<PAGE>
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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[X] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
OXIS INTERNATIONAL
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
OXIS INTERNATIONAL, INC.
6040 N. CUTTER CIRCLE, SUITE 317
PORTLAND, OREGON 97217
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 9, 1997
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of OXIS
International, Inc., a Delaware corporation ("OXIS" or the "Company"), will be
held at the Fifth Avenue Suites Hotel, 506 S.W. Washington, Portland, Oregon
97205, on Friday, May 9, 1997 at 2:00 p.m. (local time), for the following
purposes:
1. To elect a Board of eight (8) Directors to serve for the ensuing year
and until their successors are elected.
2. To consider and act upon a proposal to amend the Company's Restated
Certificate of Incorporation to (i) increase the authorized number of
shares of OXIS common stock from 40,000,000 shares to 50,000,000
shares.
3. To approve an amendment of the Company's 1994 Stock Incentive Plan to
increase the number of shares of common stock available for issuance
thereunder by 2,000,000 shares, to an aggregate of 4,200,000 shares.
4. To transact such other and further business as may properly come
before the meeting or adjournment or adjournments thereof.
Common and preferred stockholders of record at the close of business on
March 28, 1997, are entitled to notice of and to vote at the meeting. A
complete list of such stockholders is open to examination of any stockholder for
any purpose germane to the meeting, during ordinary business hours, at the
offices of the Company, located at 6040 N. Cutter Circle, Suite 317, Portland,
Oregon 97217.
A copy of the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1996, is enclosed herewith.
By Order of the Board of Directors
Jon S. Pitcher, Secretary
Dated: April 10, 1997
You are urged to fill in, sign, date and mail the enclosed Proxy as soon as
possible. If you attend the meeting and vote in person, the Proxy will not be
used. If the Proxy is mailed in the United States in the enclosed envelope, no
postage is required. The prompt return of your Proxy will save the expense
involved in further communication.
<PAGE>
OXIS INTERNATIONAL, INC.
6040 N. CUTTER CIRCLE, SUITE 317
PORTLAND, OREGON 97217
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 9, 1997
March 28, 1997
This Proxy Statement is furnished to you in connection with the solicitation by
the Board of Directors of OXIS International, Inc., a Delaware corporation
("OXIS" or the "Company"), of Proxies in the accompanying form to be used at the
Annual Meeting of Stockholders ("Meeting") to be held at the Fifth Avenue Suites
Hotel, 506 S.W. Washington, Portland, Oregon 97205, on Friday, May 9, 1997 at
2:00 p.m. (local time) and at any subsequent time which may be necessary by the
adjournment thereof.
If you were a holder of record of Common Stock, Series B Preferred Stock or
Series C Preferred Stock of the Company (the "Voting Stock") at the close of
business on March 28, 1997, you are entitled to vote at the meeting and your
presence is desired. However, to assure your representation at the meeting, you
are urged by the Board of Directors of the Company to sign and return the
enclosed proxy as soon as possible. You can, of course, revoke your proxy at
any time before it is voted if you so desire, either in person at the meeting or
by delivery of a duly executed written statement to that effect delivered to the
Secretary of the Company.
The Company is paying all costs of the solicitation of Proxies, including the
expenses of printing and mailing to its stockholders this Proxy Statement, the
accompanying Notice of Annual Meeting of Stockholders and form of Proxy and the
Annual Report on Form 10-K for the fiscal year ended December 31, 1996. The
Company has engaged Corporate Investor Communications to assist the Company in
the distribution and solicitation of Proxies and has agreed to pay Corporate
Investor Communications a fee of $900 plus expenses for its services. The
Company will also reimburse brokerage houses and other custodians, nominees and
fiduciaries for their expenses, in accordance with the regulations of the
Securities and Exchange Commission, in sending Proxies and proxy materials to
the beneficial owners of the Company's Common Stock and voting preferred stock.
Officers or employees of the Company may also solicit Proxies in person, or by
mail, telegram or telephone, but such persons will receive no compensation for
work, other than their normal compensation as such officers or employees.
At the close of business on March 28, 1997, [14,439,992] shares of Common Stock,
[642,583] shares of Series B Preferred Stock, [1,262,543] shares of Series C
Preferred Stock, [1,550] shares of Series D Preferred Stock, and [2,200] shares
of Series E Preferred Stock were outstanding. Shares of Series B and Series C
Preferred Stock are entitled to vote at the Annual Meeting. Each share of
Common Stock and Series B Preferred Stock outstanding as of March 28, 1997, is
entitled to one vote. Each share of Series C Preferred Stock outstanding as of
March 28, 1997, is entitled to the number of votes equal to 1.30 divided by the
average closing bid price of the Company's Common Stock during the fifteen (15)
consecutive trading days immediately prior to the date such share of Series C
Preferred Stock was purchased. Shares of Series D and Series E Preferred Stock
outstanding as of March 28, 1997 are not entitled to vote at the Annual Meeting.
As of the record date, each share of Series C Preferred Stock is entitled to
1.06 - 1.13 votes, resulting in a total of 1,364,332 votes for all of the Series
C Preferred Stock outstanding. This Proxy Statement and the enclosed Proxy are
first being mailed to the stockholders of the Company on or about April 10,
1997.
PROPOSALS OF STOCKHOLDERS
Proposals of stockholders intended to be presented at the 1998 Annual Meeting of
Stockholders must be received at the Company's executive offices on or before
December 9, 1997 for inclusion in the Company's Proxy Statement with respect
to such meeting.
1
<PAGE>
<PAGE>
PROXIES AND VOTE REQUIRED
PROXIES
The persons named as Proxies for the Meeting in the enclosed proxy card
(Ray R. Rogers, director and Chairman of the Board and Anna D. Barker, Ph.D.,
director, President and Chief Executive Officer) were selected by OXIS' Board
of Directors.
VOTING OF PROXIES
All properly executed Proxies that are not revoked will be voted at the
Meeting in accordance with the instructions contained therein. Proxies
containing no instructions regarding the proposals specified in the form of
proxy will be voted FOR approval of all proposals in accordance with the
recommendation of the Board of Directors of the Company. Any stockholder
signing a proxy has the power to revoke it prior to the Meeting, or at the
Meeting, prior to the vote pursuant to the proxy. A proxy may be revoked by
delivering a written notice of revocation or a duly executed proxy bearing a
later date or by attending the OXIS Meeting and voting in person.
VOTE REQUIRED
Under Delaware law, approval of the amendment of OXIS' Restated Certificate of
Incorporation to increase the authorized number of shares of Common Stock
requires the affirmative vote of the holders of the majority of the outstanding
shares of OXIS Common Stock and preferred stock entitled to vote and abstentions
will be treated as votes against. Approval of the proposal to adopt the
amendment to 1994 Stock Incentive Plan requires the affirmative vote of the
majority of shares of Voting Stock present in person or represented by proxy and
abstentions will be treated as votes against. The election of directors requires
a plurality of the votes of the shares of Voting Stock present in person or
represented by proxy and entitled to vote thereon. If a quorum is present those
nominees receiving a plurality of the votes cast will be elected. Accordingly,
shares not voted in the election of directors (including shares covered by a
proxy as to which authority is withheld to vote for all nominees) and shares not
voted for any particular nominee (including shares covered by a proxy as to
which authority is withheld to vote for only one or less than all of the
identified nominees) will not prevent the election of any of the nominees for
director. For any other matter submitted to stockholders at the meeting, if a
quorum is present the affirmative vote of the majority of the shares voted is
required for approval. As a result, abstention votes have the effect of a vote
against such matters.
The presence in person or by proxy of a majority of the shares of Common Stock
outstanding and entitled to vote at the meeting is required for a quorum.
EFFECT OF BROKER NON-VOTES
"Broker Non-Votes" occur when a broker holding shares of stock in street name
withholds its vote on certain non-routine matters because the broker has not
received instructions from the beneficial owner of those shares of stock and
does not have discretionary authority to vote on such non-routine matters
without such instructions. Under the Rules of the National Association of
Securities Dealers, Inc., brokers holding shares of stock in street name must
receive specific instructions from the beneficial owners in order to have the
authority to vote, in person or by proxy, on certain "non-routine" matters as
defined under those Rules. When a beneficial owner does not give specific
instructions to the broker, the broker, as the holder of record, is entitled to
vote only on "routine" matters and must withhold its votes as to any non-
routine matters. When a proxy solicitation includes a non-routine proposal and
the broker does not receive specific instructions from the beneficial owner, the
resulting proxy is considered a "limited proxy". Shares represented by limited
Proxies are considered present for quorum purposes. However, shares represented
by limited Proxies are not considered present for purposes of determining the
total number of shares with voting power present with regard to a non-routine
proposal. The resulting broker non-vote will not be counted for or against such
non-routine proposal.
2
<PAGE>
Proposal 3 (Approval of the OXIS 1994 Stock Incentive Plan) is a "non-routine"
proposal. Shares represented by limited Proxies are not considered present for
purposes of determining the total number of shares with voting power present
with regard to this proposal. (Broker non-votes will not be counted for or
against this proposal). Proposal 2 (Amendment to the Restated Certificate of
Incorporation) is also a "non-routine" proposal. However, the amendment to the
Restated Certificate of Incorporation requires the affirmative vote of a
majority of the outstanding stock entitled to vote thereon. Thus, all shares
represented by a limited proxy at the meeting, even if unauthorized to vote for
or against the Amendment to the Restated Certificate of Incorporation would be
included. Broker non-votes will therefore be counted in the total pool of votes
respecting Proposal 2. The ultimate effect will be that broker non-votes will
have the same effect as votes against Proposal 2. Proposal 1 (Election of
Directors) is a "routine" matter upon which brokers can cast votes with or
without specific instructions from the beneficial holders and are thus counted
for purposes of determining whether such Proposal has been approved.
PROPOSAL NO. 1 -- ELECTION OF DIRECTORS
(ITEM 1 ON PROXY CARD)
The Board of Directors of the Company currently consists of eight individuals,
seven of whom have been nominated for election at the Meeting. Unless otherwise
instructed, the proxy holders will vote the Proxies held by them for the
Company's eight nominees. In the event that any such nominee is unable or
declines to accept nomination or election, the Proxies will be voted for any
nominee who shall be recommended by the present Board of Directors. Directors
are to be elected to hold office until the next Annual Meeting of Stockholders
or until their respective successors shall have been elected and qualified. The
names and ages of the eight nominees for director are set forth below:
<TABLE>
<CAPTION>
Name Age Position
- ------------------------------ --- -----------------------------------------------
<S> <C> <C>
Ray R. Rogers 57 Director, Chairman of the Board
Anna D. Barker, Ph.D. 57 Director, President and Chief Executive Officer
Timothy G. Biro 43 Director
Brenda D. Gavin, D.V.M. 48 Director
Stuart S. Lang 60 Director
James D. McCamant 63 Director
David A. Needham, Ph.D. 58 Director
A.R. Sitaraman 63 Director
</TABLE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF THE NOMINEES
LISTED ABOVE TO THE COMPANY'S BOARD OF DIRECTORS.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
BENEFICIAL OWNERSHIP OF SECURITIES
COMMON STOCK
The following table sets forth certain information, as of March 10, 1997, with
respect to persons known to the Company to be the beneficial owner of more than
five percent of the Company's Common Stock and beneficial ownership by
directors, director nominees and executive officers of the Company's Common
Stock. Executive officers not required to be included in the Summary
Compensation Table are not shown individually, but are included in the line
captioned "Executive officers and directors as a group -- 11 persons".
3
<PAGE>
<TABLE>
<CAPTION>
Name and, as Amount and nature Percent of
appropriate, address of beneficial ownership class1/
- ----------------------------------------- ----------------------- -----------
<S> <C> <C>
S.R. One Limited
565 E. Swedesford Road, Suite 315
Wayne, PA 19087 1,791,169 9/ 11.42%
Alta-Berkeley, L.P. II
9-10 Savile Row
London W1X 1AF, United Kingdom 834,509 10/ 5.66%
Brantley Venture Partners II, L.P.
20600 Chagrin Blvd., Suite 1150
Cleveland, OH 44122 764,893 11/ 5.22%
Innolion S.A.
142 avenue de Malakoff
75116 Paris, France 522,246 12/ 5.02%
Dr. Anna D. Barker 985,472 2/3/ 6.77%
Timothy G. Biro 25,000 2/ *
Dr. Brenda D. Gavin -- 13/ --
Gerald D. Haynes 30,000 2/ *
Stuart S. Lang 22,000 2/ *
Dr. Gerald D. Mayer 27,500 2/4/ *
James D. McCamant 269,599 2/5/ 1.85%
Dr. David A. Needham 25,000 2/6/ *
Jon S. Pitcher 85,751 2/ *
Dr. Timothy C. Rodell 108,333 2/ *
Ray R. Rogers 714,701 2/7/ 4.91%
A.R. Sitaraman 76,700 2/8/ *
Executive officers and directors
as a group -- 11 persons 2,370,055 15.80%
</TABLE>
* Less than one percent.
1/ As required by regulations of the Securities and Exchange Commission, the
number of shares in the table includes shares which can be purchased
within 60 days, or, shares with respect to which a person may obtain
voting power or investment power within 60 days. Also required by such
regulations, each percentage reported in the table for these individuals
is calculated as though shares which can be purchased within 60 days have
been purchased by the respective person or group and are outstanding.
2/ The holdings of directors Lang and McCamant each include 20,000 shares
subject to options. The holdings of directors Biro, Mayer, Needham and
Sitaraman each include 25,000 shares subject to options. The holdings of
Anna D. Barker include 107,333 shares subject to options. The holdings
of Gerald D. Haynes include 30,000 shares subject to options. The
holdings of Jon S. Pitcher include 64,126 shares subject to options. The
holdings of Timothy C. Rodell include 108,333 shares subject to options.
The holdings of Ray R. Rogers include 112,333 shares subject to options.
4
<PAGE>
3/ Dr. Barker's holdings include 401,285 shares owned by Dr. Barker jointly
with her spouse.
4/ Includes 2,000 shares owned by Dr. Mayer jointly with his spouse, and 500
shares owned by Dr. Mayer's individual retirement account. Dr. Mayer is
not standing for election to the Board of Directors at the meeting.
5/ Mr. McCamant's shares include 120,000 common shares and 77,000 shares of
the Company's Series C Preferred Stock (which are convertible into
109,599 common shares) owned by America HealthCare Fund, L.P., a limited
partnership of which Mr. McCamant is the sole general partner. Mr.
McCamant also owns 85% of Piedmont Venture Group, which is a major
investor in America HealthCare Fund, L.P.
6/ Dr. Needham is a consultant to the investment advisory firm which advises
Alta-Berkeley L.P. II. Dr. Needham disclaims beneficial ownership of
shares owned by Alta-Berkeley, L.P. II.
7/ Included are 10,000 shares owned by his individual retirement account, as
to which Mr. Rogers exercises voting and investment power. Excluded from
Mr. Rogers' shares are 36,116 shares owned by an irrevocable trust for
the benefit of his children.
8/ Mr. Sitaraman's holdings include 15,300 shares owned by his SEP-IRA, 8,700
shares owned by his wife's SEP-IRA, 6,000 shares owned in equal amounts
by Mr. Sitaraman's and his spouse's individual retirement accounts,
11,700 shares owned jointly with his spouse and 10,000 shares held by his
daughter, as to which shares Mr. Sitaraman disclaims beneficial
ownership.
9/ The holdings of S.R. One Limited include 428,389 shares of the Company's
Series B Preferred Stock which are convertible into an equal number of
shares of Common Stock, a $500,000 convertible term note convertible into
663,283 shares of Common Stock, and a warrant exercisable for 150,000
shares of Common Stock.
10/ The holdings of Alta-Berkeley, L.P. II include 199,342 shares of the
Company's Series C Preferred Stock convertible into 283,735 shares of
Common Stock and an option exercisable for 16,452 shares of Common Stock.
11/ The holdings of Brantley Venture Partners II, L.P. include 214,194 shares
of the Company's Series B Preferred Stock, which are convertible into an
equal number of shares of Common Stock.
12/ The holdings of Innolion S.A. include 136,842 shares of the Company's
Series C Preferred Stock convertible into 194,775 shares of Common Stock
and an option exercisable for 18,424 shares of Common Stock.
13/ Dr. Gavin is Vice President of S.R. One Limited. S.R. One Limited owns
549,497 shares of the Company's Common Stock, 428,389 shares of the
Company's Series B Preferred Stock,, a $500,000 convertible term note and
a warrant exercisable for 150,000 shares of Common Stock .
SERIES B PREFERRED STOCK
The following table sets forth certain information, as of March 10, 1997, with
respect to persons known by the Company to be the beneficial owner of more
than five percent of the Company's Series B Preferred Stock.
<TABLE>
<CAPTION>
Amount and nature Percent of
Name and address of beneficial ownership class
- ----------------------------------------- ----------------------- -----------
<S> <C> <C>
S.R. One Limited
565 E. Swedesford Road, Suite 315
Wayne, PA 19087 428,389 66.67%
Brantley Venture Partners II, L.P.
20600 Chagrin Blvd., Suite 1150
Cleveland, OH 44122 214,194 33.33%
</TABLE>
SERIES C PREFERRED STOCK
The following table sets forth certain information, as of March 10, 1997, with
respect to persons known to the Company to be the beneficial owner of more
than five percent of the Company's Series C Preferred Stock.
<TABLE>
<CAPTION>
Amount and nature Percent of
Name and address of beneficial ownership class
- ------------------------------------- ----------------------- -----------
<S> <C> <C>
Rauch & Co.
c/o State Street Bank & Trust
225 Franklin Street
Boston, MA 02110 200,000 15.84%
Alta-Berkeley, L.P. II
9-10 Savile Row
London W1X 1AF, United Kingdom 199,342 15.79%
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Finovelec S.A.
6, rue Ancelle
92521 Neuilly Cedex, France 155,555 12.32%
Legong Investments N.V.
International Trade Center TM 126
P.O. Box 6050 Piscadera Bay
Curacao, Netherlands Antilles 153,846 12.19%
Innolion S.A.
142 avenue de Malakoff
75116 Paris, France 136,842 10.84%
Sofinnova Capital F.C.P.R.
51, rue Saint Georges
75009 Paris, France 94,051 7.45%
America HealthCare Fund, L.P.
2748 Adeline, Suite A
Berkeley, CA 94703 77,000 6.10%
Marc Dumont
37 Chemin Jean Achard
CH-1231 Conches Geneve Switzerland 76,977 6.10%
</TABLE>
6
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Rauch & Co., Legong Investments N.V., America HealthCare Fund, L.P. and Marc
Dumont purchased the shares of Series C Preferred Stock listed in the table
above from the Company between February and May 1996 at a price of $1.30 per
share.
Alta-Berkeley L.P. II, Finovelec S.A., Innolion S.A. and Sofinnova Capital
F.C.P.R. all received their shares of Series C Preferred Stock in exchange for
the cancellation of notes and accrued interest at a price of $1.30 per share
effected in May 1996.
In October 1996, in exchange for cash, a secured convertible term note in the
amount of $500,000 was issued by the Company to S.R. One Limited (the holder
of 66.67% of the Company's Series B Preferred Stock and 549,497 shares of the
Company's Common Stock).
DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
Set forth below is information regarding the directors, nominees and executive
officers of the Company.
7
<PAGE>
ANNA D. BARKER, PH.D.
AGE: 57
Dr. Barker has been a director of the Company since May 10, 1993, and also
previously served as the President and Chief Executive Officer of
International BioClinical, Inc. ("IBC") from 1992 until its merger with OXIS
in 1994. She became President and Chief Executive Officer of OXIS on
September 7, 1994. Dr. Barker has over 20 years of senior international
management experience with Battelle Memorial Institute ("Battelle") in the
development and leadership of research and development and technology-based
businesses, specifically: biotechnology; toxicology/pharmacology; analytical
chemistry; and regulatory-based support for the drug development process.
After leaving Battelle in 1991, Dr. Barker performed consulting services on an
independent basis prior to joining IBC in 1992.
Dr. Barker serves on numerous committees and boards for both scientific
societies and The National Institutes of Health. She has also published
several scientific papers in the area of tumor immunology and received a
number of awards from national agencies and civic organizations for her
professional achievements and civic activities. She holds B.S. and M.S.
degrees from Morehead State University and Ohio State University,
respectively. Dr. Barker received her Ph.D. degree in Microbiology from Ohio
State University in 1971.
TIMOTHY G. BIRO
AGE: 43
Mr. Biro has been a director of the Company since August 15, 1995. Mr. Biro is
currently a consultant for the formation of an early stage venture capital
fund. In addition to being a director of OXIS, Mr. Biro is a member of the
board of directors of Collaborative Clinical Research Inc.
Mr. Biro was previously a general partner of Brantley Ventures Partners II,
L.P. and Brantly Venture Partners III, L.P. Prior to joining Brantley Venture
Partners in 1991, Mr. Biro was Superintendent of Pharmaceutical Manufacturing
at Merck & Co., Inc. Mr. Biro holds B.S. degrees in Microbiology from
Pennsylvania State University and in Pharmacy from Temple University, and an
MBA from the Wharton School of Business.
BRENDA D. GAVIN, D.V.M.
AGE: 48
Dr. Gavin has been nominated for election to the Company's Board of Directors
at the 1997 Annual Meeting of Stockholders.
Dr. Gavin is currently Vice President of S.R. One Limited. She both makes new
investments and assists in the development of companies in the S.R. One
portfolio. Prior to joining S.R. One, Dr. Gavin was Director of Business
Development for SmithKline Beecham Animal Health Products. She also held
business development positions with IMC in the Chicago area and previously
worked for the Centers for Disease Control in Atlanta, Georgia. Dr. Gavin
holds a B.S. degree from Baylor University, a D.V.M. from the University of
Missouri, and a M.B.A. from the University of Texas.
STUART S. LANG
AGE: 60
Mr. Lang was elected to the board on January 19, 1996, to fill a vacancy.
Mr. Lang has worked in the accounting field for over 25 years. He has been a
tax partner and subsequently partner in charge of the Portland office of a
national CPA firm. He founded a local accounting firm in Portland, Oregon, in
1985, and is managing member of that firm.
During his career, Mr. Lang has specialized in a variety of areas, including
mergers, sales and acquisitions, strategic business planning, business
valuation and patents and copyrights. He serves litigation clients in the
areas of accountant's professional liability, business valuations, and the
application of generally accepted accounting principles and auditing
standards. He is a frequent expert witness in the field of forensic
accounting.
Mr. Lang is past Chairman of IA International. He has served as a member of
AICPA tax subcommittees, including Responsibilities in Tax Practice, and as
chairman of the OSCPA Taxation and Estate Planning Committees.
8
<PAGE>
JAMES D. MCCAMANT
AGE: 63
Mr. McCamant was elected to the board on January 19, 1996, to fill a vacancy.
Mr. McCamant is the editor of the Medical Technology Stock Letter and the
AgBiotech Stock Letter. He has held those positions since the founding of
those newsletters in December 1983 and August 1988, respectively. In addition,
Mr. McCamant is the President of Piedmont Venture Group, the publisher of the
two letters.
Mr. McCamant is the general partner of America HealthCare Fund, LP, an
investment partnership with a focus on investing in biotechnology stocks.
From 1960 until he began the investment letter business, Mr. McCamant worked
as a broker, analyst and principal for a number of brokerage firms in Northern
California.
DAVID A. NEEDHAM, PH.D.
AGE: 58
Dr. Needham has been a director of OXIS since September 16, 1994. He is a
consultant with Alta-Berkeley Associates, London, England, a venture capital
group that invests in healthcare, including biotechnology, media and
information services businesses. Dr. Needham has worked with Alta-Berkeley
since 1985 and is a director of several private companies in which Alta-
Berkeley has invested.
Prior to joining Alta-Berkeley in 1985, Dr. Needham worked in the United
States. Beginning in 1981, he worked for BOC Healthcare where he was
responsible for strategic direction and integration of worldwide operations
and acquisition of new technology. Previously, Dr. Needham was a Divisional
Director of the Medishield Corporation, responsible for a number of critical
care equipment businesses supplying international markets. Prior to 1976, he
was the Managing Director of a venture-backed United Kingdom medical equipment
company. Dr. Needham is a graduate of Imperial College, University of London
with B.Sc. Hons, and a Ph.D. in Aeronautical Engineering.
RAY R. ROGERS
AGE: 57
Mr. Rogers has been Chairman of the Board of the Company since May 10, 1993.
He also served as Chairman of the Board of Directors of IBC from its
organization in 1983 until its merger with the Company in 1994. Mr. Rogers
served as President and Chief Executive Officer of IBC from 1983 until 1992
when he recruited Dr. Barker to serve those roles.
Prior to his involvement with IBC, Mr. Rogers was the principal in charge of
consulting services at the Portland, Oregon, office of the international
accounting firm of Arthur Young & Company. Mr. Rogers received his B.S.
degree in Business Administration in 1964 from California State University,
Chico.
A.R. SITARAMAN
AGE: 63
Mr. Sitaraman has been a director of the Company since May 10, 1993. Mr.
Sitaraman earned an industrial engineering degree prior to graduating from the
Indian Air Force Flying College and embarking upon an 18-year career as a
pilot and instructor in the Indian Air Force. In 1974, Mr. Sitaraman entered
the property management business in the United States. Mr. Sitaraman was a
National Advisory Council Member of the National Center for Housing Management
from its inception in 1976 through the end of 1990. Mr. Sitaraman was awarded
"Certified Property Manager" designation by the Institute of Real Estate
Management in 1985.
Mr. Sitaraman is the President and Chief Executive Officer of Sitrex
International, Inc., a corporation involved in development, syndication and
consulting in the real estate industry, in addition to the import and export
business. Mr. Sitaraman has also specialized in corporate turn-arounds
involving large real estate corporations having real estate assets of over a
billion dollars.
9
<PAGE>
GERALD D. HAYNES
AGE: 39
Mr. Haynes has been Vice President and General Counsel of the Company since
January 1, 1997. Prior to joining OXIS, Mr. Haynes was Patent Counsel for
Kaiser Aluminum & Chemical Corporation. Mr. Haynes also worked as an
Associate for the law firm of Marger Johnson McCollom & Stolowitz in Portland,
Oregon and spent eight years with Chevron Corporation, where he most recently
was an Associate Counsel in their Litigation Unit in San Francisco,
California.
Mr. Haynes received his law degree from George Washington University and holds
a B.S. degree in Chemical Engineering from Washington University and a B.A.
degree in Mathematics from Lewis & Clark College. He is licensed to practice
law in Oregon, California, Texas and Louisiana and before the U.S. Patent &
Trademark Office.
JON S. PITCHER
AGE: 47
Mr. Pitcher, a Certified Public Accountant, has been Vice President and Chief
Financial Officer of OXIS since September 7, 1994, and Secretary of the
Company since August 15, 1995. Prior to the merger of IBC with the Company,
Mr. Pitcher was Chief Financial Officer of IBC, a position he had held since
1991.
Prior to joining IBC, Mr. Pitcher was a partner in the international
accounting firm, Ernst & Young, specializing in services to health care
clients. Mr. Pitcher joined Arthur Young & Company in 1973 and became a
partner in that firm in 1987. He became a partner in Ernst & Young when Arthur
Young & Company merged into Ernst & Young. Mr. Pitcher received his B.S.
degree in Business Administration from Pepperdine University in 1971 and his
M.S. degree in Management from UCLA in 1973.
TIMOTHY C. RODELL, M.D.
AGE: 46
Dr. Rodell has been Chief Operating Officer of the Company since March 1,
1996. Prior to joining OXIS, Dr. Rodell spent ten years with Cortech, Inc.,
where he was most recently Executive Vice President of Operations and Product
Development. At Cortech, Dr. Rodell was responsible for all phases of drug
development including regulatory affairs and clinical trials.
Dr. Rodell received his M.D. and A.B. degrees from the University of North
Carolina, at Chapel Hill. He subsequently completed post-doctoral training at
the Eleanor Roosevelt Institute for Cancer Research and the Webb-Waring Lung
Institute in Denver, Colorado. Dr. Rodell is Board Certified in Internal
Medicine and Pulmonary Medicine and is a Fellow of the American College of
Chest Physicians. He is currently a Clinical Assistant Professor of Medicine
at the University of Colorado Health Sciences Center.
BOARD AND COMMITTEE MEETINGS
The Board of Directors has a Compensation Committee, whose function is to
administer the Company's 1994 Stock Incentive Plan and other compensation
plans and to act upon such other compensation matters as may be referred to it
by the Board. The members of the Committee during 1996 were Messrs. Biro,
10
<PAGE>
Lang, and Sitaraman. The Compensation Committee met three times during 1996.
The Board has an Audit Committee which oversees the Company's internal
accounting procedures and consults with, and reviews the reports of, the
Company's independent accountants. The members of the Committee during 1996
were Messrs. Biro, Lang and Sitaraman. The Audit Committee met two times
during 1996.
During the year ended December 31, 1996, the Board of Directors of the Company
met thirteen times, and each director attended at least 75% of the Company's
Board meetings. The Board does not have a separate nominating committee.
COMPENSATION OF EXECUTIVE OFFICERS
DIRECTORS
The Company pays an annual fee of $4,000 to each non-employee director and an
additional $1,000 to non-employee directors for serving as committee chairmen,
but does not pay meeting fees. Directors are also reimbursed for their
expenses incurred in attending meetings. Employee directors receive no
compensation as directors. Compensation is also paid for special assignments.
Under the Company's 1994 Stock Incentive Plan non-employee directors are
awarded options to purchase 15,000 shares of Common Stock upon becoming
directors of the Company and options to purchase 5,000 shares of Common Stock
annually thereafter.
EXECUTIVE OFFICERS
SUMMARY COMPENSATION TABLE
The following table shows the compensation paid during the last three years to
Company officers who received more than $100,000, or served as Chief Executive
Officer, during 1996:
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
------------
ANNUAL COMPENSATION AWARDS
------------------- ------
NAME AND POSITION YEAR SALARY BONUS OPTIONS
<S> <C> <C> <C> <C>
Ray R. Rogers,
Chairman, President and CEO 1996 $185,000 -- 62,0001/
(from May 10, 1993 to September 7, 1994) 1995 $185,000 $42,0006/ 55,0005/
Chairman of the Board 1994 $153,125 $31,5003/ 30,0004/
(from September 7, 1994)
Dr. Anna D. Barker,
President and Chief Executive Officer 1996 $185,000 -- 62,0001/
(from September 7, 1994) 1995 $185,000 $42,0006/ 55,0005/
1994 $ 58,163 $10,5003/ 25,0002/
Dr. Timothy C. Rodell,
Chief Operating Officer
(from March 1, 1996) 1996 $183,334 -- 325,0007/
Jon S. Pitcher,
Vice President, Chief Financial Officer 1996 $105,000 -- 35,0001/
and Secretary 1995 $ 91,333 $10,5006/ 25,0005/
1994 -- -- --
</TABLE>
11
<PAGE>
1/ Options to purchase 62,000 shares of the Company's Common Stock each
-
awarded to Mr. Rogers and Dr. Barker and options to purchase 35,000 shares
awarded to Mr. Pitcher as part of their 1996 compensation.
2/ Options to purchase 15,000 shares of the Company's Common Stock at an
-
exercise price of $3.50 per share awarded to Dr. Barker as a non-employee
director before she became an employee of the Company, and options to
purchase 10,000 shares of the Company's Common Stock awarded as part of
her 1994 compensation.
3/ Bonuses for 1994 awarded by the Company's board of directors.
-
4/ Options to purchase 30,000 shares of the Company's Common Stock awarded to
-
Mr. Rogers as part of his 1994 compensation.
5/ Options to purchase 55,000 shares each awarded to Mr. Rogers and Dr.
-
Barker and options to purchase 25,000 shares awarded to Mr. Pitcher as
part of their 1995 compensation.
6/ Bonuses for 1995 of which $27,000 each for Mr. Rogers and Dr. Barker and
-
$10,500 for Mr. Pitcher were approved by the Compensation Committee in
March 1996.
7/ Options to purchase 300,000 shares of the Company's Common Stock awarded
-
to Dr. Rodell as part of his initial employment agreement and options to
purchase an additional 25,000 shares awarded as part of his 1996
compensation.
STOCK PURCHASE WARRANTS
In prior years, the Company issued warrants to purchase shares of Common Stock
to certain officers and key employees (none of whom any longer hold a position
with the Company) and to former directors.
Upon exercise of a warrant, the purchase price for the number of shares being
purchased is payable in cash. Warrants contain provisions for adjustments in
the event of stock splits, stock dividends, reorganizations and similar
events.
Warrants are taxed as stock options which do not meet the requirements of the
Internal Revenue Code of 1986 for incentive stock options. As a consequence,
warrants do not receive the favorable tax treatment accorded to incentive
stock options. Generally, upon exercise or transfer of a warrant, the holder
of the warrant realizes ordinary taxable income, and the Company realizes a
tax deduction, equal to the difference between the exercise price and the fair
market value of the shares at the time, without regard to legal restrictions
on transfer of the shares in the event the shares received are not registered
pursuant to the Securities Act. To avoid the necessity for the warrant holder
to borrow cash to purchase the shares subject to a warrant, exercisable
warrants are subject to registration by the Company pursuant to the Securities
Act and the warrants and underlying shares are transferable.
All warrants issued to former officers, directors and key employees are
exercisable at $2.875 per share and expire through December 31, 1999.
STOCK OPTIONS
The Company has reserved 2,200,000 shares of Common Stock for issuance under
the 1994 Stock Incentive Plan ("Plan"). The Plan permits granting stock
options to acquire shares of the Company's Common Stock, awarding stock
bonuses of the Company's Common Stock, and granting stock appreciation rights.
As of December 31, 1996, options to purchase 1,420,500 shares of the Company's
Common Stock had been issued and were outstanding under this Plan. During
1994, options to purchase 15,000 shares of the Company's Common Stock at an
exercise price of $3.50 per share were granted to directors Barker, Brown,
Mayer, Sitaraman and Taussig; and options to purchase 15,000 shares of the
Company's Common Stock at an exercise price of $3.13 were granted to Dr.
Needham. During 1995, options to purchase the following shares of the
Company's Common Stock were issued to directors: 25,000 to Dr. Barker and
45,000 to Mr. Rogers at an exercise price of $3.50; 20,000 to Mr. Biro, and
5,000 each to directors Brown, Mayer, Needham, Sitaraman and Taussig at an
exercise price of $3.06. During 1996, options to purchase the following shares
of the Company's Common Stock were issued to directors: 40,000 at an exercise
price of $1.6875 and 62,000 at an exercise price of $1.375 each to Mr. Rogers
and Dr. Barker; 15,000 at an exercise price of $1.56 and 5,000 at an exercise
price of $2.28125 each to Directors Lang and McCamant; and 5,000 at an
exercise price of $2.28125 each to Directors Biro, Mayer, Needham and
Sitaraman.
In addition, options to purchase 214,700 shares of the Company's Common Stock,
exercisable at $3.55 per share, were granted in connection with the 1994
acquisitions of Bioxytech and IBC. Mr. Rogers and Dr. Barker each received
20,000 of such stock options.
12
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
Options granted to executive officers of the Company who are included in the
Summary Compensation Table above for 1996 were as shown below:
<TABLE>
<CAPTION>
Individual Grants
-----------------
Number of % of total
common shares options granted Exercise
underlying to employees price per Expiration
Name grant in 1996 share date
- ------------------------ ----------------- ---------------- --------- ----------------
<S> <C> <C> <C> <C>
62,000 1/ 7% $ 1.375 October 10, 2006
Anna D. Barker 40,000 1/ 4% $1.6875 March 27, 2006
62,000 1/ 7% $ 1.375 October 10, 2006
Timothy C. Rodell 300,000 2/ 33% $1.6875 March 27, 2006
25,000 1/ 3% $ 1.375 October 10, 2006
Jon S. Pitcher 25,000 1/ 3% $1.6875 March 27, 2006
35,000 1/ 4% $ 1.375 October 10, 2006
</TABLE>
1/ The options with an exercise price of $1.375 and the options granted to
--
Mr. Rogers, Dr. Barker and Mr. Pitcher with an exercise price of
$1.6875 became exercisable as to 1/3 of the shares in 1996 and become
exercisable as to an additional 1/3 of the shares in each of 1997 and
1998.
2/ The option granted to Dr. Rodell during 1996 with an exercise price of
--
$1.6875 becomes exercisable as to 1/3 of the shares in each of 1997, 1998
and 1999.
FISCAL YEAR END OPTION VALUES
During 1996, no options were exercised by any of the Company's executive
officers. All options issued to executive officers who are included in the
Summary Compensation Table above are shown below.
<TABLE>
<CAPTION>
Number of
common shares Value of
underlying unexercised
unexercised in-the-money
options at options at
December 31, December 31,
Name 1996 1996
----------- ------------- ------------
Exercisable Unexercisable
----------- -------------
<S> <C> <C> <C>
Ray R. Rogers 98,999 68,001 $ 0
Anna D. Barker 93,999 68,001 $ 0
Timothy C. Rodell 8,333 316,667 $ 0
Jon S. Pitcher 44,124 51,669 $ 0
</TABLE>
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE.
To the Company's knowledge, the following persons (directors and/or
executive officers of the Company) failed to file on a timely basis reports
required by Section 16(a) of the Exchange Act for transactions or events
occurring in the preceding fiscal year ended December 31, 1996:
<TABLE>
<CAPTION>
Name Number of Late Transactions Not Form Not Timely
- ---- Reports Timely Reported Filed
------- --------------- -----
<S> <C> <C> <C>
Ray R. Rogers 1 2 Form 5
Anna D. Barker 1 2 Form 5
Timothy Rodell 1 2 Form 5
Jon S. Pitcher 1 2 Form 5
Gerald D. Mayer 1 1 Form 5
A.R. Sitaraman 1 1 Form 5
Timothy G. Biro 1 1 Form 5
Stuart Lang 3 3 Form 5 and Form 3
David Needham 1 1 Form 5
Gerald Haynes 1 1 Form 3
James McCamant 2 2 Form 5 and Form 3
</TABLE>
All of the above forms have now been filed. All of the transactions in
Company securities as to which late filings were made as listed above (other
than one purchase of Common Stock by Mr. Lang) consisted of the grant of options
pursuant to the Company's 1994 Stock Incentive Plan. None of such options have
been exercised.
13
<PAGE>
PROPOSAL NO. 2 --AMENDMENT TO THE COMPANY'S RESTATED CERTIFICATE OF
INCORPORATION (ITEM 2 ON PROXY CARD)
INCREASE IN NUMBER OF AUTHORIZED COMMON SHARES
The Board of Directors of OXIS has adopted a resolution to amend the first
paragraph of Article FOURTH of the Restated Certificate of Incorporation of
OXIS to read in its entirety as follows:
FOURTH: The Company is authorized to issue a total of
fifty million (50,000,000) shares of Common Stock, each of which
shares of Common Stock has a par value of Fifty Cents ($.50).
Dividends may be paid on the Common Stock as and when declared by
the Board of Directors, out of any funds of the Company legally
available for the payment of such dividends, and each share of
Common Stock will be entitled to one vote on all matters on which
such stock is entitled to vote. All duly authorized One Dollar
($1.00) par value shares outstanding shall be deemed shares having a
par value of Fifty Cents ($.50).
The purpose of such amendment is to increase the number of authorized shares
of OXIS Common Stock from 40,000,000 to 50,000,000 shares. As of March 28,
1997, OXIS had outstanding [14,439,992] shares of Common Stock and
[14,480,125] shares of common stock reserved for issuance as follows:
14
<PAGE>
<TABLE>
<CAPTION>
Common
shares
------
<S> <C>
Common shares outstanding 14,439,992
Common shares reserved:
For conversion of
convertible securities:
Series B Preferred Stock 642,583
Series C Preferred Stock - maximum number of common
shares into which 1,262,543 Series C Preferred shares could
be converted 1,823,673
Series D Preferred Stock - maximum number of common
shares into which 1,550 Series D Preferred shares could
be converted 1,936,524
Series E Preferred Stock - maximum number of common
shares into which 2,200 Series E Preferred shares could
be converted 2,678,799
Secured convertible term notes - maximum number of common
shares into which $1,000,000 of secured convertible term notes
could be converted 2,211,648
Outstanding warrants 2,737,199
Shares reserved for issuance under 1994 Stock
Incentive Plan 2,200,000 1/
Options outside the 1994 Stock Incentive Plan 249,699
-----------
Total common shares outstanding or reserved 28,920,117
===========
</TABLE>
1/ Proposal No. 3, if approved, will increase the number of shares
--
reserved for issuance under the 1994 Stock Incentive Plan to 4,200,000.
The OXIS Board believes that it is desirable for OXIS to have additional
authorized but unissued shares of OXIS Common Stock to provide flexibility to
act promptly with respect to acquisitions, public and private financing, stock
dividends and for other appropriate purposes. Approval of the increase now
will eliminate delays and the expense which otherwise would be incurred if
stockholder approval were required to increase the authorized number of shares
of OXIS Common Stock for possible future transactions involving the issuance
of additional shares. However, the rules of the National Association of
Securities Dealers ("NASD") governing corporations with securities listed on
the National Market System would still require stockholder approval by a
majority of the total votes cast in person or by proxy prior to the issuance
of designated securities (i) where the issuance would result in a change of
control of the Company, (ii) in connection with the acquisition of the stock
or assets of another company if an affiliate of the Company has certain
interlocking interests with the company to be acquired or where the Company
issues more than twenty percent (20%) of its currently outstanding shares of
Common Stock or (iii) in connection with a transaction other than a public
15
<PAGE>
offering involving the sale or issuance of more than twenty percent (20%) of
the Common Stock or voting power outstanding before the issuance, subject to
certain exceptions or application to the NASD.
The additional shares of OXIS Common Stock may be issued, subject to certain
exceptions, by the Company's Board of Directors at such times, in such amounts
and upon such terms as the OXIS Board may determine without further approval
of the stockholders. Any such issuance could reduce the current stockholders'
proportionate interests in OXIS or dilute the stock ownership of persons
seeking to obtain control of OXIS, depending on the number of shares issued
and the purpose, terms and conditions of the issuance. Stockholders have no
preemptive rights to subscribe to additional shares when issued.
VOTE REQUIRED
The approval of the amendment of OXIS' Restated Certificate of Incorporation
requires the affirmative vote of the holders of a majority of the outstanding
shares of OXIS common and preferred stock entitled to vote. Consequently,
abstentions will have the effect of a vote against the proposed amendment.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE AMENDMENT TO
OXIS' RESTATED CERTIFICATE OF INCORPORATION.
PROPOSAL NO. 3 -- APPROVAL OF AMENDMENT TO 1994 STOCK INCENTIVE PLAN
(ITEM 3 ON PROXY CARD)
The Company's Board of Directors and stockholders have previously approved the
adoption of the Company's 1994 Stock Incentive Plan (the "Plan") and the
reservation of 2,200,000 shares of the Company's Common Stock for issuance
thereunder. In March 1997, the Board of Directors authorized an amendment to
the Plan, subject to stockholder approval, to increase the shares reserved for
issuance thereunder by 2,000,000 shares, bringing the total number of shares
issuable under the Plan to 4,200,000. At the Meeting, the stockholders are
requested to consider and approve the proposed amendment to the Plan to
increase the number of shares issuable under the Plan to 4,200,000. The OXIS
Board believes that adoption of the amendment to the Plan will ensure OXIS'
ability to attract and retain the best available individuals to serve as
employees, officers, directors, consultants, independent contractors and
advisors of OXIS.
SUMMARY OF THE PLAN
The Plan permits granting stock options to acquire shares of OXIS' common
stock ("Options"), awarding stock bonuses of OXIS' Common Stock, selling
shares of OXIS' Common Stock and granting stock appreciation rights ("SARs")
(collectively, the "Awards"). Both incentive stock options ("ISOs") within
the meaning of section 422 of the Internal Revenue Code of 1986, as amended
(the "Code"), and nonqualified stock options ("NQSOs") may be granted under
the Plan.
Awards under the Plan to other than directors of OXIS who are not employees of
either OXIS or a subsidiary of OXIS (the "Non-employee Directors") are not
determinable because such awards are made in the discretion of the OXIS Board
or its designated committee. See "Administration" below.
PURPOSE
The purposes of the Plan are to attract, retain and provide equity incentive
to selected persons to promote the financial success of OXIS. The OXIS Board
of Directors believes that it is essential to the future of OXIS that OXIS be
in a position to grant Awards under a stock incentive plan to selected
employees, officers, directors, consultants, independent contractors and
advisors in order for OXIS to remain competitive in attracting and retaining
such individuals.
16
<PAGE>
ADMINISTRATION
The Plan is administered by a committee of the Board of Directors of OXIS (the
"Plan Committee") comprised of at least two "disinterested persons" within the
meaning of former Rule 16b-3(c)(2) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), although the Plan could be administered by the
OXIS Board if it were comprised solely of "disinterested persons". The
interpretation and construction of any provision of the Plan or any related
agreement by the Plan Committee is final and binding. With the exception
discussed below in "Options - Non-Employee Director Formula Option Grants",
the Plan Committee selects the persons to whom Awards will be granted,
determines the type of Award, the number of shares to be covered by any
Options or SARs awarded, the exercise price of any such Options, the period
during which any such Options may be exercised and all other terms and
conditions of Awards.
ELIGIBILITY
With the exception discussed below in "Options - Non-Employee Director Formula
Option Grants", the Plan provides that awards may be granted to employees,
officers, directors, consultants, independent contractors and advisors of OXIS
or any parent, subsidiary or affiliate of OXIS. ISOs may be granted only to
employees (including officers and directors who are also employees) of OXIS
or any parent, subsidiary or affiliate of OXIS. See "Certain United States
Federal Income Tax Information" below for information concerning the tax
treatment of ISOs and NQSOs.
As of March 28, 1997, there are eight directors of OXIS (six of whom are Non-
Employee Directors) and three OXIS officers (who are not directors) eligible
to participate in the Plan. There are approximately 44 employees of OXIS and
its subsidiaries who are not serving as officers who are also eligible to
participate. It is not possible to estimate the number of consultants,
independent contractors and advisors who are or may become eligible to
participate in the Plan.
OPTIONS
Grant of Options
----------------
The date of grant of an Option is the date on which the Plan Committee makes
the determination to grant the Option unless otherwise specified by the Plan
Committee. Option grants are evidenced by a written stock option grant and,
if for any reason a written stock option grant is not executed within sixty
(60) days of the date of grant, such Option grant shall be null and void. No
consideration shall be received by OXIS for the granting of Options. Subject
to the express provisions of the Plan, the exercise of an Option shall be
subject to such terms, conditions and restrictions as the Plan Committee may
impose in its sole discretion, including restrictions concerning
transferability, repurchase and forfeiture.
Options shall be exercisable on the terms set forth in the stock option grant;
provided that no Option shall be exercisable after the expiration of ten years
from the Option grant date. The Plan Committee may accelerate the earliest
exercise date of any Option.
The Plan states that there is a $100,000 limit to the aggregate fair market
value (calculated as set forth in "Option Price" below) of stock with respect
to which ISOs, whether granted under the Plan or any other ISO plan of OXIS or
its parent or subsidiary, are exercisable for the first time by an optionee
during any calendar year. The above limitations are driven by provisions of
the Code and are subject to change in the event that the relevant sections of
the Code or regulations promulgated thereunder are amended.
17
<PAGE>
Option Price
------------
The exercise price of a NQSO shall be not less than eighty-five percent (85%)
of the fair market value of the shares underlying the Option on the date the
Option is granted. The exercise price of an ISO shall be no less than one
hundred percent (100%) of the fair market value of the shares on the date the
Option is granted, unless the person to whom the Option is granted is a ten
percent (10%) shareholder of OXIS in which case the exercise price shall be
not less than one hundred ten percent (110%) of the fair market value of the
shares on the date the Option is granted. The Plan Committee shall have the
power, within certain limitations, to reduce the exercise price of outstanding
Options.
For purposes of the Plan, the fair market value of a share of OXIS' Common
Stock on a given date shall be the closing price on the NASDAQ National Market
System on the last trading day prior to the date of determination. The
closing price per share of OXIS' Common Stock on March 10, 1997, on the NASDAQ
National Market System was $1 1/8.
The method of payment for shares issued upon exercise of Options granted under
the Plan shall be determined by the Plan Committee and may consist of cash,
cancellation of indebtedness, other shares of Common Stock and certain other
methods permitted by law.
Non-Employee Director Formula Option Grants
-------------------------------------------
No ISOs, SARs or stock bonuses shall be awarded or shares sold to Non-Employee
Directors under the Plan. All grants of Options to Non-Employee Directors are
automatic and nondiscretionary. Accordingly, no person shall have any
discretion to select which such Non-Employee Directors shall be granted
Options, to determine when such Options may be granted or to determine the
number of shares of OXIS' Common Stock to be covered by Options granted to
such Non-Employee Directors. All grants of Options to such Non-Employee
Directors shall be made in strict accordance with the following provisions:
(i) On the first business day following OXIS Board approval of the Plan, each
Non-Employee Director received a NQSO covering 15,000 shares. The OXIS Board
approved the Plan on June 15, 1994 and the closing price per share of OXIS'
Common Stock was $3.50. Non-Employee Directors appointed by the OXIS Board or
elected by the OXIS stockholders after such date shall receive a NQSO covering
15,000 shares on the first business day following such appointment or initial
election. Thereafter, annually on the first business day following the 1995
Annual Meeting of OXIS' stockholders and the first business day following each
annual meeting thereafter, each Non-Employee Director (other than one taking
office for the first time as a result of his or her election at such meeting
and therefore receiving a NQSO covering 15,000 shares) shall receive a NQSO
covering 5,000 shares.
(ii) The exercise price of such options shall be equal to one hundred percent
(100%) of the fair market value of the shares on the date of grant determined
as set forth under "Option Price" above.
(iii) Such options shall be exercisable beginning six months after the date
of the grant and their term shall be ten years.
STOCK BONUSES
The Plan Committee may award shares under the Plan as stock bonuses for no
consideration or for such minimum consideration as may be required by
applicable law in an amount and form as determined by the Plan Committee. An
award of a stock bonus shall be subject to such terms, conditions and
restrictions as the Plan Committee may impose in its sole discretion,
including restrictions concerning transferability, repurchase and forfeiture.
The recipient of a stock bonus must also satisfy any applicable federal, state
or local tax withholding requirements.
18
<PAGE>
STOCK SALES
The Plan Committee may issue shares of OXIS Common Stock under the Plan for
such amount (no less than par value) and form of consideration as determined
by the Plan Committee. A stock sale under the Plan shall be subject to such
terms, conditions and restrictions as the Plan Committee may impose in its
sole discretion, including restrictions concerning transferability, repurchase
or forfeiture. The purchaser must also satisfy any applicable federal, state
or local tax withholding requirements.
STOCK APPRECIATION RIGHTS
A SAR may be granted by the Plan Committee in tandem with an Option or as a
freestanding SAR. No consideration shall be received by OXIS for the granting
of SARs. Subject to the express provisions of the Plan, the exercise of a SAR
shall be subject to such terms, conditions and restrictions as the Plan
Committee may impose at its sole discretion, including restrictions concerning
transferability, repurchase and forfeiture. The recipient of a SAR must also
satisfy any applicable federal, state or local tax withholding requirements.
A SAR shall be exercisable only at the time or times established by the Plan
Committee; provided that no SAR shall be exercisable after the expiration of
ten years from the date the SAR was granted. If a SAR is granted in
connection with an Option, the SAR shall be exercisable only to the extent and
on the same conditions that the related Option could be exercised and, upon
exercise of such a SAR, any Option or any portion of such Option to which the
SAR relates shall terminate. Similarly, upon the exercise of an Option to
which a SAR relates, the SAR or portion thereof to which the Option relates
shall terminate.
The Plan Committee may accelerate the earliest exercise date of any SAR.
NONASSIGNABILITY OF OPTIONS AND SARS
Options and SARs granted pursuant to the Plan are nonassignable and
nontransferable by the optionee or recipient, other than by will or by the
laws of descent and distribution and may be exercised, during the lifetime of
the optionee or recipient, only by the optionee or recipient or any permitted
transferee.
ADJUSTMENT UPON CHANGES IN CAPITALIZATION AND CORPORATE TRANSACTIONS
In the event that the number of outstanding shares of Common Stock of OXIS is
increased or decreased by a change in the capital structure of OXIS without
consideration, such as stock splits or dividends, or, if a substantial portion
of the assets of OXIS are distributed without consideration to the
stockholders of OXIS in a spin-off or similar transaction, appropriate
adjustments shall be made in the number or kind of shares available for Awards
under the Plan, the number or kind of shares subject to outstanding Options or
SARs and the exercise price per share of such Options.
In the event of a merger, consolidation, or similar occurrence where OXIS is
not the surviving corporation, or the sale of all or substantially all of the
assets of OXIS, each outstanding Award shall be assumed or substituted by such
successor corporation. In the event such successor corporation does not agree
to assume or substitute such Awards or to provide substantially similar
consideration to optionees or other recipients of Awards as was provided to
stockholders, or in the event of a dissolution or liquidation of OXIS, OXIS
shall notify each optionee or other recipient that the Awards shall expire on
a date at least twenty (20) days after OXIS gives such written notice.
19
<PAGE>
TERMINATION OF EMPLOYMENT OR SERVICE THROUGH DEATH, DISABILITY OR OTHERWISE
Under the Plan, in the event an optionee ceases to be employed by or to
provide services to OXIS or any parent or subsidiary of OXIS (and, in the case
of a NQSO, by or to any affiliate of OXIS) for any reason other than death or
permanent and total disability, any Option which was exercisable at the date
of termination may thereafter be exercised for a period of thirty (30) days.
If termination results from death or permanent and total disability, any
Option which was exercisable at the date of termination may thereafter by
exercised for a period of twelve (12) months. However, in no event may any
Option be exercised once its term has expired.
PLAN AMENDMENT AND TERMINATION
Except as described below, the Plan Committee may amend the Plan at any time
or may terminate the Plan without stockholder approval. However, except with
respect to SARs which may be withdrawn or amended at any time or may become
subject to retroactive rules and regulations, no action may be taken which
would impair the rights of any recipient of an Award without the consent of
such recipient. In any event, the Plan will terminate on April 30, 2004.
Stockholder approval is required for certain specified amendments to the Plan,
including any amendment that increases the total number of shares for which
Awards may be granted, extends the duration of the Plan, extends the period
during and over which Options or SARs may be exercised under the Plan, or
changes the class of persons eligible to receive awards granted under the Plan
(except as may be required to comport with changes in the Code, ERISA or
regulations promulgated thereunder).
CERTAIN UNITED STATES FEDERAL INCOME TAX INFORMATION REGARDING OPTIONS
Options granted under the Plan may be either ISOs, as defined in Section 422
of the Code, or NQSOs.
Incentive Stock Options
-----------------------
If an Option granted under the Plan is an incentive stock option, the optionee
will recognize no income under the grant of the incentive stock option and
incur no tax liability at the time of exercise unless the optionee is subject
to the alternative minimum tax. OXIS will not be allowed a deduction for
federal income tax purposes as a result of the exercise of the incentive stock
option regardless of the applicability of the alternative minimum tax. Upon
the sale or exchange of the shares at least two years after the grant of the
option and one year after receipt of the shares by the optionee, any gain will
be treated as long-term capital gain. If these holding periods are not
satisfied, the optionee will recognize ordinary income equal to the difference
between the exercise price and the lower of the fair market value of the stock
at the date of option exercise or the sale price of the stock. OXIS will be
entitled to a deduction in the same amount as the ordinary income recognized
by the optionee.
Nonqualified Stock Options
--------------------------
All Options which do not quality as incentive stock options under the Code are
referred to as nonqualifed stock options. Generally, an optionee will not
recognize any taxable income at the time the optionee is granted a
nonqualified stock option. However, upon exercise of the Option, the optionee
will recognize ordinary income for income tax purposes equal to the excess of
the then fair market value of the shares over the option price. The income
recognized by an optionee who is also an employee of OXIS will be subject to
tax withholdings by OXIS by payment in cash or out of the current earnings
paid to the optionee. OXIS will be allowed a deduction for federal tax
purposes in an amount equal to the income recognized by the optionee so long
as OXIS has met all applicable withholding requirements and so long as the
exercise of the option by optionee does not cause OXIS
20
<PAGE>
to violate the limits on executive compensation set forth in Section 162(m) of
the Code. If the optionee holds such shares for more than one year following
exercise of the option, any gain realized upon disposition will be treated as
long-term capital gain. If the shares are sold within one year after the
exercise date, any gain realized upon disposition will be treated as short-
term capital gain. The gain realized upon disposition will be the excess, if
any, of the sales price over the tax basis of the shares.
Tax Summary Only
----------------
The foregoing summary of the effect of federal income taxation upon the
optionee and OXIS with respect to the purchase of OXIS' shares under the Plan
does not purport to be complete, and reference should be made to the
applicable provisions of the Code. In addition, the summary does not discuss
the provisions of the income tax laws of any municipality, state, or foreign
country.
OPTIONS RECEIVED BY CERTAIN PERSONS
Options granted under the 1994 Stock Incentive Plan to certain individuals and
groups of individuals since the inception of the Plan are set forth below:
<TABLE>
<CAPTION>
Number of
Common Shares
Underlying Grant
----------------
<S> <C>
Executive officers included in Summary Compensation Table:
Ray R. Rogers, Chairman 147,000
Anna D. Barker, President and Chief Executive Officer 142,000
Timothy C. Rodell, Chief Operating Officer 325,000
Jon S. Pitcher, Vice President, Chief Financial Officer
and Secretary 95,000
Nominees for election as directors, other than Rogers and Barker, above:
Timothy G. Biro 25,000
Brenda D. Gavin 0
Stuart S. Lang 20,000
James D. McCamant 20,000
David A. Needham, Ph.D. 25,000
A.R. Sitaraman 25,000
All current executive officers, as a group 844,000
All current directors who are not executive officers,
as a group 140,000
All employees, excluding executive officers, as a group 360,400
</TABLE>
STOCKHOLDER RIGHTS
The recipient of an Award shall have no rights as a stockholder of OXIS with
respect to any shares until the date such recipient is issued a stock
certificate for such shares of OXIS.
21
<PAGE>
VOTE REQUIRED
The approval of the amendment of OXIS' 1994 Stock Incentive Plan requires the
affirmative vote of the holders of a majority of the outstanding shares of
Voting Stock. Consequently, abstentions will have the effect of a vote
against the proposed amendment.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" APPROVAL OF THE
AMENDMENT TO OXIS' 1994 STOCK INCENTIVE PLAN AND THE RESERVATION OF AN
ADDITIONAL 2,000,000 SHARES FOR ISSUANCE THEREUNDER. UNLESS OTHERWISE
DIRECTED BY A STOCKHOLDER, PROXIES WILL BE VOTED "FOR" ADOPTION OF THIS
AMENDMENT OF THE 1994 STOCK INCENTIVE PLAN AND RESERVATION OF AN ADDITIONAL
2,000,000 SHARES FOR ISSUANCE THEREUNDER.
SELECTION OF INDEPENDENT AUDITORS
Deloitte & Touche LLP has been selected to act as the Company's principal
accountant for the fiscal year ending December 31, 1997. Representatives of
Deloitte & Touche are expected to be present at the Meeting with the
opportunity to make a statement if they desire to do so and to respond to
questions of stockholders.
OTHER MATTERS
The Board of Directors of the Company knows of no other matters which are to
be brought before the Meeting. If any other matters should be presented for
proper action, it is the intention of the persons named in the Proxy to vote
in accordance with their discretion pursuant to the terms of the Proxy.
It is important the Proxies be returned promptly. Therefore, stockholders who
do not expect to attend the meeting in person are urged to fill in, sign, date
and return the enclosed Proxy.
A copy of the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996, filed with the Securities and Exchange Commission, is being
delivered simultaneously herewith to each stockholder of the Company of record
as of March 28, 1997.
The Company's stock transfer agent and registrar is Boston EquiServe, P.O. Box
644, Boston, MA 02102. Telephone: (800) 442-2001.
OXIS INTERNATIONAL, INC.
By Anna D. Barker, Ph.D.
President and Chief Executive Officer
22
<PAGE>
OXIS INTERNATIONAL, INC.
1994 STOCK INCENTIVE PLAN
1. PURPOSE. This 1994 Stock Incentive Plan ("Plan")1 is established
-------
as a compensatory plan to attract, retain and provide equity incentives to
selected persons to promote the financial success of OXIS International, Inc., a
Delaware corporation (the "Company"). Capitalized terms not otherwise defined
herein are defined in Section 21 of this Plan.
2. TYPES OF AWARDS. The Committee (as defined in Section 16 may,
---------------
from time to time, take the following actions under this Plan: (a) grant stock
options ("Options") to acquire shares of the common stock, $0.50 par value, of
the Company ("Common Stock") as provided in Sections 5 and 6; (b) award stock
bonuses of Common Stock as provided in Section 8; (c) sell shares of the Common
Stock as provided in Section 9; or (d) grant stock appreciation rights ("SARs")
as provided in Section 10 (all of the foregoing shall be collectively referred
to as the "Awards"). Options granted under this Plan may be either (a) incentive
stock options ("ISOs") within the meaning of Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code"), or (b) nonqualified stock options
("NQSOs"), as designated at the time of grant. The shares of stock that may be
awarded, sold, purchased or acquired upon exercise of Options or SARs granted
under this Plan (the "Shares") are shares of Common Stock.
3. NUMBER OF SHARES. The aggregate number of Shares that may be
----------------
issued under this Plan is 1,200,000 Shares2, subject to adjustment as provided
in this Plan. If any Option or SAR expires, is terminated or is cancelled
without being exercised in whole or in part, unissued Shares from such Option or
SAR shall again be available under this Plan. Cash payments of SARs shall not
reduce the number of Shares reserved for issuance under this Plan. If Shares
sold or awarded as a bonus under the Plan are forfeited to the Company, the
number of shares forfeited shall again be available under the Plan. At all times
during the term of this Plan, the Company shall reserve and keep available such
number of Shares as shall be required to satisfy the requirements of outstanding
Options or SARs under this Plan.
4. ELIGIBILITY.
-----------
(a) General Rules of Eligibility. Awards may be granted to
----------------------------
employees, officers, directors, consultants, independent contractors and
advisors (provided such consultants, independent contractors and advisors render
bona fide services not in connection with the offer and sale of securities in a
capital-raising transaction) of the Company or any Parent, Subsidiary or
Affiliate of the Company. ISOs may be granted only to employees (including
officers and directors who are also employees) of the Company or a Parent or
Subsidiary of the Company. Awards may be granted to directors of the Company who
are not employees of either the
- --------------
1 Approved by the Company's Board of Directors on June 15, 1994. Approved by
the Company's Stockholders on September 7, 1994.
2 Increased from 1,200,000 shares to 2,200,000 shares effective June 13, 1996.
-1-
<PAGE>
Company or a Subsidiary (a "Non-Employee Director") only pursuant to Section 6
of this Plan and in no event shall SARs or stock bonuses be awarded or Shares
sold to Non-Employee Directors under this Plan. The Committee in its sole
discretion shall select the recipients of Awards ("Participants"), subject to
the restrictions set forth in the immediately preceding sentence. A Participant
may be granted more than one Award under this Plan.
(b) Company Assumption of Awards. The Company may also,
----------------------------
from time to time, assume outstanding awards granted by another company, whether
in connection with an acquisition of such other company or otherwise, by either
(i) granting an Award under this Plan in replacement of the award assumed by the
Company, or (ii) treating the assumed award as if it had been granted under this
Plan if the terms of such assumed award could be applied to an award granted
under this Plan. Such assumption shall be permissible if the holder of the
assumed award would have been eligible to be granted an award hereunder if the
other company had applied the rules of this Plan to such grant.
5. TERMS AND CONDITIONS OF OPTIONS. The Committee shall determine
-------------------------------
whether each Option (other than Options granted pursuant to Section 6 of this
Plan) is to be an ISO or an NQSO, the number of Shares subject to the Option,
the exercise price of the Option, the period during which the Option may be
exercised, and all other terms and conditions of the Option, subject to the
following:
(a) Form of Option Grant. Each Option granted under this
--------------------
Plan shall be evidenced by a written Stock Option Grant (the "Grant") in
substantially the form attached hereto as Exhibit A or such other form as shall
be approved by the Committee.
(b) Date of Grant. The date of grant of an Option shall be
-------------
the date on which the Committee makes the determination to grant such Option
unless otherwise specified by the Committee and subject to applicable provisions
of the Code. The Grant representing the Option will be delivered to the Optionee
with a copy of this Plan within a reasonable time after the date of grant;
provided, however, that with respect to Options other than Options granted
pursuant to Section 6 of this Plan if, for any reason, including a unilateral
decision by the Company not to execute an agreement evidencing such option, a
written Grant is not executed within sixty (60) days after the date of grant,
such option shall be deemed null and void. No Option shall be exercisable until
such Grant is executed by the Company and the person receiving the Option (the
"Optionee").
(c) Exercise Price. The exercise price of an NQSO shall be
--------------
not less than eighty-five percent (85%) of the Fair Market Value of the Shares
on the date the Option is granted. The exercise price of an ISO shall be not
less than one hundred percent (100%) of the Fair Market Value of the Shares on
the date the Option is granted. The exercise price of any ISO granted to a
person owning more than ten percent (10%) of the total combined voting power of
all classes of stock of the Company or any Parent or Subsidiary of the Company
("Ten Percent Stockholders") shall not be less than one hundred and ten percent
(110%) of the Fair Market Value of the Shares on the date the Option is granted.
-2-
<PAGE>
(d) Exercise Period. Options shall be exercisable within the
---------------
times or upon the events determined by the Committee as set forth in the Grant;
provided, however that no Option shall be exercisable after the expiration of
ten (10) years from the date the Option is granted, and provided further that no
ISO granted to a Ten Percent Stockholder shall be exercisable after the
expiration of five (5) years from the date the Option is granted.
(e) Limitations on Options. The aggregate Fair Market Value
----------------------
(determined as of the time an Option is granted) of stock with respect to which
ISOs are exercisable for the first time by an Optionee during any calendar year
(under this Plan or under any other incentive stock option plan of the Company
or any Parent or Subsidiary of the Company) shall not exceed one hundred
thousand dollars ($100,000). To the extent that the Fair Market Value of stock
with respect to which ISOs are exercisable for the first time by an Optionee
during any calendar year exceeds $100,000, such Options shall be treated as
NQSOs. The foregoing shall be applied by taking Options into account in the
order in which they were granted. In the event that the Code or the regulations
promulgated thereunder are amended after the effective date of this Plan to
provide for a different limit on the Fair Market Value of Shares permitted to be
subject to ISOs, such different limit shall be incorporated herein and shall
apply to any Options granted after the effective date of such amendment.
(f) Options Non-Transferable. Options granted under this
------------------------
Plan, and any interest therein, shall not be transferable or assignable by the
Optionee, and may not be made subject to execution, attachment or similar
process, otherwise than by will or by the laws of descent and distribution and
shall be exercisable during the lifetime of the Optionee only by the Optionee or
any permitted transferee.
(g) Assumed Options. In the event the Company assumes an
---------------
option granted by another company in accordance with Section 4(b) above, the
terms and conditions of such Option shall remain unchanged (except the exercise
price and the number and nature of shares issuable upon exercise, which will be
adjusted appropriately pursuant to Section 424 of the Code and the Treasury
Regulations applicable thereto). In the event the Company elects to grant a new
Option rather than assuming an existing option (as specified in Section 4), such
new Option need not be granted at Fair Market Value on the date of grant and may
instead be granted with a similarly adjusted exercise price.
(h) Restrictions on Shares. At the discretion of the
----------------------
Committee, the Company may reserve to itself and/or its assignee(s) in the Grant
a right of first refusal to purchase all Shares that an Optionee (or a
subsequent transferee) may propose to transfer to a third party. The provisions
of this Section 5(h) shall not apply to any Option granted pursuant to Section 6
of this Plan.
(i) Modification, Extension and Renewal of Options. The
----------------------------------------------
Committee shall have the power to modify, extend or renew outstanding Options
and to authorize the grant of new Options in substitution therefor, provided
that any such action may not, without the written consent of the Optionee,
impair any rights under any Option previously granted. Any outstanding ISO that
is modified, extended, renewed or otherwise altered shall be treated in
-3-
<PAGE>
accordance with Section 424(h) of the Code. The Committee shall have the power
to reduce the exercise price of outstanding Options; provided, however, that the
exercise price per share may not be reduced below the minimum exercise price
that would be permitted under Section 5(c) of this Plan for Options granted on
the date the action is taken to reduce the exercise price. Notwithstanding any
other provision of this Plan, the Committee may accelerate the earliest date or
dates on which outstanding Options (or any installments thereof) are
exercisable. The provisions of this Section 5(i) shall not apply to Options
granted pursuant to Section 6 of this Plan.
6. DIRECTOR FORMULA OPTION GRANTS.
------------------------------
Non-Employee Directors of the Company shall receive Options in
accordance with the following terms:
(a) Formula Grant. On the first business day following
-------------
approval of this Plan by the Board of Directors of the Company (the "Board")
(subject to the approval of the Plan by the stockholders of the Company pursuant
to Section 15 hereof), each Non-Employee Director shall receive a NQSO for
15,000 Shares, and thereafter annually on the first business day following the
1995 annual meeting of stockholders of the Company and the first business day
following each annual meeting thereafter shall receive a NQSO for 5,000 Shares.
In the event any additional Non-Employee Director is appointed by the Board or
elected by the stockholders, on the first business day following appointment by
the Board or election by the stockholders, each such Non-Employee Director shall
receive a NQSO for 15,000 Shares, and thereafter annually on the first business
day following the annual meeting of stockholders shall receive a NQSO for 5,000
Shares.
(b) Terms of Grant. Options granted pursuant to this Section
--------------
6 shall be subject to the following terms:
(i) Exercise Price and Payment Terms. The exercise
--------------------------------
price for the Options granted pursuant to this Section 6 shall be equal to one
hundred percent (100%) of the Fair Market Value of the Shares on the date of the
grant, payable in cash or otherwise in accordance with the alternatives
specified in clauses (i), (ii), (iv), (v) and (vi) of Section 7(b) of this Plan.
(ii) Term. The term of the Options shall be ten (10)
----
years from the date the Option is granted.
(iii) Exercise Period. The Options shall be
---------------
exercisable beginning six (6) months after the date of the grant.
(iv) Other Terms. The Options granted pursuant to
-----------
this Section 6 shall be evidenced by a written Stock Option Grant in
substantially the form of Exhibit A or such other form of Stock Option Grant as
is approved by the Committee and the Options are otherwise subject to the
limitations of Section 5(f) of this Plan.
-4-
<PAGE>
(c) Amendments. Notwithstanding Section 18 of this Plan, the
----------
provisions of this Section 6 shall not be amended more frequently than permitted
for formula plans meeting the conditions of Rule 16b-3 as promulgated by the
Securities and Exchange Commission ("Rule 16b-3").
7. EXERCISE OF OPTIONS.
-------------------
(a) Notices. Options may be exercised only by delivery to
-------
the Company of a written exercise agreement in a form approved by the Committee
(which need not be the same for each Optionee), stating the number of Shares
being purchased, the restrictions imposed on the Shares, if any, and such
representations and agreements regarding the Optionee's investment intent and
access to information, if any, as may be required by the Company to comply with
applicable securities laws, together with payment in full of the exercise price
for the number of Shares being purchased.
(b) Payment. Payment for the Shares may be made in cash (by
-------
check) or, where approved by the Committee in its sole discretion at the time of
grant and where permitted by law: (i) by cancellation of indebtedness of the
Company to the Optionee; (ii) by surrender of shares of Common Stock of the
Company already owned by the Optionee, having a Fair Market Value equal to the
exercise price of the Option; (iii) by waiver of compensation due or accrued to
Optionee for services rendered; (iv) provided that a public market for the
Company's stock exists, through a "same day sale" commitment from the Optionee
and a broker-dealer that is a member of the National Association of Securities
Dealers, Inc. (an "NASD Dealer") whereby the Optionee irrevocably elects to
exercise the Option and to sell a portion of the Shares so purchased to pay for
the exercise price and whereby the NASD Dealer irrevocably commits upon receipt
of such Shares to forward the exercise price directly to the Company; (v)
provided that a public market for the Company's stock exists, through a "margin"
commitment from the Optionee and an NASD Dealer whereby the Optionee irrevocably
elects to exercise the Option and to pledge the Shares so purchased to the NASD
Dealer in a margin account as security for a loan from the NASD Dealer in the
amount of the exercise price, and whereby the NASD Dealer irrevocably commits
upon receipt of such Shares to forward the exercise price directly to the
Company; or (vi) by any combination of the foregoing. Payment of the exercise
price for Options granted pursuant to Section 6 shall be determined in
accordance with Section 6.
(c) Withholding Taxes. Prior to issuance of the Shares upon
-----------------
exercise of an Option, the Optionee shall pay or make adequate provision for any
federal or state withholding obligations of the Company, if applicable. Where
approved by the Committee in its sole discretion, the Optionee may provide for
payment of withholding taxes upon exercise of the Option by requesting that the
Company retain Shares with a Fair Market Value equal to the minimum amount of
taxes required to be withheld. In such case, the Company shall issue the net
number of Shares to the Optionee by deducting the Shares retained from the
Shares exercised. The Fair Market Value of the Shares to be withheld shall be
determined on the date that the amount of tax to be withheld is to be determined
in accordance with Section 83 of the Code (the "Tax Date"). All elections by
Optionees to have Shares withheld for this purpose shall be made
-5-
<PAGE>
in writing in a form acceptable to the Committee and shall be subject to the
following restrictions:
(i) the election must be made on or prior to the
applicable Tax Date;
(ii) once made, the election shall be irrevocable as
to the particular Shares as to which the election is made;
(iii) all elections shall be subject to the consent or
disapproval of the Committee;
(iv) if the Optionee is an officer or director of the
Company or other person (in each case, an "Insider") whose transactions in the
Company's Common Stock are subject to Section 16(b) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act") and if the Company is subject to
Section 16(b) of the Exchange Act, the election must be made at least six (6)
months prior to the Tax Date and must otherwise comply with Rule 16b-3.
(d) Limitations on Exercise. Notwithstanding anything else
-----------------------
to the contrary in the Plan or any Grant, no Option may be exercisable later
than the expiration date of the Option.
8. STOCK BONUSES. The Committee may award Shares under the Plan as
-------------
stock bonuses. The certificates representing the Shares awarded shall bear any
legends required by the Committee. The Company may award Shares as a stock bonus
to a Participant for no consideration or for such minimum consideration as may
be required by applicable law in an amount and form as determined by the
Committee. The Company may also require any Participant receiving a stock bonus
to pay to the Company in cash upon demand amounts necessary to satisfy any
applicable federal, state or local tax withholding requirements. If such
Participant fails to pay the amount demanded, the Company or any Parent or
Subsidiary of the Company may withhold that amount from other amounts payable to
such Participant by the Company or the Parent or Subsidiary, including salary,
subject to applicable law. With the consent of the Committee and subject to such
requirements as may be imposed by the Committee (including the requirements of
Rule 16b-3, if applicable), a Participant may deliver Shares to the Company to
satisfy the withholding obligation.
9. STOCK SALES. The Committee may issue Shares under the Plan for
-----------
such amount and form of consideration as determined by the Committee; provided,
however, that in no event shall the consideration be less than the par value of
the Shares. The certificates representing the Shares shall bear any legends
required by the Committee. The Company may require any Participant purchasing
Shares issued under this Section 9 to pay to the Company in cash upon demand
amounts necessary to satisfy any applicable federal, state or local tax
withholding requirements. If such Participant fails to pay the amount demanded,
the Company or any Parent or Subsidiary of the Company may withhold that amount
from other amounts payable to such Participant by the Company or any Parent or
Subsidiary of the Company, including salary, subject to applicable law. With the
consent of the Committee and subject to such requirements as may be imposed by
the Committee (including the requirements of Rule
-6-
<PAGE>
16b-3, if applicable), such Participant may deliver Shares to the Company to
satisfy the withholding obligation.
10. STOCK APPRECIATION RIGHTS.
-------------------------
(a) Grant. SARs may be granted under this Plan in tandem
-----
with an Option or as a freestanding SAR by the Committee, subject to such rules,
terms and conditions as the Committee prescribes.
(b) SARs Non-Transferable. SARs granted under this Plan, and
---------------------
any interest therein, shall not be transferable or assignable by the Participant
receiving such SARs, and may not be made subject to execution, attachment or
similar process, otherwise than by will or by the laws of descent and
distribution and shall be exercisable during the life of the Participant only by
the Participant or any permitted transferee.
(c) Modification, Extension and Renewal of SARs. The
-------------------------------------------
Committee shall have the power to modify, extend or renew outstanding SARs and
to authorize the grant of new SARs in substitution therefor, provided that any
such action may not, without the written consent of the Participant holding a
SAR, impair any rights under any SAR previously granted. Notwithstanding any
other provision of this Plan, the Committee may accelerate the earliest date or
dates on which outstanding SARs (or any installments thereof) are exercisable.
(d) Exercise.
--------
(i) A SAR shall be exercisable only at the time or
times established by the Committee; provided, however, that no SAR shall be
exercisable after the expiration of ten (10) years from the date the SAR is
granted. If a SAR is granted in connection with an Option, the SAR shall be
exercisable only to the extent and on the same conditions that the related
Option could be exercised. Upon exercise of a SAR, any Option or portion thereof
to which the SAR relates shall terminate. If a SAR is granted in connection with
an Option, upon exercise of the Option, the SAR or portion thereof to which the
Option relates shall terminate.
(ii) The Committee may withdraw any SAR granted under
this Plan at any time for any reason or no reason whatsoever and may impose any
terms, conditions, or restrictions upon the exercise of a SAR or adopt rules and
regulations from time to time affecting the rights of holders of SARs. Such
rules and regulations may govern the right to exercise SARs granted before
adoption or amendment of such rules and regulations as well as SARs granted
thereafter.
(iii) Each SAR shall entitle the holder, upon
exercise, to receive from the Company in exchange therefor an amount equal in
value to the excess of the Fair Market Value on the date of exercise of one
Share over its Fair Market Value on the date of grant (or, in the case of a SAR
granted in connection with an Option, the option exercise price per Share under
the Option to which the SAR relates), multiplied by the number of Shares covered
by the SAR or the Option, or portion thereof, that is surrendered. No SAR shall
be exercisable at a time that the amount determined under this subsection is
negative. Payment by the Company upon
-7-
<PAGE>
exercise of an SAR may be made in Shares valued at Fair Market Value, in cash,
or partly in Shares and partly in cash, all as determined by the Committee.
(iv) A fractional Share shall not be issued upon
exercise of a SAR and any fractions of a Share that would have resulted shall
either be cashed out at Fair Market Value or the number of Shares issuable under
the SAR shall be rounded down to the nearest whole number, as determined by the
Committee.
(v) Each Participant who has exercised a SAR shall,
upon notification of the amount due, pay to the Company in cash amounts
necessary to satisfy any applicable federal, state or local tax withholding
requirements. If such Participant fails to pay the amount demanded, the Company
or any Parent or Subsidiary of the Company may withhold that amount from other
amounts payable to such Participant by the Company or any Parent or Subsidiary,
including salary, subject to applicable law. With the consent of the Committee
and subject to such requirements as may be imposed by the Committee (including
the requirements of Rule 16b-3, if applicable), a Participant may satisfy this
obligation, in whole or in part, by having the Company withhold from any Shares
to be issued upon the exercise that number of Shares that would satisfy the
withholding amount due or by delivering Shares to the Company to satisfy the
withholding amount.
(vi) Upon the exercise of a SAR for Shares, the
number of Shares reserved for issuance under this Plan shall be reduced by the
number of Shares issued.
11. PRIVILEGES OF STOCK OWNERSHIP. No Participant receiving any
-----------------------------
Award under this Plan shall have any of the rights of a stockholder with respect
to any Shares until the date of issue to the Participant of a stock certificate
for such Shares. No adjustment shall be made for dividends or distributions or
other rights for which the record date is prior to such date, except as provided
in this Plan. The Company shall provide to each Optionee and each Participant
holding SARs a copy of the annual financial statements of the Company, at such
time after the close of each fiscal year of the Company as such statements are
released by the Company to its stockholders.
12. NO OBLIGATION TO EMPLOY; NO RIGHT TO FUTURE GRANTS. Nothing in
--------------------------------------------------
this Plan or any Award granted under this Plan shall confer on any Participant
any right (a) to continue in the employ of, or other relationship with, the
Company or any Parent or Subsidiary of the Company or limit in any way the right
of the Company or any Parent, Subsidiary or Affiliate of the Company to
terminate the Participant's employment or other relationship at any time, with
or without cause, or (b) to have any Award(s) granted to such Participant under
this Plan, or any other plan, or to acquire any other securities of the Company,
in the future.
13. ADJUSTMENT OF AWARD SHARES. In the event that the number of
--------------------------
outstanding shares of Common Stock of the Company is changed by a stock
dividend, stock split, reverse stock split, combination, reclassification or
similar change in the capital structure of the Company without consideration, or
if a substantial portion of the assets of the Company are distributed, without
consideration in a spin-off or similar transaction, to the stockholders of the
-8-
<PAGE>
Company, the number or kind of Shares available for Awards under this Plan, the
number or kind of Shares subject to outstanding Options or SARs and the exercise
price per Share of such Options, shall be proportionately adjusted, subject to
any required action by the Board or stockholders of the Company and compliance
with applicable securities laws; provided, however, that a fractional Share
shall not be issued upon exercise of any Option or SAR and any fractions of a
Share that would have resulted shall either be cashed out at Fair Market Value
or the number of Shares issuable under the Option or SAR shall be rounded down
to the nearest whole number, as determined by the Committee; provided further,
that the exercise price may not be decreased to below the par value, if any, for
the Shares.
14. ASSUMPTION OF AWARDS BY SUCCESSORS.
----------------------------------
(a) In the event of (i) a merger or consolidation in which
the Company is not the surviving corporation (other than a merger or
consolidation with a wholly-owned subsidiary or a Parent or where there is no
substantial change in the stockholders of the corporation and the Awards granted
under this Plan are assumed by the successor corporation), or (ii) the sale of
all or substantially all of the assets of the Company, any or all outstanding
Awards shall be assumed by the successor corporation, which assumption shall be
binding on all Participants, an equivalent Award shall be substituted by such
successor corporation or the successor corporation shall provide substantially
similar consideration to Participants as was provided to stockholders (after
taking into account the existing provisions of the Participants' Awards such as
the exercise price and the vesting schedule of Options), and, in the case of
outstanding shares subject to a repurchase option, issue substantially similar
shares or other property subject to repurchase restrictions no less favorable to
the Participant.
(b) In the event such successor corporation, if any, refuses
to assume or substitute, as provided above, pursuant to an event described in
subsection (a) above, or in the event of a dissolution or liquidation of the
Company, the Awards shall, notwithstanding any contrary terms in the Grant or
other agreement pertaining to any such Award, expire on a date specified in a
written notice given by the Committee to the Participants specifying the terms
and conditions of such termination (which date must be at least twenty (20) days
after the date the Committee gives the written notice).
15. ADOPTION AND STOCKHOLDER APPROVAL. This Plan shall become
---------------------------------
effective on the date that it is adopted by the Board. This Plan shall be
approved by the stockholders of the Company, in any manner permitted by
applicable corporate law, within twelve (12) months before or after the date
this Plan is adopted by the Board. The Company will comply with the requirements
of Rule 16b-3 (or its successor) with respect to stockholder approval. Options
and SARs may be granted under the Plan at any time after the date the Plan is
adopted by the Board, subject to Section 17. However, no Option or SAR granted
under this Plan shall become exercisable until the Plan is approved by the
stockholders, and all grants under this Plan prior to such approval shall be
conditioned on and subject to such approval. No Shares may be awarded as bonuses
or sold under this Plan until the Plan has been adopted by the Board and
approved by the stockholders of the Company pursuant to this Section 15.
-9-
<PAGE>
16. ADMINISTRATION. This Plan may be administered by the Board or a
--------------
Committee appointed by the Board (the "Committee"). If all of the directors are
not Disinterested Persons, the Board shall appoint a Committee consisting of not
less than two directors, each of whom is a Disinterested Person and at all times
during which the Company is registered under the Exchange Act, the Committee
shall be comprised of Disinterested Persons. As used in this Plan, references to
the "Committee" shall mean either such Committee or the Board if no committee
has been established. The interpretation by the Committee of any of the
provisions of this Plan, any related agreements, or any Option or SAR granted or
other Award received pursuant to this Plan shall be final and binding upon the
Company and all persons having an interest in any Award or any Shares purchased
pursuant to an Option, stock sale or SAR or received pursuant to any other
Award. Subject to the express provisions of the Plan, the Committee may impose
any terms, conditions, and restrictions on Awards, including the exercise of an
Option or SAR, Shares awarded as a stock bonus, or Shares issues under Section 9
of this Plan. The restrictions may include, without limitation, restrictions
concerning transferability, repurchase by the Company, and forfeiture of the
Shares issued, such as the type of restrictions set forth in Section 5(h) of
this Plan.
17. TERM OF PLAN. Options or SARs may be granted pursuant to this
------------
Plan and stock bonuses may be awarded under this Plan and Shares may be sold
under this Plan from time to time on or prior to April 30, 2004, a date which is
less than ten years after the earlier of the date of approval of this Plan by
the Board or the stockholders of the Company pursuant to Section 15 of this
Plan.
18. AMENDMENT OR TERMINATION OF PLAN. The Board or Committee may, at
--------------------------------
any time, amend, alter, suspend or discontinue the Plan, but, except as provided
in Section 10(d)(ii) of this Plan, no amendment, alteration, suspension or
discontinuation shall be made which would impair the rights of any Participant
under any Award theretofore granted, without his or her consent, or which,
without the approval of the stockholders of the Company, would:
(a) except as provided in Section 13 of the Plan, increase
the total number of Shares reserved for the purposes of the Plan;
(b) extend the duration of the Plan;
(c) extend the period during and over which Options or SARs
may be exercised under the Plan; or
(d) change the class of persons eligible to receive Awards
granted hereunder (except as may be required to comport with changes in the
Code, ERISA or regulations promulgated thereunder).
Without limiting the foregoing, the Committee may at any time or from time to
time authorize the Company, with the consent of the respective Participants, to
issue new Awards in exchange for the surrender and cancellation of any or all
outstanding Awards.
-10-
<PAGE>
19. APPLICABLE LAW AND REGULATIONS. The obligations of the Company
------------------------------
under this Plan are subject to the approval of state and federal authorities or
agencies with jurisdiction over the subject matter hereof. The Company shall not
be obligated to issue or deliver Shares under this Plan if such issuance or
delivery would violate applicable state or federal securities laws, or if
compliance with such laws would, in the opinion of the Company, be unduly
burdensome or require the disclosure of information which would not be in the
Company's best interests.
20. SECTION 16 CONSIDERATIONS. With respect to persons subject to
-------------------------
Section 16 of the Exchange Act, Awards granted or awarded under the Plan, the
cash settlement of SARs and the tax withholding provisions of this Plan are
intended to comply with all applicable conditions of Rule 16b-3 or its
successors under the Exchange Act. To the extent any provision of this Plan or
any action by the Committee fails to so comply, any such provision or action
shall be deemed null and void to the extent permitted by law and deemed
advisable by the Committee. Persons subject to Section 16 of the Exchange Act
are advised that there may be considerations relevant to transactions they
engage in with respect to the Awards or the Shares (in addition to the
provisions of the Plan or actions of the Committee) which may determine whether
such transactions comply with all applicable conditions of Rule 16b-3 or its
successors under the Exchange Act. Such considerations may include, by way of
example, restrictions on the exercise of SARs during the first six (6) months
following the date of grant and resales of Shares acquired upon receipt of an
Award or exercise of an Option.
21. CERTAIN DEFINITIONS. As used in this Plan, the following terms
-------------------
shall have the following meanings:
(a) "Parent" means any corporation (other than the Company)
in an unbroken chain of corporations ending with the Company if, at the time of
the granting of the Award, each of the corporations other than the Company owns
stock possessing fifty percent (50%) or more of the total combined voting power
of all classes of stock in one of the other corporations in such chain.
(b) "Subsidiary" means any corporation (other than the
Company) in an unbroken chain of corporations beginning with the Company if, at
the time of the granting of the Award, each of the corporations other than the
last corporation in the unbroken chain owns stock possessing fifty percent (50%)
or more of the total combined voting power of all classes of stock in one of the
other corporations in such chain.
(c) "Affiliate" means any corporation that directly, or
indirectly through one or more intermediaries, controls or is controlled by, or
is under common control with, another corporation, where "control" (including
the terms "controlled by" and "under common control with") means the possession,
direct or indirect, of the power to cause the direction of the management and
policies of the corporation, whether through the ownership of voting securities,
by contract or otherwise.
(d) "Disinterested Persons" shall have the meaning set forth
in Rule 16b-3(c)(2) as promulgated by the Securities and Exchange Commission
under Section 16(b) of the
-11-
<PAGE>
Exchange Act, as such rule is amended from time to time and as interpreted by
the Securities and Exchange Commission.
(e) "Fair Market Value" shall mean the fair market value of
the Shares as determined by the Committee from time to time in good faith. If a
public market exists for the Shares, the Fair Market Value shall be the average
of the last reported bid and asked prices for Common Stock of the Company on the
last trading day prior to the date of determination or, in the event the Common
Stock of the Company is listed on a stock exchange or is a Nasdaq National
Market security, the Fair Market Value shall be the closing price on such
exchange or system on the last trading day prior to the date of determination.
-12-
<PAGE>
EXHIBIT A
STOCK OPTION GRANT
Optionee: --------------------------------------------------
Address: --------------------------------------------------
--------------------------------------------------
Total Shares Subject to Option: -----------------------------
Exercise Price Per Share: -----------------------------------
Date of Grant: ----------------------------------------------
Expiration Date of Option: ----------------------------------
Type of Stock Option: Incentive: ------------------------
Nonqualified: ---------------------
1. Grant Of Option. OXIS International, Inc., a Delaware corporation (the
---------------
"Company"), hereby grants to the optionee named above ("Optionee") an option
(this "Option") to purchase the total number of shares of common stock of the
Company set forth above (the "Shares") at the exercise price per share set forth
above (the "Exercise Price"), subject to all of the terms and conditions of this
grant and the Company's 1994 Stock Incentive Plan, as amended to the date hereof
(the "Plan"). If designated as an incentive stock option above, this Option is
intended to qualify as an "incentive stock option" ("ISO") within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code").
Unless otherwise defined herein, capitalized terms used herein shall have the
meanings ascribed to them in the Plan.
2. Exercise Period of Option. The option rights granted hereunder are
-------------------------
exercisable during the time period or periods, and as to the number of Shares
exercisable during each time period, as follows:
_______ Shares, or any part thereof, may be exercised at any time or
times, from and including ______ to and including ______;
An additional ______ Shares, or any part thereof, may be exercised at
any time or times, from and including _____ to and including_____;
An additional ______ Shares, or any part thereof, may be exercised at
any time or times, from and including ______ to and including_____;
Exhibit A - Page 1
<PAGE>
An additional ______ Shares, or any part thereof, may be exercised at
any time or times, from and including _____ to and including_____;
An additional ______ Shares, or any part thereof, may be exercised at
any time or times, from and including ______ to and including_____.
Notwithstanding the above, (i) the Committee or to the extent a
Committee has not been appointed, the Board of Directors (it being understood in
such event reference herein to the Committee shall mean the Board of Directors),
in its sole discretion, may, upon written notice to the Optionee, accelerate the
earliest date or dates on which any of the Option rights granted hereunder are
exercisable, (ii) the minimum number of Shares that may be purchased upon any
partial exercise of the Option is One Hundred (100) Shares, and (iii) this
Option shall expire on the Expiration Date set forth above and must be
exercised, if at all, on or before the Expiration Date. The portion of Shares as
to which an Option is exercisable in accordance with the above schedule as of
the applicable dates shall be deemed "Vested Options."
3. Restriction on Exercise. This Option may not be exercised unless such
-----------------------
exercise is in compliance with the Securities Act of 1933, as amended, and all
applicable state securities laws, as they are in effect on the date of exercise,
and the requirements of any stock exchange or over-the-counter market on which
the Company's Common Stock may be listed or quoted at the time of exercise.
Optionee understands that the Company is under no obligation to register,
qualify or list the Shares with the Securities and Exchange Commission, any
state securities commission or any stock exchange to effect such compliance.
4. Termination of Option. Except as provided below in this Section 4,
---------------------
this Option shall terminate and may not be exercised if Optionee ceases to be
employed by, or provide services to, the Company or by any Parent or Subsidiary
of the Company (or, in the case of a nonqualified stock option, by or to any
Affiliate of the Company). Optionee shall be considered to be employed by the
Company for all purposes under this Section 4 if Optionee is an officer,
director or full-time employee of the Company or any Parent, Subsidiary or
Affiliate of the Company or if the Committee determines that Optionee is
rendering substantial services as a part-time employee, consultant, contractor
or advisor to the Company or any Parent, Subsidiary or Affiliate of the Company.
The Committee shall have discretion to determine whether Optionee has ceased to
be employed by the Company or any Parent, Subsidiary or Affiliate of the Company
and the effective date on which such employment terminated (the "Termination
Date").
5. Termination Generally. If Optionee ceases to be employed by the
---------------------
Company and all parents, subsidiaries or affiliates of the Company for any
reason except death or disability, the vested options, to the extent (and only
to the extent) exercisable by Optionee on the Termination Date, may be exercised
by Optionee, but only within thirty (30) days after the Termination Date;
provided that this option may not be exercised in any event after the expiration
date.
6. Death or Disability. If Optionee's employment with the Company and all
-------------------
Parents, Subsidiaries and Affiliates of the Company is terminated because of the
death of Optionee or the permanent and total disability of Optionee within the
meaning of Section 22(e)(3) of the Code,
Exhibit A - Page 2
<PAGE>
the Vested Options, to the extent (and only to the extent) exercisable by
Optionee on the Termination Date, may be exercised by Optionee (or Optionee's
legal representative), but only within twelve (12) months after the Termination
Date; and provided further that this Option may not be exercised in any event
later than the Expiration Date.
7. No Right to Employment. Nothing in the Plan or this Grant shall
----------------------
confer on Optionee any right to continue in the employ of, or other relationship
with, the Company or any Parent, Subsidiary or Affiliate of the Company or limit
in any way the right of the Company or any Parent, Subsidiary or Affiliate of
the Company to terminate Optionee's employment or other relationship at any
time, with or without cause.
8. Manner of Exercise.
------------------
(a) Exercise Agreement. This Option shall be exercisable by delivery
------------------
to the Company of an executed written Stock Option Exercise Agreement in the
form attached hereto as Exhibit 1, or in such other form as may be approved by
the Company, which shall set forth Optionee's election to exercise some or all
of this Option, the number of Shares being purchased, any restrictions imposed
on the Shares and such other representations and agreements as may be required
by the Company to comply with applicable securities laws.
(b) Exercise Price. The Stock Option Exercise Agreement shall be
--------------
accompanied by full payment of the Exercise Price for the Shares being
purchased. Payment for the Shares may be made in cash (by check), or, where
permitted by law, by any of the following methods approved by the Committee at
the date of grant of this Option, or any combinations thereof:
[_] by cancellation of indebtedness of the Company to the Optionee;
[_] by surrender of shares of Common Stock of the Company already owned by
the Optionee, or which were obtained by Optionee in the open public
market, having a Fair Market Value equal to the exercise price of the
Option;
[_] by waiver of compensation due or accrued to Optionee for services
rendered;
[_] provided that a public market for the Company's stock exists, through a
"same day sale" commitment from the Optionee and a broker-dealer that
is a member of the National Association of Securities Dealers, Inc. (an
"NASD Dealer") whereby the Optionee irrevocably elects to exercise the
Option and to sell a portion of the Shares so purchased to pay for the
exercise price and whereby the NASD Dealer irrevocably commits upon
receipt of such Shares to forward the exercise price directly to the
Company; or
[_] provided that a public market for the Company's stock exists, through a
"margin" commitment from the Optionee and an NASD Dealer whereby the
Optionee irrevocably elects to exercise this option and to pledge the
Shares so purchased to the NASD Dealer in a margin account as security
for a loan from the NASD Dealer in the amount of the exercise price,
and whereby the NASD Dealer irrevocably commits upon receipt of such
Exhibit A - Page 3
<PAGE>
Shares to forward the exercise price directly to the Company.
9. Withholding Taxes. Prior to the issuance of the Shares upon exercise
-----------------
of this Option, Optionee must pay or make adequate provision for any applicable
federal or state withholding obligations of the Company. The Optionee may
provide for payment of Optionee's minimum statutory withholding taxes upon
exercise of the Option by requesting that the Company retain Shares with a Fair
Market Value equal to the minimum amount of taxes required to be withheld, all
as set forth in Section 7(c) of the Plan. In such case, the Company shall issue
the net number of Shares to the Optionee by deducting the Shares retained from
the Shares exercised.
10. Issuance of Shares. Provided that such notice and payment are in
------------------
form and substance satisfactory to counsel for the Company, the Company shall
cause the Shares to be issued in the name of Optionee or Optionee's legal
representative.
11. Notice of Disqualifying Disposition of ISO Shares. If the Option
-------------------------------------------------
granted to Optionee herein is an ISO, and if Optionee sells or otherwise
disposes of any of the Shares acquired pursuant to the ISO on or before the
later of (1) the date two years after the Date of Grant, or (2) the date one
year after exercise of the ISO with respect to the Shares to be sold or disposed
of, the Optionee shall immediately notify the Company in writing of such
disposition. Optionee acknowledges and agrees that Optionee may be subject to
income tax withholding by the Company on the compensation income recognized by
the Optionee from any such early disposition by payment in cash or out of the
current wages or other earnings payable to the Optionee.
12. Nontransferability of Option. This Option may not be transferred in
----------------------------
any manner other than by will or by the law of descent and distribution and may
be exercised during the lifetime of Optionee only by Optionee or other permitted
transferee. The terms of this Option shall be binding upon the executors,
administrators, successors and assigns of the Optionee.
13. Federal Tax Consequences. Set forth below is a brief summary, as of
------------------------
the date this form of Option Grant was adopted, of some of the federal tax
consequences of exercise of this Option and disposition of the Shares. THIS
SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT
TO CHANGE. OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION
OR DISPOSING OF THE SHARES.
14. Exercise of ISO. If this Option qualifies as an ISO, there will be no
---------------
regular federal income tax liability upon the exercise of this Option, although
the excess, if any, of the Fair Market Value of the Shares on the date of
exercise over the Exercise Price will be treated as an adjustment to alternative
minimum taxable income for federal income tax purposes and may subject the
Optionee to an alternative minimum tax liability in the year of exercise.
15. Exercise of Nonqualified Stock Option. If this Option does not
-------------------------------------
qualify as an ISO, there may be a regular federal income tax liability upon the
exercise of the Option. The Optionee will be treated as having received
compensation income (taxable at ordinary income tax rates)
Exhibit A - Page 4
<PAGE>
equal to the excess, if any, of the Fair Market Value of the Shares on the date
of exercise over the Exercise Price. The Company will be required to withhold
from Optionee's compensation or collect from Optionee and pay to the applicable
taxing authorities an amount equal to a percentage of this compensation income
at the time of exercise.
16. Disposition of Shares. In the case of a nonqualified option, if
---------------------
Shares are held for at least one year before disposition, any gain on
disposition of the Shares will be treated as long-term capital gain for federal
and California income tax purposes. In the case of an ISO, if Shares are held
for at least one year after the date of exercise and at least two years after
the Date of Grant, any gain on disposition of the Shares will be treated as
long-term capital gain for federal and California income tax purposes. If Shares
acquired pursuant to an ISO are disposed of within such one-year or two-year
periods (a "disqualifying disposition"), gain on such disqualifying disposition
will be treated as compensation income (taxable at ordinary income rates) to the
extent of the excess, if any, of the Fair Market Value of the Shares on the date
of exercise over the Exercise Price (the "Spread"). Any gain in excess of the
Spread shall be treated as capital gain.
17. Interpretation. Any dispute regarding the interpretation of this Grant
--------------
shall be submitted by Optionee or the Company to the Company's Board of
Directors or the Committee, which shall review such dispute at its next regular
meeting. The resolution of such a dispute by the Board or Committee shall be
final and binding on the Company and Optionee.
18. Entire Agreement. The Plan and the Stock Option Exercise Agreement
----------------
attached hereto as Exhibit 1 are incorporated herein by this reference. This
Grant, the Plan and the Stock Option Exercise Agreement constitute the entire
agreement of the parties hereto and supersede all prior undertakings and
agreements with respect to the subject matter hereof.
Exhibit A - Page 5
<PAGE>
OXIS INTERNATIONAL, INC.,
a Delaware corporation
By: --------------------------------
Name: ------------------------------
Title: -----------------------------
ACCEPTANCE
Optionee hereby acknowledges receipt of a copy of the Plan, represents
that Optionee has read and understands the terms and provisions thereof, and
accepts this Option subject to all the terms and conditions of the Plan and this
Stock Option Grant. Optionee acknowledges that there may be adverse tax
consequences upon exercise of this Option or disposition of the Shares and that
Optionee should consult a tax advisor prior to such exercise or disposition.
OPTIONEE
------------------------------------
[Signature]
------------------------------------
[Print Name]
------------------------------------
[Date]
Exhibit A - Page 6
<PAGE>
EXHIBIT 1
TO STOCK OPTION GRANT
STOCK OPTION EXERCISE AGREEMENT
This Agreement is made this ____ day of ________, 19__ between OXIS
International, Inc., a Delaware corporation (the "Company"), and the optionee
named below ("Optionee").
Optionee: ___________________________________________________
Social Security Number: _____________________________________
Address: _____________________________________________________
_____________________________________________________
Number of Shares Purchased: _________________________________
Price Per Share: _____________________________________________
Aggregate Purchase Price: ___________________________________
Date of Option Grant:
Type of Stock Option: Incentive: _________________________
Nonqualified: ______________________
Optionee hereby delivers to the Company the Aggregate Purchase Price,
to the extent permitted in the Option Grant, as follows [check as applicable and
complete]:
[_] cash (check) in the amount of $_____, receipt of which is acknowledged
by the Company;
[_] by delivery of __________ fully-paid, nonassessable and vested shares
of the Common Stock of the Company owned by Optionee and owned free and
clear of all liens, claims, encumbrances or security interests, valued
at the current fair market value of $_________ per share (determined in
accordance with the Plan);
[_] by the waiver hereby of compensation due or accrued for services
rendered in the amount of $______;
[_] by delivery of a "same day sale" commitment from the Optionee and a
broker dealer that is a member of the National Association of
Securities Dealers, Inc. (an "NASD Dealer") whereby the Optionee
irrevocably elects to exercise the Option and to sell a portion of the
Shares so purchased to pay for the exercise price of $_________ and
whereby the NASD Dealer irrevocably commits upon receipt of such Shares
to forward the exercise price directly to the Company (this payment
method may be used only if a public market for
Exhibit 1 - Page 1
<PAGE>
the Company's stock exists); or
[_] by delivery of a "margin" commitment from the Optionee and an NASD
Dealer whereby the Optionee irrevocably elects to exercise this option
and to pledge the Shares so purchased to the NASD Dealer in a margin
account as security for a loan from the NASD Dealer in the amount of
the exercise price, and whereby the NASD Dealer irrevocably commits
upon receipt of such Shares to forward the exercise price of $_________
directly to the Company (this payment method may be used only if a
public market for the Company's stock exists).
The Company and Optionee hereby agree as follows:
1. Purchase of Shares. On this date and subject to the terms and
------------------
conditions of this Agreement, Optionee hereby exercises the Stock Option Grant
between the Company and Optionee dated as of the Date of Option Grant set forth
above (the "Grant"), with respect to the Number of Shares Purchased set forth
above of the Company's Common Stock (the "Shares") at an aggregate purchase
price equal to the Aggregate Purchase Price set forth above (the "Purchase
Price") and the Price per Share set forth above (the "Purchase Price Per
Share"). The term "Shares" refers to the Shares purchased under this Agreement
and includes all securities received (a) in replacement of the Shares, and (b)
as a result of stock dividends or stock splits in respect of the Shares.
Capitalized terms used herein that are not defined herein have the definitions
ascribed to them in the Plan or the Grant.
2. Representations of Purchaser. Optionee represents and warrants to the
----------------------------
Company that:
Optionee has received, read and understood the Plan and the Grant and
agrees to abide by and be bound by their terms and conditions.
Optionee is fully aware of (i) the highly speculative nature of the
investment in the Shares; (ii) the financial hazards involved; and (iii) the
potential lack of liquidity of the Shares [and the restrictions on
transferability of the Shares (e.g., that Optionee may not be able to sell or
dispose of the Shares or use them as collateral for loans)].
Optionee is capable of evaluating the merits and risks of this
investment, has the ability to protect Optionee's own interests in this
transaction and is financially capable of bearing a total loss of this
investment.
[Optionee is purchasing the Shares for Optionee's own account for
investment purposes only and not with a view to, or for sale in connection with,
a distribution of the Shares within the meaning of the Securities Act of 1933,
as amended (the "1933 Act")].
[Optionee has no present intention of selling or otherwise disposing of
all or any portion of the Shares.]
Exhibit 1 - Page 2
<PAGE>
3. [Compliance with Securities Laws. Optionee understands and
-------------------------------
acknowledges that the Shares have not been registered under the 1933 Act and
that, notwithstanding any other provision of the Grant to the contrary, the
exercise of any rights to purchase any Shares is expressly conditioned upon
compliance with the 1933 Act and all applicable state securities laws. Optionee
agrees to cooperate with the Company to ensure compliance with such laws. The
Shares are being issued under the 1933 Act pursuant to [the Company will check
the applicable box]:
[_] Section 4(2) of the 1933 Act
[_] Other: _________________________________.]
4. Federal Restrictions on Transfer. (a) Optionee understands that the
--------------------------------
Shares must be held indefinitely unless they are registered under the 1933 Act
or unless an exemption from such registration is available and that the
certificate(s) representing the Shares will bear a legend to that effect.
Optionee understands that the Company is under no obligation to register the
Shares, and that an exemption may not be available or may not permit Optionee to
transfer Shares in the amounts or at the times proposed by Optionee.]
5. [Rule 144. Optionee has been advised that Rule 144 promulgated under
--------
the 1933 Act, which permits certain resales of unregistered securities,
requires that a minimum of two (2) years elapse between the date of acquisition
of Shares from the Company or an affiliate of the Company and any resale under
Rule 144.]
6. State Law Restrictions on Transfer. Optionee understands that
----------------------------------
transfer of the Shares may be restricted by applicable state securities laws,
and that the certificate(s) representing the Shares may bear a legend or legends
to that effect.
7. [Legends. Optionee understands and agrees that the certificate(s)
-------
representing the Shares will bear a legend in substantially the following form,
in addition to any other legends required by applicable law:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 (THE 'SECURITIES ACT'), AND MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS
AND UNTIL REGISTERED UNDER THE SECURITIES ACT OR, IN THE OPINION OF
COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER OF THESE
SECURITIES, SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS IN
COMPLIANCE THEREWITH."]
[BRACKETED SECTIONS APPLY ONLY IF THE SHARES HAVE NOT BEEN REGISTERED
UNDER THE 1933 ACT]
Exhibit 1 - Page 3
<PAGE>
8. Stop-Transfer Notices. Optionee understands and agrees that, in
---------------------
order or ensure compliance with the restrictions referred to herein, the Company
may issue appropriate "stop-transfer" instructions to its transfer agent, if
any, and that, if the Company transfers its own securities, it may make
appropriate notations to the same effect in its own records.
9. Tax Consequences. OPTIONEE UNDERSTANDS THAT OPTIONEE MAY SUFFER
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ADVERSE TAX CONSEQUENCES AS A RESULT OF OPTIONEE'S PURCHASE OR DISPOSITION OF
THE SHARES. OPTIONEE REPRESENTS THAT OPTIONEE HAS CONSULTED WITH ANY TAX
CONSULTANT(S) OPTIONEE DEEMS ADVISABLE IN CONNECTION WITH THE PURCHASE OR
DISPOSITION OF THE SHARES AND THAT OPTIONEE IS NOT RELYING ON THE COMPANY FOR
ANY TAX ADVICE.
10. Entire Agreement. The Plan and Grant are incorporated herein by
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reference. This Agreement, the Plan and the Grant constitute the entire
agreement of the parties and supersede in their entirety all prior undertakings
and agreements of the Company and Optionee with respect to the subject matter
hereof, and are governed by California law except for that body of law
pertaining to conflict of laws.
OPTIONEE OXIS INTERNATIONAL, INC.,
a Delaware Corporation
By: ------------------------------ By: -----------------------------
Name: ---------------------------- Name: ---------------------------
Address: ------------------------- Title: --------------------------
-------------------------
Exhibit 1 - Page 4
<PAGE>
OXIS INTERNATIONAL, INC.
PROXY SOLICITED BY AND ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Anna D. Barker and Ray R. Rogers, and each
of them, as Proxies, each with the power to appoint his or her substitute, to
represent and to vote, as designated on the reverse side, all the shares of
Common Stock of OXIS International, Inc., held of record by, or otherwise
entitled to be voted by, the undersigned on March 28, 1997 at the 1997 Annual
Meeting of Stockholders of OXIS International, Inc., to be held on May 9, 1997
and any adjournment or postponement thereof.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
SEE REVERSE SIDE
<PAGE>
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTIONS ARE INDICATED, THE PROXIES
WILL VOTE FOR PROPOSALS 1, 2 AND 3.
1. ELECTION OF DIRECTORS
NOMINEES: Anna D. Barker, Ph.D.; Timothy G. Biro; Brenda Gavin; Stuart S. Lang;
James D. McCamant; David A. Needham, Ph.D.; Ray R. Rogers; A.R. Sitaraman
FOR WITHHELD FOR ALL NOMINEES EXCEPT AS NOTED
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2. To approve the proposal to amend the Company's Restated Certificate of
Incorporation to increase the authorized number of shares of Common Stock from
40,000,000 to 50,000,000 shares.
FOR WITHHELD ABSTAIN
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3. To approve the proposal to amend the 1994 Stock Incentive Plan increasing
the number of shares of Common Stock available for issuance thereunder by
2,000,000, to an aggregate of 4,200,000.
FOR WITHHELD ABSTAIN
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4. OTHER MATTERS
The Proxies are authorized to vote in their discretion, upon such other
matters as may properly come before the meeting, and any adjournment or
postponement thereof.
PLEASE MARK, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE RETURN ENVELOPE
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ENCLOSED.
If stock is held jointly, signature should include both names. If stock is held
by executors, administrators, trustees, guardians and others signing in a
representative capacity, please give full title. If stock is held by a
corporation, please sign in full corporate name and give name and title of
authorized officer. If stock is held by a partnership, please sign in
partnership name by authorized person.
Signature: Date:
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Signature: Date:
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