SCHEDULE 14A
(RULE 14A-101)
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant To Section 14(A) Of The Securities
Exchange Act of 1934
(Amendment No. __)
Filed by 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
North American Vaccine, 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)(4) and 0-11:
1) Title of each class of securities to which transaction applies:
_______________________________________________________________________
2) Aggregate number of securities to which transaction applies:
________________________________________________________________________
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on
which the filing is calculated and state how it was determined):
________________________________________________________________________
4) Proposed maximum aggregate value of transaction:
________________________________________________________________________
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
________________________________________________________________________
2) Form, Schedule or Registration Statement No.:
________________________________________________________________________
3) Filing Party:
________________________________________________________________________
4) Date Filed:
________________________________________________________________________
<PAGE>
NORTH AMERICAN VACCINE, INC.
12103 Indian Creek Court
Beltsville, Maryland
U.S.A. 20705
-------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 20, 1997
-------------------------
NOTICE IS HEREBY GIVEN that the 1997 Annual Meeting of Shareholders of
North American Vaccine, Inc., a Canadian corporation (the "Company"), will be
held at 275 Armand-Frappier Boulevard, Laval, Quebec, Canada on Tuesday, May 20,
1997 commencing at 9:00 a.m., local time.
THE PURPOSES of the Annual Meeting will be:
1. To elect the Board of Directors for the ensuing year;
2. To appoint Arthur Andersen LLP as independent public
accountants of the Company; and
3. To consider and act upon any other matter that may properly
come before the meeting or any adjournment thereof.
All shareholders are cordially invited to attend the Annual Meeting.
The record date for determining those shareholders entitled to vote at the
Annual Meeting is March 31, 1997. A review of the Company's operations for the
year ended December 31, 1996 will be presented. The Company's 1996 Annual Report
to Shareholders (including audited financial statements) is enclosed. The
meeting will be subject to adjournment as the shareholders present in person or
by proxy may determine.
By Order of the Board of Directors,
/s/ Daniel J. Abdun-Nabi
Daniel J. Abdun-Nabi
Secretary
April 18, 1997
IMPORTANT--WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING IN PERSON, YOU
CAN HELP IN THE PREPARATION FOR THE ANNUAL MEETING BY FILLING IN AND SIGNING THE
ENCLOSED PROXY CARD AND PROMPTLY RETURNING IT IN THE ENCLOSED ENVELOPE. IF YOU
ARE UNABLE TO ATTEND, YOUR SHARES WILL BE VOTED AS DIRECTED BY YOUR PROXY. IF
YOU DO ATTEND THE MEETING, YOU MAY VOTE YOUR SHARES EVEN THOUGH YOU HAVE SENT IN
YOUR PROXY CARD.
<PAGE>
NORTH AMERICAN VACCINE, INC.
12103 Indian Creek Court
Beltsville, Maryland
U.S.A. 20705
-------------------
PROXY STATEMENT
-------------------
THIS PROXY STATEMENT IS FURNISHED IN CONNECTION WITH THE SOLICITATION
BY MANAGEMENT OF NORTH AMERICAN VACCINE, INC. (THE "COMPANY") OF PROXIES FOR THE
1997 ANNUAL MEETING OF SHAREHOLDERS OF THE COMPANY AND ANY ADJOURNMENT THEREOF
(THE "MEETING") TO BE HELD AT 275 ARMAND-FRAPPIER BOULEVARD, LAVAL, QUEBEC,
CANADA COMMENCING AT 9:00 A.M., LOCAL TIME, ON TUESDAY, MAY 20, 1997. THIS PROXY
STATEMENT, TOGETHER WITH THE ACCOMPANYING PROXY AND THE COMPANY'S 1996 ANNUAL
REPORT TO SHAREHOLDERS (INCLUDING AUDITED FINANCIAL STATEMENTS), IS FIRST BEING
SENT OR GIVEN TO THE COMPANY'S SHAREHOLDERS ON APPROXIMATELY APRIL 18, 1997.
The cost of soliciting proxies will be borne by the Company. The
solicitation of proxies by mail may be followed by personal solicitation of
certain shareholders by officers or regular employees of the Company. Proxy
materials will also be distributed through brokers, custodians and other
nominees or fiduciaries to beneficial owners of the Company's Common Stock. The
Company expects to reimburse such persons for their charges and expenses in
connection with this distribution.
Each proxy that is properly executed and returned will be voted for or
against or withheld from voting on any ballot that may be called for in
accordance with the instructions contained in that proxy. IF NO INSTRUCTIONS ARE
GIVEN, SUCH PROXY WILL BE VOTED FOR THE ELECTION OF THE COMPANY'S NOMINEES FOR
DIRECTOR AND THE APPOINTMENT OF ARTHUR ANDERSEN LLP AS THE COMPANY'S INDEPENDENT
PUBLIC ACCOUNTANTS. THE ACCOMPANYING PROXY CONFERS DISCRETIONARY AUTHORITY WITH
RESPECT TO AMENDMENTS OR VARIATIONS TO THE MATTERS IDENTIFIED IN THE NOTICE
CALLING THE MEETING OR OTHER MATTERS THAT MAY PROPERLY COME BEFORE THE MEETING,
AND ACCORDINGLY, IN THE EVENT THERE ARE ANY SUCH AMENDMENTS OR VARIATIONS OR
OTHER MATTERS BROUGHT BEFORE THE MEETING OR ANY ADJOURNMENT OR POSTPONEMENT
THEREOF, ALL PROXIES WILL BE VOTED IN ACCORDANCE WITH THE JUDGMENT OF THE
PERSONS NAMED AS PROXIES. A shareholder may revoke his or her proxy at any time
prior to its exercise by (i) duly filing a written notice of revocation with the
Secretary of the Company, (ii) duly executing and delivering a proxy bearing a
later date to the Secretary of the Company, (iii) voting in person at the
Meeting or (iv) in any other manner permitted by law. For any written notice of
revocation or later-dated proxy to be effective, it must be delivered to the
Company's registered office at any time up to and including the last business
day preceding the day of the Meeting, or any adjournment thereof, or to the
chairman of the Meeting on the day of the Meeting, or any adjournment thereof.
The Company's registered office is located at 1 Place Ville Marie, 40th Floor,
Montreal, Quebec H3B 4M4, Canada.
<PAGE>
If a quorum is present, the affirmative vote of a majority of the votes
actually cast at the Meeting, in person or by proxy, is necessary to elect each
of the nominees for director and to appoint Arthur Andersen LLP as the Company's
independent public accountants for the year ending December 31, 1997. For
purposes of tallying the number of votes actually cast at the Meeting for the
election of directors and the appointment of independent public accountants, any
vote "for" or to "withhold" from voting shall be tallied as a vote cast at the
Meeting. Abstentions and "broker non-votes" (i.e., shares held by brokers or
nominees as to which (i) the broker or nominee does not have discretionary
voting power under the applicable exchange rules and (ii) instructions have not
been received from the beneficial owners or the persons entitled to vote such
shares) will not be counted as votes actually cast at the Meeting. Finally,
abstentions will, and "broker non-votes" will not, be treated as shares that are
present and entitled to vote for purposes of determining the presence of a
quorum.
In accordance with the Company's By-laws, the stock transfer records
were compiled on March 31, 1997, the record date set by the Board of Directors
for determining the shareholders entitled to notice of, and to vote at, the
Meeting and any adjournment thereof. On that date, there were 31,583,424
outstanding shares of the Company's Common Stock. The holders of the outstanding
shares at the close of business on March 31, 1997 will be entitled to one vote
for each share held by them as of such date.
ELECTION OF DIRECTORS
(Proposal No. 1)
Eleven (11) directors, comprising the entire membership of the Board of
Directors of the Company, are to be elected at the Meeting. The Board of
Directors has nominated the persons listed below for election as directors of
the Company. If a quorum is present, an affirmative vote of the majority of
votes actually cast at the Meeting is required to elect each director.
Name Age(1) Position
---- ------ --------
Neil W. Flanzraich................... 53 Director; Chairman
Francesco Bellini, Ph.D. ............ 49 Director; Vice Chairman
Phillip Frost, M.D. ................. 60 Director; Vice Chairman
Sharon Mates, Ph.D. ................. 44 Director; President
Alain Cousineau ..................... 55 Director
Jonathan Deitcher ................... 50 Director
Denis Dionne ........................ 47 Director
Rondi R. Grey ....................... 40 Director
Lyle Kasprick ....................... 64 Director
Francois Legault..................... 40 Director
Richard C. Pfenniger, Jr. ........... 41 Director
- -----------------------------------
(1) As of April 1, 1997.
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<PAGE>
The Company's directors are elected at each annual meeting of the
Company's shareholders and serve until the next annual meeting of shareholders
or until their respective successors are duly elected and qualified, or their
prior resignation or removal. There are no family relationships among any of the
executive officers or directors of the Company. Under the terms of a
Shareholders' Agreement, the Company's principal shareholders have agreed to
vote together for directors. See "Certain Transactions." Background information
regarding each of nominees for director is set forth below.
NEIL W. FLANZRAICH: Director of the Company since October 1989 and
Chairman since January 1995; Shareholder with law firm of Heller Ehrman White &
McAuliffe and Chairman of the Life Sciences Group of that firm since September
1995; General Counsel, Senior Vice President and Secretary of Syntex (U.S.A.),
Inc. (pharmaceutical company), a subsidiary of Roche Holding Ltd., from January
1995 to August 1995; General Counsel from January 1992 to December 1994,
Co-General Counsel from August 1987 through January 1992, and Senior Vice
President from June 1981 to December 1994 of Syntex Corporation, a
pharmaceutical company acquired by Roche Holding Ltd. at the end of 1994; and
Director of Whitman Educational Group, Inc. (operator of degree and non-degree
granting post-secondary schools) since 1997.
FRANCESCO BELLINI, PH.D.: Director of the Company since October 1989
and Vice Chairman since June 1991; President since September 1986, Chief
Executive Officer since October 1986 and Director since September 1986 of
BioChem Pharma Inc. ("BioChem") (pharmaceutical company).
PHILLIP FROST, M.D.: Director of the Company since October 1989 and
Vice Chairman since December 1990; Chairman of the Board and Chief Executive
Officer of IVAX Corporation ("IVAX") (pharmaceutical company) since 1987 and
President from July 1991 to January 1995; Director of American Exploration
Company (oil and gas exploration and production) since 1983; Chairman of Whitman
Education Group, Inc. since 1992; Director of NaPro BioTherapeutics Inc.
(natural resources pharmaceutical company) since 1993; Director of Northrop
Grumman Corporation (aerospace company) since 1996; Vice Chairman and Director
of Pan Am Corporation (commercial airline) since 1996; Vice Chairman and
Director of Continucare Corp. (health-care management) since 1996; a trustee of
the University of Miami since 1983; and a member of the Board of Governors of
the American Stock Exchange since 1992.
SHARON MATES, PH.D.: Director of the Company since October 1989;
President since February 1990.
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<PAGE>
ALAIN COUSINEAU: Director of the Company since October 1989; Chairman
of the Board of Groupe SECOR Inc. (management consultants in corporate strategic
planning) since February 1993 and President from September 1985 to February
1993; and Partner of Groupe SECOR Inc. since July 1983; Director of Bioniche
Inc. (biopharmaceutical company) since September 1996 and MPACT Immedia
Corporation (electronic commerce software and services company) since January
1997, both of which are public companies trading on the Toronto and Montreal
Stock Exchanges.
JONATHAN DEITCHER: Director of the Company since February 1990;
Director and Vice President of RBC Dominion Securities (securities investment
dealer) since May 1984; and Director of Renaissance Energy Ltd. (oil and gas
exploration) since 1982 and Vincor International Inc. (wine producer and
retailer) since November 1993, both of which are public companies trading on the
Toronto Stock Exchange.
DENIS DIONNE: Director of the Company since October 1989; President of
Societe financiere d'innovation inc. (Sofinov), a high technology investment
fund that is a subsidiary of La Caisse de depot et placement du Quebec, since
April 1996; and Senior Vice President, Economic Development and Strategic
Investments from 1995 to March 1996, and Senior Vice President, Security and
Investment from 1988 to March 1996, of Fonds de Solidarite des Travailleurs du
Quebec, an investment fund.
RONDI R. GREY: Director of the Company since March 1995; Corporate
Affairs Advisor to the President of BioChem since March 1996; Legal Advisor to
the President of BioChem from April 1995 to February 1996; health care
consultant from February 1994 to April 1995; Group Director, Public Policy for
Glaxo Inc. (pharmaceutical company) from July 1992 to January 1994; Assistant
Head, Corporate Policy Unit for Glaxo Holdings plc (pharmaceutical company) from
July 1990 to June 1992.
LYLE KASPRICK: Director of the Company since October 1989 and Chairman
from June 1991 to January 1995; private investor since March 1988; Director of
IVAX since March 1987; and, since June 1993, a member of the Board of Directors
and the Investment Committee of the University of North Dakota Foundation.
FRANCOIS LEGAULT: Senior Vice President, Finance, Administration and
Treasurer of BioChem, since February 1993 and Vice President, Finance and
Treasurer of BioChem from 1987 to February 1993; and Director of the Industrial
Biotechnology Association of Canada since 1995.
RICHARD C. PFENNIGER, JR.: Director of the Company since 1992; Chief
Executive Officer and Vice Chairman of Whitman Education Group, Inc. since March
1997 and Director since 1992; Chief Operating Officer of IVAX from May 1994 to
March 1997; Senior Vice President -- Legal Affairs and General Counsel of IVAX
from 1989 to May 1994 and Secretary from 1990 to April 1994; Director of NaPro
BioTherapeutics Inc. since 1993; and Director of Pan Am Corporation since 1996.
- 4 -
<PAGE>
The Board of Directors has established the following committees. The
Board of Directors has not established a standing nominating committee.
EXECUTIVE COMMITTEE - The Executive Committee is responsible for
exercising the authority of the Board of Directors between meetings of the Board
of Directors consistent with the limitations imposed by law. The current members
of this committee are Neil Flanzraich, Francesco Bellini, Phillip Frost, Sharon
Mates and Rondi Grey.
AUDIT COMMITTEE - The Audit Committee is responsible for meeting with
the independent public accountants and representatives of management to review
the scope and results of audits, the appropriateness of accounting principles
used in financial reporting, and the adequacy of financial and operating
controls. The current members of the Audit Committee are: Lyle Kasprick,
Francois Legault and Richard Pfenniger.
COMPENSATION COMMITTEE - The Compensation Committee is responsible for
establishing executive compensation programs, granting options under the
Company's stock option plans and interpreting and administering the Company's
option plans. The current members of the Compensation Committee are:
Alain Cousineau, Jonathan Deitcher and Denis Dionne.
During 1996, the Board of Directors of the Company held five meetings,
the Executive Committee held one meeting, the Audit Committee held four meetings
and the Compensation Committee held three meetings. All members of the Board of
Directors attended at least 75% of their Board and Committee meetings combined
during the last fiscal year, except for Jonathan Deitcher.
Additional nominations for director may be made from the floor at the
Meeting. In case any of these nominees should become unavailable for such
election for any reason presently unknown, the proxy holders will have
discretionary authority under the proxy to vote for a suitable substitute
nominee.
COMPENSATION OF DIRECTORS
Employee directors do not receive additional compensation for serving
on the Board of Directors. Non-employee directors received no cash compensation
for their service as directors, except as described below. Directors receive
reimbursement for the expenses that they incur in performing their services as
directors.
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<PAGE>
Non-employee directors have automatically received annual grants of
stock options on January 1 of each year under the 1995 Non-Employee Director and
Senior Executive Stock Option Plan (the "1995 SESOP"). Accordingly, on January
1, 1996, each non-employee director received an option to acquire: (i) 20,000
shares of the Company's Common Stock where the non-employee director was the
Chairman of the Board or Vice Chairman of the Board; (ii) 5,000 shares of the
Company's Common Stock for all other non-employee directors; and (iii) 5,000
shares of Company's Common Stock for each committee of the Board of Directors on
which non-employee directors (other than the Chairman and Vice Chairman of the
Board) serve. These options were all granted to such non-employee directors at
an exercise price of $14.125 per share, the fair market value of the Company's
Common Stock on January 1, 1996, the date of grant. These options will vest in
three equal annual installments commencing on the January 1st following the date
of the grant. No current executive officer has received, or is entitled to
receive, options under the 1995 SESOP.
Neil Flanzraich, the Chairman of the Board, received a total of
$108,333 for the 1996 calendar year for his duties performed in that capacity.
The Company maintains on behalf of the directors and officers of the Company a
directors' and officers' liability insurance policy. For the policy year ended
February 28, 1997, the premium paid by the Company for a policy with a covered
limit of $15 million was approximately $355,400, with a deductible of up to
$150,000 per claim. No allocation of premium was made in respect of the
directors as a group or the officers as a group.
IDENTIFICATION OF SENIOR MANAGEMENT
The following table identifies the senior management of the Company and
the positions that they hold. Officers of the Company are elected by the Board
of Directors at the annual meeting thereof to hold office for the term of one
year, and until successors are elected and qualified, or their prior resignation
or removal.
<TABLE>
<CAPTION>
Name Age(1) Position(s)
---- ------ -----------
<S> <C> <C>
Sharon Mates, Ph.D. (2) (3).............. 44 Director; President
Arthur Y. Elliott, Ph.D.(3).............. 61 Senior Vice President -- Operations and
Chief Operating Officer
Daniel J. Abdun-Nabi (3)................. 42 Senior Vice President -- Legal
Affairs and General Counsel; Secretary
Edward Arcuri, Ph.D. (3)................. 46 Vice President -- Manufacturing Operations
Wayne Morges, Ph.D. (3)................. 50 Vice President -- Quality/Regulatory Affairs
Stephen N. Keith, M.D., M.S.P.H. (3)..... 44 Vice President -- Sales and Marketing
Iver Heron, M.D., D.Sci. ................ 55 Vice President -- Research
C. Jo White, M.D. ....................... 42 Vice President -- Clinical Development
Joan D.S. Fusco, Ph.D. .................. 41 Vice President -- Business Development
Lawrence J. Hineline (3)................. 40 Vice President -- Finance
_________________________
(1) As of April 1, 1997.
(2) See background description under heading "Election of Directors" above.
(3) These persons are "executive officers" for purposes of the rules and
regulations of the Securities and Exchange Commission.
</TABLE>
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<PAGE>
Background information regarding each of the Company's senior
management is set forth below.
ARTHUR Y. ELLIOTT, PH.D.: Senior Vice President -- Operations and Chief
Operating Officer of the Company since March 1994; and, from 1978 to 1994, Dr.
Elliott was with Merck & Co. (pharmaceutical company) holding various positions
including: Executive Director, Biological Operations; Executive Director,
Quality Control; Senior Director, Biologics; Director, Biological Manufacturing;
and Manager, Viral Vaccines and Veterinary Services.
DANIEL J. ABDUN-NABI: Senior Vice President -- Legal Affairs and
General Counsel of the Company since February 1990, Assistant Secretary from
February 1990 to June 1991 and Secretary from June 1991.
EDWARD ARCURI, PH.D.: Vice President -- Manufacturing Operations of the
Company since January 1995; and from March 1991 to December 1994, Senior
Director, Biological Manufacturing for Merck & Co.; and from February 1989 to
March 1991, Director of Department of Gene Expression Sciences for SmithKline
Beecham Pharmaceuticals.
WAYNE MORGES, PH.D.: Vice President -- Quality/Regulatory Affairs of
the Company since January 1995; Vice President -- Manufacturing Operations of
the Company from June 1994 to January 1995; and from 1981 to 1994, Dr. Morges
was with Merck & Co. holding various positions including: Senior Director and
Responsible Head, Biological Quality Control; Director, Biological Quality
Control; Manager, Hepatitis Vaccines and Recombinant Products; and Manager,
Biological Quality Control Technical Services.
STEPHEN N. KEITH, M.D., M.S.P.H.: Vice President -- Sales and Marketing
since August 1995; from 1990 to 1995, Dr. Keith was with Merck & Co. holding
various positions including: Senior Director, Merck-Medco Managed Care Division;
Senior Customer Manager, U.S. Human Health Division; and Senior Director,
Corporate Public Affairs.
IVER HERON, M.D., D.SCI.: Vice President -- Research of the Company
since October 1996, Director of International Medical Affairs of the Company
from March 1996 to October 1996; Head of Bacterial Vaccines Department, Research
& Development at Statens Seruminstitut ("SSI") (Denmark's national center for
the prevention and control of infectious diseases and congenital disorders) from
1993 to January 1996 and Scientific Head of Vaccine Department, BCG and
Department of Biological Standardization at SSI from 1982 to 1993.
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<PAGE>
C. JO WHITE, M.D.: Vice President -- Clinical Development of the
Company since February 1997; Pharmaceutical industry consultant from 1995 to
January 1997; from 1987 to 1995, Dr. White was with Merck & Co. holding various
positions including Senior Director, Clinical Research.
Joan D.S. Fusco, Ph.D.: Vice President -- Business Development of the
Company since January 1997; Director of Business Development of the Company from
1995 to January 1997; Manager of Business Development of the Company from 1993
to 1994; from 1991 to 1992, Dr. Fusco served in various scientific and research
positions with the Company.
LAWRENCE J. HINELINE: Vice President -- Finance of the Company since
November 1993; Controller of the Company from December 1990 to November 1993.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth certain information provided to the
Company or contained in filings with the Securities and Exchange Commission (the
"SEC") regarding the beneficial ownership of shares of the Company's Common
Stock as of February 28, 1997 by (i) each person who is known by the Company to
own beneficially, or exercise control or direction over, more than 5% of the
outstanding shares of the Company's Common Stock, (ii) all current directors of
the Company, (iii) all nominees for director, (iv) each of the Named Officers
(as defined below in the section entitled "Executive Compensation-Summary
Compensation Table") and (v) all current directors and executive officers of the
Company as a group. Unless otherwise indicated, each person has sole voting and
investment power with respect to the shares specified opposite such person's
name.
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<PAGE>
<TABLE>
<CAPTION>
NAME OF BENEFICIAL OWNER NUMBER OF SHARES PERCENT OF CLASS
- ------------------------ ---------------- ----------------
<S> <C> <C>
BioChem Pharma Inc..........................13,179,114 (1) 39.3%
275 Armand-Frappier Blvd.
Laval, Quebec H7V 4A7
Frost-Nevada, Limited Partnership........... 3,755,070 (2) 11.2%
c/o Phillip Frost, M.D.
IVAX Corporation
4400 Biscayne Blvd.
Miami, Florida 33137
Phillip Frost, M.D. (3)..................... 5,812,487 (2)(4) 17.3%
c/o IVAX Corporation
4400 Biscayne Blvd.
Miami, Florida 33137
Delphi Asset Management..................... 1,994,225 (5) 6.3%
485 Madison Avenue
New York, New York 10022
Denver Investment Advisors LLC.............. 1,926,000 (6) 6.1%
1225 17th Street, 26th Floor
Denver, Colorado 80202
Neil Flanzraich (3)......................... 221,560 (4) *
Francesco Bellini, Ph.D. (3)................ 110,199 (4)(7) *
Alain Cousineau (3)......................... 29,999 (4) *
Jonathan Deitcher (3)....................... 119,999 (4) *
Denis Dionne (3)............................ 29,999 (4)(8) *
Rondi R. Grey (3)........................... 3,333 (4) *
Lyle Kasprick (3)........................... 571,920 (4) 1.8%
Francois Legault (3)........................ -- (7) *
Richard C. Pfenniger, Jr. (3)............... 64,685 (4)(9) *
Sharon Mates, Ph.D. (3)(10)................. 538,452 (4)(11) 1.7%
Arthur Y. Elliott, Ph.D. (10)............... 126,034 (4)(11) *
Daniel J. Abdun-Nabi (10)................... 340,862 (4)(11)(12) 1.1%
Wayne Morges, Ph.D. (10).................... 29,452 (4)(11) *
Edward Arcuri, Ph.D. (10)................... 41,666 (4)(11) *
All directors and executive officers as a
group (17 persons)........................ 8,170,680 (2)(4)(8)(9)(11)(12) 23.4%
_____________________________
* Indicates less than one percent.
</TABLE>
(1) The amount shown includes: 1,000,000 shares of the Company's
Series A Preferred Stock, which are convertible into 2,000,000
shares of the Company's Common Stock.
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<PAGE>
(2) 1,755,070 of these shares are held by Frost-Nevada, Limited
Partnership ("Frost-Nevada"), which has sole voting and
dispositive power with respect to such shares. Also includes
1,000,000 shares of the Company's Series A Preferred Stock,
which are convertible into 2,000,000 shares of the Company's
Common Stock, held by Frost-Nevada. Dr. Frost is the sole
shareholder, a director and an officer of Frost-Nevada
Corporation, the general partner of Frost-Nevada, and is the
sole limited partner of Frost-Nevada. Consequently, Dr. Frost
may be deemed to be the beneficial owner of all such shares
held by Frost-Nevada.
(3) A director of the Company.
(4) Includes, where applicable, shares that may be purchased upon
the exercise of stock options presently exercisable or
exercisable within 60 days of February 28, 1997 as follows:
59,999 shares with respect to Drs. Frost and Bellini; 39,998
shares with respect to Mr. Flanzraich; 19,999 shares with
respect to Mr. Cousineau; 29,999 shares with respect to each
of Messrs. Deitcher, Dionne and Pfenniger; 3,333 shares with
respect to Ms. Grey; 206,666 shares with respect to Mr.
Kasprick; 395,000 shares with respect to Dr. Mates; 125,000
shares with respect to Dr. Elliott; 226,666 shares with
respect to Mr. Abdun-Nabi; 28,585 shares with respect to Dr.
Morges; 41,666 shares with respect to Dr. Arcuri; and 128,332
shares with respect to two unnamed executive officers.
(5) Reflects aggregate beneficial ownership of shares of the
Company's Common Stock held by Delphi Asset Management
("Delphi") in its capacity as investment advisor, according to
its Schedule 13G dated February 13, 1997. Delphi has sole
voting power over 1,484,500 shares of the Company's Common
Stock and sole dispositive power over 1,994,225 shares of the
Company's Common Stock.
(6) Reflects aggregate beneficial ownership of shares of the
Company's Common Stock held by Denver Investment Advisors LLC
("DIA") in its capacity as investment advisor, according to
its Schedule 13G dated February 10, 1997. DIA has sole voting
power over 1,267,700 shares of the Company's Common Stock and
sole dispositive power over 1,926,000 shares of the Company's
Common Stock.
(7) Although a director and/or officer of BioChem, the named
individual disclaims beneficial ownership of the shares of the
Company's Common Stock beneficially owned by BioChem.
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<PAGE>
(8) Includes 26,666 stock options presently exercisable or
exercisable within 60 days of February 28, 1997 that are
subject to an agreement between Mr. Dionne and his former
employer, whereby Mr. Dionne must exercise these options at
his former employer's direction and then transfer the
underlying shares of Company Common Stock to his former
employer at cost (exercise price).
(9) Includes 34,686 shares held jointly by Mr. Pfenniger and his
wife.
(10) An executive officer of the Company.
(11) Includes, where applicable, approximately 2,300, 1,034, 2,196,
867 and 1,501 shares issued under the Company's 401(k) Plan
and Trust as a matching contribution by the Company to the
retirement accounts of Dr. Mates, Dr. Elliott, Mr. Abdun-Nabi,
Dr. Morges, and two unnamed executive officers, respectively.
(12) Includes 40,000 shares held by Mr. Abdun-Nabi's spouse, for
which Mr. Abdun-Nabi disclaims beneficial ownership.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"1934 Act"), requires the Company's executive officers and directors, and
persons who own more than ten percent of the Company's Common Stock, to file
initial reports of ownership and reports of changes in ownership with the SEC
and the American Stock Exchange (the "AMEX"), the exchange on which the
Company's Common Stock is listed for trading. Executive officers, directors and
greater than ten-percent shareholders (collectively, the "Reporting Persons")
are required by SEC regulations to furnish the Company with copies of all
Section 16(a) forms they file.
Based solely on review of the copies of such forms furnished to the
Company, and written representations by the Reporting Persons, the Company
believes that during the year ended December 31, 1996, all Section 16(a) filing
requirements applicable to the Reporting Persons were met, except that one
monthly report, covering an agreement between Denis Dionne, a director of the
Company, and his former employer relating to four stock options previously
granted to Mr. Dionne, was not timely filed.
- 11 -
<PAGE>
COMPARATIVE STOCK PERFORMANCE
The graph below compares the cumulative total return of the Company's
Common Stock (as traded on the AMEX) against the cumulative total return of the
S&P 500 Composite Stock Index and the AMEX Biotechnology Index for the five
years ended December 31, 1996.
The phrase "total cumulative return" assumes that $100 was invested on
December 31, 1991 in the Company's Common Stock and in each index and that all
dividends were reinvested during the specified periods. The price performance of
the Company's Common Stock shown below should not be viewed as being indicative
of future performance.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
North American Vaccine, Inc., S&P 500 Composite
Index and AMEX Biotechnology Index
<TABLE>
<CAPTION>
[Stock performance graph with the following plot points:
=====================================================================================
12/31/91 12/31/92 12/31/93 12/31/94 12/31/95 12/31/96
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
North $100 $ 78 $ 84 $ 64 $108 $187
American
Vaccine, Inc.
- -------------------------------------------------------------------------------------
S&P 500 Composite Stock
Index $100 $108 $118 $120 $165 $203
- -------------------------------------------------------------------------------------
AMEX $100 $ 76 $ 52 $ 37 $ 60 $ 65
Biotechnology
Index
=====================================================================================]
</TABLE>
The graph above shall not be deemed to be soliciting material or
incorporated by reference by any general statement incorporating by reference
this Proxy Statement into any filing under the Securities Act of 1933, as
amended (the "1933 Act"), or the 1934 Act, except to the extent that the Company
specifically incorporates this information by reference, and it shall not be
otherwise deemed filed under such acts.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth the cash and non-cash compensation for
each of the last three fiscal years awarded to (1) the President, as the
Company's chief executive officer, and (2) the four other most highly
compensated executive officers of the Company for the year ended December 31,
1996 (collectively, the "Named Officers").
- 12 -
<PAGE>
<TABLE>
<CAPTION>
Long-Term
Compensation
Annual Awards
Compensation ------------
-------------------------- Securities
Other Annual Underlying All Other
Name and Salary Compensation(1) Options Compensation(2)
Principal Position Year ($) ($) (#) ($)
- ------------------ ---- -------- ---------------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
Sharon Mates, Ph.D. 1996 $283,920 -- -0- (3) $5,224
President 1995 273,000 -- 75,000 4,754
1994 260,000 -- -0- 5,217
Arthur Y. Elliott, Ph.D. 1996 262,080 -- -0- 5,224
Senior Vice President- 1995 252,000 -- 75,000 4,754
Operations & Chief Operating 1994 187,591 (4) -- 100,000 4,047
Officer
Daniel J. Abdun-Nabi 1996 207,480 -- -0- 5,224
Senior Vice President- 1995 199,500 -- 50,000 4,754
Legal Affairs & General 1994 190,000 -- -0- 5,217
Counsel
Wayne Morges, Ph.D. 1996 199,680 -- -0- 5,224
Vice President- 1995 192,000 -- 25,000 4,754
Quality/Regulatory Affairs 1994 105,351 (5) -- 50,000 2,042
Edward Arcuri, Ph.D. 1996 197,600 -- -0- 474
Vice President- 1995 188,817 (6) -- 75,000 438
Manufacturing Operations 1994 n/a n/a n/a n/a
______________________________
</TABLE>
(1) For 1996, 1995 and 1994, the aggregate amount of such Other Annual
Compensation for each Named Officer is not reportable under SEC rules
because such amount is the lesser of either $50,000 or 10% of the total
annual salary for each such Named Officer.
(2) Amounts of All Other Compensation for 1996 includes (i) matching
contributions made by the Company in fiscal 1996 to the Named Officer's
retirement account under the North American Vaccine, Inc. Retirement
and Savings 401(k) Plan and Trust ($4,750 for Dr. Mates, Dr. Elliott,
Mr. Abdun-Nabi and Dr. Morges) and (ii) the Company's cost allocation
of supplemental term life insurance ($474 for Dr. Mates, Dr. Elliott,
Mr. Abdun-Nabi, Dr. Morges and Dr. Arcuri). The matching 401(k)
contributions have been made in the form of the Company's Common Stock
and are included in the table under the heading "Security Ownership of
Certain Beneficial Owners and Management."
- 13 -
<PAGE>
(3) In 1996, Dr. Mates was granted an 18-month extension of a previously
granted option to purchase 270,000 shares of the Company's Common Stock
under the Company's former Share Option Plan, which option was
originally scheduled to expire on October 30, 1996. No other terms of
the option were changed. The extension was effective as of April 14,
1996.
(4) Dr. Elliott was first employed with the Company in March 1994.
(5) Dr. Morges was first employed with the Company in June 1994.
(6) Dr. Arcuri was first employed with the Company in January 1995.
OPTION GRANTS IN LAST FISCAL YEAR
During the year ended December 31, 1996, the Company did not grant any
new options to the Named Officers, and the Company has not granted any stock
appreciation rights ("SARs"). The Company did extend the term of certain
previously granted options that were scheduled to expire during 1996, and the
following table sets forth certain information concerning the extensions of
those previously granted options for the Named Officers during the year ended
December 31, 1996.
<TABLE>
<CAPTION>
Individual Grants Potential Realizable Value
--------------------------------------------------------- at Assumed Annual Rates
Number of Percent of of Stock Price Appreciation
Securities Total Options for Option Term(1)
Underlying Granted to Exercise ---------------------------
Options Employees in or Base Expiration
Name Granted Fiscal Year Price Date 5% 10%
- ---- ------- ------------- ------- ---------- ---------------------------
(#) ($/sh)
<S> <C> <C> <C> <C> <C> <C>
Sharon Mates 270,000 (2)(3) 66.1% $12.875 04/30/1998 $82,388 $339,579
</TABLE>
____________________
(1) Gains are reported net of the option exercise price, but before taxes
associated with exercise. These amounts represent certain assumed rates
of appreciation only, based on the per share market price on the date
of grant and an annual appreciation at the rate stated through the
expiration date of the option. Actual gains, if any, on stock option
exercises are dependent on the future performance of the Company's
Common Stock, overall market conditions and the optionholder's
continued employment through the vesting period. The amounts reflected
in this table may not necessarily be achieved.
- 14 -
<PAGE>
(2) This represents an 18-month extension of a previously granted option
under the Company's former Share Option Plan, which was originally
scheduled to expire on October 30, 1996. No other terms of the option
were changed. The extension was effective as of April 14, 1996 and the
fair market value of the Company's Common Stock was $12.25 as of such
date.
(3) This option is governed by the Company's former Share Option Plan. In
accordance with the terms of that plan, upon the occurrence of certain
major corporate transactions in which the Company is not the surviving
or acquiring corporation, or in which the Company becomes a
wholly-owned subsidiary of another corporation, if any option granted
thereunder is then outstanding and unexercised and the shares
thereunder are not converted or exchanged for securities of another
corporation, then an optionholder is entitled to receive, in exchange
for the cancellation of an option, a cash payment equal to the net
difference between the fair market value of the Company's Common Stock
and the option exercise price. On the other hand, if the transaction
specifically provides for the conversion or exchange of the shares
under any outstanding and unexercised portion of an option for
securities of another corporation, the Company's Compensation
Committee, in its sole discretion, may either (i) permit, in exchange
for the cancellation of an option, a cash payment equal to net
difference between the fair market value of the Company's Common Stock
and the option exercise price or (ii) adjust the shares issuable under
any outstanding and unexercised options in a manner not inconsistent
with the terms of the transaction.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The following table summarizes the value realized by any of the Named
Officers, who exercised options under the Company's former Share Option Plan in
fiscal 1996, as well as the number and value of unexercised options held by each
Named Officer as of December 31, 1996. As the Company has not issued any SARs,
no SARs were exercised.
- 15 -
<PAGE>
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options
Options at Fiscal Year-End at Fiscal Year-End (1)
Shares -------------------------- -----------------------
Acquired on Value
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- -------- ----------- ------------- ----------- -------------
(#) ($) (#) (#) ($) ($)
<S> <C> <C> <C> <C> <C> <C>
Sharon Mates 50,000 $628,100 395,000 50,000 $4,805,000 $525,000
Arthur Y. Elliott -0- -0- 91,666 83,334 979,160 883,341
Daniel J.
Abdun-Nabi -0- -0- 226,666 33,334 3,024,993 350,007
Wayne Morges 13,081 155,337 28,585 33,334 381,151 416,675
Edward Arcuri -0- -0- 24,999 50,001 341,653 683,347
_____________________________
(1) Values based only on (i) the number of options for which the exercise
price was equal to or less than $24.375 (the closing price of the
Company's Common Stock on the AMEX on December 31, 1996) and (ii) the
difference between such closing price and such options' exercise price.
</TABLE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The following report of the Company's Compensation Committee shall not
be deemed to be soliciting material or incorporated by reference by any general
statement incorporating by reference this Proxy Statement into any filing under
the 1993 Act or the 1934 Act, except to the extent that the Company specifically
incorporates this information by reference, and it shall not be otherwise deemed
filed under such acts.
To the Company's Shareholders:
The Compensation Committee of the Company's Board of Directors is
charged with reviewing and approving the compensation of the Company's executive
officers, as well as any other employees earning $130,000 or more per year
thereafter (individually, a "Senior Manager" and, collectively, "Senior
Management"); provided, however, that the President's cash compensation is
- 16 -
<PAGE>
subject to final approval of the entire Board of Directors. For these purposes,
compensation includes salaries, benefits, stock options and any other forms of
remuneration approved by the Compensation Committee. The objectives of the
Compensation Committee's compensation program are three-fold: (i) to create
incentives to achieve outstanding corporate and individual performance, (ii) to
align Senior Management's interests with those of the Company's stockholders
through potential stock ownership and (iii) to assist the Company in attracting
and retaining qualified management by providing competitive levels of
compensation.
Consistent with these objectives and the long-term focus required at
this stage of the Company's development, the Compensation Committee adheres to
the position that a Senior Manager's compensation should consist of a reasonable
cash salary to be supplemented by meaningful equity incentives in the form of
stock option grants, whose ultimate value is tied to long-term corporate
development and enhanced shareholder value.
Salaries for Senior Management are determined initially by evaluating
the responsibilities of the position held and the experience of the individual,
as well as by reference to the competitive marketplace for management talent.
Thereafter, the President, with the assistance of other members of Senior
Management, makes annual salary recommendations for each Senior Manager to the
Compensation Committee. The Compensation Committee reviews such recommendations
and makes such modifications as it deems appropriate. The Compensation Committee
sets final annual salaries, which take effect as of January 1 of each year.
All Senior Managers establish annual goals and objectives (subject to
their respective supervisor's approval) against which they are evaluated. The
Compensation Committee also measures a Senior Manager's performance against any
increased responsibilities assumed. Further adjustments are made to reflect an
assessment of the Company's performance in relation to its strategic and
operational goals, as well as with its economic performance, giving due
consideration to its stage of development. This assessment considers the quality
and measured progress of the Company's research and development program and its
manufacturing and related operations, together with the success of strategic
actions such as corporate financings, research and development agreements,
corporate alliances and similar relationships. The Company has not, however,
established specific performance goals or tied executive compensation to the
achievement of specific performance goals. Based on the foregoing, the
Compensation Committee agreed that salary increases for fiscal 1996 should not
exceed 4% percent for Senior Managers.
- 17 -
<PAGE>
Stock option grants represent a long-term incentive program designed to
link Senior Management compensation with stockholder value over time. In
recognition of the long time horizons required for returns on investments and
strategic decisions in development-stage companies competing in the vaccine
business, these grants also serve to focus Senior Management's attention on the
Company's long-term needs. Generally, stock options are awarded to each Senior
Manager at the time that they join the Company and periodically thereafter. The
Compensation Committee's intent is to immediately align the interests of Senior
Management with those of the Company's shareholders through the initial stock
option grant and then to grant options only on an intermittent basis in
furtherance of this philosophy, taking into account the number of stock options
then held by a Senior Manager. If necessary to retain a Senior Manager, stock
option grants may also be made in amounts that, when aggregated with the other
forms of compensation mentioned above, will be, in the Compensation Committee's
subjective judgment, fair and competitive.
Grants of stock options are generally made upon the recommendations of
the President; however, the actual number of stock options granted is determined
by the Compensation Committee's subjective analyses of each such Senior
Manager's function, salary, length of service, performance and value to the
Company, with no specific weighting given as to any of such factors. All options
granted to Senior Management are made at the then current market price. Options
granted under the 1995 Share Option Plan generally first become exercisable one
year after grant and vest over a three-year period and expire ten years
following the date of grant. Generally, options may be exercised only so long as
the optionee is an employee of the Company or within the twelve-month period
following termination of employment.
These same compensation policies were applied by the Compensation
Committee for Dr. Sharon Mates, who, in the capacity of President, serves as the
Company's chief executive officer. In December 1995, the Compensation Committee
approved a salary increase for fiscal 1996 of $10,920, or approximately 4% of
fiscal 1995's salary. The Compensation Committee recommended this increase after
evaluating (i) Dr. Mates' accomplishments over the past year in light of her
stated goals and objectives, (ii) the Company's performance in relation to its
strategic, operational and economic goals, and (iii) the compensation packages
of officers with similar responsibilities at subjectively selected
development-stage biotechnology companies, with no specific weighting given to
any of such factors. In December 1995, the Compensation Committee also granted
to Dr. Mates an option to purchase 75,000 shares of Common Stock as the equity
portion of her compensation package for fiscal 1995 and 1996. This grant was
based on the subjective analyses by the Compensation Committee of Dr. Mates'
performance and value to the Company, as well as her overall leadership of the
Company from its inception in 1989 through the then current date, with no
specific weighting given to any of such factors.
- 18 -
<PAGE>
In April 1996, the Compensation Committee also extended, by an
additional 18 months, the term of a stock option previously granted to each of
three executive officers, including Dr. Mates, and one director. Each of the
options was due to expire in October 1996. As a matter of policy, the Company
generally does not alter the terms of previously granted options; however, the
Compensation Committee, under unusual circumstances and on a case-by-case basis,
occasionally considers the advisability of granting extensions of an option's
exercise period. The extensions were granted in furtherance of the Company's
efforts to conduct a private placement of subordinated convertible notes that
was consummated in May 1996. In connection with the financing, all officers and
directors were required to execute agreements restricting transactions in the
Company's Common Stock for a prescribed period. In the judgment of the
Compensation Committee, an extension of the term of the options for the 18-month
period was appropriate in order to avoid an unsuitable impairment of value to
the options. In addition, the Compensation Committee noted that the then-current
fair market value of the Company's Common Stock was less than the exercise price
of the stock options extended.
Effective January 1, 1994, the Internal Revenue Service will generally
deny the deduction for Federal income tax purposes for compensation over $1
million paid in any taxable year to the Company's President or any of its four
other most highly compensated executive officers. However, qualifying
performanced-based compensation is not subject to the limitation if certain
requirements are satisfied. Based on the rules under the new law, the Company
believes that compensation expenses associated with the Company's former Share
Option Plan, which expired by its terms in 1995, is exempt from this $1 million
cap. The Company's 1995 Share Option Plan and 1995 Non-Employee Director and
Senior Executive Stock Option Plan, each of which were approved by the Company's
shareholders at the 1995 Annual Meeting of Shareholders, have been designed to
comply with the requirements for deductibility under Section 162(m) of the
Internal Revenue Code of 1986, as amended. Accordingly, the Company does not
expect compensation to any individual to be in excess of $1 million in either
fiscal 1996 or 1997 for purposes of this tax law.
The Compensation Committee is continually evaluating the Company's
compensation programs and procedures with respect to Senior Management.
January 28, 1997 Compensation Committee
Jonathan Deitcher, Chairman
Rondi R. Grey
Richard C. Pfenniger, Jr.
- 19 -
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee for the Company's Board of
Directors during fiscal year 1996 were Jonathan Deitcher, Rondi Grey and Richard
Pfenniger. None of these individuals was or is a current employee or a former or
current officer of the Company or any of its subsidiaries. Rondi Grey is
currently the Corporate Affairs Advisor to the President of BioChem. During
fiscal 1996, Richard Pfenniger served as the Chief Operating Officer of IVAX.
Dr. Bellini is the President and Chief Executive Officer, as well as a
director, of BioChem and serves as a member of BioChem's Human Resources and
Compensation Committee. Mr. Legault is the Senior Vice President, Finance,
Administration and Treasurer of BioChem. Dr. Frost is the Chairman of the Board
and Chief Executive Officer of IVAX, and Mr. Kasprick is a director of IVAX. See
"Certain Transactions" for a description of certain transactions relating to,
among others, Dr. Frost, IVAX, BioChem and the Company.
CERTAIN TRANSACTIONS
The transaction, whereby certain vaccine technologies of BioChem and
American Vaccine Corporation, the predecessor to the Company ("American
Vaccine"), were combined into the Company, was consummated on February 28, 1990
(the "Merger"). As a result of the Merger, BioChem currently holds Common Stock
of the Company, Series A Preferred Stock of the Company, and options to purchase
Common Stock, which options may only be exercised when and to the extent that
the matching options issued to former option holders of American Vaccine are
first exercised. In the Merger, BioChem issued shares to the Company, together
with cash and certain vaccine technologies. In the Merger, the Company and
BioChem granted to each other a one-time demand registration right (with
expenses to be paid by the party exercising the registration right) and certain
piggyback registration rights. The piggy-back registration rights expired on
January 17, 1995 and the demand registration right will expire on January 17,
1998.
- 20 -
<PAGE>
A shareholders' agreement (the "Shareholders' Agreement") was executed
between Dr. Frost, Frost-Nevada and IVAX (collectively, the "Frost Group") and
BioChem as part of the Merger. Under the Shareholders' Agreement, both the Frost
Group and BioChem agreed to nominate an equal number of directors for election
to the Board of Directors of the Company, and such nominees then select one
additional nominee satisfactory to both groups of nominees. The Frost Group and
BioChem agreed to vote all of their respective shares of Common Stock of the
Company to elect to the Board of Directors all of the nominees so selected. The
combination of the voting power of the Frost Group and BioChem under the
Shareholders' Agreement gives them effective control of the Company and enables
them to determine the policies and direct the operations of the Company. The
Shareholders' Agreement also grants the Frost Group and BioChem mutual rights of
first refusal with respect to the sale, transfer or other similar disposition of
any of their shares of the Company's Common Stock, the Company's Series A
Preferred Stock or other securities of the Company held directly or indirectly
by either of them. Such rights of first refusal do not apply, however, to
transfers of such securities by the Frost Group or BioChem to their respective
affiliates. The Shareholders' Agreement will terminate on February 28, 2000. In
addition, in the event that either BioChem or the Frost Group ceases to hold an
aggregate of 50% or more of the Company's Common Stock, the Company's Series A
Preferred Stock and other Company securities owned by it on February 28, 1990,
the selling party will lose its rights of first refusal under the Shareholders'
Agreement and the provisions thereunder regarding the nomination and approval of
nominees to the Board of Directors of the Company will lapse.
In connection with the Merger, Frost-Nevada, IVAX and a former officer
(collectively, the "Indemnitees"), all of whom beneficially owned, at the time,
more than 5% of the outstanding capital stock of American Vaccine, entered into
an Indemnification Agreement with the Company (the "Indemnification Agreement"),
pursuant to which the Company agreed to indemnify the Indemnitees against any
United States federal, state and local income tax liabilities that may arise
under prescribed "gain recognition agreements" that the Indemnitees were
required to file with the United States Internal Revenue Service and that would
require the Indemnitees to recognize gain upon the occurrence of certain events.
Such gain recognition agreements generally would require that the Indemnitees
recognize gain (and file amended tax returns) if the Company sells American
Vaccine stock that it acquired as a result of the Merger or if American Vaccine
sells all or substantially all of its assets (other than in the ordinary course
of business) during the period commencing on the date of consummation of the
Merger and ending December 31, 2000. Under the Indemnification Agreement, the
Company agreed to (i) lend the Indemnitees on an interest-free and after-tax
basis, an amount equal to the taxes to be paid with the amended tax returns, and
- 21 -
<PAGE>
(ii) pay the Indemnitees, on an after-tax basis, any interest and penalties with
respect to the taxes to be paid with the amended returns. However, repayment of
these loans will only be required at the time and to the extent that the
Indemnitees receive benefit from the resulting increase in the tax basis of
their Common Stock or Series A Preferred Stock. There can be no assurance that
any such benefit will be received. Under the Indemnification Agreement, the
Company's directors nominated by the Frost Group, with the exception of Dr.
Frost, will not be precluded from voting upon a transaction that could give rise
to the Company's indemnification obligations to the Indemnitees. The affirmative
vote of 75% of all of the Company's directors, excluding Dr. Frost, will be
required to approve any transaction that could require the payment of any
indemnity pursuant to the Indemnification Agreement. No payments would be
triggered under the Indemnification Agreement arising out of a tender offer for,
or a business combination involving, all of the Company's Common Stock.
In 1996, the Company was represented by law firm of Heller Ehrman White
& McAuliffe in certain matters. Mr Flanzraich, Chairman of the Board of the
Company, is a member of that firm. The Company incurred $66,472 in legal fees to
that firm in 1996.
APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
(Proposal No. 2)
The Board of Directors has recommended that the Company's shareholders
appoint Arthur Andersen LLP as the independent public accountants for the
Company to examine its consolidated financial statements for the year ending
December 31, 1997. Arthur Andersen LLP was previously appointed by the
shareholders as the independent public accountants for the Company for the years
ended December 31, 1989 through 1996. The Company's audited consolidated balance
sheets as of December 31, 1996 and 1995 and audited consolidated statements of
operations, shareholders' equity and cash flows for the years ended December 31,
1996, 1995 and 1994 have been submitted to the shareholders as part of the 1996
Annual Report to Shareholders accompanying this Proxy Statement. A
representative of Arthur Andersen LLP will be present at the Meeting, will have
the right to make a statement if he or she so desires and will be available to
respond to appropriate questions by the shareholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 2
(APPOINTMENT OF ARTHUR ANDERSEN LLP AS INDEPENDENT PUBLIC
ACCOUNTANTS).
- 22 -
<PAGE>
OTHER BUSINESS
The Company is not aware of any other matters that may come before the
Meeting. It is the intention of the persons named in the enclosed proxy to vote
the proxy in accordance with their best judgment if any other matters do
properly come before the Meeting. Whether or not you attend the Meeting in
person, please fill in, date and sign the enclosed proxy and return it promptly.
If you attend the Meeting, you may, of course, vote your shares even though you
may have previously sent in your proxy.
1998 ANNUAL MEETING
In the event that shareholders of the Company intend to make proposals
to be presented at the Company's 1998 Annual Meeting of Shareholders to be held
in May 1998 (or such date as shall be designated by the Board of Directors),
such proposals, to be included in the 1998 Proxy Statement and form of proxy,
must be received by the Company at its principal executive offices by no later
than December 19, 1997.
APPROVAL BY THE BOARD OF DIRECTORS
THE CONTENTS AND SENDING OF THIS PROXY STATEMENT HAVE BEEN APPROVED BY THE BOARD
OF DIRECTORS OF NORTH AMERICAN VACCINE, INC. A COPY OF THIS PROXY STATEMENT HAS
BEEN SENT TO EACH DIRECTOR OF THE COMPANY, TO EACH SHAREHOLDER ENTITLED TO
NOTICE OF THE MEETING AND TO THE COMPANY'S INDEPENDENT PUBLIC ACCOUNTANTS.
/s/ Daniel J. Abdun-Nabi
- --------------------------------
Daniel J. Abdun-Nabi, Secretary
- 23 -
<PAGE>
NORTH AMERICAN VACCINE, INC.
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS TO BE HELD MAY 20, 1997
The undersigned hereby names, constitutes and appoints Sharon Mates and
Neil Flanzraich, or either of them acting in the absence of the other, with the
power of substitution, the undersigned's true and lawful attorney and proxy to
attend, act and vote for and on behalf of the undersigned at the ANNUAL MEETING
OF STOCKHOLDERS OF NORTH AMERICAN VACCINE, INC. (THE "COMPANY") TO BE HELD AT
275 ARMAND-FRAPPIER BOULEVARD, LAVAL, QUEBEC, CANADA ON TUESDAY, MAY 20, 1997
COMMENCING AT 9:00 A.M. (LOCAL TIME), and at any adjournment thereof, and to
vote all the shares of common stock held of record in the name of the
undersigned in the manner specified on the reverse side, with all of the powers
that the undersigned would possess if the undersigned were personally present.
THE UNDERSIGNED RESERVES THE RIGHT TO REVOKE THIS PROXY AT ANY TIME
PRIOR TO ITS EXERCISE BY (i) DULY FILING A WRITTEN NOTICE OF REVOCATION WITH THE
SECRETARY OF THE COMPANY, (ii) DULY EXECUTING AND DELIVERING A PROXY BEARING A
LATER DATE TO THE SECRETARY OF THE COMPANY, (iii) VOTING IN PERSON AT THE
MEETING OR (iv) IN ANY OTHER MANNER PERMITTED BY LAW. FOR ANY WRITTEN NOTICE OF
REVOCATION OR LATER-DATED PROXY TO BE EFFECTIVE, IT MUST BE DELIVERED TO THE
COMPANY'S REGISTERED OFFICE AT ANY TIME UP TO AND INCLUDING THE LAST BUSINESS
DAY PRECEDING THE DAY OF THE MEETING, OR ANY ADJOURNMENT THEREOF, OR TO THE
CHAIRMAN OF THE MEETING ON THE DAY OF THE MEETING, OR ANY ADJOURNMENT THEREOF.
THE COMPANY'S REGISTERED OFFICE IS LOCATED AT 1 PLACE VILLE MARIE, 40TH FLOOR,
MONTREAL, QUEBEC H3B 4M4, CANADA.
The undersigned may appoint a proxyholder, other than the proxyholders
identified above, to attend and act on the undersigned's behalf at the meeting.
To do so, strike the name of the proxyholders above and specify above the
stricken names the name(s) of the person(s) so appointed.
This proxy is being solicited on behalf of management of the Company.
Unless a contrary direction is indicated in this proxy, the shares represented
by this proxy will be voted FOR: (1) all nominees for directors named below and
(2) appointment of Arthur Andersen LLP as independent public accountants of the
company. If specific instructions are indicated, this proxy will be voted in
accordance with such instructions.
PLEASE VOTE, DATE AND SIGN THIS PROXY AND RETURN IT AT ONCE, WHETHER OR NOT YOU
EXPECT TO ATTEND THE MEETING. YOU MAY VOTE IN PERSON IF YOU DO ATTEND THE
MEETING. IF THIS PROXY IS NOT DATED IN THE SPACE PROVIDED BELOW, IT IS DEEMED TO
BEAR THE DATE ON WHICH IT IS MAILED TO SHAREHOLDERS.
(To Be SIGNED On Reverse Side)
<PAGE>
<TABLE>
<CAPTION>
Please mark your
[ X ] votes as in this
example.
<S> <C> <C> <C> <C> <C> <C>
FOR WITHHOLD NOMINEES: FOR WITHHOLD ABSTAIN
1. Election of [ ] [ ] Neil Flanzraich 2. Appointment of Independent [ ] [ ] [ ]
Directors. Francesco Bellini Accountants.
Phillip Frost
Alain Cousineau
FOR, except vote withheld from the Jonathan Deitcher
following nominee(s): Denis Dionne
Rondi Grey 3. Upon such other matters as may properly come
- ---------------------------------- Lyle Kasprick before, or incident to the conduct of, the
Francois Legault meeting in such manner as the proxyholders
Sharon Mates determine to be in the best interests of the
Richard Pfenniger Company. Management is not presently aware of
any such matters to be presented for action
at the meeting.
SIGNATURE(S)____________________________________________ DATE ______________
NOTE: Please sign exactly as name appears hereon. Joint owners should each
sign. When signing as attorney, executor, administrator, trustee or
guardian, please give full title as such.
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