<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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
[ ] Confidential, For Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
ADVANCED MAGNETICS, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transactions applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transactions applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials:
- --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing and 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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<PAGE> 2
ADVANCED MAGNETICS, INC.
61 MOONEY STREET
CAMBRIDGE, MASSACHUSETTS 02138
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON FEBRUARY 2, 1999
------------------------
The Annual Meeting of Stockholders ("Annual Meeting") of Advanced
Magnetics, Inc. (the "Company") will be held at the offices of the Company, 61
Mooney Street, Cambridge, Massachusetts 02138 on Tuesday, February 2, 1999 at
10:00 a.m., local time, to consider and act upon the following matters:
1. To elect seven members of the Board of Directors to serve until the
next Annual Meeting and until their successors have been elected and
qualified;
2. To consider and act upon an amendment to the Company's 1993 Stock Plan
(the "Plan") increasing the number of shares of common stock, par value
$.01 per share, of the Company available for issuance under the Plan
from 500,000 to 700,000 shares; and
3. To transact such other business as may properly come before the meeting
or any adjournment thereof.
Stockholders of record at the close of business on December 7, 1998 are
entitled to notice of, and will be entitled to vote at, the Annual Meeting or
any adjournment thereof. A list of the stockholders of record entitled to vote
shall be available for inspection at the principal office of the Company for ten
days prior to the Annual Meeting. The stock transfer books of the Company will
remain open between the record date and the date of the Annual Meeting.
By Order of the Board of Directors
MARLENE KAPLAN GOLDSTEIN,
Secretary
Cambridge, Massachusetts
December 28, 1998
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE AND
SIGN THE ENCLOSED PROXY AND MAIL IT PROMPTLY IN THE ENCLOSED ENVELOPE IN ORDER
TO ASSURE REPRESENTATION OF YOUR SHARES. NO POSTAGE NEED BE AFFIXED IF THE PROXY
IS MAILED IN THE UNITED STATES.
<PAGE> 3
ADVANCED MAGNETICS, INC.
61 MOONEY STREET
CAMBRIDGE, MASSACHUSETTS 02138
PROXY STATEMENT FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON FEBRUARY 2, 1999
This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Advanced Magnetics, Inc. (the "Company")
for use at the Annual Meeting of Stockholders ("Annual Meeting") to be held at
the offices of the Company at 61 Mooney Street, Cambridge, Massachusetts 02138,
on Tuesday, February 2, 1999 and at any adjournment of the Annual Meeting.
December 7, 1998 was the record date for the determination of stockholders
entitled to vote at the Annual Meeting. On that date, there were 6,767,660
shares of common stock, $.01 par value per share, of the Company (the "Common
Stock") outstanding. Each stockholder is entitled to one vote for each share of
Common Stock held by such stockholder on the record date.
At the Annual Meeting, a proposal to elect Messrs. Leonard Baum, Jerome
Goldstein, Leslie Goldstein, Joseph Lassiter, III, Michael Loberg, Edward
Roberts and George Whitesides as directors and a proposal to increase the number
of shares of Common Stock available for issuance under the Company's 1993 Stock
Plan will be subject to a vote of stockholders. Where a choice has been
specified on the accompanying proxy card with respect to these proposals, the
shares represented by the proxy will be voted in accordance with the
specifications, and will be voted in favor of the proposal if no specification
is indicated.
The Board of Directors of the Company knows of no other matters to be
presented at the Annual Meeting. If any other matter should be presented at the
Annual Meeting upon which a vote properly may be taken, shares represented by
all proxies received by the Board of Directors will be voted with respect
thereto in accordance with the judgment of the persons named in the proxies. Any
proxy may be revoked by a stockholder at any time before its exercise by
delivery of written revocation to the Secretary of the Company.
The Company's Annual Report on Form 10-K, including audited financial
statements for the fiscal year ended September 30, 1998, is being mailed to the
stockholders entitled to vote at the Annual Meeting along with the mailing of
this proxy statement. This proxy statement and accompanying form of proxy will
first be mailed to stockholders on or about December 28, 1998.
VOTING PROCEDURES
The representation in person or by proxy of at least a majority of the
outstanding shares of Common Stock entitled to vote at the Annual Meeting is
necessary to constitute a quorum for the transaction of business. Votes withheld
from any nominee, abstentions and broker "non-votes" are counted as present or
represented for purposes of determining the presence or absence of a quorum for
the meeting. A "non-vote" occurs when a nominee holding shares for a beneficial
owner votes on one proposal, but does not vote on another proposal because, with
respect to such other proposal, the nominee does not have discretionary voting
power and has not received instructions from the beneficial owner. Votes will be
tabulated by American Stock Transfer and Trust Company as Transfer
Agent/Registrar of the Company.
Directors are elected by a plurality of the votes cast by stockholders
entitled to vote at the meeting. With respect to the proposed amendment to the
Company's 1993 Stock Plan (the "Plan"), the Company's By-Laws and federal tax
regulations provide that the affirmative vote of the majority of shares present,
in person or represented by proxy, and voting, on that matter is required for
approval. The affirmative vote of the holders of a majority of the shares of
Common Stock present or represented, and voting, at the Annual Meeting is also
required for approval of all other matters, if any, to be submitted to
stockholders at the meeting. Abstentions and broker "non-votes" are not
considered to have been voted on any matter and have the practical effect of
reducing the number of affirmative votes required to achieve a majority for such
matter.
<PAGE> 4
DEADLINE FOR SUBMISSION OF STOCKHOLDER PROPOSALS
Proposals of stockholders intended for inclusion in the proxy statement to
be furnished to all stockholders entitled to vote at the next annual meeting of
stockholders of the Company must be received at the Company's principal
executive offices not later than August 23, 1999. The deadline for providing
timely notice to the Company of matters that stockholders otherwise desire to
introduce at the next annual meeting of stockholders of the Company is November
8, 1999. The Company may exercise its discretionary voting authority to direct
the voting of proxies on any matter submitted for a vote at the annual meeting
of stockholders if notice concerning proposal of such matter was not received
prior to November 8, 1999. In order to curtail any controversy as to the date on
which a proposal was received by the Company, it is suggested that proponents
submit their proposals by Certified Mail, Return Receipt Requested.
PRINCIPAL HOLDERS OF VOTING SECURITIES
The following table sets forth certain information, as of December 7, 1998,
with respect to the beneficial ownership of the Company's Common Stock by (i)
each person known by the Company to own beneficially more than 5% of the
outstanding shares of Common Stock, (ii) the directors, (iii) the chief
executive officer and each of the four other most highly compensated executive
officers of the Company as of September 30, 1998 whose annual compensation
exceeded $100,000 (the "Named Officers") and (iv) all directors and executive
officers of the Company as a group:
<TABLE>
<CAPTION>
NUMBER OF PERCENTAGE OF
SHARES COMMON
NAME AND ADDRESS BENEFICIALLY STOCK
OF BENEFICIAL OWNER(1) OWNED OUTSTANDING
---------------------- ------------ -------------
<S> <C> <C>
BVF Partners L.P.(2)............................... 909,235 13.4%
333 West Wacker Drive, Suite 1600
Chicago, Illinois 60606
Marlene Kaplan Goldstein(3)(4)..................... 704,237 10.4%
Jerome Goldstein(3)(4)(5).......................... 701,359 10.3%
Dimensional Fund Advisors, Inc.(6)................. 414,950 6.1%
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
Eiken Chemical Co., Ltd............................ 375,000 5.5%
1-33-8 Hongo
Bunkyo-Ku
Tokyo, Japan
Leslie Goldstein(7)................................ 339,027 5.0%
Ernest V. Groman, Ph.D.(8)......................... 116,047 1.7%
Edward B. Roberts, Ph.D.(9)........................ 101,100 1.5%
George M. Whitesides, Ph.D.(10).................... 67,125 1.0%
Paula M. Jacobs, Ph.D.(11)......................... 14,470 *
Leonard M. Baum(12)................................ 11,461 *
Jerome M. Lewis, Ph.D.(13)......................... 10,669 *
Joseph B. Lassiter, III, Ph.D.(14)................. 2,500 *
Michael D. Loberg, Ph.D.(15)....................... 2,500 *
All directors and executive officers as a group
(15 persons)(16)................................. 1,406,300 20.5%
</TABLE>
- ---------------
* Less than 1%.
(1) Unless otherwise indicated, each stockholder referred to above has sole
voting and investment power with respect to the shares listed and the
address of each stockholder is: c/o Advanced Magnetics, Inc., 61 Mooney
Street, Cambridge, Massachusetts 02138.
2
<PAGE> 5
(2) Based upon a Form 4 for the month of October 1998, filed with the
Securities and Exchange Commission, a copy of which was provided to the
Company pursuant to SEC rules, BVF Partners L.P. ("Partners") and BVF,
Inc., an investment advisor to and general partner of Partners, are the
beneficial owners of 909,235 shares of stock. Mark N. Lampert is the sole
shareholder of and sole director of BVF, Inc. and disclaims beneficial
ownership of shares beneficially owned by Partners. Partners is the general
partner of Biotechnology Value Fund, L.P. which disclaims ownership of
shares beneficially owned by Partners on behalf of certain managed
investment accounts.
(3) Jerome Goldstein and Marlene Kaplan Goldstein are husband and wife, and
each disclaims control or beneficial ownership of shares held by the other.
(4) Includes 59,400 shares held by the Kaplan Goldstein Family Foundation, a
charitable foundation whose trustees are Jerome Goldstein, Marlene Kaplan
Goldstein and their two adult children.
(5) Includes 15,937 shares issuable to Jerome Goldstein pursuant to options
exercisable on or before February 5, 1999.
(6) Based upon a Schedule 13G filed with the Securities and Exchange Commission
on February 10, 1998, Dimensional Fund Advisors Inc. ("Dimensional"), a
registered investment advisor, is deemed to have beneficial ownership of
414,950 shares as of December 31, 1997, all of which shares are held in
portfolios of DFA Investment Dimensions Group Inc., a registered open-end
investment company, or in series of the DFA Investment Trust Company, a
Delaware business trust, or the DFA Group Trust and DFA Participation Group
Trust, investment vehicles for qualified employee benefit plans, all of
which Dimensional Fund Advisors Inc. serves as investment manager.
Dimensional disclaims beneficial ownership of all such shares.
(7) Includes 215,000 shares held by Leslie Goldstein as Trustee of the Leslie
and Roslyn Goldstein Foundation and 16,902 shares held by Banjo
Investments, a family trust, over which Mr. Goldstein has discretionary
trading authority. Includes 7,125 shares issuable to Leslie Goldstein
pursuant to options exercisable on or before February 5, 1999.
(8) Includes 5,250 shares owned by Dr. Groman's son, 18,000 shares held in
trust for the benefit of Dr. Groman's sons and 7,812 shares issuable to Dr.
Groman pursuant to options exercisable on or before February 5, 1999.
(9) Includes 34,500 shares held by Dr. Roberts as trustee for his children and
7,125 shares issuable to Dr. Roberts pursuant to options exercisable on or
before February 5, 1999.
(10) Includes 7,125 shares issuable to Dr. Whitesides pursuant to options
exercisable on or before February 5, 1999.
(11) Includes 8,187 shares issuable to Dr. Jacobs pursuant to options
exercisable on or before February 5, 1999.
(12) Includes 8,750 shares issuable to Mr. Baum pursuant to options exercisable
on or before February 5, 1999.
(13) Includes 9,062 shares issuable to Dr. Lewis pursuant to options exercisable
on or before February 5, 1999.
(14) Represents 2,500 shares issuable to Dr. Lassiter pursuant to options
exercisable on or before
February 5, 1999.
(15) Represents 2,500 shares issuable to Dr. Loberg pursuant to options
exercisable on or before February 5, 1999.
(16) Includes 350,552 shares held in family or charitable trusts and custodial
accounts for various directors' and officers' children and 99,724 shares
issuable under options exercisable on or before February 5, 1999.
3
<PAGE> 6
ELECTION OF DIRECTORS
The persons named in the enclosed proxy will vote to elect as directors the
seven nominees named below, all of whom are now directors of the Company, unless
authority to vote for the election of any or all of the directors is withheld by
marking the proxy to that effect.
Each director will be elected to hold office until the next annual meeting
of stockholders and until his successor is elected and qualified, or until his
earlier death, resignation or removal. Each of the nominees has indicated his
willingness to serve, if elected, but if a nominee should be unable to serve,
the proxies may be voted for a substitute nominee designated by management.
Set forth below are the name and age of each nominee and the positions and
offices held by him, his principal occupation and business experience during the
past five years and the year of the commencement of his term as a director of
the Company.
Leonard M. Baum, age 45, has been a director since 1997. He has been
President and Chief Operating Officer of the Company since June 1997 and was a
Senior Vice President of the Company from September 1994 to September 1997. He
was formerly employed by Squibb Diagnostics from March 1986 to September 1994,
most recently as Senior Director, Worldwide Regulatory Affairs. Mr. Baum also
serves as a director of Kalisto Biologicals Inc., a subsidiary of the Company.
Jerome Goldstein, age 59, has been a director since 1981. He is a founder
of the Company and has been Chairman of the Board of Directors, Chief Executive
Officer and Treasurer since the Company's organization in November 1981. Mr.
Goldstein was President of the Company from the Company's organization in
November 1981 until June 1997. Mr. Goldstein also serves as Chairman of the
Board of Directors of Kalisto Biologicals Inc., a subsidiary of the Company.
Leslie Goldstein, age 63, has been a director since 1981. He has been
engaged in investment analysis as an associate of SRG Associates since June
1977. SRG Associates is a division of Fahnestock & Company, Inc., a security
broker-dealer. Mr. Goldstein is the brother of Jerome Goldstein.
Joseph B. Lassiter, III, Ph.D., age 51, has been a director since 1997. He
has been a Lecturer and Professor at the Harvard Business School since September
1996. He was the President of Wildfire Communications, Inc., a
telecommunications software company, from July 1994 to February 1996, and was
Vice President at Teradyne, Inc., a manufacturer of automatic test equipment,
from January 1977 to February 1994. He is a director of Security Dynamics
Technologies, Inc.
Michael D. Loberg, Ph.D., age 51, has been a director since 1997. He has
been Chief Executive Officer of NitroMed, Inc. since September 1997. Prior to
that, he served for twenty years in various senior management positions at
Bristol-Myers Squibb, including President of Squibb Diagnostics, President of
BMS Northern Europe and President of BMS Specialty Pharmaceuticals.
Edward B. Roberts, Ph.D., age 63, has been a director since 1982. He has
been Professor at the Sloan School at the Massachusetts Institute of Technology
since 1961. He was a co-founder and the Chairman of Pugh-Roberts Associates,
Inc., a management consulting firm that is now a division of PA Consulting
Group, Inc. He is also a general partner of Zero Stage Capital Management, L.P.,
a venture capital limited partnership. He is also a director of SelfCare, Inc.,
PegaSystems, Inc. and Medical Information Technology Inc.
George M. Whitesides, Ph.D., age 59, has been a director since 1981. He has
been a Professor of Chemistry at Harvard University since July 1982. He is a
director of Dexter Corporation, a manufacturer of specialty material product and
Geltex Inc., a biopharmaceutical company.
BOARD AND COMMITTEE MEETINGS
The Board of Directors met four times during the fiscal year ended
September 30, 1998. Each director attended at least 75% of the meetings of the
Board of Directors and all the Committees on which he served with the exception
of George M. Whitesides who attended two meetings.
4
<PAGE> 7
Jerome Goldstein, Joseph B. Lassiter, III and Edward B. Roberts serve as
members of the Audit Committee of the Board of Directors. The Audit Committee
oversees generally the financial controls and practices of the Company. The
Audit Committee conducted two formal meetings apart from Board of Directors
meetings during the fiscal year ended September 30, 1998.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors,
executive officers and holders of more than 10% of the Company's Common Stock
(collectively, "Reporting Persons") to file with the Commission initial reports
of ownership and reports of changes in ownership of Common Stock of the Company.
Such persons are required by regulations of the Commission to furnish the
Company with copies of all such filings. Based on its review of the copies of
such filings received by it with respect to the fiscal year ended September 30,
1998, and written representations from certain of its directors and executive
officers, the Company believes that all Reporting Persons complied with all
Section 16(a) filing requirements in the fiscal year ended September 30, 1998.
COMPENSATION AND OTHER INFORMATION
CONCERNING DIRECTORS AND OFFICERS
EXECUTIVE COMPENSATION SUMMARY
The following table sets forth the annual and long-term compensation of
each of the Named Officers for each of the fiscal years ended September 30,
1998, 1997 and 1996:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
AWARDS(2)
ANNUAL ---------------------------------
COMPENSATION(1) SECURITIES
----------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) OPTIONS/SARS(#) COMPENSATION($)
--------------------------- ---- --------- --------------- ---------------
<S> <C> <C> <C> <C>
Jerome Goldstein............................. 1998 235,273 0 18,100(3)
Chairman of the Board of Directors, 1997 228,115 30,000 16,800(3)
Chief Executive Officer and Treasurer 1996 220,738 0 11,215(3)
Leonard M. Baum.............................. 1998 204,632 10,000 2,000(4)
President and Chief Operating Officer 1997 194,104 20,000 2,000(4)
1996 186,231 0 2,000(4)
Ernest V. Groman, Ph.D.(5)................... 1998 131,743 0 2,000(4)
Vice President -- Research 1997 126,335 8,000 2,000(4)
Paula M. Jacobs, Ph.D........................ 1998 126,592 0 2,000(4)
Vice President -- Development 1997 122,861 9,000 2,000(4)
1996 118,500 0 2,000(4)
Jerome M. Lewis, Ph.D........................ 1998 121,209 0 2,000(4)
Vice President -- Scientific Operations 1997 116,413 8,000 2,000(4)
1996 112,115 0 2,000(4)
</TABLE>
- ---------------
(1) Excludes perquisites and other personal benefits, the aggregate annual
amount of which for each officer was less than the lesser of $50,000 or 10%
of the total salary and bonus reported.
(2) The Company did not grant any restricted stock awards or stock appreciation
rights or make any long term incentive plan payouts during the fiscal years
ended September 30, 1998, 1997 and 1996.
(3) Includes $16,100, $14,800 and $9,215 in premiums on a term life insurance
policy related to coverage in the fiscal years ended September 30, 1998,
1997 and 1996, respectively, in the event of the death of Mr. Goldstein and
his wife to a trust for the benefit of their children and $2,000 in
contributions for Mr. Goldstein's benefit to the Company's 401(k) plan.
(4) Represents amount contributed for the benefit of the Named Officer to the
Company's 401(k) plan.
(5) Dr. Groman was elected by the Board of Directors as an executive officer in
June 1997.
5
<PAGE> 8
OPTION GRANTS IN THE LAST FISCAL YEAR
The following table sets forth grants to the Named Officers of stock
options during the fiscal year ended September 30, 1998:
OPTION/SAR GRANTS IN LAST FISCAL YEAR(1)
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-----------------------------------------------------
PERCENT OF
TOTAL POTENTIAL REALIZABLE
NUMBER OF OPTIONS/ VALUE AT ASSUMED
SECURITIES SARS ANNUAL RATES OF
UNDERLYING GRANTED STOCK PRICE
OPTION/ TO APPRECIATION FOR
SARS EMPLOYEES EXERCISE OF OPTION TERM (2)
GRANTED IN FISCAL BASE PRICE EXPIRATION --------------------
NAME (#) YEAR ($/SH) DATE 5%($) 10%($)
---- ---------- ---------- ----------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Jerome Goldstein.............. -- -- -- -- -- --
Leonard M. Baum............... 10,000(3) 74.07 11.875 5/5/08 74,681 189,257
Ernest V. Groman, Ph.D........ -- -- -- -- -- --
Paula M. Jacobs, Ph.D......... -- -- -- -- -- --
Jerome M. Lewis, Ph.D......... -- -- -- -- -- --
</TABLE>
- ---------------
(1) No stock appreciation rights ("SARs") were granted in the fiscal year ended
September 30, 1998.
(2) Amounts reported in these columns represent amounts that may be realized
upon exercise of the options immediately prior to the expiration of their
term assuming the specified compounded rates of appreciation (5% and 10%) on
the Company's Common Stock over the term of the options. These numbers are
calculated based on rules promulgated by the Securities and Exchange
Commission and do not reflect the Company's estimate of future stock price
growth. Actual gains, if any, on stock option exercises and Common Stock
holdings are dependent on the timing of such exercise and the future
performance of the Company's Common Stock. There can be no assurance that
the rates of appreciation assumed in this table can be achieved or that the
amounts reflected will be received by the individuals.
(3) Options granted under the Company's 1993 Stock Plan at an exercise price
equal to the fair market value of the Company's Common Stock on the date of
grant. The options have a term of ten years from the date of grant and
become exercisable as to 25% of the shares on each of the first four
anniversaries of the date of grant until such options are fully exercisable.
6
<PAGE> 9
OPTION EXERCISES AND FISCAL YEAR-END VALUES
The following table sets forth information as to the Named Officers with
respect to options to purchase the Company's Common Stock held by each Named
Officer, including (i) the number of shares of Common Stock purchased upon
exercise of options in fiscal 1998, (ii) the net value realized upon such
exercise, (iii) the number of unexercised options outstanding at September 30,
1998 and (iv) the value of such unexercised options at September 30, 1998:
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
SEPTEMBER 30, 1998 OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF IN-THE-MONEY
SECURITIES UNDERLYING OPTIONS/SARS
UNEXERCISED OPTIONS/SARS AT SEPTEMBER 30,
SHARES VALUE AT SEPTEMBER 30, 1998(#) 1998($)(2)
ACQUIRED ON REALIZED --------------------------- ---------------------------
NAME EXERCISE(#) ($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Jerome Goldstein............ -- -- 15,937 14,063 -- --
Leonard M. Baum............. -- -- 8,750 21,250 -- --
Ernest V. Groman, Ph.D...... -- -- 7,812 3,938 -- --
Paula M. Jacobs, Ph.D....... 2,180 11,264 9,007 4,313 -- --
Jerome M. Lewis, Ph.D....... 1,491 8,170 9,571 3,938 -- --
</TABLE>
- ---------------
(1) Amounts disclosed in this column do not reflect amounts actually received by
the Named Officers but are calculated based on the difference between the
fair market value of the Company's Common Stock on the date of exercise and
the exercise price of the options. The Named Officers will receive cash only
if and when they sell the Common Stock issued upon exercise of the options,
and the amount of cash received by such individuals is dependent on the
price of the Company's Common Stock at the time of such sale.
(2) Value is based on the difference between the option exercise price and the
fair market value at September 30, 1998 ($7.50 per share as quoted on the
American Stock Exchange) multiplied by the number of shares underlying the
option. All options held by the Named Officers have an exercise price of
greater than $7.50 per share, and, therefore, no such options are
"in-the-money."
7
<PAGE> 10
REPORT ON EXECUTIVE COMPENSATION BY THE BOARD OF DIRECTORS
To Our Stockholders:
The Board of Directors of the Company is responsible for establishing and
administering the Company's executive compensation programs. The Company's
executive compensation policies rely on regular cash salaries and significant
equity incentives in the form of stock options.
Salaries of the five highest paid executives are listed on the Executive
Compensation Summary table found on page 5. On an annual basis, the Board
reviews these salaries and, while it is not required to, it may in its
discretion increase the salaries. The Board has typically adjusted the
compensation of each of the executives by the same percentage amount. The amount
of the annual increases has historically reflected the Board's subjective
assessment of the salary level necessary for the Company to remain at the
approximate median in compensation levels when compared to other
biopharmaceutical companies of comparable size and geographical location (which
together comprise a subset of the Company's Peer Group Index referred to in the
Performance Graph below), and the Board's subjective judgment as to Company
performance. In fiscal 1998, the Board determined the Company's performance
primarily by reference to the progress of the Company's clinical trials and
product development efforts. The Board determined to grant the Named Officers
the compensation disclosed in the Executive Compensation Summary table found on
page 5.
In order to align the interests of executives and other employees with
stockholders and motivate them to work for the long-term growth of the Company,
the Company provides significant stock option grants to its employees.
Executives are typically considered every two years for stock option grants, and
it is the Company's policy to weight total compensation heavily toward equity
compensation through stock options. Options are generally granted at fair market
value and become exercisable ratably over a four-year period. The actual number
of stock options granted to executives is not determined pursuant to any
formula, but rather they are awarded subjectively by the Board in its
discretion.
COMPANY PERFORMANCE AND CEO COMPENSATION
The compensation of the Chief Executive Officer has typically been adjusted
annually by the same percentage as the average percentage increase for all of
the Company's employees. In exercising its discretion, the Board takes into
consideration, among other things, the Company's progress in achieving the goals
of the Board of Directors (focusing in recent periods on the Company's product
development and clinical trial progress), and the compensation packages of
executive officers of comparable companies of similar size in the
biopharmaceutical industry.
As a result of the Company's performance and his individual contribution,
Jerome Goldstein was awarded the amounts reflected in the Executive Compensation
Summary table on page 5 in fiscal 1998.
Members of the Board of Directors:
<TABLE>
<S> <C>
Leonard M. Baum Michael D. Loberg
Jerome Goldstein Edward B. Roberts
Leslie Goldstein George M. Whitesides
Joseph B. Lassiter, III
</TABLE>
COMPENSATION OF DIRECTORS
During the fiscal year ended September 30, 1998, directors received no cash
compensation for their services as directors, except for reimbursement of
expenses incurred in connection with attending meetings.
Under the terms of the 1992 Director Plan, each person who was a member of
the Company's Board of Directors on November 5, 1991 (or was appointed to the
Board of Directors thereafter), and who was not an employee or an officer of the
Company, was automatically granted on November 5, 1991 (or the date of their
appointment to the Board of Directors, if thereafter) (the "1992 Initial Grant
Date") and November 5, 1996
8
<PAGE> 11
an option to purchase 5,000 shares of the Company's Common Stock, and will
receive an option to purchase an additional 5,000 shares on each successive
fifth anniversary of the 1992 Initial Grant Date if he or she is then a member
of the Board of Directors. The exercise price of options granted under the 1992
Director Plan is the fair market value of the Company's Common Stock on the date
the option is granted (subject to adjustment for any dividend, stock split or
other relevant change in the Company's capitalization). Each option granted
under the 1992 Director Plan first becomes exercisable with respect to 20% of
the shares subject to such option on the day preceding each annual anniversary
of the date of grant, until the option is exercisable with respect to all of the
shares subject thereto.
Under the terms of the 1993 Director Plan, each person who was a member of
the Company's Board of Directors on November 10, 1992 (or was appointed to the
Board of Directors thereafter), and who was not an employee or an officer of the
Company, was automatically granted on November 10, 1992 (or the date of their
appointment to the Board of Directors, if thereafter) (the "1993 Initial Grant
Date") and November 10, 1998 an option to purchase 5,000 shares of the Company's
Common Stock, and will receive an option to purchase an additional 5,000 shares
on each successive sixth anniversary of the 1993 Initial Grant Date if he or she
is then a member of the Board of Directors. The exercise price of options
granted under the 1993 Director Plan is the fair market value of the Company's
Common Stock on the date the option is granted (subject to adjustment for any
dividend, stock split or other relevant change in the Company's capitalization).
Each option granted under the 1993 Director Plan first becomes exercisable with
respect to 20% of the shares subject to such option on the day preceding each
annual anniversary of the date of grant, until the option is exercisable with
respect to all of the shares subject thereto.
Directors are also eligible for option grants under the terms of the
Company's 1993 Stock Plan.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company does not have a Compensation Committee. The Board of Directors
was responsible for determining compensation of executive officers of the
Company. During the fiscal year ended September 30, 1998, Jerome Goldstein, the
Company's Chairman of the Board of Directors, Chief Executive Officer and
Treasurer, and Leonard Baum, the Company's Chief Operating Officer and
President, participated in the establishment and administration of the Company's
executive compensation programs. Mr. Goldstein and Mr. Baum abstained from
voting with respect to decisions concerning their respective compensation as
executive officers of the Company.
9
<PAGE> 12
STOCK PERFORMANCE GRAPH
The following graph compares the yearly percentage change in the cumulative
total stockholder return on the Company's Common Stock during the five fiscal
years ended September 30, 1998 with the cumulative total return on the American
Stock Exchange Market Value Index and the Company's Peer Group based on SIC Code
2834 (pharmaceutical preparations). The comparisons assume $100 was invested on
October 1, 1993 in the Company's Common Stock, in the American Stock Exchange
Market Value Index and with the Company's Peer Group and assumes reinvestment of
dividends, if any.
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
COMPANY/INDEX/MARKET 9/30/1993 9/30/1994 9/29/1995 9/30/1996 9/30/1997 9/30/1998
<S> <C> <C> <C> <C> <C> <C>
Advanced Magnetics, Inc. 100.00 125.96 198.08 127.88 82.21 57.69
SIC Code Index 100.00 112.47 162.59 215.72 306.49 406.39
AMEX Market Index 100.00 101.92 122.80 127.81 155.42 135.76
</TABLE>
The stock price performance shown on the graph is not necessarily
indicative of future price performance. Information used in the graph was
obtained from Media General Financial Services, a source the Company believes is
reliable. However, the Company is not responsible for any errors or omissions in
such information.
10
<PAGE> 13
PROPOSAL TO AMEND THE 1993 STOCK PLAN
PROPOSED AMENDMENT
The 1993 Stock Plan (the "1993 Plan") was adopted by the Company's Board of
Directors in December 1992 and approved by the Company's stockholders in
February 1993. A maximum of 500,000 shares of Common Stock are currently
reserved for issuance under the 1993 Plan upon the exercise of options or in
connection with awards of stock of the Company ("Awards") or the opportunity to
make direct stock purchases of shares of the Company ("Purchases"). The Board of
Directors has unanimously approved and recommended to the stockholders that they
approve an amendment to increase the number of shares authorized for issuance
under the 1993 Plan to 700,000 shares.
The Company's management relies on stock options as an essential part of
the compensation packages necessary for the Company to attract and retain
experienced officers and employees. The Board of Directors of the Company
believes that the proposed increase in the number of shares available under the
1993 Plan is essential to permit the Company's management to continue to provide
long-term, equity-based incentives to present and future key employees.
As of December 7, 1998, only 125,875 shares remained authorized for
issuance under the 1993 Plan. If the increase in the number of shares authorized
for issuance under the 1993 Plan is not approved, the Company may become unable
to provide suitable long-term equity based incentives to present and future
employees. The Company has not at the present time determined who will receive
the shares of Common Stock that will be authorized for issuance under the 1993
Plan if the proposed amendment to the 1993 Plan is approved.
The Board of Directors unanimously recommends a vote FOR the approval of
the amendment to the 1993 Plan.
The following is a summary description of the 1993 Plan, which is qualified
in its entirety by reference to the complete text of the 1993 Plan which is
attached as Appendix A hereto.
DESCRIPTION OF THE 1993 PLAN
The purpose of the 1993 Plan is to provide incentives to officers and other
employees of the Company and any present or future subsidiaries (collectively,
"Related Corporations") by providing them with opportunities to purchase stock
of the Company pursuant to options which qualify as incentive stock options
("ISO" or "ISOs") as defined in Section 422 of the Internal Revenue Code of
1986, as amended (the "Code"). The 1993 Plan also provides for the issuance to
consultants, employees, officers and directors of the Company and Related
Corporations of options which do not qualify as ISOs ("Non-Qualified Option" or
"Non-Qualified Options"). Awards and Purchases may also be granted to
consultants, employees, officers and directors of the Company. ISOs,
Non-Qualified Options, Awards and Purchases are sometimes referred to
collectively as "Stock Rights" and ISOs and Non-Qualified Options are sometimes
referred to collectively as "Options." On December 7, 1998, the closing price of
the Company's Common Stock on the American Stock Exchange was $8.625.
Administration. The 1993 Plan is administered by the Board of Directors of
the Company. Subject to the terms of the 1993 Plan, the Board of Directors has
the authority to determine the persons to whom Stock Rights shall be granted
(subject to certain eligibility requirements for grants of ISOs) and the terms
of the Stock Rights granted, including (a) the number of shares subject to each
grant, (b) when the Stock Right becomes exercisable, (c) the per share exercise
or purchase price, (d) the duration of the Stock Right, (e) the time, manner and
form of payment upon the exercise of a Stock Right and (f) other terms and
provisions governing the Stock Rights. The interpretation and construction by
the Board of Directors of any provision of the 1993 Plan or of any Stock Right
granted under the 1993 Plan shall be final.
Eligible Participants. Subject to certain limitations, ISOs under the 1993
Plan may be granted to any employee of the Company or a Related Corporation. For
any ISO optionee, the aggregate fair market value (determined on the date of
grant of an ISO) of Common Stock to be received by such optionee (under all
11
<PAGE> 14
stock option plans of the Company) pursuant to an ISO if such optionee exercises
options at the earliest possible date cannot exceed $100,000 in any calendar
year; any portion of an ISO grant that exceeds such $100,000 limit will be
treated for federal tax purposes as a Non-Qualified Option. Non-Qualified
Options, Awards and Purchases may be granted to any director, officer, employee
or consultant of the Company or a Related Corporation.
Granting of Stock Rights, Prices and Duration. Stock Rights may be granted
under the 1993 Plan at any time prior to December 7, 2002. Pursuant to the 1993
Plan, ISOs cannot be granted at prices less than the fair market value of the
Common Stock on the date of grant (or less than 110% of the fair market value in
the case of ISOs granted to an employee or officer holding 10% or more of the
voting stock of the Company). The exercise price per share of Non-Qualified
options granted under the 1993 Plan cannot be less than the minimum legal
consideration required under applicable state law.
The 1993 Plan provides that each Option shall expire on the date specified
by the Board of Directors, but not more than ten years from its date of grant.
However, in the case of an ISO granted to an employee owning more than 10% of
the total combined voting power of all classes of stock of the Company or any
Related Corporation, such ISO shall expire five years from the date of grant.
Options are subject to early termination in certain circumstances.
Exercise of Options. Each Option granted under the 1993 Plan shall either
be fully exercisable at the time of grant or shall become exercisable in such
installments as the Board of Directors may specify. Each Option may be exercised
from time to time, in whole or in part, up to the total number of shares with
respect to which it is then exercisable. The Board of Directors shall have the
right to accelerate the date of exercise of any installment of any Option
(subject to the $100,000 per year limit on the fair market value of stock
subject to ISOs granted to any employee which may become exercisable in any
calendar year).
Payment for exercise of an Option under the 1993 Plan may be made in cash
or by check or, if authorized by the Board of Directors in its discretion, in
full or in part by a personal recourse, interest bearing note, by tendering
shares of Common Stock of the Company or by an assignment to the Company of the
proceeds from the sale of the Common Stock acquired upon exercise of the Option
and an authorization to the broker or selling agent to pay the amount to the
Company. In the case of ISOs, any Board of Directors authorization of a non-cash
payment must be in writing at the time of the ISO grant.
Effect of Termination of Employment, Disability or Death. No Stock Right
granted under the 1993 Plan is assignable or transferable by the grantee except
by will or by the laws of descent and distribution. If an ISO optionee ceases to
be employed by the Company or any Related Corporation other than by reason of
death or disability, no further installment of his or her ISOs will become
exercisable, and the ISOs shall terminate after the passage of 90 days from the
date of termination of employment (but not later than their specified expiration
dates), except to the extent that such ISOs shall have been converted into
Non-Qualified Options.
If an optionee dies, any ISO held by the optionee may be exercised, to the
extent exercisable on the date of death, by the optionee's estate, personal
representative or beneficiary who acquires the option by will or the laws of
descent and distribution, at any time within 180 days from the date of the
optionee's death (but not later than the specified expiration date of the ISO).
If an ISO optionee ceases to be employed by the Company by reason of his or her
disability (as defined in Section 22(e)(3) of the Code), the optionee may
exercise any ISO held by him or her on the date of termination of employment, to
the extent exercisable on that date, at any time within 180 days from the date
of termination of employment (but not later than the specified expiration date
of the ISO). Non-Qualified Options are subject to the termination and
cancellation provisions as may be determined by the Committee.
Non-Assignability of Options. Only the optionee may exercise an Option; no
assignment or transfers are permitted except by will or by the laws of descent
and distribution.
Miscellaneous. Option holders are protected against dilution in the event
of a stock dividend, recapitalization, stock split, merger or similar
transaction. The Board of Directors may from time to time adopt amendments,
certain of which are subject to stockholder approval, and may terminate the 1993
Plan at
12
<PAGE> 15
any time (although such action shall not affect options previously granted). Any
shares subject to an Option which for any reason expires or terminates
unexercised may again be available for option grants under the 1993 Plan. Unless
terminated sooner, the 1993 Plan will terminate on December 7, 2002.
FEDERAL INCOME TAX CONSEQUENCES
Incentive Stock Options. The following general rules are applicable under
current federal income tax law to ISOs under the 1993 Plan:
1. In general, no taxable income results to the optionee upon the
grant of an ISO or upon the issuance of shares to him or her upon the
exercise of the ISO, and no corresponding federal income tax deduction is
allowed to the Company upon either grant or exercise of an ISO.
2. If shares acquired upon exercise of an ISO are not disposed of
within (i) two years following the date the option was granted or (ii) one
year following the date the shares are issued to the optionee pursuant to
the ISO exercise (the "Holding Periods"), the difference between the amount
realized on any subsequent disposition of the shares and the exercise price
will generally be treated as capital gain or loss to the optionee.
3. If shares acquired upon exercise of an ISO are disposed of before
the expiration of one or both of the requisite Holding Periods (a
"Disqualifying Disposition"), then in most cases the lesser of (i) any
excess of the fair market value of the shares at the time of exercise of
the ISO over the exercise price or (ii) the actual gain on disposition will
be treated as compensation to the optionee and will be taxed as ordinary
income in the year of such disposition.
4. In any year that an optionee recognizes ordinary income on a
Disqualifying Disposition of stock acquired by exercising an ISO, the
Company generally should be entitled to a corresponding deduction for
federal income tax purposes.
5. Any excess of the amount realized by the optionee as the result of
a Disqualifying Disposition over the sum of (i) the exercise price and (ii)
the amount of ordinary income recognized under the above rules will be
treated as capital gain.
6. Capital gain or loss recognized by an optionee on a disposition of
shares will be long-term capital gain or loss if the optionee's holding
period for the shares exceeds one year.
7. An optionee may be entitled to exercise an ISO by delivering shares
of the Company's Common Stock to the Company in payment of the exercise
price, if the optionee's ISO agreement so provides. If an optionee
exercises an ISO in such fashion, special rules will apply.
8. In addition to the tax consequences described above, the exercise
of ISOs may result in a further "alternative minimum tax" under the Code.
The Code provides that an "alternative minimum tax" (at a maximum rate of
28%) will be applied against a taxable base which is equal to "alternative
minimum taxable income," reduced by a statutory exemption. In general, the
amount by which the fair market value of the Common Stock received upon
exercise of the ISO exceeds the exercise price is included in the
optionee's alternative minimum taxable income. A taxpayer is required to
pay the higher of his or her regular federal income tax liability or the
alternative minimum tax. A taxpayer who pays alternative minimum tax
attributable to the exercise of an ISO may be entitled to a tax credit
against his or her regular federal income tax liability in later years.
9. Special rules apply if the Common Stock acquired through the
exercise of an ISO is subject to certain restrictions on resale under
federal securities laws applicable to directors, officers or 10%
stockholders.
13
<PAGE> 16
Non-Qualified Options. The following general rules are applicable under
current federal income tax law to Non-Qualified Options under the 1993 Plan:
1. The optionee generally does not realize any federal taxable income
upon the grant of a Non-Qualified Option, and the Company is not allowed a
federal income tax expense deduction by reason of such grant.
2. The optionee generally will recognize ordinary income at the time
of exercise of a Non-Qualified Option in an amount 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 may be required to withhold income tax on
this amount.
3. When the optionee sells the shares acquired through an exercise of
a Non-Qualified Option, he or she generally will recognize a capital gain
or loss in an amount equal to the difference between the amount realized
upon the sale of the shares and his or her basis in the shares (generally,
the exercise price plus the amount taxed to the optionee as ordinary
income). If the optionee's holding period for the shares exceeds one year,
such gain or loss will be a long-term capital gain or loss.
4. The Company generally should be entitled to a corresponding tax
deduction for federal income tax purposes when ordinary income is
recognized by the optionee.
5. An optionee may be entitled to exercise a Non-Qualified Option by
delivering shares of the Company's Common Stock to the Company in payment
of the exercise price. If an optionee exercises a Non-Qualified Option in
such fashion, special rules will apply.
6. Special rules apply if the Common Stock acquired through the
exercise of a Non-Qualified Option is subject to certain restrictions on
resale under federal securities laws applicable to directors, officers or
10% stockholders.
Awards and Purchases. Under current federal income tax law, persons
receiving Common Stock pursuant to an Award or Purchase will generally recognize
ordinary income equal to the fair market value of the shares received, reduced
by any purchase price paid. The Company should generally be entitled to a
corresponding deduction for federal income tax purposes. When such Common Stock
is sold, the seller generally will recognize capital gain or loss equal to the
difference between the amount realized upon the sale of the Common Stock and his
or her basis in the Common Stock (generally, the exercise price plus the amount
taxed to the seller as ordinary income). If the seller's holding period for the
Common Stock exceeds one year, such gain or loss will be a long-term capital
gain or loss. Special rules apply if the stock acquired is subject to vesting,
or is subject to certain restrictions on resale under federal securities laws
applicable to directors, officers or 10% stockholders.
STOCK OPTIONS GRANTED UNDER THE 1993 PLAN SINCE ITS INCEPTION
The following table sets forth as of December 7, 1998 all options granted
under the 1993 Plan since its inception to (i) the Named Officers, (ii) each
nominee for election as a director, (iii) all current executive officers as a
group, (iv) all current directors who are not executive officers as a group, (v)
all employees, excluding executive officers, as a group, and (vi) each person
who has received five percent or greater of the options granted under the 1993
Plan.
<TABLE>
<CAPTION>
NUMBER
OF
NAME AND PRINCIPAL POSITION OPTIONS
--------------------------- -------
<S> <C>
Jerome Goldstein(1)......................................... 30,000
Chief Executive Officer, Treasurer, Chairman and Director
Leonard M. Baum(1).......................................... 30,000
Chief Operating Officer, President and Director
Ernest V. Groman, Ph.D...................................... 8,000
Senior Vice President -- Research
Paula M. Jacobs, Ph.D....................................... 9,000
Senior Vice President -- Development
</TABLE>
14
<PAGE> 17
<TABLE>
<CAPTION>
NUMBER
OF
NAME AND PRINCIPAL POSITION OPTIONS
--------------------------- -------
<S> <C>
Jerome M. Lewis, Ph.D....................................... 8,000
Senior Vice President -- Scientific Operations
Leslie Goldstein............................................ 15,000
Director
George M. Whitesides, Ph.D.................................. 15,000
Director
Edward B. Roberts, Ph.D..................................... 15,000
Director
Joseph B. Lassiter, III, Ph.D............................... 10,000
Director
Michael D. Loberg, Ph.D..................................... 10,000
Director
All Current Executive Officers as a Group (10) Persons...... 126,500
All Current Directors who are not Executive Officers as a
Group..................................................... 65,000
(5) Persons
All Employees who are not Executive Officers as a Group..... 286,575
</TABLE>
- ---------------
(1) Persons who have received five percent or greater of options granted under
the 1993 Plan.
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has selected the firm of PricewaterhouseCoopers LLP,
as the Company's independent accountants for the 1999 fiscal year.
PricewaterhouseCoopers LLP has served as the Company's independent accountants
since the Company's inception. Representatives of PricewaterhouseCoopers LLP are
expected to be present at the Annual Meeting. They will have the opportunity to
make a statement if they desire to do so and will also be available to respond
to appropriate questions from stockholders.
EXPENSES AND SOLICITATION
All costs of solicitation of proxies will be borne by the Company. In
addition to solicitations by mail, the Company's directors, officers and regular
employees, without additional remuneration, may solicit proxies by telephone,
telegraph and personal interviews. Brokers, custodians and fiduciaries will be
requested to forward proxy soliciting material to the owners of stock held in
their names, and the Company will reimburse them for their out-of-pocket
expenses in this connection.
By Order of the Board of Directors
MARLENE KAPLAN GOLDSTEIN,
Secretary
THE BOARD OF DIRECTORS WELCOMES STOCKHOLDERS WHO WISH TO ATTEND THE
MEETING. WHETHER OR NOT YOU PLAN TO ATTEND, YOU ARE URGED TO COMPLETE, DATE,
SIGN AND RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE. A PROMPT
RESPONSE WILL GREATLY FACILITATE ARRANGEMENTS FOR THE MEETING AND YOUR
COOPERATION WILL BE APPRECIATED. STOCKHOLDERS WHO ATTEND THE MEETING MAY VOTE
THEIR STOCK PERSONALLY EVEN THOUGH THEY HAVE SENT IN THEIR PROXIES BY PROVIDING
WRITTEN NOTICE TO THE SECRETARY OF THE COMPANY REVOKING THEIR PRIOR PROXY.
15
<PAGE> 18
APPENDIX A
ADVANCED MAGNETICS, INC.
1993 STOCK PLAN
1. PURPOSE. This 1993 Stock Plan (the "Plan") is intended to provide
incentives: (a) to the officers and other employees of Advanced Magnetics, Inc.
(the "Company"), and of any present or future parent or subsidiary of the
Company (collectively, "Related Corporations"), by providing them with
opportunities to purchase stock in the Company pursuant to options granted
hereunder which qualify as "incentive stock options" ("ISOs") under Section
422(b) of the Internal Revenue Code of 1986, as amended (the "Code"); (b) to
directors, officers, employees and consultants of the Company and Related
Corporations by providing them with opportunities to purchase stock in the
Company pursuant to options granted hereunder which do not qualify as ISOs
("Non-Qualified Options"); (c) to directors, officers, employees and consultants
of the Company and Related Corporations by providing them with awards of stock
in the Company ("Awards"); and (d) to directors, officers, employees and
consultants of the Company and Related Corporations by providing them with
opportunities to make direct purchases of stock in the Company ("Purchases").
Both ISOs and Non-Qualified Options are referred to hereafter individually as an
"Option" and collectively as "Options." Options, Awards and authorizations to
make Purchases are referred to hereafter collectively as "Stock Rights." As used
herein, the terms "parent" and "subsidiary" mean "parent corporation" and
"subsidiary corporation," respectively, as those terms are defined in Section
424 of the Code.
2. ADMINISTRATION OF THE PLAN.
A. BOARD OR COMMITTEE ADMINISTRATION. The Plan shall be administered
by the Board of Directors of the Company (the "Board") or by a committee
appointed by the Board (the "Committee"); provided that, to the extent
required by Rule 16b-3 promulgated under the Securities Exchange Act of
1934 or any successor provision ("Rule 16b-3"), with respect to specific
grants of Stock Rights, the Plan shall be administered by a disinterested
administrator or administrators within the meaning of Rule 16b-3.
Hereinafter, all references in this Plan to the "Committee" shall mean the
Board if no Committee has been appointed. Subject to ratification of the
grant or authorization of each Stock Right by the board (if so required by
applicable state law), and subject to the terms of the Plan, the Committee
shall have the authority to (i) determine the employees of the Company and
Related Corporations (from among the class of employees eligible under
paragraph 3 to receive ISOs) to whom ISOs shall be granted, and determine
(from among the class of individuals and entities eligible under paragraph
3 to receive Non-Qualified Options and Awards and to make Purchases) to
whom Non-Qualified Options, Awards and authorizations to make Purchases may
be granted; (ii) determine the time or times at which Options or Awards
shall be granted or Purchases made; (iii) determine the option price of
shares subject to each Option, which price shall not be less than the
minimum price specified in paragraph 6, and the purchase price of shares
subject to each Purchase; (iv) determine whether each Option granted shall
be an ISO or a Non-Qualified Option; (v) determine (subject to paragraph 7)
the time or times when each Option shall become exercisable and the
duration of the exercise period; (vi) determine whether restrictions such
as repurchase options are to be imposed on shares subject to Options,
Awards and Purchases and the nature of such restrictions, if any, and (vii)
interpret the Plan and prescribe and rescind rules and regulations relating
to it. If the Committee determines to issue a Non-Qualified Option, it
shall take whatever actions it deems necessary, under Section 422 of the
Code and the regulations promulgated thereunder, to ensure that such Option
is not treated as an ISO. The interpretation and construction by the
Committee of any provisions of the Plan or of any Stock Right granted under
it shall be final unless otherwise determined by the Board. The Committee
may from time to time adopt such rules and regulations for carrying out the
Plan as it may deem best. No member of the Board or the Committee shall be
liable for any action or determination made in good faith with respect to
the Plan or any Stock Right granted under it.
B. COMMITTEE ACTIONS. The Committee may select one of its members as
its chairman, and shall hold meetings at such time and places as it may
determine. Acts by a majority of the members of the
A-1
<PAGE> 19
committee, or acts reduced to or approved in writing by a majority of the
members of the Committee (if consistent with applicable state law), shall
constitute the valid acts of the Committee. From time to time the Board may
increase the size of the Committee and appoint additional members thereof,
remove members (with or without cause) and appoint new members in
substitution therefor, fill vacancies however caused, or remove all members
of the Committee and thereafter directly administer the Plan.
C. GRANT OF STOCK RIGHTS TO BOARD MEMBERS. Stock Rights may be
granted to members of the Board consistent with the provisions of the first
sentence of paragraph 2(A) above, if applicable. All grants of Stock Rights
to members of the Board shall in all other respects be made in accordance
with the provisions of this Plan applicable to other eligible persons.
Consistent with the provisions of the first sentence of paragraph 2(A)
above, members of the Board who either (i) are eligible to receive grants
of Stock Rights pursuant to the Plan or (ii) have been granted Stock Rights
may vote on any matters affecting the administration of the Plan or the
grant of any Stock Rights pursuant to the Plan, except that no such member
shall act upon the granting to himself of Stock Rights, but any such member
may be counted in determining the existence of a quorum at any meeting of
the Board during which action is taken with respect to the granting to him
of Stock Rights.
3. ELIGIBLE EMPLOYEES AND OTHERS. ISOs may be granted only to employees
of the Company or any Related Corporation. Non-Qualified Options, Awards and
authorizations to make Purchases may be granted to any employee, officer or
director (whether or not also an employee) or consultant of the Company or any
Related Corporation. The Committee may take into consideration a recipient's
individual circumstances in determining whether to grant an ISO, a Non-Qualified
Option, an Award or an authorization to make a Purchase. Granting of any Stock
Right to any individual or entity shall neither entitle that individual or
entity to, nor disqualify him from, participation in any other grant of Stock
Rights.
4. STOCK. The stock subject to Options, Awards and Purchases shall be
authorized but unissued shares of Common Stock of the Company, par value $.01
per share (the "Common Stock"), or shares of Common Stock reacquired by the
Company in any manner. The aggregate number of shares which may be issued
pursuant to the Plan is 500,000, subject to adjustment as provided in paragraph
13. If any Stock Right granted under the Plan shall expire or terminate for any
reason without having been exercised in full or shall cease for any reason to be
exercisable in whole or in part, the unpurchased shares subject to such Stock
Right shall again be available for grants of Stock Rights under the Plan.
5. GRANTING OF STOCK RIGHTS. Stock Rights may be granted under the Plan
at any time after December 8, 1992 and prior to December 7, 2002. The date of
grant of a Stock Right under the Plan will be the date specified by the
Committee at the time it grants the Stock Rights; provided, however, that such
date shall not be prior to the date on which the Committee acts to approve the
grant.
6. MINIMUM OPTION PRICE; ISO LIMITATIONS.
A. PRICE FOR NON-QUALIFIED OPTIONS. The exercise price per share
specified in the agreement relating to each Non-Qualified Option granted
under the Plan shall in no event be less than the minimum legal
consideration required therefor under the laws of Massachusetts or the laws
of any jurisdiction in which the Company or its successors in interest may
be organized.
B. PRICE FOR ISOS. The exercise price per share specified in the
agreement relating to each ISO granted under the Plan shall not be less
than the fair market value per share of Common Stock on the date of such
grant. In the case of an ISO to be granted to an employee owning stock
possessing more than ten percent (10%) of the total combined voting power
of all classes of stock of the Company or any Related Corporation, the
price per share specified in the agreement relating to such ISO shall not
be less than one hundred ten percent (110%) of the fair market value per
share of Common Stock on the date of grant. For purposes of determining
stock ownership under this paragraph, the rules of Section 424(d) of the
Code shall apply.
C. $100,000 ANNUAL LIMITATION ON ISO VESTING. Each eligible employee
may be granted Options treated as ISOs only to the extent that, in the
aggregate under this Plan and all incentive stock option plans of the
Company and any Related Corporation, ISOs do not become exercisable for the
first time by
A-2
<PAGE> 20
such employee during any calendar year with respect to stock having a fair
market value (determined at the time the ISOs were granted) in excess of
$100,000. The Company intends to designate any Options granted in excess of
such limitation as Non-Qualified Options.
D. DETERMINATION OF FAIR MARKET VALUE. If, at the time an Option is
granted under the Plan, the Company's Common Stock is publicly traded,
"fair market value" shall be determined as of the last business day for
which the prices or quotes discussed in this sentence are available prior
to the date such Option is granted and shall mean (i) the average (on that
date) of the high and low prices of the Common Stock on the principal
national securities exchange on which the Common Stock is traded, if the
Common Stock is then traded on a national securities exchange; or (ii) the
last reported sale price (on that date) of the Common Stock on the NASDAQ
National Market List, if the Common Stock is not then traded on a national
securities exchange; or (iii) the closing bid price (or average of bid
prices) last quoted (on that date) by an established quotation service for
over-the-counter securities, if the Common Stock is not reported on the
NASDAQ National Market List. However, if the Common Stock is not publicly
traded at the time an Option is granted under the Plan, "fair market value"
shall be deemed to be the fair value of the Common Stock as determined by
the Committee after taking into consideration all factors which it deems
appropriate, including, without limitation, recent sale and offer prices of
the Common Stock in private transactions negotiated at arm's length.
7. OPTION DURATION. Subject to earlier termination as provided in
paragraphs 9 and 10, each Option shall expire on the date specified by the
Committee, but not more than (i) ten years from the date of grant in the case of
Options generally and (ii) five years from the date of grant in the case of ISOs
granted to an employee owning stock possessing more than ten percent (10%) of
the total combined voting power of all classes of stock of the Company or any
Related Corporation, as determined under paragraph 6(B). Subject to earlier
termination as provided in paragraphs 9 and 10, the term of each ISO shall be
the term set forth in the original instrument granting such ISO, except with
respect to any part of such ISO that is converted into a Non-Qualified Option
pursuant to paragraph 16.
8. EXERCISE OF OPTION. Subject to the provisions of paragraphs 9 through
12, each Option granted under the Plan shall be exercisable as follows:
A. VESTING. The Option shall either be fully exercisable on the date
of grant or shall become exercisable thereafter in such installments as the
Committee may specify.
B. FULL VESTING OF INSTALLMENTS. Once an installment becomes
exercisable it shall remain exercisable until expiration or termination of
the Option, unless otherwise specified by the Committee.
C. PARTIAL EXERCISE. Each Option or installment may be exercised at
any time or from time to time, in whole or in part, for up to the total
number of shares with respect to which it is then exercisable.
D. ACCELERATION OF VESTING. The Committee shall have the right to
accelerate the date of exercise of any installment of any Option; provided
that the Committee shall not, without the consent of an optionee,
accelerate the exercise date of any installment of any Option granted to
any employee as an ISO (and not previously converted into a Non-Qualified
Option pursuant to paragraph 16) if such acceleration would violate the
annual vesting limitation contained in Section 422(d) of the Code, as
described in paragraph 6(C).
9. TERMINATION OF EMPLOYMENT. If an ISO optionee ceases to be employed by
the Company and all Related Corporations other than by reason of death or
disability as defined in paragraph 10, no further installments of his ISOs shall
become exercisable, and his ISOs shall terminate after the passage of ninety
(90) days from the date of termination of his employment, but in no event later
than on their specified expiration dates, except to the extent that such ISOs
(or unexercised installments thereof) have been converted into Non-Qualified
Options pursuant to paragraph 16. For purposes of this paragraph 9, employment
shall be considered as continuing uninterrupted during any bona fide leave of
absence (such as those attributable to illness, military obligations or
governmental service) provided that the period of such leave does not exceed 90
days or, if longer, any period during which such optionee's right to
reemployment is guaranteed by statute. A bone fide leave of absence with the
written approval of the Committee shall not be considered an
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<PAGE> 21
interruption of employment under this paragraph 9, provided that such written
approval contractually obligates the Company or any Related Corporation to
continue the employment of the optionee after the approved period of absence.
ISOs granted under the Plan shall not be affected by any change of employment
within or among the Company and Related Corporations, so long as the optionee
continues to be an employee of the Company or any Related Corporation. Nothing
in the Plan shall be deemed to give any grantee of any Stock Right the right to
be retained in employment or other service by the Company or any Related
Corporation for any period of time.
10. DEATH; DISABILITY.
A. DEATH. If an ISO optionee ceases to be employed by the Company
and all Related Corporations by reason of his death, any ISO of his may be
exercised, to the extent of the number of shares with respect to which he
could have exercised it on the date of his death, by his estate, personal
representative or beneficiary who has acquired the ISO by will or by the
laws of descent and distribution, at any time prior to the earlier of the
specified expiration date of the ISO or 180 days from the date of the
optionee's death.
B. DISABILITY. If an ISO optionee ceases to be employed by the
Company and all Related Corporations by reason of his disability, he shall
have the right to exercise any ISO held by him on the date of termination
of employment, to the extent of the number of shares with respect to which
he could have exercised it on that date, at any time prior to the earlier
of the specified expiration date of the ISO or 180 days from the date of
the termination of the optionee's employment. For the purposes of the Plan,
the term "disability" shall mean "permanent and total disability" as
defined in Section 22(e) (3) of the Code or any successor statute.
11. ASSIGNABILITY. No Stock Right shall be assignable or transferable by
the grantee except by will or by the laws of descent and distribution. During
the lifetime of the grantee each Stock Right shall be exercisable only by him.
12. TERMS AND CONDITIONS OF OPTIONS. Options shall be evidenced by
instruments (which need not be identical) in such forms as the Committee may
from time to time approve. Such instruments shall conform to the terms and
conditions set forth in paragraphs 6 through 11 hereof and may contain such
other provisions as the Committee deems advisable which are not inconsistent
with the Plan, including restrictions applicable to shares of Common Stock
issuable upon exercise of Options. The Committee may specify that any Non-
Qualified Option shall be subject to the restrictions set forth herein with
respect to ISOs, or to such other termination and cancellation provisions as the
Committee may determine. The Committee may from time to time confer authority
and responsibility on one or more of its own members and/or one or more officers
of the Company to execute and deliver such instruments. The proper officers of
the Company are authorized and directed to take any and all action necessary or
advisable from time to time to carry out the terms of such instruments.
13. ADJUSTMENTS. Upon the occurrence of any of the following events, an
optionee's rights with respect to Options granted to him hereunder shall be
adjusted as hereinafter provided, unless otherwise specifically provided in the
written agreement between the optionee and the Company relating to such Option:
A. STOCK DIVIDENDS AND STOCK SPLITS. If the shares of Common Stock
shall be subdivided or combined into a greater or smaller number of shares
or if the Company shall issue any shares of Common Stock as a stock
dividend on its outstanding Common Stock, the number of shares of Common
Stock deliverable upon the exercise of Options shall be appropriately
increased or decreased proportionately, and appropriate adjustments shall
be made in the purchase price per share to reflect such subdivision,
combination or stock dividend.
B. CONSOLIDATIONS OR MERGERS. If the Company is to be consolidated
with or acquired by another entity in a merger, sale of all or
substantially all of the Company's assets or otherwise (an "Acquisition"),
the Committee or the board of directors of any entity assuming the
obligations of the Company hereunder (the "Successor Board"), shall, as to
outstanding Options, either (i) make appropriate provision for the
continuation of such Options by substituting on an equitable basis for the
shares then subject to such
A-4
<PAGE> 22
Options the consideration payable with respect to the outstanding shares of
Common Stock in connection with the Acquisition; or (ii) upon written
notice to the optionees, provide that all Options must be exercised, to the
extent then exercisable, within a specified number of days of the date of
such notice, at the end of which period the Options shall terminate; or
(iii) terminate all Options in exchange for a cash payment equal to the
excess of the fair market value of the shares subject to such Options (to
the extent then exercisable) over the exercise price thereof.
C. RECAPITALIZATION OR REORGANIZATION. In the event of a
recapitalization or reorganization of the Company (other than a transaction
described in subparagraph B above) pursuant to which securities of the
company or of another corporation are issued with respect to the
outstanding shares of Common Stock, an optionee upon exercising an Option
shall be entitled to receive for the purchase price paid upon such exercise
the securities he would have received if he had exercised his Option prior
to such recapitalization or reorganization.
D. MODIFICATION OF ISOS. Notwithstanding the foregoing, any
adjustments made pursuant to subparagraphs A, B or C with respect to ISOs
shall be made only after the Committee, after consulting with counsel for
the Company, determines whether such adjustments would constitute a
"modification" or such ISOs (as that term is defined in Section 424 of the
Code) or would cause any adverse tax consequences for the holders of such
ISOs. If the Committee determines that such adjustments made with respect
to ISOs would constitute a modification of such ISOs or would cause adverse
tax consequences to the holders, it may refrain from making such
adjustments.
E. DISSOLUTION OR LIQUIDATION. In the event of the proposed
dissolution or liquidation of the Company, each Option will terminate
immediately prior to the consummation of such proposed action or at such
other time and subject to such other conditions as shall be determined by
the Committee.
F. ISSUANCES OF SECURITIES. Except as expressly provided herein, no
issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or
price of shares subject to Options. No adjustments shall be made for
dividends paid in cash or in property other than securities of the Company.
G. FRACTIONAL SHARES. No fractional shares shall be issued under the
Plan and the optionee shall receive from the Company cash in lieu of such
fractional shares.
H. ADJUSTMENTS. Upon the happening of any of the events described in
subparagraphs A, B or C above, the class and aggregate number of shares set
forth in paragraph 4 hereof that are subject to Stock Rights which
previously have been or subsequently may be granted under the Plan shall
also be appropriately adjusted to reflect the events described in such
subparagraphs. The Committee or the Successor Board shall determine the
specific adjustments to be made under this paragraph 13 and, subject to
paragraph 2, its determination shall be conclusive.
14. MEANS OF EXERCISING STOCK RIGHTS. A Stock Right (or any part or
installment thereof) shall be exercised by giving written notice to the Company
at its principal office address. Such notice shall identify the Stock Right
being exercised and specify the number of shares as to which such Stock Right is
being exercised, accompanied by full payment of the purchase price therefor
either (a) in United States dollars in cash or by check, (b) at the discretion
of the Committee, through delivery of shares of Common Stock having a fair
market value equal as of the date of the exercise to the cash exercise price of
the Stock Right, (c) at the discretion of the Committee, by delivery of the
grantee's personal recourse note bearing interest payable not less than annually
at no less than 100% of the lowest applicable Federal rate, as defined in
Section 1274(d) of the Code, (d) at the discretion of the Committee and
consistent with applicable law, through the delivery of an assignment to the
Company of a sufficient amount of the proceeds from the sale of the Common Stock
acquired upon exercise of the Stock Right and an authorization to the broker or
selling agent to pay that amount to the Company, which sale shall be at the
participant's direction at the time of exercise, or (e) at the discretion of the
Committee, by any combination of (a), (b), (c) and (d) above. If the Committee
exercises its discretion to permit payment of the exercise price of an ISO by
means of the methods set forth in the
A-5
<PAGE> 23
clauses (b), (c), (d) or (e) of the preceding sentence, such discretion shall be
exercised in writing at the time of the grant of the ISO in question. The holder
of a Stock Right shall not have the rights of a shareholder with respect to the
shares covered by his Stock Right until the date of issuance of a stock
certificate to him for such shares. Except as expressly provided above in
paragraph 13 with respect to changes in capitalization and stock dividends, no
adjustment shall be made for dividends or similar rights for which the record
date is before the date such stock certificate is issued.
15. TERM AND AMENDMENT OF PLAN. This Plan was adopted by the Board on
December 8, 1992, subject, with respect to the validation of ISOs granted under
the Plan, to approval of the Plan by the stockholders of the Company at the next
Meeting of Stockholders or, in lieu thereof, by written consent. If the approval
of stockholders is not obtained prior to December 8, 1993, any grants of ISOs
under the Plan made prior to that date will be rescinded. The Plan shall expire
at the end of the day on December 7, 2002 (except as to Options outstanding on
that date). Subject to the provisions of paragraph 5 above, Stock Rights may be
granted under the Plan prior to the date of stockholder approval of the Plan.
The Board may terminate or amend the Plan in any respect at any time, except
that, without the approval of the stockholders obtained within 12 months before
or after the Board adopts a resolution authorizing any of the following actions:
(a) the total number of shares that may be issued under the Plan may not be
increased (except by adjustment pursuant to paragraph 13); (b) the benefits
accruing to participants under the Plan may not be materially increased; (c) the
requirements as to eligibility for participation in the Plan may not be
materially modified; (d) the provisions of paragraph 3 regarding eligibility for
grants of ISOs may not be modified; (e) the provisions of paragraph 6(B)
regarding the exercise price at which shares may be offered pursuant to ISOs may
not be modified (except by adjustment pursuant to paragraph 13); (f) the
expiration date of the Plan may not be extended; and (g) the Board may not take
any action which would cause the Plan to fail to comply with Rule 16b-3. Except
as otherwise provided in this paragraph 15, in no event may action of the Board
or stockholders alter or impair the rights of a grantee, without his consent,
under any Stock Right previously granted to him.
16. CONVERSION OF ISOS INTO NON-QUALIFIED OPTIONS. The Committee, at the
written request or with the written consent of any optionee, may in its
discretion take such actions as may be necessary to convert such optionee's ISOs
(or any installments or portions of installments thereof) that have not been
exercised on the date of conversion into Non-Qualified Options at any time prior
to the expiration of such ISOs, regardless of whether the optionee is an
employee of the Company or a Related Corporation at the time of such conversion.
Such actions may include, but shall not be limited to, extending the exercise
period or reducing the exercise price of the appropriate installments of such
ISOs. At the time of such conversion, the Committee (with the consent of the
optionee) may impose such conditions on the exercise of the resulting
Non-Qualified Options as the Committee in its discretion may determine, provided
that such conditions shall not be inconsistent with this Plan. Nothing in the
Plan shall be deemed to give any optionee the right to have such optionee's ISOs
converted into Non-Qualified Options, and no such conversion shall occur until
and unless the Committee takes appropriate action.
17. APPLICATION OF FUNDS. The proceeds received by the Company from the
sale of shares pursuant to Options granted and Purchases authorized under the
Plan shall be used for general corporate purposes.
18. NOTICE TO COMPANY OF DISQUALIFYING DISPOSITION. By accepting an ISO
granted under the Plan, each optionee agrees to notify the Company in writing
immediately after he makes a Disqualifying Disposition (as described in Sections
421, 422 and 424 of the Code and regulations thereunder) of any stock acquired
pursuant to the exercise of ISOs granted under the Plan. A Disqualifying
Disposition is generally any disposition occurring within two years of the date
the ISO was granted or within one year of the date the ISO was exercised,
whichever period ends later.
19. WITHHOLDING OF ADDITIONAL INCOME TAXES. Upon the exercise of a
Non-Qualified Option, the grant of an Award, the making of a Purchase of Common
Stock for less than its fair market value, the making of a Disqualifying
Disposition (as defined in paragraph 18), the vesting or transfer of restricted
stock or securities acquired on the exercise of a Stock Right hereunder, or the
making of a distribution or other payment with respect to such stock or
securities, the Company may withhold taxes in respect of amounts that
A-6
<PAGE> 24
constitute compensation includible in gross income. The Committee in its
discretion may condition (i) the exercise of an Option, (ii) the grant of an
Award, (iii) the making of a Purchase of Common Stock for less than its fair
market value, or (iv) the vesting or transferability of restricted stock or
securities acquired by exercising a Stock Right, on the grantee's making
satisfactory arrangement for such withholding. Such arrangement may include
payment by the grantee in cash or by check of the amount of the withholding
taxes or, at the discretion of the Committee, by the grantee's delivery of
previously held shares of Common Stock or the withholding from the shares of
Common Stock otherwise deliverable upon exercise of a Stock Right shares having
an aggregate fair market value equal to the amount of such withholding taxes.
20. GOVERNMENTAL REGULATION. The Company's obligation to sell and deliver
shares of the Common Stock under this Plan is subject to the approval of any
governmental authority required in connection with the authorization, issuance
or sale of such shares.
Government regulations may impose reporting or other obligations on the
Company with respect to the Plan. For example, the Company may be required to
send tax information statements to employees and former employees that exercise
ISOs under the Plan, and the Company may be required to file tax information
returns reporting the income received by grantees of Stock Rights in connection
with the Plan.
21. GOVERNING LAW; CONSTRUCTION. The validity and construction of the
Plan and the instruments evidencing Stock Rights shall be governed by the laws
of Massachusetts, or the laws of any jurisdiction in which the Company or its
successors in interest may be organized. In construing this Plan, the singular
shall include the plural and the masculine gender shall include the feminine and
neuter, unless the context otherwise requires.
A-7
<PAGE> 25
ADVANCED MAGNETICS, INC.
PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD FEBRUARY 2, 1999
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
P
R The undersigned, revoking all prior proxies, hereby appoint(s) Jerome
O Goldstein and Edward B. Roberts, and each of them, with full power of
X substitution, as proxies to represent and vote as designated herein, all
Y shares of stock of Advanced Magnetics, Inc. ("the Company") which the
undersigned would be entitled to vote if personally present at the Annual
Meeting of Stockholders of the Company to be held at the offices of the
Company, 61 Mooney Street, Cambridge, Massachusetts 02138, on Tuesday,
February 2, 1999 at 10:00 a.m., local time, and at any adjournment thereof.
IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH
OTHER MATTERS AS PROPERLY MAY COME BEFORE THE MEETING OR ANY ADJOURNMENT
THEREOF.
This proxy, when properly executed, will be voted in the manner
directed herein by the undersigned stockholder(s). IF NO DIRECTION IS
GIVEN, THIS PROXY WILL BE VOTED FOR THE ELECTION OF DIRECTORS, FOR THE
PROPOSAL IN ITEM 2 AND AUTHORITY WILL BE DEEMED GRANTED UNDER ITEM 3.
Attendance of the undersigned at the meeting or at any adjournment thereof
will not be deemed to revoke this proxy unless the undersigned shall revoke
this proxy in writing.
-----------
CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE
-----------
[X] PLEASE MARK
VOTES AS IN
THIS EXAMPLE.
<TABLE>
<C> <C>
1. To Elect Directors. 2. To approve the proposal to amend the Company's 1993 Stock Plan
NOMINEES: Leonard M. Baum, Jerome Goldstein, Leslie Goldstein, FOR AGAINST ABSTAIN
Joseph B. Lassiter, III, Michael D. Loberg, Edward B. Roberts, [ ] [ ] [ ]
and George M. Whitesides
3. To transact such other business as may properly come before the
Annual Meeting.
FOR WITHHELD*
[ ] [ ]
MARK HERE MARK HERE IF
FOR ADDRESS [ ] YOU PLAN TO [ ]
CHANGE AND ATTEND THE
NOTE AT LEFT MEETING
Sign as name appears. Joint owners must both sign. Attorney,
________________________________ executor, administrator, trustee or guardian must give title.
*To withhold your vote for any individual nominee, write the A corporation or partnership must sign its name by authorized
nominee's name in the space provided above person.
Signature: ______________________________ Date:___________________
Signature: ______________________________ Date:___________________
</TABLE>
