<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] 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
Fuisz Technologies Ltd.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which 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 fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing 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> 2
[FUISZ TECHNOLOGIES LTD. LOGO]
3810 CONCORDE PARKWAY
SUITE 100
CHANTILLY, VIRGINIA 20151
PHONE: (703) 803-3260
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD AUGUST 4, 1997
------------------------
To the Stockholders of
Fuisz Technologies Ltd.
Notice is hereby given that the Annual Meeting of Stockholders of Fuisz
Technologies Ltd. (the "Company") will be held at the Washington Dulles Airport
Hilton, 13869 Park Center Road, Herndon, Virginia 22071, at 10:00 a.m., local
time, on August 4, 1997 for the following purposes:
1. To elect two directors of the Company to serve as Class I Directors
and two directors of the Company to serve as Class II Directors, until the
annual meetings to be held in 1999 and 2000, respectively, and until their
successors have been duly elected and qualified;
2. To ratify the selection of Coopers & Lybrand L.L.P. as independent
public accountants for the Company for the fiscal year ending December 31,
1997;
3. To approve amendments to the Company's stock option and purchase
plans to (a) increase by 1,000,000 shares the number of shares available
for issuance thereunder, (b) satisfy the requirements of Section 162(m) of
the Internal Revenue Code of 1986, as amended, and (c) to make other
technical amendments thereto; and
4. To transact such other business as may properly come before the
meeting and any adjournment thereof.
The Board of Directors has fixed the close of business on June 27, 1997, as
the record date for the determination of stockholders entitled to notice of and
to vote at the Annual Meeting or any adjournment thereof. A list of stockholders
of the Company as of the close of business on June 27, 1997, will be available
for inspection during normal business hours from July 25, 1997 through August 3,
1997, at the Company's executive offices at the address set forth above in
Chantilly, Virginia.
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING IN
PERSON. WHETHER OR NOT YOU EXPECT TO ATTEND IN PERSON, IT IS REQUESTED THAT YOU
PROMPTLY FILL IN, SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD. IF YOU LATER
DESIRE TO REVOKE YOUR PROXY, YOU MAY DO SO AT ANY TIME BEFORE IT IS EXERCISED.
By order of the Board of Directors
Richard C. Fuisz, M.D.
Secretary
July 3, 1997
<PAGE> 3
[FUISZ TECHNOLOGIES LTD. LOGO]
3810 CONCORDE PARKWAY
SUITE 100
CHANTILLY, VIRGINIA 20151
PHONE: (703) 803-3260
-------------------------
PROXY STATEMENT
-------------------------
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Fuisz Technologies Ltd. (the "Company") for
use at the annual meeting of stockholders to be held at 10:00 a.m., local time,
on August 4, 1997, at the Washington Dulles Airport Hilton, 13869 Park Center
Road, Herndon, Virginia 22071, and at any adjournment thereof (the "Meeting").
Written communications to the Company should be sent to the Company's
offices at 3810 Concorde Parkway, Suite 100, Chantilly, Virginia 20151. The
Company can be reached by telephone at (703) 803-3260. This Proxy Statement and
a proxy card, together with a copy of the Company's 1996 Annual Report, are
first being mailed on or about July 3, 1997, to persons who were holders of
record of the Company's Common Stock, par value $0.01 per share (the "Common
Stock"), at the close of business on June 27, 1997 (the "Record Date").
MATTERS TO BE CONSIDERED AT THE MEETING
At the Meeting, the holders of shares of Common Stock as of the Record Date
will be asked to consider and vote upon the three proposals described in this
Proxy Statement and on any other matter properly brought before the Meeting.
With respect to any matter to come before the Meeting, holders of record of
Common Stock will be entitled to one vote for each share of Common Stock held.
The following is a brief summary of the three proposals. The summary is not
intended to be a complete statement of all material features of the proposals
and is qualified in its entirety by the more detailed information contained
elsewhere in this Proxy Statement.
Proposal I
Proposal I concerns the election to the Board of Directors of two Class I
directors and two Class II directors, each of whom are currently serving as
members of the Board of Directors.
Proposal II
Proposal II concerns ratification of the appointment of Coopers & Lybrand
L.L.P. as the Company's independent public accountants.
Proposal III
Proposal III concerns the approval of amendments to the Company's stock
option and purchase plans to (a) increase by 1,000,000 shares the number of
shares available for issuance thereunder, (b) satisfy the requirements of
Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code"),
and (c) to make other technical amendments thereto.
<PAGE> 4
VOTING AT THE MEETING
The Board of Directors has fixed June 27, 1997 as the Record Date for the
Meeting, and only holders of record of the Common Stock at the close of business
on the Record Date are entitled to notice of, and to vote at, the Meeting. On
the Record Date, there were outstanding and entitled to vote approximately
20,764,000 shares of the Common Stock.
The presence, in person or by proxy, of the holders of a majority of the
outstanding shares of the Common Stock is necessary to constitute a quorum at
the Meeting. The election of the Board of Directors requires the affirmative
vote of a plurality of the shares of the Common Stock present and voting at the
Meeting. "Plurality" means that the individuals who receive the largest number
of votes cast "for" directors of a given class are elected as directors up to
the maximum number of directors for each such class to be chosen at the Meeting.
Ratification of the appointment of the Company's independent public
accountants, approval of the amendments to the Company's stock option and
purchase plans and approval of any other business properly brought before the
Meeting shall be decided by the affirmative vote of the holders of a majority of
the shares of Common Stock present, in person or represented by proxy, at the
Meeting and entitled to vote thereon, unless a higher vote is required for any
such other matter under applicable state law or the Company's Amended and
Restated Certificate of Incorporation (the "Certificate of Incorporation") or
By-laws.
In accordance with Delaware law, abstentions and shares held of record by a
broker or its nominee ("Broker Shares") that are voted on any particular matter
are included for purposes of determining the number of votes present on such
matter. Broker Shares that are not voted on any particular matter at the Meeting
will not be treated as present for such matter.
PROXIES
If the enclosed proxy is properly executed and returned in time for the
Meeting, the shares of stock represented thereby will be voted in accordance
with the instructions given thereon. If no instructions are given, such shares
will be voted "FOR" each nominee as director, "FOR" ratification of the
appointment of Coopers & Lybrand L.L.P. as the Company's independent public
accountants, and "FOR" approval of the amendments to the Company's stock option
and purchase plans described herein. Proxies will extend to, and be voted at,
any adjournment of the Meeting.
The Board of Directors does not intend to bring before the Meeting any
business other than as set forth in this Proxy Statement and has not been
informed that any other business is to be presented at the Meeting. However,
should any other matter properly come before the Meeting, it is the intention of
the persons named as proxies in the accompanying proxy or their duly authorized
and constituted substitutes to vote or act thereon in accordance with their best
judgment.
Any stockholder who has executed and returned a proxy and who for any
reason desires to revoke such proxy may do so at any time before the proxy is
exercised (i) by giving written notice prior to the Meeting, to the Secretary of
the Company at the above address, (ii) by voting the shares represented by such
proxy in person at the Meeting, or (iii) by giving a later dated proxy at any
time before the voting. Attendance at the Meeting will not, by itself, revoke a
proxy.
EXPENSES OF SOLICITATION
The costs of the solicitation of proxies will be borne by the Company. Such
costs include preparation, printing and mailing of the Notice of Annual Meeting
of Stockholders, this Proxy Statement, the enclosed proxy and the Company's 1996
Annual Report, and the reimbursement of brokerage firms and others for
reasonable expenses incurred by them in connection with the forwarding of proxy
solicitation materials to beneficial owners. The solicitation of proxies will be
conducted primarily by mail, but may include telephone, facsimile or oral
communications by directors, officers, or regular employees of the Company
acting without special compensation.
2
<PAGE> 5
PROPOSAL I
ELECTION OF DIRECTORS
INTRODUCTION
The Certificate of Incorporation of the Company provides that the Board of
Directors shall be divided into three classes, Class I, Class II and Class III,
as nearly equal in number as possible. The terms in office of the Directors of
each of these classes expire at the annual meeting in the year indicated
therein, in each case when their respective successors are elected and
qualified. At each subsequent annual election, Directors chosen to succeed those
whose terms are expiring will be identified as being part of that same class and
will be elected for a three year term.
The Board of Directors has nominated Richard C. Fuisz and Antone J. Lazos
for reelection as members of Class I, with a term to expire on the date of the
1999 Annual Meeting, and has nominated Fredrik C. Schreuder and John R. Fuisz to
stand for reelection as members of Class II, with a term to expire on the date
of the 2000 Annual Meeting. All of the nominees are currently serving on the
Board of Directors and have consented to being named as such in this Proxy
Statement and have agreed to serve if elected. The persons named in the
accompanying form of proxy intend to vote at the Meeting (unless directed not to
so vote) for the reelection of each of the four nominees unless any nominee
should become unavailable for election at the time of the Meeting, in which case
such persons may in their discretion vote for a substitute nominee or the Board
of Directors may choose to reduce the number of directors. The Board of
Directors has no reason to believe that any nominee will be unavailable.
The following table sets forth each nominee's name, age, position and the
year in which such nominee first became a director.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR EACH OF THE
NOMINEES NAMED BELOW.
NOMINEES
NOMINEES FOR ELECTION AS DIRECTORS WHOSE TERMS EXPIRE IN 1999 (CLASS I)
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE POSITION SINCE
- -------------------------------------------- --- -------------------------------------- --------
<S> <C> <C> <C>
Richard C. Fuisz............................ 57 Chairman of the Board of Directors 1989
Antone J. Lazos(1)(2)....................... 54 Director 1991
</TABLE>
NOMINEES FOR ELECTION AS DIRECTORS WHOSE TERMS EXPIRE IN 2000 (CLASS II)
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE POSITION SINCE
- -------------------------------------------- --- -------------------------------------- --------
<S> <C> <C> <C>
John R. Fuisz............................... 29 Director 1992
Fredrik C. Schreuder(1)..................... 60 Director 1994
</TABLE>
DIRECTORS WHOSE TERMS EXPIRE IN 1998 (CLASS III)
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE POSITION SINCE
- -------------------------------------------- --- -------------------------------------- --------
<S> <C> <C> <C>
Donald E. O'Neill(2)........................ 71 Director 1991
John Pappajohn(1)(2)........................ 68 Director 1990
Kenneth W. McVey............................ 58 President and Chief Executive Officer 1996
of the Company; Director
</TABLE>
- ---------------
(1) Member of the Audit Committee.
(2) Member of the Compensation Committee.
3
<PAGE> 6
BACKGROUND OF NOMINEES AND CONTINUING DIRECTORS
Richard C. Fuisz, M.D., founder of the Company, has served as the Chairman
of the Board since 1989. Until April 1997, Dr. Fuisz was also the Company's
President and Chief Executive Officer. From 1975 until 1982, Dr. Fuisz was
President and Chief Executive Officer of Medcom, a publicly traded medical
training company, which was subsequently acquired by Baxter Healthcare
Corporation. Inventor of the Company's core technology, Dr. Fuisz founded the
Company in June 1988. Dr. Fuisz received his B.S. and M.D. from Georgetown
University.
Antone J. Lazos has served as a director of the Company since 1991. In
October 1995, Mr. Lazos founded and since that time has served as Chief
Executive Officer of StorCOMM, Inc., a clinical information management company.
From 1981 to 1994, Mr. Lazos was Chairman and Chief Executive Officer of Medical
Imaging Centers of America, Inc., a diagnostic imaging company. From 1994 to
1995, Mr. Lazos was President of Greenbriar Consulting.
John R. Fuisz has served as a director of the Company since 1992. Mr. Fuisz
is an attorney specializing in intellectual property litigation at the
Washington, D.C. law firm of Dickstein, Shapiro, Morin & Oshinsky L.L.P., with
which he has been associated since August 1996. Prior to that, Mr. Fuisz served
as an attorney with the Washington, D.C. law firm of Nikaido, Marmelstein,
Murray and Oram L.L.P., with which he was associated since 1992.
Fredrik C. Schreuder has served as a director of the Company since August
1994. Since 1989, Mr. Schreuder has been President of Medical Venture Management
A/S, a consulting venture capital firm. From 1983 to 1989, Mr. Schreuder served
as an Executive Vice President of Hafslund Nycomed, a medical imaging company.
Donald E. O'Neill has served as a director of the Company since 1991. Mr.
O'Neill was a director, Vice President and Chairman of International Operations
of Warner Lambert Company between 1986 and 1991. Mr. O'Neill serves as a
director of Cytogen Corporation, Targeted Genetics, Alliance Pharmaceutical
Corporation, Fujisawa USA, MDL Information Systems and Immunogen.
John Pappajohn has served as a director of the Company since 1990. Since
1969, Mr. Pappajohn has been the sole owner of Pappajohn Capital Resources, a
venture capital firm, and President of Equity Dynamics, Inc., a financial
consulting firm, both based in Des Moines, Iowa. Mr. Pappajohn currently serves
as a director of the following public companies: Care Group, Inc., Core, Inc.,
Drug Screening Systems, Inc., HealthDesk Corporation, OncorMed, Inc., PACE
Health Management Systems, Inc., and Patient Infosystems Inc.
Kenneth W. McVey joined the Company in December 1996 as a director and as
President and Chief Executive Officer of Fuisz International Holdings Limited, a
wholly-owned subsidiary of the Company. In April 1997, Mr. McVey was also
appointed as President and Chief Executive Officer of the Company. Mr. McVey has
spent more than thirty years in the pharmaceutical industry. Prior to joining
the Company, Mr. McVey served as President of Elan Pharma International, a
division of Elan Corporation PLC ("Elan") and as Executive Vice President of
Elan responsible for commercial and business development, licensing and
intellectual property. He served on the Board of Directors of Elan from 1992
until 1996.
John R. Fuisz is the son of Dr. Fuisz. There are no other family
relationships among any of the directors or executive officers of the Company.
COMMITTEES AND BOARD MEETINGS
During 1996, there were four regular meetings of the Board of Directors.
Each incumbent director who is a nominee for re-election attended 75% or more of
the aggregate of the meetings of the Board and of the Board committees on which
he served.
The Board has two standing committees, an Audit Committee and a
Compensation Committee. Their functions are described below.
4
<PAGE> 7
Audit Committee. The Audit Committee meets with management and the
Company's independent accountants to consider the adequacy of the Company's
internal controls and financial reporting. The Audit Committee recommends to the
Board the Company's independent accountants; discusses with the independent
accountants their audit procedures, including the proposed scope and timing of
the audit, the audit results and accompanying management letters; reviews the
auditor's fees and services; and in general endeavors to ensure the independence
of the auditors and accountants. The Audit Committee met once during 1996. The
current members of the Audit Committee are Messrs. Lazos, Pappajohn and
Schreuder.
Compensation Committee. The Compensation Committee reviews and approves
the direct and indirect compensation and employee benefits of the executive
officers of the Company, particularly the Chief Executive Officer; administers
the Company's stock option and incentive compensation plans; and reviews in
general the Company's policies relating to the compensation of senior management
and other employees. The Compensation Committee held two meetings during 1996.
The current members of the Compensation Committee are Messrs. Lazos, O'Neill and
Pappajohn.
DIRECTORS' COMPENSATION
Directors who are employees of the Company do not receive any compensation
for their service as directors. The Company reimburses each director who is not
an employee of the Company for his out-of-pocket expenses for attending meetings
of the Board of Directors.
In May 1994, the Board adopted and the stockholders of the Company approved
the 1994 Director Stock Option Plan (the "Director Option Plan") and the Board
provided that no additional options would be granted under the Company's 1991
Stock Option Plan (the "1991 Stock Option Plan"). The Director Option Plan
provides that each new non-employee director first elected thereafter will
receive a non-statutory option to purchase 30,000 shares of Common Stock upon
his or her initial election. In addition, each non-employee director will
receive a non-statutory option to purchase 3,000 shares of Common Stock under
the Director Option Plan on the fifth business day following the end of each
fiscal year, provided that he or she remains as an eligible director on the date
of grant. All options granted to directors under the Director Option Plan are
fully vested when granted, have an exercise price equal to the fair market value
of the Common Stock on the date of grant and expire ten years after the date of
grant or 90 days after the optionee ceases to serve as a director. Pursuant to
the terms of the Director Option Plan, each of the five non-employee directors
received an option to purchase 3,000 shares of Common Stock at a price of $9.83
per share in January 1996.
EXECUTIVE COMPENSATION
The following table sets forth information regarding the compensation of
the Chief Executive Officer and the four other most highly compensated executive
officers of the Company serving as executive officers at the end of calendar
year 1996 (the "Named Executive Officers") whose total compensation during that
year exceeded $100,000.
5
<PAGE> 8
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
--------------------------------------- AWARDS
OTHER ------------------
ANNUAL SECURITIES
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(1) UNDERLYING OPTIONS
- ---------------------------------------- ---- -------- ---------- --------------- ------------------
<S> <C> <C> <C> <C> <C>
Richard C. Fuisz, M.D.(2)............... 1996 $358,333 $ 225,000 -- 150,000
Chairman of the Board 1995 254,168 225,000 -- 90,000
1994 220,833 100,000 -- 105,000
Kenneth W. McVey(3)(4).................. 1996 -- 3,000,000 -- --
President and Chief Executive
Officer
Patrick D. Scrivens..................... 1996 247,196 150,000 -- 50,000
Executive Vice President and 1995 184,167 150,000 -- 90,000
Chief Financial Officer 1994 125,000 75,000 -- 375,000
Adrian M. Gerber(4)..................... 1996 233,307 198,141(5) -- --
Executive Vice President, 1995 -- -- -- 225,000
Business Development and Licensing
Michael Myers(4)........................ 1996 181,667 47,208(6) -- 87,500
Executive Vice President, 1995 12,222 12,747(6) -- 37,500
Pharmaceutical Operations
</TABLE>
- ---------------
(1) Pursuant to regulations of the Securities and Exchange Commission,
perquisites not exceeding the lesser of $50,000 or 10% of an executive's
combined salary and bonus are not required to be reported.
(2) Dr. Fuisz resigned as Chief Executive Officer and President of the Company
on April 17, 1997.
(3) Mr. McVey was named Chief Executive Officer and President of the Company on
April 17, 1997.
(4) Mr. McVey joined the Company in 1996 and Messrs. Gerber and Myers joined the
Company in 1995. No information has been provided for prior years.
(5) Includes $148,141 in relocation expenses and payments in amounts estimated
to cover the income tax liability to the executive in connection with such
payments.
(6) Includes $17,208 and $12,039 in relocation expenses and payments in amounts
estimated to cover the income tax liability to the executive in connection
with such payments in 1996 and 1995, respectively.
The following table sets forth information regarding stock options granted
during 1996 by the Company to the Named Executive Officers.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
------------------------------------------------------------ POTENTIAL REALIZED
NUMBER OF % OF TOTAL VALUE AT ASSUMED ANNUAL
SECURITIES OPTIONS MARKET RATES OF STOCK PRICE
UNDERLYING GRANTED TO PRICE ON APPRECIATION(1)
OPTIONS EMPLOYEES IN EXERCISE DATE OF EXPIRATION -----------------------
NAME GRANTED FISCAL YEAR PRICE GRANT DATE 5% 10%
- ------------------------ ---------- ------------ -------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Richard C. Fuisz,
M.D................... 150,000 18.8% $25.00 $25.00 4/29/06 $2,358,355 $5,976,534
Kenneth W. McVey........ -- -- -- -- -- -- --
Patrick D. Scrivens..... 50,000 6.3% 25.00 25.00 4/29/06 786,118 1,992,178
Adrian M. Gerber........ -- -- -- -- -- -- --
Michael Myers........... 37,500 4.7% 15.17 15.17 2/1/06 357,685 906,443
50,000 6.3% 25.00 25.00 4/29/06 786,118 1,992,178
</TABLE>
- ---------------
(1) Amounts represent hypothetical gains that could be achieved for the
respective options if exercised at the end of the option term. These gains
are based on assumed rates of stock price appreciation of 5% and 10%
compounded annually from the date the respective options were granted to
their expiration date. This table does not take into account any
appreciation in the price of the Common Stock to date.
6
<PAGE> 9
The following table sets forth certain information regarding the exercise
of options during the year ended December 31, 1996, and the number and value of
unexercised options held at December 31, 1996 by the Named Executive Officers.
AGGREGATE OPTION EXERCISES IN 1996 AND OPTION VALUES AT DECEMBER 31, 1996
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
ACQUIRED OPTIONS AT FY-END AT FY-END(1)
ON VALUE --------------------------- ---------------------------
NAME EXERCISE REALIZED(2) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----------------------------- -------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Richard C. Fuisz, M.D. ...... -- -- 242,500 102,500 $ 450,179 $ 3,600
Kenneth W. McVey............. -- -- -- -- -- --
Patrick D. Scrivens.......... 115,000 $ 1,969,183 292,778 107,222 979,587 144,055
Adrian M. Gerber............. -- -- 124,999 100,001 -- --
Michael Myers................ -- -- 48,611 76,389 -- --
</TABLE>
- ---------------
(1) Based upon a market value of the Common Stock of $7.875 per share as of
December 31, 1996.
(2) Based on difference between option exercise price and market price of Common
Stock on date of exercise.
Employment Agreements
The Company has entered into employment agreements with each of the Named
Executive Officers other than Dr. Fuisz. Generally the employment agreements
establish an initial base salary and, in some cases, a guaranteed annual bonus.
Each agreement is conditioned upon the execution of a confidentiality agreement
by the employee, and provides for relocation costs, participation in the
Company's medical and life insurance plans, an automobile allowance and a stock
option award to purchase shares of the Company's common stock.
Mr. McVey was initially employed by the Company as President and Chief
Executive Officer of Fuisz International, Ltd., a wholly-owned subsidiary of the
Company, for an initial period of three years, beginning on December 31, 1996.
On April 17, 1997, Mr. McVey was additionally named Chief Executive Officer and
President of the Company. Mr. McVey's employment agreement provides for an
initial base salary of $400,000 per year, subject to an annual increase at least
equal to the annualized inflation rate of the United Kingdom. Mr. McVey is also
entitled to an annual performance bonus of at least $190,000, which may be
increased at the discretion of the Compensation Committee of the Board of
Directors. Mr. McVey is entitled to participate in the Company's Stock Option
Plan. All options awarded thereunder vest no later than upon the expiration of
the employment agreement, including any renewals thereof. The Company is
required to provide medical and insurance coverage to Mr. McVey and his family
throughout the term of his employment and to provide pension benefits no less
favorable than those provided by his former employer. The Company, through one
of its wholly-owned subsidiaries, has agreed to receive Mr. McVey's services
through a management company incorporated in Bermuda. Payments are made to the
management company in lieu of salary being paid to Mr. McVey.
In recognition of the forfeiture by Mr. McVey of common stock ownership
rights provided by his previous employer, Mr. McVey received restricted stock of
the Company, having a market value on the date of grant equal to $3.0 million.
All of the shares vested on December 31, 1996 and are subject to a contractual
restriction on transfer through January 1, 1998. Beginning January 1, 1998, Mr.
McVey may transfer one third of the shares, with the transfer restrictions on
each remaining third expiring each January 1, so that all restrictions expire on
January 1, 2000. In the event of a "change of control" of the Company (as
defined in the employment agreement), all transfer restrictions shall terminate.
All transfers by Mr. McVey are subject to a right of first refusal to the
Company.
The Company's employment agreement with Mr. Scrivens provided for an
initial employment term of three years beginning on October 19, 1994 (the
initial employment term has since been extended through October 19, 1999). Mr.
Scrivens may terminate his employment agreement at any time upon thirty days
7
<PAGE> 10
written notice. The employment agreement provides that if the Company terminates
the employment of Mr. Scrivens without "cause" (as defined in the employment
agreement) or Mr. Scrivens terminates his employment for "good reason" following
a "change in control" of the Company (each as defined), he is entitled to
receive monthly severance payments in an amount equal to his monthly base
salary, plus one-twelfth of his highest annual bonus during the preceding five
years, through the remaining term of his employment agreement or, if longer,
twelve months following termination. In addition, under these circumstances all
stock options will vest and the period for their exercise will be extended
through the original term of the option, and all insurance benefits will
continue to be provided for twelve months following termination. The employment
agreement contains provisions regarding the protection of confidential
information and assignment of inventions to the Company and a covenant not to
compete during the employment period and one year thereafter.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The compensation of the Company's executive officers is reviewed and
approved annually by the Compensation Committee (the "Committee"). The Committee
is currently composed of three non-employee directors. In addition to reviewing
and approving executive officers' salary and bonus arrangements, the Committee
administers the awards of stock options pursuant to the Company's stock option
and incentive plans.
COMPENSATION POLICIES APPLICABLE TO EXECUTIVE OFFICERS FOR 1996
The objectives of the Company's executive compensation program are to (i)
attract, motivate, and retain key executives responsible for the success of the
Company, (ii) reward key executives based on corporate and individual
performance, and (iii) provide incentives designed to maximize shareholder
value. The three primary components of the executive officer compensation
program are base salaries, annual cash bonuses, and equity awards in the form of
stock options.
BASE SALARY
The base salary of each of the Company's executive officers is generally
established pursuant to an employment agreement that is approved by the
Committee. Base salaries are reviewed annually by the Committee after
considering salary recommendations prepared by the Chief Executive Officer (the
"CEO") (except for the CEO's base salary) and other executive officers.
Recommendations for 1996 executive officer salary adjustments were based
primarily on a subjective evaluation of past and potential future individual
performance and contributions and alternative opportunities that might be
available to the executives in question. The Committee reviewed compensation
data from companies employing executives in positions similar to the Company's
executive officers as well as market conditions for executives in general with
similar skills, background and performance levels.
EXECUTIVE BONUS PLAN
Each executive is entitled to receive an annual bonus which is determined
by the Committee after considering recommendations prepared by the CEO (other
than as to himself). In preparing the recommendations, the CEO subjectively
considers, among other things, such executives' leadership and teamwork skills,
as well as relationships with the Company's current and prospective customers.
STOCK OPTIONS
Options to purchase the Company's common stock are a key component of the
Company's executive compensation program. The Committee views the grant of stock
options as a valuable incentive that serves to align the interests of executive
officers with the Company's goal of enhancing stockholder value. Options will
only have value to an executive officer if the stock price increases over the
exercise price. The Committee reviews and acts upon recommendations by the
Company's CEO with regard to the grant of stock options to executive officers
(other than to himself). In determining the size and other terms of an option
grant to an
8
<PAGE> 11
executive officer, the Committee considers a number of factors, including such
officer's position, responsibilities and previous stock option grants (if any).
Options typically vest in equal installments over three to five years and,
therefore, encourage an officer to remain in the employ of the Company.
During 1996, the Committee authorized the exchange of 134,800 non-executive
employee stock options originally granted during 1996 under the 1994 Stock
Incentive Plan at exercise prices ranging from $8.00 to $30.25 for 134,800 stock
options having an exercise price of $10.375 and $7.6875, the fair market value
on the dates of exchange. The Committee approved this exchange because
management determined that these options did not provide a meaningful incentive
to employees and were not effective in aligning the interests of employees with
those of the Company's shareholders. The Committee and management recognize the
contributions the employees make to the success of the Company, and believe that
this justifies repricing these options to reflect market conditions and the
reliance by the Company on compensating its employees with non-cash
compensation.
CHIEF EXECUTIVE OFFICER COMPENSATION
In determining the overall compensation package for the CEO, the Committee
considered each of the factors enumerated in the preceding paragraphs regarding
compensation for executive officers of the Company. In setting the overall
compensation of the CEO, however, the Committee considered the aggregate base
salary, bonus and option packages of Chief Executive Officers in comparable
positions, and gave particular weight to the successful completion of the
Company's initial public offering in December 1995 and secondary offering in
April 1996.
OTHER MATTERS
Under Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"), a publicly-held corporation such as the Company will not be allowed a
federal income tax deduction for compensation paid to the executive officers
named in the Summary Compensation Table to the extent that compensation
(including stock-based compensation) paid to a particular officer exceeds $1.0
million in any fiscal year, unless such compensation was "performance based."
Stock options granted under the Company's stock option and incentive plans
currently qualify as "performance-based compensation" that is not subject to the
deduction limitation of Section 162(m). The Committee intends to evaluate other
elements of compensation in light of Section 162(m), but may enter into
arrangements that do not satisfy exceptions to Section 162(m), as the Committee
determines to be appropriate. In particular, the federal income tax deduction
available to the Company relating to the $3.0 million restricted stock grant in
1996 to Mr. McVey will be limited to $1.0 million.
COMPENSATION COMMITTEE
Antone J. Lazos
Donald E. O'Neill
John Pappajohn
The above report of the Committee shall not be deemed incorporated by
reference by any general statement incorporating by reference this Proxy
Statement into any filing under the Securities Act of 1933 or under the
Securities Exchange Act of 1934, except to the extent that the Company
specifically incorporates this information by reference, and shall not otherwise
be deemed filed under such Acts.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Committee consists of Messrs. O'Neill, Lazos and Pappajohn. No member
of the Committee is employed by the Company.
On May 20, 1997, the Company acquired all of the capital stock of Pangea,
Ltd., a Delaware corporation engaged in the business of product marketing and
distribution ("Pangea"). Under the terms of the stock purchase agreement (the
"Agreement"), the Company paid in aggregate purchase price of $1,023,000 to
9
<PAGE> 12
Pangea stockholders in exchange for all outstanding Pangea capital stock and
cancellation of all options and warrants to purchase Pangea capital stock. In
connection with the acquisition, the Company repaid approximately $837,000 of
indebtedness of Pangea.
Prior to the closing of the transaction, Mr. Pappajohn was a stockholder
and director of Pangea. At the closing, Mr. Pappajohn received $500,000 of the
purchase price for his Pangea shares and repayment in full of $200,000 in loans
to Pangea. Dr. Richard C. Fuisz was a director of Pangea at the time of the
acquisition but received no compensation with respect thereto.
COMPANY STOCK PERFORMANCE GRAPH
The following graph compares the cumulative returns of $100 invested on
December 16, 1995 (the date of the Company's initial public offering) in (a) the
Company, (b) the CRSP Index for the Nasdaq Stock Market (the "Nasdaq U.S.
Companies") and (c) the CRSP Index for Nasdaq Pharmaceutical Stocks (the "Nasdaq
Pharmaceutical Stocks"), assuming reinvestment of all dividends.
<TABLE>
<CAPTION>
Nasdaq
Measurement Period Pharmaceutical Fuisz
(Fiscal Year Covered) Nasdaq Composite Index Technologies
<S> <C> <C> <C>
12/16/95 100.00 100.00 100.00
12/31/95 102.67 111.96 127.09
12/31/96 126.26 112.27 98.44
</TABLE>
Prior to December 16, 1995, there was no active market for the Company's
Common Stock. Therefore, the prices of the Company's Common Stock as set forth
in the Performance Graph are for a period from December 16, 1995 until December
31, 1996.
10
<PAGE> 13
PROPOSAL II
RATIFICATION OF COMPANY'S INDEPENDENT PUBLIC ACCOUNTANTS
The selection of Coopers & Lybrand L.L.P. as the Company's independent
public accountants for fiscal year 1997 has been approved by the Board of
Directors. Coopers & Lybrand has served as the Company's independent public
accountants since 1990. The stockholders of the Company are requested to ratify
this selection. This proposal is put before the stockholders in conformity with
the current practice of seeking stockholder approval of the selection of
independent public accountants. If the stockholders do not approve this
selection, the Board of Directors will reconsider the appointment.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE RATIFICATION
OF COOPERS AND LYBRAND L.L.P. AS THE COMPANY'S INDEPENDENT PUBLIC ACCOUNTANTS.
The audit for the Company for the fiscal year ending December 31, 1996, was
conducted by Coopers & Lybrand. A representative of Coopers & Lybrand is
expected to attend the Meeting and will have the opportunity to make a statement
and/or respond to appropriate questions from stockholders present at the
Meeting.
PROPOSAL III
APPROVAL OF AMENDMENTS TO THE COMPANY'S 1994 STOCK OPTION
AND PURCHASE PLANS
The Board of Directors of the Company has adopted, subject to stockholder
approval, an amendment to each of the 1994 Director Stock Option Plan, 1994
Employee Stock Purchase Plan and 1994 Stock Incentive Plan (collectively, the
"1994 Plans") to increase the aggregate number of shares of Common Stock which
may be issued pursuant to the exercise of options under the 1994 Plans, together
with the shares issued under the 1991 Stock Option Plan (the "1991 Plan," and
together with the 1994 Plans, the "Plans"), from 3,900,000 shares to 4,900,000
shares. In addition, the Board of Directors has adopted an amendment to the 1994
Stock Incentive Plan in order to satisfy the requirements of Section 162(m) of
the Code to provide that no employee may be granted any options under the 1994
Stock Incentive Plan for more than 400,000 shares in the aggregate in any
calendar year. Finally, the Board of Directors has adopted an amendment to the
1994 Director Stock Option Plan clarifying that the number of shares issuable
annually pursuant to the exercise of stock options granted under the 1994
Director Stock Option Plan has been adjusted to reflect stock splits and stock
dividends.
As of April 30, 1997, approximately 50,000 shares of Common Stock are
available for issuance under the 1994 Plans. The Board of Directors believes
that the 1994 Plans are a key component of the Company's ability to attract and
retain key personnel. The Board considers the amendments to the 1994 Plans to be
necessary to provide for future grants over the remaining term of the 1994
Plans. Except as discussed herein, the amendments will not affect the other
provisions of the 1994 Plans and, in particular, will not extend their
respective terms. A summary of the material features of the 1994 Plans are set
forth below. A copy of the 1994 Plans may be obtained by sending a written
request to the Corporate Secretary.
Stockholder approval of the terms of the 1994 Stock Incentive Plan
described herein, as amended to limit to 400,000 the number of shares subject to
options under the 1994 Stock Incentive Plan that may be granted to any employee
in any calendar year, is necessary in order to allow the Company to fully deduct
certain compensation to executive officers whose compensation is required to be
disclosed in the Company's proxy statement. Under Section 162(m) of the Code,
the requirements that must be satisfied in order for compensation related to
options granted in the future under the 1994 Stock Incentive Plan to be
"performance-based compensation" not subject to the $1,000,000 deduction
limitation include (i) the Company must place a limit on the number of shares
subject to options that may be granted to an employee during any calendar year
under the 1994 Stock Incentive Plan, (ii) the exercise price of such options
must be at least equal to the fair market value of the underlying shares on the
date of grant and (iii) such options must be awarded by a committee consisting
solely of two or more "outside directors" (as defined in Section 162(m)).
Although the Board of Directors does not believe that compensation levels of the
Company's executive officers
11
<PAGE> 14
will reach the Section 162(m) deductibility limit in fiscal 1997, the Board of
Directors believes that it is important for the Company to take all steps
reasonably necessary to ensure that the Company will be able to take all
available tax deductions with respect to compensation resulting from options
granted under the 1994 Stock Incentive Plan.
TERMS OF THE 1994 PLANS
The Company currently has four stock incentive plans, the 1994 Plans and
the 1991 Plan. The Board has provided that no further grants may be made under
the 1991 Plan. Under the 1994 Plans, a variety of awards, including stock
options, stock appreciation rights and restricted and unrestricted stock grants
may be made to the Company's directors, officers, employees, consultants and
advisors who are and are expected to contribute to the Company's future growth
and success. At June 20, 1997, the market value of the Common Stock was $9.00.
1994 Director Stock Option Plan. The 1994 Director Stock Option Plan (the
"Director Option Plan") is administered by the Board of Directors and provides
that each non-employee director will receive a nonstatutory option to purchase
30,000 shares of Common Stock upon his or her initial election to the Board. In
addition, each non-employee director will receive a nonstatutory option to
purchase 3,000 shares of Common Stock under the Director Option Plan on the
fifth business day following the end of each fiscal year, provided that he or
she remains as an eligible director on the date of grant. All options granted to
directors under the Director Option Plan are fully vested when granted, have an
exercise price equal to the fair market value of the Common Stock on the date of
grant and expire ten years after the date of grant or 90 days after the optionee
ceases to serve as a director. The Board of Directors may at any time suspend,
discontinue or amend the Director Option Plan without stockholder approval, but
may not, without stockholder approval, increase the number of shares subject to
the Director Option Plan (other than to reflect a change in capitalization),
change the designation of the class of directors eligible to receive options or
materially increase the benefits accruing to participants under the Director
Option Plan.
1994 Employee Stock Purchase Plan. Under the Company's 1994 Employee Stock
Purchase Plan (the "Stock Purchase Plan"), which is administered by the Board of
Directors or a committee designated by the Board, officers and other employees
of the Company are eligible to participate in semiannual plan offerings in which
payroll deductions may be used to purchase shares of Common Stock. The purchase
price of such shares is the lower of 85% of the fair market value of the Common
Stock on the day the offering commences and 85% of the fair market value of the
Common Stock on the day the offering terminates. The Board or committee
designated by the Board may terminate or amend the Stock Purchase Plan at any
time, without stockholder approval, except for amendments that would cause the
Stock Purchase Plan to fail to comply with certain federal securities and tax
laws, or where stockholder approval is required under the rules of Nasdaq or
such national securities exchange on which the Common Stock is then traded.
1994 Stock Incentive Plan. Under the Company's 1994 Stock Incentive Plan
(the "Stock Incentive Plan"), a variety of awards, including stock options,
stock appreciation rights and restricted and unrestricted stock grants may be
made to the Company's employees, officers, consultants and advisors who are
expected to contribute to the Company's future growth and success. The
Compensation Committee administers the Stock Incentive Plan and determines the
price and other terms upon which awards shall be made. Stock options may be
granted either in the form of incentive stock options or nonstatutory stock
options. The option exercise price of incentive stock options may not be less
than the fair market value of the Common Stock on the date of grant. The
Compensation Committee anticipates that all options granted under the Stock
Incentive Plan will be granted with an exercise price at least equal to the fair
market value of the underlying shares on the date of grant to the extent that
the Compensation Committee intends such options to comply with the requirements
of Section 162(m) of the Code. While the Company currently anticipates that most
grants under this Plan will consist of stock options, the Company may grant
stock appreciation rights, which represent rights to receive any excess in value
of shares of Common Stock over the exercise price, restricted stock awards,
which entitle recipients to acquire shares of Common Stock, subject to the
rights of the Company to repurchase all or part of such shares at their purchase
price in the event that the conditions specified in the award are not satisfied,
or unrestricted stock awards, which represent grants of shares to participants
free of any restrictions under the Stock Incentive Plan. Options or other awards
that are granted under the Stock Incentive Plan but expire unexercised are
available for future grants. The Board may amend, suspend or terminate the Stock
Incentive
12
<PAGE> 15
Plan at any time, without stockholder approval, except for amendments requiring
stockholder approval in order to comply with applicable tax or regulatory
requirements.
Federal Income Tax Consequences. The following discussion of the federal
income tax consequences of the 1994 Plans is intended to be a summary of
applicable federal law as currently in effect. State and local tax consequences
may differ and may be amended or interpreted differently during the term of the
1994 Plans or of options granted thereunder. Because the federal income tax
rules governing options and related payments are complex and subject to frequent
change, optionees are advised to consult their tax advisors prior to exercise of
options or dispositions of stock acquired pursuant to option exercise.
Incentive stock options ("ISOs") and non-qualified stock options ("NSOs")
are treated differently for federal income tax purposes. ISOs are intended to
comply with the requirements of Section 422 of the Internal Revenue Code of 1986
(the "Code"). NSOs need not comply with such requirements.
An optionee is not taxed on the grant or exercise of an ISO. The difference
between the exercise price and the fair market value of the shares on the
exercise date will, however, be a preference item for purposes of the
alternative minimum tax. If an optionee holds the shares acquired upon exercise
of an ISO for at least two years following the option grant date and at least
one year following exercise, the optionee's gain, if any, upon a subsequent
disposition of such shares is long term capital gain. The measure of the gain is
the difference between the proceeds received on disposition and the optionee's
basis in the shares (which generally equals the exercise price). If an optionee
disposes of stock acquired pursuant to exercise of an ISO before satisfying the
one and two-year holding periods described above, the optionee will recognize
both ordinary income and capital gain in the year of disposition. The amount of
the ordinary income will be the lesser of (i) the amount realized on disposition
less the optionee's adjusted basis in the stock (usually the option price) or
(ii) the difference between the fair market value of the stock on the exercise
date and the option price. The balance of the consideration received on such a
disposition will be long term capital gain if the stock had been held for at
least one year following exercise of the ISO. The Company is not entitled to an
income tax deduction on the grant or exercise of an ISO or on the optionee's
disposition of the shares after satisfying the holding period requirement
described above. If the holding periods are not satisfied, the Company will be
entitled to a deduction in the year the optionee disposes of the shares, in an
amount equal to the ordinary income recognized by the optionee.
An optionee is not taxed on the grant of an NSO. On exercise, however, the
optionee recognizes ordinary income equal to the difference between the option
price and the fair market value of the shares acquired on the date of exercise.
The Company is entitled to an income tax deduction in the year of exercise in
the amount recognized by the optionee as ordinary income. Any gain on subsequent
disposition of the shares is long term capital gain if the shares are held for
at least one year following exercise. The Company does not receive a deduction
for this gain.
Options granted under the Stock Incentive Plan, as amended herein, may
qualify as "performance-based compensation" under Section 162(m) of the Code in
order to preserve federal income tax deductions by the Company with respect to
any compensation required to be taken into account under Section 162 of the Code
that is in excess of $1,000,000 and paid to a "Covered Employee" (as defined in
Section 162). To so qualify, options must have an exercise price at least equal
to the fair market value of the underlying shares on the date of grant, be
awarded by a Committee consisting of two or more "outside directors" (as defined
in Section 162) and satisfy the limit set forth in the Stock Incentive Plan on
the total number of shares subject to options that may be awarded to any one
participant during any calendar year.
Other than awards under the Director Option Plan, the amount of options to
be received by any one employee or class of employees under the 1994 Plans as
amended will be set by the Committee from time to time in its discretion and
therefore is not presently determinable.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR APPROVAL OF THE
AMENDMENTS TO THE 1994 PLANS.
13
<PAGE> 16
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information, as of April 30, 1997,
concerning beneficial ownership of the Company's common stock by (i) each person
known by the Company to own beneficially more than five percent of the
outstanding shares of the common stock, (ii) each director of the Company, (iii)
each executive officer of the Company named in the Summary Compensation Table,
and (iv) all directors and executive officers of the Company as a group. Unless
otherwise indicated, all amounts reflected in the table represent shares in
which the beneficial owners have sole voting and investment power.
<TABLE>
<CAPTION>
NUMBER OF SHARES
NAME BENEFICIALLY OWNED(1) PERCENT
- ------------------------------------------------------------------ --------------------- ----
<S> <C> <C>
Richard C. Fuisz, M.D.(2)(3)...................................... 4,268,333 20.3%
Adrian M. Gerber(4)............................................... 124,999 *
Kenneth W. McVey.................................................. 387,702 1.9%
Michael Myers, Ph.D.(4)........................................... 76,444 *
Patrick D. Scrivens(4)............................................ 334,444 1.6%
John R. Fuisz(4).................................................. 40,500 *
Antone J. Lazos(5)................................................ 30,000 *
Donald E. O'Neill(6).............................................. 95,250 *
John Pappajohn(7)................................................. 941,248 4.5%
Fredrik C. Schreuder(8)........................................... 154,048 *
All directors and executive officers as a group (12 persons)(9)... 6,624,311 30.3%
</TABLE>
- ---------------
* Less than one percent.
(1) The persons named in the table have sole voting and investment power with
respect to all shares of common stock shown as beneficially owned by them,
subject to the information contained in the footnotes to this table.
(2) Does not include shares held by the Richard C. Fuisz Children's Trust. See
Note (3). Includes 268,333 shares issuable upon exercise of outstanding
stock options exercisable within 60 days after April 30, 1997.
(3) Richard C. Fuisz is the grantor of the Richard C. Fuisz Children's Trust, an
irrevocable trust formed for the benefit of the children of Dr. Fuisz. The
trustee of the trust is The Bankers Trust Company. Dr. Fuisz disclaims
beneficial ownership of these shares.
(4) Includes the following shares issuable upon exercise of outstanding stock
options exercisable within 60 days after April 30, 1997: Mr.
Gerber -- 124,999, Mr. Scrivens -- 334,444, Dr. Myers -- 69,444 and Mr. John
Fuisz -- 40,500.
(5) Includes 18,000 shares held of record by Donna Lazos, wife of Antone J.
Lazos as Trustee for the DGT Trust. Mr. Lazos disclaims beneficial ownership
of these shares. Also includes 12,000 shares issuable upon exercise of
outstanding stock options exercisable within 60 days after April 30, 1997.
(6) Includes 76,500 shares held of record by O'Neill Asset Partners Ltd., over
which Mr. O'Neill shares voting and investment power and 15,000 shares
issuable upon exercise of outstanding stock options exercisable within 60
days after April 30, 1997.
(7) Shares indicated as beneficially owned by Mr. Pappajohn include 53,500
shares held of record by Mary Pappajohn, Mr. Pappajohn's wife, and 441,000
shares held of record by Thebes, Ltd., of which Mrs. Pappajohn is the sole
shareholder. Mr. Pappajohn disclaims beneficial ownership of these shares.
Also includes 56,500 shares issuable upon exercise of outstanding stock
options and 42,000 shares issuable upon the exercise of warrants, in each
case exercisable within 60 days after April 30, 1997.
(8) Shares indicated as beneficially owned by Mr. Schreuder include 54,000
shares held by K/S Nordic Health Care Partners ("Nordic") and 23,463 shares
held by Viking Medical Ventures Ltd. ("Viking"). Mr. Schreuder is the
President of a company that serves as the management company for Nordic and
an investment advisor to Viking. Also includes 9,000 shares issuable upon
exercise of outstanding stock
14
<PAGE> 17
options exercisable within 60 days after April 30, 1997. (9) Includes
1,085,361 shares issuable on exercise of outstanding stock options and
warrants exercisable within 60 days after April 30, 1997 and other shares
described in Notes (5), (6), (7) and (8).
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors, executive officers, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file with the Securities
and Exchange Commission, The NASDAQ Stock Market and the Company initial reports
of ownership and reports of changes in ownership of common stock and other
equity securities of the Company. Based upon the information supplied to it by
such persons, the Company is required to report any known failure to file these
reports within the period specified by the instructions to the reporting forms.
Based solely upon review of the copies of such forms received by it, the Company
believes that, during fiscal 1996, all filing requirements applicable to such
persons were complied with, except that a Form 3 filed by Mr. McVey upon his
becoming an executive officer of the Company inadvertently failed to report
6,750 shares of the Company's common stock held by him prior to that date.
During May 1997, Mr. McVey filed an amended Form 3 to include these shares.
STOCKHOLDER PROPOSALS
Securities and Exchange Commission regulations permit stockholders to
submit proposals for consideration at annual meetings of stockholders. Any such
proposals for the Company's Annual Meeting of Stockholders to be held in 1998
must be submitted to the Company on or before March 5, 1998, and must comply
with applicable regulations of the Securities and Exchange Commission in order
to be included in proxy materials relating to that meeting. Proposals should be
sent to: Fuisz Technologies Ltd., Attn: Secretary, 3810 Concorde Parkway, Suite
100, Chantilly, Virginia 20151.
MISCELLANEOUS
A COPY OF THE COMPANY'S REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31,
1996 (INCLUDING THE FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES OF
THE COMPANY), AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, IS AVAILABLE
FREE OF CHARGE TO ALL STOCKHOLDERS OF RECORD AS OF THE RECORD DATE BY WRITING TO
THE COMPANY AT THE COMPANY'S PRINCIPAL EXECUTIVE OFFICE SET FORTH ABOVE.
------------------------
Please complete, date, sign and mail promptly the accompanying proxy in the
postage-paid envelope enclosed for your convenience. The signing of the proxy
will not prevent your attending the Meeting and voting in person.
Chantilly, Virginia
July 3, 1997
15
<PAGE> 18
FUISZ TECHNOLOGIES LTD.
ANNUAL MEETING OF STOCKHOLDERS
AUGUST 4, 1997
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
Patrick D. Scrivens, Lars G. Okeson and Ronald O. Mueller, and each of
them, with several powers of substitution, are hereby authorized to represent
and vote all shares of Common Stock of the undersigned at the Annual Meeting of
Stockholders of Fuisz Technologies Ltd., to be held at the Washington Dulles
Airport Hilton, 13869 Park Center Road, Herndon, Virginia 22071 on Monday,
August 4, 1997 at 10:00 a.m., local time, and at any adjournments thereof. The
undersigned hereby revokes any Proxy previously given and acknowledges receipt
of the Notice of Annual Meeting and Proxy Statement, dated July 3, 1997, and a
copy of the Annual Report for the year ended December 31, 1996.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED BY THE
UNDERSIGNED. THE BOARD OF DIRECTORS OF FUISZ TECHNOLOGIES LTD. RECOMMENDS A
VOTE FOR THE NOMINEES SET FORTH BELOW AND FOR PROPOSALS 2 AND 3. IF THIS PROXY
IS SIGNED AND RETURNED AND DOES NOT SPECIFY A VOTE ON ANY PROPOSAL, THE PROXY
WILL BE SO VOTED.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
- -------------------------------(REVERSE SIDE)-----------------------------------
Please mark
[X] votes as in
this example.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1, 2, AND 3.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
1. Election of Directors: 2. Ratification of the FOR AGAINST ABSTAIN
Class I Directors (term expires in 1999): appointment of Coopers &
Richard C. Fuisz and Antone J. Lazos Lybrand L.L.P. as independent [ ] [ ] [ ]
Class II Directors (term expires in 2000): public accountants for the
John R. Fuisz and Fredrik C. Schreuder fiscal year ending December
31, 1997:
FOR ALL [ ] [ ] WITHHOLD MARK HERE [ ] 3. Approval of the amendments FOR AGAINST ABSTAIN
NOMINEES AUTHORITY IF YOU PLAN to the Company's 1994
(with exceptions FOR ALL TO ATTEND Director Stock Option Plan, [ ] [ ] [ ]
noted) NOMINEES THE 1994 Employee Stock
MEETING Purchase Plan and 1994 Stock
Incentive Plan:
[ ] MARK HERE
For all nominees except as noted above FOR ADDRESS [ ]
CHANGE AND
NOTE BELOW
Please mark, date and sign exactly as your name
appears hereon and return in the enclosed envelope.
If acting as executor, administrator, trustee,
guardian, etc., you should so indicate when signing.
If the signer is a corporation, please sign the full
corporate name, by duly authorized officer. If
shares are held jointly, each stockholder named
should sign.
<CAPTION>
<S> <C> <C> <C>
Signature: Date: Signature: Date:
------------------------------ -------- ---------------------- ----------
</TABLE>
