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:
[ ]Preliminary Proxy Statement
[ X ]Definitive Proxy Statement
[ ]Definitive Additional Materials
[ ]Soliciting Material pursuant to Rule 14a-11(c) or Rule 14a-12
ENZON, INC.
(Name of Registrant as Specified In Its Charter)
KEVIN T. COLLINS, ESQ.
(Name of Person(s) filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[ X ]$125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
[ ]$500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).
[ ]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:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
(4) Proposed maximum aggregate value of transaction:
Set forth the amount on which the filing fee is calculated and state
how it was determined.
[ ]Check box if any part of the fee is offset as provided by Exchange Act
rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
. . . . . . . . . . . . . .
2) Form, Schedule or Registration Statement No.:
. . . . . . . . . . . . . . .
3) Filing Party:
. . . . . . . . . . . . . . .
4) Date Filed:
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ENZON, INC.
20 KINGSBRIDGE ROAD
PISCATAWAY, NEW JERSEY 08854
(908) 980-4500
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD DECEMBER 5, 1995
To our Stockholders:
You are hereby notified that the annual meeting of stockholders (the
"Annual Meeting") of Enzon, Inc., a Delaware corporation ("Enzon" or the
"Company") will be held at the Embassy Suites Hotel, 121 Centennial Avenue,
Piscataway, New Jersey on Tuesday, December 5, 1995 at 10:00 a.m. local time,
for the following purposes:
1. To elect two Class III directors, each for a term of three years in
accordance with the Company's Certificate of Incorporation and
By-Laws (Proposal No. 1);
2. To vote on a proposal to approve an amendment to the Company's Non-
Qualified Stock Option Plan, as amended (the "Non-Qualified Stock
Option Plan") to increase the number of shares of Common Stock
reserved for issuance upon exercise of options granted to officers,
employees, directors and independent consultants under the Non-
Qualified Stock Option Plan from 5,000,000 to 6,200,000 (Proposal
No. 2);
3. To ratify the selection of KPMG Peat Marwick LLP, independent
certified public accountants, to audit the consolidated financial
statements of the Company for the fiscal year ending June 30, 1996
(Proposal No. 3); and
4. To transact such other matters as may properly come before the
Annual Meeting or any adjournment thereof.
Only holders of record of the Company's Common Stock, par value $.01 per
share, and Series A Cumulative Convertible Preferred Stock, par value $.01 per
share, at the close of business on October 25, 1995 are entitled to notice of
and to vote at the Annual Meeting.
Enzon hopes that as many stockholders as possible will personally attend
the Annual Meeting. WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING,
PLEASE COMPLETE THE ENCLOSED PROXY CARD AND SIGN, DATE AND RETURN IT PROMPTLY
SO THAT YOUR SHARES WILL BE REPRESENTED. Sending in your proxy will not
prevent you from voting in person at the Annual Meeting.
By order of the Board of Directors,
John A. Caruso, Secretary
Piscataway, New Jersey
October 31, 1995
ENZON, INC.
_______
PROXY STATEMENT
_______
This Proxy Statement is furnished in connection with the solicitation of
proxies for use at the annual meeting of stockholders (the "Annual Meeting") of
Enzon, Inc. ("Enzon" or the "Company") to be held on Tuesday, December 5, 1995
and at any adjournment thereof. THE ACCOMPANYING PROXY IS SOLICITED BY THE
BOARD OF DIRECTORS OF THE COMPANY AND IS REVOCABLE BY THE STOCKHOLDER ANY TIME
BEFORE IT IS VOTED. For more information concerning the procedure for revoking
the proxy see "General." This Proxy Statement was first mailed to stockholders
of the Company on or about October 31, 1995, accompanied by the Company's
Annual Report to Stockholders for the fiscal year ended June 30, 1995. The
principal executive offices of the Company are located at 20 Kingsbridge Road,
Piscataway, New Jersey 08854, telephone (908) 980-4500.
OUTSTANDING SHARES AND VOTING RIGHTS
Only holders of the Company's common stock, par value $.01 per share (the
"Common Stock" or "Common Shares") and Series A Cumulative Convertible
Preferred Stock, $.01 per share (the "Series A Preferred Stock" or "Series A
Preferred Shares") outstanding at the close of business on October 25, 1995
(the "Record Date") are entitled to receive notice of and vote at the Annual
Meeting. As of the Record Date, the number and class of stock that was
outstanding and will be entitled to vote at the meeting were 26,328,874 Common
Shares and 109,000 Series A Preferred Shares. Each Common Share and Series A
Preferred Share is entitled to one vote on all matters. No other class of
securities will be entitled to vote at the Annual Meeting. There are no
cumulative voting rights.
To be elected, a director must receive a plurality of the votes of the
Common Shares and Series A Preferred Shares, voting as a single class, present
in person or represented by proxy at the Annual Meeting and entitled to vote on
the election of directors. The affirmative vote of at least a majority of the
Common Shares and Series A Preferred Shares, present in person or represented
by proxy at the Annual Meeting and entitled to vote thereon, voting together as
a single class, is necessary for approval of Proposal No. 2 and Proposal No. 3.
A quorum is representation in person or by proxy at the Annual Meeting of at
least one-third of the combined Common Shares and Series A Preferred Shares
outstanding as of the Record Date.
Pursuant to Delaware General Corporation Law, only votes cast "For" a
matter constitute affirmative votes. Proxy cards which are voted by marking
"Withheld" or "Abstain" on a particular matter are counted as present for
quorum purposes and for purposes of determining the outcome of such matter, but
since they are not cast "For" a particular matter, they will have the same
effect as negative votes or votes "Against" a particular matter. If a validly
executed proxy card is not marked to indicate a vote on a particular matter and
the proxy granted thereby is not revoked before it is voted, it will be voted
"For" such matter. Where brokers are prohibited from exercising discretionary
authority for beneficial owners who have not provided voting instructions
(commonly referred to as "broker non-votes"), such broker non-votes will be
treated as shares that are present for purposes of determining the presence of
a quorum, but will be treated as not present for purposes of determining the
outcome of any matter as to which the broker does not have authority to vote.
PROPOSAL NO. 1 - ELECTION OF DIRECTORS
Pursuant to the provisions of the Company's Certificate of Incorporation
and By-laws, the Board of Directors is comprised of three classes of directors,
designated Class I, Class II and Class III. One class of directors is elected
each year to hold office for a three-year term and until successors of such
directors are duly elected and qualified. Two Class III directors will be
elected at this year's Annual Meeting. The nominees for election to the office
of director, and certain information with respect to their backgrounds and the
backgrounds of non-nominee directors, are set forth below. It is the intention
of the persons named in the accompanying proxy card, unless otherwise
instructed, to vote to elect the nominees named herein as Class III directors.
Each of the nominees named herein presently serves as a director of the
Company. In the event any of the nominees named herein is unable to serve as a
director, discretionary authority is reserved to the Board of Directors to vote
for a substitute. The Board of Directors has no reason to believe that any of
the nominees named herein will be unable to serve if elected.
NOMINEES FOR ELECTION TO THE OFFICE OF DIRECTOR
AT THE 1995 ANNUAL MEETING
DIRECTOR
NOMINEE AGE SINCE POSITION WITH THE COMPANY
Dr. Abraham
Abuchowski, Ph.D.(1) 47 1983 Chairman of the Board
Robert LeBuhn(2)(3) 63 1994 Director
NON-NOMINEE DIRECTORS CONTINUING TO SERVE
IN THE OFFICE OF DIRECTOR AFTER THE 1995 ANNUAL MEETING
DIRECTOR
NOMINEE AGE SINCE POSITION WITH THE COMPANY
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Peter G.
Tombros(1)(4) 53 1994 President and Chief Executive
Officer
Dr. Rosina B.
Dixon(2)(4) 52 1994 Director
A.M. "Don"
MacKinnon(1)(3)(5) 70 1990 Director
Randy H. Thurman(1)(5) 46 1993 Director
</TABLE>
(1) Member of the Executive Committee
(2) Member of the Compensation Committee
(3) Member of the Audit Committee
(4) Class I director serving until the 1996 Annual Meeting
(5) Class II director serving until the 1997 Annual Meeting
BUSINESS EXPERIENCE OF DIRECTORS
NOMINEE CLASS III DIRECTORS FOR ELECTION AT 1995 ANNUAL MEETING
DR. ABRAHAM ABUCHOWSKI, PH.D., a co-founder of the Company, has served as
Chairman of the Board of Directors since the Company's inception. Dr.
Abuchowski served as President and Chief Executive Officer of the Company from
its inception until April 1994. He received his B.A. degree from Rutgers
College of South Jersey in 1970. Subsequent to that, he began his doctoral
training at Rutgers University under the tutelage of Dr. Frank Davis, the
Company's other co-founder and a retired member of the Board, where he assisted
in developing the chemical technology which serves as the basis for the
Company's proprietary technology, PEG modification. Dr. Abuchowski was
supported as a National Science Foundation Fellow and a Charles and Johanna
Busch Fellow until receiving his Ph.D. from Rutgers in 1975. From 1975 until
1979, he remained in Dr. Davis' laboratory as a post-doctoral fellow while
further developing PEG modification. In 1980, he became a visiting assistant
professor at Rutgers and in 1981, won a five year award as a Scholar of the
Leukemia Society of America, one of ten in the world, for his outstanding work
in this area. In 1981, Dr. Davis and he founded Enzon.
ROBERT LEBUHN has served as a Director of the Company since August 1994.
Mr. LeBuhn was chairman of Investor International (U.S.), Inc., a subsidiary of
Investor A.B., part of Sweden's Wallenberg Group from June 1992 until his
retirement in September 1994, and was its president from August 1984 through
June 1992. He is a former managing director of Rothschild, Inc. Mr. LeBuhn is
a director of USAir Group, Inc., Acceptance Insurance Companies, Inc., Lomas
Financial Corporation and Cambrex Corporation. Lomas Financial Corporation
filed for protection under Chapter 11 of the United States Bankruptcy Code in
October 1995. He is president and a trustee of the Geraldine R. Dodge
Foundation.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR DR. ABUCHOWSKI AND MR.
LEBUHN AS CLASS III DIRECTORS (PROPOSAL NO. 1 ON THE PROXY CARD).
NON-NOMINEE CLASS I DIRECTORS SERVING UNTIL 1996 ANNUAL MEETING
PETER G. TOMBROS has served as President and Chief Executive Officer of
the Company and a member of the Board since April 1994. Prior to joining
Enzon, Mr. Tombros spent 25 years with Pfizer Inc., a research based, global
healthcare company headquartered in New York City. From 1986 to March 1994, he
served as a vice president of Pfizer Inc. in the following areas: executive
vice president of Pfizer Pharmaceuticals, a division of Pfizer Inc., corporate
strategic planning and investor relations. From 1980 to 1986, Mr. Tombros
served as senior vice president of Pfizer Pharmaceuticals and general manager
for the Roerig division of Pfizer Inc. Mr. Tombros currently serves on the
board of trustees of Cancer Care and the National Cancer Care Foundation,
Dominican College and Fisk University. From 1980 to 1992, he was a director of
the American Foundation of Pharmaceutical Education and served as Chairman for
three of those years. Mr. Tombros serves on the Board of Directors of Alpharma
Inc., formally A.L. Pharma Inc., a Norwegian company specializing in the areas
of animal health, pharmaceuticals and fine chemicals.
DR. ROSINA B. DIXON has served as Director of the Company since August
1994. Dr. Dixon has been a consultant to the pharmaceutical industry since
1987. Prior to such time she held senior positions at CIBA-GEIGY
Pharmaceuticals, a division of CIBA-GEIGY Corporation, and Schering-Plough
Corporation. She received her M.D. from Columbia University, College of
Physicians and Surgeons and is certified by the National Board of Medical
Examiners and the American Board of Internal Medicine. She is a member of the
American College of Clinical Pharmacology, American Society for Clinical
Pharmacology and Therapeutics and the National Association of Corporate
Directors and currently serves as a director of Church & Dwight Co., Inc. and
Cambrex Corporation.
NON-NOMINEE CLASS II DIRECTORS SERVING UNTIL 1997 ANNUAL MEETING
A.M. "DON" MACKINNON has served as a Director of the Company since 1990.
Mr. MacKinnon was president and chief operating officer of CIBA-GEIGY
Corporation from 1980 until his retirement in 1986. He was a member of the
Board of Directors of CIBA-GEIGY Corporation from 1970 until he reached the
mandatory retirement age in December 1994. Over the last eight years, Mr.
MacKinnon has served on the Board of Directors of several biopharmaceutical
companies.
RANDY H. THURMAN has served as a Director of the Company since April
1993. From 1993 to 1995, Mr. Thurman served as chairman and chief executive
officer of Corning Life Sciences. From 1985 to 1993, Mr. Thurman served as
corporate executive vice president and director of Rhone-Poulenc Rorer, Inc.
and president of Rhone-Poulenc Rorer Pharmaceuticals, Inc. He also serves on
the boards of directors of Immune Response Corporation, Hahnemann University
and the Fox Chase Cancer Center.
DIRECTORS' COMPENSATION
DIRECTORS' CASH COMPENSATION
During the fiscal year ended June 30, 1995, the Company provided no cash
compensation to its directors for acting as a director or a member of
committees of the Board of Directors, other than reimbursement of reasonable
expenses incurred by the director in attending Board and committee meetings.
DIRECTORS' STOCK OPTIONS
In December 1993, the Board of Directors adopted, and the stockholders
approved, an amendment to the Non-Qualified Stock Option Plan, as amended,
providing for automatic grants of options ("Automatic Grants") under a formula
(the "Formula") to Independent Directors.
Under the Formula, Independent Directors automatically receive an option
to purchase 60,000 shares of Common Stock on each of the following dates:
January 2, 1994, January 2, 1997, January 2, 2000 and January 2, 2003 (the
"Regular Grants"). On the date of each Independent Director's initial election
to the board, pursuant to a vote of the Company's stockholders or the board,
such newly-elected Independent Director automatically receives (i) an option to
purchase such Independent Director's pro rata share of the Regular Grant, which
equals the product of 1,666 multiplied by the number of whole months remaining
in the relevant three year period until the next Regular Grant (the "Pro Rata
Grant"); and (ii) an option to purchase 10,000 shares of Common Stock (the
"Initial Election Grant"). Each option granted to an Independent Director
pursuant to a Regular Grant vests and becomes exercisable as follows: as to
20,000 shares one year after the date of grant; as to 20,000 shares two years
after the date of grant, and as to the remaining 20,000 shares three years
after the date of grant. Those options granted pursuant to a Pro Rata Grant
vest and become exercisable as to that number of shares equal to the product of
1,666 multiplied by the number of whole months remaining in the first calendar
year in which the Independent Director is elected initially to the board on the
January 1st following such Independent Director's initial election to the
board; and as to any remaining shares in accordance with the schedule for
options granted pursuant to a Regular Grant. Those options granted pursuant to
an Initial Election Grant vest and become exercisable as to 5,000 shares one
year after the date of grant; and as to 5,000 shares two years after the date
of grant.
An option granted to an Independent Director pursuant to the Formula will
not become exercisable as to the relevant shares unless such Independent
Director has served continuously on the board during the year preceding the
date on which such options are scheduled to vest and become exercisable, or
from the date such Independent Director joined the board until the end of such
year should such Independent Director have joined the board during such year;
provided, however, that if an Independent Director does not fulfill such
continuous service requirement due to such Independent Director's death or
disability all options granted under the Formula and held by such Independent
Director nonetheless vest and become exercisable as though such Independent
Director fulfilled the continuous service requirement. An option granted to an
Independent Director pursuant to the Formula remains exercisable for a period
of ten years from the date of grant.
During the fiscal year ended June 30, 1995, the persons set forth below
were granted the following options under the Company's Non-Qualified Stock
Option Plan. The exercise price of all options granted during the fiscal year
ended June 30, 1995 represents the fair market value of the Common Stock on the
date of grant.
NAME NUMBER OF OPTIONS EXERCISE PRICE
Dr. Rosina B. Dixon 46,664{(1)} $2.75
Dr. Rosina B. Dixon 10,000{(2)} 2.75
Robert LeBuhn 46,664{(1)} 2.75
Robert LeBuhn 10,000{(2)} 2.75
A.M. "Don" MacKinnon 20,000{(3)} 2.00
Randy H. Thurman 20,000{(3)} 2.00
(1) These options were granted to new independent directors, pursuant to the
Formula described above for Pro Rata Grants. Accordingly, they vest and
become exercisable as to 6,664 shares on January 2, 1995, as to 20,000
shares on January 2, 1996 and as to 20,000 shares on January 2, 1997.
(2) These options were granted to new independent directors, pursuant to the
Formula described above for Initial Election Grants. Accordingly, they
vest and become exercisable as to 5,000 shares on August 15, 1995 and
5,000 shares on August 15, 1996.
(3) These options were granted as consideration for additional services
provided as directors. They vested and became exercisable as to all
20,000 shares on August 21, 1995.
REPORTING OF SECURITIES TRANSACTIONS
Ownership of and transactions in the Company's stock by Executive
Officers and Directors of the Company and owners of 10% or more of the
Company's outstanding Common Stock are required to be reported to the
Securities and Exchange Commission pursuant to Section 16(a) of the Securities
Exchange Act of 1934, as amended. During the year ended June 30, 1995, the
following persons inadvertently did not file such reports in a timely manner:
Mr. Tombros did not file a Form 5 in a timely manner to report a gift of his
shares of Common Stock and options granted to him, Messrs. MacKinnon, Thurman,
Abuchowski, Caruso and Zuerblis did not file a Form 5 in a timely manner to
reflect options granted to them, and Dr. Abuchowski did not file a Form 4 in a
timely manner to report purchases of Common Stock for his retirement account.
INFORMATION CONCERNING BOARD AND COMMITTEE MEETINGS
AND COMMITTEES OF THE BOARD
Nine meetings of the Company's Board of Directors were held during the
fiscal year ended June 30, 1995. Randy Thurman attended six of the nine Board
of Directors' meetings held during the fiscal year. Each other incumbent
Director attended at least 75% of the total number of meetings of the Board of
Directors held during the fiscal year.
Each incumbent Director attended at least 75% of the total number of
meetings of any committees of the Board of Directors held during the period in
such fiscal year during which such director was a member of any such committee.
As of June 30, 1995, the only standing committees of the Company's Board
of Directors were the Executive Committee, Audit Committee and Compensation
Committee.
The Executive Committee, comprised of A.M. "Don" MacKinnon, Chairman,
Peter G. Tombros, Dr. Abraham Abuchowski, and Randy H. Thurman, meets to review
and make decisions concerning matters which would otherwise come before the
board, as permitted by Delaware law and the Company's by-laws. Given the
relatively small size of the Company's current Board of Directors, the Company
determined that efficiencies were not being realized from meetings of the
Executive Committee and therefore suspended meetings of the Executive Committee
in September 1994. The Executive Committee met once during the fiscal year
ended June 30, 1995.
The Audit Committee is comprised of Robert LeBuhn, Chairman and A.M.
"Don" MacKinnon. The primary functions of the Audit Committee are to meet with
the Company's independent auditors to discuss and review audit procedures and
issues, meet with management on matters concerning the Company's financial
condition, internal controls and year-end audit, and report to the board on
such matters. The Audit Committee held two meetings during the fiscal year
ended June 30, 1995.
The Compensation Committee is comprised of Dr. Rosina B. Dixon,
Chairperson and Robert LeBuhn. The primary functions of the Compensation
Committee are to administer the Company's Non-Qualified Stock Option Plan,
determine the compensation of the Company's officers and senior management and
review compensation policy. There were four meetings of the Compensation
Committee during the fiscal year ended June 30, 1995.
COMPENSATION COMMITTEE INTERLOCKS AND
INSIDER PARTICIPATION
As of the date hereof, the members of the Board of Directors serving on
the Compensation Committee of the Board of Directors are Dr. Rosina B. Dixon,
Chairperson and Robert LeBuhn, both of whom are non-employee directors of the
Company. Dr. Rosina B. Dixon and Robert LeBuhn joined the Compensation
Committee on August 15, 1994. Randy H. Thurman, a non-employee director,
served as a member of the Compensation Committee through January 16, 1995.
James F. Mrazek and Norman Gross, former non-employee directors, served as
members of the Compensation Committee through August 14, 1994.
BUSINESS EXPERIENCE OF EXECUTIVE OFFICERS
Set forth below is certain information regarding the executive officers
of the Company who do not serve on the Board of Directors.
JOHN A. CARUSO, 50, has served as Vice President, Business Development
and General Counsel of the Company since July 1994 and as Secretary of the
Company since July 1989. From January 1991 to July 1994, Mr. Caruso served as
Vice President, Legal Affairs of the Company. From the time he joined the
Company in September 1987 through December 1990, Mr. Caruso served as Corporate
Counsel to the Company. From 1979 through 1987, Mr. Caruso was employed at
Baxter Travenol Laboratories in Deerfield, Illinois as corporate counsel.
KENNETH J. ZUERBLIS, 36, has served as Vice President, Finance since
April 1994. From July 1991 to April 1994, Mr. Zuerblis served as the Company's
Controller. From January 1982 to July 1991, Mr. Zuerblis was employed by KPMG
Peat Marwick LLP. He became a certified public accountant in 1985.
SUMMARY COMPENSATION TABLE
The following table provides a summary of cash and non-cash compensation
for each of the last three fiscal years ended June 30, 1995, 1994 and 1993 with
respect to Enzon's Chief Executive Officer and the other three most highly
compensated executive officers serving during the fiscal year ended June 30,
1995 (the "Named Executive Officers").
LONG-TERM
<TABLE> COMPENSATION
ANNUAL COMPENSATION AWARDS
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Name and Other Annual Securities Underlying All Other
PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($)(1) OPTIONS(#)(2) COMPENSATION($)(3)
Peter G. Tombros{(4)} 1995 $300,000 -- $32,000{(5)} 189,000 $1,270
President and Chief 1994 68,080 -- 10,000{(5)} 400,000 --
Executive Officer 1993 -- -- -- -- --
Dr. Abraham Abuchowski 1995 253,000 -- -- 95,000 2,262
Chairman of the Board 1994 250,373 -- -- -- 3,117
1993 226,579 $37,500 -- 15,385 2,213
John A. Caruso 1995 122,299 -- -- 82,000 --
Vice President, Business 1994 122,212 -- -- 21,400 --
Development, General Counsel 1993 116,358 5,822 -- -- 29
and Secretary
Kenneth J. Zuerblis 1995 100,000 -- -- 85,000 1,500
Vice President, Finance 1994 91,322 -- -- 5,000 1,335
1993 80,723 -- -- -- 1,211
</TABLE>
(1) Excludes perquisites and other personal benefits that in the aggregate do
not exceed 10% of the Named Executive Officer's total annual salary and
bonus.
(2) Options were granted in consideration, or as a bonus, for services rendered
during the relevant fiscal year and may have been granted during the
following fiscal year.
(3) Consists of annual Company contributions to a 401(k) plan.
(4) Mr. Tombros joined the Company as President and Chief Executive Officer in
April 1994.
(5) Consists of auto and living allowance under Mr. Tombros' employment
agreement with the Company.
OPTION GRANTS IN LAST FISCAL YEAR
The following table contains information concerning the grant of stock
options under the Company's Non-Qualified Stock Option Plan ("the Plan") to the
Named Executive Officers during the fiscal year ended June 30, 1995.
INDIVIDUAL GRANTS
Number of
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Securities % of Total Potential Realizable Value at Assumed
Underlying Options Granted Annual Rates of Stock Price
Options to Employees Exercise or Base Expiration APPRECIATION FOR OPTION TERM (5)
NAME GRANTED (1) IN FISCAL YEAR PRICE ($/SHARE) DATE 0%($) 5%($) 10%($)
Peter G. Tombros55,000(2) 4.98% $2.63 8/24/04 $0 $90,796 $230,096
50,000(3) 4.53% 2.09 1/20/05 0 65,838 166,849
84,000(4) 7.61% 2.00 5/15/05 0 105,654 267,748
Dr. Abraham
Abuchowski 55,000(2) 4.98% 2.63 8/24/04 0 90,796 230,096
40,000(3) 3.62% 2.09 1/20/05 52,671 133,479
John A. Caruso 42,000(2) 3.80% 2.63 8/24/04 0 69,335 175,710
40,000(3) 3.62% 2.09 1/20/05 0 52,671 133,479
Kenneth J.
Zuerblis 45,000(2) 4.08% 2.63 8/24/04 0 74,288 188,261
40,000(3) 3.62% 2.09 1/20/05 0 52,671 133,479
</TABLE>
(1) All options were granted at an exercise price that equalled or exceeded
the fair market value of the Common Stock on the date of grant, as
determined by the last sale price as reported on the NASDAQ National
Market System. The options will become exercisable as to all shares
immediately upon a "change in control" of the Company as defined in
certain agreements between the executive officers and the Company. See
"Employment and Termination Agreements".
(2) This option will vest and become exercisable on August 24, 1996, provided
that the Named Executive Officer is employed by the Company on that date.
In the event employment is terminated prior to such vesting date for any
reason other than a voluntary resignation or a termination by the Company
(i) due to the named Executive Officer's failure to adequately perform
his duties or (ii) otherwise for cause, the option shall immediately vest
and become exercisable on the date of termination as to a pro rata number
of shares based upon the number of days of service subsequent to the
grant date divided by the total days during the vesting period.
(3) This option will vest and become exercisable on January 20, 1997,
provided that the Named Executive Officer is employed by the Company on
that date. In the event employment is terminated prior to such vesting
date for any reason other than a voluntary resignation or a termination
by the Company (i) due to the named Executive Officer's failure to
adequately perform his duties or (ii) otherwise for cause, the option
shall immediately vest and become exercisable on the date of termination
as to a pro rata number of shares based upon the number of days of
service subsequent to the grant date divided by the total days during the
vesting period.
(4) Mr. Tombros' option to purchase 84,000 shares will vest and become
exercisable as to 42,000 shares on May 15, 1996 and 42,000 shares on May
15, 1997.
(5) The amounts set forth in the three columns represent hypothetical gains
that might be achieved by the optionees if the respective options are
exercised at the end of their terms. These gains are based on assumed
rates of stock price appreciation of 0%, 5% and 10% compounded annually
from the dates the respective options were granted. The 0% appreciation
column is included because the options were granted with exercise prices
which equalled or exceeded the market price of the underlying Common
Stock on the date of grant, and thus will have no value unless the
Company's stock price increases above the exercise prices.
OPTION EXERCISES AND FISCAL YEAR-END VALUES
The following table sets forth the information with respect to the Named
Executive Officers concerning the exercise of options during the fiscal year
ended June 30, 1995 and unexercised options held as of June 30, 1995.
<TABLE>
<CAPTION>
<S> NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
SHARES ACQUIRED VALUE OPTIONS AT FY-END (#) AT FY-END ($)(1)
NAME ON EXERCISE (#) REALIZED($)EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
<C> <C> <C> <C> <C> <C>
Peter G. Tombros -- -- 133,333 455,667 -- $45,560
Dr. Abraham Abuchowski-- -- 561,686 95,000 -- 11,248
John A. Caruso -- -- 58,992 82,000 -- 11,248
Kenneth J. Zuerblis -- -- 25,000 85,000 -- 11,248
</TABLE>
(1) Based upon a market value of $2.38 as determined by the last sale price
as reported on the NASDAQ National Market System on June 30, 1995. If
the exercise price is equal to or greater than such last sale price the
option is deemed to have no value.
EMPLOYMENT AND TERMINATION AGREEMENTS
The Company has a three-year employment agreement with Mr. Tombros
effective as of April 5, 1994, pursuant to which he receives an annual base
salary of $300,000. Mr. Tombros' agreement provided for a mandatory bonus
consisting of stock options and cash for his first year of employment under the
Company's Total Compensation Program for Officers and Senior Executives (the
"Bonus Program"). This bonus was to be at least 40% of Mr. Tombros' base
annual salary with 50% of such bonus payable in cash and the remainder payable
in stock options, valued in accordance with the provisions of the Program.
During fiscal 1995, at the request of Mr. Tombros, the Company amended this
agreement with regard to the bonus in order to make it consistent with the
Company's policy of not paying cash bonuses. In lieu of the bonus called for
under the agreement, the Company agreed to grant a ten year option under the
Company's Non-Qualified Stock Option Plan, as amended, to purchase 84,000
shares of the Company's Common Stock at a per share price of $2.00, the fair
market value of the Company's Common Stock on the date of grant. The option
vests under generally the same provisions as the Bonus Program, 50% after each
of the first and second anniversaries of the grant. Mr. Tombros is entitled to
receive bonuses under the Bonus Program subsequent to his first year of
employment, but the amount of such bonuses will be determined at the discretion
of the Compensation Committee of the Board of Directors. In the event Mr.
Tombros' employment is terminated prior to April 5, 1996 for any reason, except
if such employment is terminated (i) voluntarily by Mr. Tombros (other than in
response to the Company's prior material breach of the employment agreement),
(ii) by the Company "for cause" (as defined in the employment agreement) or
(iii) as a result of Mr. Tombros' death or disability, Mr. Tombros will be
entitled to receive his base salary until the later of April 5, 1996 or one
year after such termination. If Mr. Tombros' employment is terminated
subsequent to April 5, 1996, except for the reasons set forth in (i), (ii) and
(iii) above, he will receive his base salary for one year after such
termination. In the event Mr. Tombros' employment is terminated due to his
death or disability his base salary will be paid for six months subsequent to
such termination. Pursuant to his employment agreement, Mr. Tombros was also
granted a ten-year option under the Company's Non-Qualified Stock Option Plan,
as amended, to purchase 400,000 shares of the Company's Common Stock at a per
share exercise price of $4.50, the fair market value of the Company's Common
Stock on the date of grant. The option vests as to 1/3 of the shares on each
of the first, second and third anniversaries of the effective date of Mr.
Tombros' employment agreement, provided Mr. Tombros does not voluntarily
terminate his employment with the Company (except in response to the Company's
prior material breach of the employment agreement) prior to the relevant
vesting date. Mr. Tombros' employment agreement also requires him to maintain
the confidentiality of Company information and assign inventions to the
Company. Mr. Tombros is precluded from competing with the Company during the
term of his employment agreement and for two years after his employment is
terminated if his employment is terminated by the Company for cause or by Mr.
Tombros voluntarily (except in response to the Company's prior material breach
of the employment agreement).
The Company has agreements with each of its executive officers which
provide for payment to each executive officer of three years of compensation
and benefits (as defined in such agreements) following a change in control of
the Company (as defined in such agreements), including the provision for such
payment in the event such executive officer's employment with the Company is
terminated under certain circumstances following such change in control. Upon
a change in control of the Company, all options held by such executive officers
shall vest immediately, notwithstanding any vesting provisions in the option
certificates or any plan covering such options. The term of these agreements
is for three years and prior to a change in control of the Company, the
agreements automatically renew on each successive anniversary for an additional
three years, unless the Company gives the executive officer 60 days notice
prior to the anniversary date that it does not plan to renew such contracts.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
The Compensation Committee of the Board of Directors consists of two non-
employee directors and determines all compensation paid or awarded to the
Company's executive officers, including the Named Executive Officers in the
Summary Compensation Table. As with many other biotechnology companies,
Enzon's current level of development and the highly volatile nature of
biotechnology stocks in general makes executive compensation which is based on
sales and earnings goals or stock performance impracticable. The Compensation
Committee believes that an important factor in Enzon's success is the continued
development and maintenance of a culture focused on team-oriented performance.
In this context, compensation has been based on the accomplishment of a blend
of mutually shared and individual goals. Typically, the Compensation Committee
has reviewed the executive compensation of other biotechnology companies with
comparable levels of stockholders' equity and development and has designed the
Company's total executive compensation to be targeted at the median of
executive compensation levels of these companies. In the past, compensation of
the Company's executive officers typically has consisted of two principal
components: (i) base salary and benefits determined at the beginning of each
fiscal year, and (ii) a bonus consisting of cash and stock options awarded
under the Bonus Program after the end of each fiscal year.
Based on the financial position of the Company, executive officers did
not receive an increase in their salaries and did not receive cash bonuses
during the fiscal year ended June 30, 1995. This decision was made
notwithstanding the Compensation Committee's determination of the Company's
current executive officers' performance during fiscal 1995.
During the fiscal year ended June 30, 1995, the Compensation Committee
granted options to purchase an aggregate of 367,000 shares of Common Stock to
the Company's Named Executive Officers. These options were granted for the
purpose of encouraging the Named Executive Officers to remain with the Company
and to provide a performance incentive to such officers. The options were
granted with exercise prices that equalled or exceeded the fair market value of
the Company's Common Stock on the date of grant. The options generally require
the officers to remain with the Company for two years, in order for the options
to be exercisable.
The only bonus awarded to a Named Executive Officer in connection with
fiscal year 1995 compensation was an option grant related to a commitment under
an employment agreement with the Company's Chief Executive Officer, Peter G.
Tombros. Under his employment agreement, Mr. Tombros was guaranteed a minimum
bonus under the Bonus Program equal to 40% of his base compensation or
$120,000, of which $60,000 would be paid in cash and the remainder in a stock
option grant. At the request of Mr. Tombros and notwithstanding the
Compensation Committee's determination that Mr. Tombros' performance during his
first year of employment would warrant such a bonus, the Company and Mr.
Tombros amended the agreement eliminating the cash portion of the bonus. The
amendment provides for a grant of a ten year option to purchase 84,000 shares
of Common Stock at $2.00 per share, the fair market value of the Company's
Common Stock on the date of grant, in lieu of the cash and option grant called
for under the original agreement. The option vests and becomes exercisable as
to 42,000 shares one year after the date of grant, and as to the remaining
42,000 shares, two years after the grant.
The annual base salary provided under Peter Tombros' employment agreement
for fiscal 1995 was $300,000. In determining the compensation to be paid to
Mr. Tombros, the Compensation Committee took into account Mr. Tombros'
extensive experience as a senior executive of a major multinational
pharmaceutical firm and the compensation paid to chief executive officers with
similar credentials at comparable biotech companies.
THE COMPENSATION COMMITTEE
Dr. Rosina B. Dixon, Chairperson
Robert LeBuhn
STOCKHOLDER RETURN PERFORMANCE GRAPH
The graph below summarizes the total cumulative return experienced by the
Company's stockholders from June 30, 1990 through June 30, 1995, compared to
the NASDAQ Stock Market Index and a Peer Group index consisting of: Isis
Pharmaceuticals, Inc., Repligen Corp., Celgene Corp., Gensia Pharmaceuticals
Inc., Collagen Corp., DNA Plant Technology Corp., Liposome Inc., Cytel Corp.,
Calgene Inc., Cytogen Corp. and Cephalon Inc. (the "Peer Group"). The Company
and the companies comprising the Peer Group are biotechnology companies which
are all traded on the NASDAQ Stock Market. The Peer Group used for the current
year's stockholder return performance graph does not include Synergen Inc. or
Cambridge Biotech Corporation which were included in the Peer Group in prior
years. Synergen Inc. was acquired in December 1994 and is no longer publicly
traded and Cambridge Biotech Corporation is no longer traded on the NASDAQ
Stock Market. The changes for the periods shown in the graph and table below
are based on the assumption that $100 had been invested in Enzon, Inc. Common
Stock and in each index below on June 30, 1990.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG ENZON, INC., THE NASDAQ STOCK MARKET-US INDEX AND A PEER GROUP
FISCAL YEAR ENDING JUNE 30,
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
1990 1991 1992 1993 1994 1995
Enzon, Inc. 100 95 63 45 25 22
Peer Group 100 137 192 152 92 95
NASDAQ Stock
Market-US 100 106 127 160 162 215
</TABLE>
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information concerning stock
ownership of all persons known by the Company to own beneficially 5% or more of
the outstanding shares of the Company's voting stock, each Director, each
Executive Officer named in the Summary Compensation Table and all Executive
Officers and Directors of the Company as a group as of October 19, 1995:
PERCENTAGE OF
DIRECTORS, OFFICERS OR NUMBER OF VOTING STOCK
5% STOCKHOLDERS{(1)} SHARES{(2)} OUTSTANDING{(3)}
Peter G. Tombros 144,633{(4)} *
Dr. Abraham Abuchowski 1,265,156{(5)} 4.7%
Dr. Rosina B. Dixon 17,664{(6)} *
Robert LeBuhn 21,664{(7)} *
A.M. "Don" MacKinnon 141,100{(8)} *
Randy H. Thurman 55,000{(9)} *
John A. Caruso 58,992{(10)} *
Kenneth J. Zuerblis 26,100{(11)} *
Leslie Alexander 1,356,000{(12)} 5.1%
P.O. Box 63939
Miami, Florida
Eastman Kodak Company 1,375,000{(13)} 5.2%
343 State Street
Rochester, NY 14650
State of Wisconsin 2,271,000{(14)} 8.6%
Investment Board
P.O. Box 7842
Madison, Wisconsin 53707
All Executive Officers and Directors1,730,309{(15)} 6.3%
as a group (eight persons)
* Less than one percent.
(1) The address of all Executive Officers and Directors listed above is in
the care of the Company.
(2) All shares listed are Common Stock. Except as discussed below, none of
these shares are subject to rights to acquire beneficial ownership, as
specified in Rule 13d-3(d)(1) under the Securities Exchange Act of 1934
as amended, and the beneficial owner has sole voting and investment
power, subject to community property laws where applicable.
(3) Gives effect to 109,000 shares of Series A Preferred Stock which were
issued and outstanding as of October 19, 1995. Except with respect to a
vote to change the terms of the Series A Preferred Stock and as required
by Section 242 of the Delaware General Corporation Law, the Series A
Preferred Stock and Common Stock will vote as one class of stock. Each
share of Common Stock and each share of Series A Preferred Stock is
entitled to one vote. The percentage of voting stock outstanding for
each stockholder is calculated by dividing (i) the number of shares
deemed to be beneficially held by such stockholder as of October 19,
1995 by (ii) the sum of (A) the number of shares of Common Stock
outstanding as of October 19, 1995 plus (B) the number of shares of
Series A Preferred Stock outstanding as of October 19, 1995 plus (C) the
number of shares issuable upon exercise of options or warrants held by
such stockholder which were exercisable as of October 19, 1995 or which
will become exercisable within 60 days after October 19, 1995.
(4) Includes 133,333 shares subject to options which were exercisable as of
October 19, 1995 or which will become exercisable within 60 days after
October 19, 1995.
(5) Includes 22,100 shares held by SKG and Co., Inc. of which Dr. Abuchowski
is the president and a principal stockholder, 15,329 shares held in Dr.
Abuchowski's 401(k) retirement plan account, 569,378 shares subject to
options which were exercisable as of October 19, 1995 or which will
become exercisable within 60 days after October 19, 1995, 9,000 shares
owned as of October 19, 1995 by Dr. Abuchowski's wife who is a former
employee of the Company and 2,556 shares subject to options under the
Non-Qualified Stock Option Plan held by Dr. Abuchowski's wife which were
exercisable as of October 19, 1995 or which will become exercisable
within 60 days after October 19, 1995 and an aggregate of 261,000 shares
held by trusts for the benefit of Dr. Abuchowski's wife, son and
daughter, for which Dr. Abuchowski's wife and a bank are trustees. Dr.
Abuchowski disclaims beneficial ownership as to the shares owned by his
wife and such trusts.
(6) Includes 11,664 shares subject to options which were exercisable as of
October 19, 1995 or which will become exercisable within 60 days after
October 19, 1995.
(7) Includes 11,664 shares subject to options which were exercisable as of
October 19, 1995 or which will become exercisable within 60 days after
October 19, 1995.
(8) Includes 122,500 shares subject to options which were exercisable as of
October 19, 1995 or which will become exercisable within 60 days after
October 19, 1995 and 11,800 shares beneficially owned by Mr. MacKinnon's
wife. Mr. MacKinnon disclaims beneficial ownership as to the shares
owned by his wife.
(9) Includes 55,000 shares subject to options which were exercisable as of
October 19, 1995 or which will become exercisable within 60 days after
October 19, 1995.
(10) Includes 58,992 shares subject to options which were exercisable as of
October 19, 1995 or which will become exercisable within 60 days after
October 19, 1995.
(11) Includes 25,000 shares subject to options which were exercisable as of
October 19, 1995 or which will become exercisable within 60 days after
October 19, 1995 and 600 shares owned by Mr. Zuerblis' IRA.
(12) Includes 35,000 shares held by Mr. Alexander as custodian for his
daughter. The information concerning Mr. Alexander's stock ownership
was obtained from an amended Schedule 13D filed with the Securities and
Exchange Commission on April 2, 1993.
(13) The information concerning the stock ownership of Eastman Kodak Company
("Kodak") was determined from an amended Schedule 13D filed by Kodak
with the Securities and Exchange Commission on January 27, 1993 .
(14) The information concerning the stock ownership of the State of Wisconsin
Investment Board was obtained from a Form 13F filed by the State of
Wisconsin Investment Board with the Securities and Exchange Commission
dated August 29, 1995.
(15) Includes all shares owned beneficially by the directors and the
executive officers named in the table.
PROPOSAL NO. 2 - APPROVAL OF AMENDMENT
TO THE NON-QUALIFIED STOCK OPTION PLAN
In November 1987, the Company's Board of Directors adopted the Non-
Qualified Stock Option Plan (the "Plan") in order to enable the Company to
attract and retain qualified employees, directors and independent consultants.
Subject to stockholder approval, the Board of Directors has approved an
amendment to the Plan to increase the total number of shares of Common Stock
authorized for issuance upon exercise of options granted to officers,
employees, directors and independent consultants under the Plan from 5,000,000
to 6,200,000.
The board believes that the best way to attract and retain qualified
executives and board members is to offer significant potential rewards based
upon the Company's success through the issuance of stock options. The
amendment to the Plan increasing the shares of Common Stock authorized for
issuance presented herein to the stockholders for their approval is designed to
assist the Company in accomplishing this goal. Of the 5,000,000 shares of
Common Stock currently authorized, at October 19, 1995, 597,467 shares remained
available for future grants.
The following summary description of the Plan is qualified in its
entirety by the full text of the Plan which may be obtained by the Company's
stockholders upon request to the Secretary of the Company.
The last sale price of a share of the Company's Common Stock as reported
by the NASDAQ National Market System on October 19, 1995 was $3 3/16.
BASIC TERMS
Under the Plan, directors, officers and employees of the Company and
independent consultants to the Company have been, and will be, eligible for
grants of options to purchase shares of Common Stock. To date, all options
granted under the Plan have been awarded in the discretion of the Board of
Directors or a committee thereof or pursuant to the formulas described below.
Currently, the Compensation Committee of the Board of Directors determines who
will receive options under the Plan, the number of shares of Common Stock which
will be issuable upon exercise of options which are granted under the Plan and
the terms of the options granted under the Plan to the extent the terms are not
otherwise set forth in the Plan. No option granted under the Plan may be
transferred by the optionee, otherwise than by will or the laws of descent and
distribution and, generally, during the optionee's lifetime, the option may be
exercised only by the optionee. The exercise price of the options must be at
least equal to the fair market value of the underlying Common Stock as of the
date of grant. Either the Compensation Committee of the Board of Directors or
the Board of Directors may, in its discretion, provide that an option may not
be exercised in whole or in part for any specified period or periods of time.
No option may be exercised for a minimum of six months from the date of grant
except immediately prior to the dissolution or liquidation of the Company or a
merger or consolidation where the Company is not the surviving corporation, in
which case all outstanding options become immediately exercisable. Options
expire no later than the tenth anniversary of the date of grant.
AUTOMATIC AWARDS TO INDEPENDENT DIRECTORS
The Plan provides that Independent Directors receive option grants
pursuant to a formula (the "Formula"). The Formula provides that on each of
January 2, 1994, January 2, 1997, January 2, 2000 and January 2, 2003, each of
the Company's Independent Directors will automatically receive an option to
purchase 60,000 shares of Common Stock (the "Regular Grant"). On the date of
each Independent Director's initial election to the board, pursuant to a vote
of the Company's stockholders or the board, such newly-elected Independent
Director will automatically receive (i) an option to purchase such Independent
Director's pro rata share of the Regular Grant, which will equal the product of
1,666 multiplied by the number of whole months remaining in the relevant three
year period until the next Regular Grant (the "Pro Rata Grant"); and (ii) an
option to purchase 10,000 shares of Common Stock (the "Initial Election
Grant"). Each option granted to an Independent Director pursuant to the
Formula will vest and become exercisable as follows: those options granted
pursuant to a Regular Grant will vest and become exercisable as to 20,000
shares one year after the date of grant; as to 20,000 shares two years after
the date of grant; and as to the remaining 20,000 shares three years after the
date of grant. Those options granted pursuant to a Pro Rata Grant will vest
and become exercisable as to that number of shares equal to the product of
1,666 multiplied by the number of whole months remaining in the first calendar
year in which the Independent Director is elected initially to the board on the
January 1st following such Independent Director's initial election to the
board; and as to any remaining shares in accordance with the schedule for
options granted pursuant to a Regular Grant. Those options granted pursuant to
an Initial Election Grant will vest and become exercisable as to 5,000 shares
one year after the date of grant; and as to 5,000 shares two years after the
date of grant.
An option granted to an Independent Director pursuant to the Formula will
not become exercisable as to the relevant shares unless such Independent
Director has served continuously on the board during the year preceding the
date on which such options are scheduled to vest and become exercisable, or
from the date such Independent Director joined the board until the end of such
year should such Independent Director have joined the board during such year;
PROVIDED, HOWEVER, that if an Independent Director does not fulfill such
continuous service requirement due to such Independent Director's death or
disability all options granted under the Formula and held by such Independent
Director shall nonetheless vest and become exercisable as though such
Independent Director fulfilled the continuous service requirement. An option
granted to an Independent Director pursuant to the Formula will remain
exercisable for a period of ten years from the date of grant.
ADMINISTRATION
The Plan is to be administered by either the Board of Directors or a
committee of at least two directors appointed by the board. The Plan is
currently administered by the Compensation Committee. It is intended for the
automatic grants to Independent Directors described herein to qualify as
"formula awards" under Rule 16b-3 of the Exchange Act. In this case,
Independent Directors would, notwithstanding their receipt of options to
purchase the Company's Common Stock, be considered "disinterested persons"
under Rule 16b-3 and be able to administer the Plan and award options under the
Plan to employee directors and executive officers which would qualify under
Rule 16b-3. Also, the grants of options to Independent Directors under the
Formula will qualify under Rule 16b-3.
AMENDMENTS AND TERMINATION
Currently, no options may be granted under the Plan beyond November 21,
2007. The Compensation Committee or the Board of Directors may terminate,
amend, or revise the Plan with respect to any shares as to which options have
not been granted, but may not alter any previously granted options without the
optionee's consent. Termination of the Plan will not affect previously granted
options. No amendment may be made by the Compensation Committee or the Board
of Directors, which, without stockholder approval, would cause the Plan to fail
to comply with the requirements of Rule 16b-3 under the Exchange Act. Rule
16b-3 currently would require stockholder approval for any amendments to the
Plan which would (a) materially increase the benefits accruing to participants
in the Plan; (b) materially increase the number of securities which may be
issued under the Plan; or (c) materially modify the requirements as to
eligibility for participation in the Plan. In addition, the portion of the
Plan which provides for automatic formula grants to Independent Directors may
be amended or terminated by the Compensation Committee or the board, as the
case may be, as they deem advisable; provided that an amendment revising the
price, date of exercisability, exercise period or amount of shares subject to
an option will not be made more frequently than once every six months unless
necessary to comply with the Internal Revenue Code of 1986, as amended, or with
the Employee Retirement Income Security Act of 1974, as amended, or the rules
thereunder.
CAPITAL ADJUSTMENTS
The aggregate number of shares of Common Stock available for options, the
shares subject to any option, and the price per share, will all be
proportionately adjusted for any increase or decrease in the number of issued
shares of Common Stock resulting from (1) a subdivision or consolidation of
shares or any other capital adjustment, (2) the payment of a stock dividend on
the Company's Common Stock, or (3) other increase or decrease in such shares
effected without receipt of consideration by the Company. If the Company shall
be the surviving corporation in any merger or consolidation, any option
outstanding under the Plan shall pertain, apply, and relate to the securities
to which a holder of the number of shares of Common Stock subject to the option
would have been entitled after the merger or consolidation. Upon dissolution
or liquidation of the Company, or upon a merger or consolidation in which the
Company is not the surviving corporation, all options outstanding under the
Plan shall terminate; except that each optionee shall have the right,
immediately prior to such dissolution or liquidation, or such merger or
consolidation, to exercise such options in whole or in part, that such optionee
holds.
TAX CONSEQUENCES
An optionee will not recognize taxable income for Federal income tax
purposes upon the receipt of an option under the Plan, and the Company will not
be entitled to a deduction upon the grant of an option. Upon exercise of an
option, the optionee will recognize ordinary income equal to the excess of the
fair market value on the date of exercise of the Common Stock received upon
exercise over the exercise price for such Common Stock. However, any such
optionee who is subject to the trading restrictions of Section 16(b) of the
Exchange Act would, unless the optionee elected to recognize ordinary income on
the date of exercise, recognize ordinary income on the date such trading
restrictions terminate (the "Deferred Date"). The amount of such income would
equal the excess of the fair market value on the Deferred Date of the Common
Stock received upon exercise of the option over the exercise price for such
Common Stock, and the holding period for long-term capital gain treatment would
not begin until the Deferred Date. The Company will be entitled to a deduction
equal to the amount of ordinary income recognized by any optionee at the same
time that such optionee recognized such income.
ELIGIBLE PARTICIPANTS
As of October 19, 1995, there were approximately 121 persons eligible to
participate in the Plan. Of these eligible participants, six are members of
the Board of Directors (four of whom are Independent Directors), two are
executive officers who are not board members and the remainder are employees of
the Company who are not executive officers.
For information concerning options granted under the Plan to directors,
the Chief Executive Officer and the Named Executive Officers see "DIRECTORS'
COMPENSATION - DIRECTORS' STOCK OPTIONS," "SUMMARY COMPENSATION TABLE" AND
"OPTION GRANTS IN LAST FISCAL YEAR."
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE AMENDMENT TO
THE NON-QUALIFIED STOCK OPTION PLAN TO INCREASE THE NUMBER OF SHARES OF
COMMON STOCK RESERVED FOR ISSUANCE UPON THE EXERCISE OF OPTIONS GRANTED
TO OFFICERS, EMPLOYEES, DIRECTORS AND INDEPENDENT CONSULTANTS UNDER THE PLAN
FROM 5,000,000 TO 6,200,000 (PROPOSAL NO. 2 ON THE PROXY CARD).
PROPOSAL NO. 3 - RATIFICATION OF AUDITORS
On September 15, 1995, the Audit Committee of the Board of Directors,
pursuant to authority granted by the Board of Directors, approved the retention
of KPMG Peat Marwick LLP ("KPMG"), independent certified public accountants, to
audit the consolidated financial statements of the Company for the fiscal year
ending June 30, 1996. KPMG served as auditor of the consolidated financial
statements of the Company for the fiscal years ended June 30, 1995, June 30,
1994, and June 30, 1993. Representatives of KPMG are expected to be present at
the Annual Meeting and will have the opportunity to make a statement should
they desire to do so. Such representatives are also expected to be available
to respond to questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE
SELECTION OF KPMG PEAT MARWICK LLP, INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS,
TO AUDIT THE CONSOLIDATED FINANCIAL STATEMENTS OF THE COMPANY FOR THE FISCAL
YEAR ENDING JUNE 30, 1996 (PROPOSAL NO. 3 ON THE PROXY CARD).
ANNUAL REPORT TO STOCKHOLDERS
The Company's Annual Report to Stockholders for the fiscal year ended
June 30, 1995 accompanies this Proxy Statement.
STOCKHOLDERS' PROPOSALS
IT IS ANTICIPATED THAT THE COMPANY'S FISCAL 1996 ANNUAL MEETING OF
STOCKHOLDERS WILL BE HELD ON OR ABOUT DECEMBER 3, 1996. STOCKHOLDERS WHO
INTEND TO PRESENT PROPOSALS AT SUCH ANNUAL MEETING OF STOCKHOLDERS MUST SUBMIT
THEIR PROPOSALS TO THE SECRETARY OF THE COMPANY ON OR BEFORE AUGUST 16, 1996.
<PAGE>
GENERAL
The cost of soliciting proxies will be borne by the Company. In addition
to the use of mails, proxies may be solicited by personal interview, telephone
and telegraph, and by directors, officers and regular employees of the Company,
without special compensation therefor. The Company expects to reimburse banks,
brokers and other persons for their reasonable out-of-pocket expenses in
handling proxy materials for beneficial owners of the Company's Common Stock.
Unless contrary instructions are indicated on the proxy card, all Common
Shares or Series A Preferred Shares represented by valid proxies received
pursuant to this solicitation (and not revoked before they are voted) will be
voted FOR the election of the nominees for directors named herein and FOR
Proposal No. 2 and Proposal No. 3.
Any proxy given pursuant to this solicitation may be revoked by the
person giving it at any time before it is voted. Proxies may be revoked by
filing with the Secretary of the Company written notice of revocation bearing a
later date than the proxy, by duly executing a subsequent proxy relating to the
same Common Shares or Series A Preferred Shares or by attending the Annual
Meeting and voting in person. Attendance at the Annual Meeting will not in and
of itself constitute revocation of a proxy unless the stockholder votes his or
her Common Shares or Series A Preferred Shares in person at the Annual Meeting.
Any notice revoking a proxy should be sent to the Secretary of the Company,
John A. Caruso, at Enzon, Inc., 20 Kingsbridge Road, Piscataway, New Jersey
08854.
The Board of Directors knows of no business other than that set forth
above to be transacted at the meeting, but if other matters requiring a vote of
the stockholders arise, the persons designated as proxies will vote the Common
Shares or Series A Preferred Shares represented by the proxies in accordance
with their judgment on such matters. If a stockholder specifies a different
choice on the proxy, his or her Common Shares or Series A Preferred Shares will
be voted in accordance with the specification so made.
Please complete, sign and date the enclosed proxy card, which is
revocable as described herein, and mail it promptly in the enclosed postage-
paid envelope.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. WE URGE YOU TO FILL
IN, SIGN AND RETURN THE ACCOMPANYING PROXY CARD, NO MATTER HOW LARGE OR SMALL
YOUR HOLDINGS MAY BE.
By order of the Board of Directors,
John A. Caruso, Secretary
Piscataway, New Jersey
October 31, 1995
<PAGE>
PROXY
ENZON, INC.
ANNUAL MEETING OF STOCKHOLDERS DECEMBER 5, 1995
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Peter G. Tombros and John A. Caruso and each of them, as proxies, with
full power of substitution in each of them, are hereby authorized to represent
and to vote, as designated below and on the reverse side, on all proposals and
in the discretion of the proxies on such other matters as may properly come
before the annual meeting of stockholders of Enzon, Inc. to be held on December
5, 1995 or any adjournment(s), postponement(s), or other delay(s) thereof (the
"Annual Meeting"), all shares of stock of Enzon, Inc. to which the undersigned
is entitled to vote at the Annual Meeting.
UNLESS OTHERWISE DIRECTED, THIS PROXY WILL BE VOTED "FOR" PROPOSALS 1, 2
AND 3 AND WILL BE VOTED IN THE DISCRETION OF THE PROXIES ON SUCH OTHER MATTERS
AS MAY PROPERLY COME BEFORE THE ANNUAL MEETING. THE BOARD OF DIRECTORS
RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" PROPOSALS 1, 2 AND 3.
(1) Election of the following nominees as Class III Directors to serve in
such capacities until their successors are duly elected and qualified:
DR. ABRAHAM ABUCHOWSKI
ROBERT LEBUHN
(Authority to vote for any nominee(s) may be withheld by lining through the
name(s) of any such nominee(s).)
/ / FOR / / WITHHOLD AUTHORITY FOR ALL
(2) Proposal to approve an amendment to the Enzon, Inc. Non-Qualified Stock
Option Plan which increases the number of shares reserved for issuance
upon exercise of options from 5,000,000 to 6,200,000.
/ / FOR / / AGAINST / / ABSTAIN
(3) Ratification of the selection of KPMG Peat Marwick LLP to audit the
consolidated financial statements of the Company for the fiscal year
ending June 30, 1996.
/ / FOR / / AGAINST / / ABSTAIN
/ / PLEASE CHECK THIS BOX IF YOU EXPECT TO ATTEND THE ANNUAL MEETING IN
PERSON.
Please sign exactly as name
appears to the left, date and
return. If shares are held by
joint tenants, both should
sign. When signing as
attorney, executor,
administrator, trustees or
guardian, please give full
title as such. If a
corporation, please sign in
full corporate name by
president or other authorized
officer. If a partnership,
please sign in partnership name
by authorized person.)
Date:
Sign Here:
Signature (if held jointly)
Capacity (Title or Authority,
i.e. Executor, Trustee)
PLEASE SIGN, DATE AND MAIL YOUR PROXY TODAY
<PAGE>
APPENDIX
ENZON, INC.
NON-QUALIFIED STOCK OPTION PLAN, AS AMENDED{*}
A. PURPOSE AND SCOPE
The purpose of this Plan is to encourage stock ownership by employees
and directors of, and independent consultants to, Enzon, Inc., a Delaware
corporation, and its subsidiaries (herein called the "Company"), to provide
an incentive to such persons to develop, expand and improve the profits and
prosperity of the Company, and to assist the Company in attracting key
personnel and consultants through the grant of Options to purchase shares
of the Company's Common Stock.
B. DEFINITIONS
Unless otherwise required by the context:
1. "Board" shall mean the Board of Directors of the Company.
2. "Committee" shall mean the Compensation Committee, which is
appointed by the Board, and which shall be composed of three members of the
Board.
3. "Company" shall mean Enzon, Inc. and its subsidiaries.
4. "Code" shall mean the Internal Revenue Code of 1986, as amended.
5. "Independent Director" shall mean a director who is not an
employee of the Company.
6. "Option" shall mean a right to purchase Stock, granted pursuant
to the Plan.
7. "Option Price" shall mean the purchase price for Stock under an
Option, as determined in Section F below.
8. "Participant" shall mean an employee of the Company, a director
of the Company, a consultant to the Company, or any person to whom an
Option is granted under the Plan.
9. "Plan" shall mean this Enzon, Inc. Non-Qualified Stock Option
Plan, as amended.
10. "Stock" shall mean the Common Stock of the Company, par value
$.01.
C. STOCK TO BE OPTIONED
Subject to the provisions of Section L of the Plan, the maximum number
of shares of Stock that may be optioned or sold under the Plan is 5,000,000
shares. Such shares may be treasury, or authorized but unissued shares of,
the Stock of the Company.
D. ADMINISTRATION
The Plan shall be administered by the Committee or the Board. Two
members of the Committee shall constitute a quorum for the transaction of
business. Except as provided in Section R hereof, the Committee or the
Board shall make all decisions with respect to the operation of the Plan,
the participation in the Plan by employees or directors of, or consultants
to the Company, and with respect to the extent of that participation. The
interpretation and construction of any provision of the Plan by the Board
or the Committee shall be final. No member of the Board or the Committee
shall be liable for any action or determination made by him in good faith.
E. ELIGIBILITY
The Board or the Committee may grant Options to any employee
(including an employee who is a director or an officer), or any non-
employee who is a director or an officer, or any non-employee director of
the Company, or any consultant to the Company. Options may be awarded by
the Board or the Committee at any time and from time to time to new
Participants, or to then current Participants, or to a greater or lesser
number of Participants, and may include or exclude previous Participants,
as the Board, or the Committee shall determine. Options granted at
different times need not contain similar provisions.
F. OPTION PRICE
The purchase price for Stock under each Option shall be at least 100
percent of the fair market value of the Stock at the time the Option is
granted, but in no event less than the par value of the Stock. The fair
market value of the Company's Stock shall be determined as follows:
a. If the Common Stock continues to be traded on the over-the-
counter market as a National Market System Security or is traded
on a national securities exchange, the fair market value of the
Stock shall be the closing sale price on such day that the Option
is granted as reported by the National Association of Securities
Dealers Automated Quotation System ("NASDAQ") or the national
securities exchange on which the Stock is trading, as the case
may be; or
b. If the Common Stock ceases to be traded as a National Market
System Security but continues to be traded on the over-the-
counter market, the fair market value of the Stock shall be the
closing bid price on such day that the Option is granted as
reported by NASDAQ; or
c. If the Common Stock ceases to be traded on the over-the-
counter market and is not traded on a national securities
exchange, the current market value shall be determined by a
reputable investment banking firm retained by the Board.
G. TERMS AND CONDITIONS OF OPTIONS
Except as provided in Section R hereof, Options granted pursuant to
the Plan shall be authorized by the Board or the Committee and shall be
evidenced by agreements ("Option Agreements") in such form as the Board or
the Committee, shall from time to time approve. Such Agreements shall
comply with and be subject to the following terms and conditions:
1. EMPLOYMENT AGREEMENT - The Board or the Committee may, in its
discretion, include in any Option granted under the Plan to a Participant
who is an employee of the Company a condition that the Participant shall
agree to remain in the employ of, and/or to render services to, the Company
for a period of time (specified in the Option Agreement) following the date
the Option is granted. No such agreement shall impose upon the Company,
however, any obligation to employ the Participant for any period of time,
except as otherwise agreed to by the Company.
2. TIME AND METHOD OF PAYMENT - The Option Price shall be paid in
full in cash, by certified check or official bank check, at the time an
Option is exercised under the Plan. If the Board or the Committee in its
sole discretion so authorizes, payment may be made by exchange of shares of
the Company's Common Stock previously owned by the optionee, having the
same fair market value as determined in the manner set forth in Section F.
Without payment by one of the methods described above, an exercise of any
Option granted under the Plan shall be invalid and of no effect. Promptly
after the exercise of an Option and the payment of the full Option Price,
the Participant shall be entitled to the issuance of a stock certificate
evidencing his or her ownership of the Stock issuable under such Option. A
Participant shall have none of the rights of a stockholder until the Option
is duly exercised, and no adjustment will be made for dividends or other
rights for which the record date is prior to the date such Option is duly
exercised.
3. NUMBER OF SHARES - Each Option shall state the total number of
shares of Stock to which it pertains.
4. OPTION PERIOD AND LIMITATIONS ON EXERCISE OF OPTIONS -Except for
Options granted pursuant to Section R hereof, the Board or Committee shall
determine the period of time during which an Option may be exercised,
PROVIDED, HOWEVER, that no Option may be exercised after the expiration of
ten years from the date it is granted. Except for Options granted pursuant
to Section R hereof, the Board or the Committee may, in its discretion,
provide that an Option may not be exercised in whole or in part for any
period or periods of time specified in the Option Agreement; PROVIDED,
HOWEVER, that no Option granted subsequent to November 21, 1991 may be
exercisable for a minimum of six months from the date of grant. Options
granted pursuant to Section R hereof will be exercisable in accordance with
Section S hereof. Except as provided in the Option Agreement and in this
Section G(4), an Option may be exercised in whole or in part at any time
during its term. No Option may be exercised for a fractional share of
Stock.
H. TERMINATION OF EMPLOYMENT
Except as provided in Section I below, if an employee who is a
Participant ceases to be employed by the Company, his or her Options unless
otherwise exercised, shall terminate as of the close of business on the one
hundred and ninetieth (190th) day following the termination of the
Participant's employment with the Company; PROVIDED, HOWEVER, that such
Participant may exercise his or her Options during such one hundred and
ninety (190) day period following such termination of employment only to
the extent that he or she would otherwise be entitled to exercise such
Options during such period; PROVIDED, FURTHER, HOWEVER, that in no event
shall any Option be exercisable more than ten (10) years from the date it
was granted. Notwithstanding the foregoing, the Board or the Committee may
cancel an Option during the one hundred and ninety (190) day period
referred to in this section, if the Participant engages in employment or
activities contrary, in the opinion of the Board or the Committee, to the
best interests of the Company. The Board or the Committee shall determine
in each case whether a termination of employment shall be considered a
retirement with the consent of the Company, and, subject to applicable law,
whether a leave of absence shall constitute a termination of employment.
Any such determination of the Board or the Committee shall be final and
conclusive. The foregoing provisions may be modified or waived by the
Board or the Committee and do not, in any case, apply to any Participant
who is not an employee of the Company. Except for Options granted pursuant
to Section R hereof, the Board or the Committee will determine what, if
any, provisions for earlier termination of the Option will be included in
the Option Agreement issued to any non-employee. The Board or the
Committee will determine who shall be deemed to be an employee of the
Company for the purposes of this Section H and Section I below at the time
the Option is granted.
I. RIGHTS IN EVENT OF DEATH
If an employee who is a Participant dies while employed by the
Company, or within three months after having retired with the consent of
the Company, and without having fully exercised his or her Options, the
executors or administrators, or legatees or heirs, of his or her estate
shall have the right to exercise such Options to the extent that such
deceased Participant was entitled to exercise the Options on the date of
his or her death; PROVIDED, HOWEVER, that in no event shall the Options be
exercisable more than ten years from the date they were granted. The
foregoing provisions may be modified or waived by the Board or the
Committee and do not, in any case, apply to any Participant who is not an
employee of the Company. Except for Options granted pursuant to Section R
hereof, the Board or the Committee will determine what, if any, provisions
concerning exercise of the Option upon the death of the holder will be
included in the Option Agreement issued to any non-employee.
J. NO OBLIGATIONS TO EXERCISE OPTION
The granting of an Option shall impose no obligation upon the
Participant to exercise such Option.
K. NONASSIGNABILITY
Options shall not be transferable other than by will or by the laws of
descent and distribution, and during a Participant's lifetime an Option
shall be exercisable only by such Participant.
L. EFFECT OF CHANGE IN STOCK SUBJECT TO THE PLAN
The aggregate number of shares of Stock available for Options under
the Plan, the shares subject to any Option, and the price per share, shall
all be proportionately adjusted for any increase or decrease in the number
of issued shares of Stock subsequent to the effective date of the Plan
resulting from (1) a subdivision or consolidation of shares or any other
capital adjustment, (2) the payment of a stock dividend on the Company's
Common Stock, or (3) other increase or decrease in such shares effected
without receipt of consideration by the Company. If the Company shall be
the surviving corporation in any merger or consolidation, any Option shall
pertain, apply, and relate to the securities to which a holder of the
number of shares of Stock subject to the Option would have been entitled
after the merger or consolidation. Upon dissolution or liquidation of the
Company, or upon a merger or consolidation in which the Company is not the
surviving corporation, all Options outstanding under the Plan shall
terminate; PROVIDED, HOWEVER, that each Participant (and each other person
entitled under Section I to exercise an Option) shall have the right,
immediately prior to such dissolution or liquidation, or such merger or
consolidation, to exercise such Participant's Options in whole or in part,
notwithstanding any provisions contained in the Plan or the Option
Agreement to the contrary.
M. AMENDMENT AND TERMINATION
Subject to the last paragraph of this Section M, the Board or the
Committee, by resolution, may terminate, amend, or revise the Plan with
respect to any shares as to which Options have not been granted. Neither
the Board nor the Committee may, without the consent of the holder of an
Option, alter or impair any Option previously granted under the Plan,
except as authorized herein. Unless sooner terminated, the Plan shall
remain in effect for a period of twenty years from the date of the Plan's
initial adoption by the Board. Termination of the Plan shall not affect
any Option previously granted.
No amendment may be made without stockholder approval where such
amendment would materially (i) increase the total number of shares which
may be issued under the Plan (except that adjustments authorized by Section
L hereof shall not be limited by this provision); (ii) alter the class of
persons eligible to participate in the Plan; or (iii) increase the benefits
under the Plan.
N. AGREEMENT AND REPRESENTATION OF PARTICIPANTS
As a condition to the exercise of any portion of an Option, the
Company may require the person exercising such Option to represent and
warrant at the time of such exercise that any shares of Stock acquired at
exercise are not registered under the Securities Act of 1933 (the "Act"),
are "restricted securities" as that term is defined in Rule 144 under the
Act and are being acquired only for investment and without any present
intention to sell or distribute such shares, if, in the opinion of counsel
for the Company, such a representation is required under the Act or any
other applicable law, regulation, or rule of any governmental agency.
O. RESERVATION OF SHARES OF STOCK
The Company, during the term of this Plan, will at all times reserve
and keep available, and will seek or obtain from any regulatory body having
jurisdiction any requisite authority necessary to issue and to sell, the
number of shares of Stock that shall be sufficient to satisfy the
requirements of this Plan. The inability of the Company to obtain from any
regulatory body having jurisdiction the authority deemed necessary by
counsel for the Company for the lawful issuance and sale of its Stock
hereunder shall relieve the Company of any liability in respect of the
failure to issue or sell Stock as to which the requisite authority has not
been obtained.
P. EFFECTIVE DATE OF PLAN
The Plan shall be effective as of the date it is initially adopted by
the Board, provided that Section R shall not become effective until it has
been ratified by the stockholders.
Q. LIMITS ON BOARD
Notwithstanding anything else provided in the Plan, the selection of
persons eligible for participation in the Plan and decisions concerning the
timing, pricing and amount of a grant or award shall not be made by the
Board unless each member of the Board is a "disinterested person" (as that
term is defined in Rule 16b-3).
R. GRANT OF OPTIONS TO INDEPENDENT DIRECTORS
(a) On each of January 2, 1994, January 2, 1997, January 2, 2000 and
January 2, 2003, each Independent Director shall automatically receive an
Option to purchase 60,000 shares of Stock (the "Regular Independent
Director Grant"). Notwithstanding the foregoing, should the date on which
a Regular Independent Director Grant is scheduled to be awarded pursuant to
the preceding sentence fall on a Saturday, Sunday or holiday, the Regular
Independent Director Grant shall be awarded on the first business day
immediately following such scheduled date.
(b) On the date of each Independent Director's initial election to
the Board, pursuant to a vote of the Company's stockholders or the Board,
such newly-elected Independent Director shall automatically receive (i) an
Option to purchase a pro rata share of the shares of Stock underlying an
Option granted pursuant to a Regular Independent Director Grant, which
shall be equal to the product of 1,666 multiplied by the number of whole
months remaining in the relevant three year period until the next Regular
Independent Director Grant (the "Pro Rata Independent Director Grant"); and
(ii) an Option to purchase 10,000 shares of Common Stock (the "Initial
Independent Director Election Grant").
S. EXERCISE PERIOD OF OPTIONS GRANTED TO INDEPENDENT DIRECTORS
Subject to the last paragraph of this Section S, each Option granted
pursuant to the Plan shall vest and become exercisable as follows:
(1) Those Options granted pursuant to a Regular Independent Director
Grant shall vest and become exercisable as to 20,000 shares on the first
anniversary of the date of grant; as to 20,000 shares on the second
anniversary of the date of grant; and as to the remaining 20,000 shares on
the third anniversary of the date of grant.
(2) Those Options granted pursuant to a Pro Rata Independent Director
Grant shall vest and become exercisable as to that number of shares equal
to the product of 1,666 multiplied by the number of whole months remaining
in the first calendar year in which the Independent Director is elected
initially to the Board on the January 1st following such Independent
Director's initial election to the Board; and as to any remaining shares in
accordance with the schedule for Options granted pursuant to a Regular
Independent Director Grant as provided in Section S(1) hereof.
(3) Those Options granted pursuant to an Initial Independent Director
Election Grant shall become exercisable as to 5,000 shares on the first
anniversary of the date of grant; and as to 5,000 shares on the second
anniversary of the date of grant.
Notwithstanding the foregoing, an Option shall not vest and become
exercisable as to the relevant shares unless such Independent Director has
served continuously on the Board during the year preceding the date on
which such Options are scheduled to vest and become exercisable, or from
the date such Independent Director joined the board should such Independent
Director have joined the board during such preceding year; PROVIDED,
HOWEVER, that if an Independent Director does not fulfill such continuous
service requirement due to such Independent Director's death or disability
all Options granted to such Independent Director pursuant to Section R
hereof shall nonetheless vest and become exercisable as provided in this
Section S. For purposes of this Section S "disability" shall mean a
physical or mental condition which prevents an Independent Director from
performing his duties as an Independent Director of the Company for a
continuous six month period or for a total of six months during any 18
month period. Any Option which does not vest and become exercisable in
accordance with this Section S shall terminate and be of no further force
or effect. Subject to the provisions of Section L, an Option granted
pursuant to this Section S shall remain exercisable for a period of ten
years from the date of grant.
**FOOTNOTES**
{*} The Plan was amended by vote of the Board of Directors on each of
January 10, 1990, February 6, 1990, April 25, 1990, February 23, 1991, May
30, 1991, November 21, 1991, approved by vote of the Stockholders on
January 22, 1992, amended by vote of the Board of Directors on December 28,
1992 with such amendment ratified by vote of the Stockholders on February
8, 1993, amended by vote of the Board of Directors on September 13, 1993
with such amendment ratified by vote of the Stockholders on December 7,
1993.
