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 [Sec.] 240.14a-11(c) or [Sec.] 204.14a-12
PROCEPT, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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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.)
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] 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:
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2) Form, Schedule or Registration Statement No.:
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4) Date Filed:
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<PAGE>
PROCEPT, INC.
840 Memorial Drive, Cambridge, Massachusetts 02139
(617) 491-1100
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
The annual meeting of the stockholders of Procept, Inc., a Delaware
corporation ("Procept"), will be held at the offices of Procept, 840 Memorial
Drive, Cambridge, Massachusetts, at 10:00 a.m. on Monday, June 16, 1997, for the
following purposes:
1. To elect four directors of Procept.
2. To vote on a proposed amendment to Procept's 1989 Stock Plan that
would increase the number of shares of Common Stock covered by the
plan by 500,000 shares.
3. To vote on a proposed amendment to Procept's 1994 Employee Stock
Purchase Plan that would increase the number of shares of Common
Stock covered by the plan by 250,000 shares.
4. To vote on a proposed amendment to Procept's 1994 Director Stock
Option Plan that would increase the number of shares of Common Stock
covered by the plan by 150,000 shares.
5. To approve an amendment and restatement of Procept's Restated
Certificate of Incorporation to authorize 1,000,000 shares of
preferred stock.
6. To transact such other business as may properly come before the
meeting.
Only stockholders of record at the close of business on April 21, 1997
will be entitled to vote at the meeting.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING.
THEREFORE, WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE YOUR
PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE IF
MAILED IN THE UNITED STATES. IF YOU ATTEND THE MEETING AND WISH TO VOTE IN
PERSON, YOUR PROXY WILL NOT BE USED.
By order of the Board of Directors,
Lynnette C. Fallon
Secretary
April 30, 1997
<PAGE>
PROCEPT, INC.
840 Memorial Drive, Cambridge, Massachusetts 02139
(617) 491-1100
---------------
Proxy Statement
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GENERAL INFORMATION
The enclosed proxy is solicited on behalf of the Board of Directors of
Procept, Inc. ("Procept") for use at the annual meeting of stockholders to be
held at the offices of Procept, 840 Memorial Drive, Cambridge, Massachusetts, at
10:00 a.m. on Monday, June 16, 1997, and at any adjournments thereof.
The authority granted by an executed proxy may be revoked, at any time
before its exercise, by filing with the Secretary of Procept a written
revocation or a duly executed proxy bearing a later date or by voting in person
at the meeting. Shares represented by valid proxies will be voted in accordance
with the specifications in the proxies. If no specifications are made, the
proxies will be voted to elect the directors nominated by the Board of
Directors.
On April 21, 1997, Procept had outstanding 13,771,868 shares of common
stock, $.01 par value (the "Common Stock"), which is its only outstanding class
of voting stock. Only stockholders of record at the close of business on April
21, 1997 will be entitled to vote at the meeting. The holders of Common Stock
are entitled to one vote for each share registered in their names on the record
date with respect to all matters to be acted upon at the meeting. The presence
at the meeting, in person or by proxy, of a majority in interest of the Common
Stock issued and outstanding and entitled to vote at the meeting shall
constitute a quorum for the transaction of business. Abstentions and broker
non-votes will be considered present for purposes of determining the presence of
a quorum.
The approximate date on which this proxy statement and accompanying
proxy are first being sent or given to stockholders is April 30, 1997.
April 30, 1997
<PAGE>
SHARE OWNERSHIP
The following table and footnotes set forth certain information
regarding the beneficial ownership of Procept's Common Stock as of April 1,
1997 by (i) persons known by Procept to be beneficial owners of more than 5% of
the Common Stock, (ii) the Chief Executive Officer and all other executive
officers whose 1996 salary and bonus exceeded $100,000, (iii) each director and
nominee for election as a director of Procept, and (iv) all current executive
officers and directors of Procept as a group:
Shares of Common Stock
Beneficially Owned (1)
----------------------
Beneficial Owner Shares Percent
---------------- ------ -------
Aeneas Venture Corporation................. 1,184,393 8.6%
600 Atlantic Avenue
Boston, MA 02110
HealthCare Ventures II, L.P................ 831,325(2) 6.0%
379 Thornall Street
Edison, NJ 08837
Stanley C. Erck............................ 256,495(3) 1.8%
James C. Jenson, Ph.D...................... 79,365(4) *
Michael J. Higgins......................... 38,491(5) *
James H. Cavanaugh, Ph.D................... 831,325(6) 6.0%
Zola P. Horovitz, Ph.D..................... 15,000(7) *
Max Link, Ph.D............................. 15,000 *
Ellis L. Reinherz, M.D..................... 26,412(8) *
All current executive officers and
directors as a group (7 persons)...... 1,262,088(9) 9.0%
- --------------------
* Indicates less than 1%
(1) Unless otherwise indicated in these footnotes, each stockholder has sole
voting and investment power with respect to the shares of Common Stock
shown as beneficially owned by such stockholder, subject to community
property laws where applicable. Shares of Common Stock issuable upon the
exercise of options or warrants currently exercisable or exercisable within
60 days of April 1, 1997 are treated as outstanding solely for the purpose
of calculating the amount and percentage of shares beneficially owned by
the holder of such options or warrants.
- 2 -
<PAGE>
(2) Includes 14,008 shares of Common Stock issuable upon the exercise of
currently exercisable warrants.
(3) Includes 178,218 shares issuable to Mr. Erck upon the exercise of options
currently exercisable or exercisable within 60 days of April 1, 1997.
(4) Includes 40 shares held by Dr. Jenson's sons and 74,569 shares issuable to
Dr. Jenson upon the exercise of options currently exercisable or
exercisable within 60 days of April 1, 1997.
(5) Includes 33,872 shares issuable to Mr. Higgins upon the exercise of options
currently exercisable or exercisable within 60 days of April 1, 1997 and
100 shares held in a trust for the benefit of Mr. Higgins' daughter.
(6) Consists solely of shares and warrants held of record by HealthCare
Ventures II, L.P. ("HCV-II"). Dr. Cavanaugh is a general partner of
HealthCare Partners II, L.P., the general partner of HCV-II.
(7) Consists solely of shares issuable to Dr. Horovitz upon the exercise of
options currently exercisable or exercisable within 60 days of April 1,
1997.
(8) Includes 2,500 shares held by Dr. Reinherz's son.
(9) See notes (3) through (8).
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Procept's executive officers and directors and persons who own
beneficially more than ten percent of Procept's Common Stock are required under
Section 16(a) of the Securities Exchange Act of 1934 to file reports of
ownership and changes in ownership of Procept securities with the Securities and
Exchange Commission. Copies of these reports must also be furnished to Procept.
Based solely on a review of the copies of reports furnished to Procept and
written representations that no other reports were required, Procept believes
that during 1996 Procept's executive officers, directors and 10% beneficial
owners complied with all applicable Section 16(a) filing requirements.
- 3 -
<PAGE>
ELECTION OF DIRECTORS
The Board of Directors has fixed the number of directors at five for
the coming year. The four persons named below have been nominated for election
as directors at the annual meeting of stockholders to be held on June 16, 1997,
to serve until the next annual meeting of stockholders and until their
successors are elected and qualified. At his request, Dr. James H. Cavanaugh is
not a nominee for re-election at the annual meeting and therefore, his term will
expire. Procept currently is seeking to identify a suitable candidate for the
vacancy that will exist on the Board of Directors. Each of the four nominees for
director has consented to being named a nominee in this proxy statement and to
serve, if elected, as a director. If any nominee is unable to serve, proxies
will be voted for such other candidates as may be nominated by the Board of
Directors.
Pursuant to Procept's by-laws, directors will be elected by a plurality
of the votes properly cast at the meeting. Abstentions and votes withheld will
not be treated as votes cast for this purpose and will not affect the outcome of
the election.
The following table contains certain information about the nominees for
directors.
<TABLE>
<CAPTION>
Business Experience During Past Five Director
Name and Age Years and Other Directorships Since
- ------------ ------------------------------------ --------
<S> <C> <C>
Stanley C. Erck Stanley C. Erck has served as President and Chief Executive 1988
Age: 49 Officer of Procept since joining Procept in December 1988.
From 1983 to 1988, Mr. Erck was Vice President - Corporate
Development of Integrated Genetics, Inc., a publicly held
biotechnology company developing therapeutic and
diagnostic products. Prior to that, Mr. Erck was
founder and Chief Executive Officer of a closely held
supplier of blood derivatives. He had previously held
the position of Director of Operations at the Fenwal
Division of Baxter Healthcare Corp., a division of
Baxter International Inc., a large supplier of health
care products. Mr. Erck holds an M.B.A. from the
University of Chicago.
Zola P. Horovitz, Zola P. Horovitz, Ph.D., currently a consultant to 1992
Ph.D. pharmaceutical companies, served as Vice President -
Age: 62 Business Development and Planning at Bristol-Myers Squibb
Pharmaceutical Group, from August 1991 to April 1994, and as
Vice President - Licensing, from 1989 to August 1991. Prior
to 1989, Dr. Horovitz spent 30 years as a member of the
Squibb Institute for Medical Research, most recently as Vice
President - Research Planning. He is also a director of
seven other biotechnology and pharmaceutical companies:
Avigen, Inc., BioCryst, Inc., Clinicor, Inc., Diacrin, Inc.,
Magainin Pharmaceuticals, Inc., Roberts Pharmaceutical
Corporation and Synaptic Pharmaceuticals, Inc. Dr. Horovitz
received his Ph.D. from the University of Pittsburgh.
- 4 -
<PAGE>
Max Link, Ph.D. Max Link, Ph.D. has held a number of executive positions 1995
Age: 56 with pharmaceutical and healthcare companies. Most
recently, he served as Chief Executive Officer of Corange
Limited, from May 1993 until June 1994. Prior to joining
Corange, Dr. Link served in a number of positions within
Sandoz Pharma Ltd., including Chief Executive Officer, from
1987 until April 1992, and Chairman, from April 1992 until
May 1993. Dr. Link currently serves on the board of
directors of four publicly traded life science companies:
Alexion Pharmaceuticals, Inc., CytRx Corporation, Human
Genome Sciences, Inc. and Protein Design Labs, Inc. Dr. Link
received his Ph.D. in Economics from the University of St.
Gallen in 1970.
Ellis L. Reinherz, Ellis L. Reinherz, M.D. is a founder of Procept and has 1985
M.D. served as Chairman of its Scientific Advisory Board since
Age: 46 October 1985. Since 1984, he has served as Chief,
Laboratory of Immunobiology at the Dana-Farber Cancer
Institute and as Professor of Medicine at Harvard Medical
School. He received his M.D. from Harvard Medical School in
1975. Dr. Reinherz serves on the editorial and review boards
of key medical and scientific publications in hematology and
immunology.
</TABLE>
The Board of Directors held eight meetings during 1996. Each of the
directors then in office attended at least 75% of the aggregate of all meetings
of the Board and all meetings of the committees of the Board on which such
director then served, except Dr. Cavanaugh, who attended 33% of the meetings of
the Compensation Committee.
Procept has standing Audit and Compensation Committees of the Board of
Directors but does not have a Nominating Committee. The Audit Committee, which
during 1996 consisted of Nancy S. Amer and Dr. Horovitz, held two meetings in
1996. The primary function of the Audit Committee is to assist the Board of
Directors in the discharge of its duties and responsibilities by providing the
Board with an independent review of the financial health of Procept and of the
reliability of Procept's financial controls and financial reporting systems. The
Committee reviews the general scope of Procept's annual audit, the fee charged
by Procept's independent accountants and other matters relating to internal
control systems. For information about the Compensation Committee, see the
"Compensation Committee Report on Executive Compensation" below.
- 5 -
<PAGE>
EXECUTIVE COMPENSATION
The Compensation Committee Report set forth below describes Procept's
compensation policies applicable to executive officers and the bases for Mr.
Erck's compensation as Chief Executive Officer. The following graph shows a
comparison of the cumulative total shareholder returns on the Common Stock over
the period from February 10, 1994 (the first trading day of Procept's Common
Stock) to December 31, 1996, as compared with that of the S&P 500 Composite
Index and the Hambrecht & Quist Biotechnology Index. In prior years, Procept
compared the cumulative total shareholder returns on the Common Stock with the
cumulative total return of the Amex Biotechnology Index. The Amex Biotechnology
Index, however, is no longer published and Procept adopted the Hambrecht & Quist
Biotechnology Index for future use. The graph assumes $100 invested on February
10, 1994 in Procept Common Stock, the S&P 500 Composite Index and the Hambrecht
& Quist Biotechnology Index, with all dividends, if any, being reinvested.
Comparison of the Cumulative Total Return Among
Procept, Inc., the S&P 500 Composite Index,
and the Hambrecht & Quist Biotechnology Index(1)
- -----------------------------------------------------------------------
2/10/94 1994 1995 1996
- -----------------------------------------------------------------------
Procept, Inc. $100 $30 $ 37 $ 13
S & P 500 Composite Index $100 $98 $135 $166
Hambrecht & Quist Biotechnology Index $100 $91 $155 $143
- -----------------------------------------------------------------------
(1) $100 invested on February 10, 1994 in Common Stock or on January 31, 1994 in
Index; total return includes dividend reinvestment; fiscal year ending
December 31.
- 6 -
<PAGE>
Compensation Committee Report on Executive Compensation
The Compensation Committee of the Board of Directors (the "Committee")
currently consists of Dr. James H. Cavanaugh, Dr. Zola P. Horovitz and Dr. Max
Link. During 1996, the Committee consisted of Ms. Nancy S. Amer, Dr. Cavanaugh
and Dr. Horovitz. Ms. Amer resigned from the Board of Directors on January 20,
1997. The Committee's responsibilities include: (i) reviewing the performance of
the Chief Executive Officer and the other executive officers of the company and
making determinations as to their cash and equity-based compensation and
benefits, and (ii) administration of employee stock option grants and stock
awards under Procept's 1989 Stock Plan (the "Option Plan"). The Committee met
four times during 1996. Dr. Link was elected to the Committee on March 17, 1997.
Mr. Cavanaugh's service on the Board of Directors will end on June 16, 1997, the
date of the Annual Meeting.
The Company's executive compensation policy is designed to attract,
retain and reward executive officers who contribute to the long term success of
Procept by maintaining a competitive salary structure as compared with other
biotechnology companies and by aligning individual compensation with the
achievement of business objectives and individual performance.
The Committee reviews the entire executive compensation package which
consists of: base salary, annual cash or stock bonuses based on performance, and
stock option grants under the Option Plan.
Executive Officer Compensation
Based on both the stock price performance during 1996 and the need to
conserve cash, the Committee determined not to make any increases in executive
officer base salaries for its 1996 fiscal year and no bonuses were paid with
respect to such year. The Chief Executive Officer, Mr. Higgins and Dr. Jenson
continued to receive the base salaries approved for the 1995 fiscal year.
Stock Options
In general, stock options are granted to Procept's executive officers
at the time of their hire and at such other times as the Committee may deem
appropriate, such as a promotion and upon nearing full vesting of prior options.
In reviewing option grants, the Committee uses the same industry survey data as
used in its analysis of base salaries and bonuses. The Committee bases its stock
option award decisions upon a comparison with the equity ownership of officers
holding similar positions in other biotechnology companies.
The stock option grants made by the Committee are designed to align the
interest of management with those of the shareholders. In order to maintain the
incentive aspects of these grants, the Committee has determined that a
significant percentage of any officer's stock options should be unvested option
shares. Consistent with this determination, the Committee uses a four year
vesting period for all option shares and periodically reviews individual officer
stock option holdings.
The Compensation Committee approved option grants to Mr. Erck, Mr
Higgins and Dr. Jenson (75,000, 35,250 and 50,250 shares, respectively) in 1996,
as part of a company-wide option grant program.
- 7 -
<PAGE>
Deduction Limit for Executive Compensation
With respect to qualifying compensation paid to executive officers
under Section 162(m) of the Internal Revenue Code, Procept does not expect to
have compensation exceeding the one-million-dollar limitation for the
foreseeable future. Outstanding stock options granted under the Option Plan will
not be subject to the limitation under applicable regulations, and Procept plans
to maintain the exclusion for any additional options that may be granted to
employees covered by Section 162(m).
By the Compensation Committee,
James H. Cavanaugh, Ph.D.
Zola P. Horovitz, Ph.D.
Max Link, Ph.D.
- 8 -
<PAGE>
The following tables set forth certain compensation information for the
Chief Executive Officer of Procept and for each executive officer of Procept
whose 1996 salary and bonus exceeded $100,000.
Summary Compensation Table
LONG TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
------------------- ------------
Other Annual Securities
Name and Salary Bonus Compensation Underlying
Principal Position Year ($) ($) ($) Options(#)
- ------------------ ---- ------ ----- ------------ ----------
Stanley C. Erck 1996 231,000 0 0 75,000
President, 1995 231,000 0 0 35,000
Chief Executive Officer 1994 220,000 38,500 0 24,610
James C. Jenson, Ph.D. 1996 178,000 0 0 50,250
Vice President, 1995 177,222 0 0 15,000
Research and 1994 170,814 20,000 0 6,697
Preclinical Development
Michael J. Higgins 1996 102,000 0 0 35,250
Vice President, 1995 98,818 5,000 0 5,000
Finance, Chief 1994 91,461 0 0 23,632
Financial Officer
- 9 -
<PAGE>
The following table provides required information concerning the grant
of stock options, under the Option Plan, to Messrs. Erck, Jenson and Higgins
during the last fiscal year. In addition, the table shows 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 options were granted to
their expiration date. This table does not take into account any change in the
price of the Common Stock to date, nor does Procept make any representation
regarding the rate of its appreciation.
<TABLE>
<CAPTION>
Option Grants In Last Fiscal Year
Potential Realizable Value At
Number of Assumed Annual Rates of
securities Percent of total Stock Price Appreciation For
underlying options granted Exercise or Option Term (1)
options to employees in base price Expiration
Name granted(#) fiscal year (per share) date 5% 10%
---- ---------- ----------- ----------- ---- -- ---
<S> <C> <C> <C> <C> <C> <C>
Stanley C. Erck 75,000 (2) 15.4% $1.25 10/08/06 $58,979 $149,477
James C. Jenson, 30,000 (2) 6.2% $1.25 10/08/06 $23,592 $59,791
Ph.D. 20,250 (3) 4.2% $2.3125 3/20/06 $29,460 $74,664
Michael J. Higgins 30,000 (2) 6.2% $1.25 10/08/06 $23,592 $59,791
5,250 (3) 1.1% $2.3125 3/20/06 $7,638 $19,357
</TABLE>
- -----------------
(1) The dollar amounts under these columns include the results at the 5% and 10%
rates set by the Securities and Exchange Commission and, therefore, are not
intended to forecast possible future appreciation, if any, in the price of
the underlying Common Stock. No gain to the optionees is possible without an
increase in price of the Common Stock, which will benefit all stockholders
proportionately.
(2) These options became exercisable with respect to 25% of such shares on
January 1, 1997, become exercisable as to an additional 25% of such shares
on each of the next three anniversaries of that date, and have a term of ten
years.
(3) These options become exercisable with respect to 25% of such shares on each
of the first four anniversaries of the date of grant and have a term of ten
years.
- 10 -
<PAGE>
Aggregated Option Exercises In Last Fiscal Year And
Fiscal Year-End Option Value
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised in-the-Money
Options at Options at
Shares Fiscal Year-End(#) Fiscal Year-End($)
Acquired on Value Exercisable/ Exercisable/
Name Exercise(#) Realized($) Unexercisable Unexercisable (1)
---- ----------- ----------- ------------- -----------------
<S> <C> <C> <C> <C>
Stanley C. Erck 50,000 34,250 144,566/119,707 6,303/0
James C. Jenson, Ph.D. 0 -- 56,708/66,274 0/0
Michael J. Higgins 0 -- 19,276/51,474 56/0
</TABLE>
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(1) Based on the difference between the option exercise price and the closing
price of the underlying Common Stock on December 31, 1996, which closing
price was $1.06.
Director Compensation
Members of the Board of Directors of Procept are not compensated for
attending Board meetings or meetings of Board committees on which they serve.
Directors who also serve as consultants to Procept are eligible, as
such, to receive grants under Procept's 1989 Plan. In addition, certain
directors of Procept are eligible to participate in Procept's 1994 Director
Stock Option Plan (the "Director Plan"). Under the terms of the Director Plan,
any director of Procept who is not (i) an employee of Procept or of any
subsidiary of Procept, (ii) an employee or representative of an institutional
venture capital investor in Procept or (iii) a director subject to any law or
contract that prohibits or restricts such director's ownership of shares of
Common Stock ("Eligible Directors"), is eligible to participate in the Director
Plan. Currently, Dr. Horovitz and Dr. Link are Eligible Directors.
The Director Plan, as amended by the Board of Directors on January 20,
1997, provides that each Eligible Director as of January 20, 1997 will be
automatically granted options to purchase 20,000 shares of Common Stock on such
date. Eligible Directors initially elected to the Board of Directors after
January 20, 1997 will be automatically granted options to purchase 20,000 shares
of Common Stock upon such initial election. Upon re-election to the Board of
Directors, all Eligible Directors will automatically receive additional options
to purchase 20,000 shares of Common Stock, except that no options will be
granted to any Eligible Director upon his or her re-election if such Eligible
Director holds options granted under the Director Plan that are not fully
exercisable on the date of such re-election. Options granted under the Director
Plan to Eligible Directors become exercisable with respect to 10,000 shares on
the date of each of the next two annual meetings of stockholders following the
date of grant, so long as the optionee then remains a director of Procept. All
options will have a term of ten years and an exercise price, payable in cash or
by check or in shares of Common Stock, equal to the fair market value of the
Common Stock on the date of grant.
- 11 -
<PAGE>
Pursuant to a Consulting Agreement dated August 9, 1990, Dr. Reinherz
agreed to provide consulting services to Procept for a period coterminous with
the term of the Amended and Restated Research and Licensing Agreement between
Procept and the Dana-Farber Cancer Institute. See "Certain Relationships and
Related Transactions" below. Under the terms of the agreement, Procept makes
quarterly payments to Dr. Reinherz of $12,500 and reimburses his related
out-of-pocket expenses.
Pursuant to a Consulting and Confidentiality Agreement dated January 1,
1997, Dr. Horovitz agreed to provide consulting services to Procept for a
one-year period, subject to annual renewal until terminated by either Procept or
Dr. Horovitz. Under the agreement, Procept pays Dr. Horovitz an annual retainer
of $10,000, plus $2,000 for each day consulting services are rendered, and
reimburses his related out-of-pocket expenses.
Pursuant to a Consulting and Confidentiality Agreement dated January 1,
1997, Dr. Link agreed to provide consulting services to Procept for a one-year
period, subject to annual renewal until terminated by either Procept or Dr.
Link. Under the agreement, Procept pays Dr. Link an annual retainer of $10,000
and reimburses his related out-of-pocket expenses.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the fiscal year ended December 31, 1996, Procept's Compensation
Committee consisted of Ms. Amer and Drs. Cavanaugh and Horovitz. None of the
members of the Compensation Committee has been an officer or employee of
Procept.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Procept holds licenses to certain technology, pursuant to an Amended
and Restated Research and Licensing Agreement (the "Research Agreement") dated
as of February 19, 1987 between Procept and the Dana-Farber Cancer Institute.
Procept has made certain payments and is obligated to make certain further
payments to the Dana-Farber Cancer Institute pursuant to the Research Agreement
and has extended its funding obligations thereunder through April 1998. Dr.
Reinherz, a Director of Procept, is Chief, Laboratory of Immunobiology at the
Dana-Farber Cancer Institute, and the funding provided by Procept under the
Research Agreement is used to support research being conducted in the laboratory
of Dr. Reinherz at the Institute. Dr. Reinherz also owns 26,412 shares of
Procept's Common Stock (including 2,500 shares held by Dr. Reinherz's son).
Procept is also a party to a Consulting Agreement with Dr. Reinherz under which
Dr. Reinherz provides certain consulting services to Procept for an annual
consulting fee of $50,000.
The regulations and policies of the Harvard University Faculty of
Medicine contain guidelines on conflicts of interest (the "Harvard Guidelines")
which govern the relationship between a faculty member and a commercial
enterprise with which he has a consulting arrangement or an ownership interest.
In light of the Harvard Guidelines and their interpretation by the Harvard
University Faculty of Medicine, Dr. Reinherz has agreed to divest his equity
interest in Procept. As a result, Dr. Reinherz surrendered all his options to
acquire shares of Common Stock to Procept for cancellation in 1996. In addition,
Dr. Reinherz is making arrangements to transfer his Common Stock to a charitable
remainder trust.
- 12 -
<PAGE>
PROPOSAL TO AMEND THE 1989 STOCK PLAN
General
The 1989 Stock Plan (the "Option Plan") was adopted by the Board of
Directors in 1989 and was approved by the stockholders of Procept in June 1994.
Currently, Procept may grant options and award shares under the Option Plan for
a total of 1,387,118 shares of Common Stock. The purpose of the Option Plan is
to attract and retain key employees and consultants of Procept, to provide
incentives for them to achieve long-range performance goals and to enable them
to participate in the long-term growth of Procept. The closing price of
Procept's Common Stock on April 21, 1997, as reported by the Nasdaq National
Market was $0.97 per share.
Amendment to the Option Plan
The Board of Directors voted on March 17, 1997, subject to the approval
of the stockholders, to amend the Option Plan by increasing the aggregate number
of shares that may be subject to grants under the Option Plan by 500,000 shares
from 1,387,118 to 1,887,118 shares.
Administration and Eligibility
The Option Plan provides for the grant of stock options (incentive and
nonstatutory), stock awards and authorizations to make direct purchases of
Common Stock from Procept (collectively, "Stock Rights") to employees and
consultants of Procept and its affiliates. As of April 21, 1997, 37 employees
were eligible to participate in the Option Plan. The Compensation Committee may
delegate to one or more officers the power to grant Stock Rights under the
Option Plan to persons other than officers of Procept who are subject to the
reporting requirements of Section 16 of the Exchange Act.
Plan Benefits
Stock Rights are granted at the discretion of the Compensation
Committee, which determines the recipients and establishes the terms and
conditions upon which such Stock Rights will be granted, including the exercise
price, the form of payment of the exercise price, the number of shares subject
to options or other equity rights and the time at which such options become
exercisable. However, the exercise price of any incentive stock option granted
under the Option Plan may not be less than the fair market value of the Common
Stock on the date of grant and the exercise price of any nonstatutory stock
option may not be less than 50% of the fair market value of the Common Stock on
the date of grant.
The amount of Stock Rights to be received under the Option Plan by each
of the executive officers named in the Summary Compensation Table, the current
executive officers of Procept as a group, all current directors who are also
consultants to Procept and all employees, including all current officers of
Procept who are not executive officers, as a group, is not determinable and is
in the discretion of the Compensation Committee. Details on options granted
during the last fiscal year under the Option Plan to certain executive officers
are presented in the tables and text under the heading "EXECUTIVE COMPENSATION".
In general, as of April 21, 1997, options to purchase an aggregate of 1,188,798
shares of Common Stock had been granted and not cancelled unexercised under the
Option Plan, of which options to purchase 154,058 shares had been exercised and
options to purchase 1,034,740 shares were outstanding. In addition, stock awards
for a total of 5,400 shares of Common Stock had been granted, leaving 192,920
shares available for future grants of Stock Rights. Of the aggregate number of
options granted, options to purchase an aggregate of 532,005 shares of Common
Stock had been granted to all current executive officers as a group, 73,000 of
which have been exercised, and options to purchase an aggregate of 383,188
- 13 -
<PAGE>
shares of Common Stock had been granted to all other employees, none of which
shares had been exercised as of April 21, 1997.
Federal Income Tax Consequences Relating to Stock Options
Incentive Stock Options. An optionee does not realize taxable income
upon the grant or exercise of an incentive stock option ("ISO") under the Option
Plan.
If no disposition of shares issued to an optionee pursuant to the
exercise of an ISO is made by the optionee within two years from the date of
grant or within one year from the date of exercise, then (a) upon sale of such
shares, any amount realized in excess of the option price (the amount paid for
the shares) is taxed to the optionee as long-term capital gain and any loss
sustained will be a long-term capital loss and (b) no deduction is allowed to
Procept for Federal income tax purposes. The exercise of ISOs gives rise to an
adjustment in computing alternative minimum taxable income that may result in
alternative minimum tax liability for the optionee.
If shares of Common Stock acquired upon the exercise of an ISO are
disposed of prior to the expiration of the two-year and one-year holding periods
described above (a "disqualifying disposition") then (a) the optionee realizes
ordinary income in the year of disposition in an amount equal to the excess (if
any) of the fair market value of the shares at exercise (or, if less, the amount
realized on a sale of such shares) over the option price thereof and (b) Procept
is entitled to deduct such amount. Any further gain realized is taxed as a
short-term or long-term capital gain and does not result in any deduction to
Procept. A disqualifying disposition in the year of exercise will generally
avoid the alternative minimum tax consequences of the exercise of an ISO.
Nonstatutory Stock Options. No income is realized by the optionee at
the time a nonstatutory option is granted. Upon exercise, (a) ordinary income is
realized by the optionee in an amount equal to the difference between the option
price and the fair market value of the shares on the date of exercise and (b)
Procept receives a tax deduction for the same amount. Upon disposition of the
shares, appreciation or depreciation after the date of exercise is treated as a
short-term or long-term capital gain or loss and will not result in any
deduction by Procept.
Vote Required
The affirmative vote by the holders of a majority of the shares of
Common Stock present or represented, and entitled to vote at the meeting is
required to approve the amendment to the Option Plan. Broker non-votes will not
be counted as present or represented for this purpose. Abstentions will be
counted as present and entitled to vote and, accordingly, will have the effect
of a negative vote.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.
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<PAGE>
PROPOSAL TO AMEND THE 1994 EMPLOYEE STOCK PURCHASE PLAN
General
The 1994 Employee Stock Purchase Plan (the "Purchase Plan") was adopted
by the Board of Directors on March 2, 1994 and was approved by the stockholders
of Procept in June 1994. Currently, a total of 250,000 shares of Common Stock
are reserved for issuance under the Purchase Plan, of which 172,440 shares have
been issued. The purpose of the Purchase Plan is to provide full-time employees
of Procept an opportunity to purchase Common Stock on favorable terms.
Amendment to the Purchase Plan
The Board of Directors voted on March 17, 1997, subject to the approval
of the stockholders, to amend the Purchase Plan by increasing the aggregate
number of shares that may be issued under the Purchase Plan by 250,000 shares
from 250,000 to 500,000 shares.
Administration and Eligibility
The Purchase Plan is intended to qualify as an "employee stock purchase
plan" under Section 423 of the Internal Revenue Code of 1986, as amended (the
"Code"). The purchase price per share of Common Stock in an offering is 85% of
the lower of its fair market value on the first day of an offering period, or
the applicable exercise date and may be paid through regular payroll deductions,
lump sum cash payments or a combination of both, as determined by the Board of
Directors. Eligible employees participate voluntarily and may withdraw from any
offering at any time before Common Stock is purchased. Participation terminates
automatically upon termination of employment for any reason. Rights to purchase
Common Stock under the Purchase Plan are granted at the discretion of the Board
of Directors, which, through an administrator, determines the frequency and
duration of individual offerings under the Plan and the date(s) when stock may
be purchased. The Purchase Plan terminates on March 2, 2004.
In accordance with Section 423 of the Code, no employee may subscribe
for shares under the 1994 Purchase Plan if, immediately after having subscribed,
the employee would own 5% or more of the voting power or of the value of all
classes of stock of Procept (including stock which may be purchased through
subscriptions under the Purchase Plan or any other plans) nor may an employee
buy more than $25,000 worth of stock (determined by the fair market value of the
Common Stock at the time the offering begins) through the Purchase Plan in any
calendar year. The Purchase Plan provides that no employee may allocate more
than 15%, or such lesser percentage as the Board of Directors may fix, of the
employee's annual rate of compensation to the purchase of stock through the
Plan.
As of April 21, 1997, 37 employees were eligible to participate in the
Purchase Plan and 172,440 shares of Common Stock had been purchased under the
Purchase Plan, leaving 77,560 shares available for future issuance. Of these
shares, the current executive officers as a group have purchased an aggregate of
10,153 shares of Common Stock and all other employees have purchased an
aggregate of 162,287 shares of Common Stock.
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<PAGE>
Federal Income Tax Consequences Relating to the Purchase Plan
Participants do not realize taxable income at the commencement of an
offering or at the time shares are purchased under the Purchase Plan.
If no disposition of shares purchased under the Purchase Plan is made
by the participant within two years from the offering commencement date or
within one year from the purchase date, then (a) upon sale of such shares, 15%
of the fair market value of the stock at the commencement of the offering period
(or, if less, the amount realized on sale of such shares in excess of the
purchase price) is taxed to the participant as ordinary income with any
additional gain taxed as a long-term capital gain and any loss sustained is
treated as a long-term capital loss and (b) no deduction is allowed to Procept
for Federal income tax purposes.
If the participant dies at any time while owning shares purchased under
the Purchase Plan, then (a) 15% of the fair market value of the stock at the
commencement of the offering period (or, if less, the fair market value of such
shares on the date of death in excess of the purchase price) is taxed to the
participant as ordinary income in the year of death and (b) no deduction is
allowed to Procept for Federal income tax purposes.
If shares of Common Stock purchased under the Purchase Plan are
disposed of prior to the expiration of the two-year and one-year holding periods
described above, then (a) the participant realizes ordinary income in the year
of disposition in an amount equal to the excess (if any) of the fair market
value of the shares on the date of purchase (or, if less, the amount realized on
sale of such shares) over the purchase price thereof, and (b) Procept is
entitled to deduct such amount. Any further gain realized is taxed as a
short-term or long-term capital gain and will not result in any deduction by
Procept.
Vote Required
The affirmative vote by the holders of a majority of the shares of
Common Stock present or represented, and entitled to vote at the meeting is
required to approve the amendment to the Purchase Plan. Broker non-votes will
not be counted as present or represented for this purpose. Abstentions will be
counted as present and entitled to vote and, accordingly, will have the effect
of a negative vote.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.
PROPOSAL TO AMEND THE 1994 DIRECTOR STOCK OPTION PLAN
General
The 1994 Director Stock Option Plan (the "Director Plan") was adopted
by the Board of Directors on June 21, 1994 and was approved by the stockholders
of Procept in June 1995. The Director Plan was further amended by the Board of
Directors on January 20, 1997 to modify the timing and amount of grants
thereunder, which amendment did not require stockholder approval. The purpose of
the Director Plan is to attract and retain highly qualified, non-employee
directors of Procept and to encourage ownership of stock of Procept by such
directors so as to provide additional incentives to promote the success of
Procept. Currently, automatic grants of nonstatutory stock options may be made
under the Director Plan for a total of 150,000 shares of Common Stock, subject
to adjustment for stock splits and similar capital changes, to Eligible
Directors, as
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<PAGE>
defined below. As of April 21, 1997, options to purchase an aggregate of 80,000
shares had been granted under the Director Plan.
Amendment to the Director Plan
The Board of Directors voted on March 17, 1997, subject to the approval
of the stockholders, to amend the Director Plan by increasing the aggregate
number of shares that may be issued under the Director Plan by 150,000 shares to
300,000 shares.
Administration and Eligibility
Awards made pursuant to the Director Plan are intended to be "formula
awards" within the meaning of Rule 16b-3 of the Securities Exchange Act of 1934,
as amended. Directors eligible to participate in the 1994 Director Plan
("Eligible Directors") include any director of Procept who is not any one of:
(i) an employee of Procept or of any subsidiary of Procept, (ii) an employee or
representative of an institutional venture capital investor in Procept, and
(iii) a director subject to any law or contract that prohibits or restricts such
director's ownership of shares of Procept's Common Stock. Currently, Dr.
Horovitz and Dr. Link are Eligible Directors.
The Director Plan, as amended by the Board of Directors on January 20,
1997, provides that each Eligible Director as of January 20, 1997 will be
automatically granted options to purchase 20,000 shares of Common Stock on such
date. Eligible Directors initially elected to the Board of Directors after
January 20, 1997 will be automatically granted options to purchase 20,000 shares
of Common Stock upon such initial election. Upon re-election to the Board of
Directors, all Eligible Directors will automatically receive additional options
to purchase 20,000 shares of Common Stock, except that no options will be
granted to any Eligible Director upon his or her re-election if such Eligible
Director holds options granted under the Director Plan that are not fully
exercisable on the date of such re-election. Options granted under the Director
Plan to Eligible Directors become exercisable with respect to 10,000 shares on
the date of each of the next two annual meetings of stockholders following the
date of grant, so long as the optionee then remains a director of Procept. All
options will have a term of ten years and an exercise price, payable in cash or
by check or in shares of Common Stock, equal to the fair market value of the
Common Stock on the date of grant.
Federal Income Tax Consequences
Options granted under the Plan are nonstatutory options. No income is
realized by the director at the time a nonstatutory option is granted. Upon
exercise, (a) ordinary income is realized by the director in an amount equal to
the difference between the option price and the fair market value of the shares
on the date of exercise and (b) Procept receives a tax deduction for the same
amount. Upon disposition of the shares, appreciation or depreciation after the
date of exercise is treated as a short-term or a long-term capital gain or loss
and will not result in any deduction by Procept.
Vote Required
The affirmative vote by the holders of a majority of the shares of
Common Stock present or represented, and entitled to vote at the meeting is
required to approve the amendment to the Purchase Plan.
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<PAGE>
Broker non-votes will not be counted as present or represented for this purpose.
Abstentions will be counted as present and entitled to vote and, accordingly,
will have the effect of a negative vote.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.
PROPOSAL TO APPROVE AN AMENDMENT AND RESTATEMENT OF
PROCEPT'S CERTIFICATE OF INCORPORATION
On March 17, 1997, the Board of Directors approved and recommended to
the stockholders a proposed amendment of Procept's certificate of incorporation
to create a newly authorized class of preferred stock ("Preferred Stock")
consisting of 1,000,000 shares by means of a Restated Certificate of
Incorporation (the "Restatement"). If the Restatement is approved, the Board of
Directors will be authorized, without further action by the stockholders, to
issue shares of Preferred Stock in one or more series and to fix the rights,
preferences, privileges and restrictions thereof. The proposed form of
Restatement is set forth as Exhibit A hereto.
Authorization of Preferred Stock
The authorized capital stock of Procept currently consists of a single
class of Common Stock. The Restatement would authorize 1,000,000 shares of
Preferred Stock in order to provide flexibility for future financings or
acquisition transactions by Procept, although no specific issuances are
presently contemplated. If the Restatement is approved, the Board of Directors
will be able to specify the precise characteristics of the Preferred Stock to be
issued, taking into account the nature of specific transactions and current
market conditions. The Board of Directors realizes that Procept will need to
consider future equity financing opportunities and strategic business
combinations, including mergers. The Board wishes to minimize the dilutive
impact of such equity transactions. The Board of Directors believes that the
ability to issue Preferred Stock would allow it to provide special privileges to
meet the demands of future investors and acquisition targets while offering a
security having higher value per share and thereby to minimize the dilutive
impact such future issuance will have on Procept's Common Stock.
The Restatement would enable Procept, by action of the Board of
Directors, to issue, at any time or from time to time, one or more series of
Preferred Stock without further shareholder approval. In addition, the Board of
Directors would be able to determine all designations, preferences, limitations,
and relative rights of such stock including, but not limited to, the designation
of series and numbers of shares, dividend rights, rights upon liquidation or
distribution of the assets of Procept, conversion or exchange rights, redemption
provisions, sinking fund provisions, voting rights, and any other preferences or
rights and any qualifications, limitations or restrictions of such preferences
or rights.
It is not possible to state the effect of the authorization of the
Preferred Stock upon the rights of holders of Common Stock until the Board of
Directors determines the respective rights of the holders of one or more series
of Preferred Stock. However, such effects might include (a) dilution of the
voting power of the Common Stock to the extent that the Preferred Stock has
voting rights and (b) the holders of Common Stock not being entitled to share in
Procept's assets upon liquidation until satisfaction of any liquidation
preference granted to the Preferred Stock.
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<PAGE>
In addition to the intended purposes for authorizing the Preferred
Stock as discussed above, the issuance of Preferred Stock, whether convertible
into Common Stock or not, could have the effect of discouraging attempts to
acquire control of Procept and thus deprive stockholders of an opportunity to
realize a premium for their shares. The Board of Directors is not considering
the use of Preferred Stock for such purposes, and is not aware of any present
effort to accumulate Procept's stock for the purpose of gaining control of
Procept. The Board of Directors believes that, as structured, the authorization
of Preferred Stock is in the best interest of stockholders and Procept because
it will facilitate Procept's ability to take advantage of financing
opportunities and acquisition strategies that might not be available or, if
available, would be available on less attractive terms than if Common Stock were
the only security available to the Board of Directors.
Vote Required
The Restatement must be approved by the holders of a majority of the
outstanding shares of Common Stock. Accordingly, abstentions and broker
non-votes will have the same effect as a vote against the Restatement.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL
INFORMATION CONCERNING AUDITORS
The firm of Coopers & Lybrand L.L.P., independent accountants, examined
Procept's financial statements for the year ending December 31, 1996. The Board
of Directors has appointed Coopers & Lybrand L.L.P. to serve as Procept's
auditors for its fiscal year ending December 31, 1997. Representatives of
Coopers & Lybrand L.L.P. are expected to attend the annual meeting to respond to
appropriate questions, and will have the opportunity to make a statement if they
desire.
DEADLINE FOR STOCKHOLDER PROPOSALS
In order for a stockholder proposal to be considered for inclusion in
Procept's proxy materials for the 1998 annual meeting, it must be received by
Procept at 840 Memorial Drive, Cambridge, Massachusetts 02139, Attention:
Michael J. Higgins, Chief Financial Officer, no later than December 26, 1997.
EXPENSES OF SOLICITATION
Procept will bear the cost of the solicitation of proxies, including
the charges and expenses of brokerage firms and others of forwarding
solicitation material to beneficial owners of stock. In addition to the use of
mails, proxies may be solicited by officers and any regular employees of Procept
in person or by telephone. Procept expects that the costs incurred in the
solicitation of proxies will be nominal.
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<PAGE>
OTHER MATTERS
The Board of Directors does not know of any business to come before the
meeting other than the matters described in the notice. If other business is
properly presented for consideration at the meeting, the enclosed proxy
authorizes the persons named therein to vote the shares in their discretion.
- 20 -
Exhibit A
RESTATED CERTIFICATE OF INCORPORATION
OF
PROCEPT, INC.
Incorporated Pursuant to an Original
Certificate of Incorporation
filed with the Secretary of State
of Delaware on May 8, 1992
The undersigned, for the purpose of amending and restating the
Certificate of Incorporation, as amended, of Procept, Inc. (the "Corporation")
under the laws of the State of Delaware, hereby certifies as follows:
FIRST: The name of the Corporation is Procept, Inc.
SECOND: The address of the Corporation's registered office in the State
of Delaware is Corporation Trust Center, 1209 Orange Street, City of Wilmington,
County of New Castle, State of Delaware. The name of its registered agent at
such address is The Corporation Trust Company.
THIRD: The nature of the business or purposes to be conducted or
promoted are:
To engage in any lawful act or activity for which corporations may be
organized under the General Corporation Law of Delaware.
In general, to possess and exercise all the powers and privileges
granted by the General Corporation Law of Delaware or by any other law of
Delaware or by this Restated Certificate of Incorporation, together with any
powers incidental thereto, so far as such powers and privileges are necessary or
convenient to the conduct, promotion or attainment of the business or purposes
of the Corporation.
FOURTH: The total number of shares of stock which the Corporation shall
have authority to issue is Thirty Million (30,000,000) shares of Common Stock
with a par value of $0.01 per share and One Million (1,000,000) shares of
Preferred Stock with a par value of $0.01 per share.
The following is a statement of the designations, preferences, voting
powers, qualifications, special or relative rights and privileges in respect of
the authorized capital stock of the Corporation.
Preferred Stock
The Board of Directors is authorized, subject to limitations prescribed
by law and the provisions of this Article FOURTH, to provide by resolution for
the issuance of the shares of Preferred Stock in one or more series, and by
filing a certificate pursuant to the applicable law of the State of Delaware, to
establish from time to time the number of shares to be included in each such
<PAGE>
series, and to fix the designations, powers, preferences and rights of the
shares of each such series and the qualifications, limitations or restrictions
thereof.
The authority of the Board of Directors with respect to each series
shall include, but shall not be limited to, determination of the following:
(a) The number of shares constituting that series and the distinctive
designation of that series;
(b) The dividend rate, if any, on the shares of that series, whether
dividends shall be cumulative, and if so, from which date or dates, and the
relative rights of priority, if any, of payment of dividends on shares of the
series;
(c) Whether that series shall have voting rights, in addition to the
voting rights provided by law, and, if so, the terms of such voting rights;
(d) Whether that series shall have conversion privileges, and, if so,
the terms and conditions of such conversion, including provision for adjustment
of the conversion rate in such events as the Board of Directors shall determine;
(e) Whether or not the shares of that series shall be redeemable, and
if so, the terms and conditions of such redemption, including the date or dates
upon or after which they shall be redeemable, and the amount per share payable
in case of redemption, which amount may vary under different conditions and at
different redemption dates;
(f) Whether that series shall have a sinking fund for the redemption or
purchase of shares of that series, and if so, the terms and amount of such
sinking fund;
(g) The rights of the shares of that series in the event of voluntary
or involuntary liquidation, dissolution or winding up of the Corporation, and
the relative rights of priority, if any, of payment of shares of that series;
(h) Any other relative rights, preferences and limitations of that
series.
Common Stock
The Common Stock is subject to the rights and preferences of the
Preferred Stock as hereinbefore set forth or authorized.
Subject to the provisions of any applicable law or of the by-laws of
the Corporation, as from time to time amended, with respect to the fixing of a
record date for the determination of stockholders entitled to vote, and except
as otherwise provided herein or by law or by the resolution or resolutions
providing for the issue of any series of Preferred Stock, the holders of
outstanding shares of Common Stock shall have exclusive voting rights for the
election of directors and for all other purposes, each holder of record of
shares of Common Stock being entitled to one vote for each share of Common Stock
standing in his name on the books of the Corporation.
- 2 -
<PAGE>
Subject to the rights of any one or more series of Preferred Stock, the
holders of Common Stock shall be entitled to receive such dividends from time to
time as may be declared by the Board of Directors out of any funds of the
Corporation legally available for the payment of such dividends.
In the event of the liquidation, dissolution, or winding up of the
Corporation, whether voluntary or involuntary, after payment shall have been
made to the holders of the Preferred Stock of the full amount to which they are
entitled, the holders of Common Stock shall be entitled to share ratably
according to the number of shares of Common Stock held by them in all remaining
assets of the Corporation available for distribution to its stockholders.
Issuance
Subject to the provisions of this Certificate of Incorporation and
except as otherwise provided by law, the shares of stock of the Corporation,
regardless of class, may be issued for such consideration and for such corporate
purposes as the Board of Directors may from time to time determine.
FIFTH: The Corporation is to have perpetual existence.
SIXTH: The Board of Directors is expressly authorized to exercise all
powers granted to the Directors by law except insofar as such powers are limited
or denied herein or in the by-laws of the Corporation. In furtherance of such
powers, the Board of Directors shall have the right to make, alter or repeal the
by-laws of the Corporation.
SEVENTH: Meetings of Stockholders may be held within or without the
State of Delaware, as the by-laws may provide. The books of the Corporation may
be kept outside the State of Delaware at such place or places as may be
designated from time to time by the Board of Directors or in the by-laws of the
Corporation. Elections of Directors need not be by written ballot unless the
by-laws of the Corporation shall so provide.
EIGHTH: The Corporation shall, to the fullest extent permitted by
Section 145 of the General Corporation Law of the State of Delaware, as amended
from time to time, indemnify each person who was or is a party or is threatened
to be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative, by reason
of the fact that he is or was, or has agreed to become, a director or officer of
the Corporation, or is or was serving, or has agreed to serve, at the request of
the Corporation, as a director, officer or trustee of, or in a similar capacity
with, another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him or on his
behalf in connection with such action, suit or proceeding and any appeal
therefrom.
Indemnification may include payment by the Corporation of expenses in
defending an action or proceeding in advance of the final disposition of such
action or proceeding upon receipt of any undertaking by the person indemnified
to repay such payment if it is ultimately determined that such person is not
entitled to indemnification under this Article, which undertaking may be
accepted without reference to the financial ability of such person to make such
repayments.
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<PAGE>
The Corporation shall not indemnify any such person seeking
indemnification in connection with a proceeding (or part thereof) initiated by
such person unless the initiation thereof was approved by the Board of Directors
of the Corporation.
The indemnification rights provided in this Article (i) shall not be
deemed exclusive of any other rights to which those indemnified may be entitled
under any law, agreement or vote of stockholders or disinterested directors or
otherwise, and (ii) shall inure to the benefit of the heirs, executors and
administrators of such persons. The Corporation may, to the extent authorized
from time to time by its Board of Directors, grant indemnification rights to
other employees or agents of the Corporation or other persons serving the
Corporation and such rights may be equivalent to, or greater or less than, those
set forth in this Article.
NINTH: No director shall be personally liable to the Corporation or its
stockholders for monetary damages for any breach of fiduciary duty by such
director as a director. Notwithstanding the foregoing sentence, a director shall
be liable to the extent provided by applicable law (i) for breach of the
director's duty of loyalty to the Corporation or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) pursuant to Section 174 of the Delaware General
Corporation Law or (iv) for any transaction from which the director derived an
improper personal benefit. If the Delaware General Corporation Law is hereafter
amended to authorize a further limitation or elimination of the liability of
directors or officers, then the liability of a director or officer of the
Corporation shall, in addition to the limitation on personal liability provided
herein, be limited or eliminated to the fullest extent permitted by the Delaware
General Corporation Law, as from time to time amended. No amendment to or repeal
of this Article Ninth shall apply to or have any effect on the liability or
alleged liability of any director or officer of the Corporation for or with
respect to any acts or omissions of such director or officer occurring prior to
such amendment or repeal.
TENTH: The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this Restated Certificate of Incorporation, in
the manner now or hereafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation.
The amendments and the restatement of the Certificate of Incorporation
herein certified have been approved by the Board of Directors of the Corporation
and duly adopted by the holders of a majority of the outstanding shares of
Common Stock in accordance with the provisions of Sections 242 and 245 of the
General Corporation Law of the State of Delaware.
Signed this ___th day of _____________, 1997.
Stanley C. Erck, President
Attest:
- -----------------------------
Lynnette C. Fallon, Secretary
- 4 -
<PAGE>
(FRONT OF PROXY CARD)
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS JUNE 16, 1997
PROCEPT, INC.
The undersigned stockholder of Procept, Inc. (the "Company") hereby
appoints Stanley C. Erck, Michael J. Higgins and Lynnette Fallon, and each of
them acting singly, the attorneys and proxies of the undersigned, with full
power of substitution, to vote on behalf of the undersigned all of the shares of
capital stock of the Company that the undersigned is entitled to vote at the
Annual Meeting of Stockholders of the Company to be held June 16, 1997, and at
all adjournments thereof, hereby revoking any proxy heretofore given with
respect to such shares.
This proxy when properly executed will be voted in the manner directed
by the undersigned stockholder(s). If no specification is made, this proxy will
be voted for all proposals. In their discretion, the proxies are also authorized
to vote upon such matters as may properly come before the meeting.
PLEASE SIGN AND MAIL PROXY TODAY
Mark Here For Address Change and Note on Reverse [ ]
(Continued and to be signed on reverse side.)
[SEE REVERSE SIDE]
<PAGE>
(REVERSE OF PROXY CARD)
[X] Please mark your votes as this example.
FOR WITHHELD
All nominees For all nominees
1. Proposal to elect directors [ ] [ ]
FOR, except withheld from the following nominee(s):
Nominees: Stanley C. Erck
Zola P. Horovitz, Ph.D.
Max Link, Ph.D.
Ellis L. Reinherz, M.D.
FOR AGAINST ABSTAIN
2. Proposal to amend the 1989 [ ] [ ] [ ]
Stock Plan to increase the number
of shares covered by the plan by
500,000 shares.
3. Proposal to amend the 1994 [ ] [ ] [ ]
Employee Stock Purchase Plan to
increase the number of shares
covered by the plan by 250,000
shares.
4. Proposal to amend the 1994 [ ] [ ] [ ]
Director Stock Option Plan to
increase the number of shares
covered by the plan by
150,000 shares.
- 2 -
<PAGE>
FOR AGAINST ABSTAIN
5. Proposal to approve an [ ] [ ] [ ]
amendment and restatement of
the Company's Restated
Certificate of Incorporation
to authorize 1,000,000 shares
of preferred stock.
Signature: __________________________________ Date: ________________
Signature: __________________________________ Date: ________________
NOTE: Please sign exactly as name appears on stock certificate. When
shares are held by joint tenants, both should sign. When
signing as attorney, executor, administrator, trustee, or
guardian, please give full title as such. If a corporation,
please sign in full corporate name by President or other
authorized officer. If a partnership, please sign in
partnership name by authorized person.
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