<PAGE>
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
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the
Commission Only (as
permitted by Rule 14a-6(e)
(2)
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
CISTRON BIOTECHNOLOGY, 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.
[ ] 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
previous filing by registration number, or the form or
schedule and the date of its filing.
<PAGE>
[CISTRON LOGO]
10 Bloomfield Avenue
Pine Brook, New Jersey 07058
(973) 575-1700
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JANUARY 7, 1998
----------------------
To the Stockholders of
CISTRON BIOTECHNOLOGY, INC.
NOTICE IS HEREBY GIVEN that the Annual Meeting of
Stockholders (the "Annual Meeting") of Cistron Biotechnology, Inc. (the
"Company") will be held at the Waldorf-Astoria, 301 Park Avenue, Park Avenue
Center North, 4th Floor, New York, New York 10022, on Wednesday, January 7,
1998, at 10:00 a.m., New York time, to consider and act upon the following
proposals:
1. To elect a board of five (5) directors;
2. To approve the Company's 1997 Incentive and Non-Incentive
Stock Option Plan, under which an aggregate of 1,200,000
shares of Common Stock of the Company will be reserved for
issuance upon exercise of options granted thereunder;
3. To approve an amendment to the Company's Certificate of
Incorporation to authorize 5,000,000 shares of preferred
stock;
4. To ratify the reappointment of Deloitte & Touche LLP as
independent auditors of the Company for the year ending June
30, 1998; and
5. To transact such other business as may properly come before
the Annual Meeting or any adjournment or postponement
thereof.
Only holders of record of Common Stock at the close of
business on November 24, 1997, the Record Date for the Annual Meeting, are
entitled to notice of and to vote at the Annual Meeting.
By Order of the Board of Directors,
Bruce C. Galton
Secretary
Pine Brook, New Jersey
December 1, 1997
STOCKHOLDERS WHO DO NOT EXPECT TO ATTEND THE MEETING
ARE REQUESTED TO DATE, SIGN AND PROMPTLY RETURN THE ENCLOSED
PROXY IN THE ENCLOSED POSTAGE-PREPAID ENVELOPE.
<PAGE>
(THIS PAGE INTENTIONALLY LEFT BLANK)
<PAGE>
[CISTRON LOGO]
CISTRON BIOTECHNOLOGY, INC.
10 Bloomfield Avenue
Pine Brook, New Jersey 07058
(201) 575-1700
-----------------------
PROXY STATEMENT
-----------------------
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JANUARY 7, 1998
-----------------------
INTRODUCTION
General
This Proxy Statement is being furnished to holders of Common Stock,
par value $.01 per share ("Common Stock"), of Cistron Biotechnology, Inc., a
Delaware corporation (the "Company"), in connection with the solicitation of
proxies by the Board of Directors of the Company for use at the Annual Meeting
of Stockholders to be held on Wednesday, January 7, 1998, at the Waldorf-
Astoria, 301 Park Avenue, Park Avenue Center North, 4th Floor, New York,
New York 10022, at 10:00 a.m., New York time, and at any and all adjournments
or postponements thereof (the "Annual Meeting"). The cost of this solicitation
will be borne by the Company. This Proxy Statement and enclosed proxy card are
being mailed to the Company's stockholders on or about December 2, 1997.
Matters to be Considered at the Annual Meeting
At the Annual Meeting, the stockholders will be asked to consider and
vote upon the following proposals:
1. To elect a board of five (5) directors;
2. To approve the Company's 1997 Incentive and Non-Incentive
Stock Option Plan, under which an aggregate of 1,200,000
shares of Common Stock of the Company will be reserved for
issuance upon exercise of options granted thereunder;
3. To approve an amendment to the Company's Certificate of
Incorporation to authorize 5,000,000 shares of preferred
stock; and
<PAGE>
4. To ratify the reappointment of Deloitte & Touche LLP as
independent auditors of the Company for the year ending June
30, 1998,
all as more fully described in this Proxy Statement.
Voting at the Annual Meeting
Only holders of record of Common Stock at the close of business on
November 24, 1997 (the "Record Date") are entitled to notice of and to vote at
the Annual Meeting, each such holder of record being entitled to one vote per
share on each matter to be considered at the Annual Meeting. On the Record
Date, there were 26,930,187 shares of Common Stock issued and outstanding.
The presence, in person or by properly executed proxy, of the holders
of a majority of the outstanding shares of Common Stock entitled to vote at
the Annual Meeting 13,465,094 shares of the 26,930,187 shares outstanding) is
necessary to constitute a quorum at the Annual Meeting. All abstentions and
broker non-votes, if any, will be included as shares that are present and
entitled to vote for purposes of determining the presence of a quorum at the
Annual Meeting. A plurality vote of the shares of Common Stock present in
person or represented by proxy at the Annual Meeting is required to elect the
Board of five (5) directors and the affirmative vote by the holders of a
majority of such votes is required to approve the 1997 Incentive and
Non-Incentive Stock Option Plan and to ratify the reappointment of Deloitte &
Touche LLP as independent auditors of the Company for the year ending June 30,
1998. The affirmative vote by the holders of a majority of the outstanding
shares of Common Stock is required to approve the amendment to the Company's
certificate of incorporation authorizing 5,000,000 shares of preferred stock.
If the enclosed proxy card is properly executed and returned to the
Company prior to voting at the Annual Meeting, the shares represented thereby
will be voted in accordance with the instructions marked thereon. Shares
represented by proxies which are marked "WITHHOLD AUTHORITY" to vote for (i)
all five (5) nominees or (ii) any individual nominee(s) for election as
directors and are not otherwise marked "FOR" the other nominees, will not be
counted in determining whether a plurality vote has been received for the
election of directors. Similarly, shares represented by proxies which are
marked "ABSTAIN" on any other proposal will not be counted in determining
whether the requisite vote has been received for such proposal. IN THE ABSENCE
OF INSTRUCTIONS, THE SHARES WILL BE VOTED FOR ALL THE PROPOSALS SET FORTH IN
THE NOTICE OF ANNUAL MEETING. At any time prior to its exercise, a proxy may
be revoked by the holder of Common Stock granting it by delivering written
notice of revocation or a duly executed proxy bearing a later date to the
Secretary of the Company at the address of the Company set forth on the first
page of this Proxy Statement or by attending the Annual Meeting and voting in
person.
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<PAGE>
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the beneficial ownership of the Common
Stock on the Record Date by (i) each person known by the Company to own
beneficially five percent or more of such shares, (ii) each Director, (iii)
the sole nominee for election as a Director who is not currently a Director,
(iv) each person named in the Summary Compensation Table under "Executive
Compensation" on page 16 of this Proxy Statement, and (iv) all Directors and
executive officers as a group, together with their respective percentage
ownership of the outstanding shares:
<TABLE>
<CAPTION>
Name and Address of Shares Beneficially
Beneficial Owner Owned Percent Outstanding
- --------------------------------------------------------- --------------------- -------------------------
<S> <C> <C>
Henry Grausz, M.D. 5,817,993(2) 21.4%
5910 Bradley Boulevard
Bethesda, MD 20814
Med-Tech Ventures, Inc. 4,126,365(3) 15.3
c/o Warner-Lambert Company
Mt. Tabor Road
Morris Plains, NJ 07950
Isidore S. Edelman, M.D.(1) 2,411,681(4) 9.0
Bruce C. Galton(1) 1,401,007(5) 5.0
Thomas P. Carney, Ph.D.(1) 150,000(5) *
Frank G. Stout(1) 600(6) *
Stephen M. Simes 50,000(7) *
Robert Naismith, Ph.D. 400,000(8)
All directors and executive officers as a group 4,410,495(9) 15.3
(6 persons)
</TABLE>
* less than 1%
(1) c/o Cistron Biotechnology, Inc. 10 Bloomfield Avenue, Pine Brook, New
Jersey 07058.
(2) Includes 259,587 shares issuable upon currently exercisable options.
(3) Med-Tech Ventures, Inc. ("Med-Tech") has the right, exercisable at
any time to require the Company to register all of Med-Tech's shares
under the Act at the Company's expense. Med-Tech is a venture capital
subsidiary of Warner-Lambert Company, and has no other business
relationship with the Company.
(4) Includes 54,374 shares issuable upon currently exercisable options,
but does not include 194,935 shares owned by Dr. Edelman's spouse, as
to which he disclaims beneficial ownership.
(5) Includes 1,355,810 shares issuable upon exercise of currently
exercisable options.
-3-
<PAGE>
(6) Mr. Stout disclaims beneficial ownership of 400,534 shares, 302,289
shares and 136,870 shares owned as of August 31, 1994 by the
Massachusetts Institute of Technology, the New England Medical Center
Hospitals, Inc. and Wellesley College, respectively, the Institutions
of which Mr. Stout serves as designee on the Company's Board of
Directors.
(7) Consists of options which will become exercisable upon the election
of the Board of Directors at the Annual Meeting.
(8) Consists of currently exercisable warrants issued to BlueStone
Capital Partners, L.P. See "Certain Relationships and Related
Transactions."
(9) Includes options described in notes (2), (5) and (6) and options to
356,722 shares held by an executive officer not named in Summary
Compensation Table, but excludes 194,935 shares owned by Dr.
Edelman's spouse.
-----------------------------
On the Record Date, the outstanding Common Stock was held by 740
registered stockholders.
ELECTION OF DIRECTORS
At the Meeting, the entire Board of five (5) Directors, as fixed by
the Company's by-laws, is to be elected to hold office until the next Annual
Meeting of Stockholders and until their successors are duly elected and
qualified. Unless otherwise specifically directed by stockholders executing
proxies, it is intended that all proxies in the accompanying form received in
time for the Annual Meeting will be voted at the Annual Meeting FOR the
election of the five (5) nominees named below, all of whom are currently
Directors of the Company. In the event any nominee should become unavailable
for election for any presently unforeseen reason, it is intended that the
proxies will be voted for such substitute nominee as may be designated by the
present Board of Directors.
Each nominee's name, age, office with the Company, the year first
elected as a Director and certain biographical information are set forth
below:
<TABLE>
<CAPTION>
YEAR FIRST SERVED
NAME AGE AS A DIRECTOR POSITION
---- --- ----------------- --------
<S> <C> <C> <C>
Bruce C. Galton 45 1988 Acting Chairman and
CEO, President, Chief
Operating and Financial
Officer, Secretary and
Treasurer, Director
Isidore S. Edelman, M.D. 76 1983 Vice Chairman of the
Board of Directors
Thomas P. Carney, Ph.D. 82 1989 Director
Frank G. Stout 48 1990 Director
Robert Naismith, Ph.D. 53 - Nominee
</TABLE>
-4-
<PAGE>
Bruce C. Galton has been Acting Chairman and CEO since May 1997 and
President, Chief Operating and Financial Officer and a director since November
1988. Prior to November 1988, Mr. Galton was Vice President and Chief
Financial Officer, Secretary and Treasurer of the Company since January 1985.
From 1977 to 1984, Mr. Galton was employed in various capacities by Becton,
Dickinson & Co. Mr. Galton was Manager of Cost and Budgets at Becton's B-D
Immunodiagnostics division from August 1983 to December 1984 and Financial
Manager of its Becton, Dickinson Laboratory Systems Division from May 1981 to
August 1983. He holds a B.S. from the University of Virginia and an MBA from
Fairleigh Dickinson University.
Isidore S. Edelman, M.D. is co-founder of the Company and has been a
director since its inception. Dr. Edelman holds degrees from Indiana
University (B.A.) and Indiana University School of Medicine (M.D.). Dr.
Edelman is the Robert Wood Johnson, Jr. Professor of Biochemistry, director of
Columbia University's Genome Center and former Chairman of the Department of
Biochemistry and Molecular Biophysics, College of Physicians and Surgeons,
Columbia University. Prior to joining the faculty of Columbia University in
June 1978, he was the Samuel Neider Research Professor of Medicine and
Professor of Biophysics at the University of California School of Medicine in
San Francisco. Dr. Edelman is a member of the National Academy of Sciences and
the Institute of Medicine of the National Academy of Sciences and the American
Academy of Arts and Sciences.
Thomas P. Carney, Ph.D. has been a director of the Company since
September 1989. Dr. Carney has been Chairman and CEO of Metatech Corporation,
which develops medical devices, since it was organized in 1976. Prior to
forming Metatech Corporation, Dr. Carney was an Executive Vice President of
G.D. Searle & Company (1965-1976) and was Vice President of Research and
Development of Eli Lilly and Company prior to joining Searle. Dr. Carney holds
a B.S. in chemical engineering from the University of Notre Dame and Masters
and Ph.D. degrees from Pennsylvania State University.
Frank G. Stout has been the Vice President-Research Administration of
New England Medical Center Hospitals, Inc. (Tufts University) since 1983.
Prior to 1983, Mr. Stout was Assistant Director of Research Administration of
the Center for the Advancement of Research and Biotechnology. Mr. Stout
received his B.Sc. in Biology from the University of South Dakota and his MPH
in Health Administration from the Tulane Medical Center.
Robert W. Naismith, Ph.D. has been Managing Director of Healthcare at
BlueStone Capital Partners, L.P., since October 1, 1996. Dr. Naismith has also
served as Director and Chairman of the Compensation Committee of the Board of
Directors of Penn Security Bank & Trust Company, Scranton, Pennsylvania since
1988 and as Director of the Marion Nichols Corporation, Clark Summit,
Pennsylvania since 1993. Dr. Naismith co- founded, and served as the President,
Chief Executive Officer and a director of Biofor, Inc., a biopharmaceutical
research and discovery company specializing in rational drug design via
computer assisted molecular analysis from 1986 to 1995. He was co-founder
and Executive Vice President of Pharmakon Research International, Inc.,
an international preclinical contact organization from
-5-
<PAGE>
1980 until 1988. In addition, he served as Vice President of Scherer
Healthcare, Inc., an Atlanta based healthcare company whose subsidiaries
address various medical service and product markets, from 1986 to 1995, from
1994 to 1997 as Chairman and Director of Derma Sciences, Inc., a wound care
company, Director and Chairman of the Joint Conference Committee of the
Community Medical Center, Scranton, Pennsylvania from 1980 to 1992 and in 1996
as Chairman and Director of The Micro Cap Fund, Inc., a publicly traded bridge
fund. He holds an adjunct associate professorship in the School of Medicine at
Case Western Reserve University, adjunct professorships in the Department of
Biology at Pennsylvania State University, and the Department of Biology at the
University of Scranton. He was awarded a tenured Associate Professorship at
Pennsylvania State University in Biology in 1977. Dr. Naismith also serves as
a Senior Fellow at the Institute of Molecular Biology & Medicine at the
University of Scranton, Scranton, Pennsylvania, Trustee of the William Harvey
Medical Foundation, London, U.K., a Director of the Pennsylvania Regional
Tissue Bank and the International Institute for the Advancement of Medicine.
He is a member of the several Editorial Boards and the author of over 30
publications. Dr. Naismith received his Ph.D. in Genetics from the
Pennsylvania State University of 1971.
All directors hold office until the next annual meeting of
stockholders and until their successors are elected and qualified. Officers
hold office until their successors are chosen and qualify, subject to earlier
removal by the Board of Directors and subject to rights, if any, under
contracts of employment. As part of the Company's Chapter 11 settlement
agreement, the Institutions have the right to designate one individual
nominated by management to the Board of Directors. If Cistron is consolidated
or merged or acquired by a third party whose primary products and/or interest
is in areas other than IL-1, its variants, derivatives or applications,
Cistron will no longer be obligated to appoint such a representative and the
representative of the Institutions then acting as a Director of Cistron will
resign. The "Institutions" are New England Medical Center Hospitals, Inc.,
Tufts University, Massachusetts Institute of Technology and Wellesley College.
Currently, Mr. Frank G. Stout is the Institutions' designee on the Board. Dr.
Robert Naismith, Ph.D. serves as a designee of BlueStone Capital Partners,
L.P., which during the term of its engagement as the Company's financial
advisor, has the right to designate one Director to the Board. See "Certain
Relationships and Related Transactions."
-----------------------------------
MEETINGS AND COMMITTEES
There were 11 meetings of the Board of Directors during fiscal 1997.
There were no committees of the Board during fiscal 1997. The Board of
Directors expects to form and elect Board members to a Stock Option and
Compensation Committee of the Board ("Committee") prior to the Annual Meeting.
The Committee's responsibilities shall include the administration of the 1997
Incentive and Non-Incentive Stock Option Plan.
-----------------------------------
-6-
<PAGE>
COMPENSATION OF DIRECTORS
Starting in Fiscal 1996, directors who are not employees received a
retainer fee of $1,200 per annum and $500 for each meeting of the Board of
Directors attended. Also starting in Fiscal 1996, Dr. Edelman will be paid at
the rate of $200 per hour for any scientific consulting services he may
perform at the Company's request. During 1997, Dr. Edelman was paid an
aggregate of $1,300 for such consulting services. Directors who are not
employees or officers of the Company also receive options to purchase 50,000
shares of Common Stock for each year of service as such, up to a total of
150,000 shares. Mr. Stout has agreed to serve without cash compensation and
without receipt of stock options.
APPROVAL OF THE 1997 INCENTIVE AND
NON-INCENTIVE STOCK OPTION PLAN
General
In September, 1984, the Company adopted its Employee Stock Option
Plan (the "Employee Plan") under which an aggregate of 1,157,913 of Common
Stock were reserved for issuance upon exercise of options granted to employees
thereunder. As of the Record Date, options to purchase an aggregate of 964,393
shares of Common Stock had been granted and were outstanding, an aggregate of
91,007 shares of Common Stock had been issued upon exercise of options, and a
balance of 102,513 shares are reserved for issuance under the Employee Plan for
options granted thereunder after the Record Date.
In October 1997, the Board of Directors approved the 1997 Incentive
and Non-Incentive Stock Option Plan (the "Plan") to authorize additional
options to attract and retain qualified personnel, including consultants. The
Plan reserves 1,200,000 shares of Common Stock for issuance thereunder upon
exercise of options ("Options") granted thereunder. The Board of Directors
believes that the 1,200,000 shares of Common Stock should be sufficient to
attract and retain qualified personnel for approximately 18-24 months.
The purpose of the Plan is to encourage selected employees, directors
and other persons who contribute and are expected to contribute materially to
the Company's success to obtain a proprietary interest in the Company through
ownership of stock, thereby providing such persons with an added incentive to
promote the best interests of the Company.
As of the date of this Proxy Statement, the Company has not made any
commitments to grant any options under the Plan. On November 28, 1997, the
closing bid price of the Common Stock was $.24 per share, as reported by the
Nasdaq Electronic Bulletin Board.
-7-
<PAGE>
Summary of the Plan
The essential features of the Plan are outlined below.
Definition of "Outside Director"
As defined in Regulation ss. 1.162-27(e)(3) of the Internal Revenue
Code of 1986, as amended (the "Code"), an "Outside Director" is a director of
the Company that: (a) is not a current employee of the Company; (b) is not a
former employee of the Company who receives compensation for prior services
(other than benefits under a tax-qualified retirement plan) during the taxable
year; (c) has not been an officer of the Company; and (d) does not receive
remuneration (including any payment in exchange for goods or services, and
other than de minimis remuneration, as defined by such Regulation) from the
Company, either directly or indirectly, in any capacity other than as a
director. The Committee shall at all times be composed solely of two or more
Outside Directors.
Grant of Options
The Committee administers the Plan and in its discretion determines:
(i) the persons to whom, and the time or times at which, Options are granted;
(ii) the number of shares subject to each Option; (iii) the provisions
regarding exercisability of each Option; (iv) the expiration date of each
Option, which cannot exceed ten years (five years for incentive stock options
("Incentive Options") qualifying under Section 422A of the Code granted to a
person who owns or is considered as owning stock possessing more than 10% of
the total voting power of all classes of stock of the Company or any
subsidiary thereof (a "Ten Percent Stockholder"); (v) whether all or any
portion of the Options will be Incentive or stock options which do not so
qualify ("Non-Incentive Options"); (vi) the exercise price, which for
Non-Incentive Options cannot be less than eighty-five percent (85%) of the
fair market value of the Common Stock on the date of grant ( or 100% of such
fair market value for Incentive Options or 110% thereof for Incentive Options
granted to Ten Percent Stockholders)); (vii) whether each Option will have a
"cashless-exercise" provision; (viii) whether a Non-Incentive Option shall
have limited transferability as permitted under the Plan; and (ix) whether a
Non-Incentive Option granted to a non-employee shall terminate following the
non-employee's termination of engagement in performing services for the
Company. In making such determinations, the Committee may take into account
the nature of the services rendered by such persons, their present and
potential contribution to the Company's success and such other factors as the
Committee in its sole discretion may deem relevant.
The Committee has the sole authority to interpret the Plan; to
prescribe, amend and rescind rules and regulations relating thereto; to
determine the terms and provisions of the respective option agreements under
which Options are granted (the "Option Agreements"); to amend the provisions
of outstanding Options to provide for accelerated exercisability or the
extension of the expiration date of such Options; and to make all other
determinations necessary
-8-
<PAGE>
or advisable for the administration of the Plan, all of which determinations
shall be conclusive and not subject to review.
For purposes of the Plan, unless the Committee determines otherwise,
the "fair market value" of a share of Common Stock as of a certain date shall
be the closing bid price of the Common Stock on The Nasdaq Stock Market (or
the Nasdaq Electronic Bulletin Board) or, if the Common Stock is not then
traded on The Nasdaq Stock Market (or quoted on the Nasdaq Electronic Bulletin
Board), such national securities exchange on which the Common Stock is then
traded, on the trading date immediately preceding the date the fair market
value is being determined. The Committee may make such other determination of
fair market value, based on other factors, as it shall deem appropriate.
The aggregate fair market value (determined as of the time an
Incentive Option is granted) of the shares of Common Stock initially
purchasable upon exercise of an Incentive Option during any calendar year may
not exceed $100,000.
Additionally, the maximum number of shares that may be subject to
options under this Plan granted during any calendar year to any employee of the
Company is 400,000 shares.
The date of grant of an Option is the date on which the Committee
shall by resolution duly authorize such Option.
Exercise of Options
Each Option is exercisable to the extent determined by the Committee
and set forth in the Option Agreement, but in no event will an Option be
exercisable until at least six months from the date of grant. An Option may
not be exercised for fractional shares of Common Stock.
Payment for the shares may be made in cash. The Committee may, in its
discretion, include a "cashless exercise" provision in the applicable Option
Agreement, in which event the optionee will be permitted to deliver previously
owned shares of Common Stock with a fair market value equal to the exercise
price in payment of the full purchase price of such shares, provided such
shares, if purchased upon exercise of a stock option, shall have been held for
at least six months.
Prior to the issuance of shares upon the exercise of an option, the
optionee is required to pay or make adequate provision for payment of any
federal, state or local withholding tax obligations of the Company, in the
manner determined in the sole discretion of the Committee. No optionee shall
have any of the rights of a stockholder of the Company with respect to any
shares subject to an option until the Option has been validly exercised.
-9-
<PAGE>
Transferability of Options
No Option granted pursuant to the Plan shall be transferable
otherwise than by will or the laws of descent or distribution and an Option
may be exercised during the lifetime of the holder only by such holder, except
that the Committee may provide for transferability of a NonIncentive Option to
an optionee's family members or family trusts.
Acceleration of Exercisability Upon a "Change in Control" of the Company.
Upon the occurrence of a "change in control" of the Company (as
defined below), all outstanding Options shall become immediately fully
exercisable. For purposes of the Plan, a "change in control" of the Company
shall mean (i) the acquisition at any time by a "person" or "group" (as such
terms are used Sections 13(d) and 14(d)(2) of the Exchange Act of beneficial
ownership (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities representing 50% or more of the combined voting
power in the election of directors of the then outstanding securities of the
Company or any successor or the Company; (ii) the termination of service of
directors, for any reason other than death, disability or retirement from the
Board, during any period of two consecutive years or less, of individuals who
at the beginning of such period constituted a majority of the Board, unless
the election of or nomination for election of each new director during such
period was approved by a vote of at least two-thirds of the directors still in
office who were directors at the beginning of the period; (iii) approval by
the stockholders of the Company of any merger, consolidation, or statutory
share exchange as a result of which the Common Stock shall be changed, converted
or exchanged (other than a merger, consolidation or share exchange with a
wholly-owned subsidiary) or liquidation of the Company or any sale or
disposition of 80% or more of the assets or earning power or the Company; or
(iv) approval by the stockholders of the Company of any merger, consolidation,
or statutory share exchange to which the Company is a party as a result of
which the persons who were stockholders immediately prior to the effective
date of the merger, consolidation or share exchange shall have beneficial
ownership of less than 50% of the combined voting power in the election of
directors of the surviving corporation.
Termination or Lapse of Options
In the event the employment of an optionee by the Company terminates
for any reason other than by death or disability, or the engagement of a
non-employee optionee terminates for any reason other than death, such optionee
may, within three months from the date of such termination, exercise such
Option to the extent such Option was exercisable by such holder at the date of
such termination. No Option, however, may be exercised subsequent to the date
of its expiration. Absence on leave approved by the employer corporation is not
considered an interruption of employment for any purpose under the Plan. In
addition, at the discretion of the Committee,
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<PAGE>
the exercisability of an outstanding Non-Incentive Option may be extended to a
date determined by the Committee but not beyond ten years from the date of
grant.
The Committee may, in its discretion, at the time of grant or by
amending the applicable outstanding Non-Incentive Option, delete the foregoing
termination provision with respect to a Non-Incentive Option granted to a
non-employee of the Company.
Option Adjustments
The Plan contains a customary anti-dilution provision that provides
that in the event of any change in number of the Company's outstanding Common
Stock by reason of a stock dividend, stock split, reverse stock split,
combination, reclassification or similar change in the capital structure of
the Company without consideration, the number of shares of the Common Stock
available under the Plan and the number of shares subject to outstanding
options and exercise price per share of such options shall be proportionately
adjusted, subject to any required action by the Committee or stockholders of
the Company and compliance with applicable securities laws. No certificate or
scrip representing fractional shares shall be issued upon the exercise of any
option and any resulting fractions of a share shall be ignored.
Issuance of Shares
The shares of Common Stock, when issued and paid for pursuant to
options granted under the Plan, shall be issued as fully paid and
non-assessable shares.
Termination of the Plan
No options may be granted under the Plan subsequent to November 3,
2007, but options theretofore granted may extend beyond that date and the
terms of the Plan shall continue to apply to such options and to any shares
acquired upon exercise thereof. The Committee may at any time terminate or
amend the Plan in any respect (including, but not limited to, any form of
grant, agreement or instrument to be executed pursuant to the Plan); subject
to stockholder approval if required to comply with the provisions of the Code,
or the listed company requirements of The Nasdaq Stock Market or of a national
securities exchange on which the shares are traded, or other applicable
provisions of state or federal law or self-regulatory agencies. No amendment
of the Plan may adversely affect any then outstanding options or any
unexercised portions thereof without the written consent of the optionee.
FEDERAL INCOME TAX CONSEQUENCES
The following is based upon federal tax laws and regulations as
presently in effect and does not purport to be a complete description of the
federal income tax aspects of the Plan. Also, the specific state tax
consequences to each participant under the Plan may vary, depending upon the
laws of the various states and the individual circumstances of each
participant.
-11-
<PAGE>
Incentive Options
No taxable income is recognized by the optionee upon the grant of an
Incentive Option under the Plan. Further, no taxable income will be recognized
by the optionee upon exercise of an Incentive Option granted under the Plan
and no business expense deduction will be available to the Company. Generally,
if the optionee holds shares acquired upon the exercise of Incentive Options
for at least two (2) years from the date of grant of the option and for at
least one (1) year from the date of exercise, any gain on a subsequent sale of
such shares will be considered as long-term capital gain. The gain recognized
upon the sale of the shares is equal to the excess of the selling price of the
shares over the exercise price. Therefore, the net federal income tax effect
on the holders of Incentive Options is to defer, until the shares are sold,
taxation of any increase in the value of the shares from the date of grant and
to treat such gain, at the time of sale, as capital gain rather than ordinary
income.
However, in general, if the optionee sells the shares prior to
expiration of either the two-year or one-year period, referred to as a
"disqualifying disposition," the optionee will recognize taxable income at
ordinary tax rates in an amount equal to the lesser of (i) the value of the
shares on the date of exercise, less the exercise price; or (ii) the amount
realized on the date of sale, less the exercise price, and the Company will
receive a corresponding business expense deduction. The balance of the gain
recognized on the disqualifying disposition will be long-term or short-term
capital gain depending upon the holding period of the optioned shares. The
two-year and one-year holding period rules do not apply to optioned shares
which are disposed of by the optionee's estate or a person who acquired such
shares by reason of the death of the optionee.
Under Section 162(m) of the Code, certain compensation payments in
excess of $1 million are subject to a limitation on deductibility for the
Company. The limitation on deductibility applies with respect to that portion
of a compensation payment for a taxable year in excess of $1 million to either
the Company's Chief Executive Officer or any one of the Company's other four
(4) most highly compensated executive officers. Certain performance-based
compensation is not subject to the limitation on deductibility. Options can
qualify for this performance-based exception, but only if they are granted at
fair market value, the total number of shares that can be granted to an
executive for a specified period is stated in the Plan, and stockholder
approval of the Plan is obtained. The Plan has been drafted to allow
compliance with those performance-based criteria that relate to Incentive
Options.
-12-
<PAGE>
If shares of Common Stock are used in payment of the exercise price
of an Incentive Option, the following rules apply:
(i) If the exercise price under an Incentive Option is paid
by delivery of shares of Common Stock previously acquired upon
exercise of an earlier granted Incentive Option, if such delivery
constitutes a "disqualifying disposition" of the delivered shares
because such shares of Common Stock had not been held long enough to
satisfy the requisite two-year and one-year holding periods
applicable to Incentive Options, such disqualifying disposition will
render the optionee subject to ordinary taxation as discussed above
on the delivered shares. To the extent the number of newly acquired
shares equals the number of delivered shares as to which there was a
disqualifying disposition, the basis for such newly acquired shares
will be equal to the fair market value of the delivered shares at the
time they were delivered, and the holding period for these newly
acquired shares will, except for disqualifying disposition purposes,
include the period for which the delivered shares were held; and to
the extent the number of newly acquired shares exceeds the number of
delivered shares, such additional shares will have a zero basis and a
holding period measured from the date of exercise of the option; and
(ii) If an Incentive Option is exercised with (i) shares of
Common Stock acquired upon exercise of an Incentive Option and held
for the requisite holding period prior to delivery, (ii) shares of
Common Stock acquired under a Non-Incentive Option, or (iii) shares
of Common Stock acquired through open-market purchases, then the
optionee will not recognize any taxable income (other than relating
to alternative minimum tax) with respect to the shares of Common
Stock so delivered. To the extent the purchased shares equal in
number the shares of Common Stock delivered in payment of the
exercise price, the newly acquired shares will have the same basis
and holding period as the delivered shares. The balance of the
purchased shares will have a zero basis for tax purposes, and their
holding period will commence on the date these additional shares are
acquired upon exercise by the optionee.
An employee may be subject to an alternative minimum tax upon
exercise of an Incentive Option since the excess of the fair market value of
the optioned stock at the date of exercise over the exercise price must be
included in alternative minimum taxable income, unless the acquired shares are
disposed of in the same year that the option was exercised.
Non-Incentive Options
As in the case of Incentive Options, the grant of Non-Incentive
Options will not result in any taxable income to the optionee. However, unlike
Incentive Options, generally the optionee will recognize ordinary income in
the year in which the option is exercised in the amount by which the fair
market value of the purchased shares on the date of exercise exceeds the
exercise price.
-13-
<PAGE>
The fair market value of the shares on the date income is required to
be recognized will constitute the tax basis thereof for computing gain or loss
on any subsequent sale. Any gain or loss recognized by the optionee upon the
subsequent disposition of the shares will be treated as capital gain or loss
and will qualify as long-term capital gain or loss if the shares are held for
more than twelve months prior to disposition.
Generally, the Company will be entitled to a business expense
deduction equal to the amount of ordinary income recognized by the optionee at
the date of exercise. The income recognized by the optionee will be treated as
compensation income and will be subject to income tax withholding by the
Company.
Under Section 162(m) of the Code, certain compensation payments in
excess of $1 million are subject to a limitation on deductibility for the
Company. The limitation on deductibility applies with respect to that portion
of a compensation payment for a taxable year in excess of $1 million to either
the Company's Chief Executive Officer or any one of the Company's other four
(4) most highly compensated executive officers. Certain performance-based
compensation is not subject to the limitation on deductibility. Options can
qualify for this performance-based exception, but only if they are granted at
fair market value, the total number of shares that can be granted to an
executive for a specified period is stated in the Plan, and stockholder
approval of the Plan is obtained. The Plan has been drafted to allow
compliance with those performance-based criteria that relate to Non-Incentive
Options, except that NonIncentive Options granted with an exercise price less
than the fair market value of the Common Stock on the date of the grant will
not meet such performance-based criteria and, accordingly, the compensation
attributable to such options will be subject to the deductibility limitations
contained in Section 162(m) of the Code.
REQUIRED VOTE
Approval of the Plan will require the affirmative vote of the holders
of a majority of the outstanding shares of Common Stock present in person or
represented by proxy at the Annual Meeting and entitled to vote. In instances
of broker non-votes, those shares will not be included in the vote totals, and
therefore will have no effect on the vote for the approval of the Plan. Unless
marked to the contrary, proxies received will be voted FOR approval of the
Plan.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE
APPROVAL OF THE PLAN.
-14-
<PAGE>
ADOPTION OF AMENDMENT TO THE COMPANY'S
CERTIFICATE OF INCORPORATION
The Company is presently authorized to issue 50,000,000
shares of Common Stock, $.01 par value.
The Board of Directors has approved, subject to adoption by
the stockholders, an amendment to the Company's Certificate of Incorporation
in substantially the form attached hereto as Exhibit A to this Proxy
Statement, to add 5,000,000 shares of preferred stock, par value $1.00 per
share, to the authorized capital stock of the Company (the "Charter
Amendment").
The Charter Amendment will provide the Board of Directors
with the authority, without further action by the stockholders, to issue from
time to time up to 5,000,000 shares of preferred stock, par value $1.00 per
share. The Board of Directors will be authorized to establish and designate
the classes, series, voting powers, designations, preferences and relative,
participating, optional or other rights, and such qualifications, limitations
and restrictions of the preferred stock as the Board may determine in its sole
discretion without further vote or action by the stockholders.
The rights, preferences, privileges, and restrictions or
qualifications of different series of preferred stock may differ with respect
to dividend rates, amounts payable on liquidation, voting rights, conversion
rights, redemption provisions, sinking fund provisions, and other matters. The
issuance of preferred stock could decrease the amount of earnings and assets
available for distribution to holders of Common Stock or could adversely
affect the rights and powers, including voting rights, of holders of Common
Stock.
The existence of the preferred stock, and the power of the
Board of Directors of the Company to set its terms and issue a series of
preferred stock at any time without stockholder approval, could have certain
antitakeover effects. These effects include that of making the Company a less
attractive target for a "hostile" takeover bid or rendering more difficult or
discouraging the making of a merger proposal, assumption of control through
the acquisition of a large block of Common Stock or removal of incumbent
management, even if such actions could be beneficial to the stockholders of
the Company.
The Board has no present plans to issue any series of
preferred stock but believes that it is desirable to have the shares of
preferred stock available for possible future financing transactions and other
corporate purposes. Having such authorized shares available for issuance in
the future will give the Company greater flexibility and allow the shares to
be issued without the expense and delay of a special stockholders' meeting.
-15-
<PAGE>
REQUIRED VOTE
Adoption of the Charter Amendment requires the affirmative
vote by the holders of a majority of the outstanding shares of Common Stock of
the Company (13,465,094 shares of the 26,930,187 shares outstanding). Unless
marked to the contrary, proxies received will be voted FOR adoption of the
Charter Amendment.
THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE ADOPTION OF THE
CHARTER AMENDMENT.
RATIFICATION OF REAPPOINTMENT OF INDEPENDENT AUDITORS
Subject to ratification by the stockholders, the Board of Directors
has reappointed Deloitte & Touche LLP as independent auditors of the Company
for the year ending June 30, 1998. The affirmative vote of a majority of
shares of Common Stock present in person or represented by proxy at the Annual
Meeting is required to ratify the reappointment of Deloitte & Touche LLP. It
is anticipated that a representative of Deloitte & Touche LLP at the Annual
Meeting to answer questions within such firm's field of expertise.
THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE RATIFICATION OF
THE REAPPOINTMENT OF THE INDEPENDENT AUDITORS.
OTHER BUSINESS
Management does not know of any matter to be brought before the
Annual Meeting other than as described above. In the event any other matter
properly comes before the Annual Meeting, the persons named in the
accompanying form of proxy have discretionary authority to vote on such
matters.
-16-
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth a summary of the compensation earned
in each of the last three fiscal years by each Chief Executive Officer and by
the only other executive officer whose cash compensation during such year
exceeded $100,000 in fiscal year 1997.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
LONG-TERM COMPENSATION
-------------------------------------------------------
ANNUAL COMPENSATION AWARDS
-----------------------------------------------------------------------------
COMMON STOCK
NAME AND PRINCIPAL POSITION FISCAL YEAR SALARY ($) BONUS($) UNDERLYING OPTIONS (1)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Henry Grausz, M.D.(1) 1997 $31,385
------------------ ------------------- -------------------------
former Chairman and CEO 1996 __ __ __
1995
Bruce C. Galton 1997 $187,500 $50,000 __
Acting Chairman, CEO (May 1996 $156,667 __ 784,000
1997)
President, Chief Operating and 1995 $140,000 73,053
Financial Officer __
Richard S. Dondero 1997 $95,833 $50,000 __
Vice President - Operations 1996 $90,000 __ 31,546
and Product Development 1995 $92,750 __
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Dr. Gausz resigned as Chairman and director in May 1997 and received
consulting fees of $10,000 per month from May 21 to July 31, 1997.
Prior to his resignation, Dr. Grausz received a salary of $10,000 per
month from the period of February 15 to May 20, 1997.
No options were granted in Fiscal 1997 to the individuals named in the Summary
Compensation Table.
-17-
<PAGE>
The following table sets forth certain information concerning
unexercised options held at June 30, 1997 by the executive officer listed in
the Summary Compensation Table (who did not exercise any options during Fiscal
1997).
OPTION VALUES AT JUNE 30, 1997
<TABLE>
<CAPTION>
==================================================================================================================================
NUMBER OF UNEXERCISED OPTIONS AT JUNE 30, VALUE OF UNEXERCISED IN-THE-MONEY
1997 OPTIONS AT JUNE 30, 1997(1)
NAME ------------------------------------------------ ------------------------------------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Henry Grausz, M.D. 259,587 __ $ 67,493 __
- ----------------------------------------------------------------------------------------------------------------------------------
Bruce C. Galton 1,291,976 109,031(2) $123,544 __
- ----------------------------------------------------------------------------------------------------------------------------------
Richard S. Dondero 400,176 31,546(2) $ 36,721 __
==================================================================================================================================
</TABLE>
(1) Based on the average of the bid and asked prices on June 30, 1997 of
$.28 per share.
(2) Unexercisable options for Mr. Galton to purchase 109,031 shares and
for Mr. Dondero to purchase 31,546 shares are out-of-the-money.
In April 1994, Mr. Galton and Mr. Dondero entered into a new
five-year employment contract with the Company. The employment agreements also
contain a confidentiality provision that requires Mr. Galton and Mr. Dondero
to maintain as confidential any confidential information obtained during the
course of employment for the period of such agreement and for three years
after termination thereof.
The employment agreement of Mr. Galton provides that in the event the
employment of Mr. Galton is terminated without cause by the Board of
Directors, or if the Company refuses to renew the employment agreement of Mr.
Galton, then upon his written request, the Company will (i) pay Mr. Galton an
amount equal to six months of Mr. Galton's current salary in equal monthly
installments, commencing the month in which the termination occurs or the
salary which would be due under the remaining unexpired term of the agreement,
whichever is greater, (ii) enter into a consulting contract with Mr. Galton's
at full pay and benefits for a minimum of three months and (iii) lend Mr.
Galton such amount as may be required to exercise any stock options then
exercisable by Mr. Galton to purchase shares of the Company's Common Stock.
The employment agreement also provides that in the event the Company
relocates during the term of the employment agreement, and Mr. Galton
relocates with the Company, the Company will reimburse Mr. Galton for all
relocation costs and pay Mr. Galton a bonus of $25,000 upon completing such
relocation. If Mr. Galton chooses not to relocate with the Company, he will
receive the applicable termination pay described in clauses (i) and (iii) of
the preceding paragraph plus an additional three months salary as severance
pay.
During Fiscal 1997, the Company maintained a "key man" life insurance
policy on the life of Mr. Galton in the amount of $1,000,000.
-18-
<PAGE>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16 of the Securities Exchange Act of 1934, as amended,
requires that officers, directors and holders of more than 10% of the Common
Stock (collectively, "Reporting Persons") file reports of their trading in
Company equity securities with the Securities and Exchange Commission. Based
on a review of Section 16 forms filed by the Reporting Persons during the last
fiscal year, the Company believes that the Reporting Persons complied with all
applicable Section 16 filing requirements.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On August 1, 1997, the Company filed suit in the circuit Court of
Fairfax County (Virginia) against Rebuild, L.L.C. ("Rebuild") and against
Henry Grausz, M.D., Cistron's former chairman, to collect $230,000 (plus
interest and attorney's fees) loaned to Rebuild under a short-term note,
originally due May 15, 1997. The loan was personally and unconditionally
guaranteed by Dr. Grausz who is a member of Rebuild. In October 1997, the
Company obtained a default judgment against Dr. Grausz for the principal and
interest under the Note together with costs of collection.
In September 1997, the Company engaged the services of BlueStone
Capital Partners, L.P. ("BlueStone Capital") to act as the Company's financial
advisor as to corporate strategy and financial initiatives. Robert W.
Naismith, Ph.D., a nominee for election to the Board, is a Managing Director
of BlueStone Capital. The initial engagement is for six months and may be
renewed upon mutual consent of the parties. The Company is obligated to pay
BlueStone Capital $90,000 for the initial six-month period and issue warrants
to purchase 400,000 shares of Common Stock at $.25 per share. The Company
would be obligated to make payments including certain percentage fees as well
as issue additional warrants to BlueStone Capital to purchase up to an
additional 400,000 shares of Common Stock in completing a merger, acquisition,
joint venture, partnership, license or contract.
STOCKHOLDER PROPOSALS FOR THE NEXT
ANNUAL MEETING OF STOCKHOLDERS
Any stockholder proposal to be considered for inclusion in the
Company's proxy soliciting material for the next Annual Meeting of
Stockholders must be received by the Company at its principal office by June
30, 1998.
Dated: December 1, 1997
-19-
<PAGE>
EXHIBIT A
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
CISTRON BIOTECHNOLOGY, INC.
PURSUANT TO SECTION 242 OF THE GENERAL
CORPORATION LAW OF THE STATE OF DELAWARE
Cistron Biotechnology, Inc., a corporation organized and
existing under the General Corporation Law of the State of Delaware (the
"Corporation"), hereby certifies as follows:
FIRST: The name of the Corporation is Cistron
Biotechnology, Inc. and the name under which the Corporation originally was
incorporated is Cistron Technology, Inc.
SECOND: The original Certificate of Incorporation of the
Corporation was filed with the Secretary of State of Delaware on July 14,
1983.
THIRD: The Certificate of Incorporation of the Corporation,
as heretofore amended or supplemented, is hereby further amended by striking
out Section "4" and substituting in lieu thereof a new Section "4" changing
the authorized capital stock of the Corporation to read as follows:
"4. The authorized capital stock of the Corporation shall consist of
fifty-five million (55,000,000) shares, consisting of fifty million
(50,000,000) shares of Common Stock, each having a par value of $.01 (the
"Common Stock"), and five million (5,000,000) shares of Preferred Stock, each
having a par value of $1.00 (the "Preferred Stock").
The Preferred Stock may be issued from time to time in one
or more series of any number of shares provided that the aggregate number of
shares issued and not cancelled of any and all such series shall not exceed
the total number of shares of Preferred Stock hereinabove authorized. Each
series of Preferred Stock shall be distinctively designated by letter or
descriptive words. All series of Preferred Stock shall rank equally and be
identical in all respects except as permitted by the provisions of this
Section 4.
-20-
<PAGE>
Authority is hereby expressly vested in the Board of
Directors from time to time to issue the Preferred Stock as Preferred Stock of
any series and in connection with the creation of each such series to fix by
the resolution or resolutions providing for the issue of shares thereof the
designations, preferences, limitations and relative participating, optional or
other special rights, and the qualifications, limitations or restrictions
thereof, to the full extent now or hereafter permitted by this Certificate of
Incorporation and the laws of the State of Delaware, including, without
limitation:
(1) the distinctive designation of such series and the
number of shares which shall constitute such series, which number may
be increased (but not above the total number of authorized shares of
the series) or decreased (but not below the number of shares thereof
then outstanding) from time to time by a resolution or resolutions of
the Board of Directors, all subject to the conditions or restrictions
set forth in the resolution or resolutions adopted by the Board of
Directors providing for the issuance of any series of Preferred
Stock;
(2) the dividend rate payable on shares of such series, the
conditions and dates upon which such dividends shall be payable, the
preferences or relation which such dividend shall bear to the
dividends payable on any other class or classes or any other series
of capital stock (except as otherwise expressly provided in this
Certificate of Incorporation), and whether such dividends shall be
cumulative or non-cumulative and, if cumulative, the date or dates
from which dividends shall accumulate;
(3) whether the shares of such series shall be subject to
redemption by the Corporation and, if made subject to redemption, the
price or prices at which, and the terms and conditions on which, the
shares of such series may be redeemed by the Corporation;
(4) the amount or amounts payable upon the shares of such
series in the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation and the preferences or
relation which such payments shall bear to such payments made on any
other class or classes or any other series of capital stock (except
as otherwise expressly provided in this Certificate of
Incorporation);
(5) whether or not the shares of such series shall be made
convertible into, or exchangeable for, shares of any other class or
classes of capital stock of the Corporation, or any series thereof,
or for any other series of the same class of capital stock of the
Corporation or for debt of the Corporation evidenced by an instrument
of indebtedness, and, if so convertible or exchangeable, the
conversion price or prices, or the rate or rates of exchange, and the
adjustments thereof, if any, at which such conversion or exchange may
be made, and any other terms and conditions of such conversion or
exchange;
(6) whether the holders of shares of such series shall have
any right or power to vote or to receive notice of any meeting of
stockholders, either generally or as a condition to specified
corporate action; and
-21-
<PAGE>
(7) any other preferences and relative, participating,
optional or other special rights and qualifications, limitations or
restrictions thereof as may be permitted by the laws of the State of
Delaware and as shall not be inconsistent with this Section 4.
Shares of Preferred Stock which have been issued and
reacquired in any manner by the Corporation (excluding, until the Corporation
elects to retire them, shares which are held as treasury shares, but including
shares redeemed, shares purchased and retired and shares which have been
converted into shares of Common Stock) shall have the status of authorized but
unissued shares of Preferred Stock and may be reissued as a part of the series
of which they were originally a part or may be reissued as a part of another
series of Preferred Stock, all subject to the conditions or restrictions or
issuance set forth in the resolution or resolutions adopted by the Board of
Directors providing for the issuance of any series of Preferred Stock.
Except as otherwise provided by the resolution or
resolutions providing for the issuance of any series of Preferred Stock, after
payment shall have been made to the holders of Preferred Stock of the full
amount of dividends to which they shall be entitled pursuant to the resolution
or resolutions providing for the issuance of any series of Preferred Stock,
the holders of Common Stock shall be entitled, to the exclusion of the holders
of Preferred Stock of any and all series, to receive such dividends as from
time to time may be declared by the Board of Directors.
Except as otherwise provided by the resolution or
resolutions providing for the issuance of any series of Preferred Stock, in
the event of any liquidation, dissolution or winding up of the Corporation,
whether voluntary or involuntary, after payment shall have been made to the
holders of Preferred Stock of the full amounts to which they shall be entitled
pursuant to the resolution or resolutions providing for the issuance of any
series of Preferred Stock, the holders of Common Stock shall be entitled, to
the exclusion of the holders of Preferred Stock of any and all series, to
share, ratably according to the number of shares of Common Stock held by them,
in all remaining assets of the Corporation available for distribution to its
stockholders.
The holders of Preferred Stock shall not have any preemptive
rights except to the extent such rights shall be specifically provided for in
the resolution or resolutions providing for the issuance thereof adopted by
the Board of Directors."
FOURTH: The amendment to the Certificate of Incorporation,
herein certified has been duly adopted in the manner and by the vote
prescribed by Section 242 of the General Corporation Law of the State of
Delaware.
-22-
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused its corporate
seal to be affixed hereto and this certificate be signed by its President and
attested by its Assistant Secretary this day of , 1997.
CISTRON BIOTECHNOLOGY, INC.
By:_________________________________
Bruce C. Galton
President
Attest:
By:_________________________________
-23-
<PAGE>
[FRONT OF PROXY CARD]
PROXY CISTRON BIOTECHNOLOGY, INC.
THIS PROXY IS BEING SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints BRUCE C. GALTON and ISIDORE
S. EDELMAN, M.D., and each of them, proxies, each with the power of
substitution, to vote the shares of the undersigned at the Annual Meeting of
Stockholders of Cistron Biotechnology, Inc. on January 7, 1998, and any
adjournments and postponements thereof, upon all matters as may properly come
before the Annual Meeting. Without otherwise limiting the foregoing general
authorization, the proxies are instructed to vote as indicated herein.
PLEASE COMPLETE, DATE AND SIGN ON THE REVERSE SIDE AND
MAIL IN THE ENCLOSED ENVELOPE.
[BACK OF PROXY CARD]
Please mark
your votes
as in this
example.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR MATTERS (1), (2), (3) and (4)
LISTED BELOW, TO COME BEFORE THE ANNUAL MEETING:
(1) TO ELECT A BOARD OF FIVE (5) DIRECTORS,
FOR WITHHOLD AUTHORITY
(except as marked to the to vote for all five (5)
contrary below) all five (5) nominees listed below
nominees listed below
[ ]
[ ]
Bruce C. Galton, Isidore S. Edelman, M.D., Thomas P. Carney, Ph.D.,
Frank G. Stout and Robert W. Naismith, Ph.D.
To WITHHOLD AUTHORITY to vote for any individual nominee(s), print such
nominee's name below:
<PAGE>
- -------------------------------------------------------------------------------
(2) To approve the Company's 1997 Incentive and Non-Incentive Stock
Option Plan, under which an aggregate of 1,200,000 shares of Common
Stock of the Company will be reserved for issuance upon exercise of
options granted thereunder;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(3) To approve an amendment to the Company's Certificate of Incorporation
authorizing 5,000,000 shares of preferred stock;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(4) To ratify the reappointment of Deloitte & Touche LLP as independent
auditors of the Company for the year ending June 30, 1998; and
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(5) Upon any and all other business that may come before the Annual
Meeting.
Check here if you plan to attend the Annual Meeting of Stockholders. [ ]
THIS PROXY, WHICH IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS, WILL BE VOTED FOR THE MATTERS DESCRIBED IN PARAGRAPHS (1), (2), (3)
and (4) UNLESS THE STOCKHOLDER SPECIFIES OTHERWISE, IN WHICH CASE IT WILL BE
VOTED AS SPECIFIED.
SIGNATURE(S): DATE 1997
------------------------------------- --------------
Note: Executors, Administrators, Trustees, etc.
should give full title.
