<PAGE>
- - --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN ISSUER
PURSUANT TO RULE 13A-16 OR 15D-16 OF THE SECURITIES EXCHANGE ACT OF 1934
FILING NO. 2 FOR THE MONTH OF APRIL, 2000
VISIBLE GENETICS INC.
---------------------
(Exact name of Registrant)
700 BAY STREET, SUITE 1000, TORONTO ON, CANADA M5G 1Z6
------------------------------------------------------
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports
under cover Form 20-F or Form 40-F
Form 20-F X Form 40-F __
Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes __ No X
- - --------------------------------------------------------------------------------
<PAGE>
VISIBLE GENETICS INC.
On or about April 19, 2000, Visible Genetics Inc. (the
"Company") mailed a Notice of Annual and Special Meeting of Shareholders, and
Management Information Circular and Proxy Statement, each dated April 13, 2000
and Forms of Proxy.
The information included in the materials mailed to shareholders which
is expressly listed below is incorporated by reference into the Company's
Registration Statements on Form F-3, and into the prospectuses contained
therein, (File Nos. 333-67607, 333-68939, 333-91155 and 333-94649) and the
Company's outstanding Registration Statements on Form S-8. Any information
included in such material which is not expressly listed below is not
incorporated by reference into any of such registration statements:
1. Management Information Circular and Proxy Statement dated April 13, 2000 -
the following sections only:
- Proposal No. 2 - Election of Directors - Only information with respect
to director nominees J. Spencer Lanthier and Jacques R. Lapointe
- Proposal No. 4 - Approval of the 2000 Employee Share Option Plan -
Summary Description of the 2000 Plan only
- Exhibit B - 2000 Employee Share Option Plan
Exhibit 1. Notice of Annual and Special Meeting of Shareholders, dated April 13,
2000
Exhibit 2. Management Information Circular and Proxy Statement, dated April 13,
2000
Exhibit 3. Forms of Proxy
<PAGE>
SIGNATURES
Pursuant to the requirements 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.
VISIBLE GENETICS INC.
Date: April 19, 2000 By: /s/ Thomas J. Clarke
--------------------
Name: Thomas J. Clarke
Title: Chief Financial Officer
<PAGE>
Exhibit 1
VISIBLE GENETICS INC.
700 BAY STREET
TORONTO, ONTARIO, CANADA
M5G 1Z6
------------------------------------------
NOTICE OF ANNUAL AND SPECIAL MEETING OF SHAREHOLDERS
-------------------------------------------
The 2000 Annual and Special Meeting of Shareholders (the "Meeting") of
Visible Genetics Inc. (the "Company") will be held at the Marriott Eaton Centre,
525 Bay Street, Toronto, Ontario, Canada M5G 2L2, on May 16, 2000 at 4:00 p.m.
(Toronto time) for the following purposes:
(1) To receive the 1999 Annual Report and the consolidated financial
statements of the Company for the year ended December 31, 1999,
together with the report of the auditors thereon;
(2) To consider and, if thought fit, to pass a resolution confirming
the amendment (previously approved by the Board of Directors) of
By-law No. 3 of the Company regarding the Series A Directorship;
(3) To elect directors;
(4) To appoint the auditors of the Company and authorize the Board of
Directors to fix their remuneration;
(5) To consider and, if thought fit, to pass a resolution approving
the Company's 2000 Employee Share Option Plan; and
(6) To transact such other business as may properly come before the
Meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on April 7, 1999
as the record date for the determination of shareholders entitled to notice of,
and to vote at, the Meeting.
Enclosed is the 1999 Annual Report, which is not proxy solicitation
material. Shareholders are invited to attend the Meeting. Shareholders who are
unable to attend the Meeting are urged to complete, sign, date, and return the
enclosed proxy promptly in the envelope provided.
Dated at Toronto, Canada, this 13 day of April, 2000.
By Order of the Board of Directors
Richard T. Daly, President and
Chief Executive Officer
<PAGE>
Exhibit 2
VISIBLE GENETICS INC.
700 BAY STREET
TORONTO, ONTARIO, CANADA
M5G 1Z6
------------------------------------------
MANAGEMENT INFORMATION CIRCULAR AND PROXY STATEMENT
APRIL 13, 2000
-------------------------------------------
This Management Information Circular and Proxy Statement and the
accompanying proxy are being furnished to shareholders in connection with the
solicitation by management of Visible Genetics Inc. (the "Company") of proxies
to be voted at the 2000 Annual and Special Meeting of Shareholders (the
"Meeting") of the Company to be held on May 16, 2000 at 4:00 p.m. (Toronto time)
at the Marriott Eaton Centre, 525 Bay Street, Toronto, Ontario, Canada M5G 2L2,
and at any adjournment thereof. This proxy statement and the proxies solicited
hereby are first being sent or delivered to shareholders on or about April 17,
2000.
GENERAL INFORMATION
All common shares ("common shares") and all Series A Convertible
Preferred Shares ("Series A preferred shares") of the Company represented at the
Meeting by properly executed proxies received by the Company at its offices at
least one hour prior to the Meeting or at the offices of the Company's transfer
agent by 4:00 p.m. (New York City time) on the business day immediately prior to
the date of the Meeting and which are not revoked, will be voted at the Meeting.
If the person executing or revoking a proxy does so under a power of attorney or
other authorization, including authorization by a corporation's board of
directors or shareholders, the Company must receive the original or a duly
certified copy of the power of attorney or other authorization. A proxy may be
revoked by a shareholder at any time prior to its use by voting in person at the
Meeting, by executing a later proxy, or by submitting a written notice of
revocation to the General Counsel of the Company at the Company's offices at
least one hour prior to the Meeting. If the proxy is signed properly by the
shareholder and is not revoked, it will be voted at the Meeting. If a
shareholder specifies how the proxy is to be voted, the proxy will be voted in
accordance with such specification. In the absence of any direction to the
contrary: the common shares represented by such proxies will be voted for the
election of management's nominees as the Class I Directors; the Series A
preferred shares represented by such proxies will be voted for the election of
management's nominee as the Series A Director; and the common shares and Series
A preferred shares (collectively, the "Shares") represented by such proxies will
be voted for the appointment of PricewaterhouseCoopers LLP as auditors and for
the approval of the By-law Amendment Resolution and for the approval of the
Share Option Plan Resolution, which are described in this Management Information
Circular and Proxy Statement. The enclosed form of proxy confers discretionary
authority upon the persons named therein with respect to amendments or
variations to matters identified in the Notice of Meeting and with respect to
other matters which may properly come before the Meeting or any adjournments
thereof.
<PAGE>
The persons named in the enclosed form of proxy are officers of the
Company. A shareholder has the right to appoint a person (who need not be a
shareholder) to attend and act for him or her and on his or her behalf at the
Meeting or any adjournments thereof other than the persons designated on the
enclosed form of proxy. Such right may be exercised by striking out the names of
the persons designated on the enclosed form of proxy and by inserting in the
blank space provided for that purpose the name of the desired person or by
completing another proper form of proxy and, in either case, delivering the
completed and executed proxy to the Company at least one hour prior to the
meeting, or to the Company's transfer agent prior to 4:00 p.m. (New York City
time) on the business day immediately prior to the date of the meeting or any
adjournments thereof.
All costs in connection with the solicitation of the enclosed proxy
will be borne by the Company. In addition to solicitations of proxies by use of
the mail, certain officers or employees of the Company, without additional
remuneration, may solicit proxies personally or by telephone, facsimile and
telegraph. The Company will also request brokers, dealers, banks and their
nominees to solicit proxies from their clients, where appropriate, and will
reimburse them for reasonable expenses related thereto.
The presence of two or more shareholders in person entitled to vote at
the Meeting, or a duly appointed proxy holder or representative for a
shareholder so entitled, will constitute a quorum for the transaction of
business at the Meeting. Under the Company's by-laws, if a quorum is not present
at the Meeting, the shareholders present or represented may adjourn the Meeting
to a fixed time and place but may not transact any other business.
Only shareholders of record at the close of business on April 7, 2000
(the "Record Date") are entitled to notice of and to vote at the Meeting. At the
close of business on the Record Date, 15,024,295 common shares were outstanding
and eligible for voting at the Meeting and 33,948 Series A preferred shares,
convertible into 3,282,894 common shares, were outstanding and eligible for
voting at the Meeting. Each holder of record of common shares is entitled to one
vote for each common share held on all matters to come before the Meeting.
However, holders of common shares may not vote for the election of the director
to be elected by holders of Series A preferred shares (the "Series A Director").
Each holder of record of Series A preferred shares is entitled to the number of
votes corresponding to the number of common shares the holder is entitled to
receive upon conversion of such holder's Series A preferred shares. Holders of
Series A preferred shares vote separately for the election of one Series A
director and are not entitled to vote for any other directors.
For all matters other than the election of directors, the affirmative
vote of the holders of a majority of the votes attributable to the Shares voted
at the Meeting is required to approve each of the matters to be considered at
the Meeting. The affirmative vote of the holders of a majority of common shares
voted at the Meeting is required to elect the Class I Directors and the
affirmative vote of the holders of a majority of the Series A preferred shares
voted at the Meeting is required to elect the Series A Director.
All dollar amounts herein are expressed in United States dollars,
unless stated otherwise.
2
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information regarding the
beneficial ownership of our outstanding voting shares, as of the Record Date,
for (i) all shareholders known to the Company to beneficially own or exercise
control or direction over more than 10% of the votes attributable to the Shares,
and (ii) all directors and executive officers as a group (13 persons):
<TABLE>
<CAPTION>
NUMBER OF SHARES
BENEFICIALLY OWNED(1)(2)
-------------------------------------
NAME OF BENEFICIAL OWNER NUMBER PERCENT
--------------- ------------
<S> <C> <C>
Warburg, Pincus Funds (3)............................................ 2,928,888 16.0%
GeneVest Inc. (4).................................................... 1,927,134 10.5%
All directors and executive officers as a group (13 persons)(5)...... 394,134 2.2%
</TABLE>
- - ----------------------------
(1) The information in this table is based on our records, information
provided to its by directors and executive officers and a review of any
Schedules 13D and 13G filed in 1999 and 2000 by our shareholders with
the Securities and Exchange Commission. Beneficial ownership is
determined in accordance with rules of the Securities and Exchange
Commission and includes shares over which the indicated beneficial
owner exercises voting and/or investment power. Our common shares
subject to options currently exercisable or exercisable within 60 days
are deemed outstanding for computing the percentage ownership of the
person holding the options but are not deemed outstanding for computing
the percentage ownership of any other person.
(2) This information is based on 18,307,189 common shares outstanding as of
the Record Date, which includes 3,282,894 common shares issuable upon
conversion of our Series A preferred shares as of the Record Date. The
number of common shares issuable upon conversion of our Series A
preferred shares will increase as the dividends payable thereon accrue.
(3) Consists of (i) 1,383,901 common shares held by Warburg, Pincus Equity
Partners, L.P, which includes 1,370,787 common shares issuable upon
conversion of their Series A preferred shares; (ii) 1,464,444 common
shares held by Warburg, Pincus Ventures International, L.P, which
includes 1,450,568 common shares issuable upon conversion of their
Series A preferred shares; (iii) 43,933 common shares held by Warburg,
Pincus Netherlands Equity Partners, I, C.V, which includes 43,517
common shares issuable upon conversion of their Series A preferred
shares; (iv) 29,288 common shares held by Warburg, Pincus Netherlands
Equity Partners, II, C.V, which includes 29,011 common shares issuable
upon conversion of their Series A preferred shares; and (v) 7,322
common shares held by Warburg, Pincus Netherlands Equity Partners III,
C.V., which includes 7,253 common shares issuable upon conversion of
their Series A preferred shares. Warburg, Pincus & Co. ("WP") is the
sole general partner of each of these shareholders. Each of these
shareholders is managed by E.M. Warburg, Pincus & Co., LLC ("EMW LLC").
Lionel I. Pincus is the managing partner of WP and the managing member
of EMW LLC, and may be deemed to control both entities. Jonathan S.
Leff, a director of the Company, is a general partner of WP and a
managing director and member of EMW
3
<PAGE>
LLC. Mr. Leff may be deemed to have an indirect pecuniary interest
(within the meaning of Rule 16a-1 under the Securities Exchange Act of
1934, as amended) in an indeterminate portion of the shares
beneficially owned by these shareholders. Mr. Leff disclaims
beneficial ownership of all such shares.
(4) GeneVest Inc. is a Canadian company incorporated pursuant to the laws
of Alberta, Canada. Mr. Sheldon Inwentash, a director of the Company,
is the Chairman and Chief Executive Officer of GeneVest and, together
with his affiliates, beneficially owns approximately 45% of GeneVest's
issued and outstanding common shares.
(5) Includes an aggregate of 349,943 common shares subject to options,
exercisable within 60 days from the Record Date, held by our directors
and executive officers, but excludes the Shares held by GeneVest Inc.
and the Warburg Pincus Funds.
4
<PAGE>
PROPOSAL NO. 1 CONFIRMATION OF AMENDMENT TO BY-LAW NO. 3
At the Meeting, shareholders will be asked to consider and, if thought
fit, to pass a resolution (the "By-law Amendment Resolution") confirming an
amendment to By-law No. 3 providing for the election of a Series A Director by
the holders of the Series A preferred shares voting as a separate class. The
full text of the By-law Amendment Resolution is attached as Schedule A.
In July 1999, certain affiliated funds managed by E.M. Warburg, Pincus
& Co., LLC (the "Warburg Pincus Funds") invested $30 million in the Company. In
consideration for this investment, the Company issued to the Warburg Pincus
Funds 30,000 Series A preferred shares convertible at the holder's option into
common shares at $11.00 per share, and warrants to purchase 1,100,000 common
shares exercisable for four years at an exercise price of $12.60 per share.
In connection with this transaction, the Company repaid or satisfied
certain outstanding loans made to the Company by funds affiliated with Hilal
Capital Management LLC (the "Hilal Funds"). Of the $8.0 million principal amount
of the loans, the Company paid $4.1 million of principal plus accrued interest
in cash. The Hilal Funds converted the remaining $3.9 million principal amount
plus accrued interest into 3,948 Series A preferred shares and warrants to
purchase 147,098 common shares. These Series A preferred shares and warrants
have the same terms as those granted to the Warburg Pincus Funds.
Holders of Series A preferred shares have the right to vote as a
separate class for one director. This right together with the other rights,
privileges and terms of the Series A preferred shares were set out in Articles
of Amendment approved by the Board of Directors and the Certificate and Articles
of Amendment issued by the Ontario Ministry of Consumer and Commercial
Relations, effective July 15, 1999. Under the Company's articles and applicable
Ontario law, shareholder approval in respect of the creation and issuance of the
Series A preferred shares, including the establishment of a Series A Director,
was not required. Prior to the creation and issuance of the Series A preferred
shares, By-law No. 3 provided that the Board of Directors would be divided into
three classes of directors with the directors elected in each class generally
serving for a three-year term with one class of directors being elected each
year. The terms of the Series A preferred shares provide that the Series A
Director shall be elected for a term of one year only. In order to ensure that
the provisions of the Company's by-laws did not conflict with the provisions of
the Company's articles, the Board of Directors amended By-law No. 3 by revising
Section 4.03 in the manner set out in Exhibit A. While shareholder confirmation
of the amendment to By-law No. 3 is required to amend the by-laws, it was not
required to create the Series A Directorship. Therefore, even if the
shareholders do not ratify this by-law amendment, the Series A Directorship will
remain in effect and the election of a Series A Director at the Meeting will not
be affected. With the exception of subsection (c) of revised Section 4.03 of
By-Law No. 3 (see below), the only consequence of shareholders failing to ratify
the by-law amendment is that the language of the by-laws will conflict with the
language of the Company's articles.
The holders of the Series A preferred shares shall have the right to
elect, as a separate class, the Series A Director for so long as the total
number of common shares issuable upon conversion of the Series A preferred
shares equals at least 5% of the then outstanding common
5
<PAGE>
shares. The Series A Director is elected by the affirmative vote of the holders
of record of a majority of the outstanding Series A preferred shares.
Subsection (c) of the revised Section 4.03 of By-law No. 3 provides
that, if upon the conversion of the Series A preferred shares, the holders of
those common shares issued upon the conversion of Series A preferred shares own
and continue to own at least 5% of the then outstanding common shares, the
Company shall nominate and use commercially reasonable efforts to elect and
cause to remain on the board one individual designated by such holders. This
subsection reflects a separate contractual obligation of the Company and is not
included in the Company's articles. Therefore, if the shareholders do not ratify
the by-law amendment, this right granted to the holders of Series A preferred
shares will not be included as part of the Company's by-laws. However, it will
remain a contractual obligation of the Company.
Only holders of Series A preferred shares are entitled to vote for the
Series A Director, and such holders are not entitled to vote for any other
directors.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR PROPOSAL NO. 1.
PROPOSAL NO. 2 ELECTION OF DIRECTORS
The Company's Board of Directors is comprised of: (i) three classes,
consisting of Class I Directors, Class II Directors and Class III Directors, and
(ii) the Series A Director. At each annual shareholders' meeting, successors to
the class of directors, other than the Series A Director, whose term expires at
that Meeting are elected for a three-year term. The term of the Class I
Directors expire at the Meeting, and the terms of the Class II and Class III
Directors expire on the date of the annual shareholders' meetings to be held in
2001 and 2002, respectively. The Series A Director serves for a one-year term
and any vacancy may be filled only by a vote of the holders of Series A
preferred shares.
At the Meeting, the common shareholders will be asked to elect two
directors nominated by the Company's Board of Directors to serve as Class I
Directors for three years until the annual shareholders' meeting to be held
during 2003 and until their respective successors shall have been elected and
duly qualified. In addition, the holders of Series A preferred shares will be
asked to elect one director to serve as the Series A Director for one year until
the next annual shareholders' meeting and until his respective successor shall
have been elected and duly qualified.
Unless authority to do so is withheld, it is intended that proxies
solicited by the Board of Directors will be voted for the election of the
persons nominated. If any nominee is unable or unwilling to serve, which the
Board of Directors does not anticipate, the persons named in the proxy will vote
for another person in accordance with their best judgment.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR PROPOSAL NO. 2.
6
<PAGE>
The following information is supplied with respect to each person
nominated and recommended to be elected by the Board of Directors of the
Company, as well as existing directors of the Company, based upon the records of
the Company and information furnished to it by the nominees.
NOMINEES TO BE VOTED UPON AT THE MEETING
CLASS I DIRECTORS NOMINATED FOR TERMS EXPIRING IN 2003
MICHAEL A. CARDIFF has been a Director of the Company since June 1999.
Since September 1999, Mr. Cardiff has been President and Chief Executive Officer
of Prologic Corporation. From October 1996 to September 1999, Mr. Cardiff was
Executive Vice President, Financial Services of EDS Canada. From November 1994
to September 1996, Mr. Cardiff was Senior Vice President of Sales and Marketing
of EDS Canada and from 1989 to 1994, he held several positions with Stratus
Computer Corp. Mr. Cardiff presently is a member of the boards of directors of
Visible Decisions Inc. (which is not related to the Company), SOLCORP Insurance
Software Solutions Corp. and Spectra Securities Software Inc.
J. SPENCER LANTHIER was appointed to the Board of Directors in April
2000, filling the vacancy created by the resignation, from the Board of
Directors, of Marguerite Ethier, Vice President and General Counsel of the
Company. Ms. Ethier was appointed to the Board of Directors in March 2000 to
fill the vacancy created by the resignation of Samuel Schwartz. Since January
2000, Mr. Lanthier has been self-employed as a corporate director. From 1993 to
April 1999, Mr. Lanthier was Chairman and Chief Executive Officer of KPMG Canada
LLP.
SERIES A DIRECTOR NOMINATED FOR A TERM EXPIRING IN 2001
JONATHAN S. LEFF has been a Director of the Company since July 1999,
serving as the designee of the holders of Series A preferred shares. Mr. Leff
joined E.M. Warburg, Pincus & Co., LLC in July 1996 as an Associate. In January
1999, he became a Vice President, and in January 2000, he became a Managing
Director. Mr. Leff presently is a member of the boards of directors of VitalCom
Inc., Intermune Pharmaceuticals Inc. and a number of private health care
companies.
DIRECTORS NOT STANDING FOR ELECTION AT THE MEETING
CLASS II DIRECTORS UP FOR ELECTION IN 2001
RICHARD T. DALY has been a Director of the Company since June 1998,
Executive Vice President since March 1999 and President and Chief Executive
Officer since July 1999. Prior to joining the Company, Mr. Daly founded, and,
from March 1989 through July 1998, served as Chairman and Chief Executive
Officer of Clinical Partners, Inc., a San Francisco-based company providing
comprehensive, therapy-specific management of HIV and AIDS patients for
employers and managed health-care organizations. Prior to founding Clinical
Partners, Mr. Daly spent over 15 years in the healthcare industry with several
companies in a variety of executive positions in sales, marketing and general
management, including serving as the President of Baxter Canada for a period of
four years, and President of the Health Data Institute.
DR. LLOYD M. SMITH has been a Director of the Company since March 1995.
Since June 1994, Dr. Smith has been Professor of Chemistry at the University of
Wisconsin-Madison. Dr.
7
<PAGE>
Smith has been involved in the development of fluorescence-based automated DNA
sequencers for over 15 years, has written numerous scientific papers and is a
named inventor on a number of U.S. patents. Dr. Smith is a past member of the
National Institutes of Health National Human Genome Research Institute Study
Section. Dr. Smith is a member of the Scientific Advisory Board of CuraGen Corp.
He also serves, or has served, on the editorial boards of GENOME RESEARCH, DNA
SEQUENCE GENETIC ANALYSIS: TECHNIQUES AND APPLICATIONS and JOURNAL OF CAPILLARY
ELECTROPHORESIS and was a member of the scientific advisory boards of Fotodyne
Incorporated and Boehringer Mannheim Corp. Dr. Smith is a co-founder of
Third-Wave Technologies, Inc., a biotechnology company, which has agreed to be
acquired by PE Biosystems Group in a stock-for-stock transaction. On December
27, 1999, Perkin-Elmer Corporation, PE Biosystems Group filed a lawsuit against
the Company claiming that the Company's DNA sequencing equipment and products
infringe patents licensed to Perkin-Elmer by the California Institute of
Technology. This lawsuit is more fully described in the Company's Annual Report
on Form 20-F/A-1 for the year ended December 31, 1999.
DR. KONRAD M. WEIS has been a Director of the Company since 1997. Dr.
Weis has been the honorary Chairman of Bayer Corporation since 1991. He was
President and Chief Executive Officer of the company that later became Bayer
Corporation from 1974 until his retirement in 1991. Dr. Weis presently is a
member of the boards of directors of Demegen Inc., Michael Baker Corporation and
Titan Pharmaceuticals, Inc.
CLASS III DIRECTORS UP FOR ELECTION IN 2002
SHELDON INWENTASH has been a Director of the Company since April 1994.
Since November 1993, Mr. Inwentash has been the Chairman and Chief Executive
Officer of GeneVest Inc. (formerly known as Gene Screen Inc.), an Alberta
company which is a principal shareholder of the Company. Since February 1992,
Mr. Inwentash has been the Chairman and Chief Executive Officer of Pinetree
Capital Corp., a venture capital firm.
JACQUES R. LAPOINTE was appointed to the Board of Directors in April
2000, filling the vacancy created by the resignation of Robert M. MacIntosh. Mr.
MacIntosh was appointed to the Board of Directors in March 2000 to fill the
vacancy created by the resignation of Dr. Thomas C. Merigan. Since June 1998,
Mr. Lapointe has been President and Chief Operating Officer of BioChem Pharma
Inc. From April 1994 to June 1998, Mr. Lapointe was Managing Director and
Business Development Director of Glaxo Wellcome Plc. Mr. Lapointe is presently a
member of the board of directors of BioChem Pharma Inc.
PROF. J. ROBERT S. PRICHARD has been a Director of the Company since
May 1999. Prof. Prichard has been President of the University of Toronto since
1990. From 1984 to 1990, Prof. Prichard was Dean of the Faculty of Law at the
University of Toronto. Prof. Prichard is past Chairman of the Council of Ontario
Universities, a Director of the Association of American Universities and a
Director of the Association of Universities and Colleges of Canada and the
International Association of Universities. Prof. Prichard presently is a member
of the boards of directors of the University Health Network, Onex Corporation,
BioChem Pharmaceuticals, Moore Corporation, Four Seasons Hotels Inc. and Tesma
International Inc.
There are no family relationships among the officers and directors of
the Company.
8
<PAGE>
CORPORATE GOVERNANCE
Pursuant to the BUSINESS CORPORATIONS ACT (Ontario) and the Company's
by-laws, a majority of the Company's Board of Directors and each committee of
the Board of Directors must be resident Canadians. A "resident Canadian" is an
individual who is either a Canadian citizen ordinarily resident in Canada, or a
permanent resident within the meaning of the IMMIGRATION ACT (Canada) who is
ordinarily resident in Canada.
COMMITTEES OF THE BOARD OF DIRECTORS
The Company's Board of Directors has three standing committees: Audit
Committee, Compensation Committee and Governance Committee.
AUDIT COMMITTEE. The Audit Committee recommends to the Board of
Directors the firm to be appointed each year as independent auditors of the
Company's financial statements and to perform services related to the completion
of such audit. The Audit Committee also has responsibility for:
- reviewing the scope and results of the audit with the
independent auditors;
- reviewing with management and the independent auditors the
Company's interim and year-end financial condition and results
of operations;
- considering the adequacy of the internal accounting,
bookkeeping and control procedures of the Company; and
- reviewing any non-audit services and special engagements to be
performed by the independent auditors and considering the
effect of such performance on the auditors' independence.
The Audit Committee also reviews at least once each year the terms of all
material transactions and arrangements between the Company and its affiliates.
The members of the Audit Committee are Messrs. Inwentash, Leff and Lanthier.
COMPENSATION COMMITTEE. The Compensation Committee establishes and
reviews overall policy and structure with respect to compensation matters,
including the determination of compensation arrangements for directors,
executive officers and key employees of the Company. The Compensation Committee
is also responsible for the administration and award of options to purchase
shares pursuant to the Company's option and share purchase plans. The members of
the Compensation Committee are Messrs. Cardiff, Leff and Prichard.
GOVERNANCE COMMITTEE. The Governance Committee monitors the Company's
corporate governance practices and suggests applicable revisions. The members of
the Governance Committee are Messrs. Daly and Prichard.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
All directors who are not affiliated with the Company as employees
receive a $2,500 fee for each Board of Directors or committee meeting they
attend, up to $10,000 per year. Directors who are not employees of the Company
are also eligible to participate in the Company's Director Option Plan. All
directors are reimbursed for reasonable out-of-pocket travel expenses incurred
by them in attending meetings of the Board of Directors or committee meetings
9
<PAGE>
The aggregate amount of compensation paid to (or earned) by all of the
directors and executive officers of the Company as a group (16 persons) in 1999
was $1,249,408 for services in such capacities, of which $40,476 was paid as
bonuses and $519,063 was paid as severance payments. These amounts do not
include compensation paid by the Company to firms with which a director and a
former director, respectively, are associated. See "Interests of Management in
Certain Transactions."
INTEREST OF MANAGEMENT IN CERTAIN TRANSACTIONS
Dr. John K. Stevens, the Company's founder, served as the President and
Chief Executive Officer of the Company until his retirement in July 1999. In
July 1996, the Company loaned Dr. Stevens $323,405. Interest accrued on the
outstanding principal amount of the loan at the annual rate of 6% and was
payable annually on December 31. The principal amount was payable $17,967 on or
before December 31, 1997 and the balance in nine equal annual installments
ending on December 31, 2007. In 1998, the Company amended the loan arrangement
to eliminate all required interest payments and to provide that the principal
was payable in full on or before December 31, 2006. In addition, during 1997,
the Company loaned Dr. Stevens $50,000 which was payable, together with accrued
interest at the rate of 6% per year, on December 31, 1999. The largest aggregate
amount of indebtedness owed by Dr. Stevens was $379,769 during 1999. Upon
retirement, Dr. Stevens paid all amounts owed to the Company.
In accordance with the terms of his employment agreement, in July 1999,
Dr. Stevens received a severance package of two years salary plus benefits. The
Company extended the termination date of Dr. Stevens' options until 2003. In
November 1999, Dr. Stevens retired as Chairman of the Board of Directors.
In connection with the termination of employment of the Company's
former chief financial officer, Mr. Jeffrey K. Sherman, in November 1999, the
Company paid $89,388 to Mr. Sherman.
In November 1999, Dr. Chalom Sayada ceased employment with the Company
as its Vice President for European Business Development. In connection with his
termination of employment, the Company paid him $262,500. In addition, the
Company retained him as a consultant to provide marketing and strategy services
to it for 18 months. In consideration of such services, he will earn a minimum
of $125,000 for the first twelve months of service and $63,000 for the remaining
six months of service.
In June 1998, Mr. Richard T. Daly was appointed as one of the Company's
directors. Mr. Daly was appointed President and Chief Executive Officer of the
Company in July 1999. During 1999, the Company paid an aggregate $291,115 in
consulting fees to Clinical Partners, Inc. in connection with clinical studies
performed by Clinical Partners for the Company. Mr. Daly is the founder and was
previously the Chairman and President of Clinical Partners.
Mr. Samuel Schwartz, a former director and executive officer of the
Company, is a senior partner of a law firm to which the Company paid $246,210
legal fees in 1999.
The Company has agreed to file a registration statement with the
Securities and Exchange Commission (the "SEC") covering 1,927,134 common shares
owed by GeneVest Inc., which will be filed no earlier than 90 days and no later
than 180 days after April 4, 2000. Mr. Sheldon Inwentash, one of the Company's
directors, is the Chairman and Chief Executive Officer of
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GeneVest and, together with his affiliates, beneficially owns approximately 45%
of GeneVest's issued and outstanding common shares.
For a description of transactions involving the Company and Hilal
Capital Management LLC and the Company and E.M. Warburg, Pincus & Co., LLC, see
"Management's Discussion and Analysis of Financial Condition and Results of
Operations-Liquidity and Capital Resources" in the Company's 1999 Annual Report
on Form 20-F/A-1.
PROPOSAL NO. 3 APPOINTMENT OF AUDITORS
At the Meeting, the shareholders will be asked to approve the
reappointment of PricewaterhouseCoopers LLP ("PricewaterhouseCoopers") as
auditors of the Company to hold office until the next annual meeting of
shareholders and to authorize the Board of Directors to fix their remuneration.
A representative of PricewaterhouseCoopers will attend the Meeting and will have
an opportunity to make a statement if he so desires and respond to appropriate
questions. PricewaterhouseCoopers served as the Company's auditors for the year
ended December 31, 1999.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR PROPOSAL NO. 3.
PROPOSAL NO. 4 APPROVAL OF THE 2000 EMPLOYEE SHARE OPTION PLAN
At the Meeting, shareholders will be asked to consider and, if thought
fit, to pass the a resolution (the "Share Option Plan Resolution") approving the
adoption of the 2000 Employee Share Option Plan (the "2000 Plan"). The full text
of the Share Option Plan Resolution is attached as Schedule B.
On April 13, 2000, the Board of Directors adopted the 2000 Plan and
directed that the 2000 Plan be submitted to the shareholders at the Meeting. The
2000 Plan is effective subject to the affirmative vote of a majority of the
votes cast by shareholders voting in person or by proxy at the Meeting.
The 2000 Plan is intended as a performance incentive for officers,
directors, employees and consultants of the Company or its Subsidiaries (as that
term is defined in the 2000 Plan) to enable the persons to whom options are
granted to acquire or increase a proprietary interest in the success of the
Company. In the past, the Company has awarded options under its 1996 Employee
Share Option Plan (the "1996 Plan") and other plans. The Company has granted a
total of 3,334,055 options out of the 3,750,901 options authorized under its
existing plans. In order to increase the number of options the Company may
award, the Board of Directors believes that it is in the best interests of the
Company to adopt a new plan and discontinue the grant of awards under the 1996
Plan. No further awards will be made under the 1996 Plan after the 2000 Plan is
approved.
SUMMARY DESCRIPTION OF THE 2000 PLAN
The following summary of the 2000 Plan is qualified in its entirety by
reference to the
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text of the 2000 Plan, which is attached to this proxy statement as Exhibit B.
The 2000 Plan will be administered by the Board of Directors or the Compensation
Committee of the Board of Directors (the Board of Directors and the Compensation
Committee hereinafter called "the Option Committee"). The 2000 Plan provides for
the grant of Incentive Options and Nonqualified Options (as those terms are
defined below). The Option Committee has full and final authority to operate,
manage and administer the 2000 Plan.
The following is a summary of certain provisions of the 2000 Plan:
ELIGIBILITY. The Option Committee is authorized to grant options to
officers or other employees of the Company or its Subsidiaries, to members of
the Board of Directors of the Company or any Subsidiary whether or not employees
of the Company or such Subsidiary, and to consultants who provide services to
the Company or its Subsidiaries (regardless of whether they are also employees).
Incentive Options, however, may be granted only to officers or other employees
of the Company or certain Subsidiaries, including members of the Board of
Directors who are also employees of the Company or such Subsidiaries. In
addition, only Nonqualified Options will be granted to employees of the Company
or any Subsidiary who are Canadian residents.
No person shall be eligible to receive any Incentive Option under the
2000 Plan if, at the date of grant, such person beneficially owns shares
representing in excess of 10% of the voting power of all outstanding share
capital of the Company or its parent or a Subsidiary (a "10% Shareholder"),
unless (i) the purchase price of the Incentive Option is at least 110% of the
fair market value of the common shares at the time of the grant and (ii) the
Incentive Option is not exercisable more than five years from the date of grant.
PURCHASE PRICE. The purchase price will be determined by the Option
Committee at the time the option is granted. However, the purchase price of each
Nonqualified Option granted to a Canadian resident or a person who is otherwise
taxable in Canada, and the purchase price of each Incentive Option shall not be
less than the fair market value of the Company's common shares on the date the
option is granted. Fair market value for purposes of the 2000 Plan shall not be
less than the closing price of the Company's common shares as reported on the
Nasdaq National Market System on the relevant date.
EXPIRATION. Each option will terminate on the date fixed in the option
agreement entered into between the Company and the option holder (the "option
agreement") which, in the case of Incentive Options, shall not be later than (a)
ten years after the date of the grant and (b) five years after the date of grant
of Incentive Options granted to 10% Shareholders.
VESTING. Options may be exercisable in full or in installments and at
such time or times as may be designated by the Option Committee. Except as
otherwise provided in the option agreement, no option shall first be
exercisable, either in whole or in part, until the expiration of six months from
the date of grant, and shall be exercisable with respect to a number of common
shares equal to 1/8 of the total number of shares subject to the option on the
six month anniversary of the date of grant and with respect to a number of
common shares equal to 1/48 of the total number of shares subject to the option
on the same day of each month as the grant for forty-two consecutive months
commencing on the seventh month anniversary of the date of the grant.
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LIMITATION ON EXERCISABLE OPTIONS. The aggregate fair market value
(determined as of the time the option is granted) of the common shares with
respect to which Incentive Options are exercisable for the first time by any
individual during any calendar year (under the 2000 Plan and all other plans of
the Company and its parent and Subsidiaries) shall not exceed $100,000. Any
Incentive Option granted under the 2000 Plan in excess of the foregoing
limitation shall be deemed a Nonqualified Option.
PAYMENT. Payment for shares purchased on the exercise of an option must
be made in full at the time the option is exercised, as well as arrangements for
any applicable withholding.
SHARES SUBJECT TO THE 2000 PLAN. The common shares subject to options
granted under the 2000 Plan shall be authorized but unissued common shares of
the Company. The total number of shares that may be issued pursuant to options
granted under the 2000 Plan shall not exceed an aggregate of 1,000,000 common
shares. No employee of the Company or any Subsidiary will be granted options to
acquire more than 500,000 common shares during any fiscal year of the Company.
If any option terminates or is canceled for any reason without having been
exercised in full, the common shares not issued or transferred will then become
available for additional grants of options. The common shares available under
the 2000 Plan represent approximately 6.7% of the Company's issued and
outstanding common shares on April 7, 2000. The number of common shares
available under the 2000 Plan is subject to adjustment in the event of any stock
split, stock dividend, recapitalization, spin-off or other similar action.
TERMINATION OF AND AMENDMENTS TO THE 2000 PLAN. The Board of Directors
may discontinue or amend the 2000 Plan from time to time in any manner permitted
by applicable laws and regulations, except that no amendment will be effective
unless approved by the shareholders, as required by applicable law or where such
amendment will:
- increase the number of shares as to which options may be
granted; or
- change in substance the provisions relating to eligibility to
participate in the 2000 Plan.
OUTSTANDING OPTIONS. As of April 7, 2000 there were options outstanding
to purchase an aggregate of 1,795,436 common shares, including options to
purchase 995,776 common shares held by directors and executive officers as a
group. The options held by directors and executive officers as a group have
exercise price ranging from $1.37 to $48.88 per share and expire at various
times between 2004 and 2010. The other options have exercise prices ranging from
$1.37 to $53.00 per share, and expire at various times between 2002 and 2010.
U.S. FEDERAL INCOME TAX CONSEQUENCES TO THE COMPANY AND THE OPTIONEES
INCENTIVE OPTIONS. Some of the options granted under the 2000 Plan may
be intended to constitute "Incentive Stock Options" ("Incentive Options") within
the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code"). Under present U.S. federal tax laws and regulations, there will be no
U.S. federal income tax consequences to either the Company, its Subsidiaries or
an optionee upon the grant of an Incentive Option, nor will an optionee's
exercise of an Incentive Option result in U.S. federal income tax consequences
to the Company or its Subsidiaries. Although an optionee will not generally
realize ordinary income upon his exercise of an Incentive Option, the excess of
the fair market value of the common
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shares acquired at the time of exercise over the option price may constitute an
adjustment in computing alternative minimum taxable income under Section 56 of
the Code and, thus, may result in the imposition of the "alternative minimum
tax" pursuant to Section 55 of the Code on the optionee. If an optionee does not
dispose of the common shares acquired through an Incentive Option within one
year of the Incentive Option's date of exercise, and within two years of the
Incentive Option's date of grant, any gain realized upon a subsequent
disposition of common shares will constitute capital gain (long term capital
gain if the shares are held by the optionee for at least one year and one day)
to the optionee. If an optionee disposes of the common shares within such
one-year or two-year period, an amount equal to the lesser of (i) the excess of
the fair market value of the common shares on the date of exercise over the
option price or (ii) the actual gain realized upon such disposition will
constitute ordinary income to the optionee in the year of the disposition. Any
additional gain upon such disposition will be taxed as long- or short-term
capital gain, depending on the optionee's holding period. The Company or its
Subsidiary will receive a deduction in an amount equal to the amount, if any,
constituting ordinary income to an optionee.
NONSTATUTORY OPTIONS. Certain options which do not constitute Incentive
Options ("Nonqualified Options") may be granted under the 2000 Plan. Under
present U.S. federal income tax laws and regulations, there should be no U.S.
federal income tax consequences to either the Company, its Subsidiaries or the
optionee upon the grant of a Nonqualified Option. However, the optionee will
realize ordinary income upon the exercise of Nonqualified Option in an amount
equal to the excess of the fair market value of the common shares acquired on
the date of exercise of such option over the option price, and the Company or
its Subsidiary will receive a corresponding deduction. The gain, if any,
realized upon a subsequent disposition of the common shares will constitute
short- or long-term capital gain, depending on the optionee's holding period.
The U.S. federal income tax consequences described in this section are
based on laws and regulations in effect on April 7, 2000, and there is no
assurance that the laws and regulations will not change in the future and affect
the tax consequences of the matters discussed in this section.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR PROPOSAL NO. 4.
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ADDITIONAL INFORMATION
A copy of the Company's Annual Report on Form 20-F/A-1 for the year
ended December 31, 1999, as filed with the Securities and Exchange Commission,
is available on request by writing to Mr. Thomas J. Clarke, Chief Financial
Officer, Visible Genetics Inc., 700 Bay Street, Box 333, Toronto, Ontario,
Canada M5G 1Z6.
OTHER MATTERS
Management knows of no other matters to come before the meeting other
than the matters referred to in the Notice of Meeting of Shareholders. However,
if any other matters, which are not now known to management, should properly
come before the Meeting, the proxy will be voted upon such matters in accordance
with the best judgment of the person voting the proxy.
DIRECTORS' APPROVAL
The contents and sending of this Management Information Circular to the
shareholders of the Company have been approved by the Board of Directors.
Toronto, Canada, April 13, 2000.
BY ORDER OF THE BOARD OF DIRECTORS
Richard T. Daly, President and
Chief Executive Officer
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SCHEDULE A
BY-LAW AMENDMENT RESOLUTION
BE RESOLVED IT THAT the amendment of By-law No. 3 of the Corporation
duly adopted by the Board of Directors on July 14, 1999 providing for the
election of a Series A Director is hereby approved, ratified and confirmed.
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SCHEDULE B
SHARE OPTION PLAN RESOLUTION
BE IT RESOLVED THAT the adoption of the Company's 2000 Employee Share
Option Plan, as approved by the Board of Directors on April 13, 2000, is hereby
approved, ratified and confirmed.
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EXHIBIT A
VISIBLE GENETICS INC.
REVISED SECTION 4.03 OF THE COMPANY'S BY-LAWS ADOPTED BY THE
BOARD OF DIRECTORS ON JULY 14, 1999*
-------------------------------------------------------------------------
4.03 ELECTION AND TERM. (A) SUBJECT TO THE PROVISIONS OF SECTION
4.03(B) AND (C), the board of directors shall be divided into three classes,
each of which shall consist of that number of directors as the directors may
determine. The initial term of office for members of the first class shall
expire at the annual meeting of shareholders next following the date of
confirmation by the shareholders of this by-law; the initial term for members of
the second class shall expire at the second annual meeting of shareholders next
following the date of confirmation by the shareholders of this by-law; and the
initial term for members of the third class shall expire at the third annual
meeting of shareholders next following the date of confirmation by the
shareholders of this by-law. At the expiration of the initial term and of each
succeeding term of each class, the directors of each class shall be elected to
serve for a three-year term. Subject to the Act, the number of directors to be
elected at any such annual meeting of shareholders together with the number of
directors continuing in office shall, in the aggregate, be the number of
directors determined from time to time by special resolution or, if the special
resolution empowers the directors to determine the number, by resolution of the
board. Where the shareholders adopt an amendment to the articles to increase the
number or minimum number of directors, the shareholders may, at the meeting at
which they adopt the amendment, elect the additional number of directors
authorized by the amendment to take office from the effective date of the
endorsement of the articles of amendment with respect thereto. Upon such change
in the number of directors, any increase or decrease in such directors shall be
apportioned by the board of directors among the classes as nearly equal as
possible, provided that no decrease in the number of directors shall affect the
terms of any directors then in office. A director shall hold office until the
annual meeting of shareholders for the year in which his term expires and until
his successor is elected and qualified. The election of directors shall be by
resolution and shall take place at each annual meeting of shareholders and any
directors who retire at such meeting shall, if qualified, be eligible for
re-election. If an election of directors is not held at the proper time, the
incumbent directors shall continue in office until their successors are elected.
(b) IN ADDITION TO THE DIRECTORS PROVIDED FOR IN SECTION 4.03(A), THERE
IS HEREBY CREATED AN ADDITIONAL DIRECTORSHIP (THE "SERIES A DIRECTOR") WHICH
DIRECTORSHIP SHALL CONTINUE IN EFFECT FOR SO LONG AS THE TOTAL NUMBER OF COMMON
SHARES OF THE CORPORATION ("COMMON STOCK") ISSUABLE UPON CONVERSION OF THE
CORPORATION'S SERIES A CONVERTIBLE PREFERRED SHARES (THE "SERIES A PREFERRED
STOCK") IN ACCORDANCE WITH THE PROVISIONS THEREOF EQUALS AT LEAST 5% OF THE THEN
OUTSTANDING SHARES OF COMMON STOCK OF THE CORPORATION. THE HOLDERS OF SERIES A
PREFERRED STOCK SHALL HAVE THE EXCLUSIVE RIGHT, VOTING SEPARATELY AS A CLASS, TO
ELECT THE SERIES A DIRECTOR. THE SERIES A DIRECTOR SHALL BE ELECTED BY THE
AFFIRMATIVE VOTE OF THE HOLDERS OF RECORD OF A
- - ------------------
* Revised portions to be voted upon by shareholders included in Proposal 1 are
indicated in italics.
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MAJORITY OF THE OUTSTANDING SHARES OF SERIES A PREFERRED STOCK, EITHER AT
MEETINGS OF STOCKHOLDERS AT WHICH DIRECTORS ARE ELECTED, A SPECIAL MEETING OF
HOLDERS OF SERIES A PREFERRED STOCK OR BY WRITTEN CONSENT WITHOUT A MEETING IN
ACCORDANCE WITH THE ACT. EACH SERIES A DIRECTOR SO ELECTED SHALL SERVE FOR A
TERM OF ONE YEAR AND UNTIL HIS SUCCESSOR IS ELECTED AND QUALIFIED. ANY VACANCY
IN THE POSITION OF A SERIES A DIRECTOR MAY BE FILLED ONLY BY THE HOLDERS OF THE
SERIES A PREFERRED STOCK. EACH SERIES A DIRECTOR MAY, DURING HIS TERM OF OFFICE,
BE REMOVED AT ANY TIME, WITH OR WITHOUT CAUSE, BY AND ONLY BY THE AFFIRMATIVE
VOTE, AT A SPECIAL MEETING OF HOLDERS OF SERIES A PREFERRED STOCK CALLED FOR
SUCH PURPOSE, OR THE WRITTEN CONSENT, OF THE HOLDERS OF RECORD OF A MAJORITY OF
THE OUTSTANDING SHARES OF SERIES A PREFERRED STOCK. ANY VACANCY CREATED BY SUCH
REMOVAL MAY ALSO BE FILLED AT SUCH MEETING OR BY SUCH CONSENT. AT SUCH TIME AS
THE HOLDERS OF SERIES A PREFERRED STOCK SHALL NO LONGER BE ELIGIBLE TO ELECT A
SERIES A DIRECTOR, THE TERM OF THE SERIES A DIRECTOR THEN SERVING SHALL
IMMEDIATELY AND AUTOMATICALLY TERMINATE WITHOUT ANY ACTION BY THE BOARD OF
DIRECTORS, THE SERIES A DIRECTOR OR ANY OTHER PERSON OR ENTITY.
(c) FROM AND AFTER THE DATE ON WHICH THE HOLDERS OF THE SERIES A
PREFERRED STOCK (THE "PURCHASERS") SHALL HAVE CONVERTED THE SERIES A PREFERRED
STOCK INTO COMMON STOCK, FOR AS LONG AS THE PURCHASERS CONTINUE COLLECTIVELY TO
OWN BENEFICIALLY (WITHIN THE MEANING OF RULE 13D-3 UNDER THE SECURITIES EXCHANGE
ACT OF 1934, AS AMENDED), IN THE AGGREGATE, AT LEAST 5% OF THE ISSUED AND
OUTSTANDING SHARES OF COMMON STOCK, THE CORPORATION WILL NOMINATE AND USE
COMMERCIALLY REASONABLE EFFORTS TO ELECT AND TO CAUSE TO REMAIN AS A DIRECTOR ON
THE BOARD, FILLING THE POSITION FORMERLY OCCUPIED BY THE SERIES A DIRECTOR, ONE
INDIVIDUAL AS DESIGNATED BY THE PURCHASERS. ANY VACANCY CREATED BY THE DEATH,
DISABILITY, RETIREMENT OR REMOVAL OF SUCH INDIVIDUAL MAY BE FILLED BY AN
INDIVIDUAL DESIGNATED BY THE PURCHASERS. AT SUCH TIME AS THE PURCHASERS NO
LONGER BENEFICIALLY OWN, IN THE AGGREGATE, AT LEAST 5% OF THE ISSUED AND
OUTSTANDING SHARES OF COMMON STOCK, THE TERM OF OFFICE OF SUCH INDIVIDUAL
DESIGNATED BY THE PURCHASERS WHO IS THEN SERVING SHALL IMMEDIATELY AND
AUTOMATICALLY TERMINATE WITHOUT ANY ACTION BY THE BOARD, SUCH INDIVIDUAL OR ANY
OTHER PERSON OR ENTITY.
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EXHIBIT B
VISIBLE GENETICS INC.
2000 EMPLOYEE SHARE OPTION PLAN
1. PURPOSE.
This Employee Share Option Plan (the "Plan") is intended as a
performance incentive for officers, directors, employees and consultants of
Visible Genetics Inc. (the "Company") and its Subsidiaries (as hereinafter
defined) to enable the persons to whom options are granted (the "Optionees") to
acquire or increase a proprietary interest in the success of the Company. The
Company intends that this purpose will be effected by the granting of stock
options. Options granted under the Plan may be either "incentive stock options"
("Incentive Options") as defined in Section 422 of the Internal Revenue Code of
1986, as amended (the "Code"), or options that do not qualify as Incentive
Options ("Nonqualified Options"). The term "Subsidiaries" includes any
corporations in which stock possessing greater than fifty percent of the total
combined voting power of all classes of stock is owned directly or indirectly by
the Company, and for purposes of Incentive Options granted under the Plan is
limited to Subsidiaries that are "subsidiary corporations" within the meaning of
Section 424(d)(2) of the Code.
2. OPTIONS TO BE GRANTED.
Options granted under the Plan may be either Incentive Options
or Nonqualified Options, and shall be designated as such at the time of grant.
To the extent that any option intended to be an Incentive Option shall fail to
qualify as an "incentive stock option" under the Code, such option shall be
deemed to be a Nonqualified Option. Further, all options granted to employees of
the Company or any Subsidiary who are residents of Canada shall be deemed to be
Nonqualified Options, and all Incentive Options granted to employees of the
Company or any Subsidiary who are not residents of Canada but otherwise taxable
in Canada shall be Incentive Options for all purposes other than Canadian tax
reporting and assessment purposes.
3. ADMINISTRATION.
(a) BOARD OR OPTION COMMITTEE. The Plan shall be administered
by the Board of Directors of the Company (the "Board of Directors") or by a
committee (the "Option Committee") of not less than two directors of the Company
appointed by the Board. All references in the Plan to the Option Committee shall
mean the Board if no Option Committee has been appointed; provided that the
Board at its discretion may exercise any power of the Option Committee under the
Plan regardless of whether an Option Committee has been appointed. It is the
intention of the Company that each member of the Option Committee shall be a
"non-employed director" as that term is defined and interpreted pursuant to Rule
16b-3(b)(3) or any successor rule thereto promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). To the extent that the
Board of Directors determines it to be desirable to
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qualify options granted hereunder as "performance-based compensation" within the
meaning of Section 162(m) of the Code ("Performance Based Compensation"), each
member of the Option Committee also shall be an "outside director" within the
meaning of said Section 162(m), and the grant of such option shall be made by
the Option Committee. Action by the Option Committee shall require the
affirmative vote of a majority of all its members (or unanimous approval if
there are only two members).
(b) POWERS OF OPTION COMMITTEE. Subject to the terms and
conditions of the Plan, the Option Committee shall have full and final authority
to operate, manage and administer the Plan on behalf of the Company, including,
without limitation, the power:
(i) To effect the grant of options under the Plan; to
grant options conditionally or unconditionally; to determine from time
to time the persons to whom options shall be granted, the form of
option to be granted to such persons under the Plan (including whether
such options shall be Incentive Options or Nonqualified Options), the
number of shares subject to any such option, the exercise price for
options (which price shall be subject to the applicable requirements of
Section 6(d)), the time or times at which each option shall become
exercisable, the conditions under which exercise may be accelerated,
the duration of the exercise period (which shall not exceed the
limitations specified in Section 6(a)) and any restrictions on shares
issued upon exercise of such option; and to prescribe the form or forms
of the instruments evidencing options granted under the Plan and the
terms and provisions (which need not be identical) of each option
granted under the Plan to such persons;
(ii) To waive compliance by an Optionee with any
obligation to be performed by such Optionee under an option and to
waive any condition or provision of an option, both generally and in
particular instances, except that the Option Committee may not, in the
case of an Incentive Option, other than in accordance with Section 8 or
9, (A) increase the total number of shares covered by the option, (B)
extend the term of the option to more than ten years (or five years in
the case of an Incentive Option granted to shareholders subject to the
limitations described in Section 5(b)) or (C) unless the Optionee
consents, reduce the purchase price per Common Share subject to such
option (but in no event below the fair market value of the Common
Shares at such time (determined by reference to the provisions of
Section 6(b) hereof)) or waive compliance by the Optionee with any
obligation, condition or provision required for such option to qualify
as an Incentive Option.
(iii) To construe and interpret the Plan and options
granted thereunder and to establish, amend, and revoke rules and
regulations for administration of the Plan, and in this connection, the
Option Committee may correct any defect or supply any omission, or
reconcile any inconsistency in the Plan, in any option agreement or in
any related agreements, in the manner and to the extent it shall deem
necessary or expedient to make the Plan fully effective, with all
decisions and determinations by the Option Committee in the exercise of
this power to be final and binding upon the Company and Optionees; and
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(iv) Generally, to exercise such powers and to
perform such acts as are deemed necessary or expedient to administer
the Plan or to promote the best interests of the Company with respect
to the Plan.
(c) PERFORMANCE BASED COMPENSATION. The Option Committee, in
its discretion, may take such actions as may be necessary to ensure that options
granted under the Plan qualify as Performance Based Compensation.
4. STOCK.
(a) SHARES SUBJECT TO PLAN. The stock subject to options
granted under the Plan shall be authorized but unissued common shares of the
Company (the "Common Shares"). The total number of Common Shares that may be
issued pursuant to options granted under the Plan shall not exceed an aggregate
of one million (1,000,000) Common Shares. Such number of shares shall be subject
to adjustment as provided in Section 8 hereof. No employee of the Company or any
Subsidiary may be granted options to acquire, in the aggregate, more than five
hundred thousand (500,000) Common Shares (subject to adjustment as provided in
Section 8 hereof) under the Plan during any fiscal year of the Company.
(b) RESTRICTIONS ON SHARES. Shares purchased upon the exercise
of options granted under the Plan may be subject to restrictions, such as
limitations on transfer, vesting and repurchase provisions, and the like, as set
forth in the relevant option agreement or in any other agreement to which the
Optionee is subject. Such restrictions shall be in such form as the Option
Committee shall from time to time deem appropriate. Stock restriction provisions
need not be identical.
(c) LAPSED OR UNEXERCISED OPTIONS. Whenever any outstanding
option under the Plan expires, is cancelled or is otherwise terminated (other
than by exercise), the Common Shares allocable to the unexercised portion of
such option may again be the subject of options under the Plan. When any
withholding tax obligation of an Optionee with respect to the exercise of an
option granted under the Plan is satisfied by cancellation of options, as
permitted in Section 10(a), the total number of Common Shares for which further
options may be granted under the Plan shall be irrevocably reduced by the total
number of shares for which such option is thus exercised and the number of
shares for which such option is canceled.
5. ELIGIBILITY.
(a) ELIGIBLE OPTIONEES. Incentive Options may be granted only
to officers or other employees of the Company or its Subsidiaries, including
members of the Board of Directors who are also employees of the Company or its
Subsidiaries. Nonqualified Options may be granted to officers or other employees
of the Company or its Subsidiaries, to members of the Board of Directors of the
Company or any Subsidiary whether or not employees of the Company or such
Subsidiary, and to consultants who provide services to the Company or its
Subsidiaries (regardless of whether they are also employees). For purposes of
granting options to consultants, the term "consultant" shall be limited to any
individual, other than an employee, director or officer of the Company or a
Subsidiary, that (i) is engaged to provide on a BONA FIDE basis
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consulting services to the Company or a Subsidiary under a written contract
between the Company or a Subsidiary and the individual or a consultant company
or consultant partnership of the individual, and (ii) in the reasonable opinion
of the Company, spends or will spend a significant amount of time and attention
on the affairs and business of the Company or a Subsidiary.
(b) LIMITATION ON 10% SHAREHOLDERS. No person shall be
eligible to receive any Incentive Option under the Plan if, at the date of
grant, such person beneficially owns stock representing in excess of ten percent
(10%) of the voting power of all outstanding capital stock of the Company or its
parent or a Subsidiary, unless notwithstanding anything in this Plan to the
contrary (i) the purchase price for stock subject to such Incentive Option is at
least one hundred ten percent (110%) of the fair market value of such stock at
the time of the grant (determined by reference to the provisions of Section 6(d)
hereof) and (ii) such Incentive Option by its terms is not exercisable more than
five (5) years from the date of grant thereof.
(c) LIMITATION ON EXERCISABLE OPTIONS. Notwithstanding any
other provision of the Plan, the aggregate fair market value (determined as of
the time the option is granted) of the stock with respect to which Incentive
Options are exercisable for the first time by any individual during any calendar
year (under the Plan and all other plans of the Company and its parent and
Subsidiaries) shall not exceed U.S. $100,000. Any option granted under the Plan
in excess of the foregoing limitation shall be deemed a Nonqualified Option. The
provisions of this Section 5(c) shall be construed and applied in accordance
with Section 422(d) of the Code and the regulations, if any, promulgated
thereunder.
(d) OTHER AWARDS. Receipt of options under the Plan or of
awards under any other employee benefit plan of the Company or any of its
Subsidiaries shall not preclude an employee from receiving options or additional
options under the Plan. In granting options the Option Committee may include or
exclude previous participants in the Plan as the Option Committee may determine.
6. TERMS OF THE OPTION AGREEMENTS.
Subject to the terms and conditions of the Plan, each option shall be
evidenced by an option agreement, which shall contain such provisions not
inconsistent with the Plan as the Option Committee shall from time to time deem
appropriate. In the event of any conflict between the terms of an option
agreement and the terms of the Plan, the terms of the Plan shall control. Option
agreements need not be identical, but each option agreement by appropriate
language shall include the substance of all of the following provisions:
(a) EXPIRATION. Notwithstanding any other provision of the
Plan or of any option agreement, each option shall expire on the date
specified in the option agreement, which date in the case of any Incentive
Option shall not be later than the tenth anniversary of the date on which the
option was granted (or five years in the case of an Incentive Option granted
to shareholders subject to the limitations described in Section 5(b)).
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<PAGE>
(b) MINIMUM SHARES EXERCISABLE. Option agreements may in the
discretion of the Option Committee set forth a minimum number of shares with
respect to which an option may be exercised at any one time.
(c) EXERCISE. Options may be exercisable in full or in such
installments (which need not be equal) and at such time or times (including upon
the occurrence of such event or events) as may be designated by the Option
Committee. Except as otherwise provided in the applicable option agreement, no
option shall first be exercisable, either in whole or in part, until the
expiration of six months from the date of grant, and shall be exercisable with
respect to a number of shares equal to one-eighth (1/8) of the total number of
shares subject to such option on the six month anniversary of the date of grant
and with respect to a number of shares equal to one-forty-eighth (1/48) of the
total number of shares subject to such option on the same day of each month as
the date of grant for forty-two (42) consecutive months commencing on the seven
month anniversary of the date of grant. To the extent installments of an option
become exercisable but are not exercised, such installments shall accumulate and
be exercisable, in whole or in part, at any time after becoming exercisable, but
not later than the date the option expires or terminates.
(d) PURCHASE PRICE. The purchase price per Common Share
subject to each option shall be determined by the Option Committee at the time
the option is granted; provided, however, that the purchase price per share
subject to each Nonqualified Option granted to a resident of Canada or person
who is otherwise taxable in Canada and the purchase price per share subject to
each Incentive Option shall be not less than the fair market value of the Common
Shares on the date such option is granted (subject to Section 5(b)). For the
purposes of the Plan, the fair market value of the Common Shares subject to
options granted hereunder shall be determined in good faith by the Option
Committee; provided, however, that (i) if the Common Shares are admitted to
quotation on the National Association of Securities Dealers Automated Quotation
System ("NASDAQ") on the date the option is granted, the fair market value shall
not be less than the average of the highest bid and lowest asked prices of the
Common Shares on NASDAQ reported for such date, or (ii) if the Common Shares are
admitted to trading on a national securities exchange or the NASDAQ National
Market System on the date the option is granted, the fair market value shall not
be less than the closing price reported for the Common Shares on such exchange
or system for such date or, if no sales were reported for such date, for the
last date preceding such date for which a sale was reported.
(e) TRANSFER. Options granted under the Plan and the rights
and privileges conferred thereby may not be transferred, assigned, pledged or
hypothecated in any manner (whether by operation of law or otherwise) other than
by will or by applicable laws of descent and distribution, and may be exercised
during the Optionee's lifetime only by the Optionee, or his or her guardian or
legal representative; provided, however, that a Nonqualified Option may also be
transferred by the Optionee, subject to applicable Canadian federal and
provincial and United States federal and state securities laws, to an INTER
VIVOS or testamentary trust under which (i) such option may be distributed to
beneficiaries upon the death of the Optionee or to the "immediate family" (as
such term is defined in 17 C.F.R. 240.16a-1(e)) of the Optionee by gift, and
(ii) at least one of the trustees is the Optionee and the beneficiaries are one
or more of the
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<PAGE>
Optionee and his or her spouse, minor child or minor grandchild. No option
granted under the Plan shall be subject to execution, attachment or similar
process. Upon any attempt to transfer, assign, pledge, hypothecate or otherwise
dispose of any option under the Plan or any right or privilege conferred hereby
contrary to the provisions of the Plan, or upon the sale or levy or any
attachment or similar process upon the rights and privileges conferred hereby,
such option shall thereupon terminate and become null and void. Notwithstanding
the above provisions of this Section 6(e), any option granted under the Plan may
be pledged or hypothecated to secure an obligation to the Company.
(f) TERMINATION OF EMPLOYMENT OR DEATH OR DISABILITY OF
OPTIONEE. The Option Committee may in its discretion specify, at the time an
option is granted under the Plan and subject to the agreement of the applicable
Optionee thereafter, a period or periods within which such option may be
exercised following termination of the Optionee's employment with the Company or
its Subsidiaries, if any, for any reason, or upon the happening of any other
event. Except as otherwise provided in the applicable option agreement, options
granted hereunder shall terminate on the earliest to occur of:
(i) the date of expiration thereof;
(ii) if the Optionee is employed by the Company or a
Subsidiary and such employment is terminated by the Company or such
Subsidiary for cause (as hereinafter defined), on the date of such
termination of employment;
(iii) if the Optionee is employed by the Company or a
Subsidiary and such employment is terminated for any reason other than
death, permanent and total disability, or for cause, on the earlier of
the date of expiration thereof or ninety (90) days following the date
of such termination of employment (provided that no further shares
shall first become exercisable during such ninety (90) day period and
such option may be exercised only with respect to that portion of the
option that was exercisable immediately prior to such termination of
employment); or
(iv) if the Optionee dies or becomes permanently and
totally disabled while employed by the Company, on the earlier of the
date of expiration thereof or one (1) year following the date of such
death or disability (provided that no further shares shall first become
exercisable during such one (1) year period and such option may be
exercised only with respect to that portion of the option that was
exercisable immediately prior to such death or disability).
For purposes of the Plan, (A) the date of termination
of employment for any Optionee that is employed by the Company or a Subsidiary
in Canada shall mean the later of (1) the date that is the last day of any
statutory notice period applicable to the Optionee pursuant to applicable
employment standards legislation, and (2) the date that is designated by the
Company or the Subsidiary, as the case may be, as the last day of the Optionee's
employment, and the date of termination of employment specifically does not mean
the date on which any period of reasonable notice that the Company or the
Subsidiary, as the case may be, may be required at law to provide to the
Optionee, would expire, and (B) the date of termination of
25
<PAGE>
employment for any Optionee that is employed by the Company or a Subsidiary in
any country other than Canada shall mean the date the employee actually ceases
to be employed by the Company for any reason regardless of any period thereafter
during which the Company pays or is required to pay the employee salary
continuation benefits or salary in lieu of notice.
An employment relationship between the Company and
the Optionee shall be deemed to exist during any period during which the
Optionee is employed by the Company or any Subsidiary. For purposes of the Plan,
employment shall not be considered terminated in the case of the transfer of an
Optionee from the employ of the Company to a Subsidiary or VICE VERSA, or from
one Subsidiary to another, or to the employment of a corporation (or a parent or
subsidiary corporation of such corporation) assuming an option in the
circumstances described in and subject to Section 9. Whether authorized leave of
absence or absence on military service shall constitute termination of the
employment relationship between the Company and the Optionee shall be determined
by the Option Committee at the time thereof. Nothing contained in the Plan or in
any option agreement shall confer upon any Optionee any right with respect to
the continuation of his or her employment or other relationship with the Company
or any Subsidiary or interfere in any way with the right of the Company or any
Subsidiary at any time to terminate such employment or relationship or to
increase or decrease the compensation of the Optionee.
For purposes of this Section 5(f), the term "cause"
shall have the same meaning given to such term (or other term of similar
meaning) in any written employment or other similar agreement between the
Optionee and the Company or a Subsidiary for purposes of termination of
employment under such agreement, and in the absence of any such agreement or if
such agreement does not include a definition of "cause" (or other term of
similar meaning), the term "cause" shall mean (i) any material breach by the
Optionee of any agreement to which the Optionee and the Company are both
parties, (ii) any act or omission to act by the Optionee which may have a
material and adverse effect on the Company's business or on the Optionee's
ability to perform services for the Company, including, without limitation, the
commission of any crime (other than minor traffic violations), (iii) any
material misconduct or material neglect of duties by the Optionee in connection
with the business or affairs of the Company or a Subsidiary or affiliate of the
Company, or (iv) in the case of any Optionee employed by the Company or a
Subsidiary in Canada, any grounds at common law for which an employer is
entitled to dismiss an employee summarily.
After the death of the Optionee, his executor,
administrator or any person or persons to whom his option is transferred by will
or by the laws of descent and distribution, shall have the right, at any time
prior to such termination, to exercise the option in whole or in part. An
Optionee shall be deemed to be permanently and totally disabled if he is unable
to engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result in
death or which has lasted or can be expected to last for a continuous period of
not less than twelve (12) months.
(g) RIGHTS OF OPTIONEES. No Optionee shall be deemed for any
purpose to be the owner of any Common Shares subject to any option unless and
until (i) the option shall have been exercised with respect to such shares
pursuant to the terms thereof, (ii) all requirements under applicable law and
regulations with respect to such exercise shall have been complied with
26
<PAGE>
to the satisfaction of the Company, and (iii) the Company shall have issued and
delivered such shares to the Optionee. Thereupon, the Optionee shall have full
voting, dividend and other ownership rights with respect to such Common Shares.
7. METHOD OF EXERCISE; PAYMENT OF PURCHASE PRICE.
(a) NOTICE OF EXERCISE. Any option granted under the Plan may
be exercised by the Optionee in whole or, subject to Section 6(b) hereof, in
part, to the extent then exercisable in accordance with the terms of the
applicable option agreement, by delivering to the Company on any business day a
written notice specifying the number of Common Shares the Optionee then desires
to purchase (the "Notice"). The Notice shall be accompanied by payment for such
shares, any required payment of withholding taxes, and such documents as may
reasonably be required or requested by the Company. If an option is exercised by
the executor or administrator of a deceased Optionee, or by the person or
persons to whom the option has been transferred by the Optionee's will or the
applicable laws of descent and distribution, the Company shall be under no
obligation to honor the Notice until the Company is satisfied as to the
authority of the person or persons exercising the option.
(b) MEANS OF PAYMENT AND DELIVERY. Payment for Common Shares
purchased pursuant to the exercise of an option shall be made either: (i) in
cash, or by certified or bank check or other payment acceptable to the Company,
equal to the option exercise price for the number of shares specified in the
Notice (the "Total Option Price"); (ii) if authorized by the applicable option
agreement or by the Option Committee and if permitted by law, by the Optionee
delivering the Notice to the Company together with irrevocable instructions to a
broker to promptly deliver the Total Option Price to the Company in cash or by
other method of payment acceptable to the Company (provided, however, that the
Optionee and the broker shall comply with such procedures and enter into such
agreements of indemnity or other agreements as the Company shall prescribe as a
condition of payment under this clause (ii)); (iii) any other form of payment
authorized by the applicable option agreement or by the Option Committee and
permitted by law or (iv) by any combination of the above permissible forms of
payment.
(c) CONDITIONS TO EXERCISE. The delivery of certificates
representing Common Shares to be purchased pursuant to the exercise of an option
will be contingent upon the Company's receipt of the Total Option Price in a
manner provided above and of any written representations from the Optionee
required by the Option Committee, and the fulfillment of any other requirements
contained in the option agreement or applicable provisions of law.
8. ADJUSTMENT UPON CHANGES IN CAPITALIZATION.
(a) NO EFFECT OF OPTIONS UPON CERTAIN CORPORATE TRANSACTIONS.
The existence of outstanding options shall not affect in any way the right or
power of the Company or its shareholders to make or authorize any or all
adjustments, recapitalizations, reorganizations or other changes in the
Company's capital structure or its business, or any merger, amalgamation,
arrangement, or consolidation of the Company, or any issue of Common Shares, or
any issue of bonds, debentures, preferred or prior preference stock ahead of or
affecting the Common Shares or the rights thereof, or the dissolution or
liquidation of the Company, or any sale or transfer of
27
<PAGE>
all or any part of its assets or business, or any other corporate act or
proceeding, whether of a similar character or otherwise.
(b) STOCK DIVIDENDS, RECAPITALIZATIONS, ETC. If the shares of
the Company's Common Shares as a whole are increased, decreased, changed into or
exchanged for a different number or kind of shares or securities of the Company
or, subject to Section 9, securities not of the Company's issue, whether through
merger, amalgamation, arrangement, consolidation, reorganization,
recapitalization, reclassification, stock dividend, stock split, combination of
shares, exchange of shares, change in corporate structure or the like, an
appropriate and proportionate adjustment shall be made in the number and kind of
shares subject to the Plan, and in the number, kind, and per share exercise
price of shares subject to unexercised options or portions thereof granted prior
to any such change. In the event of any such adjustment in an outstanding
option, the Optionee thereafter shall have the right to purchase the number of
shares under such option at the per share price, as so adjusted, which the
Optionee could purchase at the total purchase price applicable to the option
immediately prior to such adjustment.
(c) DETERMINATION OF ADJUSTMENT. Adjustments under this
Section 8 shall be determined by the Option Committee and such determinations
shall be final and conclusive. The Option Committee shall have the discretion
and power in any such event to determine and to make effective provision for
acceleration of the time or times at which any option or portion thereof shall
become exercisable.
(d) NO ADJUSTMENT IN CERTAIN CASES. Except as hereinbefore
expressly provided, the issue by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, for cash or property
or for labor or services, either upon direct sale or upon the exercise of rights
or warrants to subscribe therefor, or upon conversion of shares or obligations
of the Company convertible into such shares or other securities, shall not
affect, and no adjustment by reason thereof shall be made with respect to, the
number or price of Common Shares then subject to outstanding options.
(e) MODIFICATION OF INCENTIVE OPTIONS. Any adjustments made
pursuant to this Section 8 with respect to Incentive Options shall be made only
after the Option Committee, after consulting with counsel for the Company,
determines whether such adjustments would constitute a "modification" of such
Incentive Options (as that term is defined in Section 424 of the Code) or would
cause any adverse tax consequences for the holders of such Incentive Options. If
the Option Committee determines that such adjustments made with respect to
Incentive Options would constitute a modification of such Incentive Options or
would cause adverse tax consequences to the holders of such Incentive Options,
it may refrain from making such adjustments.
9. EFFECT OF CERTAIN TRANSACTIONS.
In the case of (i) the dissolution, winding-up or liquidation of the
Company, (ii) a merger, amalgamation, arrangement, reorganization or
consolidation in which the Company is acquired by another person or entity
(other than a holding company formed by the Company) and as a result of which
outstanding Common Shares are changed into or exchanged for cash or property
28
<PAGE>
or securities not of the Company's issue, or any combination thereof, (iii) the
sale of all or substantially all of the assets of the Company to, or the
acquisition of shares (either alone or together with other previously held
shares) representing more than fifty percent (50%) of the voting power of the
stock of the Company then outstanding by, any person or entity or persons or
entities acting in concert or combination, the Plan and the options issued
hereunder shall terminate upon the effectiveness of any such transaction or
event, unless provision is made in writing in connection with such transaction
for the assumption of options theretofore granted, or the substitution for such
options of new options of the successor entity or parent thereof, with
appropriate adjustment as to the number and kind of shares and the per share
exercise prices, as provided in Section 8, in which event the Plan and options
theretofore granted shall continue in the manner and under the terms so
provided. In the event of such termination, each Optionee shall be permitted to
exercise, at such time prior to the consummation of the transaction causing such
termination as the Company shall designate, (i) the unexercised portions of
options held by such Optionee to the extent they are then exercisable, and (ii)
such unexercised portions of options held by such Optionee, to the extent such
options are not then exercisable, as may be specified in the relevant option
agreement or otherwise provided by the Board at the time. The option agreement
evidencing any option may also provide for such acceleration of otherwise
unexercisable portions of the option upon other specified events or occurrences,
such as involuntary terminations of the Optionee's employment following certain
changes in the control of the Company.
10. TAX WITHHOLDING.
(a) WITHHOLDING OBLIGATION. Each Optionee shall, no later than
the date as of which the value of any option or of any Common Shares issued upon
the exercise of any option first becomes includible in the gross income of the
Optionee for income tax purposes (the "Tax Date"), pay to the Company, or make
arrangements satisfactory to the Company regarding payment of any federal,
state, provincial or local taxes of any kind required by law to be withheld with
respect to such income, and the Company may withhold such taxes from payments of
any kind otherwise due to the Optionee. Such arrangements may include (a)
payment by the Optionee in cash or by certified or bank check or other payment
acceptable to the Company of the amount of withholding taxes; (ii) if authorized
by the applicable option agreement or by the Option Committee and if permitted
by law, by the Optionee delivering to the Company irrevocable instructions to a
broker to promptly deliver the amount of withholding taxes to the Company in
cash or by other method of payment acceptable to the Company (provided, however,
that the Optionee and the broker shall comply with such procedures and enter
into such agreements of indemnity or other agreements as the Company shall
prescribe as a condition of payment under this clause (ii)); (iii) if authorized
by the applicable option agreement or by the Option Committee and if permitted
by law, by the surrender for cancellation of options that are then exercisable
under the applicable option agreement and the Plan to purchase such number of
Common Shares as is equal to (A) the amount of withholding taxes, divided by (B)
the fair market value on such date of one Common Share (determined by reference
to the provisions of Section 6(d) hereof) minus the exercise price of one Common
Share under the option so canceled; (iv) any other form of payment authorized by
the applicable option agreement or by the Option Committee and permitted by law;
or (v) by any combination of the above permissible forms of payment.
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<PAGE>
(b) CONDITION OF EXERCISE. Without limiting the generality of
Section 10(a), (i) in the case of a Nonqualified Option, the Option Committee
may require as a condition of exercise of such Nonqualified Option that the
Optionee exercising the option pay to the Company, or make arrangements
satisfactory to the Company regarding payment of withholding taxes, and (ii) in
the case of an Incentive Option, if at the time the Incentive Option is
exercised the Option Committee determines that under applicable law and
regulations the Company could be liable for the withholding of any federal,
state, provincial or local tax with respect to a disposition of the Common
Shares received upon exercise of such Incentive Option, the Option Committee
shall have the right to require as a condition of exercise of such Incentive
Option that the Optionee exercising the option agree to give such security as
the Option Committee deems adequate to meet the potential liability of the
Company for the withholding of tax, and to augment such security from time to
time in any amount reasonably deemed necessary by the Option Committee to
preserve the adequacy of such security.
(c) NOTICE OF DISQUALIFYING DISPOSITIONS. By accepting an Incentive Option
granted under the Plan, each Optionee agrees to notify the Company in writing
immediately after such Optionee makes a disqualifying disposition (within the
meaning of Sections 421 and 422 of the Code) of any Common Shares acquired upon
exercise of an Incentive Option granted under the Plan.
11. FINANCIAL ASSISTANCE.
The Company is vested with authority under the Plan to assist any
Optionee to whom an option is granted hereunder in the payment of the purchase
price payable on exercise of that option, or the payment of any federal, state,
provincial or local income tax with respect to income recognized as the result
of the exercise of such option (or any withholding tax obligation relating
thereto), by making a loan to such Optionee on such terms and at such rates of
interest and upon such security (or unsecured) as shall have been authorized by
or under authority of the Board of Directors in the amount of such purchase
price or the amount of any federal, state and local income tax with respect to
income recognized as a result of the exercise of such option.
12. AMENDMENT OF THE PLAN.
The Board of Directors may discontinue the Plan or amend the Plan at
any time, and from time to time, subject to any required regulatory approval and
the limitation that, except as provided in Sections 8 and 9 hereof, no amendment
shall be effective unless approved by the shareholders of the Company in
accordance with applicable law and regulations at an annual or special meeting
held within twelve (12) months before or after the date of adoption of such
amendment, where such amendment would:
(a) increase the number of Common Shares as to which options
may be granted under the Plan;
(b) change in substance Section 5 hereof relating to
eligibility to participate in the Plan; or
30
<PAGE>
(c) otherwise require the approval of shareholders of the
Company under applicable law or regulations.
Notwithstanding the foregoing, the Board shall have the right (but not the
obligation), without the consent of any Optionee who may be affected thereby, to
amend or modify the terms and provisions of the Plan, and the Option Committee
shall have the right (but not the obligation), without the consent of any
Optionee who may be affected thereby, to amend or modify the terms and
provisions of option agreements entered into in connection with any outstanding
options (i) to the extent necessary to ensure the compliance of the Plan and
such options under Rule 16b-3 of the Exchange Act, or any successor rule
thereto, and (ii) to the extent necessary to preserve the Company's deduction
for United States income tax purposes, if any, of compensation paid to certain
Optionees who are "covered employees," within the meaning of Treasury Regulation
Section 1.162-27(c)(2), as a result of the grant or exercise of options under
the Plan.
Except as provided above or in Sections 8 and 9 hereof, rights and
obligations under any option granted before any amendment of the Plan effected
after the date of this amendment and restatement of the Plan shall not be
altered or impaired by such amendment, except with the consent of the Optionee.
13. NONEXCLUSIVITY OF THE PLAN; NON-UNIFORM DETERMINATIONS.
(a) NONEXCLUSIVITY. Neither the adoption of the Plan by the
Board of Directors nor the submission of the Plan to the shareholders of the
Company for approval shall be construed as creating any limitations on the power
of the Board of Directors to adopt such other incentive arrangements as it may
deem desirable, including, without limitation, the granting of stock options
otherwise than under the Plan, and such arrangements may be either applicable
generally or only in specific cases. Neither the Plan nor any grant of any
option hereunder shall be deemed to confer upon any Optionee or other employee
any right to continued employment with the Company or its Subsidiaries or
interfere in any way with any right of the Company or any of its Subsidiaries to
terminate the employment of an Optionee or other employee at any time.
(b) NON-UNIFORM DETERMINATIONS. The Option Committee shall be
entitled to make nonuniform and selective determinations, and to enter into
non-uniform and selective option agreements, as to, among other things, (i) the
persons to receive options under the Plan and (ii) the terms and provisions of
options.
14. GOVERNMENT AND OTHER REGULATIONS; GOVERNING LAW.
(a) The obligation of the Company to sell and deliver shares
of Common Stock with respect to options granted under the Plan shall be subject
to all applicable laws, rules and regulations. Each option shall be subject to
the requirement that if, at any time, counsel to the Company shall determine
that the listing, registration or qualification of the shares subject to such
option upon any securities exchange or automated quotation system or under any
applicable
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<PAGE>
law, or the consent or approval of any governmental or regulatory body, or that
the disclosure of non-public information or the satisfaction of any other
condition, is necessary as a condition of, or in connection with the issuance or
purchase of shares thereunder, except to the extent expressly permitted by the
Board of Directors, such option may not be exercised, in whole or in part,
unless such listing, registration, qualification, consent or approval or
satisfaction of such condition shall have been effected or obtained on
conditions acceptable to the Board of Directors. The Company may, but shall in
no event be obligated to, register or qualify any shares covered by options
under any applicable Canadian federal and provincial and United states federal
and state securities laws; provided that the Company shall not be obligated to
take any action in order to cause the exercise of an option or the issuance of
shares pursuant thereto to comply with any law or regulation of any governmental
authority.
(b) The Plan shall be governed by Ontario law, and the federal
laws of Canada applicable therein.
(c) Transactions under the Plan are intended to comply with
Rule 16b-3 or any successor rule thereto promulgated under the Exchange Act.
15. EFFECTIVE DATE OF PLAN; SHAREHOLDER APPROVAL.
The Plan shall become effective upon the date that it is approved by the Board
of Directors of the Company; provided, however, that the Plan shall be subject
to the approval of the Company's shareholders in accordance with applicable laws
and regulations at an annual or special meeting held within twelve (12) months
of such effective date. No options granted under the Plan prior to such
shareholder approval may be exercised until such approval has been obtained. No
options may be granted under the Plan after the tenth anniversary of the
effective date of the Plan. Unless sooner terminated by the Board of Directors,
the Plan shall terminate upon the close of business on the day next preceding
the tenth anniversary of the effective date of the Plan; provided, however, that
such termination will not affect any options granted prior to termination of the
Plan.
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Exhibit 3
FORM OF PROXY SOLICITED BY THE MANAGEMENT OF
VISIBLE GENETICS INC.
PROXY
FOR USE AT THE ANNUAL AND SPECIAL MEETING OF SHAREHOLDERS TO BE HELD MAY 16,
2000.
The undersigned holder of Series A Convertible Preferred Shares ("Series A
Preferred Shares") of Visible Genetics Inc. (the "Company") hereby appoints
Richard T. Daly, President and Chief Executive Officer of the Company, or
failing him, Thomas J. Clarke, Chief Financial, Officer, or instead of any of
the foregoing _______________________________ as the nominee of the
undersigned to attend and act for and on behalf of the undersigned at the
Annual and Special Meeting of the Shareholders of the Company to be held on
the 16th day of May, 2000, and at any adjournment or adjournments thereof.
The undersigned specifies that all of the Series A Preferred Shares of the
Company owned by him and represented by this form of proxy shall be voted as
follows:
(CONTINUED ON REVERSE SIDE)
FOLD AND DETACH HERE
<PAGE>
<TABLE>
<S> <C>
If no specification is made with respect to the voting on the resolutions Please mark your
referred to in items 1, 2, 3 or 4 below, the proxy nominees are votes as
instructed to vote the Series A preferred shares represented by indicated in
this proxy on such matter and in favor of such resolution this example
X
</TABLE>
<TABLE>
<S> <C> <C>
1. RESOLUTION CONFIRMING THE 2. ELECTION OF CLASS I DIRECTOR (INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY
AMENDMENT TO THE COMPANY'S INDIVIDUAL NOMINEE, STRIKE A LINE THROUGH THAT
BY-LAWS CREATING THE SERIES A NOMINEE'S NAME BELOW.)
DIRECTORSHIP.
Jonathan S. Leff
---------------------------------------------------
</TABLE>
FOR all nominees WITHHOLD AUTHORITY
listed to the to vote for all
right (except as nominees listed to
marked to the the right
contrary)
FOR AGAINST ABSTAIN / / / /
/ / / / / /
<TABLE>
<S> <C>
3. RESOLUTION APPROVING THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP as 5. To vote at the discretion of the proxy
auditors of the Company and authorizing the Board of Directors to fix nominee on any amendments or variations
their remuneration. to the foregoing and on any other matter
which may properly come before the meeting
or any adjournment or adjournments thereof.
</TABLE>
FOR WITHHOLD
/ / / /
4. RESOLUTION APPROVING THE 2000 EMPLOYEE SHARE OPTION PLAN.
FOR AGAINST ABSTAIN
/ / / / / /
THIS PROXY IS SOLICITED ON BEHALF OF MANAGEMENT OF THE
COMPANY. SHAREHOLDERS HAVE THE RIGHT TO APPOINT A PERSON TO
ATTEND AND ACT ON THEIR BEHALF AT THE ANNUAL AND SPECIAL
MEETING OTHER THAN THE NOMINEES DESIGNATED AND MAY EXERCISE
SUCH RIGHT BY STRIKING OUT THE NAMES OF THE PERSONS
DESIGNATED THEREIN AND INSERTING THE NAME OF THEIR NOMINEE
IN THE BLANK SPACE PROVIDED ABOVE FOR THAT PURPOSE OR BY
COMPLETING ANOTHER FORM OF PROXY AND, IN EITHER CASE,
DELIVERING THE COMPLETED AND EXECUTED FORM OF PROXY TO THE
COMPANY AT LEAST ONE HOUR PRIOR TO THE MEETING, OR TO THE
COMPANY'S TRANSFER AGENT PRIOR TO 4:00 P.M. NEW YORK CITY
TIME, ON THE BUSINESS DAY IMMEDIATELY PRIOR TO THE ANNUAL
AND SPECIAL MEETING.
(SIGNATURE OF SHAREHOLDER) ________________________ (NAME OF SHAREHOLDER -
PLEASE PRINT) ________________________DATED THIS __ DAY OF _______, 2000. THIS
PROXY MUST BE SIGNED AND DATED BY THE SHAREHOLDER OR HIS OR HER ATTORNEY
AUTHORIZED IN WRITING, OR, IF THE SHAREHOLDER IS A CORPORATION, EXECUTED BY A
DULY AUTHORIZED OFFICER OR ATTORNEY.
FOLD AND DETACH HERE
NOTES:
1. This proxy must be signed and dated by the shareholder or his or her attorney
authorized in writing, or, if the shareholder is a corporation, executed by a
duly authorized officer or attorney.
2. IF NO SPECIFICATION IS MADE WITH RESPECT TO THE VOTING ON THE RESOLUTIONS
REFERRED TO IN ITEMS 1, 2, 3 OR 4 ABOVE, THE PROXY NOMINEES ARE INSTRUCTED TO
VOTE THE SERIES A PREFERRED SHARES REPRESENTED BY THIS PROXY ON SUCH MATTER
AND IN FAVOR OF SUCH RESOLUTION.
3. Proxies to be used at the meeting must be received at the Company's office at
least one hour prior to the Annual and Special Meeting, or at the office of the
Company's transfer agent by 4:00 p.m. New York City time on the business day
immediately prior to the Annual and Special Meeting.
4. Please date the proxy. If this proxy is not dated in the space provided, it
is deemed to bear the date on which it is mailed.
Please return this proxy using the enclosed postage paid envelope.
<PAGE>
FORM OF PROXY SOLICITED BY THE MANAGEMENT OF
VISIBLE GENETICS INC.
PROXY
FOR USE AT THE ANNUAL AND SPECIAL MEETING OF SHAREHOLDERS TO BE HELD MAY 16,
2000.
The undersigned common shareholder of Visible Genetics Inc. (the "Company")
hereby appoints Richard T. Daly, President and Chief Executive Officer of the
Company, or failing him, Thomas J. Clarke, Chief Financial, Officer, or instead
of any of the foregoing _______________________________ as the nominee of the
undersigned to attend and act for and on behalf of the undersigned at the Annual
and Special Meeting of the Shareholders of the Company to be held on the 16th
day of May, 2000, and at any adjournment or adjournments thereof.
The undersigned specifies that all of the common shares of the Company owned by
him and represented by this form of proxy shall be voted as follows:
(CONTINUED ON REVERSE SIDE)
FOLD AND DETACH HERE
<PAGE>
<TABLE>
<S> <C>
If no specification is made with respect to the voting on the resolutions Please mark your
referred to in items 1, 2, 3 or 4 below, the proxy nominees are votes as
instructed to vote the common shares represented by this proxy on indicated in
such matter and in favor of such resolution this example
X
</TABLE>
<TABLE>
<S> <C> <C>
1. RESOLUTION CONFIRMING THE 2. ELECTION OF CLASS I DIRECTORS (INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY
AMENDMENT TO THE COMPANY'S INDIVIDUAL NOMINEE, STRIKE A LINE THROUGH THAT
BY-LAWS CREATING THE SERIES A NOMINEE'S NAME BELOW.)
DIRECTORSHIP.
Michael A. Cardiff and J. Spencer Lanthier.
---------------------------------------------------
</TABLE>
FOR all nominees WITHHOLD AUTHORITY
listed to the to vote for all
right (except as nominees listed to
marked to the the right
contrary)
FOR AGAINST ABSTAIN / / / /
/ / / / / /
<TABLE>
<S> <C>
3. RESOLUTION APPROVING THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP as 5. To vote at the discretion of the proxy
auditors of the Company and authorizing the Board of Directors to fix nominee on any amendments or variations
their remuneration. to the foregoing and on any other matter
which may properly come before the meeting
or any adjournment or adjournments thereof.
</TABLE>
FOR WITHHOLD
/ / / /
4. RESOLUTION APPROVING THE 2000 EMPLOYEE SHARE OPTION PLAN.
FOR AGAINST ABSTAIN
/ / / / / /
THIS PROXY IS SOLICITED ON BEHALF OF MANAGEMENT OF THE
COMPANY. SHAREHOLDERS HAVE THE RIGHT TO APPOINT A PERSON TO
ATTEND AND ACT ON THEIR BEHALF AT THE ANNUAL AND SPECIAL
MEETING OTHER THAN THE NOMINEES DESIGNATED AND MAY EXERCISE
SUCH RIGHT BY STRIKING OUT THE NAMES OF THE PERSONS
DESIGNATED THEREIN AND INSERTING THE NAME OF THEIR NOMINEE
IN THE BLANK SPACE PROVIDED ABOVE FOR THAT PURPOSE OR BY
COMPLETING ANOTHER FORM OF PROXY AND, IN EITHER CASE,
DELIVERING THE COMPLETED AND EXECUTED FORM OF PROXY TO THE
COMPANY AT LEAST ONE HOUR PRIOR TO THE MEETING, OR TO THE
COMPANY'S TRANSFER AGENT PRIOR TO 4:00 P.M. NEW YORK CITY
TIME, ON THE BUSINESS DAY IMMEDIATELY PRIOR TO THE ANNUAL
AND SPECIAL MEETING.
(SIGNATURE OF SHAREHOLDER) ________________________ (NAME OF SHAREHOLDER -
PLEASE PRINT) ________________________DATED THIS __ DAY OF _______, 2000. THIS
PROXY MUST BE SIGNED AND DATED BY THE SHAREHOLDER OR HIS OR HER ATTORNEY
AUTHORIZED IN WRITING, OR, IF THE SHAREHOLDER IS A CORPORATION, EXECUTED BY A
DULY AUTHORIZED OFFICER OR ATTORNEY.
FOLD AND DETACH HERE
NOTES:
1. This proxy must be signed and dated by the shareholder or his or her attorney
authorized in writing, or, if the shareholder is a corporation, executed by a
duly authorized officer or attorney.
2. IF NO SPECIFICATION IS MADE WITH RESPECT TO THE VOTING ON THE RESOLUTIONS
REFERRED TO IN ITEMS 1, 2, 3 OR 4 ABOVE, THE PROXY NOMINEES ARE INSTRUCTED TO
VOTE THE COMMON SHARES REPRESENTED BY THIS PROXY ON SUCH MATTER AND IN FAVOR OF
SUCH RESOLUTION.
3. Proxies to be used at the meeting must be received at the Company's office at
least one hour prior to the Annual and Special Meeting, or at the office of the
Company's transfer agent by 4:00 p.m. New York City time on the business day
immediately prior to the Annual and Special Meeting.
4. Please date the proxy. If this proxy is not dated in the space provided, it
is deemed to bear the date on which it is mailed.
Please return this proxy using the enclosed postage paid envelope.
