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 Section 240.14a-11(c) or Section 240.14a-12
EMBREX, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
Not Applicable
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than 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: N/A
--------
2) Aggregate number of securities to which transaction applies: N/A
---------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction: N/A
-----
5) Total fee paid: N/A
-----
( ) Fee paid previously with preliminary materials.
( ) Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid: N/A
-----
2) Form, Schedule, or Registration Statement No.: N/A
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3) Filing Party: N/A
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4) Date Filed: N/A
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<PAGE>
EMBREX, INC.
1035 Swabia Court
Durham, North Carolina 27703
----------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
----------------------------------------
TO BE HELD ON MAY 18, 2000
TO SHAREHOLDERS:
You are cordially invited to attend the Annual Meeting of Shareholders of
Embrex, Inc. (the "Company") which will be held on Thursday, May 18, 2000, at
9:00 a.m., local time, at the North Carolina Biotechnology Center, 15 Alexander
Drive, Research Triangle Park, North Carolina, for the following purposes:
(1) To elect a Board of Directors of the Company for the ensuing year.
(2) To approve an amendment to the Company's Amended and Restated Incentive
Stock Option and Nonstatutory Stock Option Plan which would increase
the maximum number of shares of Common Stock available for issuance
pursuant to such Plan.
(3) To approve an amendment to the Company's Amended and Restated Employee
Stock Purchase Plan which would increase the maximum number of shares
of Common Stock available for purchase pursuant to such Plan.
(4) To ratify the action of the Board of Directors in appointing Ernst &
Young LLP as independent accountants for the fiscal year ending
December 31, 2000.
(5) To transact such other business as may properly come before the Annual
Meeting or any adjournments of the meeting.
Shareholders of record at the close of business on March 20, 2000, are
entitled to notice of and to vote at the Annual Meeting and any adjournment,
postponement or continuation of the meeting.
IT IS DESIRABLE THAT YOUR SHARES OF STOCK BE REPRESENTED AT THE MEETING
REGARDLESS OF THE NUMBER OF SHARES YOU MAY HOLD. EVEN THOUGH YOU MAY PLAN TO
ATTEND THE MEETING IN PERSON, PLEASE COMPLETE AND RETURN THE ENCLOSED PROXY IN
THE ENVELOPE PROVIDED. IF YOU ATTEND THE MEETING, YOU MAY REVOKE YOUR PROXY AND
VOTE IN PERSON.
By Order of the Board of Directors
/s/ Don T. Seaquist
-------------------
Don T. Seaquist
Secretary
Durham, North Carolina
April 13, 2000
<PAGE>
EMBREX, INC.
1035 Swabia Court
Durham, North Carolina 27703
----------------
PROXY STATEMENT
----------------
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD MAY 18, 2000
SOLICITATION AND VOTING RIGHTS
This Proxy Statement and the accompanying proxy card are being mailed to
shareholders on or about April 13, 2000, in connection with the solicitation of
proxies by the Board of Directors of Embrex, Inc. (the "Company") for use at the
Annual Meeting of Shareholders (the "Annual Meeting") to be held at the North
Carolina Biotechnology Center, 15 Alexander Drive, Research Triangle Park, North
Carolina, on May 18, 2000, at 9:00 a.m., local time, and at any adjournment,
postponement or continuation of the meeting. All expenses incurred in connection
with this solicitation, including postage, printing, handling, and the actual
expenses incurred by custodians, nominees, and fiduciaries in forwarding proxy
material to beneficial owners, will be paid by the Company. In addition to
solicitation by mail, certain officers, directors, and employees of the Company,
who will receive no additional compensation for their services, may solicit
proxies by telephone, personal communication or other means. Corporate Election
Services has been engaged by the Company to tabulate the proxy voting. In
addition, Beacon Hill Partners, Inc. will solicit delinquent proxies or request
resubmission of proxies which are received by the Company unsigned or improperly
completed. The aggregate fees to be paid to Corporate Election Services and
Beacon Hill Partners, Inc. are not expected to exceed $20,000.
The purposes of the Annual Meeting are to: (1) elect seven nominees to the
Board of Directors; (2) approve an amendment to the Company's Amended and
Restated Incentive Stock Option and Nonstatutory Stock Option Plan which would
increase the maximum number of shares of Common Stock available for issuance
pursuant to such Plan; (3) approve an amendment to the Company's Amended and
Restated Employee Stock Purchase Plan which would increase the maximum number of
shares of Common Stock available for purchase pursuant to such Plan; (4) ratify
the action of the Board of Directors in appointing Ernst & Young LLP as
independent accountants for the fiscal year ending December 31, 2000; and (5)
act upon such other matters as may properly come before the Annual Meeting or
any adjournments of the meeting. The Board of Directors knows of no other
matters other than those stated above to be brought before the Annual Meeting or
any adjournment of the meeting.
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before it is voted by: filing with the Secretary of the
Company written notice of revocation, provided such notice is actually received
prior to the vote of shareholders; duly executing and filing a subsequent proxy
with the Secretary of the Company before the vote of shareholders; or attending
the Annual Meeting and voting in person. If the accompanying proxy card is
properly signed and returned, the proxy and the shares of the Company
represented by the proxy will be voted in the manner directed in the proxy card.
If no direction is made, the proxy and such shares will be voted FOR the
proposals set forth in the accompanying proxy card and described in this Proxy
Statement. If any other matter properly comes before the Annual Meeting or any
adjournments of the meeting, the accompanying proxy card will confer
discretionary authority to vote and the proxyholders named in the proxy card
will vote on any such matters in their discretion.
The Board of Directors has fixed the close of business on March 20, 2000 as
the record date for the determination of shareholders entitled to receive notice
of and to vote at the Annual Meeting and all adjournments of the meeting. As of
the close of business on February 25, 2000, there were 8,006,361 shares of
Common Stock of the Company outstanding and entitled to vote. On all matters to
come before the Annual Meeting, each holder of Common Stock will be entitled to
one vote for each share held. The presence at the Annual Meeting, in person or
by proxy, of the holders of a majority of the shares entitled to vote at the
meeting will constitute a quorum.
<PAGE>
SHARE OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information, as of February 25,
2000, regarding shares of Common Stock of the Company owned of record or known
to the Company to be owned beneficially by each director and nominee for
director, each executive officer named in the Summary Compensation Table in this
Proxy Statement, and all directors and executive officers as a group. Except as
indicated in the footnotes to this table, each of the persons named in the table
has sole voting and investment power with respect to the shares beneficially
owned by such person. The address of the directors, nominees and executive
officers is the Company's address.
<TABLE>
<CAPTION>
SHARES
BENEFICIALLY PERCENT
NAME OWNED (1) OF CLASS
- ---- --------- --------
<S> <C> <C>
Randall L. Marcuson .......................................... 246,431(2) 3.1%
C. Daniel Blackshear ......................................... 27,900(3) *
Lester M. Crawford, DVM, Ph.D. ............................... 32,500(4) *
Peter J. Holzer .............................................. 62,300(5) *
Kenneth N. May, Ph.D. ........................................ 45,000(6) *
Arthur M. Pappas ............................................. 63,550(7) *
Walter V. Smiley ............................................. 38,000(8) *
Don T. Seaquist .............................................. 55,970(9) *
David M. Baines, Ph.D. ....................................... 63,668(10) *
Brian V. Cosgriff ............................................ 51,118(11) *
Catherine A. Ricks, Ph.D. .................................... 87,982(12) 1.1%
Brian C. Hrudka .............................................. 1,429 *
All Directors and Executive Officers as a Group (12 Persons) . 942,127(13) 11.8%
</TABLE>
- ---------
* Less than one percent
(1) The shares of Common Stock and voting rights owned by each person or by
all directors and executive officers as a group, and the shares included
in the total number of shares of Common Stock outstanding used to
determine the percentage of shares of Common Stock owned by each person
and such group, have been adjusted in accordance with Rule 13d-3 under
the Securities Exchange Act of 1934, as amended, to reflect the
ownership of shares issuable upon exercise of outstanding options,
warrants or other common stock equivalents which are exercisable within
60 days. As provided in such Rule, such shares issuable to any holder
are deemed outstanding for the purpose of calculating such holder's
beneficial ownership but not any other holder's beneficial ownership.
(2) Includes 166,070 shares of Common Stock subject to exercisable options,
4,991 shares of Common Stock owned jointly by Mr. Marcuson and his
children and 75,370 shares owned by Mr. Marcuson.
(3) Includes 15,400 shares of Common Stock and 12,500 shares of Common Stock
subject to exercisable options.
(4) Includes 1,000 shares of Common Stock and 31,500 shares of Common Stock
subject to exercisable options.
(5) Includes 35,000 shares of Common Stock owned by Mr. Holzer, 14,800
shares of Common Stock owned by Mr. Holzer's spouse, and 12,500 shares
of Common Stock subject to exercisable options.
(6) Includes 30,000 shares of Common Stock subject to exercisable options
and 15,000 shares held jointly with Dr. May's spouse.
(7) Includes 36,300 shares of Common Stock and 27,250 shares of Common Stock
subject to exercisable options.
(8) Includes 10,000 shares of Common Stock owned by Smiley Family Limited
Partnership, of which Mr. Smiley is a limited partner, 8,000 shares
owned by the Campbell Family Children's Trust, of which Mr. Smiley is a
Trustee, 10,000 shares directly owned by Mr. Smiley and 10,000 shares
subject to exercisable options.
(9) Includes 21,595 shares of Common Stock and 34,375 shares of Common Stock
subject to exercisable options.
(10) Includes 8,193 shares of Common Stock owned by Dr. Baines and 55,475
shares of Common Stock subject to exercisable options.
(11) Includes 8,901 shares of Common Stock owned by Mr. Cosgriff, 42,000
shares of Common Stock subject to exercisable options and 217 shares of
Common Stock owned jointly by Mr. Cosgriff and his children.
2
<PAGE>
(12) Includes 19,707 shares of Common Stock owned by Dr. Ricks, 68,175 shares of
Common Stock subject to exercisable options and 100 shares of Common Stock
owned by Dr. Ricks' spouse. Dr. Ricks disclaims beneficial ownership of the
shares held by her spouse.
(13) Includes 489,845 shares of Common Stock subject to exercisable options.
In addition, the following table sets forth certain information as to each
person known to the Company to be the beneficial owner of more than five percent
of the Company's Common Stock as of February 25, 2000.
<TABLE>
<CAPTION>
SHARES
NAME AND ADDRESS BENEFICIALLY PERCENT
OF BENEFICIAL OWNER OWNED OF CLASS
- ------------------- ----- --------
<S> <C> <C>
Mohamed Abdulmohsin Al Kharafi 629,500(1) 7.9%
& Sons W.L.L.
P.O. Box 886 Safat
13009 Safat Kuwait
Palo Alto Investors, Inc., 977,100(2) 12.2%
William Leland Edwards
and Micro Cap Partners, L.P.
470 University Avenue
Palo Alto, CA 94301
</TABLE>
- ---------
(1) Based on information obtained from a Schedule 13D filed by Mohamed
Abdulmohsin Al Kharafi & Sons W.L.L. ("Kharafi") with the Securities and
Exchange Commission dated May 15, 1996. Kharafi indicated in the Schedule
13D that it holds the Company's Common Stock as an equity investment.
(2) Based on information obtained from a Schedule 13G amendment filed by Palo
Alto Investors, Inc., William Leland Edwards and Micro Cap Partners, L.P.
with the Securities and Exchange Commission on February 28, 2000. Palo Alto
Investors, Inc. and Mr. Edwards share voting and dispositive power over
977,100 shares and Mr. Edwards has sole voting and dispositive power over
32,400 shares. Micro Cap Partners, L.P. has shared voting and dispositive
power over 515,400 shares. Mr. Edwards is the controlling shareholder of
Palo Alto Investors, Inc., a California corporation that is a registered
investment adviser under section 203 of the Investment Advisers Act of
1940. Micro Cap Partners, L.P. is an investment limited partnership of
which Palo Alto Investors, Inc. is the general partner.
3
<PAGE>
MANAGEMENT
The executive officers of the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION WITH COMPANY
---- --- ---------------------
<S> <C> <C>
Randall L. Marcuson 51 President, Chief Executive Officer and Director
Don T. Seaquist 51 Vice President, Finance and Administration
David M. Baines, Ph.D. 52 Vice President, Global Marketing and Sales
Brian V. Cosgriff 47 Vice President, Sales and Marketing
Catherine A. Ricks, Ph.D. 53 Vice President, Research and Development
Brian C. Hrudka 42 Vice President, Global Commercial Development
</TABLE>
RANDALL L. MARCUSON joined the Company in 1990 as President and Chief
Executive Officer and a director. Prior to coming to the Company, Mr. Marcuson
was Vice President, Animal Health Products for the International Agricultural
Division of American Cyanamid. Mr. Marcuson joined American Cyanamid in 1984
after 10 years of domestic and international marketing experience with Monsanto
Agricultural Products Company. Mr. Marcuson holds a B.A. degree in
international relations from the University of Kansas.
DON T. SEAQUIST joined the Company in 1996 as Vice President, Finance and
Administration. Prior to joining the Company, Mr. Seaquist was Vice President
and Treasurer of Greyhound Lines, Inc. from February 1990 to January 1995.
Previously, Mr. Seaquist was Managing Director of Trinity Litchfield Group, an
investment firm, Vice President and Treasurer of Horsehead Industries, an
international manufacturing company, and Manager of International Corporate
Finance for United Technologies Corporation. Mr. Seaquist holds a B.S.B.A. in
Management from Georgetown University and an MBA in Finance and Marketing from
Columbia University.
DAVID M. BAINES, PH.D. was appointed Vice President, Global Marketing and
Sales in July 1999. Dr. Baines has been a Vice President of Embrex, Inc. since
1995 and joined the Company in 1993 as Managing Director of Embrex Europe
Limited and served in this capacity until 1999. Prior to this, Dr. Baines
served as a consultant to the Company. Before his affiliation with Embrex, Dr.
Baines had a 23-year career with Rhone Merieux, a subsidiary of Rhone-Poulenc.
Dr. Baines served as Chief Executive of Rhone Merieux's United Kingdom animal
health subsidiary, and before that as General Manager of its operations in New
Zealand. Dr. Baines began his career as a development and senior research
scientist for Rhone Merieux, and holds a B.Sc. degree in Zoology from Reading
University and a Ph.D. degree in Entomology from London University.
BRIAN V. COSGRIFF joined the Company in 1995 as Vice President, Sales and
Marketing. Prior to joining the Company, Mr. Cosgriff was with SmithKline
Beecham for approximately nine years, where he served in various capacities,
including Director of Strategic Product Development for that firm's Animal
Health business, Director of Business Development and Planning in the United
States, and as Sales Director in Australia. Mr. Cosgriff has also worked for
Monsanto Australia, Ltd. and Merck Sharp & Dohme, New Zealand. Mr. Cosgriff
holds a B.S. degree in biology and economics from the University of Canterbury,
Christchurch, New Zealand and an advanced degree in marketing from the
University of New South Wales in Sydney, Australia.
CATHERINE A. RICKS, PH.D. joined the Company in 1989 as Vice President,
Research and Development. Prior to joining the Company, Dr. Ricks was Manager
of Animal Industry Discovery and Biotechnology for American Cyanamid. During
her 10 years with American Cyanamid she managed a variety of research programs
directed at increasing livestock productivity. She holds a B.S. in botany and
an M.S. in plant physiology from London University, London, England, and a
Ph.D. in dairy science from Michigan State University, and is an Adjunct
Professor in poultry science at North Carolina State University.
BRIAN C. HRUDKA joined the Company in 1999 as Vice President, Global
Commercial Development. Prior to joining the Company, Mr. Hrudka was with
Novartis in the United States for approximately nine years, where he served in
various capacities, including Vice President, Operations and Chief Financial
Officer & Director of Business Development for the Animal Health Division, and
as Brand Manager for the Plant Genetics Division for Ciba-Geigy, Inc., the
predecessor company to Novartis prior to the merger of Ciba-Geigy and Sandoz.
He also worked at Ciba-Geigy Global Headquarters in Basel, Switzerland for
three years. He worked for King Agro Inc. in a variety of sales and managerial
positions. Mr. Hrudka holds both a B.S. degree in Biochemistry and an MBA from
the University of Western Ontario.
4
<PAGE>
PROPOSAL 1: ELECTION OF DIRECTORS
Pursuant to the authority granted by the Company's Bylaws, the Board of
Directors of the Company has established the number constituting the Board of
Directors for the ensuing year to be seven. The proxies cannot be voted for a
greater number of persons than the number of nominees named, and any seat not
filled at the Annual Meeting may be filled as a vacancy by the Board of
Directors. Each of the nominees currently serves as a director of the Company.
The nominees for election as directors are named and certain other information
is provided below:
<TABLE>
<CAPTION>
FIRST YEAR
NAME POSITION WITH COMPANY AGE ELECTED DIRECTOR
- ---- --------------------- --- ----------------
<S> <C> <C> <C>
Randall L. Marcuson President, Chief Executive 51 1990
Officer, and Director
C. Daniel Blackshear(2) Director 56 1998
Lester M. Crawford, DVM, Ph.D.(2) Director 62 1993
Peter J. Holzer(2) Chairman of the Board of 54 1998
Directors
Kenneth N. May, Ph.D.(1) Director 69 1989
Arthur M. Pappas (1) Director 52 1995
Walter V. Smiley (1) Director 62 1999
</TABLE>
- ---------
(1) Member of the Compensation Committee of the Board.
(2) Member of the Audit Committee of the Board.
RANDALL L. MARCUSON'S biographical information is included under
MANAGEMENT in this Proxy Statement.
C. DANIEL BLACKSHEAR has served as a director of the Company since 1998.
Mr. Blackshear has been President and CEO of Carolina Turkeys since 1994.
Carolina Turkeys is the fifth largest turkey producer in the U.S. From 1982 to
1994, Mr. Blackshear was Senior Vice President, Food Division, of Cuddy Farms,
Inc., responsible for operation of this vertically integrated operation. From
1971 to 1982, he served in a number of managerial positions at Pillsbury Farms,
Country Pride Foods and ConAgra Poultry. Early in his career, he worked as
Quality Assurance Director and Food Scientists Section Manager at Gold Kist,
Inc. Mr. Blackshear holds both a B.S. degree in Agriculture as a poultry major
and a M.S. degree in Food Science and Management from the University of
Georgia. He is a past President of both the North Carolina Turkey Federation
and the North Carolina Poultry Federation. He is former Director of the
American Meat Institute and currently is a director of the National Turkey
Federation.
LESTER M. CRAWFORD, DVM, PH.D. has served as a director of the Company
since 1993. Dr. Crawford is a Director of the Center for Food and Nutrition
Policy at Georgetown University. Previously, he was Executive Director for the
Association of American Veterinary Medical Colleges, Executive Vice President
for Scientific Affairs of the National Food Processors Association, and
Administrator of the Food Safety and Inspection Service, U.S. Department of
Agriculture (USDA). Prior to joining the USDA, Dr. Crawford served as Director
of the Center for Veterinary Medicine, Food and Drug Administration and in
various positions at the University of Georgia, including Head, Department of
Physiology-Pharmacology. Very early in his career he worked in research and
development for American Cyanamid and in private veterinary practice. Presently,
he serves on the Expert Advisory Panel on Food Safety of the World Health
Organization, the Committee on Scientific Freedom and Responsibility of the
American Association for the Advancement of Science, the Board of Directors at
the Food and Drug Law Institute, and the Science Advisory Board of the Institute
of Food Technologists. Dr. Crawford holds a Doctorate of Veterinary Medicine
degree from Auburn University, a Ph.D. in Pharmacology from the University of
Georgia and received an honorary doctorate from Budapest University in 1987.
PETER J. HOLZER became a director of the Company in May 1998 and Chairman
of the Board in 2000. Since 1996, Mr. Holzer has been an Advisory Director of
AMT Capital Management, LLC, a New York-based strategic consulting and financial
advisory firm focused on the financial services industry. At AMT Capital, Mr.
Holzer participates in strategic consulting and financial advisory engagements.
From 1967 to 1996, he served in a number of managerial capacities at The Chase
Manhattan Corporation, most recently as Executive Vice President and Director,
Strategic Planning and Development from 1990 to 1996. In this role, he was a
member of the senior management team responsible for determining strategic
direction as well as managing internal corporate development. From 1987 to 1990,
he was Senior Vice President and Sector Executive, International Individual
Banking, responsible for all of Chase's international private banking and
consumer banking businesses. Prior positions at Chase included Vice President
and General Manager in Switzerland, Vice President
5
<PAGE>
and General Manager in Singapore, as well as responsibilities for credit
training and management of the bank's European petroleum division. Currently,
Mr. Holzer also serves on the board of the privately owned Columbia Analytical
Services, an environmental testing laboratory company, and as a trustee of Big
Brothers/Big Sisters, New York, NY. He holds a B.A. degree in International
Affairs from Princeton University and an MBA from Stanford University.
KENNETH N. MAY, PH.D. has served as a director of the Company since 1989.
Dr. May retired in August 1989 as Chairman, Chief Executive Officer and a
director of Holly Farms Foods, Inc., completing 19 years with that company. Dr.
May began his career with Holly Farms as Director of Research and Quality
Assurance and subsequently became Vice President of that function. Prior to
joining Holly Farms, Dr. May held positions as Professor of Poultry Science at
Mississippi State University and the University of Georgia. He holds B.S. and
M.S. degrees in poultry science from Louisiana State University and a Ph.D. in
food technology from Purdue University. He also holds an honorary doctorate of
agriculture from Purdue University. Dr. May also is a director of Alcide
Corporation. Dr. May has been active in the Poultry and Egg Institute, the
Poultry Science Association, and the National Chicken Council and has served on
various committees for the USDA.
ARTHUR M. PAPPAS has served as a director of the Company since 1995. Mr.
Pappas is Chairman and Chief Executive Officer of A. M. Pappas & Associates,
LLC, an international consulting, investment and venture company that works
with life science companies, products and related technologies. Prior to
founding A. M. Pappas & Associates, LLC in 1994, Mr. Pappas was a director on
the main board of Glaxo Holdings plc with executive responsibilities for
operations in Asia Pacific, Latin America and Canada. In this capacity, Mr.
Pappas was Chairman and Chief Executive of Glaxo Far East (Pte) Ltd. and Glaxo
Latin America Inc., as well as Chairman of Glaxo Canada Inc. He has held
various senior executive positions with Abbott Laboratories International Ltd.,
Merrell Dow Pharmaceuticals and the Dow Chemical Company, in the United States
and internationally. Mr. Pappas is a director of publicly-traded Quintiles
Transnational Corp., a contract research, sales and marketing organization;
Valentis Inc., a gene therapy research company; and KeraVision, Inc., a company
developing products for reversible vision correction surgery. He is also a
director of privately-held AtheroGenics Inc. and ArgoMed, Inc. Mr. Pappas
received a B.S. degree in Biology from Ohio State University and an M.B.A. in
Finance from Xavier University.
WALTER V. SMILEY has served as director of the Company since 1999. Since
1989, Mr. Smiley has been the owner and President of Smiley Investment Company,
a venture capital firm based in Little Rock, Arkansas. From 1983 through 1998,
Mr. Smiley served as a director of Acxiom Corporation, a company which provides
data delivery and information integration management for customers in the
United States and the United Kingdom. He served from 1968 until 1989 as
Chairman of the Board and Chief Executive Officer of Systematics, Inc., a
predecessor of ALLTEL Data Services Corporation, an Arkansas-based company
which provides data processing services to financial institutions throughout
the United States and abroad. Mr. Smiley also serves as Chairman of the Board
of Directors of Southern Development Banc Corp. He holds an M.B.A. and a B.S.
in industrial management from the University of Arkansas.
The Board of Directors has no reason to believe that the persons named
above as nominees for directors will be unable or will decline to serve if
elected. However, in the event of death or disqualification of any nominee or
refusal or inability of any nominee to serve, it is the intention of the
proxyholders named in the accompanying proxy card to vote for the election of
such other person or persons as the proxyholders determine in their discretion.
In no circumstance will the proxy be voted for more than seven nominees.
Properly signed and returned proxies, unless revoked, will be voted as directed
by the shareholder or, in the absence of such direction, will be voted in favor
of the election of the recommended nominees.
Under North Carolina law and the Company's Bylaws, directors are elected by
a plurality of the votes cast by the holders of the Common Stock of the Company
at a meeting at which a quorum is present. "Plurality" means that the
individuals who receive the largest number of votes cast, even if less than a
majority, are elected as directors up to the maximum number of directors to be
chosen at the meeting. Consequently, any shares not voted (whether by
abstention, broker nonvote or otherwise) will not be included in determining
which nominees receive the highest number of votes. All directors hold office
until the next Annual Meeting of the Company's shareholders and until the
election and qualification of their successors.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" THE
ELECTION OF THE NOMINEES.
6
<PAGE>
DIRECTOR ATTENDANCE AND BOARD COMMITTEES
During the last fiscal year, the Board of Directors met 16 times. Each
person that served as a director during the 1999 fiscal year attended 75% or
more of the aggregate of the Board meetings and committee meetings (held during
the period for which the director was in office) of the Board of which the
director was a member.
The Board of Directors has two standing committees, an Audit Committee and
a Compensation Committee. The members of these committees are identified in the
table above.
The Audit Committee is responsible for reviewing the scope, results and
effectiveness of the Company's internal accounting controls and the audits by
the Company's independent public accountants. Also, the Audit Committee
recommends to the Board the engagement of independent auditors. During 1999, the
Audit Committee held 3 meetings.
The Compensation Committee recommends to the Board of Directors
compensation arrangements for certain employees and directors and is responsible
for the administration of certain of the Company's compensation plans.
Specifically, the Compensation Committee administers the Company's incentive and
nonstatutory stock option plans and employee stock purchase plan. During 1999,
the Compensation Committee held 4 meetings.
The Company does not have a nominating committee of the Board of Directors.
The Board performs the functions that might be performed by such a committee.
COMPENSATION OF DIRECTORS
During 1999, non-officer directors received a $10,000 annual retainer,
payable $2,500 each calendar quarter, and $1,000 per Board of Directors or
committee meeting attended, plus expenses. During 1999, the non-officer Chairman
of the Board received an $18,000 annual retainer, payable $4,500 each calendar
quarter, and $1,000 per Board of Directors or committee meeting attended, plus
expenses. No compensation is paid for committee meetings held on the same day as
or on days contiguous to the date of a Board of Directors meeting. Non-officer
directors also are eligible to receive nonstatutory stock option grants pursuant
to the Company's Amended and Restated Incentive Stock Option and Nonstatutory
Stock Option Plan. During 1999, each non-officer director of the Company also
received options to purchase 5,000 shares of Common Stock at an exercise price
of $5.125.
7
<PAGE>
EXECUTIVE COMPENSATION
The following tables set forth a summary of compensation earned by or paid
to the Company's Chief Executive Officer and the next four most highly
compensated executive officers of the Company who served in such capacities on
December 31, 1999, for services rendered during the fiscal years indicated.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
NAME AND ANNUAL LONG TERM COMPENSATION
PRINCIPAL POSITION COMPENSATION (1)(2) SECURITIES UNDERLYING OPTIONS (#)
- ----------------------------------- -------------------------------- ----------------------------------
YEAR SALARY BONUS(3)
------ ----------- ---------
<S> <C> <C> <C> <C>
Randall L. Marcuson 1999 $260,000 $60,000 20,000
President and Chief 1998 $240,000 $50,000 24,000
Executive Officer 1997 $210,000 -0- 35,000
Don T. Seaquist 1999 $164,000 $30,000 10,000
Vice President, Finance 1998 $155,000 $27,400 12,000
and Administration 1997 $137,000 -0- 3,000
David M. Baines, Ph.D. 1999 $168,000 $13,000 12,000
Vice President, Global Marketing 1998 $144,450 -0- 12,000
and Sales 1997 $114,918 -0- 12,000
Brian V. Cosgriff 1999 $155,000 $29,000 12,000
Vice President, Sales and 1998 $145,000 $32,876 13,000
Marketing 1997 $131,500 -0- 10,000
Catherine A. Ricks, Ph.D. 1999 $150,000 $21,000 10,000
Vice President, Research 1998 $143,000 $26,600 12,000
and Development 1997 $133,000 -0- 12,500
</TABLE>
- ---------
(1) No executive officer of the Company received any personal benefits other
than those benefits available to all employees through participation in
employee benefit plans.
(2) Includes compensation that has been deferred under the Company's 401(k)
Retirement Savings Plan.
(3) These incentive compensation payments consist of cash and stock; see "Report
of the Compensation Committee of the Board of Directors."
8
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth stock options granted by the Company to the
named executive officers in the past fiscal year. No stock appreciation rights
were granted. The table also sets forth the hypothetical potential realizable
values that would exist for the options at the end of their ten-year terms, at
assumed rates of stock price appreciation of 5% and 10%. The actual value of the
options will depend on the market value of the Company's Common Stock. No gain
to the option holders is possible without an increase in the stock price, which
will benefit all shareholders proportionately. These potential realizable
values, based on 5% and 10% appreciation rates prescribed by the Securities and
Exchange Commission, are not intended to forecast possible future appreciation,
if any, of the Company's stock price.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
STOCK PRICE
APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM
------------------------------------------------------------- ------------------------
PERCENT OF
NUMBER OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED EXERCISE EXERCISE
OPTIONS TO EMPLOYEES PRICE PER PRICE PER
NAME GRANTED IN FISCAL YEAR SHARE SHARE 5% ($) 10% ($)
- ---------------------------- --------------- ---------------- ----------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Randall L. Marcuson 20,000(1) 5.88% $ 5.125 1/14/09 $ 64,462 $163,358
Don T. Seaquist 10,000(1) 2.94% $ 5.125 1/14/09 $ 32,231 $ 81,679
David M. Baines, Ph.D. 12,000(1) 3.53% $ 5.125 1/14/09 $ 38,677 $ 98,015
Brian V. Cosgriff 12,000(1) 3.53% $ 5.125 1/14/09 $ 38,677 $ 98,015
Catherine A. Ricks, Ph.D. 10,000(1) 2.94% $ 5.125 1/14/09 $ 32,231 $ 81,679
Total potential stock price appreciation from January 14, 1999 to January 14,
2009 for all shareholders at assumed rates of stock price appreciation (2) $312,895 $792,932
</TABLE>
- ---------
(1) The options granted are incentive stock options and non-qualified stock
options and become exercisable 25% per year commencing one year from the
date of grant and are fully exercisable four years from the date of grant.
Payment of the exercise price must be in cash, or at the discretion of the
Compensation Committee, in capital stock of the Company, by a note bearing
interest and payable in installments, or by any other lawful means.
Generally, the options granted must be exercised within 10 years from the
date of grant, but must be exercised within three months after termination
of the option holder's employment (for reasons other than disability or
death) and within one year after the option holder's disability or death.
These stock options include a provision that would accelerate the vesting of
the options upon a "change in control" of the Company.
(2) Based on price of $5.125 on January 14, 1999, and a total of 7,926,092
shares of Common Stock outstanding.
9
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL
YEAR AND FISCAL YEAR-END OPTION VALUES (1)
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES UNDERLYING UNEXERCISED "IN-THE-MONEY" OPTIONS AT
ACQUIRED ON VALUE OPTIONS AT FISCAL YEAR-END FISCAL YEAR-END
NAME EXERCISE (#) REALIZED ($)(1) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE (2)
- --------------------------- -------------- ----------------- ---------------------------- ------------------------------
<S> <C> <C> <C> <C>
Randall L. Marcuson 30,000 $213,750 183,395 / 55,500 $964,539 / $277,063
Don T. Seaquist 0 0 28,125 / 28,375 $128,250 / $145,875
David M. Baines, Ph.D. 0 0 46,350 / 27,250 $212,219 / $140,094
Brian V. Cosgriff 0 0 33,250 / 26,750 $158,719 / $139,281
Catherine A. Ricks, Ph.D. 15,000 $105,000 59,550 / 25,250 $315,200 / $128,844
</TABLE>
- ---------
(1) The value realized is calculated by subtracting the exercise price from the
closing market price of the shares acquired on the date of exercise.
(2) Options are "In-the-Money" if the fair market value of the underlying
securities exceeds the exercise price of the options. The value of the
options is calculated by subtracting the exercise price from $10.75, the
closing market price of the underlying Common Stock as of December 31, 1999.
EMPLOYMENT AGREEMENTS
All employees of the Company, including the executive officers named in the
above tables, have entered into employment agreements with the Company. Each
employment agreement provides for merit-based salary increases at the Board of
Directors' sole discretion and includes confidentiality and non-competition
provisions, as well as an ownership provision in the Company's favor for
techniques, discoveries and inventions arising during the term of employment.
Each employment agreement provides that the named executive officer serves at
the pleasure of the Company and does not state a term of employment. Each
agreement also provides that if the Company terminates the officer's employment
without cause, the officer will be entitled to receive an amount ranging from
one to one and one-half times the officer's annual compensation.
Each of the executive officers of the Company has entered into a Change in
Control Severance Agreement with the Company. Each of these agreements provides
that after a change in control of the Company, the officer will be entitled to
receive certain payments and benefits, including a payment equal to 2.9 times
the officer's annual compensation, if within two years the Company terminates
the officer's employment for reasons other than cause, disability or death, or
if the employee terminates his employment for good reason, for example, a change
in the employee's position, responsibilities, or salary. Also under such
circumstances, all stock options held by such officers immediately vest.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's executive officers and directors to file reports of ownership and
changes in ownership with the Securities and Exchange Commission. Based solely
on a review of the report forms that were filed and written representations from
executive officers and directors, the Company believes that during 1999 all
Section 16 filing requirements applicable to its executive officers and
directors were complied with, except that the following filing requirements were
not complied with, which in each case was inadvertent: one required report for
Catherine A. Ricks for one transaction which occurred in August, and one
required report for Randall L. Marcuson for one transaction which occurred in
November. Each of the foregoing transactions were reported late on Form 5s for
the year ended December 31, 1999.
10
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
GENERAL
The Compensation Committee (the "Committee") reviews and makes
recommendations to the full Board of Directors regarding the overall
compensation structure and program of the Company including employee benefit and
stock option plans. The Committee serves also as the Stock Option Committee and
approves (or recommends to the full Board of Directors at its discretion) the
grant of stock options from the Company's various stock option plans. The
Committee is composed entirely of non-officer and non-employee directors.
EXECUTIVE COMPENSATION
The Company's policy is to pay its executives and other employees at rates
competitive with the national or local markets in which it must recruit to
enable the Company to maintain a highly competent and productive staff. The
Company competes for management personnel with many larger and more profitable
companies.
Compensation of executives consists of the same components as the
compensation of other Company employees: monthly salary, company paid fringe
benefits (consisting principally of group health and other insurance), incentive
compensation, and stock options. Executives are paid salaries within a range
established for their position. Salary ranges for executive positions are
established using the same process as for other positions and job levels within
the Company, i.e., by systematically evaluating the position and assigning a
salary range based on comparisons with pay scales for similar positions in
reasonably comparable companies using regional and national salary surveys.
Companies included in these salary surveys will vary and are not necessarily the
same as the companies used for purposes of the performance graph included in
this Proxy Statement. Presently, incentive compensation payments and stock
option awards are the principal means for rewarding executives for good
performance.
Adjustments to executive salaries are generally made annually along with
adjustments to other employee salaries. Adjustments to executive salaries other
than the Chief Executive Officer ("CEO") are recommended to the Committee by the
CEO based on an executive's performance during the preceding year, the
executive's salary relative to the salary range for the position, and the
competitive situation. That performance is measured based on the executive's
success in achieving goals established at the beginning of the year. Where
achievement of these goals cannot readily be measured objectively, the Committee
will exercise its subjective judgment in determining the degree to which goals
are achieved. Corporate performance also is considered by the Committee,
although it is not determinative of executive compensation because corporate
performance is best measured over longer periods of time.
Incentive compensation payments (bonus payments) to executives are
generally made annually along with incentive compensation payments to other
employees. Incentive compensation payments other than the CEO are recommended to
the Committee by the CEO based on an executive's performance during the
preceding year. The performance is measured based on the executive's success in
achieving goals established in the beginning of the year and on corporate
performance. Incentive compensation payments are made to executives in the
following manner: 50% of the payment is awarded in the form of shares of the
Company's Common Stock and 50% is awarded in the form of cash. This method of
payment is intended to increase executive ownership of the Company's Common
Stock while providing sufficient cash to withhold taxes on the entire cash/stock
compensation.
CEO COMPENSATION
The CEO's compensation is recommended by the Committee to the full Board of
Directors based on the Committee's knowledge of the level appropriate to enable
the Company to remain competitive and retain top management.
In addition, the compensation of Mr. Randall L. Marcuson, President and
Chief Executive Officer, has been and is based on the Committee's subjective
assessment of his progress toward achieving Company objectives of profitability,
developing the Inovoject(R) egg injection system and other products, commercial
introduction of those products to the global poultry industry, establishing a
commercial presence in international markets, overall organizational
development, and enhancing long term shareholder value. In reaching this year's
recommendation, particular weight was given to the fact that the Company had
increased its number of Inovoject(R) system placements, commenced global
expansion into Asia and Latin America, and increased revenues and net income.
The incentive compensation payment to Mr. Marcuson is made in the
following manner: 67% of the payment is awarded in the form of shares of the
Company's Common Stock and 33% is awarded in the form of cash. Like other
executives, this
11
<PAGE>
method of payment is intended to increase Mr. Marcuson's ownership of the
Company's Common Stock while providing sufficient cash to withhold taxes on the
entire cash/stock compensation.
STOCK OPTION GRANTS
Stock options are intended to enhance the long term proprietary interest in
the Company on the part of employees and others who can contribute to the
Company's overall success and to increase the value of the Company to its
shareholders.
Generally all employees of the Company are eligible to receive annual stock
option grants. Guidelines are established for ranges of option grants based on
the salary ranges of various position levels within the Company. Guideline
ranges for stock option grants increase relative to cash compensation as
position levels increase, since the Committee believes that employees at higher
levels in the organization have a greater opportunity to influence and
contribute to shareholder value. The Committee may decide to award stock options
greater than the guideline amounts or more frequently than annually, if it
believes the recipient has made an exceptional contribution to the Company's
progress.
Stock options are also awarded upon hiring employees to fill certain senior
positions in the Company. The size of those awards are determined based on the
guidelines for annual awards for the position to be occupied by the new employee
and the competitive situation.
The process for determining amounts of stock option awards is based on the
same criteria as those used for determining adjustments to cash compensation,
although success in achieving performance goals is weighed more heavily in
determining stock option awards.
POLICY WITH RESPECT TO $1 MILLION DEDUCTION LIMIT
All compensation that the Company has paid to its executive officers has
been deductible under Section 162(m) of the Internal Revenue Code of 1986, as
amended. That section imposes a $1 million limit on the U.S. corporate income
tax deduction a publicly-held company may claim for compensation paid to its
executive officers. An exception to this limitation is available for
"performance-based" compensation. Compensation received as a result of the
exercise of stock options may be considered performance-based compensation if
certain requirements of Section 162(m) are satisfied. In the event that the
Committee considers approving compensation in the future that would exceed the
$1 million threshhold, the Committee will consider what actions, if any, should
be taken to make such compensation deductible.
This report is submitted by the following members of the Compensation
Committee of the Board of Directors:
Kenneth N. May, Ph.D.
Arthur M. Pappas
Walter V. Smiley
12
<PAGE>
COMPARISON OF CUMULATIVE TOTAL RETURN
The following graph compares the cumulative total shareholder return on
the Company's Common Stock over the five-year period ended December 31, 1999,
with the cumulative total return for the same period on the Nasdaq Composite
(US) Index, the Wilshire MicroCap Index and a peer group selected by the
Company on a line-of-business basis (the "Peer Group"), in accordance with
Regulation S-K under the Securities Act of 1933. The Peer Group is based on
companies identified as bio/veterinary by BioCentury Publications Inc. in its
yearly report, "BioCentury, The Bernstein Report on BioBusiness" (the
"Bernstein Report"). The individual companies identified in the Bernstein
Report may change from year to year. In the graph below, the Peer Group
consists of the following 10 companies identified in this year's Bernstein
Report: Bionova Holding Corp., Draxis Health, Inc., Ecogen Inc., Ecoscience
Corp., Energy Biosystems Inc., Envirogen Inc., Heska Corp., Idexx Labs Inc.,
ImmuCell Corp., and Polydex Pharmaceuticals, Ltd. The following companies in
the 1999 Peer Group were removed from the Bernstein Report: Cantab
Pharmaceuticals, plc., CytRx Corp., and Epitope, Inc. DNAP Holding Corp.
changed its name to Bionova Holding Corp. and remains in the Peer Group. Heska
Corp. and Polydex Pharmaceuticals, Ltd. were added to the Peer Group during
1999. The graph assumes that at the beginning of the period indicated $100 was
invested in the Company's Common Stock and the stock of the companies
comprising the Nasdaq Composite (US) Index, the Wilshire MicroCap Index and the
Peer Group, and that all dividends, if any, were reinvested.
[BAR CHART APPEARS HERE]
<TABLE>
<CAPTION>
COMPARISON OF CUMULATIVE TOTAL RETURN
<S> <C> <C> <C> <C> <C> <C>
12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99
- ---------------------------------------------------------------------------------------------------------
EMBREX, INC. $100.00 $95.92 $106.12 $86.73 $81.63 $175.51
- ---------------------------------------------------------------------------------------------------------
PEER GROUP $100.00 $121.91 $87.34 $63.29 $38.56 $53.30
- ---------------------------------------------------------------------------------------------------------
NASDAQ COMPOSITE (US) $100.00 $140.85 $173.24 $211.55 $296.37 $551.10
- ---------------------------------------------------------------------------------------------------------
WILSHIRE MICROCAP INDEX $100.00 $133.92 $117.01 $124.16 $92.60 $140.84
- ---------------------------------------------------------------------------------------------------------
</TABLE>
13
<PAGE>
PROPOSAL 2: AMENDMENT TO AMENDED AND RESTATED INCENTIVE STOCK OPTION
AND NONSTATUTORY STOCK OPTION PLAN
GENERAL
On March 16, 2000, the Board of Directors of the Company approved, subject
to shareholder approval, an amendment to the Company's Amended and Restated
Incentive Stock Option and Nonstatutory Stock Option Plan (the "Plan") to
increase the number of shares of Common Stock that may be issued under the Plan.
The Board of Directors recommends that the shareholders approve the proposed
amendment to the Plan, which increases the maximum number of shares of Common
Stock that may be issued under the Plan from 1,900,000 to 2,600,000. The
proposed amendment would not change any other terms of the Plan.
REASONS FOR APPROVAL
The Board of Directors desires to amend the Plan in order to ensure the
availability of an adequate number of shares of Common Stock to allow the Plan
to continue. As of February 25, 2000, 1,535,511 shares had been issued or
reserved for issuance pursuant to options previously granted under the Plan.
Outstanding options granted under the Plan are included in the descriptions of
options under "EXECUTIVE COMPENSATION" in this Proxy Statement.
The Plan is designed to secure for the Company and its shareholders the
benefits arising from capital stock ownership by employees of the Company and
other participants who are expected to contribute to the Company's future growth
and success. The Plan is intended to benefit the Company and its shareholders by
encouraging employees and other participants to remain employees of, or
otherwise be involved with, the Company, to own stock, and to share in the
long-term success of the Company to which they contribute. If the proposed
amendment to the Plan is not approved by shareholders, the amendment will not
become effective.
The Plan was originally approved by shareholders at the 1993 Annual Meeting
and was amended by shareholders at each of the 1996 Annual Meeting and the 1998
Annual Meeting, each time to increase the maximum number of shares issuable
under the Plan (the "Plan Amendments"). The Plan was amended and restated by the
Board of Directors in 1999. The Plan and Plan Amendments were submitted to
shareholders so that incentive stock options granted under the Plan would be
afforded favorable federal tax treatment, as described below under "Summary of
Material Terms." The proposed amendment to the Plan is being submitted to the
shareholders in order that participants under the Plan will be able to continue
to avail themselves of favorable federal tax treatment and so that stock options
granted under the Plan may qualify as "performance-based compensation" within
the meaning of Section 162(m) of the Internal Revenue Code of 1986, as amended
(the "Code"). The Plan also is being submitted to shareholders because under the
terms of the Plan, a material increase in the maximum number of shares which may
be issued under the Plan requires shareholder approval, as well as approval by
the Board of Directors.
As of February 25, 2000, the market price of the Company's Common Stock was
$15.625 per share, based on the last reported transaction price on such date for
the Common Stock as listed for trading on the Nasdaq National Market System.
SUMMARY OF MATERIAL TERMS
The following description of the Plan is a summary of the material terms
and provisions of the Plan, is not intended to be a complete description, and is
qualified in its entirety by reference to the full text of the Plan. A copy of
the Plan may be obtained without charge upon written request made by a
shareholder to Don T. Seaquist, Vice President Finance and Administration and
Corporate Secretary, Embrex, Inc., Post Office Box 13989, Research Triangle
Park, North Carolina 27709.
GENERAL INFORMATION. The Plan authorizes the Company to grant either
"incentive stock options" within the meaning of Section 422 of the Code, or
nonstatutory stock options. The Plan may be used to grant incentive stock
options to employees and nonstatutory stock options to employees, officers,
directors, consultants or other parties who have made significant contributions
to the Company. The Plan also authorizes the Company to award bonus compensation
in the form of stock awards payable in shares of Common Stock of the Company to
employees, officers, directors or consultants of the Company. Without the
proposed amendment, the aggregate number of shares of Common Stock which may be
issued under the Plan may not exceed 1,900,000. The proposed amendment to the
Plan would increase such aggregate number of shares to 2,600,000.
14
<PAGE>
ADMINISTRATION OF PLAN. The Plan is administered by a committee appointed
by the Board of Directors, which must consist of two or more directors who are
"outside directors" within the meaning of Section 162(m) of the Code or
"non-employee directors" within the meaning of Rule 16b-3 under the Securities
Exchange Act of 1934, as amended. Presently, the Compensation Committee of the
Board serves as the committee under the Plan. In general, the Compensation
Committee has broad discretionary authority regarding the Plan, including the
authority to determine which options shall constitute incentive stock options
and which options shall constitute nonstatutory stock options, which persons
shall be granted options and stock awards and the amount of such options and
stock awards, to determine and construe the terms and provisions of the
agreements and other documents by which options and stock awards are granted and
accepted, and to make all other determinations that the Compensation Committee
shall deem necessary or desirable for the administration of the Plan.
ELIGIBILITY. Those persons eligible to receive incentive stock options
under the Plan are certain employees of the Company whom the Compensation
Committee may select from time to time in order to fulfill the purpose of the
Plan as described above. Those persons eligible to receive nonstatutory stock
options under the Plan are certain employees, officers, directors and
consultants of the Company, or other parties who have made a significant
contribution to the business and success of the Company, as may be selected from
time to time by the Compensation Committee or the Board of Directors. Those
persons eligible to receive stock awards under the Plan are certain employees,
officers, directors and consultants of the Company, as the Board of Directors or
the Compensation Committee, in its sole discretion, shall determine from time to
time. As of February 25, 2000, there were 137 employees, officers and directors
of the Company eligible to receive stock options under the Plan. The granting of
stock options is conditioned on the execution by the recipient of an option
agreement which shall contain terms and conditions consistent with the Plan as
determined by the Compensation Committee or the Board of Directors from time to
time. The Company does not receive any payment or other consideration at the
time of the granting of the options.
ANNUAL LIMITATIONS. No participant may be granted options to purchase more
than 300,000 shares of Common Stock during any fiscal year of the Company.
However, a participant may be granted options to purchase up to 300,000
additional shares of Common Stock in connection with his or her initial service
to the Company that will not count against the 300,000 share annual limitation.
TERMS AND EXERCISE OF INCENTIVE STOCK OPTIONS. The prices at which shares
of Common Stock under the incentive stock options may be purchased are
determined in the discretion of the Board of Directors or Compensation
Committee, but option exercise prices must be no less than the fair market value
of the underlying Common Stock at the time of the grant (110% of the fair market
value for 10% or greater shareholders). For all incentive stock options issued
after April 30, 1998, a person may, at his or her discretion and to the extent
permitted by the Board of Directors or the Compensation Committee, elect to pay
the purchase price of the shares, (i) in cash, (ii) in Common Stock of the
Company (valued at the fair market value thereof on the date of exercise)
through the surrender of previously held shares of Common Stock of the Company
(by delivery of stock certificates in negotiable form), (iii) by a combination
of cash and Common Stock of the Company or (iv) with any other consideration
(including payment in accordance with a cashless exercise program under which,
if so instructed by a participant, shares of Common Stock of the Company may be
issued directly to the participant's broker or dealer upon receipt of the
purchase price in cash from the broker or dealer). The Board of Directors or
Compensation Committee in its discretion shall determine the term of each
incentive stock option, but incentive stock options may not be exercised later
than 10 years from the date of grant (5 years for 10% or greater shareholders).
Each incentive stock option granted under the Plan is exercisable either in full
or installments as set forth in the agreement evidencing the option.
Incentive stock options are not transferable otherwise than by will or the
laws of descent and distribution, and during the optionee's lifetime are
exercisable only by the optionee. Generally, incentive stock options granted
under the Plan must be exercised within three months after termination of the
optionee's employment (for reasons other than cause, disability or death),
within one year after the optionee's death or disability, or within 10 years
after the date of the option grant. If the optionee's employment is terminated
by the Company for cause, the right to exercise the option terminates
immediately. The holder of an incentive stock option shall have no rights as a
shareholder with respect to the shares of Common Stock covered by the option
until the date of issuance of a stock certificate upon the due exercise of the
option.
FEDERAL INCOME TAX CONSEQUENCES OF INCENTIVE STOCK OPTIONS. Incentive stock
options issued under the Plan are intended to qualify for favorable tax
treatment under the Code. Under the rules governing such options, an employee
will not recognize income, and the Company will not be entitled to any
deduction, upon the grant of an option to the employee. In addition, the
employee will not recognize income, and the Company will not be entitled to any
deduction, when the option is exercised, provided the employee was an employee
of the Company at all times during the period from the grant of the option until
the date three months before its exercise. The employee will recognize gain or
loss upon a sale or other disposition of the stock received in exercise of the
option. If the disposition occurs more than two years from the date the option
15
<PAGE>
was granted and one year from the date the option was exercised, the amount of
gain or loss recognized will equal the difference between the amount realized on
the disposition of the stock and the option price the employee paid for the
stock, and the entire gain will be treated as capital gain. If the disposition
occurs before the end of these holding periods, the employee will recognize
ordinary income equal to the difference between the fair market value of the
stock on the date the option was exercised and the option price paid for the
stock. The employee will also recognize capital gain or loss equal to the
difference between the amount realized on the disposition of the stock and the
sum of the option price the employee paid for the stock and the amount of
income, if any, the employee recognized as a result of the disposition. In such
a case, the Company will be entitled to a deduction equal to the amount treated
as income to the employee.
TERMS AND EXERCISE OF NONSTATUTORY STOCK OPTIONS. The prices at which
shares of Common Stock under the nonstatutory stock options may be purchased are
determined in the discretion of the Board of Directors or Compensation
Committee, but option exercise prices must be no less than the fair market value
of the underlying Common Stock at the time of the grant. For all nonstatutory
stock options, a person may, at his or her discretion and to the extent
permitted by the Board of Directors or the Compensation Committee, elect to pay
the purchase price of the shares, (i) in cash, (ii) in Common Stock of the
Company (valued at the fair market value thereof on the date of exercise)
through the surrender of previously held shares of Common Stock of the Company
(by delivery of stock certificates in negotiable form), (iii) by a combination
of cash and Common Stock of the Company or (iv) with any other consideration
(including payment in accordance with a cashless exercise program under which,
if so instructed by a participant, shares of Common Stock of the Company may be
issued directly to the participant's broker or dealer upon receipt of the
purchase price in cash from the broker or dealer). The Compensation Committee,
in its discretion, shall determine the term of each nonstatutory stock option,
but such options may not be exercisable more than 10 years from the date of
grant. Each nonstatutory stock option granted under the Plan is exercisable
either in full or installments as set forth in the agreement evidencing the
option.
Except as determined otherwise by the Compensation Committee, nonstatutory
stock options are not transferable otherwise than by will or the laws of descent
and distribution, and during the optionee's lifetime are exercisable only by the
optionee. Generally, nonstatutory stock options granted under the Plan must be
exercised within three months after termination of the optionee's employment
(for reasons other than cause, disability or death), within one year after the
optionee's death or disability, or within 10 years after the date of the option
grant. If the optionee's employment is terminated by the Company for cause, the
right to exercise the option terminates immediately.
The Plan provides that each non-officer director, upon the director's
initial election to the Board of Directors, shall receive a nonstatutory option
to purchase 2,500 shares of Common Stock, and annually thereafter shall receive
a nonstatutory option to purchase 5,000 shares of Common Stock. If a director is
not qualified for an award under the above schedule because the director was not
still a director at the time of the annual grant, the Compensation Committee, in
its discretion, may determine whether or not an option will be awarded.
FEDERAL INCOME TAX CONSEQUENCES OF NONSTATUTORY STOCK OPTIONS. Under the
Code, an individual granted a nonstatutory stock option realizes no taxable
income upon receipt of the option, provided the option does not have readily
ascertainable fair market value at the date of grant. The employee will
recognize ordinary taxable income upon the exercise of the option equal to the
excess of the fair market value of the stock acquired at the time of the
exercise of the option over the option price paid. The Company generally will be
entitled to a corresponding deduction equal to the same amount. The deduction
will be allowed in the Company's taxable year which includes the last day of the
optionee's taxable year in which the option is exercised. An optionee's tax
basis in shares acquired upon the exercise of the option will be the fair market
value of such shares on the date the option is exercised. Upon any sale of
shares acquired upon exercise of a nonstatutory stock option, the optionee's
gain or loss will equal the difference between the amount realized on the sale
and such tax basis.
STOCK AWARDS. The Board of Directors or the Compensation Committee, in its
sole discretion, may determine the eligibility, the number of shares covered by
stock awards, and all other terms and conditions of stock awards, which do not
need to be identical for all stock awards. The Company may grant stock awards
either alone or in addition to cash awards or options granted under the Plan.
AMENDMENT AND TERMINATION. The Board of Directors may from time to time
modify or amend the Plan in any respect, except that without the approval of the
shareholders of the Company, the Board may not materially increase the benefits
accruing to individuals who participate in the Plan, materially increase the
maximum number of shares which may be issued under the Plan (except for
permissible adjustments provided in the Plan), or materially modify the
requirements as to eligibility for participation in the Plan. The modification
or amendment of the Plan shall not, without the consent of the participant,
affect his rights under an option or stock award previously granted to him,
provided that with respect to incentive stock options, the Board of Directors
shall have the right to amend or modify the Plan and any outstanding options
granted under
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the Plan to the extent necessary to qualify such options for favorable income
tax treatment (including deferral of taxation upon exercise) as may be afforded
incentive stock options under Section 422 of the Code. The Plan terminates upon
the earlier of the tenth anniversary of the date of its adoption by the Board of
Directors or the date on which all shares available for issuance under the Plan
shall have been issued pursuant to the exercise or cancellation of options and
stock awards granted under the Plan.
REQUIRED VOTE
Under North Carolina law and the Company's Bylaws, assuming the presence of
a quorum, this amendment to the Plan will be approved if the votes cast in favor
of the amendment exceed the votes cast against the amendment. Thus, approval of
this amendment requires approval by the affirmative vote, either in person or by
proxy, of at least a majority of all shares of the Company's Common Stock voted
at the Annual Meeting. The presence at the Annual Meeting, either in person or
by proxy, of the holders of a majority of the votes entitled to be cast at such
meeting will constitute a quorum for the transaction of business. Abstentions
and broker non-votes will be treated as shares that are present and entitled to
vote for purposes of determining the presence of a quorum. However, under North
Carolina corporate law, abstentions and broker non-votes will not be treated as
votes cast against a proposal in determining whether shareholders have approved
a proposal.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" THE
PROPOSED AMENDMENT TO THE PLAN.
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PROPOSAL 3: AMENDMENT TO AMENDED AND RESTATED EMPLOYEE
STOCK PURCHASE PLAN
GENERAL
On November 18, 1999, the Board of Directors of the Company approved,
subject to shareholder approval, an amendment to the Company's Amended and
Restated Employee Stock Purchase Plan (the "Purchase Plan") to increase the
number of shares of Common Stock that may be purchased under the Purchase Plan.
The Board of Directors recommends that the shareholders approve the proposed
amendment to the Purchase Plan, which increases the maximum number of shares of
Common Stock that may be purchased under the Purchase Plan from 100,000 to
200,000, including the number of shares issued under the Non-U.S. Employee Stock
Purchase Plan of the Company (the "Non-U.S. Purchase Plan"), as discussed below.
The proposed amendment would not change any other terms of the Purchase Plan.
REASONS FOR APPROVAL
The Board of Directors desires to amend the Purchase Plan in order to
ensure the availability of an adequate number of shares of Common Stock to allow
the Purchase Plan to continue. As of February 25, 2000, 92,284 shares have been
purchased under the Purchase Plan. The Purchase Plan is designed to secure for
the Company and its shareholders the benefits arising from capital stock
ownership by employees of the Company and other participants who are expected to
contribute to the Company's future growth and success. The Purchase Plan is
intended to benefit the Company and its shareholders by encouraging employees to
remain employees of the Company, to own stock, and to share in the long-term
success of the Company to which they contribute. The Purchase Plan also is
intended to provide the employees of the Company with an opportunity to share in
the ownership of the Company by providing them a convenient means for regular
and systematic savings for purchase of the Company's Common Stock and, thus, to
develop a stronger incentive to work for the continued success of the Company.
If the proposed amendment to the Purchase Plan is not approved by shareholders,
the amendment will not become effective.
The Purchase Plan was originally approved by shareholders at the 1993
Annual Meeting and was amended and restated by the Board of Directors in 1996.
In 1998, the Board of Directors extended the term of the Purchase Plan to May
30, 2003. The Purchase Plan was submitted to shareholders so that the stock
purchases under the Purchase Plan would be afforded favorable federal tax
treatment, as described below under "Summary of Material Terms." The proposed
amendment to the Purchase Plan is being submitted to the shareholders in order
that participants under the Purchase Plan will be able to continue to avail
themselves of favorable federal tax treatment. The Purchase Plan also is being
submitted to shareholders because under the terms of the Purchase Plan, an
increase in the maximum number of shares which may be purchased under the
Purchase Plan requires shareholder approval, as well as approval by the Board of
Directors.
As of February 25, 2000, the market price of the Company's Common Stock was
$15.625 per share, based on the last reported transaction price on such date for
the Common Stock as listed for trading on the Nasdaq National Market System.
SUMMARY OF MATERIAL TERMS
The following description of the Purchase Plan is a summary of the material
terms and provisions of the Purchase Plan, is not intended to be a complete
description, and is qualified in its entirety by reference to the full text of
the Purchase Plan. A copy of the Purchase Plan may be obtained without charge
upon written request made by a shareholder to Don T. Seaquist, Vice President
Finance and Administration and Corporate Secretary, Embrex, Inc., Post Office
Box 13989, Research Triangle Park, North Carolina 27709.
GENERAL INFORMATION. The Purchase Plan was effective as of June 1, 1993.
Without the proposed amendment, the aggregate number of shares which may be
purchased under the Purchase Plan may not exceed 100,000 shares. The proposed
amendment to the Purchase Plan would increase such aggregate number of shares to
200,000.
ADMINISTRATION OF PURCHASE PLAN. The Purchase Plan is administered by a
committee consisting of three or more persons who may, but need not be,
directors of the Company. Presently, the Compensation Committee of the Board
serves as the committee under the Purchase Plan. The Compensation Committee has
full authority to administer the Purchase Plan, including authority to interpret
and construe any provision of the Purchase Plan, to establish deadlines by which
the various administrative forms must be received in order to be effective, and
to adopt such other rules and regulations for administering the Purchase Plan as
it may deem appropriate. The shares of Common Stock to be issued and sold under
the Purchase Plan shall be authorized but unissued shares of Common Stock.
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ELIGIBILITY. All employees of the Company or a subsidiary designated by the
Compensation Committee whose customary employment is at least 20 hours per week
for more than five months in a calendar year, and who have been employed by the
Company for more than three months are eligible to participate. As of February
25, 2000, there were 120 employees of the Company eligible to participate in the
Purchase Plan. All eligible employees may elect to participate in the Purchase
Plan by filing with the Company a form provided by the Company authorizing
regular payroll deductions from the gross cash compensation paid by the Company
but excluding all bonus payments, expense allowances and compensation payable in
a form other than cash (the "Current Compensation"). Participation and payroll
deductions begin on the employee's date of enrollment in the Purchase Plan and
continues until the employee withdraws from the Purchase Plan or otherwise
ceases to be eligible to participate. The enrollment date for employees who file
an election within 30 days of the date upon which they become eligible to
participate will be the first day of the next succeeding pay period following
their election, and the enrollment date for all others will be the next
succeeding July 1 following their election. No employee will be granted any
right to purchase under the Purchase Plan if such employee would own, directly
or indirectly, Common Stock possessing five percent or more of the total
combined voting power or value of all classes of the Company's capital stock.
The rules of Section 424(d) of the Code will be applied to determine an
individual's stock ownership, and stock which may be purchased by an employee
under outstanding options is treated as stock owned by such employee.
Participation in the Purchase Plan on the part of the employee is voluntary and
such participation is not a condition of employment, nor does participation in
the Purchase Plan entitle an employee to be retained as an employee.
PAYROLL DEDUCTIONS AND STOCK PURCHASE ACCOUNTS. An eligible employee may
elect payroll deductions of any whole percentage from one percent through twenty
percent of Current Compensation for each pay period. The employee may reduce
future payroll deductions by filing with the Company a form provided by the
Company for such purpose. The payroll deductions will be credited to an account
maintained in the books and records of the Company recording the amount received
from each employee through payroll deductions made under the Purchase Plan. No
interest will be paid upon payroll deductions or any amount credited to, or on
deposit in, an employee's stock purchase account. The stock purchase account is
established solely for accounting purposes, and all amounts credited to the
stock purchase account remain part of the general assets of the Company. An
employee may not make payments into his stock purchase account other than by
payroll deductions pursuant to the Purchase Plan.
Each employee will have the right to purchase at any time any number of
whole shares of Common Stock that can be purchased with the balance in the
employee stock purchase account, provided, that no more than 5,000 shares of
Common Stock may be purchased under the Purchase Plan by any one employee for a
given purchase period, defined in the Purchase Plan as beginning for new
participants on the new participant's enrollment date and ending on the next
succeeding June 30, and thereafter the one year period beginning on July 1 of
each year and ending on June 30 of the next succeeding year (the "Purchase
Period"). No more than $25,000 of Common Stock at the fair market value may be
purchased under the Purchase Plan by any one employee for each calendar year. No
less than 10 whole shares may be purchased upon exercise of the right to
purchase, and each eligible employee may exercise the right to purchase no more
than four times during any Purchase Period. The purchase price will be
established by the Compensation Committee at least 30 days prior to the
beginning of each Purchase Period but will be no less than the lesser of 85% of
the fair market value of the Common Stock on the first business day of the
Purchase Period or 85% of the fair market value of the Common Stock on the date
of exercise of the right to purchase by the employee.
Any amount remaining in an employee stock purchase account after the last
business day of a Purchase Period will be paid to the employee in cash within 30
days after the end of the Purchase Period.
WITHDRAWAL. An employee may, at any time, withdraw from the Purchase Plan
and cease making payroll deductions by filing with the Company a form provided
for this purpose. Upon withdrawal, the entire credit balance in the employee
stock purchase account will be paid to the employee in cash within 30 days.
Participation in the Purchase Plan also will cease on the date the employee
ceases to be an eligible employee for any reason, and the entire credit balance
in the stock purchase account will be paid to the employee or the employee's
estate or designated beneficiary, as applicable, within 30 days.
FEDERAL INCOME TAX CONSEQUENCES. The Purchase Plan is intended to comply
with the requirements governing employee stock purchase plans set forth in the
Code. Certain favorable tax consequences are afforded to purchasers of stock
pursuant to an employee stock purchase plan meeting those requirements. If a
participant acquires stock under such a plan and holds it for a period of more
than two years from the date the option is granted and more than one year from
the date the option is exercised, the participant will not realize any ordinary
income on exercise but will realize ordinary income upon disposition of such
stock to the extent of the lesser of (1) the excess market value of such stock
at the time the option was granted over its option price and (2) the excess of
the fair market value of such stock at the time of disposition over its option
price, and the participant would report any additional gain as capital gain.
Neither the grant of an option under an employee stock
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purchase plan meeting the requirements in the Code nor the exercise of such an
option has tax consequences to the Company. If a participant disposes of stock
acquired pursuant to such an option within two years from the date the option is
granted or one year from the date the option is exercised, the participant must
report as ordinary income the difference between the option price and the fair
market value of the stock at the time the option was exercised, and the Company
may take an income tax deduction in that amount.
AMENDMENT AND TERMINATION. The Board of Directors may, at any time, amend
or terminate the Purchase Plan, except that no amendment will be made without
the prior approval of the shareholders which would (i) authorize an increase in
the number of shares of Common Stock which may be purchased under the Purchase
Plan except as provided in the Purchase Plan, (ii) permit the issuance of Common
Stock for payment therefor in full, (iii) increase the rate of payroll
deductions above 20% of Current Compensation, or (iv) reduce the price per share
at which the Common Stock may be purchased. The Purchase Plan will terminate
automatically on May 30, 2003, unless extended by the Board of Directors.
NON-U.S. EMPLOYEES
On July 1, 1998, the Board of Directors of the Company adopted the Non-U.S.
Purchase Plan for employees of the Company's non-U.S. subsidiaries who are not
subject to taxation under U.S. tax laws. The terms of the Non-U.S. Purchase Plan
correspond to those of the Purchase Plan, except as required to comply with
local tax and other applicable law. The maximum number of shares that may be
issued under the Non-U.S. Purchase Plan is 100,000. However, shares issued under
the Non-U.S. Purchase Plan decrease the number of shares that may be issued
under the Purchase Plan by a corresponding amount. Consequently, upon approval
of the amendment to increase the number of shares reserved for issuance under
the Purchase Plan to 200,000, the maximum number of shares that may be issued
under both Purchase Plans together shall not exceed 200,000.
The eligibility requirements under the Non-U.S. Purchase Plan differ from
those described in the Purchase Plan. Under the Non-U.S. Purchase Plan, all
employees of a non-U.S. subsidiary designated by the Compensation Committee who
have been employed by such subsidiary for more than three months are eligible
to participate. As of February 25, 2000, there were 24 employees eligible to
participate in the Non-U.S. Purchase Plan. Also, because the Non-U.S. Purchase
Plan only applies to employees of non-U.S. subsidiaries, the federal income tax
consequences described above are inapplicable to the Non-U.S. Purchase Plan.
REQUIRED VOTE
Under North Carolina law and the Company's Bylaws, assuming the presence of
a quorum, this amendment to the Purchase Plan will be approved if the votes cast
in favor of the amendment exceed the votes cast against the amendment. Thus,
approval of this amendment requires approval by the affirmative vote, either in
person or by proxy, of at least a majority of all shares of the Company's Common
Stock voted at the Annual Meeting. The presence at the Annual Meeting, either in
person or by proxy, of the holders of a majority of the votes entitled to be
cast at such meeting will constitute a quorum for the transaction of business.
Abstentions and broker non-votes will be treated as shares that are present and
entitled to vote for purposes of determining the presence of a quorum. However,
under North Carolina corporate law, abstentions and broker non-votes will not be
treated as votes cast against a proposal in determining whether shareholders
have approved a proposal.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" THE
PROPOSED AMENDMENT TO THE PURCHASE PLAN.
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PROPOSAL 4: RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
Ernst & Young LLP has served as the independent accounting firm of the
Company since its inception. Pursuant to the recommendation of the Audit
Committee, the Board of Directors has appointed Ernst & Young LLP as independent
accountants for the fiscal year ending December 31, 2000. Although the selection
and appointment of independent accountants are not required to be submitted to a
vote of the shareholders, the Board of Directors desires to obtain shareholder
ratification of this appointment. A representative of Ernst & Young LLP is
expected to be present at the Annual Meeting and to be available to respond to
appropriate questions, and will be afforded an opportunity to make a statement.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" THE
RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP FOR FISCAL YEAR 2000.
MISCELLANEOUS
Upon written request made by any shareholder to Don T. Seaquist, Vice
President Finance and Administration and Corporate Secretary, Embrex, Inc., Post
Office Box 13989, Research Triangle Park, North Carolina 27709, a copy of the
Company's Annual Report on Form 10-K for the year ended December 31, 1999,
including the financial statements, will be provided without charge.
SUBMISSION OF SHAREHOLDER PROPOSALS
FOR 2001 ANNUAL MEETING
Any proposals which shareholders intend to present for a vote of
shareholders at the annual meeting of shareholders for the year 2001 and which
such shareholders wish to have included in the Company's proxy statement and
form of proxy relating to that meeting must be sent to the Company's principal
executive offices, marked to the attention of the Secretary of the Company, and
received by the Company at such offices on or before December 15, 2000.
Proposals received after December 15, 2000 will not be considered for inclusion
in the Company's proxy materials for its 2001 Annual Meeting.
In addition, if a shareholder intends to present a matter for a vote at the
annual meeting of shareholders for the year 2001, other than by submitting a
proposal for inclusion in the Company's proxy statement for that meeting, the
shareholder must give timely notice in accordance with the Company's Bylaws. To
be timely, a shareholder's notice must be received by the Company not more than
90 days and not less than 50 days before the meeting. The Company's Bylaws
provide that an annual meeting may be held in any month; the 2000 annual meeting
will be held on May 18, 2000, and it is anticipated that the annual meeting for
the year 2001 will be held on a similar schedule.
Any shareholder proposal or notice described above must be in writing and
sent to the Company by registered mail, return receipt requested, to the
Company's executive offices at Post Office Box 13989, Research Triangle Park,
North Carolina 27709, Attention: Corporate Secretary. Any such proposal or
notice also will be subject to the requirements contained in the Company's
Bylaws relating to shareholder proposals and any applicable requirements of the
Securities Exchange Act of 1934, as amended.
By Order of the Board of Directors
/s/ Don T. Seaquist
-------------------
Don T. Seaquist
Secretary
April 13, 2000
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<PAGE>
EMBREX, INC.
PROXY
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 18, 2000
SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints Randall L. Marcuson and
Don T. Seaquist and each of them as attorney and proxy of the undersigned, each
with full power of substitution, to represent the undersigned and to vote all of
the shares of Common Stock in Embrex, Inc. (the "Company") which the undersigned
is entitled to vote at the Annual Meeting of Shareholders of the Company to be
held at the North Carolina Biotechnology Center, 15 Alexander Drive, Research
Triangle Park, North Carolina, on Thursday, May 18, 2000, at 9:00 a.m., local
time, and any adjournments of the meeting.
WHEN PROPERLY EXECUTED AND RETURNED, THIS PROXY AND THE SHARES REPRESENTED
HEREBY WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED. IF NO
DIRECTION IS MADE, THIS PROXY AND SUCH SHARES WILL BE VOTED FOR THE PROPOSALS
SET FORTH BELOW AND DESCRIBED IN THE ACCOMPANYING PROXY STATEMENT. THE
UNDERSIGNED FURTHER GIVES THE ABOVE-NAMED ATTORNEYS AND PROXIES THE
DISCRETIONARY AUTHORITY TO VOTE IN THEIR DISCRETION UPON SUCH OTHER MATTERS AS
MAY PROPERLY COME BEFORE THE ANNUAL MEETING AND ANY ADJOURNMENTS OF THE MEETING.
THIS PROXY MAY BE REVOKED PRIOR TO ITS EXERCISE.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSALS LISTED BELOW.
<TABLE>
<CAPTION>
1. Election of Board of Directors:
<S> <C> <C> <C>
[ ] FOR all nominees listed below (except as marked to the contrary below). [ ] WITHHOLD AUTHORITY to vote for all nominees listed
below.
</TABLE>
C. Daniel Blackshear; Lester M. Crawford, DVM, Ph.D.; Peter J. Holzer; Randall
L. Marcuson; Kenneth N. May, Ph.D.; Arthur M. Pappas; Walter V. Smiley.
INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below:
- --------------------------------------------------------------------------------
2. Approve an amendment to the Company's Amended and Restated Incentive Stock
Option and Nonstatutory Stock Option Plan which would increase the maximum
number of shares of Common Stock available for issuance pursuant to such
Plan:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
<PAGE>
3. Approve an amendment to the Company's Amended and Restated Employee Stock
Purchase Plan which would increase the maximum number of shares of Common
Stock available for purchase pursuant to such Plan:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. Ratify the action of the Board of Directors in appointing Ernst & Young LLP
as independent accountants for the Company for the fiscal year ending December
31, 2000:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting of
Shareholders, the Proxy Statement for such meeting, and the Annual Report to
Shareholders for 1999.
Please sign exactly as your name appears below. When shares are held by joint
tenants, both should sign.
Dated: _______________________, 2000
(Be sure to date proxy)
__________________________________
Signature and title, if applicable
__________________________________
Signature if held jointly
When signing as attorney, executor, administrator, trustee or guardian, please
give full title as such. If a corporation, please sign the full corporate name
by the President or other authorized officer. If a partnership or other
non-corporate entity, please sign in the entity's name by an authorized person.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
