PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
(Amendment No. )
[ X ] Filed by the Registrant
[ ] 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 sec. 240.14a-11(c) or sec.
240.14a-12
SEPRAGEN CORPORATION
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement if other than Registrant)
Payment of Filing Fee:
[ X ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-
6(j)(2) or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1) Title of each class of securities to which transaction
applies: N/A
2) Aggregate number of securities to which transaction
applies:N/A
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11: N/A
4) Proposed maximum aggregate value of transaction: N/A
5) Total Fee Paid: N/A
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or
Schedule and the date of its filing.
1) Amount Previously Paid: N/A
2) Form, Schedule or Registration Statement No.: N/A
3) Filing Party: N/A
4) Date Filed: N/A
<PAGE>
SEPRAGEN CORPORATION
30689 Huntwood Avenue
Hayward, California 94544
NOTICE OF 1996 ANNUAL MEETING OF SHAREHOLDERS
The 1996 Annual Meeting of Shareholders of Sepragen Corporation
(the "Company") will be held at the principal offices of the Company at
30689 Huntwood Avenue, Hayward, California 94544, on June 28, 1996 at
3:30 p.m., Pacific Standard Time, for the following purposes:
1. To elect a Board of Directors for the ensuing year
(the Board has nominated Vinit Saxena, Armin Ramel, Werner
Kofod Nielsen and Robert Leach);
2. To approve the 1996 Stock Option Plan in the form
attached hereto and the issuance of stock options to officers
and directors of the corporation pursuant to said plan;
3. To consider and act upon a proposal to approve the
appointment of Coopers & Lybrand L.L.P. as the independent
accountants of the Company for the fiscal year ending December
31, 1996; and
4. To transact such other business as may properly come
before the meeting or any adjournments thereof.
The stock transfer books of the Company will not be closed, but
only holders of Common Stock of record at the close of business on May
31, 1996 will be entitled to vote at the meeting.
Your proxy is enclosed. You are cordially invited to attend the
meeting, but if you do not expect to attend, or if you plan to attend
but desire the proxyholder to vote your shares, please date and sign
your proxy and return it in the enclosed postage paid envelope. The
giving of this proxy will not affect your right to vote in person in
the event you find it convenient to attend.
For the Board of Directors,
/s/ Vinit Saxena
Vinit Saxena
Chairman of the Board and
Chief Executive Officer
June 14, 1996<PAGE>
SEPRAGEN CORPORATION
30689 Huntwood Avenue
Hayward, California 94544
PROXY STATEMENT
FOR 1996 ANNUAL MEETING TO BE HELD
June 28, 1996
Your proxy is solicited on behalf of the Board of Directors of
Sepragen Corporation (the "Company") for use at the annual meeting of
shareholders to be held at 3:30 p.m., Pacific Standard Time, on June 28,
1996 at the principal offices of the Company, 30689 Huntwood Avenue,
Hayward, California 94544. If a proxy in the accompanying form is duly
executed and returned, the shares represented by the proxy will be voted
as directed. If no direction is given, the shares will be voted for the
election of the four nominees for Director named herein, for the
approval of the 1996 Stock Option Plan and issuance of stock options to
the identified officers and directors, and for the approval of Coopers &
Lybrand L.L.P. as the Company's independent accountants for the fiscal
year ending June 30, 1996. Votes will be tallied by an inspector of
election at the annual meeting. Pursuant to state law and the bylaws of
the Company, abstentions and broker no-votes will have the same effect
as votes against any proposals presented at the meeting. However, an
affirmative vote that does not specify the number of affirmative votes
and abstentions will be presumed to be all affirmative votes. A proxy
given by a shareholder may be revoked at any time before it is exercised
by notifying the Secretary of the Company in writing of such revocation,
by giving another proxy bearing a later date or by voting in person at
the meeting.
The cost of this solicitation of proxies will be borne by the
Company. Solicitations will be made by mail. In addition, the officers
and regularly engaged employees of the Company may, in a limited number
of instances, solicit proxies personally or by telephone. The Company
will reimburse banks, brokerage firms, other custodians, nominees and
fiduciaries for reasonable expenses incurred in sending proxy materials
to beneficial owners of Class A, B and E Common Stock of the Company.
June 14, 1996, is the approximate date on which this proxy statement is
first being sent to shareholders.
The Company's Annual Report including financial statements for its
fiscal year ended December 31, 1995 is being mailed to all shareholders
concurrently herewith. The Annual Report is not part of the proxy
materials.
Holders of Common Stock of record at the close of business on May
31, 1996 will be entitled to vote at the meeting. There were 2,070,00
shares of Class A Common Stock, 786,431 shares of Class B Common Stock
and 1,209,894 shares of Class E Common Stock outstanding at that time.
Each share of Class A Common Stock is entitled to one vote and each
share of Class B and E Common Stock is entitled to five votes. A
majority of the outstanding shares of Common Stock entitled to vote is
necessary to constitute a quorum for the meeting. Shareholders have
cumulative voting rights in the election of Directors. Under the
cumulative voting method a shareholder may multiply the number of shares
owned by the number of Directors to be elected and cast this total
number of votes for any one candidate or distribute the total number of
votes in any proportion among as many candidates as the shareholder
desires. A shareholder may not cumulate his or her votes for a
candidate unless such candidate's name has been placed in nomination
prior to the voting and unless a shareholder has given notice at the
meeting prior to the voting of his or her intention to cumulate his or
her votes. If any shareholder gives such notice, all shareholders may
then cumulate their votes.
ELECTION OF DIRECTORS
The Company's Directors are elected annually to serve until the
next annual meeting of shareholders and thereafter until their
successors are elected. The number of Directors presently authorized by
the Bylaws of the Company is five. Unless otherwise directed by
shareholders, the proxyholder will vote all shares represented by
proxies held by him for the election of the maximum number of the
following nominees, all of whom are now members of and constitute the
Company's Board of Directors. The Company is advised that all of the
nominees have indicated their availability and willingness to serve if
elected. In the event that any nominee becomes unavailable or unable to
serve as a Director of the Company prior to the voting, the proxyholder
will vote for a substitute nominee in the exercise of his best judgment.
The following table sets forth the name and age of each nominee,
the year in which each nominee first became a Director of the Company,
other offices and positions, if any, which each nominee holds with the
Company or his or her principal occupation, and the names of other
publicly held companies of which each nominee serves as a director:
Name, Offices and Position First
with the Company or Principal Became a
Occupation and Directorships Age Director
Vinit Saxena 40 1985
President, Chief Executive Officer, Chief
Financial Officer, Chairman of the Board
and Director of the Company since 1985.
He is the inventor of the Company's
original radial flow chromatography
technology. His background includes
several years as a biochemical engineer,
product marketing manager, and most
recently as a product marketing manager
for industrial chromatography with Bio-Rad
Laboratories (from 1980-1984) and a
manager of production and bioengineering
for Bio-Response (now Baxter Healthcare)
(from 1984-1985). Mr. Saxena has an M.S.
in Chemical Engineering from Syracuse
University and an M.B.A. from the
University of California at Berkeley. Mr.
Saxena also serves as a director of Scan
Incorporated of Mountain View, California,
a privately-held artificial intelligence
medical imaging company.
Armin Ramel* 70 1986
Director of the Company in September 1986 and
was elected as Secretary of the Company as
of October 1, 1995. He has been employed
since July 1993 as Vice President of
Product Development of Scios Nova Inc., a
publicly-held biotechnical company. From
November 1982 to June 1993, Dr. Ramel was
employed by Genentech, his last position
there being Senior Director of the Process
Science Division from April 1991 to June
1993. From 1969 to October 1982, Dr.
Ramel was employed in various positions at
Hoffmann - La Roche, Inc., his last
position there being Director of the
Biopolymer Research Department from 1977,
to October 1982. Prior to 1969, he was a
professor at the University of Basel,
Switzerland and State University of New
York at Buffalo. Dr. Ramel holds a Ph.D.
in physical chemistry from the University
of Basel.
Werner Nielsen* 50 1992
Director of the Company in December 1992. He
has been employed since 1986 as a
Technical Director by APV Pasilac AS
("APV"), a Danish subsidiary of APV plc
that constructs processing facilities for
the food, beverage and dairy industry.
Mr. Nielsen was appointed Technical
Director of APV's Liquid Food Division in
1992. From 1970 to 1985, Mr. Nielsen was
employed in various positions by The
Danish Sugar Corporation A/S, his last
position there being Vice President in
charge of membrane filtration. Mr.
Nielsen received an M.Sc. in Chemistry
from The Technical University of Denmark
in 1970.
Robert Leach* 52 1995
Director of the Company since October 1, 1995.
Since 1992, Mr. Leach has been involved in
consulting and management responsibilities
for four start-up technology development
stage companies. Since September 1995, he
has been the Chief Operating Officer of
the U.C.S.D CONNECT Program in Technology
and Entrepreneurship. Prior to the
CONNECT position, Mr. Leach's activities
included: (i) Hemagen Pfc/Ltd. of San
Francisco, California, a company engaged
in development of drug delivery and
diagnostic imaging technology, where Mr.
Leach served as President from July of
1992 to February of 1993; (ii) Chromaxome
Corporation of San Diego, California, a
company developing chemical agents from
natural oceanic sources for application to
the drug industry, where Mr. Leach has
been Chairman of the Board since March of
1995; (iii) Synzyme Corporation of Irvine,
California, a company engaged in
developing products for the detoxification
of blood substitutes where Mr. Leach
served as Chief Executive Officer from
July of 1994 to December of 1994; and (iv)
Exogene Corporation of Monrovia,
California, a company researching
metabolic engineering technology, where
Mr. Leach served as Chief Executive
Officer and Chairman of the Board from
February of 1993 to March of 1994. Mr.
Leach was retained to facilitate a
restructuring or sale of Exogene
Corporation. The assets of Exogene
Corporation were acquired by Parnassus,
Inc. in March of 1994 and Mr. Leach
resigned as an officer and director in
March of 1994. Subsequent to his
resignation, Parnassus, Inc. filed for
protection under Chapter 7 of the
Bankruptcy Code in September 1994 and
Exogene Corporation filed for bankruptcy
protection under Chapter 7 of the
Bankruptcy Code in December 1994. From
1990 to 1992, Mr. Leach was President and
Chief Executive Officer of Genencor
International of Rochester, New York, the
second largest worldwide enzyme producer.
From 1982 through 1990, Mr. Leach was
President and Chief Executive Officer of
Genencor, Inc. of South San Francisco,
California, a company involved in
producing non-drug recombinant DNA
products and the development of protein
engineering techniques. Genencor, Inc.
was acquired by Eastman Kodak Company and
Cultor, Ltd. in 1990. Mr. Leach has a BS
degree in Chemistry and an MBA from
Pennsylvania State University and is a
member of the American Chemical Society,
the American Institute of Chemical
Engineers, and is a former chairman of the
California Biotechnology Association. Mr.
Leach also serves on the Board of
Directors of Genomyx Corporation of Foster
City, California, since 1988, a company
engaged in manufacturing sequencing
instrumentation for the biotechnology
industry.
* Member of the Compensation Committee and Audit Committee.
OTHER EXECUTIVE OFFICERS OF THE COMPANY
QUIRIN MIRANDA 56 n/a
Vice President of Corporate Research of the
Company since October 1991. From February
1989 until December 1990, he co-founded
and served as President of Food Services
Corporation, a research company involved
in developing microbiological processes
for removing cholesterol from various
foods. During his association with Food
Services Corporation, Dr. Miranda
developed an enzyme-based technology to
remove cholesterol from food products.
Dr. Miranda was elected as a fellow of the
American Academy of Microbiology in 1979.
Dr. Miranda has over 20 years experience
in product development in the
pharmaceutical and diagnostic industries
during which time he was associated with
Schering-Plough, Organon Diagnostics, IDT
(a division of Boehringer Ingelheim),
International Immunoassay Laboratories,
and DDI Pharmaceuticals. He has a Ph.D.
in microbiology from the Victoria
University of Manchester in the United
Kingdom. Dr. Miranda is a Fellow of the
American Academy of Microbiology and the
American Institute of Chemists.
Mr. H. Michael Schneider resigned as secretary and director of the
Company effective October 1, 1995 to devote more time to his other
business interests. Allan Waitz, Ph.D. resigned as a director of the
Company also effective October 1, 1995 to devote more time to both
personal and business interests. Pursuant to the bylaws of the Company,
and in order to fill one of the vacancies on the Board of Directors, the
Board of Directors elected Robert Leach to serve on the Board of
Directors of the Company until a successor has been duly elected and
qualified.
The Company has one vacancy on the Board of Directors, which
vacancy will be filled by either a vote of the shareholders at a special
shareholders meeting or by approval of the Board of Directors prior to
the Company's annual meeting in June of 1996. As of this date, no
candidates have been nominated for the director's position by management
or any shareholder. The Board of Directors has filled the position of
corporate secretary created by the resignation of H. Michael Schneider
by appointing Dr. Armin Ramel, a director of the Company, to also serve
as secretary of the Company.
The Company is currently seeking to employ a Vice President of
Manufacturing, Vice President of Marketing and Sales and Chief Financial
Officer. Although the Company has had discussions regarding such
employment with certain individuals, no assurance can be given that the
Company will be able to employ any of these or other individuals for
these positions.
All directors hold office until the next annual meeting of
shareholders and the election and qualification of their successors.
Directors receive compensation for serving on the Board of Directors as
described below. Pursuant to the Underwriting Agreement with Blair, the
Company is required to appoint a nominee of Blair to the Board of
Directors for a period of five years from March 23, 1995. Blair has not
yet selected such a designee.
The Company has established audit and compensation committees, a
majority of whose members must be non-employee directors. Dr. Ramel,
Mr. Leach and Mr. Nielson serve on the audit and compensation
committees. Officers are elected annually by the Board of Directors
and serve at the discretion of the Board (and in the case of Mr. Saxena
and Dr. Miranda, pursuant to their employment agreements).
The Audit Committee of the Board of Directors recommends accounting
policies to the Board, meets annually with the Company's independent
auditors and oversees generally the financial controls and practices of
the Company. The Compensation Committee, makes recommendations to the
Board with regard to compensation of directors, officers and other key
employees of the Company.
At the present time, the Company has no standing nominating
committee of the Board of Directors and nominations are made by and
through the Executive Committee. During fiscal 1995, the Board of
Directors held five meetings and one Audit committee meeting. Each
Director attended at least 75% of the Board and committee meetings held
during the term of their office, except for Werner Nielsen who attended
one meeting.
Indemnification
Pursuant to the Company's Articles of Incorporation, as amended,
Bylaws and certain written agreements dated October 27, 1994, officers
and directors of the Company will be indemnified by the Company to the
fullest extent allowed under California law for claims brought against
them in their capacities as officers or directors. The Company has
elected not to obtain directors' and officers' liability insurance at
this time. No assurance can be given that the Company will be able to
obtain such insurance at a price the Board of Directors determines is
reasonable. Indemnification will not be provided if the officer or
director does not act in good faith and in a manner reasonably believed
to be in the best interests of the Company, or, with respect to any
criminal proceedings, if the officer or director had no reasonable cause
to believe his conduct was lawful. Accordingly, indemnification may be
sought for liabilities arising under the Securities Act. Insofar as
indemnification for liabilities arising under the Securities Act may be
permitted for directors, officers and controlling persons of the Company
pursuant to the foregoing provisions or otherwise, the Company has been
advised that in the opinion of the Securities and Exchange Commission,
such indemnification is against public policy as expressed in the
Securities Act and may, therefore, be unenforceable.
Compensation of Directors
Members of the Board of Directors who are not employees of the
Company will receive an annual cash fee of $3,000 plus $500 for each
meeting of the Board of Directors and any of its committees attended by
such director, and will also be entitled to reimbursement of reasonable
expenses incurred in attending such meetings.
1996 STOCK OPTION PLAN
The Directors of the Company have directed that the proposal to
approve the Company's 1996 Stock Option Plan attached hereto and
incorporated by reference as Exhibit A (the "1996 Plan") and related
issuance of stock options to officers and directors of the corporation
pursuant to said plan be submitted for shareholder authorization at the
Company's 1996 annual meeting.
The 1996 Plan provides for the grant of incentive stock options
("ISOs") within the meaning of Section 422 of the Internal Revenue Code
of 1986, as amended (the "Code"), and non-qualified stock options
("NQSOs") to certain employees, officers, directors, consultants and
agents of the Company. The purpose of the 1996 Plan is to attract and
retain qualified employees, agents, consultants, officers and directors.
At May 20, 1996, the Company had 21 full-time employees and one part-
time employee.
The total number of shares of Class A Common Stock with respect to
which options may be granted under the 1996 Plan is 250,000 of which a
maximum of 100,000 shares may be granted to directors and executive
officers of the Company. The shares subject to, and available under,
the 1996 Plan may consist, in whole or in part, of authorized but
unissued stock or treasury stock not reserved for any other purpose.
Any shares subject to an option that terminates, expires or lapses for
any reason, and any shares purchased upon exercise of an option and
subsequently repurchased by the Company pursuant to the terms of the
option, become available for grant under the 1996 Plan. As of May 20,
1996, the average of the highest and lowest bid prices of a share of
Class A Common Stock as reported on the NASDAQ SmallCap market was $3.50
per share.
The 1996 Stock Option Plan is administered by the Board of
Directors of the Company, which determines, in its discretion, among
other things, the recipients of grants, whether a grant will consist of
ISOs or NQSOs, or a combination thereof, and the number of shares of
Common Stock to be subject to such options. The Board may, in its
discretion, delegate its power, duties and responsibilities under the
1996 Plan to a committee consisting of two or more directors who are
"disinterested persons" within the meaning of Rule 16b-3 promulgated
under the Exchange Act. The exercise price for ISOs must be at least
100% of the fair market value per share of Common Stock on the date of
grant, as determined by the Board. ISOs are not transferable other than
by will or the laws of descent and distribution. NQSOs may be
transferred to the optionee's spouse or lineal descendants, subject to
certain restrictions. Options may be exercised during the holder's
lifetime only by the holder or his or her guardian or legal
representative.
Options may be exercisable for a term determined by the Board,
which may not be less than one year or greater than 10 years from the
date of grant. No options may be granted under the 1996 Plan later than
10 years after the 1996 Plan's effective date as of the date of
shareholder approval. ISOs are not transferable other than by will or
the laws of descent and distribution. NQSOs may be transferred to the
optionee's spouse or lineal descendants, subject to certain
restrictions. Options may be exercised during the holder's lifetime
only by the holder or his or her guardian or legal representative.
Options may be exercised only while the original optionee has a
relationship with the Company which confers eligibility to be granted
options or within 90 days after termination of such relationship with
the Company, or up to six months after death or total and permanent
disability. In the event the Company terminates such relationship
between the original optionee and the Company for cause (as defined in
the 1996 Plan), all options granted to the optionee terminate
immediately. In the event of certain basic changes in the Company,
including a change in control of the Company (as defined in the 1996
Plan), at the discretion of the Board, the Board may make certain
adjustments to the outstanding stock options.
The 1996 Plan contains certain limitations applicable only to ISOs
granted thereunder to satisfy specific provisions of the Code. For
example, the aggregate fair market value, as of the date of grant, of
the shares to which ISOs become exercisable for the first time by an
optionee during the calendar year may not exceed $100,000. In addition,
if an optionee owns more than 10% of the Company's stock at the time the
individual is granted an ISO, the exercise price per share cannot be
less than 110% of the fair market value per share and the term of the
option cannot exceed five years.
Options may be paid for in cash, by check or, in certain instances,
by delivering an assignment of shares of Common Stock having a value
equal to the option price, or any combination of the foregoing, as
stipulated in the option agreement entered into between the Company and
the optionee. At the discretion of the Board, the Company may loan to
the optionee some or all of the purchase price of the shares acquired
upon exercise of an option granted under the 1996 Plan.
The Board may modify, suspend or terminate the 1996 Plan; provided,
however, that certain material modifications affecting the 1996 Plan
must be approved by the shareholders, and any change in the 1996 Plan
that may adversely affect an optionee's rights under an option
previously granted under the 1996 Plan requires the consent of the
optionee.
Neither the receipt nor the exercise of an ISO is a taxable event,
and if the optionee does not dispose of stock acquired under an ISO
prior to the expiration of the requisite holding periods, any gain
resulting from the sale of the stock is long term capital gain. In such
case, the Company is not entitled to any tax deduction with respect to
the grant or the exercise of the option. However, the amount by which
the fair market value of shares at the time of exercise of the option
exceeds the option price will constitute an item of tax preference for
purposes of the alternative minimum tax. The statutory holding period
is at least two years from the date the ISO is granted and one year from
the date the optionee receives his shares of Common Stock pursuant to
the exercise. If the stock is disposed of before the end of the
statutory holding period, the lesser of the difference between the
exercise price and the fair market value of the stock on the date of
exercise or the total amount of gain realized on the sale must be
reported by the optionee as ordinary income and the Company is entitled
to a tax deduction for that amount. The remaining gain, if any, is
taxed to the optionee as long or short term capital gain.
The receipt of a NQSO issued under the 1996 Plan will not result in
any taxable income to the optionee or a tax deduction to the Company at
the time the option is granted. Generally, the optionee will recognize
ordinary income at the time the NQSO is exercised in an amount equal to
the excess of the fair market value on the date of exercise of the
shares received over the exercise price, and the Company will be
entitled to a tax deduction of an equal amount in the year the optionee
recognizes such income. The optionee will have a tax basis for his
shares equal to their fair market value at the time the optionee
recognizes ordinary income and any additional gain or loss recognized by
the option on disposition of the shares will generally be a short or
long term capital gain or loss and will not result in any additional tax
deduction to the Company.
To become effective, the 1996 Plan requires the affirmative vote of
a majority of votes cast by the Common Stock of the Company represented
at the meeting in person or by proxy.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR
THE PROPOSAL TO APPROVE THE 1996 STOCK OPTION PLAN.
The Board has proposed to the shareholders of the Company the 1996
Stock Option Plan which reserves up to 100,000 shares under the Plan for
issuance to the officers and directors of the Company.
NEW PLAN BENEFITS
1996 Stock Option Plan
Name and Title Dollar Value(1) Units
All directors and current
executive officers as a group $350,000 100,000
(maximum)
All employees, as a group $875,000 250,000
(less shares granted
to officers and directors.)
(1) Based on per share exercise price of $3.50.
Securities Ownership
The following table sets forth certain information as to the
beneficial ownership of the Company's Common Stock as of March 29, 1996
of: (i) each person who is known by the Company to own beneficially more
than 5% of the outstanding shares of the Company's Common Stock, (ii)
each director of the Company and (iii) all officers and directors of the
Company as a group.
Number
of Shares
Name and Address of of Class A Percentage of
Beneficial Owner Common Stock Common Stock Percentage
Beneficially Beneficially of Voting
or Number in Group Owned (1) Owned (1) Power
Vinit Saxena (2) 937,049 20.5% 35.5%
30689 Huntwood Avenue
Hayward, CA 94544
Michael Schneider (3) 1,106,698 24.2% 31.2%
2081 Bay Road
East Palo Alto, CA 94303
Armin Ramel, Ph.D. (4) 52,997 1.2% n/a
4 Sandstone
Portola Valley, CA 94028
Werner Kofod Nielsen (5) 2,246 (6) n/a
APV Pasilac AS
2, Europlads
DK - 8100 Aarhus C, Denmark
Quirin Miranda (7) 16,984 .4% n/a
30689 Huntwood Avenue
Hayward, CA 94544
All directors and
executive officers as
a group (5 in number) 2,115,974 46.3% 66.7%
(1) Except as otherwise indicated, each of the parties listed has sole
voting and investment power with respect to all shares of Common
Stock indicated below. Beneficial ownership is calculated in
accordance with Rule 13d-3(d) under the Securities Exchange Act of
1934, as amended. The Company has three classes of equity
securities outstanding, Class A, Class B and Class E Common Stock.
Amounts and percentages do not include shares of Class A Common
Stock issuable upon the exercise of options which are not
exercisable within 60 days of the date of this statement. See "1994
Stock Option Plan."
(2) Amounts and percentages include (i) 296,281 shares of Class B
Common Stock and 455,826 shares of Class E Common Stock each of
which are convertible into one share of Class A Common Stock (each
share of Class B and E Common Stock has five votes per share); (ii)
vested options to purchase 178,324 shares of Class A Common Stock
granted under the Company's 1994 Stock Option Plan; (iii) vested
options to purchase 983 shares of Class B Common Stock and 1,512
shares of Class E Common Stock at an exercise price of $3.00 per
share and 997 shares at $10.00 per share and (iv) vested options to
purchase 2,625 shares of Class A Common Stock held by Renu Saxena,
an employee of Sepragen and the spouse of Vinit Saxena; and (v)
14,984 shares owned jointly by Renu Saxena and Rakesh Chabra (Renu
Saxena's brother). See "1994 Stock Option Plan." The Company has
a right to repurchase shares from Mr. Saxena upon exercise of
certain options. See "Certain Relationships and Related
Transactions--Founder's Stock Repurchase Agreement."
(3) Amounts and percentages include (i) 75,432 shares of Class B Common
Stock and 116,051 shares of Class E Common Stock; (ii) 262,051
shares of Class B Common Stock and 403,164 shares of Class E Common
Stock beneficially owned by Mr. Schneider or by Romic Environmental
Technologies Corporation, of which Mr. Schneider is Chairman of the
Board and a principal shareholder, (iii) 150,000 shares issuable
under an option held by Romic, and (iv) 50,000 Class A Warrants.
See "Management" and "Certain Relationships and Related
Transactions--Relationship with Romic Environmental Technologies
Corporation."
(4) Amounts and percentages include 25,000 Class A Warrants and vested
options to purchase 2,997 shares of Class A Common Stock granted
under the Company's 1994 Stock Option Plan.
(5) Amounts and percentages include: (i) shares issuable upon exercise
of vested options to purchase 885 shares of Class B Common Stock
and 1,361 shares of Class E Common Stock at an exercise price of
$10.00 per share.
(6) Less than .1%.
(7) Amounts and percentages include vested options to purchase 16,984
shares of Class A Common Stock granted under the Company's 1994
Stock Option Plan.
EXECUTIVE COMPENSATION
Employment Agreements
On August 30, 1994, the Company entered into employment agreements
with Mr. Vinit Saxena as its President and Chief Executive Officer, and
Dr. Q. R. Miranda its Vice President of Corporate Research. The
agreements are for a six-year term in the case of Mr. Saxena and a
three-year term in the case of Dr. Miranda. Mr. Saxena and Dr. Miranda
are to receive salaries of $125,000 and $90,000 per annum, respectively,
with annual adjustments for inflation, plus bonuses up to $25,000 and
$18,000 per annum, respectively. Such compensation may be increased and
bonuses may be given upon the approval of the Board of Directors of the
Company. Mr. Saxena and Dr. Miranda have each agreed to devote their
full time and efforts to their employment with the Company. Each of
them will be entitled to participate in employee benefit plans.
The Company has the right to terminate either agreement for cause
or as a result of death or permanent disability. Except in the case of
termination for cause, upon early termination of their agreements, Mr.
Saxena and Dr. Miranda will be entitled to receive their salary plus
fringe benefits for a period of 36 months and 12 months, respectively,
from the date of termination and any bonuses prorated through the date
of termination, so long as they do not violate the nondisclosure and
nonsolicitation provisions of their agreements; provided, however, any
salary and benefits to be received after termination will be reduced by
any salary and benefits such persons receive from any successor position
during the post-termination payment periods.
Mr. Saxena and Dr. Miranda have agreed not to disclose to anyone
confidential information of the Company during the term of their
employment or thereafter and will not compete with the Company during
the term of their employment. All work, research and results thereof,
including, without limitation, inventions, processes or formulae,
conceived or developed by Mr. Saxena or Dr. Miranda during the term of
employment which are related to the business, research, and development
work or field of operation of the Company shall be the property of the
Company.
Key-Person Life Insurance
The Company has obtained key-person life insurance coverage in the
face amount of $2,000,000 on both Mr. Saxena and Dr. Miranda naming the
Company as beneficiary under such policies. The Company has agreed with
Blair to maintain such policies in force for at least three years from
March 23, 1995.
1994 Stock Option Plan
On August 30, 1994, the Board of Directors and the shareholders of
the Company adopted and approved the 1994 Stock Option Plan. The 1994
Stock Option Plan provides for the grant of incentive stock options
("ISOs") within the meaning of Section 422 of the Internal Revenue Code
of 1986, as amended (the "Code"), and non-qualified stock options
("NQSOs") to certain employees, officers, directors, consultants and
agents of the Company. The purpose of the 1994 Stock Option Plan is to
attract and retain qualified employees, agents, consultants, officers
and directors.
The total number of shares of Class A Common Stock with respect to
which options may be granted under the 1994 Stock Option Plan is
400,000. The shares subject to, and available under, the 1994 Stock
Option Plan may consist, in whole or in part, of authorized but unissued
stock or treasury stock not reserved for any other purpose. Any shares
subject to an option that terminates, expires or lapses for any reason,
and any shares purchased upon exercise of an option and subsequently
repurchased by the Company pursuant to the terms of the options, become
available for grant under the 1994 Stock Option Plan.
The 1994 Stock Option Plan is administered by the Board of
Directors of the Company, which determines, in its discretion, among
other things, the recipients of grants, whether a grant will consist of
ISOs or NQSOs, or a combination thereof, and the number of shares of
Class A Common Stock to be subject to such options. The Board may, in
its discretion, delegate its power, duties and responsibilities under
the 1994 Stock Option Plan to a committee consisting of two or more
directors who are "disinterested persons" within the meaning of Rule
16b-3 promulgated under the Exchange Act. The exercise price for ISOs
must be at least 100% of the fair market value per share of Class A
Common Stock on the date of grant, as determined by the Board. ISOs are
not transferable other than by will or the laws of descent and
distribution. NQSOs may be transferred to the options spouse or lineal
descendants, subject to certain restrictions. Options may be exercised
during the holder's lifetime only by the holder or his or her guardian
or legal representative.
Options may be exercisable for a term determined by the Board,
which may not be less than one year or greater than 10 years from the
date of grant. No options may be granted under the 1994 Stock Option
Plan later than 10 years after the 1994 Stock Option Plan's effective
date of August 30, 1994. ISOs are not transferable other than by will
or the laws of descent and distribution. NQSOs may be transferred to
the optionee's spouse or lineal descendants, subject to certain
restrictions. Options may be exercised during the holder's lifetime
only by the holder or his or her guardian or legal representative.
Options may be exercised only while the original optionee has a
relationship with the Company which confers eligibility to be granted
options or within 90 days after termination of such relationship with
the Company, or up to six months after death or total and permanent
disability. In the event the Company terminates such relationship
between the original optionee and the Company for cause (as defined in
the 1994 Stock Option Plan), all options granted to the optionee
terminate immediately. In the event of certain basic changes in the
Company, including a change in control of the Company (as defined in the
1994 Stock Option Plan), at the discretion of the Board, the Board may
make certain adjustments to the outstanding stock options.
The 1994 Stock Option Plan contains certain limitations applicable
only to ISOs granted thereunder to satisfy specific provisions of the
Code. For example, the aggregate fair market value, as of the date of
grant, of the shares to which ISOs become exercisable for the first time
by an optionee during the calendar year may not exceed $100,000. In
addition, if an optionee owns more than 10% of the Company's stock at
the time the individual is granted an ISO, the exercise price per share
cannot be less than 110% of the fair market value per share and the term
of the option cannot exceed five years.
Options may be paid for in cash, by check or, in certain instances,
by delivering an assignment of shares of Class A Common Stock having a
value equal to the option price, or any combination of the foregoing, as
stipulated in the option agreement entered into between the Company and
the optionee. At the discretion of the Board, the Company may loan to
the optionee some or all of the purchase price of the shares acquired
upon exercise of an option granted under the 1994 Stock Option Plan.
The Board may modify, suspend or terminate the 1994 Stock Option
Plan; provided, however, that certain material modifications affecting
the 1994 Stock Option Plan must be approved by the shareholders, and any
change in the 1994 Stock Option Plan that may adversely affect an
options rights under an option previously granted under the 1994 Stock
Option Plan requires the consent of the optionee.
As of March 15, 1996, the Company had the following outstanding
options to purchase shares of Class A Common Stock at $5.00 per share to
the following directors and executive officers. The option granted to
Mr. Leach becomes exercisable at the rate of 25% over four years
beginning October 20, 1996 and expires October 20, 2000. All other
options vested and became fully exercisable on July 1, 1995 and remain
exercisable until March 23, 2005 as long as the optionee remains as a
director, officer or employee with the Company. Dr. Miranda's and Mr.
Leach's options are ISOs; the other options shown are NQSOs.
Number of Shares
Name
Subject to Option
Mr. Saxena ..... 178,324
Dr. Ramel ............... 2,997
Dr. Miranda .............16,984
Robert Leach .............10,000
Total ..........208,305
During 1995, the Company also granted incentive stock options to
purchase 182,425 shares of Class A Common Stock to 26 employees who are
not executive officers or directors of the Company at exercise price of
$5.00 per share.
Outstanding Stock Options
In addition to the shares of Class A Common Stock with respect to
which options may be granted under the Company's 1994 Stock Option Plan,
the Board of Directors of the Company has granted nonqualified options
to various investors and current and former directors, employees,
scientific advisors and consultants to the Company to purchase an
aggregate of 72,895 shares of Class B Common Stock and 112,140 shares of
Class E Common Stock at a weighted average exercise price of $5.51 per
share, of which options covering 70,997 shares of Class B Common Stock
and 109,221 shares of Class E Common Stock shares were vested as of
March 15, 1996 with a weighted average exercise price of $5.39 per share
401(k) Profit Sharing Plan
In 1995, the Company adopted a 401(k) profit sharing plan under
which employees may defer a portion of their salary. The Plan did not
become effective until 1996 and no deferrals or contributions were made
in 1995.
Summary Compensation Table
The following table sets forth all compensation paid for the past
three fiscal years to the chief executive officer and to executive
officers whose cash compensation exceeded $100,000 during the fiscal
year ended December 31, 1995.
Annual Compensation Long Term Compensation
(a) (b) (c) (d) (g)
Securities
underlying
Name and Principal Salary Options/
Position Year (1)(2) Bonus SARs(#)
Vinit Saxena,
President, Chief
Executive Officer 1995 $118,044 $25,000 178,324
and Chief 1994 $67,018 -- --
Financial Officer 1993 $64,116 -- --
Quirin Miranda
Vice President 1995 $88,867 $18,000 16,984
of Corporate 1994 $50,999 -- --
Research 1993 $46,000 -- --
(1) Includes all amounts paid or accrued. On August 30, 1994, Mr.
Saxena waived all rights to deferred salary of approximately
$40,000. As of April 1995, Mr. Saxena's base salary increased to
$125,000 per year under his new employment agreement. See "Employ-
ment Agreements."
(2) Includes health insurance costs for Mr. Saxena and his family in
the amounts of $7,866, $7,018 and $5,929 during 1993, 1994 and
1995, respectively.
(2) Includes health insurance costs for Mr. Miranda and his family in
the amounts of $5,600, $5,999 and $6,944 during 1993, 1994 and
1995, respectively.
Option/SAR Grants in Last Fiscal Year 1995
Individual Grants
(a) (b) (c) (d) (e)
Percent Exer
of Total cise
Options
SARs or
Options granted to base Expira
/SARs employees in price tion
Name Granted fiscal year ($/Sh) date
Vinit Saxena
President,
Chief Executive
Officer, Chief
Financial Officer
& Chairman
of the Board(1) 178,324 44% $5.00 3/23/05
Quirin Miranda
Vice President
and Director(1) 16,984 4% $5.00 3/23/05
(1) Options authorized on March 23, 1995 and exercisable on July 15,
1995.
Aggregated Option/SAR Exercises in Last Fiscal Year 1995 and
1995 Fiscal Year-End Option/SAR Values
(a) (b) (c) (d) (e)
Number of Value of
Securities Unexrd
Underlying In-the-
Unexercised Money
Shares Options Options
Acquired Value /SARs at /SARs at
on Exercise Realized FY-End(#) FY-End($)
Name (#)(1) ($) UnexExrble Unex Exrble
Vinit Saxena
President, Chief
Executive Officer,
Chief Financial
Officer & Chairman
of the Board 0 $0 -- 178,324 $0 $0(1)
Quirin Miranda
Vice President
and Director 0 $0 -- 16,984 $0 $0(1)
(1) Based on market value of $3.50 per share of Class A Common Stock as
of March 20, 1996.
In the last three fiscal years, the Company has not paid or awarded
any other stock awards, options, stock appreciation rights, or other
long term incentive plan compensation to the executive officers named
above.
The Company has no other retirement, pension, profit sharing or
similar program at the present time. The creation of any such program
will be at the discretion of the Board of Directors of the Company. The
Board of Directors may adopt such employee benefit and executive
compensation plans in the future as it deems advisable and consistent
with the best interests of the shareholders and the financial condition
and potential of the Company.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Founder's Stock Repurchase Agreement
In 1986, the Company entered into a Founder's Stock Repurchase
Agreement (the "Founder's Agreement") with Vinit Saxena, the President,
Chief Financial Officer, Chairman of the Board, and a principal
shareholder of the Company. The purpose of the Founder's Agreement was
to serve as an anti-dilution provision for the benefit of those
investors who purchased shares of Common Stock or acquired stock options
covering shares of Common Stock during the term of the Agreement's
effectiveness.
By its terms, the Founder's Agreement lapsed on March 10, 1989.
However, pursuant to the terms of a Covenant for the Benefit of
Investors dated March 10, 1989, the Company has a continuing right to
repurchase certain shares of Common Stock held by Mr. Saxena upon the
exercise of stock options granted to certain present and former
employees by the Company during the period that the Founder's Agreement
was in effect. As of the date of this Prospectus, the continuing right
of the Company to repurchase such shares covers 1,494 shares of Class B
Common Stock and 2,298 shares of Class E Common Stock, for a total of
3,792 shares, at a repurchase price of $.033 per share.
Relationship with Romic Environmental Technologies Corporation
During 1991 and 1992, Romic advanced the Company the use of an
employee, whose services were valued by the Company at $100,000, and
loaned the Company $225,000. In 1992, the Company converted the in-kind
advance into 13,118 shares of Class B Common Stock and 20,182 shares of
Class E Common Stock at $3.00 per share and converted the $225,000 loan
into 17,710 shares of Class B Common Stock and 27,246 shares of Class E
Common Stock at $5.00 per share. In 1992, Romic also purchased 5,903
shares of Class B Common Stock and 9,081 shares of Class E Common Stock
at $10.01 per share. The founder and Chairman of the Board of Romic is
H. Michael Schneider, former secretary, former director and a
shareholder of the Company. The President of Romic is Peter D.
Schneider, a shareholder of the Company and the son of H. Michael
Schneider. See "Security Ownership."
In 1993, Romic purchased an additional 5,903 shares of Class B
Common Stock and 9,081 shares of Class E Common Stock at $10.01 per
share. In 1993, to cover operating expenses, the Company borrowed
$727,000 from Romic pursuant to an unsecured promissory note bearing
interest at 10% per annum.
On March 23, 1995, the Company issued Romic 57,224 shares of Class
B Common Stock and 88,039 shares of Class E Common Stock in exchange for
cancellation of outstanding indebtedness in the principal amount of
$727,000 and accrued interest of $67,909 thereon owed by the Company to
Romic. As additional consideration for the cancellation of such
indebtedness and accrued interest on such indebtedness, on March 23,
1995, the Company granted Romic an option to purchase 59,090 shares of
Class B Common Stock and 90,910 shares of Class E Common Stock at $5.50
per share. The option is immediately exercisable and terminates
February 15, 2000.
Pursuant to management and consulting agreements with Romic, the
Company and Romic developed certain uses of radial flow chromatography
columns in the environmental remediation field. On April 11, 1995,
Romic assigned all rights to such technology, including pending patent
applications, to the Company.
Bridge Financing
In July 1994, H. Michael Schneider and Armin Ramel loaned the
Company $100,000 and $50,000, respectively (together, the "Shareholder
Loans"). The Shareholder Loans were made to the Company to pay a
portion of the expenses of this offering and for working capital
purposes and bore interest at the rate of 10% per annum. Upon the
closing of the Private Placement in November 1994, the Shareholder Loans
were exchanged for Bridge Notes of the same principal amount and
warrants to purchase 75,000 shares of Class A Common Stock, of which
Messrs. Schneider and Ramel received warrants to purchase 50,000 shares
and 25,000 shares, respectively. Upon the closing the IPO, such
warrants were automatically convert into an aggregate of 75,000 Selling
Securityholders' Warrants. The Company repaid the principal and
interest on the Bridge Notes upon the closing of the IPO. See "Security
Ownership.
INDEPENDENT ACCOUNTANTS
The Directors of the Company have directed that management's pro-
posal to engage Coopers & Lybrand L.L.P. to act as its independent
accountants for the fiscal year ending December 31, 1996 be submitted
for shareholder authorization at the Company's 1996 annual meeting.
Coopers & Lybrand L.L.P. acted for the Company in such capacity for the
fiscal year ended December 31, 1995. Representatives of Coopers &
Lybrand L.L.P. are expected to be present at the annual meeting and will
have the opportunity to make a statement if they desire to do so. They
will also be available to respond to appropriate questions.
SHAREHOLDER PROPOSALS
Shareholder proposals intended to be presented at the 1997 annual
meeting must be received at the Company's principal office no later than
February 14, 1997 in order to be considered for inclusion in the proxy
statement and form of proxy relating to that meeting.
OTHER BUSINESS
The Board of Directors knows of no other matter to be acted upon at
the meeting. However, if any other matter shall properly come before
the meeting, the proxyholder named in the proxy accompanying this
statement will have discretionary authority to vote all proxies in
accordance with his best judgment.
By Order of the Board of Directors,
/s/ Vinit Saxena
Vinit Saxena
Chief Executive Officer
and Chairman of the Board
June 14, 1996
Hayward, California
<PAGE>
EXHIBIT A
SEPRAGEN CORPORATION
1996 STOCK OPTION PLAN
1. Purpose.
The purpose of this plan (the "Plan") is to secure for Sepragen
Corporation (the "Company") and its shareholders the benefits arising from
capital stock ownership by employees, officers and directors of, and
consultants or advisors to, the Company and its subsidiary corporations
who are expected to contribute to the Company's future growth and success.
Except where the context otherwise requires, the term "Company" shall
include all present and future subsidiaries of the Company as defined in
Sections 424(e) and 424(f) of the Internal Revenue Code of 1986, as
amended or replaced from time to time (the "Code"). Those provisions of
the Plan which make express reference to Section 422 shall apply only to
Incentive Stock Options (as that term is defined in the Plan).
2. Type of Options and Administration.
(a) Types of Options. Options granted pursuant to the Plan
shall be authorized by action of the Board of Directors of the Company (or
a Committee designated by the Board of Directors) and may be either
incentive stock options ("Incentive Stock Options") meeting the
requirements of Section 422 of the Code or non-statutory options which are
not intended to meet the requirements of Section 422 of the Code.
(b) Administration. The Plan will be administered by a
committee (the "Committee") appointed by the Board of Directors of the
Company, whose construction and interpretation of the terms and provisions
of the Plan shall be final and conclusive. The delegation of powers to
the Committee shall be consistent with applicable laws or regulations
(including, without limitation, applicable state law and Rule 16b-3
promulgated under the Securities Exchange Act of 1934 (the "Exchange
Act"), or any successor rule ("Rule 16b-3")). The Committee may in its
sole discretion grant options to purchase shares of the Company's Class A
Common Stock ("Common Stock") and issue shares upon exercise of such
options as provided in the Plan. The Committee shall have authority,
subject to the express provisions of the Plan, to construe the respective
option agreements and the Plan, to prescribe, amend and rescind rules and
regulations relating to the Plan, to determine the terms and provisions of
the respective option agreements, which need not be identical, and to make
all other determinations in the judgment of the Committee necessary or
desirable for the administration of the Plan. The Committee may correct
any defect or supply any omission or reconcile any inconsistency in the
Plan or in any option agreement in the manner and to the extent it shall
deem expedient to carry the Plan into effect and it shall be the sole and
final judge of such expediency. No director or person acting pursuant to
authority delegated by the Board of Directors shall be liable for any
action or determination under the Plan made in good faith.
(c) Applicability of Rule 16b-3. Those provisions of the Plan
which make express reference to Rule 16b-3 shall apply to the Company only
at such time as the Company's Common Stock is registered under the
Exchange Act, subject to the last sentence of Section 3(b), and then only
to such persons as are required to file reports under Section 16(a) of the
Exchange Act (a "Reporting Person").
3. Eligibility.
(a) General. Options may be granted to persons who are, at the
time of grant, employees, officers or directors of, or consultants or
advisors to, the Company provided, that Incentive Stock Options may only
be granted to individuals who are employees of the Company (within the
meaning of Section 3401(c) of the Code). A person who has been granted an
option may, if he or she is otherwise eligible, be granted additional
options if the Board of Directors shall so determine.
(b) Grant of Options to Reporting Persons. From and after the
registration of the Common Stock of the Company under the Exchange Act,
the selection of a director or an officer who is a Reporting Person (as
the terms "director" and "officer" are defined for purposes of Rule 16b-3)
as a recipient of an option, the timing of the option grant, the exercise
price of the option and the number of shares subject to the option shall
be determined either (i) by the Board of Directors, of which all members
shall be "disinterested persons" (as hereinafter defined), (ii) by a
committee consisting of two or more directors having full authority to act
in the matter, each of whom shall be a "disinterested persons or (iii)
pursuant to provisions for automatic grants set forth in Section 3(c)
below. For the purposes of the Plan, a director shall be deemed to be a
"disinterested person" only if such person qualifies as a "disinterested
person" within the meaning of Rule 16b-3, as such term is interpreted from
time to time. If at least two of the members of the Board of Directors do
not qualify as a "disinterested person" within the meaning of Rule 16b-3,
as such term is interpreted from time to time, then the granting of
options to officers and directors who are Reporting Persons under the Plan
shall not be determined in accordance with this Section 3(b) but shall be
determined in accordance with the other provisions of the Plan.
(c) Officer's and Director's Options. A maximum of 100,000
option shares may be granted to directors or executive officers under this
plan.
4. Stock Subject to Plan.
The stock subject to options granted under the Plan shall be shares
of authorized but unissued Class A Common Stock. Subject to adjustment as
provided in Section 15 below, the maximum number of shares of Class A
Common Stock of the Company which may be issued and sold under the Plan is
250,000 shares. If an option granted under the Plan shall expire,
terminate or is cancelled for any reason without having been exercised in
full, the unpurchased shares subject to such option shall again be
available for subsequent option grants under the Plan.
5. Forms of Option Agreements.
As a condition to the grant of an option under the Plan, each
recipient of an option shall execute an option agreement in such form not
inconsistent with the Plan as may be approved by the Board of Directors.
Such option agreements may differ among recipients.
6. Purchase Price.
(a) General. The purchase price per share of stock deliverable
upon the exercise of an option shall be determined by the Board of
Directors at the time of grant of such option; provided, however, that in
the case of an Incentive Stock Option, the exercise price shall not be
less than 100% of the Fair Market Value (as hereinafter defined) of such
stock, at the time of grant of such option, or less than 110% of such Fair
Market Value in the case of options described in Section 11(b). "Fair
Market Value" of a share of Common Stock of the Company as of a specified
date for the purposes of the Plan shall mean the closing price of a share
of the Common Stock on the principal securities exchange on which such
shares are traded on the day immediately preceding the date as of which
Fair Market Value is being determined, or on the next preceding date on
which such shares are traded if no shares were traded on such immediately
preceding day, or if the shares are not traded on a securities exchange,
Fair Market Value shall be deemed to be the average of the high bid and
low asked prices of the shares in the over-the-counter market on the day
immediately preceding the date as of which Fair Market Value is being
determined or on the next preceding date on which such high bid and low
asked prices were recorded. If the shares are not publicly traded, Fair
Market Value of a share of Common Stock (including, in the case of any
repurchase of shares, any distributions with respect thereto which would
be repurchased with the shares) shall be determined in good faith by the
Board of Directors. In no case shall Fair Market Value be determined with
regard to restrictions other than restrictions which, by their terms, will
never lapse.
(b) Payment of Purchase Price. Options granted under the Plan
may provide for the payment of the exercise price by delivery of cash or a
check to the order of the Company in an amount equal to the exercise price
of such options, or, to the extent provided in the applicable option
agreement, (i) by delivery to the Company of shares of Common Stock of the
Company having a Fair Market Value on the date of exercise equal in amount
to the exercise price of the options being exercised, (ii) by any other
means which the Board of Directors determines are consistent with the
purpose of the Plan and with applicable laws and regulations (including,
without limitation, the provisions of Rule 16b-3 and Regulation T
promulgated by the Federal Reserve Board) or (iii) by any combination of
such methods of payment.
7. Option Period.
Subject to earlier termination as provided in the Plan, each option
and all rights thereunder shall expire on such date as determined by the
Board of Directors and set forth in the applicable option agreement,
provided, that such date shall not be later than (10) ten years after the
date on which the option is granted.
8. Exercise of Options.
Each option granted under the Plan shall be exercisable either in
full or in installments at such time or times and during such period as
shall be set forth in the option agreement evidencing such option, subject
to the provisions of the Plan. No option granted to a Reporting Person
for purposes of the Exchange Act, however, shall be exercisable during the
first six months after the date of grant. Subject to the requirements in
the immediately preceding sentence, if an option is not at the time of
grant immediately exercisable, the Board of Directors may (i) in the
agreement evidencing such option, provide for the acceleration of the
exercise date or dates of the subject option upon the occurrence of
specified events, and/or (ii) at any time prior to the complete
termination of an option, accelerate the exercise date or dates of such
option.
9. Non-transferability of Option.
No option granted under this Plan shall be assignable or otherwise
transferable by the optionee except by will or by the laws of descent and
distribution or pursuant to a qualified domestic relations order as
defined in the Code or Title I of the Employee Retirement Income Security
Act, or the rules thereunder. An option may be exercised during the
lifetime of the optionee only by the optionee. In the event an optionee
dies during his employment by the Company or any of its subsidiaries, or
during the three-month period following the date of termination of such
employment, his option shall thereafter be exercisable, during the period
specified in the option agreement, by his executors or administrators to
the full extent to which such option was exercisable by the optionee at
the time of his death during the periods set forth in Section 10 or 11(d).
10. Effect of Termination of Employment or Other Relationship
Except as provided in Section 11(d) with respect to Incentive Stock
Options, and subject to the provisions of the Plan, an optionee may
exercise an option at any time within three (3) months following the
termination of the optionee's employment or other relationship with the
Company or within one (1) year if such termination was due to the death or
disability of the optionee, but, except in the case of the optionee's
death, in no event later than the expiration date of the Option. If the
termination of the optionee's employment is for cause or is otherwise
attributable to a breach by the optionee of an employment or
confidentiality or non-disclosure agreement, the option shall expire
immediately upon such termination. The Board of Directors shall have the
power to determine what constitutes a termination for cause or a breach of
an employment or confidentiality or non-disclosure agreement, whether an
optionee has been terminated for cause or has breached such an agreement,
and the date upon which such termination for cause or breach occurs. Any
such determinations shall be final and conclusive and binding upon the
optionee.
11. Incentive Stock Option.
Options granted under the Plan which are intended to be Incentive
Stock Options shall be subject to the following additional terms and
conditions:
(a) Express Designation. All Incentive Stock Options granted
under the Plan shall, at the time of grant, be specifically designated as
such in the option agreement covering such Incentive Stock Options.
(b) 10% Shareholder. If any employee to whom an Incentive
Stock Option is to be granted under the Plan is, at the time of the grant
of such option, the owner of stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company (after taking
into account the attribution of stock ownership rules of Section 424(d) of
the Code), then the following special provisions shall be applicable to
the Incentive Stock Option granted to such individual:
i. The purchase price per share of the Common Stock
subject to such Incentive Stock Option shall not be less than 110% of
the Fair Market Value of one share of Common Stock at the time of
grant; and
ii. the option exercise period shall not exceed five years
from the date of grant.
(c) Dollar Limitation. For so long as the Code shall so
provide, options granted to any employee under the Plan (and any other
incentive stock option plans of the Company) which are intended to
constitute Incentive Stock Options shall not constitute Incentive Stock
Options to the extent that such options, in the aggregate, become
exercisable for the first time in any one calendar year for shares of
Common Stock with an aggregate Fair Market Value, as of the respective
date or dates of grant, of more than $100,000.
(d) Termination of Employment. Death or Disability. No
Incentive Stock Option may be exercised unless, at the time of such
exercise, the optionee is, and has been continuously since the date of
grant of his or her option, employed by the Company, except that:
i. an Incentive Stock Option may be exercised within the
period of three months after the date the optionee ceases to be an
employee of the Company (or within such lesser period as may be
specified in the applicable option agreement), provided, that the
agreement with respect to such option may designate a longer exercise
period and that the exercise after such three-month period shall be
treated as the exercise of a non-statutory option under the Plan;
ii. if the optionee dies while in the employ of the
Company, or within three months after the optionee ceases to be such
an employee, the Incentive Stock Option may be exercised by the
person to whom it is transferred by will or the laws of descent and
distribution within the period of one year after the date of death
(or within such lesser period as may be specified in the applicable
option agreement); and
iii. if the optionee becomes disabled (within the meaning
of Section 22(e)(3) of the Code or any successor provisions thereto)
while in the employ of the Company, the Incentive Stock Option may be
exercised within the period of one year after the date the optionee
ceases to be such an employee because of such disability (or within
such lesser period as may be specified in the applicable option
agreement).
For all purposes of the Plan and any option granted hereunder,
"Unemployment" shall be defined in accordance with the provisions of
Section 1.421-7(h) of the Income Tax Regulations (or any successor
regulations). Notwithstanding the foregoing provisions, no Incentive
Stock Option may be exercised after its expiration date.
12. Additional Provisions.
(a) Additional Option Provisions. The Board of Directors may,
in its sole discretion, include additional provisions in option agreements
covering options granted under the Plan, including without limitation
restrictions on transfer, repurchase rights, rights of first refusal,
commitments to pay cash bonuses, to make, arrange for or guarantee loans
or to transfer other property to options upon exercise of options, or such
other provisions as shall be determined by the Board of Directors;
provided, that such additional provisions shall not be inconsistent with
any other term or condition of the Plan and such additional provisions
shall not cause any Incentive Stock Option granted under the Plan to fail
to qualify as an Incentive Stock Option within the meaning of Section 422
of the Code.
(b) Acceleration, Extension, Etc. The Board of Directors may,
in its sole discretion, (i) accelerate the date or dates on which all or
any particular option or options granted under the Plan may be exercised
or (ii) extend the dates during which all, or any particular, option or
options granted under the Plan may be exercised; provided, however, that
no such extension shall be permitted if it would cause the Plan to fail to
comply with Section 422 of the Code or with Rule 16b-3 (if applicable).
13. General Restrictions.
(a) Investment Representations. The Company may require any
person to whom an option is granted, as a condition of exercising such
option, to give written assurances in substance and form satisfactory to
the Company to the effect that such person is acquiring the Common Stock
subject to the option for his or her own account for investment and not
with any present intention of selling or otherwise distributing the same,
and to such other effects as the Company deems necessary or appropriate in
order to comply with federal and applicable state securities laws, or with
covenants or representations made by the Company in connection with any
public offering of its Common Stock.
(b) Compliance With Securities Laws. Each option shall be
subject to the requirement that if, at any time, counsel to the Company
shall determine that the listing, registration or qualification of the
shares subject to such option upon any securities exchange or under any
state or federal law, or the consent or approval of any governmental or
regulatory body, or that the disclosure of non-public information or the
satisfaction of any other condition is necessary as a condition of, or in
connection with the issuance or purchase of shares thereunder, such option
may not be exercised, in whole or in part, unless such listing,
registration, qualification, consent or approval, or satisfaction of such
condition shall have been effected or obtained on conditions acceptable to
the Board of Directors. Nothing herein shall be deemed to require the
Company to apply for or to obtain such listing, registration or
qualification, or to satisfy such condition.
14. Rights as a Shareholder.
The holder of an option shall have no rights as a shareholder with
respect to any shares covered by the option (including, without
limitation, any rights to receive dividends or non-cash distributions with
respect to such shares) until the date of issue of a stock certificate to
him or her for such shares. No adjustment shall be made for dividends or
other rights for which the record date is prior to the date such stock
certificate is issued.
15. Adjustment Provisions for Recapitalization, Reorganizations and
Related Transactions.
(a) Recapitalization and Related Transactions. If, through or
as a result of any recapitalization, reclassification, stock dividend,
stock split, reverse stock split or other similar transaction, (i) the
outstanding shares of Common Stock are increased, decreased or exchanged
for a different number or kind of shares or other securities of the
Company, or (ii) additional shares or new or different shares or other
non-cash assets are distributed with respect to such shares of Common
Stock or other securities, an appropriate and proportionate adjustment
shall be made in (x) the maximum number and kind of shares reserved for
issuance under the Plan, (y) the number and kind of shares or other
securities subject to any then outstanding options under the Plan, and (z)
the price for each share subject to any then outstanding options under the
Plan, without changing the aggregate purchase price as to which such
options remain exercisable. Notwithstanding the foregoing, no adjustment
shall be made pursuant to this Section 15 if such adjustment (i) would
cause the Plan to fail to comply with Section 422 of the Code or with Rule
16b-3 or (ii) would be considered as the adoption of a new plan requiring
stockholder approval.
(b) Reorganization, Merger and Related Transactions. If the
Company shall be the surviving corporation in any reorganization, merger
or consolidation of the Company with one or more other corporations, any
then outstanding option granted pursuant to the Plan shall pertain to and
apply to the securities to which a holder of the number of shares of
Common Stock subject to such options would have been entitled immediately
following such reorganization, merger, or consolidation, with a
corresponding proportionate adjustment of the purchase price as to which
such options may be exercised so that the aggregate purchase price as to
which such options may be exercised shall be the same as the aggregate
purchase price as to which such options may be exercised for the shares
remaining subject to the options immediately prior to such reorganization,
merger, or consolidation.
(c) Board Authority to Make Adjustments. Any adjustments under
this Section 15 will be made by the Board of Directors, whose
determination as to what adjustments, if any, will be made and the extent
thereof will be final, binding and conclusive. No fractional shares will
be issued under the Plan on account of any such adjustments.
16. Merger, Consolidation, Asset Sale, Liquidation, etc.
(a) General. In the event of a consolidation or merger in
which the Company is not the surviving corporation, or sale of all or
substantially all of the assets of the Company in which outstanding shares
of Common Stock are exchanged for securities, cash or other property of
any other corporation or business entity or in the event of a liquidation
of the Company (collectively, a "Corporate Transaction"), the Board of
Directors of the Company, or the board of directors of any corporation
assuming the obligations of the Company, may, in its discretion, take any
one or more of the following actions, as to outstanding options: (i)
provide that such options shall be assumed, or equivalent options shall be
substituted, by the acquiring or succeeding corporation (or an affiliate
thereof), provided that any such options substituted for Incentive Stock
Options shall meet the requirements of Section 424(a) of the Code, (ii)
upon written notice to the options, provide that all unexercised options
will terminate immediately prior to the consummation of such transaction
unless exercised by the optionee within a specified period following the
date of such notice, (iii) in the event of a Corporate Transaction under
the terms of which holders of the Common Stock of the Company will receive
upon consummation thereof a cash payment for each share surrendered in the
Corporate Transaction (the "Transaction Price), make or provide for a cash
payment to the options equal to the difference between (A) the Transaction
Price times the number of shares of Common Stock subject to such
outstanding options (to the extent then exercisable at prices not in
excess of the Transaction Price) and (B) the aggregate exercise price of
all such outstanding options in exchange for the termination of such
options, and (iv) provide that all or any outstanding options shall become
exercisable in full immediately prior to such event.
(b) Substitute Options. The Company may grant options under
the Plan in substitution for options held by employees of another
corporation who become employees of the Company, or a subsidiary of the
Company, as the result of a merger or consolidation of the employing
corporation with the Company or a subsidiary of the Company, or as a
result of the acquisition by the Company, or one of its subsidiaries, of
property or stock of the employing corporation. The Company may direct
that substitute options be granted on such terms and conditions as the
Board of Directors considers appropriate in the circumstances.
17. No Special Employment Rights.
Nothing contained in the Plan or in any option shall confer upon any
optionee any right with respect to the continuation of his or her
employment by the Company or interfere in any way with the right of the
Company at any time to terminate such employment or to increase or
decrease the compensation of the optionee.
18. Other Employee Benefits.
Except as to plans which by their terms include such amounts as
compensation, the amount of any compensation deemed to be received by an
employee as a result of the exercise of an option or the sale of shares
received upon such exercise will not constitute compensation with respect
to which any other employee benefits of such employee are determined,
including, without limitation, benefits under any bonus, pension,
profit-sharing, life insurance or salary continuation plan, except as
otherwise specifically determined by the Board of Directors.
19. Amendment of the Plan.
(a) The Board of Directors may at any time, and from time to
time, modify or amend the Plan in any respect, except that if at any time
the approval of the shareholders of the Company is required under Section
422 of the Code or any successor provision with respect to Incentive Stock
Options, or under Rule 16b-3, the Board of Directors may not effect such
modification or amendment without such approval.
(b) The modification or amendment of the Plan shall not,
without the consent of an optionee, affect his or her rights under an
option previously granted to him or her. With the consent of the optionee
affected, the Board of Directors may amend outstanding option agreements
in a manner not inconsistent with the Plan. The Board of Directors shall
have the right to amend or modify (i) the terms and provisions of the Plan
and of any outstanding Incentive Stock Options granted under the Plan to
the extent necessary to qualify any or all such options for such favorable
federal income tax treatment (including deferral of taxation upon
exercise) as may be afforded incentive stock options under Section 422 of
the Code and (ii) the terms and provisions of the Plan and of any
outstanding option to the extent necessary to ensure the qualification of
the Plan under Rule 16b-3.
20. Withholding.
(a) The Company shall have the right to deduct from payments of
any kind otherwise due to the optionee any federal, state or local taxes
of any kind required by law to be withheld with respect to any shares
issued upon exercise of options under the Plan. Subject to the prior
approval of the Company, which may be withheld by the Company in its sole
discretion, the optionee may elect to satisfy such obligations, in whole
or in part, (i) by causing the Company to withhold shares of Common Stock
otherwise issuable pursuant to the exercise of an option or (ii) by
delivering to the Company shares of Common Stock already owned by the
optionee. The shares so delivered or withheld shall have a Fair Market
Value equal to such withholding obligation as of the date that the amount
of tax to be withheld is to be determined. An optionee who has made an
election pursuant to this Section 20(a) may only satisfy his or her
withholding obligation with shares of Common Stock which are not subject
to any repurchase, forfeiture, unfulfilled vesting or other similar
requirements.
(b) The acceptance of shares of Common Stock upon exercise of
an Incentive Stock Option shall constitute an agreement by the optionee
(i) to notify the Company if any or all of such shares are disposed of by
the optionee within two years from the date the option was granted or
within one year from the date the shares were issued to the optionee
pursuant to the exercise of the option, and (ii) if required by law, to
remit to the Company, at the time of and in the case of any such
disposition, an amount sufficient to satisfy the Company's federal, state
and local withholding tax obligations with respect to such disposition,
whether or not, as to both (i) and (ii), the optionee is in the employ of
the Company at the time of such disposition.
(c) Notwithstanding the foregoing, in the case of a Reporting
Person whose options have been granted in accordance with the provisions
of Section 3(b) herein, no election to use shares for the payment of
withholding taxes shall be effective unless made in compliance with any
applicable requirements of Rule 16b-3.
21. Cancellation and New Grant of Options, Etc.
The Board of Directors shall have the authority to effect, at any
time and from time to time, with the consent of the affected options, (i)
the cancellation of any or all outstanding options under the Plan and the
grant in substitution there for of new options under the Plan covering the
same or different numbers of shares of Common Stock and having an option
exercise price per share which may be lower or higher than the exercise
price per share of the cancelled options or (ii) the amendment of the
terms of any and all outstanding options under the Plan to provide an
option exercise price per share which is higher or lower than the
then-current exercise price per share of such outstanding options.
22. Effective Date and Duration of the Plan.
(a) Effective Date. The Plan shall become effective when
adopted by the Board of Directors, but no Incentive Stock Option granted
under the Plan shall become exercisable unless and until the Plan shall
have been approved by the Company's shareholders. If such shareholder
approval is not obtained within twelve months after the date of the
Board's adoption of the Plan, no options previously granted under the Plan
shall be deemed to be Incentive Stock Options and no Incentive Stock
Options shall be granted thereafter. Amendments to the Plan not requiring
shareholder approval shall become effective when adopted by the Board of
Directors; amendments requiring shareholder approval (as provided in
Section 19) shall become effective when adopted by the Board of Directors,
but no Incentive Stock Option granted after the date of such amendment
shall become exercisable (to the extent that such amendment to the Plan
was required to enable the Company to grant such Incentive Stock Option to
a particular optionee) unless and until such amendment shall have been
approved by the Company's shareholders. If such shareholder approval is
not obtained within twelve months of the Board's adoption of such
amendment, any Incentive Stock Options granted on or after the date of
such amendment shall terminate to the extent that such amendment to the
Plan was required to enable the Company to grant such option to a
particular optionee. Subject to this limitation, options may be granted
under the Plan at any time after the effective date and before the date
fixed for termination of the Plan.
(b) Termination. Unless sooner terminated in accordance with
Section 16, the Plan shall terminate upon the earlier of (i) the close of
business on the day next preceding the tenth anniversary of the date of
its adoption by the Board of Directors, or (ii) the date on which all
shares available for issuance under the Plan shall have been issued
pursuant to the exercise or cancellation of options granted under the
Plan. If the date of termination is determined under (i) above, then
options outstanding on such date shall continue to have force and effect
in accordance with the provisions of the instruments evidencing such
options.
23. Provision for Foreign Participants.
The Board of Directors may, without amending the Plan, modify awards
or options granted to participants who are foreign nationals or employed
outside the United States to recognize differences in laws, rules,
regulations or customs of such foreign jurisdictions with respect to tax,
securities, currency, employee benefit or other matters.
24. Governing Law.
The provisions of this Plan shall be governed and construed in
accordance with the laws of the State of California.
Adopted by the Board of Directors on May 15, 1996.
Proxy
Sepragen Corporation
30689 Huntwood Avenue, Hayward, California 94544
THIS PROXY IS SOLICITED BY AND ON BEHALF OF THE BOARD OF DIRECTORS
AND MAY BE REVOKED PRIOR TO EXERCISE
The undersigned hereby acknowledges receipt of the Notice of Annual
Meeting of Shareholders, Sepragen Corporation (the "Company") and the
accompanying Proxy Statement dated June 14, 1996, and revoking any
proxy heretofore given, hereby constitutes and appoints Vinit Saxena
and Quirin Miranda, or either of them, with full power of
substitution, as attorney and proxy to appear and vote all of the
shares of Class A, B or E Common Stock of the Company standing in the
name of the undersigned which the undersigned could vote if
personally present and acting at the Annual Meeting of Shareholders
to be held on June 28, 1996, at 3:30 p.m. or at any adjournments
thereof, upon the following items as set forth in the Notice of
Meeting and more fully described in the Proxy Statement.
(To be Signed on Reverse Side)
A (X) Please mark your votes in this example
1. ELECTION OF DIRECTORS
(INSTRUCTION: to withhold authority to vote for any individual
nominee, write that nominee's name in the space provided below.)
_____________________________________________
FOR all nominees listed to the right (except as marked to the
contrary ( )
WITHHOLD AUTHORITY to vote for all nominees listed to the right ( )
NOMINEES: Vinit Saxena, Armin Ramel, Werner Kofod Nielsen,
Robert Leach
2. To approve the 1996 Stock Option Plan in the form attached hereto
and the issuance of stock options to officers and directors of the
corporation pursuant to said plan;
For ( ) Against ( ) Abstain ( )
3. Ratification of COOPER & LYBRAND L.L.P. as the independent
accountants of the Company of the fiscal year ending
December 31, 1996.
For ( ) Against ( ) Abstain ( )
4. In his discretion, the Proxy is authorized to vote upon such other
business as may properly come before the meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED. IF NO DIRECTION IS MADE, THIS
PROXY WILL BE VOTED FOR PROPOSALS 1, 2, 3, AND 4.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
Signature_______________Dated____________, 1996
Signature if Held Jointly__________________Dated__________, 1996
NOTE: (Please sign exactly as name appears hereon. When shares
are held by joint tenants, both should sign. When signing
as an attorney, as executor, administrator, trustee or
guardian, please give full title as such. If a corporation,
please sign in full corporate name by President or other
authorized officer. If a partnership, please sign in
partnership name by authorized person.)
