was less than $.01 per
share.
(G) USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the period.
Actual amounts could differ from those estimates.
(3)ACCRUED EXPENSES
Accrued expenses consisted of the following:
December 31,
1995 1994
Accrued royalties $ 66,166 $ 67,604
Accrued professional fees 53,525 50,617
Accrued payroll 55,603 58,500
Accrued stock issuance costs -- 8,018
Accrued other 75,118 63,542
-------- ---------
$250,412 $248,281
======== ========
(4) DEBT OBLIGATIONS
The Company has long term debt obligations, net of current maturities,
as follows:
December 31,
1995 1994
10.27% Note payable to bank, collateralized by accounts
receivable, inventory and certain fixed assets,
due 1996 to 1998 $375,420 $483,371
9.5% Bank mortgage, collateralized by first security
interest in building, due 1996 to 2000 212,044 215,784
9.62% Note payable to bank, collateralized by accounts
receivable, inventory and certain fixed assets, due 1996
to 1999 189,763 --
9.5% Mortgage, collateralized by second security interest
in building -- 44,140
777,227 743,295
Less current portion 168,884 113,528
-------- --------
Long term debt $608,343 $629,767
======== ========
Principal payments under the above debt obligations due subsequent to
December 31, 1995 are approximately as follows: $169,000 (1996); $187,000
(1997); $181,000 (1998); $50,000 (1999); and $190,000 (2000).
(5) INCOME TAXES
The Company adopted Financial Accounting Standards Board (FASB)
Statement No. 109 effective January 1, 1993. Adoption of the Statement had no
impact on the financial statements as the Company provided a valuation
allowance for its net deferred tax assets at January 1, 1993.
The Company has no net deferred taxes at December 31, 1995 as the net
deferred tax assets (consisting of the tax effect of net operating loss
carryforwards amounting to approximately $2,108,000, the tax credit
carryforwards of approximately $207,000 and temporary differences relating
principally to depreciation) have been fully reserved for due to the
uncertainty of future taxable income.
At December 31, 1995, the Company had available net operating loss
carryforwards of approximately $5,270,000. The Company also had available at
December 31, 1995 approximately $207,000 of tax credits to reduce future
federal income taxes, if any. The operating loss and tax credit carryforwards
expire in 1998 through 2008. These carryforwards are subject to review and
possible adjustment by the Internal Revenue Service. The Tax Reform
Act of 1986 contains provisions which may limit the net operating loss
carryforwards available to be used in any given year in the event of certain
significant changes in ownership interests. The Company does not believe that
the cumulative effect of all ownership changes to date will reduce the
availability of its net operating loss carryforwards.
(6) STOCKHOLDERS' EQUITY
(A) ACQUISITION OF TREASURY STOCK
In December 1994, The Company repurchased the 342,857 shares of its
common stock held by Cambridge Biotech Corporation for the aggregate
consideration of $308,571. These shares represented approximately 13% of
the Company's common stock prior to the repurchase.
(B) STOCK WARRANTS AND OPTIONS
In April 1992, a total of 200,000 nonqualified stock options were issued
to three employees of the Company at $1.05 per share, the then current market
price of the Company's common stock. These options, which were granted outside
of the stock option plans described below, expire in April 2002. Half of these
options became exercisable in April 1993, and the remaining half became
exercisable in April 1994.
In November 1994, the Company entered into a non-exclusive investment
banking contract with Redwood MicroCap Fund of Colorado Springs, Colorado ("
Redwood"). As compensation for services provided under this contract, the
Company issued 30,000 non-qualified stock options to Redwood, which are
exercisable at $1.45 per share as to 10,000 shares on and after November 2,
1995, an additional 10,000 shares on and after November 2, 1996, and
the remaining 10,000 shares on and after November 2, 1997. The options expire
completely to the extent not exercised on or before November 2, 1999.
(C) STOCK OPTION PLANS
In May 1989, the stockholders approved the 1989 Stock Option and
Incentive Plan (the "1989 Plan") pursuant to the provisions of the Internal
Revenue Code of 1986, under which employees may be granted options to purchase
shares of the Company's common stock at i) no less than fair market value on
the date of grant in the case of incentive stock options and ii) no less than
85% of fair market value on the date of grant in the case of non-qualified
stock options. 90,000 shares of common stock were originally reserved for
issuance under the 1989 Plan; the stockholders of the Company approved an
increase in this number to 190,000 shares at the August 1992 Annual Meeting and
a further increase in this number to 290,000 shares at the June 1994 Annual
Meeting. All options granted under the 1989 Plan expire no later than ten
years from the date of grant.
In February 1990, the Board of Directors adopted the 1990 Stock Option
Plan for Outside Directors (the "1990 Plan"). The 1990 Plan was approved by
the stockholders of the Company on July 23, 1990. Under the 1990 Plan,
each director who was not an employee of the Company on the date the Plan was
adopted was automatically granted a non-qualified stock option to purchase
2,250 shares of common stock at fair market value on the day preceding the
date of the grant. Directors who were newly elected to the Board subsequent to
that date received an automatic grant of an option to purchase 2,250 shares, at
the fair market value on the day preceding the date of the grant. All options
granted under the 1990 Plan expire no later than five years from the date of
grant. The 1990 Plan expired on February 2, 1995, and no further grants of
options maybe made under the 1990 Plan.
In February 1995, the Board of Directors adopted the 1995 Stock Option
Plan for Outside Directors (the "1995 Plan"). The 1995 Plan was approved by the
stockholders of the Company on June 23, 1995. Under the 1995 Plan, each
director who was not an employee of the Company on the date the Plan was
adopted was automatically granted a non-qualified stock option to purchase
8,000 shares of common stock at its fair market value on the date of the grant.
Directors who are newly elected to the Board subsequent to February 1995
receive an automatic grant of an option to purchase 8,000 shares, at fair
market value on the date when such directors are first elected to the
Board by the stockholders. As of February 1995, 64,000 shares of common stock
were reserved for issuance under the 1995 Plan. Options to purchase an
aggregate of 40,000 shares were automatically granted on the date the Plan
was adopted by the Board of Directors. Of these 40,000 options,
8,000 terminated in September 1995. Options to purchase another 8,000 shares
were automatically granted on June 23, 1995. One half of the shares subject to
the options will become exercisable after the 1996 Annual Meeting of
Stockholders, and the remaining half of the shares subject to the options will
become exercisable after the 1997 Annual Meeting of Stockholders. All options
granted under the 1995 Plan expire no later than five years from the date of
grant.
Activity under the stock option plans described above, was as follows:
1989 Plan 1990 Plan 1995 Plan Option Price Per Share
Balance,
December 31, 1992 85,000 11,250 $ .59 - $9.38
Grants 58,500 -- 1.38 - 1.47
Terminations (8,000) (2,250) .91 - 7.81
Balance,
December 31, 1993 135,500 9,000 .59 - 9.38
Grants 22,500 2,250 2.00 - 2.25
Terminations (4,000) (2,250) .91 - 2.09
Balance,
December 31, 1994 154,000 9,000 -- .59 - 9.38
Grants 84,000 -- 48,000 1.25 - 2.19
Terminations (46,750) (6,750) (8,000) .91 - 9.38
Balance,
December 31, 1995 191,250 2,250 40,000 .59 - 2.19
======= ======= ======= ===============
Exercisable,
December 31, 1995 83,216 2,250 0 $ .59 - $1.53
======== ======= ======= ===============
At December 31, 1995, approximately 586,250 common shares were reserved
for future issuance under all warrants, stock options and stock option plans
described above.
(D) COMPLIANCE WITH FINANCIAL ACCOUNTING STANDARDS BOARD NEW ACCOUNTING
STANDARD
In 1995, the Financial Accounting Standards Board issued "Statement of
Financial Accounting Standard (SFAS) No. 123 - Accounting for Stock Based
Compensation". This statement requires a fair value based method of accounting
for employee stock options and similar equity instruments. It also permits a
Company to continue to measure compensation expense for such plans using the
intrinsic value based method as prescribed by APB Opinion No. 25, "Accounting
for Stock Issued to Employees". Companies electing to continue following the
accounting rules of APB No. 25 must make pro forma disclosures of net income
and earnings per share, as if the fair value based method for accounting as
defined in SFAS No. 123 had been applied. The Company has elected to continue
to measure its cost using APB No. 25 and, as required, will disclose the impact
of SFAS No. 123 with its 1996 financial statements.
(E) COMMON STOCK RIGHTS PLAN
On September 5, 1995, the Board of Directors of the Company adopted a
Common Stock Rights Plan and declared a dividend of one common share purchase
right (a "Right") for each of the then outstanding shares of the common stock
of the Company. The dividend was distributed to the shareholders of record as
of the close of business on September 19, 1995. Each Right entitles the
registered holder to purchase from the Company one share of common stock at an
initial purchase price of $70.00 per share, subject to adjustment. The
description and terms of the Rights are set forth in a Rights Agreement between
the Company and American Stock Transfer & Trust Co., as Right Agent.
The Rights become exercisable and transferrable apart from the common
stock upon the earlier of (i) 10 days following a public announcement that a
person or group (acquiring person) has, without the prior consent of
the Continuing Directors (as such term is defined in the Rights Agreement),
acquired beneficial ownership of 15 percent or more of the outstanding common
stock, or (ii) 10 days following commencement of a tender offer or exchange
offer the consummation of which would result in ownership by a person or group
of 20% or more of the outstanding common stock (the earlier of such dates being
called the "Distribution Date").
Upon the acquisition of 15% or more of the Company's common stock by an
acquiring person, the holder of each Right not owned by the acquiring person
would be entitled to purchase common stock having a market value equal to two
times the exercise price of the Right (i.e., at a 50 percent discount). If,
after the Distribution Date, the Company should consolidate or merge with any
other entity and the Company were not the surviving company, or, if the Company
were the surviving company, all or part of the Company's common stock were
changed or exchanged into the securities of any other entity, or if more than
50% of the Company's assets or earning power were sold, each Right would
entitle its holder to purchase, at the Rights' then-current purchase price, a
number of shares of the acquiring company's common stock having a market value
at that time equal to twice the Right's exercise price.
At any time after a person or group becomes an acquiring person and
prior to the acquisition by such person or group of 50% or more of the
outstanding common stock, the Board of Directors of the Company may exchange
the Rights (other than Rights owned by such person or group which have become
void), in whole or in part, at an exchange ratio of one share of common stock
per Right (subject to adjustment).
At any time prior to fourteen days following the date that any person
or group becomes an acquiring person, the Board of Directors of the Company may
redeem the then outstanding Rights in whole, but not in part, at a price of
$.005 per Right, subject to adjustment. The Rights will expire on the earlier
of (i) the close of business on September 19, 2005, or (ii) the time at which
the Rights are redeemed by the Company.
(7) SEGMENT AND SIGNIFICANT CUSTOMER INFORMATION
The Company operates in the single business segment described in Note
1. The Company's primary customers for the majority of its current product
sales (67%) are in the United States dairy and beef industries. Revenues
derived from foreign customers, who are also in the dairy and beef industries,
were approximately $862,000, $952,000 and $820,000 during the years ended
December 31, 1995, 1994 and 1993, respectively.
Collaborative research and development revenue comprised less than
1%($10,000), 6% ($250,000) and 7% ($260,000) of total revenues in the years
ended December 31, 1995, 1994 and 1993, respectively. Government grant
income amounted to approximately 12% ($577,000), 5% ($204,000) and less than 1%
($6,000) of total revenues in the years ended December 31, 1995, 1994 and 1993,
respectively.
(8) COMMITMENTS AND CONTINGENCIES
The Company currently leases a manufacturing and warehouse facility and
had leased office and research space in a second building prior to purchasing
that building in November 1993, both under operating leases. Costs incurred
under operating lease (primarily rent and real estate taxes) totaled
approximately $24,000, $24,000 and $56,000 in 1995, 1994, and 1993,
respectively. The lease for the manufacturing and warehouse facility expires
in March 1996. Minimum non-cancelable rental payments under the lease total
approximately $6,000 in 1996. In connection with the consolidation of the
Company's operations into the building that it owns, the Company has committed
to incur approximately $200,000 in building improvement and modification costs.
Additionally, the Company has entered into purchase commitments for certain
manufacturing and research equipment aggregating approximately $200,000.
In order to maintain an exclusive world-wide license to the use of a
certain milk whey purification machine for all milk purification applications,
the Company must meet certain performance requirements, including the purchase
of a machine valued at approximately $450,000 by June 1996.
The Company has entered into employment contracts with its three
executive officers which could require the Company to pay from two to four
months' salary as severance pay depending upon the circumstances of any
termination of employment of these key employees.
In December 1993, the Company entered into a renewal of its service and
license agreement effective through December 31, 1999 with Kamar, Inc. whereby
Kamar will continue to provide the Company warehousing, distribution
and certain other services and the Company will continue to market a certain
bovine heat detection device under an exclusive world-wide license. The
renewal agreement is cancelable by either party upon twelve months written
notice. The Company is committed to pay Kamar a monthly fee for distribution
services and related license fees of $19,630 until the license agreement is
canceled. Royalties paid on sales made during the years ended December 31,
1995, 1994 and 1993 were $178,000, $192,000 and $159,000, respectively.
The research, manufacturing and marketing of human and animal health
care products by the Company entail an inherent risk that liability claims will
be asserted against the Company. The Company feels it has adequate levels of
liability insurance to support its operations.
(9) EMPLOYEE BENEFITS
The Company has a 401(k) savings plan in which all employees completing
one year of service with the Company (working at least 1,000 hours) are
eligible to participate. Participants may contribute up to 20% of their
annual compensation to the plan, subject to certain limitations. In 1993, the
Company implemented a dollar-for-dollar match of the first $400 contributed by
each employee to the plan. Under this matching contribution program, the
Company paid the aggregate of $5,600 to the plan in December 1993. Beginning
January 1, 1994, the Company has matched 50% of each employee's contribution to
the plan up to a maximum match of 3% of each employee's compensation. Under
this matching contribution program, the Company paid the aggregate of $23,000
and $21,000 to the plan for the years ended December 31, 1995 and 1994,
respectively. The Company intends to continue this same matching contribution
program in 1996.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
IMMUCELL
CORPORATION
Date: March 27, 1996 By: /s/ Thomas C. Hatch
Thomas C. Hatch
President,
Chief Executive Officer
and Director
POWER OF ATTORNEY
We, the undersigned directors and officers of ImmuCell Corporation hereby
severally constitute and appoint Thomas C. Hatch and Michael F. Brigham, and
each of them (with full power to each of them to act alone), our true and
lawful attorneys-in-fact and agents, with full power of substitution and
resubstitution, for us and in our stead, in any and all capacities, to sign any
and all amendments to this report and all documents relating thereto, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing necessary or advisable to be done in
and about the premises, as fully to all intents and purposes as he might
or could do in person, hereby ratifying and confirming all that said attorneys-
in-fact and agents, or any of them, or their substitute or substitutes, may
lawfully do or to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Date: March 27, 1996 By: /s/ Michael F. Brigham
Michael F. Brigham
Chief Financial Officer,
Treasurer & Secretary
Date: March 27, 1996 By: /s/ Anthony B. Cashen
Anthony B. Cashen, Director
Date: March 27, 1996 By: /s/ Thomas C. Hatch
Thomas C. Hatch
President,
Chief Executive Officer & Director
Date: March 27, 1996 By: /s/ George W. Masters
George W. Masters, Director
Date: March 27, 1996 By: /s/ William H. Maxwell
William H. Maxwell, M.D., Director
Date: March 27, 1996 By: /s/ John R. McKernan, Jr.
John R. McKernan, Jr., Director
Date: March 27, 1996 By: /s/ Mitchel Sayare
Mitchel Sayare, Director
IMMUCELL CORPORATION AND SUBSIDIARY
Exhibit Index
3.3 Bylaws of the Registrant as amended.
10.28 Amendment No. 4 to Agreement for Exclusivity between Advanced
Separation Technologies, Inc. and the Registrant dated
November 15, 1995.
10.29 Option Agreement dated November 22, 1995 between the Registrant and
Agri-Mark, Inc. of Methuen, Massachusetts.
10.30{+} Employment Agreement dated November 1991 between the Registrant and
Joseph H. Crabb.
10.31{+} Amendment, dated March 1992, to Employment Agreement dated November
1991, between the Registrant and Joseph H. Crabb.
10.32{+} Amendment, dated April 1992, to Employment Agreement dated November
1991, between the Registrant and Joseph H. Crabb.
27.1 Financial Data Schedule.
IMMUCELL CORPORATION AND SUBSIDIARY
Exhibit 3.3
Bylaws of the Registrant as amended.
By-Laws of
IMMUCELL CORPORATION
A Delaware Corporation
As amended through March 8, 1996
Table of Contents
Page
ARTICLE I MEETINGS OF STOCKHOLDERS ...................................1
Section 1. Place of Meetings ..........................................1
Section 2. Annual Meeting .............................................1
Section 3. Special Meetings ...........................................1
Section 4. Notice of Meetings .........................................1
Section 5. Voting List ................................................2
Section 6. Quorum .....................................................2
Section 7. Adjournments ...............................................2
Section 8. Action at Meetings .........................................2
Section 9. Voting and Proxies .........................................2
Section 10. Action Without Meeting .....................................3
Section 11. Nomination of Directors ....................................3
Section 12. Notice of Stockholder Business .............................4
ARTICLE II DIRECTORS ..........................................5
Section 1. Number, Election, Tenure and Qualification .........5
Section 2. Enlargement ........................................5
Section 3. Vacancies ..........................................5
Section 4. Resignation and Removal ............................5
Section 5. General Powers .....................................6
Section 6. Chairman of the Board ..............................6
Section 7. Place of Meetings ..................................6
Section 8. Regular Meetings ...................................6
Section 9. Special Meetings ...................................6
Section 10. Quorum, Action at Meeting, Adjournments ............6
Section 11. Action by Consent ..................................7
Section 12. Telephonic Meetings ................................7
Section 13. Committees .........................................7
Section 14. Compensation .......................................7
ARTICLE III OFFICERS ...........................................8
Section 1. Enumeration ................................................8
Section 2. Election ...........................................8
Section 3. Tenure .............................................8
Section 4. President ..........................................8
Section 5. Vice-Presidents ....................................9
Section 6. Secretary ..........................................9
Section 7. Assistant Secretaries ..............................9
Section 8. Treasurer ..........................................9
Section 9. Assistant Treasurers ..............................10
Section 10. Bond ..............................................10
ARTICLE IV NOTICES ...........................................10
Section 1. Delivery ..........................................10
Section 2. Waiver of Notice ..................................11
ARTICLE V INDEMNIFICATION ...........................................11
Section 1. Actions other than by or in the Right of the
Corporation ......................................11
Section 2. Actions by or in the Right of the Corporation .....11
Section 3. Success on the Merits .............................12
Section 4. Specific Authorization ............................12
Section 5. Advance Payment ...................................12
Section 6. Non-Exclusivity ...................................12
Section 7. Insurance .........................................12
Section 8. Continuation of Indemnification and Advancement
of Expenses ......................................12
Section 9. Intent of Article .................................13
ARTICLE VI CAPITAL STOCK .....................................13
Section 1. Certificates of Stock .............................13
Section 2. Lost Certificates .................................13
Section 3. Transfer of Stock .................................13
Section 4. Record Date .......................................14
Section 5. Registered Stockholders ...........................15
ARTICLE VII CERTAIN TRANSACTIONS ......................................15
Section 1. Transactions with Interested Parties ..............15
Section 2. Quorum ............................................15
ARTICLE VIII GENERAL PROVISIONS ........................................16
Section 1. Dividends .........................................16
Section 2. Reserves ..........................................16
Section 3. Checks ............................................16
Section 4. Fiscal Year .......................................16
Section 5. Seal ..............................................16
ARTICLE IX AMENDMENTS ........................................16
IMMUCELL CORPORATION
* * * * *
BY- LAWS
* * * * *
ARTICLE I
MEETINGS OF STOCKHOLDERS
Section 1. Place of Meetings. All meetings of the stockholders
shall he held at such place within or without the State of Delaware as may be
fixed from time to time by the board of directors or the chief executive
officer, or if not so designated, at the registered office of the corporation.
Section 2. Annual Meeting. Commencing in calendar year 1988,
annual meetings of stockholders shall be held on the third Tuesday in May in
each year if not a legal holiday, and if a legal holiday, then on the next
secular day following, at 10:00 a.m., or at such other date and time as shall
be designated from time to time by the board of directors or the chief
executive officer, at which meeting the stockholders shall elect by a plurality
vote a board of directors and shall transact such other business as may
properly be brought before the meeting. If no annual meeting is held in
accordance with the foregoing provisions, the board of directors shall cause
the meeting to be held as soon thereafter as convenient, which meeting shall be
designated a special meeting in lieu of annual meeting.
Section 3. Special Meetings. Special meetings of the stockholders,
for any purpose or purposes, may, unless otherwise prescribed by statute or by
the certificate of incorporation, be called by the board of directors or the
chief executive officer and shall be called by the chief executive officer or
secretary at the request in writing of a majority of the board of directors, or
at the request in writing of stockholders owning a majority in amount of the
entire capital stock of the corporation issued and outstanding and entitled to
vote. Such request shall state the purpose or purposes of the proposed
meeting. Business transacted at any special meeting shall be limited
to matters relating to the purpose or purposes stated in the notice of meeting.
Section 4. Notice of Meetings. Except as otherwise provided by
law, written notice of each meeting of stockholders, annual or special, stating
the place, date and hour of the meeting and, in the case of a special meeting,
the purpose or purposes for which the meeting is called, shall be given not
less than ten or more than sixty days before the date of the meeting, to each
stockholder entitled to vote at such meeting.
Section 5. Voting List. The officer who has charge of the stock
ledger of the corporation shall prepare and make, at least ten days before
every meeting of stockholders, a complete list of the stockholders entitled to
vote at the meeting, arranged in alphabetical order, and showing the address of
each stockholder and the number of shares registered in the name of each
stockholder. Such list shall be open to the examination of any stockholder,
for any purpose germane to the meeting, during ordinary business hours, for a
period of at least ten days prior to the meeting, either at a place within the
city or town where the meeting is to be held, which place shall be specified in
the notice of the meeting, or, if not so specified, at the place where the
meeting is to be held. The list shall also be produced and kept at the time
and place of the meeting during the whole time thereof, and may be inspected by
any stockholder who is present.
Section 6. Quorum. The holders of one-third of the stock issued
and outstanding and entitled to vote thereat, present in person or represented
by proxy, shall constitute a quorum at all meetings of the stockholders for the
transaction of business, except as otherwise provided by statute, the
certificate of incorporation or these by-laws.
Section 7. Adjournments. Any meeting of stockholders may be
adjourned from time to time to any other time and to any other place at which a
meeting of stockholders may be held under these by-laws, which time and place
shall be announced at the meeting, by a majority of the stockholders present in
person or represented by proxy at the meeting and entitled to vote, though less
than a quorum, or, if no stockholder is present or represented by proxy, by any
officer entitled to preside at or to act as secretary of such meeting, without
notice other than announcement at the meeting, until a quorum shall be present
or represented. At such adjournment meeting at which a quorum shall be present
or represented, any business may be transacted which might have been transacted
at the original meeting. If the adjournment is for more than thirty days, or if
after the adjournment a new record date is fixed for the adjourned meeting, a
notice of the adjourned meeting shall be given to each stockholder of record
entitled to vote at the meeting.
Section 8. Action at Meetings. Except with respect to the election
of directors, when a quorum is present at any meeting, the vote of the holders
of a majority of the stock present in person or represented by proxy and
entitled to vote on the question shall decide any question brought before such
meeting, unless the question is one upon which by express provision of law,
the certificate of incorporation or these bylaws, a different vote is required,
in which case such express provision shall govern and control the decision of
such question. Unless otherwise provided in the certificate of incorporation
or by express provision of law, directors shall be elected by a plurality of
the votes of the shares present in person or represented by proxy at the
meeting and entitled to vote on the election of directors.
Section 9. Voting and Proxies. Unless otherwise provided in the
certificate of incorporation, each stockholder shall at every meeting of the
stockholders be entitled to one vote for each share of capital stock having
voting power held of record by such stockholder. Each stockholder entitled to
vote at a meeting of stockholders, or to express consent or dissent to
corporate action in writing without a meeting, may authorize another person or
persons to act for him by proxy, but no such proxy shall be voted or acted upon
after three years from its date, unless the proxy provides for a longer period.
Section 10. Action Without Meeting. Unless otherwise provided in
the certificate of incorporation, any action required to be taken at any annual
or special meeting of such stockholders, may be taken without a meeting,
without prior notice and without a vote, if a consent or consents in writing,
setting forth the action so taken, shall be signed by the holders of
outstanding stock having not less than the minimum number of votes that would
be necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted and shall be delivered to the
corporation by delivery to its registered office in Delaware, its principal
place of business, or an officer or agent of the corporation having custody
of the book in which proceedings of meetings of stockholders are recorded.
Delivery made to a corporation's registered office shall be by hand or
certified or registered mail, return receipt requested. Every written consent
shall bear the date of signature of each stockholder or member who signs the
consent and no written consent shall be effective to take the corporate action
referred to therein unless, within sixty days of the earliest dated consent
delivered in the manner provided for herein to the corporation, written
consents signed by a sufficient number of holders or members to take action are
delivered to the corporation by delivery to its registered office in
Delaware, its principal place of business, or an officer or agent of the
corporation having custody of the book in which proceedings of meetings of
stockholders are recorded. Delivery made to a corporation's registered office
shall be by hand or by certified or registered mail, return receipt requested.
Prompt notice of the taking of the corporate action without a meeting by less
than unanimous written consent shall be given to those stockholders or members
who have not consented in writing.
Section 11. Nomination of Directors. (a) Only persons who are
nominated in accordance with the procedures set forth in this Section 11 shall
be eligible for election as directors. Nominations of persons for election to
the board of directors of the corporation may be made at a meeting of
stockholders (i) by or at the direction of the board of directors or (ii) by
any stockholder of the corporation entitled to vote for the election of
directors at the meeting who complies with the notice procedures set forth in
this Section 11.
(b) Nominations by stockholders shall be made pursuant to
timely notice in writing to the secretary of the corporation. To be timely, a
stockholder's notice shall be delivered to or mailed and received at the
principal executive offices of the corporation (i) in the case of an
annual meeting, not less than 60 days nor more than 90 days prior to the first
anniversary of the preceding year's annual meeting; provided, however, that in
the event that the date of the annual meeting is changed by more than 30 days
from such anniversary date, notice by the stockholder to be timely must be so
received not later than the close of business on the 10th day following the
earlier of the day on which notice of the date of the meeting was mailed or
public disclosure was made, and (ii) in the case of a special meeting at which
directors are to be elected, not later than the close of business on the 10th
day following the earlier of the day on which notice of the date of the meeting
was mailed or public disclosure was made. Such stockholder's notice shall set
forth (i) as to each person whom the stockholder proposes to nominate for
election or re-election as a director, (1) the name, age, business address and
residence address of such person, (2) the principal occupation or employment of
such person, (3) the class and number of shares of the corporation which are
beneficially owned by such person and (4) any other information relating
to such person that is required to be disclosed in solicitations of proxies for
election of directors, or is otherwise required, in each case pursuant to
Regulation 14A under the Securities Exchange Act of 1934, as amended (including
without limitation such persons' written consent to being named in the proxy
statement as a nominee and to serving as a director if elected); and (ii) as to
the stockholder giving the notice (1) the name and address, as they appear on
the corporation's books, of such stockholder and (2) the class and number of
shares of the corporation which are beneficially owned by such stockholder. At
the request of the board of directors any person nominated by the board of
directors for election as a director shall furnish to the secretary of the
corporation that information required to be set forth in a stockholder's notice
of nomination which pertains to the nominee.
(c) No person shall be eligible for election as a director
of the corporation unless nominated in accordance with the procedures set forth
in this Section 11. The chairman of the meeting shall, if the facts warrant,
determine and declare to the meeting that a nomination was not made in
accordance with the procedures prescribed by these by-laws, and if he should so
determine, he shall so declare to the meeting and the defective nomination
shall be disregarded. Notwithstanding the foregoing provisions of this by-law,
a stockholder shall also comply with all applicable requirements of the
Securities Exchange Act of 1934, as amended, and the rules and regulations
thereunder with respect to the matters set forth in this by-law.
Section 12. Notice of Stockholder Business.(a) At an annual meeting
of the stockholders, only such business shall be conducted as shall have been
properly brought before the meeting. To be properly brought before an annual
meeting business must be (i) specified in the notice of meeting (or any
supplement thereto) given by or at the direction of the board of directors,
(ii) otherwise properly brought before the meeting by or at the direction of
the board of directors, or (iii) otherwise properly brought before the meeting
by a stockholder. For business to be properly brought before an annual meeting
by a stockholder, the stockholder must have given timely notice thereof in
writing to the secretary of the corporation. To be timely, a stockholder's
notice must be delivered to or mailed and received at the principal executive
offices of the corporation, not less than 60 days nor more than 90 days prior
to the first anniversary of the preceding year's annual meeting; provided,
however, that in the event that the date of the meeting is changed by more than
30 days from such anniversary date, notice by the stockholder to be timely must
be so received not later than the close of business on the 10th day following
the earlier of the day on which notice of the date of the annual meeting was
mailed or public disclosure was made. A stockholder's notice to the secretary
shall set forth as to each matter the stockholder proposes to bring before the
annual meeting (i) a brief description of the business desired to be brought
before the annual meeting and the reasons for conducting such business at
the annual meeting, (ii) the name and address, as they appear on the
corporation's books, of the stockholder proposing such business, (iii) the
class and number of shares of the corporation which are beneficially owned by
the stockholder, and (iv) any material interest of the stockholder in such
business.
(b) Notwithstanding anything in these by-laws to the
contrary, no business shall be conducted at any annual meeting except in
accordance with the procedures set forth in this Section 12. The chairman of
the annual meeting shall, if the facts warrant, determine and declare to the
meeting that business was not properly brought before the meeting and in
accordance with the provisions of this Section 12, and if he should so
determine, he shall so declare to the meeting and any such business not
properly brought before the meeting shall not be transacted. Notwithstanding
the foregoing provisions of this by-law, a stockholder shall also comply with
all applicable requirements of the Securities Exchange Act of 1934, as amended,
and the rules and regulations thereunder with respect to the matters set forth
in this by-law.
ARTICLE II
DIRECTORS
Section 1. Number, Election, Tenure and Qualification. The
corporation shall have not less than three (3) nor more than fifteen (15)
directors. The number of directors may be increased or decreased from time to
time by resolution of the board of directors but no decrease shall have the
effect of shortening the term of any incumbent director. The directors shall
be elected at the annual meeting or at any special meeting of the stockholders,
except as provided in Section 3 of this Article, and each director elected
shall hold office until his successor is elected and qualified, unless sooner
displaced. Directors need not be stockholders.
Section 2. Enlargement. The number of the board of directors may
be increased at any time by vote of a majority of the directors then in office.
Section 3. Vacancies. Vacancies and newly created directorships
resulting from any increase in the authorized number of directors may be filled
by a majority of the directors then in office, though less than a quorum, or by
a sole remaining director, and the directors so chosen shall hold office until
the next annual election and until their successors are duly elected and
shall qualify, unless sooner displaced. If there are no directors in office,
then an election of directors may be held in the manner provided by statute.
In the event of a vacancy in the board of directors, the remaining directors,
except as otherwise provided by law or these by-laws, may exercise the powers
of the full board until the vacancy is filled.
Section 4. Resignation and Removal. Any director may resign at any
time upon written notice to the corporation at its principal place of business
or to the chief executive officer or secretary. Such resignation shall be
effective upon receipt unless it is specified to be effective at some other
time or upon the happening of some other event. Any director or the entire
board of directors may be removed, with or without cause, by the holders of a
majority of the shares then entitled to vote at an election of directors,
unless otherwise specified by law or the certificate of incorporation.
Section 5. General Powers. The business and affairs of the
corporation shall be managed by its board of directors, which may exercise all
powers of the corporation and do all such lawful acts and things as are not by
statute or by the certificate of incorporation or by these by-laws directed or
required to be exercised or done by the stockholders.
Section 6. Chairman of the Board. If the board of directors
appoints a chairman of the board, he shall, when present, preside at all
meetings of the stockholders and the board of directors. He shall perform such
duties and possess such powers as are customarily vested in him by the board of
directors.
Section 7. Place of Meetings. The board of directors may hold
meetings, both regular and special, either within or without the State of
Delaware.
Section 8. Regular Meetings. Regular meetings of the board of
directors may be held without notice at such time and at such place as shall
from time to time be determined by the board; provided that any director who is
absent when such a determination is made shall be given prompt notice of such
determination. A regular meeting of the board of directors may be held
without notice immediately after and at the same place as the annual meeting of
stockholders.
Section 9. Special Meetings. Special meetings of the board may be
called by the chief executive officer, secretary, or on the written request of
two or more directors, or by one director in the event that there is only one
director in office. Two days' notice to each director, either personally or by
telegram, cable, telecopy, commercial delivery service, telex or similar
means sent to his business or home address, or three days' notice by written
notice deposited in the mail, shall be given to each director by the secretary
or by the officer or one of the directors calling the meeting. A notice or
waiver of notice of a meeting of the board of directors need not specify the
purposes of the meeting.
Section 10. Quorum, Action at Meeting, Adjournments. At all meetings
of the board a majority of directors then in office, but in no event less than
one third of the entire board, shall constitute a quorum for the transaction of
business and the act of a majority of the directors present at any meeting at
which there is a quorum shall be the act of the board of directors, except as
may be otherwise specifically provided by law or by the certificate of
incorporation. For purposes of this section, the term "entire board" shall
mean the number of directors last fixed by the stockholders or directors, as
the case may be, in accordance with law and these by-laws; provided, however,
that if less than all the number so fixed of directors were elected, the
"entire board" shall mean the greatest number of directors so elected to hold
office at any one time pursuant to such authorization. If a quorum shall not
be present at any meeting of the board of directors, a majority of the
directors present thereat may adjourn the meeting from time to time,
without notice other than the announcement at the meeting, until a quorum shall
be present.
Section 11. Action by Consent. Unless otherwise restricted by the
certificate of incorporation or these by-laws, any action required or permitted
to be taken at any meeting of the board of directors or of any committee
thereof may be taken without a meeting, if all members of the board or
committee, as the case may be, consent thereto in writing, and the writing or
writings are filed with the minutes of proceedings of the board or committee.
Section 12. Telephonic Meetings. Unless otherwise restricted by the
certificate of incorporation or these by-laws, members of the board of
directors or of any committee thereof may participate in a meeting of the board
of directors or of any committee, as the case may be, by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and such participation in a
meeting shall constitute presence in person at the meeting.
Section 13. Committees. The board of directors may, by resolution
passed by a majority of the whole board, designate one or more committees, each
committee to consist of one or more of the directors of the corporation. The
board may designate one or more directors as alternate members of any
committee, who may replace any absent or disqualified member at any meeting of
the committee. Any such committee, to the extent provided in the resolution of
the board of directors, shall have and may exercise all the powers and
authority of the board of directors in the management of the business and
affairs of the corporation, and may authorize the seal of the corporation to be
affixed to all papers which may require it; but no such committee shall have
the power or authority in reference to amending the certificate of
incorporation, adopting an agreement of merger or consolidation, recommending
to the stockholders the sale, lease or exchange of all or substantially all of
the corporation's property and assets, recommending to the stockholders a
dissolution of the corporation or a revocation of a dissolution, or amending
the by-laws of the corporation; and, unless the resolution designating
such committee or the certificate of incorporation expressly so provide, no
such committee shall have the power or authority to declare a dividend or to
authorize the issuance of stock. Such committee or committees shall have such
name or names as may be determined from time to time by resolution adopted by
the board of directors. Each committee shall keep regular minutes of its
meetings and make such reports to the board of directors as the board of
directors may request. Except as the board of directors may otherwise
determine, any committee may make rules for the conduct of its business, but
unless otherwise provided by the directors or in such rules, its business shall
be conducted as nearly as possible in the same manner as is provided in
these by-laws for the conduct of its business by the board of directors.
Section 14. Compensation. Unless otherwise restricted by the
certificate of incorporation or these by-laws, the board of directors shall
have the authority to fix from time to time the compensation of directors. The
directors may be paid their expenses, if any, of attendance at each meeting of
the board of directors and the performance of their responsibilities as
directors and may be paid a fixed sum for attendance at each meeting of the
board of directors and/or a stated salary as director. No such payment shall
preclude any director from serving the corporation or its parent or subsidiary
corporations in any other capacity and receiving compensation therefor. The
board of directors may also allow compensation for members of special or
standing committees for service on such committees.
ARTICLE III
OFFICERS
Section 1. Enumeration. The officers of the corporation shall be
chosen by the board of directors and shall be a president, a secretary and a
treasurer and such other officers with such titles, terms of office and duties
as the board of directors may from time to time determine, including a chairman
of the board, one or more vice-presidents, and one or more assistant
secretaries and assistant treasurers. If authorized by resolution of the board
of directors, the chief executive officer may be empowered to appoint from time
to time assistant secretaries and assistant treasurers. Any number of offices
may be held by the same person, unless the certificate of incorporation or
these by-laws otherwise provide.
Section 2. Election. The board of directors at its first meeting
after each annual meeting of stockholders shall choose a president, a secretary
and a treasurer. Other officers may be appointed by the board of directors at
such meeting, at any other meeting, or by written consent.
Section 3. Tenure. The officers of the corporation shall hold
office until their successors are chosen and qualify, unless a different term
is specified in the vote choosing or appointing him, or until his earlier
death, resignation or removal. Any officer elected or appointed by the board
of directors or by the chief executive officer may be removed at any time
by the affirmative vote of a majority of the board or directors or a committee
duly authorized to do so, except that any officer appointed by the chief
executive officer may also be removed at any time by the chief executive
officer. Any vacancy occurring in any office of the corporation may be filled
by the board of directors, at its discretion. Any officer may resign by
delivering his written resignation to the corporation at its principal place of
business or to the chief executive officer or the secretary. Such resignation
shall be effective upon receipt unless it is specified to be effective at some
other time or upon the happening of some other event.
Section 4. President. The president shall be the chief operating
officer of the corporation. He shall also be the chief executive officer
unless the board of directors otherwise provides. The president shall, unless
the board of directors provides otherwise in specific instance or generally,
preside at all meetings of the stockholders and the board of directors, have
general and active management of the business of the corporation and see that
all orders and resolutions of the board of directors are carried into effect.
The president shall execute bonds, mortgages, and other contracts requiring a
seal, under the seal of corporation, except where required or permitted by law
to be otherwise signed and executed and except where the signing and execution
thereof shall be expressly delegated by the board of directors to some other
officer or agent of the corporation.
Section 5. Vice-Presidents. In the absence of the president or in
the event of his inability or refusal to act, the vice-president, or if there
be more than one vice-president, the vice-presidents in the order designated by
the board of directors or the chief executive officer (or in the absence of any
designation, then in the order determined by their tenure in office) shall
perform the duties of the president, and when so acting, shall have all the
powers of and be subject to all the restrictions upon the president. The vice-
presidents shall perform such other duties and have such other powers as the
board of directors or the chief executive officer may from time to time
prescribe.
Section 6. Secretary. The secretary shall have such powers and
perform such duties as are incident to the office of secretary. He shall
maintain a stock ledger and prepare lists of custodian of corporate records.
The secretary shall attend all meetings of the board of directors and all
meetings of the stockholders and record all the proceedings of the meetings of
the corporation and of the board of directors in a book to be kept for that
purpose and shall perform like duties for the standing committees when
required. He shall give, or cause to be given, notice of all meetings of the
stockholders and special meetings of the board of directors, and shall
perform such other duties as may be from time to time prescribed by the board
of directors or chief executive officer, under whose supervision he shall be.
He shall have custody of the corporate seal of the corporation and he, or an
assistant secretary, shall have authority to affix the same to any instrument
requiring it and when so affixed, it may be attested by his signature or by
the signature of such assistant secretary. The board of directors may give
general authority to any other officer to affix the seal of the corporation and
to attest the affixing by his signature.
Section 7. Assistant Secretaries. The assistant secretary, or if
there be more than one, the assistant secretaries in the order determined by
the board of directors, the chief executive officer or the secretary (or if
there be no such determination, then in the order determined by their tenure in
office), shall, in the absence of the secretary or in the event of his
inability or refusal to act, perform the duties and exercise the powers of the
secretary and shall perform the duties and exercise the powers of the secretary
and shall perform such other duties and have such other powers as the board of
directors, the chief executive officer or the secretary may from time
to time prescribe. In the absence of the secretary or any assistant secretary
at any meeting of stockholders or directors, the person presiding at the
meeting shall designate a temporary or acting secretary to keep a record of the
meeting.
Section 8. Treasurer. The treasurer shall perform such duties and
shall have such powers as may be assigned to him by the board of directors or
the chief executive officer. In addition, the treasurer shall perform such
duties and have such powers as are incident to the office of treasurer shall
keep full and accurate accounts of receipts and disbursements in books
belonging to the corporation and shall deposit all moneys and other valuable
effects in the name and to the credit of the corporation in such depositories
as may be designated by the board of directors. He shall disburse the funds of
the corporation as may be ordered by the board of directors, taking proper
vouchers for such disbursements, and shall render to the chief executive
officer and the board of directors, when the chief executive officer or board
of directors so requires, an account of all his transactions as treasurer and
of the financial condition of the corporation.
Section 9. Assistant Treasurers. The assistant treasurer, or if
there shall be more than one, the assistant treasurers in the order determined
by the board of directors, the chief executive officer or the treasurer (or if
there be no such determination, then in the order determined by their
tenure in office), shall, in the absence of the treasurer or in the event of
his inability or refusal to act, perform the duties and exercise the powers of
the treasurer and shall perform such other duties and have such other powers as
the board of directors, the chief executive officer or the treasurer may from
time to time prescribe.
Section 10. Bond. If required by the board of directors, any
officer shall give the corporation a bond in such sum and with such surety or
sureties and upon such terms and conditions as shall be satisfactory to the
board of directors, including without limitation a bond for the faithful
performance of the duties of his office and for the restoration to the
corporation of all books, papers, vouchers, money and other property of
whatever kind in his possession or under his control and belonging to the
corporation.
ARTICLE IV
NOTICES
Section 1. Delivery. Whenever, under the provisions of law, or of
the certificate of incorporation or these by-laws, written notice is required
to given to any director or stockholder, such notice may be given by mail,
addressed to such director or stockholder, at his address as it appears on the
records of the corporation, with postage thereon prepaid, and such notice shall
be deemed to be given at the time when the same shall be deposited in the
United States mail. Unless written notice by mail is required by law, written
notice may also be given by telegram, cable, telecopy, commercial delivery
service, telex or similar means, addressed to such director or stockholder at
his address as it appears on the records of the corporation, in which case such
notice shall be deemed to be given when delivered into the control of the
persons charged with effecting such transmission, the transmission charge to be
paid by the corporation or the person sending such notice and not by the
addressee. Oral notice or other in-hand delivery (in person or by telephone)
shall be deemed given at the time it is actually given.
Section 2. Waiver of Notice. Whenever any notice is required to be
given under the provisions of law or of the certificate of incorporation or of
these by-laws, a waiver thereof in writing, signed by the person or persons
entitled to said notice, whether before or after the time stated therein, shall
be deemed equivalent thereto.
ARTICLE V
INDEMNIFICATION
Section 1. Actions other than by or in the Right of the
Corporation. The corporation shall indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation) by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request or the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceedings, had no reasonable cause to believe his conduct was unlawful.
The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that the person did not act in good
faith and in a manner which he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had reasonable cause to believe that his conduct was unlawful.
Section 2. Actions by or in the Right of the Corporation. The
corporation shall indemnify any person who was or is a party or is threatened
to be made a party to any threatened, pending or completed action or suit by or
in the right of the corporation to procure a judgment in its favor by reason of
the fact that he is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprises against expenses (including attorney's
fees) actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation and except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable for negligence or misconduct in the performance of his duties to the
corporation unless and only to the extent that the Court of Chancery of the
State of Delaware or the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability but in
view of all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Court of Chancery of the
State of Delaware or such other court shall deem proper.
Section 3. Success on the Merits. To the extent that any person
described in Section 1 or 2 of this Article V has been successful on the merits
or otherwise in defense of any action, suit or proceeding referred to in said
Sections, or in defense of any claim, issue or matter therein, he shall be
indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection therewith.
Section 4. Specific Authorization. Any indemnification under
Section 1 or 2 of this Article V (unless ordered by a court) shall be made by
the corporation only as authorized in the specific case upon a determination
that indemnification of any person described in said Sections is proper in the
circumstances because he has met the applicable standard of conduct set forth
in said Sections. Such determination shall be made (1) by the board of
director by a majority vote of a quorum consisting of directors who were not
parties to such action, suit or proceeding, or (2) if such a quorum is not
obtainable, or even if obtainable a quorum of disinterested directors so
directs, by independent legal counsel in a written opinion, or (3) by the
stockholders of the corporation.
Section 5. Advance Payment. Expenses incurred in defending a civil
or criminal action, suit or proceeding may be paid by the corporation in
advance of the final disposition of such action, suit or proceeding upon
receipt of an undertaking by or on behalf of any person described in said
Section to repay such amount if it shall ultimately be determined that he is
not entitled to indemnification by the corporation as authorized in this
Article V.
Section 6. Non-Exclusivity. The indemnification and advancement of
expenses provided by, or granted pursuant to, the other Sections of this
Article V shall not be deemed exclusive of any other rights to which those
provided indemnification or advancement of expenses may be entitled under any
by-law, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office.
Section 7. Insurance. The board of directors may authorize, by a
vote of the majority of the full board, the corporation to purchase and
maintain insurance on behalf of any person who is or was a director, officer,
employee or agent of the corporation, or is or was serving at the request of
the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against any
liability asserted against him and incurred by him in any such capacity, or
arising out of his status as such, whether or not the corporation would have
the power to indemnify him against such liability under the provisions of
this Article V.
Section 8. Continuation of Indemnification and Advancement of
Expenses. The indemnification and advancement of expenses provided by, or
granted pursuant to, this Article V shall continue as to a person who has
ceased to be a director, officer, employee or agent and shall inure to the
benefit of the heirs, executors and administrators of such a person.
Section 9. Intent of Article. The intent of this Article V is to
provide for indemnification and advancement of expenses to the fullest extent
permitted by Section 145 of the General Corporation Law of Delaware. To the
extent that such Section or any successor section may be amended or
supplemented from time to time, this Article V shall be amended automatically
and construed so as to permit indemnification and advancement of expenses to
the fullest extent from time to time permitted by law.
ARTICLE VI
CAPITAL STOCK
Section 1. Certificates of Stock. Every holder of stock in the
corporation shall be entitled to have a certificate, signed by, or in the name
of the corporation by, the chairman or vice-chairman of the board of directors,
or the president or a vice-president and the treasurer or an assistant
treasurer, or the secretary or an assistant secretary of the corporation,
certifying the number of shares owned by him in the corporation. Any or all of
the signatures on the certificate may be a facsimile. In case any officer,
transfer agent or registrar who has signed or whose facsimile signature has
been placed upon a certificate shall have ceased to be such officer,
transfer agent or registrar before such certificate is issued, it may be issued
by the corporation with the same effect as if he were such officer, transfer
agent or registrar at the date of issue. Certificates may be issued for partly
paid shares and in such case upon the face or back of the certificates issued
to represent any such partly paid shares, the total amount of the consideration
to be paid therefor, and the amount paid thereon shall be specified.
Section 2. Lost Certificates. The board of directors may direct a
new certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the corporation alleged to have been lost,
stolen or destroyed. When authorizing such issue of a new certificate or
certificates, the board of directors may, in its discretion and as a condition
precedent to the issuance thereof, require the owner of such lost, stolen or
destroyed certificate or certificates, or his legal representative, to give
reasonable evidence of such loss, theft or destruction, to advertise the same
in such manner as it shall require and/or to give the corporation a bond in
such sum as it may direct as indemnity against any claim that may be made
against the corporation with respect to the certificate alleged to have been
lost, stolen or destroyed or the issuance of such new certificate.
Section 3. Transfer of Stock. Upon surrender to the corporation or
the transfer agent of the corporation of a certificate for shares, duly
endorsed or accompanied by proper evidence of succession, assignment or
authority to transfer, and proper evidence of compliance with other conditions
to rightful transfer, it shall be the duty of the corporation to issue a new
certificate to the person entitled thereto, cancel the old certificate and
record the transaction upon its books.
Section 4. Record Date. (a) In order that the corporation may
determine the stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, the board of directors may fix a
record date, which record date shall not precede the date upon which the
resolution fixing the record date is adopted by the board of directors, and
which record date shall not be more than sixty nor less than ten days before
the date of such meeting. If no record date is fixed by the board of
directors, the record date for determining stockholders entitled to notice of
or to vote at a meeting of stockholders shall be at the close of business on
the day next preceding the day on which notice is given, or, if notice is
waived, at the close of business on the day next preceding the day on which the
meeting is held. A determination of stockholders of record entitled to notice
of or to vote at a meeting of stockholders shall apply to any adjournment of
the meeting; provided, however, that the board of directors may fix a new
record date for the adjourned meeting.
(b) In order that the corporation may determine the stockholders
entitled to consent to corporate action in writing without a meeting, the board
of directors may fix a record date, which record date shall not precede the
date upon which the resolution fixing the record date is adopted by the board
of directors, and which date shall not be more than ten days after the date
upon which the resolution fixing the record date is adopted by the board of
directors. If no record date has been fixed by the board of directors, the
record date for determining stockholders entitled to consent to corporate
action in writing without a meeting, when no prior action by the board of
directors is required by this chapter, shall be the first date on which a
signed written consent setting forth the action taken or proposed to be taken
is delivered to the corporation by delivery to its registered office in
Delaware, its principal place of business, or an officer or agent of the
corporation having custody of the book in which proceedings of meetings of
stockholders are recorded. Delivery made to a corporation's registered office
shall be by hand or by certified or registered mail, return receipt requested.
If no record date has been fixed by the board of directors and prior action by
the board of directors is required by this chapter, the record date for
determining stockholders entitled to consent to corporate action in writing
without a meeting shall be at the close of business on the day on which the
board of directors adopts the resolution taking such prior action.
(c) In order that the corporation may determine the stockholders
entitled to receive payment of any dividend or other distribution or allotment
of any rights or the stockholders entitled to exercise any rights in respect of
any change, conversion or exchange of stock, or for the purpose of any other
lawful action, the board of directors may fix a record date, which record
date shall not precede the date upon which the resolution fixing the record
date is adopted, and which record date shall be not more than sixty days prior
to such action. If no record date is fixed, the record date for determining
stockholders for any such purpose shall be at the close of business on the day
on which the board of directors adopts the resolution relating thereto.
Section 5. Registered Stockholders. The corporation shall be
entitled to recognize the exclusive right of a person registered on its books
as the owner of shares to receive dividends, and to vote as such owner, and to
hold liable for calls and assessments a person registered on its books as the
owner of shares, and shall not be bound to recognize any equitable or other
claim to or interest in such share or shares on the part of any other person,
whether or not it shall have express or other notice thereof, except as
otherwise provided by the laws of Delaware.
ARTICLE VII
CERTAIN TRANSACTIONS
Section 1. Transactions with Interested Parties. No contract or
transaction between the corporation and one or more of its directors or
officers, or between the corporation and any other corporation, partnership,
association, or other organization in which one or more of its directors or
officers are directors or officers, or have a financial interest, shall be void
or voidable solely for this reason, or solely because the director or officer
is present at or participates in the meeting of the board or committee thereof
which authorizes the contract or transaction or solely because his or their
votes are counted for such purpose, if:
(a) The material facts as to his relationship or
interest and as to the contract or transaction are disclosed or
are known to the board of directors or the committee, and the
board or committee in good faith authorizes the contract or
transaction by the affirmative votes of a majority of the
disinterested directors, even though the disinterested directors
be less than a quorum; or
(b) The material facts as to his relationship or
interest and as to be contract or transaction are disclosed or
are known to the stockholders entitled to vote thereon, and the
contract or transaction is specifically approved in good faith
by vote of the stockholders; or
(c) The contract or transaction is fair as to the
corporation as of the time it is authorized, approved or
ratified, by the board of directors, a committee thereof, or the
stockholders.
Section 2. Quorum. Common or interested directors may be counted
in determining the presence of a quorum at a meeting of the board of directors
or of a committee which authorizes the contract or transaction.
ARTICLE VIII
GENERAL PROVISIONS
Section 1. Dividends. Dividends upon the capital stock of the
corporation, if any, may be declared by the board of directors at any regular
or special meeting or by written consent, pursuant to law. Dividends may be
paid in cash, in property, or in shares of the capital stock, subject to the
provisions of the certificate of incorporation.
Section 2. Reserves. The directors may set apart out of any funds
of the corporation available for dividends a reserve or reserves for any proper
purpose and may abolish any such reserve.
Section 3. Checks. All checks or demands for money and notes of
the corporation shall be signed by such officer or officers or such other
person or persons as the board of directors may from time to time designate.
Section 4. Fiscal Year. The fiscal year of the corporation shall
be fixed by resolution of the board of directors.
Section 5. Seal. The board of directors may, by resolution, adopt
a corporate seal. The corporate seal shall have inscribed thereon the name of
the corporation, the year of its organization and the word "Delaware". The
seal may be used by causing it or a facsimile thereof to be impressed or
affixed or reproduced or otherwise. The seal may be altered from time to time
by the board of directors.
ARTICLE IX
AMENDMENTS
These by-laws may be altered, amended or repealed or new bylaws may be
adopted by the stockholders or by the board of directors, when such power is
conferred upon the board of directors by the certificate of incorporation, at
any regular meeting of the stockholders or of the board of directors or at any
special meeting of the stockholders or of the board of directors provided,
however, that in the case of a regular or special meeting of stockholders,
notice of such alteration, amendment, repeal or adoption of new by-laws be
contained in the notice of such meeting.
Register of Amendments to the By-laws
|Date |Section Affected |Change |
|August 4, 1987 |Article I, Section 2 |First sentence replaced in its entirety.|
|March 1, 1988 |Article I, Sections 8 and 10; Article |Sections replaced in their |
| |IV, Section 4 |entirety. |
|March 8, 1996 |Article I, Sections 11 and 12 |Added new Sections 11 and |
| | |12 |
IMMUCELL CORPORATION AND SUBSIDIARY
Exhibit 10.28
Amendment No. 4 to Agreement for Exclusivity between Advanced Separation
Technologies, Inc. and the Registrant dated November 15, 1995.
AMENDMENT TO AGREEMENT
FOR EXCLUSIVITY
NOVEMBER 15, 1995
THIS AMENDMENT ("The Amendment") to AGREEMENT FOR EXCLUSIVITY IN
PROTEIN SEPARATION OF MILK OR WHEY PROTEINS (the "Agreement" dated August 30,
1993) is made this 15th day of November, 1995 by and between ImmuCell
Corporation, a Delaware Corporation with its principal place of business at 56
Evergreen Drive, Portland, Maine 04103 ("ImmuCell") and Advanced Separation
Technologies, Inc., a Florida corporation with its principal place of business
at 5315 Great Oak Drive, Lakeland, Florida 33801 ("AST").
RECITALS
A.) ImmuCell and AST have entered into an Agreement for Exclusivity,
dated August 30, 1993 (Agreement), pursuant to which AST granted
ImmuCell certain rights in return for meeting certain purchase
requirements.
B.) ImmuCell and AST have amended the Agreement on November 5, 1993,
January 14, 1994, December 16, 1994 and May 3, 1995.
C.) ImmuCell and AST desire to amend the Agreement again.
NOW THEREFORE, in consideration of the mutual convents and conditions contained
herein, the parties hereto agree as follows:
1.) Article II, Section 2.0 on page four of the Agreement is deleted
in its entirety and replaced with the following:
2.0 AST agrees to grant ImmuCell the exclusive rights
to buy ISEP(r) Systems and the right to use ISEP
Systems/ISEP Technology throughout the Territory
for the purification of milk and whey proteins
included in the Field of Use, provided the
following conditions are met:
2.) Article II, Section 2.4 on page four of the Agreement is deleted
in its entirety and replaced with the following:
2.4 Commercial ISEP-ImmuCell will place order for a
commercial ISEP System as defined in Proposal No.
24-95289B and C. Rev. 1 within twenty-four months
of receipt of the ISEP(r) defined in Proposal No.
42-95289-A and purchased by ImmuCell under P.O.
#A0463 on September 28, 1993. ImmuCell will pay
AST One Thousand Dollars ($1,000) per month for
each month the order is delayed past the twelth
month from receipt of the ISEP defined in
Page 2. AST/ImmuCell Agreement
Proposal No. 42-952889-A. The date by which
ImmuCell must place an orderper this Section 2.4
will be extended to June 30, 1996 if the following
two conditions are met: i) an agreement between
ImmuCell and Agri-Mark toenter into a pilot
development project is signed by November 22,
1995, and ii) the pilot ISEP unit owned by
ImmuCell will be shipped to the Middlebury
cheese plant of Agri-Mark on or before
December 15, 1995.
3.) The following Section 2.11 is added to Article II of the
Agreement:
2.11 ImmuCell may grant written sublicenses to third
parties; except that no sublicense may be granted
by ImmuCell to any competitor of AST. Any
agreement in which ImmuCell grants a sublicense
to buy and use ISEP Systems in the Field of Use
shall state that the sublicense is subject to the
terms and conditions of this Agreement.
4.) The following Section 4.3 is added to Article IV of the
Agreement:
4.3 If ImmuCell does not order an ISEP System as
contemplated in Section 2.4, ImmuCell shall grant
AST a perpetual non-exclusive, royalty free
license with rights to sublicense, to data from
and process steps employing the continuous
absorption or adsorption and chromatography
capabilities of the ISEP System as developed by
ImmuCell in its pilot plant programs in Fond
du Lac, WI and Middlebury, Vermont. ImmuCell
shall provide such data and process information
to AST by August 30, 1996. Any data and
processes developed by ImmuCell after June 30,
1996 shall not be included in this license. If
ImmuCell or an ImmuCell sublicensee orders an
ISEP per the terms of Section 2.4, ImmuCell will
be under no obligation to grant the license
described in this Section 4.3.
5.) The following Article V, Section 5.0 is added to the Agreement:
5.0 Sections 2.11, 3.4, 3.5, 4.1 and 4.3 shall
survive termination of the Agreement.
6.) All other provision of the Agreement remain unchanged and in
full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this amendment as of the
day and year first above written.
IMMUCELL CORPORATION ADVANCED SEPARATION TECHNOLOGIES, INC.
By: /s/ Thomas C. Hatch By: /s/ Steven Weiss
November 17, 1995 November 30, 1995
IMMUCELL CORPORATION AND SUBSIDIARY
Exhibit 10.29
Option Agreement dated November 22, 1995 between the Registrant and Agri-Mark,
Inc. of Methuen, Massachusetts.
OPTION AGREEMENT
THIS OPTION AGREEMENT (the "Agreement") is made as of this 22nd day of
November, 1995, by and between ImmuCell Corporation, a Delaware corporation
with its principal place of business at 56 Evergreen Drive, Portland, Maine
04103 ("ImmuCell"), and Agri-Mark, Inc., a Delaware corporation with its
principal place of business at 100 Milk Street Office Park, Methuen,
Massachusetts 01944 ("AgriMark").
RECITALS
WHEREAS, ImmuCell owns or controls certain proprietary and other rights
(the "Lactoferrin Technology") relating to the production of lactoferrin from
cows' milk (the "Lactoferrin Product"); and
WHEREAS, ImmuCell and AgriMark desire to further develop the process
of producing the Lactoferrin Product using the Lactoferrin Technology for
commercial sale; and
WHEREAS, ImmuCell and AgriMark recognize the goal of the Option Period
(as hereinafter defined) is to determine whether it is possible: (i) to make
lactoferrin using the Lactoferrin Technology, (ii) to fully equip a commercial
plant at AgriMark's Middlebury, Vermont facility to make lactoferrin using the
Lactoferrin Technology for a maximum capital investment of $800,000, (iii) to
locate buyers willing to purchase lactoferrin for a least $200 per pound; and
whether the Lactoferrin Technology and ISEP System (as hereinafter defined)
will meet all USDA, USPH and other applicable regulatory standards.
WHEREAS, ImmuCell desires to have AgriMark provide certain funding for
the development and commercialization efforts, and
WHEREAS, AgriMark desires to purchase an option to form a joint venture
with ImmuCell in the form of a limited liability company to use the Lactoferrin
Technology in the commercial production and production and sale of the
Lactoferrin Product on the terms and conditions set forth below, and
WHEREAS, ImmuCell has agreed that during the term of the Agreement
ImmuCell will not enter into another option agreement on Lactoferrin Product
with similar material terms with any other party;
NOW THEREFORE, in consideration of the mutual covenants and conditions
contained herein, the parties hereto agree as follows:
ARTICLE 1 - DEFINITIONS
1.1 Affiliate shall mean any corporation or business entity
controlled by, controlling, or under common control with, a party to this
Agreement. For this purpose, "control" shall mean direct or indirect
beneficial ownership of at least fifty percent (50%) of the voting stock or
income interest in such corporation or other business entity, or such other
relationship as, in fact, constitutes actual control.
1.2 Confidential Information shall mean any know-how, technology,
expertise and information, whether or not patented or patentable, copyrighted
or copyrightable and any designs, processes, procedures, formulae, or
improvements which relate to the development, formulation, production,
manufacture or marketing of the Lactoferrin Product and which are confidential
and commercially valuable in the sense that their confidentiality affords the
disclosing party a competitive advantage over its competitors.
1.3 Lactoferrin Product shall mean lactoferrin which is derived
from the milk of dairy cows using the Lactoferrin Technology, together with
any Improvements thereto.
1.4 Lactoferrin Technology shall mean know-how, technology,
information and processes owned by and/or licensed to ImmuCell and used in
deriving lactoferrin from whey using the ISEP System, together with all
improvements thereto, except as restricted by Section 4.3 below.
1.5 Effective Date shall mean the date set forth above.
1.6 Improvements shall mean any and all inventions, modifications,
discoveries, ideas, developments and enhancements related to the manufacture of
the Lactoferrin Product, which inventions, etc., are conceived or first reduced
to practice prior to the expiration or termination of this Agreement.
1.7 AST shall mean Advanced Separation Technologies, Inc. a Florida
corporation located in Lakeland, Florida, which owns the ISEP System and which
has granted an exclusive license, with the right of sublicense, to ImmuCell to
use the ISEP System as part of the Lactoferrin Technology.
1.8 The ISEP System shall mean certain patented process and
equipment technology owned by AST relating to the design, manufacture and
operation of equipment for use in continuous chromatography described in U.S.
Patent Nos. 4,522,726, 4,764.276, 4,808,317 and 5,069,883, attached to
this agreement as Exhibit C.
1.9 LLC shall have the encasing set forth in Section 3.1.
1.10 Option Period shall mean the period of time which shall begin
on the Effective Date of this Agreement and shall end on the earlier of (i) the
formation of the LLC per the terms of Appendix A, (ii) June 15, 1996, or on any
date before June 15, 1996 in which early termination is given per the terms of
Section 7.1 or 7.2. In no event will the option be extended past June 15,
1996.
ARTICLE 2 - REPRESENTATIONS AND WARRANTIES
2.1 By ImmuCell. ImmuCell hereby represents and warrants to AgriMark the
following:
(a) It is a corporation validly formed and existing under the laws
of the State of Delaware.
(b) It has an exclusive, worldwide license to use the ISEP System
for the purification of milk or whey proteins and produce the Lactoferrin
Product, and has full power and authority to sublicense the ISEP System for
such use to AgriMark and the LLC as provided and contemplated in this
Agreement. Except with respect to the ISEP System, and to the best of its
knowledge, ImmuCell is the sole owner of all Lactoferrin Technology and does
not know of any other person or entity who claims any right, title or
interest in or to any of the Lactoferrin Technology.
(c) There are no prior or contemporaneous assignments, grants,
licenser, encumbrances, obligations or agreements, either written or oral,
express or implied, to which it is a party, that are inconsistent with this
Agreement.
(d) To the best of ImmuCell's knowledge, the production, use and
sale of the Lactoferrin Product, does not violate or infringe upon any patent
or proprietary rights of any third party and ImmuCell has no knowledge of any
claim of any kind pending, threatened or anticipated that alleges any
such violation or infringement,
(e) Immucell knows of no legal impediment to the license and option
granted or to be granted in this Agreement and ImmuCell is aware of no pending
or threatened claims or litigation that might create a legal impediment in the
future.
(f) The execution, delivery and performance of this Agreement and
the consummation of the joint venture contemplated herein (i) have been duly
and effectively authorized by all necessary corporate or other actions; (ii) do
not violate, conflict with, or result in the breach of any provision of its
Certificate of Incorporation. Bylaws or any comparable document, or of any
agreement to which it is a party; (iii) do not require any consent, waiver or
authorization of any third party; and (iv) do not result in the creation of
any lien, charge or encumbrance upon the Lactoferrin Technology.
(g) This Agreement is binding on and enforceable against ImmuCell in
accordance with its terms.
(h) ImmuCell makes no representations or warranties, that the
Lactoferrin Technology or ISEP System can meet 3A dairy standards. Information
collected by ImmuCell as it relates to system and process design are available
for examination by AgriMark and appropriate regulatory personnel in Vermont.
(i) To the best of ImmuCell's knowledge, the Lactoferrin Technology
is free and clear of any mortgage, security interest, lien or encumbrance.
(j) The representation and warranties made by ImmuCell in this
Agreement or any document provided in connection with this Agreement are true
and correct at and as of the date of this Agreement.
2.2 By AgriMark. AgriMark hereby represents and warrants to
ImmuCell the following:
(a) It is a corporation validly formed and existing under the laws
of the State of Delaware.
(b) There are no prior or contemporaneous assignments, grants,
licenses, encumbrances, obligations or agreements, either written or oral,
express or implied, to which it is a party, that are inconsistent with this
Agreement.
(c) The execution, delivery and performance of this Agreement, but
not consummation of the joint venture contemplated herein, (i) have been duly
and effectively authorized by all necessary corporate or other actions and (ii)
do not violate, conflict with, or result in the breach of any provision of its
Certificate of Incorporation, Bylaws or any comparable document, or of any
agreement to which it is a party.
(d) This Agreement is binding on and enforceable against AgriMark
in accordance with its terms.
(e) The representation and warranties made by AgriMark in this
Agreement or any document provided in connection with this Agreement are true
and correct at and as of the date of this Agreement.
ARTICLE 3 - GRANT OF OPTION
3.1 Option. ImmuCell hereby grants to AgriMark an option to
jointly form, fund, own and operate a joint venture entity with ImmuCell, which
option may be exercised by AgriMark by written notice thereof to ImmuCell
during the Option Period, in the form of a Delaware Limited Liability
Company ("LLC'), for the purpose of commercializing the production and sale of
the Lactoferrin Product. The LLC would be formed under the general terms
outlined in Appendix A. ImmuCell further agrees to grant to the LLC a non-
exclusive license to use the Lactoferrin Technology and a non-exclusive
sublicense to buy and use a single commercial size ISEP System to manufacture
Lactoferrin Product on a royalty free basis. The non-exclusive sublicense to
buy and use an ISEP System to manufacture Lactoferrin Product is subject to the
terms and conditions in the license agreement between AST and ImmuCell dated
August 30, 1993 and all subsequent amendments up to and including the amendment
of November 16, 1995.
ARTICLE 4 - PILOT PLANT DEVELOPMENT
4.1 Product Development: ImmuCell
(a) During the first four months of the Option Period,
ImmuCell will use its best efforts to contract for services from a service
provider or will use its own employees for between three and four days per week
of personnel time to assist in the assembly, set up and operation of the pilot
plant. ImmuCell will also provide one additional full time employee to the
pilot plant development efforts during the first four months of the Option
Period. ImmuCell agrees to provide all appropriate support for the conduct of
the pilot plant development being conducted by AgriMark, including, without
limitation, all testing and analysis necessary to characterize the Lactoferrin
Product. ImmuCell shall make available the fixed assets and equipment detailed
in Appendix B to the pilot plant, F.O.B. the pilot plant location. ImmuCell
will provide all consumables and supplies needed by the pilot plant during the
Option Period with the exception of the neat whey which is to be supplied by
AgriMark as defined in Section 4.2.
(b) ImmuCell shall pay all license fees required to maintain
its exclusive rights to all Lactoferrin Technology except that ImmuCell will
not be required to meet any purchase requirement for the ISEP System needed to
maintain its exclusive license to use the ISEP System.
(c) ImmuCell will perform marketing and technical sales
support during the Option Period and during the first year of operation of the
LLC.
(d) ImmuCell hereby grants to AgriMark a non-exclusive
license to use the Lactoferrin Technology during the Option Period.
4.2 Product Development - AgriMark. During the Option Period,
AgriMark will initiate and diligently pursue and supply, at its own expense:
(i) the construction or acquisition of an adequate pilot facility by AgriMark
personnel containing approximately 1,500 square feet of floor space with
required utilities, (ii) one employee to assist in process operations, and
(iii) a supply of neat whey representative of the eventual production whey (up
to 1,000 - 2,000 gallons of neat whey or equivalent per day needed during the
Option Period).
4.3 Rights to ImmuCell's Improvement. Any Improvements to the
Lactoferrin Technology developed during the Option Period and thereafter solely
by Immucell, or which ImmuCell otherwise has the right to license, shall be
automatically included in the license to be granted to the LLC by ImmuCell,
with no right to sublicense.
4.4 Rights to AgriMark's Improvements. AgriMark hereby grants to
ImmuCell and shall cause its Affiliates to grant to ImmuCell, and ImmuCell
hereby accepts, a perpetual, non-exclusive, royalty-free license, to use any
improvements developed during the Option Period and thereafter solely by
AgriMark, or which AgriMark otherwise has the right to license, to make or have
made the Lactoferrin Product with no right of sublicense.
4.5 Publicity. With the exception of required filings by the
Securities and Exchange Commission, the parties shall absolutely refrain from
any disclosures to any third parties regarding this Agreement without the
consent of the other.
ARTICLE 5 - OPTION PURCHASE PRICE, EXERCISE
AND COMPETITIVE PROTECTION
5.1 Option Purchase Payment. In consideration of ImmuCell granting
AgriMark the Option contemplated in Section 3.1 to form an LLC with ImmuCell
for the manufacture of the Lactoferrin Product, AgriMark agrees to pay ImmuCell
$75,000 upon execution of this Agreement. ImmuCell will refund this $75,000
fee to AgriMark if the pilot ISEP unit is not shipped to Middlebury on or
before December 15, 1995.
5.2 Option Exercise Payment. If AgriMark elects to exercise the
option to form an LLC with ImmuCell, AgriMark will capitalize the LLC with a
maximum of $800,000 Invested Capital, approximately $400,000 of which
investment shall be for the purchase of a commercial size ISEP System. The
balance will be used to purchase other needed equipment as mutually determined
by ImmuCell and AgriMark. The ISEP System must be ordered no later than June
15, 1996.
5.3 Additional Lactoferrin Production. If AgriMark exercises its
option to form an LLC, ImmuCell at its sole discretion will either:
(a) not commission additional lactoferrin production
capacity until AgriMark has recovered double its Invested Capital in the LLC; or
(b) for a period of ten years, pay AgriMark 2.5% of net
sales derived from all subsequent lactoferrin production business arrangements
in which ImmuCell is involved; or
(c) not commission any additional lactoferrin production
capacity until the LLC has contracted with a customer under a full output
supply contract that guarantees a price of $200 per pound or higher for a
sufficient period of time to return to AgriMark double the amount of its
Invested Capital.
ARTICLE 6 - PATENT PROTECTION
6.1 Patent Protection. ImmuCell will own and shall be responsible
for seeking patent protection for any improvements discovered in the pilot
plant during the Option Period.
ARTICLE 7 - TERM AND TERMINATION
7.1 Termination by AgriMark. (a) AgriMark may terminate this
Agreement without cause and without penalty at any time by giving ImmuCell
written notice. If AgriMark so terminates this Agreement, all rights and
future obligations shall cease as of the date written notice is given to
terminate the Agreement, except that the rights provided under Section 9.11
shall survive any termination by AgriMark under this Section 7.1; (b) upon
termination in accordance with this Section 7.1, AgriMark agrees to transfer
to ImmuCell, at no cost, all data and analysis pertaining to the Lactoferrin
Product in its possession at the termination date.
7.2 Termination by ImmuCell. ImmuCell may terminate this Agreement
at any time upon thirty (30) days' advance notice to AgriMark if AgriMark
breaches any material term, provision or covenant hereof which is not cured by
AgriMark within the thirty (30) day notice period provided above. In the event
AgriMark disputes any ImmuCell claim of an event of breach under this Section.
and such dispute is submitted to arbitration under Section 9.10, the cure
period for the alleged breach shall be extended until the earlier of (a) an
agreement by the parties to settle the matter in dispute without further
arbitration, or (b) a final decision of the arbitration panel. If ImmuCell so
terminates this Agreement, except for Section 9.11 hereof, all rights and
future obligations of the parties shall cease as of the effective date of
termination.
ARTICLE 8 - INDEMNITY AND INSURANCE
8.1 General Indemnification. Each party agrees to indemnify and
hold the other party harmless against any and all losses, liabilities, damages,
claim, judgments, demands, and expenses, reasonable attorneys' fees and all
other costs (hereinafter collectively or individually referred to as a
"Loss") arising out of or in connection with (i) the breach by the indemnifying
party of any of its representations or warranties contained in this Agreement,
or (ii) the nonperformance, partial or total, of any covenants of the
indemnifying party contained in this Agreement. As a condition to the
indemnified party's right to indemnification under this Section 8.1, the
indemnified party shall give prompt notice to the indemnifying party of any
suits, claims or demands by third parties which may give rise to any Loss for
which indemnification may be required under this Section. The indemnifying
party shall be entitled to assume the defense and control of any suit, claim or
demand of any third party at its own cost and expense.
8.2 Specific Indemnification. Without limiting the general indemnity
provisions of Section
8.1: (a) AgriMark shall indemnify ImmuCell for any Loss arising out of or
connected with any negligence or willful misconduct of AgriMark and ImmuCell
shall indemnify AgriMark for any Loss arising out of any negligence or willful
misconduct of ImmuCell connected with their respective responsibilities under
this Agreement during the Option Period, (b) ImmuCell shall indemnify and hold
harmless AgriMark from and against all losses, liabilities and expenses
including reasonable attorneys fees arising out of any claim against AgriMark
by any third party for infringement of any patent, trade secret, copyright or
other intellectual property right relating to AgriMark's use of the Lactoferrin
Technology, unless the claim results from any Improvement created by AgriMark
in which case AgriMark shall indemnify ImmuCell.
8.3 Insurance. AgriMark and ImmuCell agree to maintain during the
Option Period liability insurance against loss or damage related during the
Option Period in the minimum amount of $1,000,000 per occurrence and in a
minimum aggregate of $1,000,000. Each party will name the other as an
additional insured on Said policy(ies), and will, upon written request, provide
a certificate of insurance evidencing such coverage.
ARTICLE 9 - GENERAL PROVISIONS
9.1 Notices. Except as otherwise specified herein, any notices
permitted or required by this Agreement shall be sent by telephonically
confirmed telecopy, by recognized overnight mail service or by certified or
registered mail, return receipt requested except that normal correspondence not
related to termination, defaults, or rights to manufacture may be sent by first
class mail. Any such notice shall be effective when received if sent and
addressed as follows or to such other address as may be designated by
such party in writing and delivered in accordance with this Section 9.1:
If to ImmuCell:
ImmuCell Corporation
56 Evergreen Drive
Portland, Maine 04103
Telephone: (207) 878-2770
Telefax: (207) 878-2117
Attention: Thomas Hatch
with a copy to:
Jeffrey A. Clopeck, Esq.
Day, Berry & Howard
260 Franklin Street
Boston, Massachusetts 02110-3109
Telephone: (617) 345-4600
Telefax: (617) 439-4453
If to AgriMark:
AgriMark, Incorporated
P.O. Box 5800
Lawrence, Massachusetts 01842
Telephone: (508) 689-4442
Telefax: (508) 685-8716
Attention: Richard 0. Langworthy
with a copy to:
Eileen Brogan
AgriMark, Incorporated
P.O. Box 5800
Lawrence, Massachusetts 01842
Telephone: (508) 689-4442
Telefax: (508) 685-8716
9.2 Entire Agreement: Amendment. The parties acknowledge that this
Agreement sets forth the entire agreement and understanding of the parties and
supersedes all prior written or oral agreements or understandings with respect
to the subject matter hereof. No modification or amendment of any of the
terms of this Agreement shall be deemed to be valid unless in writing and
signed by both parties hereto.
9.3 Waiver. No waiver by any party of any default shall operate as
a waiver of any other default or of the same default on a future occasion.
9.4 Assignment. Neither party shall assign or transfer this
Agreement without the other party's prior written consent. This Agreement
shall be binding on and inure to the benefit of each party's permitted
successors and assigns.
9.5 Governing Law. This Agreement shall be governed by and
construed under the substantive and procedural laws of the State of Maine
without giving effect to choice of law principles.
9.6 Severability. If any term, provision or condition of this
Agreement, or the application thereof to any person or circumstance, shall be
invalid, illegal or unenforceable in any respect, the remainder of this
Agreement shall be construed without such provision and the application of such
term or provision to persons or circumstances other than those as to which it
is held invalid, illegal or unenforceable, as the case may be, shall not be
affected thereby, and each term and provision of this Agreement shall be valid
and enforced to the fullest extent permitted by law.
9.7 Counterparts. This Agreement may be executed in any number of
duplicate originals and each such duplicate original shall be deemed to
constitute one and the same instrument.
9.8 Headings. The headings of the paragraphs of this Agreement are
for convenience only and have no meaning with respect to this Agreement or the
rights or obligations of the parties.
9.9 Independent Contractor. The parties are each independent
contractors and nothing herein shall be deemed to establish a relationship of
principal and agent between them, nor any of their agents or employees for any
purpose whatsoever. This Agreement shall not be construed as constituting
the parties as partners, or as creating any other form of legal association or
arrangement which would impose liability upon one party for the act or failure
to act of the other party.
9.10 Arbitration and Jurisdiction.
(a) All disputes arising between ImmuCell and AgriMark under
this Agreement shall be settled by arbitration conducted in accordance with the
procedures of the commercial Arbitration Rules of the American Arbitration
Association, before a panel of three arbitrators, one of whom shall be selected
by AgriMark, one of whom shall be selected by ImmuCell, and one of whom shall
be selected by AgriMark and ImmuCell (or by the other two arbitrators, if the
parties cannot agree). The parties will request an expedited hearing for any
dispute related to a nonpayment hereunder, and will otherwise cooperate with
each other in causing the arbitration to be held in as efficient and
expeditious a manner as practicable. Any arbitration proceeding initiated by
AgriMark shall be brought and conducted in Portland, Maine. Any arbitration
proceeding initiated by ImmuCell shall be brought and conducted in the Boston,
MA metropolitan area.
(b) Any award rendered by the arbitrators shall be binding
upon the parties hereto and shall be final, subject to review by a court of
competent jurisdiction under the statutory standard of review applicable to
arbitrations. Judgement upon the award may be entered in any court of
competent jurisdiction. Each party shall pay its own expenses of arbitration
and the expenses of the arbitrators shall be equally shared except that if, in
the opinion of the arbitrators, any claim by a party hereto or any defenses or
objection thereto by the other party was unreasonable, the arbitrators may in
their discretion assess as part of their award all or any part of the
arbitration expenses of the other party (including reasonable attorneys fees)
and expenses of the arbitrators against the party raising such unreasonable
claim, defense or objection. Nothing herein shall prevent the parties from
settling any dispute by mutual agreement at any time.
(c) The parties irrevocably and unconditionally (i) agree
that any suit, action or other legal proceeding for the review of any
arbitration proceeding under this Agreement may be brought in the United States
District Court located in the opposing party's jurisdiction, or, if such court
does not have jurisdiction or will not accept jurisdiction, in any court of
general jurisdiction in the state of the opposing party; (ii) consents to the
jurisdiction of any such court in any such suit, action or proceedings; and
(iii) waives any objection that it may have to the laying of venue of any such
suit, action or proceeding in any such court.
9.11 Confidential. AgriMark and ImmuCell shall not disclose any
Confidential Information of the other party received pursuant to this Agreement
or otherwise, or use any such Confidential Information in any manner, or for
any purpose, that is not expressly or implicitly permitted hereby, without
the prior written consent of such other party. These obligations shall not
apply to: (a) information which is known to the receiving party at the time of
disclosure or independently developed by the receiving party, and documented by
written records; (b) information disclosed to the receiving party by a third
party which has a right to make such disclosure; (c) information which becomes
patented, published or otherwise part of the public domain as a result of acts
by the disclosing party; or (d) disclosures of such Confidential Information to
the Affiliates or employees of the disclosing party on a need to know basis,
provided the disclosing party takes reasonable precautions to preclude any
further disclosures of such Confidential Information. Upon request by the
party providing the Confidential Information, at the expiration or earlier
termination of this Agreement, the other party shall return all Confidential
Information and all copies thereof that are in its possession.
9.12 Force Majeure Events. Failure of either party to perform its
obligations under this Agreement (except the obligation to make payments) shall
not subject such party to any liability to the other party if such failure is
caused by any cause beyond the reasonable control of such nonperforming
party, including, but not limited to, acts of God, fire, explosion, flood,
drought, war, riot, sabotage, embargo, strikes or other labor trouble, failure
in whole or in part of suppliers to deliver on schedule materials, equipment or
machinery, interruption of or delay in transportation, a national health
emergency or compliance with any order or regulation of any government entity
acting with color of right.
9.13 ImmuCell shall not use AgriMark's name and AgriMark shall not
use ImmuCell's name in any sales promotion advertising or any other form of
publicity without the prior written approval of the entity or person whose name
is being used, which approval shall not be unreasonably withheld.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
IMMUCELL CORPORATION
By: /s/ Thomas C. Hatch
Name: Thomas C. Hatch
Title: President and CEO
Date: November 22, 1995
AGRIMARK, INC.
By: /s/ Richard Langworthy
Name: Richard Langworthy
Title: Sr. V.P. Manufacturing Operations
Date: November 22, 1995
Appendix A
OUTLINE HEADS OF AGREEMENT
APPLYING TO THE FORMATION, OWNERSHIP
AND OPERATION OF AN INTENDED LLC BETWEEN
IMMUCELL AND AGRIMARK
1. GRANT OF LICENSE
Upon the formation of an LLC between ImmuCell and AgriMark, ImmuCell shall
grant the LLC the right to purchase a single ISEP System from AST and a non-
exclusive, non-terminable, royalty free license to use the Lactoferrin
Technology including a non-exclusive sublicense to use the ISEP System, as well
as all improvements conceived or reduced to practice or obtained at any time by
ImmuCell, to which ImmuCell has the right to license or sublicense, in order
for the LLC to manufacture Lactoferrin Product using whey produced as a result
of cheesemaking operations at the Middlebury, Vermont cheese plant plus an
additional amount of 250,000 lbs. of neat whey per day from other sources.
2. INVESTED CAPITAL BY AGRIMARK
AgriMark will capitalize the LLC with a maximum of $800,000 ("Invested
Capital"), $400,000 of this amount must be contributed upon formation of the
LLC and will be spent principally purchasing an ISEP System. The remaining
amount will be contributed as needed to equip the production plant to
manufacture Lactoferrin Product on a commercial basis.
3. ASSET CONTRIBUTION BY IMMUCELL
ImmuCell will contribute applicable equipment from the pilot plant to the LLC
("the Contributed Assets"). This explicitly excludes the pilot ISEP System
and associated pumps and hardware.
4. ECONOMIC INTERESTS IN THE LLC
AgriMark and ImmuCell shall have equal economic interests in the LLC to be
formed except that 90% of the net income before taxes from the LLC shall go to
AgriMark until twice the amount of its Invested Capital is returned to
AgriMark. The other 10% of net income before taxes from the LLC shall go to
ImmuCell during the same period. After such time as twice the Invested Capital
is returned to AgriMark, all subsequent net income before taxes of the LLC
shall be divided between ImmuCell and AgriMark on the basis of their equal
economic interests in the LLC. All tax obligations will accrue to each party
on the basis of their interests in the income from the LLC.
S. FREEZE DRYING
ImmuCell shall freeze dry all Lactoferrin Product produced by the LLC at a 30%
discount to the next best quote from a commercial freeze dryer.
6. WHEY SUPPLY
AgriMark will provide whey to the LLC at no cost. AgriMark's economic interest
in providing whey at no cost is to earn a return on its economic interest in
the LLC.
7. LIFE OF LLC AND RETURN OF CAPITAL
The LLC will have a thirty year life. Upon expiration or earlier termination
the Contributed Assets and all documents related to Lactoferrin Technology will
be returned to ImmuCell. The assets purchased with Invested Capital will be
returned to AgriMark. Other assets will be distributed according to the
parties' ownership shares in the LLC, which are expected to be equal. Section
8 notwithstanding, upon expiration of the 30 year term, the license granted by
Immucell to use the Lactoferrin Technology will terminate and AgriMark will at
that time have no right to use the Lactoferrin Technology for any purpose.
8. DISPOSITION AND USE OF ISEP SYSTEM
If the LLC is terminated, ImmuCell grants AgriMark the right to sell the ISEP
System described in Paragraph 2 to ImmuCell any time within one year of
installation of the ISEP System in the Middlebury plant at half the purchase
price. AgriMark will be under no obligation to make such a sale but ImmuCell
will be obligated to make such a purchase within ninety (90) days of
notification by AgriMark of its desire to make such a sale. AgriMark will
provide seller financing for the purchase price with terms of three years and
twelve percent interest, payments of principal and interest to be made monthly.
If ImmuCell terminates or causes the termination of the LLC, AgriMark shall be
permitted by ImmuCell to use the ISEP System and the Lactoferrin Technology to
manufacture Lactoferrin Product and will pay a royalty rate equal to royalty
rates ImmuCell has entered into with other parties for the manufacture of
Lactoferrin Product in arm's length negotiations. If no other license
agreements are in place on Lactoferrin Product, ImmuCell and AgriMark shall
negotiate a reasonable royalty rate to apply to sales. Upon termination of
the LLC without cause by AgriMark, AgriMark shall be prohibited from
manufacturing Lactoferrin Product for a period of five years, and all
documents, material, information, procedures, processes and know-how related to
Lactoferrin Technology will be returned to ImmuCell within ninety days.
9. PATENTS AND IMPROVEMENTS
Once formed, the LLC shall be responsible for seeking patent protection for any
Improvements made in the manufacture or use of the Lactoferrin Product if
deemed patentable. Any such patent shall be licensed to ImmuCell and to
AgriMark, and to no others, on a royalty-free basis for the life of the patent
with no rights to sublicense. Improvements shall mean any and all inventions,
modifications, discoveries, ideas, developments and enhancements related to the
manufacture of the Lactoferrin Product.
10. FORMATION COSTS AND WORKING CAPITAL REQUIREMENTS
ImmuCell and AgriMark will share equally in the legal costs of forming the LLC
and in providing necessary working capital to fund initial production and
sales of Lactoferrin Product.
11. AgriMark and ImmuCell agree to negotiate in good faith all remaining
terms needed to form the LLC if AgriMark exercises itS option to proceed.
12. AgriMark will have 51% voting control in the management and operation
of the business of the LLC; ImmuCell will have 49%. In accordance with
Section 4 of this Appendix A, AgriMark will have the right to annual
distribution of the income to which it is entitled until it receives twice
the amount of its Invested Capital. Each party will then have rights to
annual distributions of income based on economic interests in the LLC.
13. ADDITIONAL LACTOFERRIN PRODUCTION
ImmuCell at its sole discretion will either:
(a) not commission additional lactoferrin production
capacity until AgriMark has recovered double its Invested Capital in the LLC; or
(b) for a period of ten years, pay AgriMark 2.5% of net
sales derived from any subsequent lactoferrin production business arrangements
in which ImmuCell is involved; or
(c) not commission any additional lactoferrin production
capacity until the LLC has contracted with a customer under a full output
supply contract at a price of $200 per pound for a sufficient period of time to
return to AgriMark double the amounts of its Capital Investment.
14. INDEMNIFICATION
ImmuCell shall indemnify and hold harmless LLC and AgriMark from and against
all losses, liabilities and expenses including reasonable attorneys fees
arising out of any claim against LLC by any third party for infringement of any
patent, trade secret, copyright or other intellectual property right relating
to LLC's use of the Lactoferrin Technology. In the case of infringement,
ImmuCell shall have the right to defend against any suit and to obtain a
license to use the Lactoferrin Technology. Any royalties or license fees
are to be paid only from sale of product and will be deducted only from
ImmuCell's portion of net income before taxes. AgriMark will indemnify
ImmuCell against any claims resulting from any improvement created by AgriMark.
APPENDIX B
IMMUCELL PILOT LAB EQUIPMENT
1. ISEP - 30 x 7.85 liter - 235 lit. bed volume
2. ISEP Data acquisition Equipment (Gateway 386 Computer LabTech Control
Software & Flow Cell Sensors)
3. Niro, Pilot UF Unit - 4 stages/8 elements
4. Hollow Fiber UF Module - UFP-30-75C. (AG Technology)
5. Positive Displacement Pumps
- Tri-Clover PRO10 (0.75-6.0 gpm) (3)
- Waukashau 18U (0.3-3.0 gpm)
6. Centrifugal Pumps (2)
7. Shell & Tube Heat Exchanger
8. Niro Reverse Osmosis Unit - three elements
9. UV Liquid Sterilizer
10. Bulk Tanks - refrigerated
- 500 gal with stirrer & compressor
- 300 gal with stirrer & compressor
11. Holding Tank - jacketed (45 gal)
12. Lyophilizer - Viritis Freezemobile 6
13. Sanitary tubing and tri-clover connectors
14. Analytical lab equipment (HPLC, UV-Vis Spectrophotometer)
APPENDIX C
U.S. Patent Nos. 4,522,726
4,764,276
4,808,317
5,069,883
IMMUCELL CORPORATION AND SUBSIDIARY
Exhibit 10.30
Employment Agreement dated November 1991 between the Registrant and
Joseph H. Crabb.
EMPLOYMENT AGREEMENT
AGREEMENT made this 8th day of November, 1991 between IMMUCELL CORPORATION, a
Delaware Corporation (the "Company"), and Joseph Crabb, of Newfield, Maine
("Crabb").
WITNESSETH:
In consideration of the mutual promises hereinafter contained, the parties
hereto agree as follows:
1. EMPLOYMENT AND TERM. The Company hereby employs Crabb and Crabb hereby
accepts employment by the Company subject to the provisions of this Agreement
for a term commencing on October 18, 1991 and ending upon June 30, 1992. The
Company shall notify Crabb in writing by March 1, 1992 if the Company will
renew or extend this Agreement.
2. DUTIES OF CRABB. Crabb shall be employed by the Company as Director of
Research and Development to perform such duties consistent with such a position
as Director of Research and Development as its Chief Executive Officer shall
assign Crabb from time to time. Crabb shall serve the Company faithfully
and diligently, use his best efforts to promote the interests of the Company,
and shall devote his full time and efforts to the business and affairs of the
Company.
3. COMPENSATION.
(a) Base salary. As compensation for his services hereunder, the Company
shall pay Crabb $5,166.67 per month, beginning on 1 November, 1991. During the
entire term of this agreement, Crabb's salary shall be subject to periodic
review and adjustment by the Chief Executive Officer, which Chief Executive
Officer may in his sole discretion change the salary to an amount greater than
that provided for therein; provided, however, that in no event may the Company
decrease Crabb's salary below that which is provided for herein.
(b) Employee Benefits. During the term of this Agreement the Company shall
provide Crabb with the standard health, life, and disability insurance coverage
that is provided to the Company's other non-officer employees. Crabb shall
also be entitled to all other employee benefits of the Company in the same
manner and to the same extent as other employees of the Company in accordance
with the Company's policies, including, without limitation, any incentive pay
programs offered by the Company to all of its non-executive employees.
(c) Bonus. A cash bonus of up to 20% of the base salary in 3(a) above
will be paid to Crabb by the Company if certain performance objectives are met
during the Company's 1992 fiscal year. These objectives will be specified by
the Chief Executive Officer no later than 1 December, 1991.
4. TERMINATION OF EMPLOYMENT.
(a) Voluntary Termination. Should Crabb voluntarily terminate his
employment with the company, Crabb hereby covenants that, for a period of one
(1) year he will not, directly or indirectly, render assistance to any
person, firm, or corporation in the same line of business as, or in any line of
business kindred or similar to, the business of the Company. Crabb furthermore
agrees that for this same period of one year after termination of employment he
will not accept employment in which he would engage in research or development
or any business activity identical to those previously carried out, in
progress, or planned by the Company. For the same period he will not at any
place or through any medium whatever, either on behalf of himself or another,
directly or indirectly solicit business in a line of business which is the same
as, kindred, to, or similar to that of the Company, from any person or persons
who were customers of the Company.
(b) Other Termination. Should Crabb's employment with the Company
terminate for any reason except through Crabb's voluntary act or by termination
for "just cause" as provided by subsection (c) of this Section 4 or (ii)
should the Company terminate Crabb's employment at any time prior to the end
of the term of this Agreement, Crabb shall receive from the Company salary and
benefits in the same manner as if Crabb's employment had not been terminated.
In consideration for the payments to be made to him pursuant to this subsection
(b), Crabb shall be bound by the provisions of subsection (a) of this Section
in the same manner as if his termination had been voluntary, and Crabb shall
not compete with the Company as provided therein for a period of one (1) year
from the date of termination of Crabb's employment by the Company.
(c) Termination for Just Cause. Notwithstanding the forgoing provisions of
this Section 4, the Chief Executive officer may at any time terminate the
employment of Crabb for just cause (as hereinafter defined) upon fourteen (14)
days' written notice to Crabb. Upon the expiration of such fourteen (14) day
period, Crabb's employment with the Company shall cease, and from and after
such date the Company shall have no further liability or obligation to make any
payments or provide any benefits which would otherwise be paid to Crabb
hereunder, except as such have accrued on or before such date. In the event of
the termination of Crabb's employment for just cause as provided herein, Crabb
shall be bound by the provisions of subsection (a) of this Section in the same
manner as if his termination had been voluntary, and Crabb shall not compete
with the Company as provided therein for a period of one (1) year from the date
of termination of Crabb's employment.
As used in this subsection (c), "just cause" shall be deemed to include only
the following:
(i) Crabb's conviction of a felony involving moral turpitude or
dishonesty; or
ii) Crabb's persistent failure to comply with the reasonable directives
or assignments of the Company's Chief Executive Officer; or
(iii) Crabb's persistent failure to devote his full time and efforts to
the business and affairs of the Company in the manner contemplated by
Section 2 of this Agreement.
(d) Certain Events. In the event that (i) following the termination of
Crabb's employment pursuant to subsection (b) of this Section 4 the Company
shall fail to pay Crabb when due, or within ten (10) business days thereafter,
all current sums payable to Crabb pursuant to said subsection (b), or (ii)
following the termination of Crabb's employment for any reason whatsoever, the
Company or any successor or assignee of the Company
entitled to the benefits of this Agreement shall cease to conduct the business
of the company engaged in by the Company at the times of such termination,
then, and in either such event, the covenants against competition set forth in
subsections (a), (b), and (c) of this Section 4 shall be terminated and Crabb
shall thereafter not be bound by the provisions thereof. The termination of
said covenants against competition shall not alter or affect the obligation of
the Company to make any payments required to be made to Crabb pursuant to the
provisions of subsection (b) of this Section 4.
5. COVENANT CONCERNING OTHER EMPLOYEES. Should Crabb voluntarily
terminate his employment with the Company for any reason whatsoever, Crabb
hereby covenants that, for a period of one (1) year, Crabb will not directly
or indirectly persuade, induce or otherwise encourage any other employee of
the Company to leave the employ of the Company to join or form any other firm,
corporation, partnership, association, joint venture, trust or business entity
of any kind engaged in, or to be engaged in future in, any business which is
similar to or competitive with the business now or at any time hereafter
engaged in by the Company.
6. MISCELLANEOUS.
(a) Notice.Any notice required to be given hereunder shall be given in
writing and shall be delivered by hand or sent by registered or certified mail,
postage prepaid, return receipt requested, or by Federal Express, if to the
Company, at the address of its principal offices on the date upon which such
notice is given, and if to Crabb, at the then current residential address of
Crabb (as reflected on the records of the Company) by any of the aforesaid
means. Any such notice shall be effective when delivered in person or
deposited in the United States mails in accordance with the provisions of this
subsection.
b) Death. In the event of the death of Crabb during the term of this
Agreement while he shall be an employee of the Company, Crabb's compensation
pursuant to Section 3 hereof shall cease as of the last day of the month in
which Crabb's death occurs. Any remaining amounts owing to Crabb pursuant to
Section 3 hereof in respect to such month shall be paid to his estate or shall
pass by applicable laws of descent and
distribution. In the event of the death of Crabb after he has terminated his
employment with the Company, but prior to the payment of all amounts payable to
him pursuant to the provisions of subsection (b) of Section 4 hereof, the
remaining such amounts shall be paid to the representatives of Crabb's estate.
(c) Injunctive Relief. The parties agree that the extent of damage to the
Company in the event of the breach by Crabb of the noncompetition covenants
contained in the agreement attached hereto as Exhibit A would be difficult or
impossible to ascertain and that there would be no adequate remedy at law
available to the Company in the event of such breach. Therefore, in the event
of any such breach, the Company shall be entitled to enforce any or all of such
covenants by injunction or other equitable relief in addition to receiving
damages or other relief to which the Company may be entitled.
(d) Binding Effect; Assignment. The provision of this Agreement shall be
binding upon and shall inure to the benefit of the Company and its successors
and assigns and to the benefit of Crabb and his heirs and legal representative.
This Agreement is a personal contract and the rights and interest of Crabb
herein may not be sold, transferred, assigned, pledged, or hypothecated and any
such attempted sale, transfer, assignment, pledge or hypothecation shall be
null, void and of no effect.
(e) Entire Agreement. This Agreement contains the entire agreement between
the parties hereto with respect to the transactions contemplated herein and
supersedes all prior agreements and understandings, written and oral with
respect to the subject matter hereof, and may not be amended or modified except
by an instrument in writing signed by both parties hereto.
(f) No Inconsistent Obligations. Crabb hereby represents and warrants to
the Company that he is not now under any obligation to any person, firm,
corporation or other entity which is inconsistent or in conflict with this
Agreement or which would prevent, limit or repair in any way the performance by
him of his obligations hereunder.
(g) Severability. If any provision of this Agreement is declared invalid,
illegal or unenforceable, such provision shall be severed and all remaining
provisions shall continue in full force and effect.
(h) Law Governing. This Agreement shall be governed by and enforced in
accordance with the laws of the State of Maine.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement, intending
the same to take effect as a sealed instrument, as of the date first above
written.
IMMUCELL CORPORATION
/s/ Joseph H. Crabb By /s/ Thomas C. Hatch
Joseph H. Crabb
Its: President
IMMUCELL CORPORATION AND SUBSIDIARY
Exhibit 10.31
Amendment, dated March 1992, to Employment Agreement dated November 1991,
between the Registrant and Joseph H. Crabb.
AMENDMENT TO EMPLOYMENT AGREEMENT
THIS AMENDMENT made this 17th day of March, 1992, between IMMUCELL CORPORATION,
a Delaware Corporation (the "Company"), and Joseph Crabb, of Newfield, Maine
("Crabb").
WHEREAS, the Company and Crabb entered into an employment agreement, dated
November 8, 1991; and
WHEREAS, Section 6 (e) of the Agreement provides that it "may not be amended or
modified except by an instrument in writing signed by both parties"; and
WHEREAS, the Company and Crabb desire to amend the Agreement to modify the
term;
NOW THEREFORE, in consideration of the mutual promises hereinafter contained,
IT IS AGREED:
1. Section 1 of the Agreement is hereby amended by replacing "June 30,
1992" with "July 31, 1992"; deleting the second sentence; and inserting the
following two sentences: "The ending date of this Agreement shall be extended
on a rolling four month basis until such time as the Company gives notice of
termination to Crabb, at which time the term of the employment agreement will
be fixed at four months from date of notification (the termination period).
The Company will not require Crabb to perform any duties during the fourth
month of the termination period."
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the
date first above written.
/s/ Thomas C. Hatch
Thomas C. Hatch
President, IMMUCELL
/s/ Joseph H. Crabb
Joseph H. Crabb
IMMUCELL CORPORATION AND SUBSIDIARY
Exhibit 10.32
Amendment, dated April 1992, to Employment Agreement dated November 1991,
between the Registrant and Joseph H. Crabb.
AMENDMENT TO EMPLOYMENT AGREEMENT
THIS AMENDMENT made this 13th day of April, 1992, between IMMUCELL
CORPORATION, a Delaware Corporation (the "Company"), and JOSEPH H. CRABB, of
Portland, Maine ("Crabb").
WHEREAS, the Company and Crabb entered into an employment agreement,
dated November 8, 1991 ("Agreement"); and
WHEREAS, Section 6 (e) of the Agreement provides that it "may not be
amended or modified except by an instrument in writing signed by both parties";
and
WHEREAS, the Company and Crabb desire to amend the Agreement to grant
Crabb a nonqualified stock option to purchase twenty-five thousand (25,000)
shares of the Company's common stock on the terms and conditions hereinafter
set forth;
NOW THEREFORE, in consideration of the mutual promises hereinafter
contained, IT IS AGREED:
1. The terms used in this Amendment shall have the meanings set forth
in the Agreement, unless the context clearly indicates otherwise.
2. Section 3 of the Agreement is hereby amended by adding at the end
thereof a new subsection (d) to read as follows:
(d) Nonqualified Stock Options.
(1) Grant. The Company grants to Crabb an option ('Option') to
purchase twenty-five thousand (25,000) shares of ImmuCell common
stock ('Shares') at a price equal to the fair market value of a
share of such common stock on the date of this Amendment, as
determined under the Company's 1989 Stock Option and Incentive
Plan ('Fair Market Value').
(2) Vesting. Crabb's right to purchase the Shares subject to
this Option shall vest as follows: fifty percent (50%) one year
from signing of this Amendment, and fifty percent (50%) on the
second anniversary of the signing of this Amendment.
(3) Exercise. Except as hereinafter provided, the Option may be
exercised in full or in part at any time to the extent vested in
accordance with subsection (2). In the event any exercise
of the Option would, in the opinion of the Company's independent
auditors, cause the Company's quarterly earnings to be reduced
by more than twenty-five percent (25%), such exercise shall be
limited to that number of Shares the purchase of which shall
cause quarterly earnings to be reduced by twenty-five percent
(25%). The foregoing limit shall not apply to the extent that
the Option would otherwise terminate or expire. In no event may
the Option be exercised to purchase fewer than one hundred (100)
Shares, unless fewer than one hundred (100) Shares are subject
to the Option.
The purchase price for the Shares acquired upon exercise
of the Option shall be paid (i) in cash or certified check, or
(ii) at the direction of the Stock Option Committee of the
Board of Directors of the Company by delivery of one or more
stock certificates, duly endorsed, evidencing other Shares with
a Fair Market Value on the date of exercise equal to
the option price, or (iii) by a combination of the methods
described in (i) or (ii). As soon as practicable after Crabb
has tendered payment of the purchase price to the Company, the
Company shall provide Crabb with a Certificate evidencing the
Shares purchased. Such certificate shall include any legends
required under federal or state securities laws.
In the event of Crabb's termination of employment with the
Company, disability or death, the Option shall be exercisable
to the extent provided in Section III.2 (c) (ii), (iii) or (iv)
of the Company's 1989 Stock option and Incentive Plan.
(4) Expiration of Option This Option shall expire
ten (10) years from the date of this Amendment and may not be
exercised thereafter.
(5) Nontransferability. Crabb may not transfer the
Option other than by will or the laws of descent and
distribution. During Crabb's lifetime, only Crabb may exercise
the Option.
(6) Change in ControlIn the event of a change in control
of the Company, Crabb's right to purchase Shares subject to the
Option shall vest immediately. For purposes of this Amendment,
'change in control' shall mean any one of the following events:
(a) Any person shall become beneficial owner, directly
or indirectly, of securities representing forty percent (40%) or
more of the combined voting power of the Company's then
outstanding stock.
As used in this Paragraph 6 (a), 'beneficial owner'
shall have the meaning ascribed to it from time to time under
rules promulgated by the Securities and Exchange Commission
pursuant to Section 13 (d) of the Securities Exchange Act of
1934, or any similar successor statute or rule; and a 'person'
shall include any natural person, corporation, partnership,
trust, association, or any group or combination thereof, whose
ownership of the Company stock would be reportable pursuant to
such provision of the Securities Exchange Act of 1934
and the rules and regulations promulgated thereunder;
(b) The Company's stockholders approve (i) any
consolidation or merger of the Company in which the Company is
not the continuing or surviving corporation or pursuant
to which shares of Company common stock would be converted into
cash, securities or other property, or (ii) any sale, lease,
exchange, liquidation or other transfer (in one transaction or
a series of transactions) of all or substantially all of the
assets of the Company.
(e) Any other event which a majority of all the
Company's Outside Directors determines constitutes a change in
control.
For purposes of this Section 3, 'Outside Directors'
shall mean those members of the Company's Board, at the time a
determination is to be made hereunder by the Outside Directors,
who were not Company employees and who were directors of the
Company six (6) months prior to the Change in Control.
(7) No Registration of Securities. The parties agree
that the Company intends to rely or the securities registration
exemption contained in Section 1052 (1) (L) of the Revised
Maine Securities Act and that, accordingly, no registration or
exemption filing shall be made by the Company under such Act
with respect to the Shares. Crabb acknowledges that transfer
of the Shares may be restricted by applicable federal and state
securities laws and that the Shares when issued shall contain an
appropriate legend to that effect."
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the date first above written.
/s/ Thomas C. Hatch /s/ Joseph H. Crabb
Joseph H. Crabb
IMMUCELL CORPORATION
/s/ Lisa DeTera By /s/ William J. Reidy
Its
IMMUCELL CORPORATION AND SUBSIDIARY
Exhibit 27.1
Financial Data Schedule
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 1995 AS
REPORTED ON FORM 10-K AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS
Item Number Item Description
5-02(1) cash and cash items $1,550,011
5-02(2) marketable securities 0
5-02(3)(a)(1) notes and accounts receivable-trade $408,533
5-02(4) allowances for doubtful accounts $51,000
5-02(6) inventory $636,203
5-02(9) total current assets $2,570,347
5-02(13) property, plant and equipment $1,402,680
5-02(14) accumulated depreciation $740,751
5-02(18) total assets $3,234,426
5-02(21) total current liabilities $720,767
5-02(22) bonds, mortgages and similar debt $608,343
5-02(28) preferred stock-mandatory redemption 0
5-02(29) preferred stock-no mandatory redemption 0
5-02(30) common stock $268,159
5-02(31) other stockholders' equity $1,637,157
5-02(32) total liabilities and stockholders' equity $3,234,426
5-03(b)1(a) net sales of tangible products $4,350,340
5-03(b)1 total revenues $4,937,529
5-03(b)2(a) cost of tangible goods sold $1,957,095
5-03(b)2 total costs and expenses applicable to sales and revenues
$4,940,811
5-03(b)3 other costs and expenses $72,531
5-03(b)5 provision for doubtful accounts and notes $(2,000)
5-03(b)(8) interest and amortization of debt discount $105,624
5-03(b)(10) income before taxes and other items $29,811
5-03(b)(11) income tax expense 0
5-03(b)(14) income (loss) continuing operations $29,811
5-03(b)(15) discontinued operations 0
5-03(b)(17) extraordinary items 0
5-03(b)(18) cumulative effect-changes in accounting principles 0
5-03(b)(19) net income or (loss) $29,811
5-03(b)(20) earnings per share-primary $.01
5-03(b)(20) earnings per share-fully diluted $.01