<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
ANTEX BIOLOGICS INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
- --------------------------------------------------------------------------------
<PAGE> 2
ANTEX BIOLOGICS INC.
300 PROFESSIONAL DRIVE
GAITHERSBURG, MD 20879
--------------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 18, 1997
--------------------------------------------
The Annual Meeting of Stockholders of Antex Biologics Inc. (the "Company")
will be held on Friday, April 18, 1997, at 10:00 a.m. at the Courtyard by
Marriott, 805 Russell Avenue, Gaithersburg, Maryland, for the following
purposes:
1. To reelect Donald G. Stark to the Board of Directors to serve as a
Class II director for a three-year term;
2. To consider and take action on a proposal to approve an amendment
to the Company's Certificate of Incorporation to increase the
number of authorized shares of Common Stock;
3. To consider and take action on proposed amendments to the Antex
Biologics Inc. Amended and Restated Stock Option Plan;
4. To consider and take action on proposed amendments to the Antex
Biologics Inc. 1992 Directors' Stock Option Plan;
5. To ratify the appointment of Coopers & Lybrand L.L.P. as the
independent public accountants to audit the Company's accounts for
the fiscal year ending December 31, 1997; and
6. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on February 19,
1997 as the record date for determining stockholders entitled to notice of and
to vote at the meeting. A complete list of stockholders entitled to vote at
the meeting will be open to examination by stockholders for any purpose germane
to the meeting during normal business hours at the Company's offices at 300
Professional Drive, Gaithersburg, Maryland 20879.
By Order of the Board of Directors
GREGORY C. ZAKARIAN
Secretary
March 5, 1997
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE AND
SIGN THE ENCLOSED PROXY CARD AND MAIL IT PROMPTLY IN THE ENCLOSED ENVELOPE TO
ASSURE THE REPRESENTATION OF YOUR SHARES. NO POSTAGE NEED BE AFFIXED IF MAILED
IN THE UNITED STATES.
<PAGE> 3
Antex Biologics Inc.
300 Professional Drive
Gaithersburg, Maryland 20879
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
To be Held
April 18, 1997
This Proxy Statement is furnished to the stockholders of Antex
Biologics Inc., a Delaware corporation ("Antex Biologics" or the "Company"), in
connection with the solicitation by the Board of Directors of proxies for use
at the Annual Meeting of Stockholders of the Company to be held on April 18,
1997, and any adjournment or adjournments thereof. A copy of the notice of
meeting accompanies this Proxy Statement. It is anticipated that the mailing
of this Proxy Statement and enclosed form of proxy will commence on or about
March 5, 1997.
Only stockholders of record at the close of business on February 19,
1997, the record date for the meeting, will be entitled to notice of and to
vote at the meeting. On the record date, the Company had issued and
outstanding 22,479,679 shares of common stock, which are the only securities of
the Company entitled to vote at the meeting. Each outstanding share of common
stock is entitled to one vote.
A quorum for the meeting requires the presence in person or by proxy
of the holders of a majority of the outstanding shares of common stock.
Assuming a quorum is present, one director of the Company will be elected by a
plurality of the votes cast by stockholders present or represented and entitled
to vote at the meeting. The affirmative vote of the holders of at least a
majority of the issued and outstanding shares of Common Stock is required for
the approval of the amendment to the Certificate of Incorporation (the
"Certificate Amendment"). The affirmative vote of the holders of at least a
majority of the issued and outstanding shares of common stock present or
represented and entitled to vote at the Annual Meeting is required for the
approval of the proposed amendments to the Antex Biologics Inc. Amended and
Restated Stock Option Plan (the "Stock Option Plan"), for the approval of the
amendments to the Antex Biologics Inc. 1992 Directors' Stock Option Plan (the
"Directors' Plan") and for the ratification of the appointment of auditors for
the current fiscal year.
Abstentions will have no effect on the outcome of the vote for the
election of the director. In determining whether the Certificate Amendment has
obtained the required number of affirmative votes, abstentions and shares held
in "street name" by a broker or nominee who has indicated the absence of
discretionary authority to vote such shares (a "broker non-vote") have the
effect of a "no" vote. For purposes of a vote on each of the matters that
requires for adoption the affirmative vote of a majority of the shares present
or represented and entitled to vote, shares as to which a holder abstains from
voting effectively constitute "no" votes since such shares nevertheless are
considered present at the meeting and broker non-votes are not counted as
shares entitled to vote on such matter.
Stockholders who execute proxies may revoke them by giving written
notice to the Secretary of the Company at any time before such proxies are
voted. Attendance at the meeting will not have the effect of revoking a proxy
unless the stockholder notifies the Secretary of the meeting in writing prior
to the voting of the proxy.
The Board of Directors does not know of any matter, other than those
described herein, that is expected to be presented for consideration at the
meeting. However, if other matters properly come before the meeting, the
persons named in the accompanying proxy intend to vote the shares represented
by such proxy on any such matter in accordance with their judgment. All
proxies received pursuant to this solicitation will be voted except as to
matters where authority to vote is specifically withheld and, where a choice is
specified as to the proposal, they will be voted in accordance with such
specification. If no instructions are given, the persons named in the
Page 1 of 12
<PAGE> 4
enclosed proxy intend to vote for the nominee for reelection as a director as
set forth below, for the approval of the Certificate Amendment, for the
approval of the amendments to the Stock Option Plan, for the approval of the
amendments to the Directors' Plan and for the ratification of Coopers & Lybrand
L.L.P. as the independent public accountants to audit the Company's accounts
for the fiscal year ending December 31, 1997.
The Company will bear the cost of soliciting proxies, including the
cost of mailing the proxy material, and will reimburse banks, brokers and other
custodial nominees and fiduciaries for the costs of supplying the proxy
material to beneficial owners of the common stock. The Company has retained
MacKenzie Partners, Inc. ("MacKenzie") to assist in the solicitation of proxies.
The Company has agreed to pay MacKenzie a fee not to exceed $5,000; to reimburse
MacKenzie for their out-of-pocket expenses, estimated at no more than $15,000;
and to indemnify MacKenzie against any losses, claims, damages, liabilities or
expenses to which they may become subject arising from or in connection with
their solicitation services. Directors, officers, and regular employees of the
Company (who will not be specifically compensated for such service) also may
solicit proxies in person or by telephone.
The 1996 Annual Report to Stockholders is enclosed herewith. The
Annual Report, which includes financial statements, does not form any part of
the proxy solicitation materials.
VOTING SECURITIES AND PRINCIPAL STOCKHOLDERS
The following table sets forth certain information as of February 19,
1997 regarding the beneficial ownership of the Company's common stock by (i)
each person known to the Company to own beneficially more than 5% of the
outstanding shares of common stock, (ii) each director of the Company, (iii)
each executive officer of the Company named in the Summary Compensation Table,
and (iv) all directors and executive officers of the Company as a group. The
persons named in the table below have advised the Company that they have sole
voting power and sole investment power with respect to all shares of common
stock shown as beneficially owned by them, except as otherwise indicated.
<TABLE>
<CAPTION>
NUMBER PERCENTAGE
NAME AND ADDRESS(1) OF SHARES OF CLASS
---------------- ------------ ------------
<S> <C> <C>
V. M. Esposito, Ph.D. 2,413,301(2)(3)(4) 9.72%
Charles J. Coulter 36,219(5) *
Bruce E. Elmblad 15,788(5) *
Donald G. Stark 71,934(6) *
Gregory C. Zakarian 550,000(7) 2.39%
All directors and executive officers
(6 persons in group) 3,087,242(8) 12.13%
</TABLE>
- ----------------
* less than 1%
(1) The address of each person is 300 Professional Drive, Gaithersburg, MD
20879.
(2) Includes 39,083 shares that are subject to an escrow arrangement entered
into by certain of the Company's stockholders and optionholders in
connection with the Company's initial public offering under which the
shares are subject to forfeiture if certain income targets are not met
(the "Escrow Arrangement").
Page 2 of 12
<PAGE> 5
(3) Includes 2,336,053 shares issuable upon the exercise of options that are
immediately exercisable or that will become exercisable within 60 days
after February 19, 1997 (of which 20,003 are subject to forfeiture in
accordance with the terms of the Escrow Arrangement).
(4) Includes 20,000 shares owned by a trust of which Dr. Esposito's wife is
sole trustee and as to which he disclaims beneficial ownership.
(5) Consists solely of shares issuable upon the exercise of options that are
immediately exercisable or that will become exercisable within 60 days
after February 19, 1997.
(6) Includes 36,219 shares issuable upon the exercise of options that are
immediately exercisable or that will become exercisable within 60 days
after February 19, 1997.
(7) Includes 545,000 shares issuable upon the exercise of options that are
immediately exercisable or that will become exercisable within 60 days
after February 19, 1997 (of which 6,666 are subject to forfeiture in
accordance with the terms of the Escrow Arrangement).
(8) Includes 39,083 shares subject to forfeiture in accordance with the
terms of the Escrow Arrangement and 2,969,279 shares issuable upon the
exercise of options that are immediately exercisable or that will become
exercisable within 60 days after February 19, 1997 (of which options
26,669 are subject to forfeiture in accordance with the terms of the
Escrow Arrangement).
ITEM 1.
ELECTION OF ONE DIRECTOR
The Board of Directors of the Company is divided into three classes
which are required to be as nearly equal in size as possible. Directors are
elected for three-year terms. At the 1994 Annual Meeting, Donald G. Stark was
reelected as a Class II director (term to expire at the 1997 Annual Meeting).
At the 1995 Annual Meeting, V. M. Esposito, Ph.D. and Charles J. Coulter were
reelected as Class III directors (terms to expire at the 1998 Annual Meeting).
At the 1996 Annual Meeting, Bruce E. Elmblad was elected as a Class I director
(term to expire at the 1999 Annual Meeting). At the 1997 Annual Meeting, the
stockholders will elect one Class II director, whose term will extend until the
2000 Annual Meeting.
The Board of Directors has nominated Donald G. Stark for reelection as a
Class II director. Shares represented by all proxies received by the Board of
Directors and not so marked as to withhold authority to vote for the nominee
will be voted (unless the nominee is unable or unwilling to serve) for the
election of the nominee as a Class II director. The Board of Directors knows
of no reason why the nominee will be unable or unwilling to serve, but if such
should be the case the persons named in the proxy will have the authority to
vote the proxy for the election of a replacement nominee selected by the Board
of Directors.
NOMINEE, CONTINUING DIRECTORS AND EXECUTIVE OFFICERS
The names of the nominee for election as director, each continuing
director, and each executive officer, and each such individual's age, positions
and offices held with the Company, years of service as a director, if
applicable, principal occupation and business experience during the past five
years, and certain other directorships held is set forth below. The following
descriptions are based on information provided by such persons.
V. M. ESPOSITO, PH.D., age 56, has served as President, Chief Executive
Officer and a director of the Company since May 1992. In July 1992, he was
elected Chairman of the Board of Directors. From April 1987 until joining the
Company, Dr. Esposito was the Founder and served as the President and Chief
Executive Officer of Theracel Corporation, a privately-owned biotechnology
company.
CHARLES J. COULTER, age 71, has been a director of the Company since
October 1992. Mr. Coulter was President of American Research and Development,
a venture capital organization, from 1973 until his retirement in June 1992.
Mr. Coulter is currently a director of a publicly-held company, Fusion Systems,
Inc.
BRUCE E. ELMBLAD, age 68, has been a director the Company since April
1995. Mr. Elmblad has been the President of Venture Investment Advisors, Inc.,
a venture capital organization, since November 1994. From April 1990 to
October 1994 he was a Partner with SED Partners and the President of SEC
Management Company,
Page 3 of 12
<PAGE> 6
Inc., two venture capital organizations. Mr. Elmblad is currently a director
of two publicly-held companies, Martek Biosciences Corporation and PCD.
DONALD G. STARK, age 70, has been a director of the Company since
October 1992. From September 1987 until his retirement in September 1992, Mr.
Stark served as the Vice Chairman of the Board of Nova Pharmaceutical
Corporation.
THERESA M. SMITH, ESQ., age 36, has served as Vice President, Corporate
Development of the Company since September 30, 1996. From January 1995 to
September 1996, Ms. Smith served as a patent attorney for the law firm of
Armstrong, Westerman, Hattori, McLeland & Naughton. Previously, she was a
patent attorney with the law firm of Pennie & Edmonds from August 1993 to
January 1995. Prior to August 1993, she worked as a patent attorney in the
legal department of The DuPont Merck Pharmaceutical Company.
GREGORY C. ZAKARIAN, CPA, age 48, has served as Vice President,
Administration, Chief Financial Officer and Treasurer of the Company since
September 1992. He has served as Secretary of the Company since November 1993,
and was Assistant Secretary of the Company from September 1992 until October
1993. Mr. Zakarian served as Director of Finance and Administration for
Partnership for Democracy, a charitable organization, from 1991 until September
1992.
The Compensation Committee of the Board of Directors reviews and makes
recommendations to the Board on matters relating to employee compensation and
benefits, determines the compensation of the officers and other key employees,
and administers the Stock Option Plan. The current members are Charles J.
Coulter, Bruce E. Elmblad and Donald G. Stark (chair). The Audit Committee of
the Board of Directors reviews and monitors the Company's financial reporting
and accounting practices. The current members are Charles J. Coulter (chair),
Bruce E. Elmblad and Donald G. Stark. The Company does not have a nominating
committee.
During 1996, the Board of Directors met 7 times, the Compensation
Committee met three times and the Audit Committee met once.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires that each of the Company's directors and executive
officers, and any beneficial owner of more than 10% of the Company's common
stock, file with the Securities and Exchange Commission (the "SEC") initial
reports of beneficial ownership of the common stock and reports of change in
beneficial ownership of the common stock. Such persons also are required by
SEC regulations to furnish the Company with copies of all such reports. Based
solely on its review of the copies of such reports furnished to the Company for
the year ended December 31, 1996, and on the written representations made by
such persons that no other such reports were required, the Company is not aware
of any noncompliance with Section 16(a) during 1996.
Page 4 of 12
<PAGE> 7
EXECUTIVE COMPENSATION
The following table sets forth information for each of the Company's
last three fiscal years concerning the compensation earned by each of the
Company's executive officers whose compensation, consisting of salary and
bonuses, exceeded $100,000 for the year ended December 31, 1996 (the "named
executive officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term Compensation
------------------------------------
Annual
Compensation Awards Payouts
----------------------------------------------------------------------------------------------------
SECURITIES ALL OTHER
Name and OTHER RESTRICTED UNDERLYING LTIP COMPEN-
Principal ANNUAL STOCK OPTIONS/ PAY- SATION
Position YEAR SALARY ($)(1) BONUS ($) COMPENSAT.($) AWARDS($) SARS(#) OUTS($) ($)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
V.M. Esposito, 1996 257,990 175,000 -- -- 1,000,000 -- 64,023(3)
Ph.D., Chief 1995 230,000 -- -- -- 1,250,000 -- 88,674
Executive 1994 205,000(2) -- -- -- 250,000 -- 64,033
Officer
G.C. Zakarian, 1996 127,212 30,000 -- -- 125,000 -- 26,739(3)
Chief Financial 1995 118,000 -- -- -- 325,000 -- 34,918
Officer 1994 103,000 -- -- -- 75,000 -- 24,139
</TABLE>
- --------------
(1) Pursuant to the terms of the Company's private placement, the
compensation of the named executive officers of the Company (except for
options, warrants and similar equity incentives) could not be increased
for a period ending 13 months following the April 18, 1995 termination
date of the offering.
(2) Dr. Esposito elected to defer receipt of $25,000 in 1994 of his salary
under the Company's Deferred Compensation Program.
(3) Consists of premiums paid by the Company on a split dollar life
insurance policy held by the individual.
The following table sets forth individual grants of stock options to the
named executive officers during the year ended December 31, 1996.
OPTION GRANTS IN 1996
<TABLE>
<CAPTION>
Number of Percent of
Securities Total Options
Underlying Granted Exercise
Options to Employees Price Expiration
Name Granted (#) in Fiscal Year ($/Share) Date
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
V. M. Esposito, Ph.D. 500,000(1) 33.4% $0.37 01/16/06
500,000(2) 33.4% $0.56 11/11/06
G. C. Zakarian 125,000(1) 8.3% $0.37 01/16/06
</TABLE>
- --------------
(1) All options vested on May 7, 1996.
(2) 250,000 options vested on January 1, 1997. Balance of 250,000 options
vest ratably on a monthly basis over the period November 11, 1996
through November 11, 2000.
Page 5 of 12
<PAGE> 8
The following table sets forth information concerning stock options
exercised during 1996 and the value of unexercised stock options held at
December 31, 1996 by the named executive officers.
AGGREGATED OPTION EXERCISES IN 1996
AND YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of
Securities Underlying Value of Unexercised
Unexercised Options In-the-Money Options
at Year-End (#) at Year-End
Shares Acquired on Exercisable (E)/ Exercisable (E)/
Name Exercise (#) Value Realized ($) Unexercisable (U) Unexercisable (U)
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
V. M. Esposito, Ph.D. 0 -- 2,065,219(E)(1) $135,000(E)
494,792(U)(2) --
G. C. Zakarian 0 -- 545,000(E)(3) $34,250(E)
-- --
</TABLE>
(1) Includes options to purchase 20,003 shares that are subject to
forfeiture in accordance with the terms of the Escrow Arrangement.
(2) Includes 250,000 options that vested on January 1, 1997.
(3) Includes options to purchase 6,666 shares that are subject to forfeiture
in accordance with the terms of the Escrow Arrangement.
COMPENSATION OF DIRECTORS
Only directors who are not employees of the Company are compensated
for their services as directors. During 1996, each nonemployee director was paid
$1,000 for each meeting of the Board of Directors which he attended. In
addition, each nonemployee director received $500 for each meeting of a
committee of the Board attended in person and held separately. Directors also
are reimbursed for their expenses incurred in attending Board and committee
meetings. Effective May 1, 1997, each nonemployee director will also be paid an
annual retainer of $10,000 as compensation for services.
The 1992 Directors' Stock Option Plan (the "Directors' Plan"), as
amended May 1996, provides for the grant by the Company of options to purchase
up to an aggregate of 1,200,000 shares of the Company's authorized but unissued
common stock (subject to adjustment, in certain cases, including stock splits,
recapitalizations and reorganizations). Each member of the Board of Directors
of the Company who is not an employee of the Company qualifies to participate in
the Directors' Plan. Upon initial election to the Board, a director is granted
an option to purchase the number of shares of common stock equal to $20,000
($10,000 if elected on or after the six-month anniversary of the most recent
annual shareholders meeting) divided by the greater of the market price of the
common stock on the date of grant or $0.50. At the time of reelection to serve
or upon continuing to hold office for the following year, a director is granted
an additional option to purchase the number of shares of common stock equal to
$20,000 divided by the greater of the market price of the common stock on the
date of the grant or $0.50. For directors who have served for at least three
years, this basic annual grant is supplemented every third year by an additional
grant of an option to purchase a number of shares of common stock equal to 150%
of the number of shares covered by the basic grant. Vesting occurs quarterly in
four equal installments over a period of one year following the date of grant.
All stock options granted under the Directors' Plan have a five-year term. At
December 31, 1996, options to purchase 111,300 shares of common stock were
outstanding under the Directors' Plan. A proposal to amend the Directors' Plan
is being submitted to a vote of the stockholders at the Annual Meeting. See
Item 4. - Approval of the Amendments to the Antex Biologics Inc. 1992 Directors'
Stock Option Plan.
Page 6 of 12
<PAGE> 9
EMPLOYMENT CONTRACTS
Dr. Esposito entered into an agreement with the Company which commenced
January 1, 1996 and expires on December 31, 2000. The agreement requires Dr.
Esposito to devote his entire business time to the Company, not to compete with
the Company for a period of two years after termination of employment with the
Company and to assign to the Company all rights to technology discovered by him
during his employment. The agreement provides for an annual base salary of
$300,000 through December 31, 1997, and thereafter is subject to adjustment by
the Board, provided that it is not less than the prior year's base salary. Dr.
Esposito also is eligible to receive bonuses as determined by the Board. The
agreement provides for termination by the Company on thirty-six months' prior
notice or without notice upon payment of severance equal to thirty-six months'
salary and any bonus to which he would have been entitled.
Gregory C. Zakarian is employed under an agreement with the Company
which commenced May 1, 1995 and expires on April 30, 1998. Like Dr. Esposito's
agreement, Mr. Zakarian's agreement requires him to devote his entire business
time to the Company, not to compete with the Company for a period of two years
after termination of employment with the Company and to assign to the Company
all rights to technology discovered by him during his employment. The
agreement provides for an annual base salary of $135,000 through April 30,
1997, and thereafter is subject to adjustment by the Board, provided that it is
not less than the prior year's base salary. Mr. Zakarian also is eligible to
receive bonuses as determined by the Board. The agreement provides for
termination by the Company on twelve months' prior notice or without notice
upon payment of severance equal to twelve months' salary and any bonus to which
he would have been entitled.
ITEM 2.
AMENDMENT OF CERTIFICATE OF INCORPORATION
TO INCREASE AUTHORIZED SHARES OF COMMON STOCK
The Board of Directors by unanimous vote has approved and is submitting
to stockholders for adoption an amendment to Article FOURTH of the Company's
Certificate of Incorporation to increase the number of its authorized shares of
common stock, par value $0.01 per share, from 65 million to 95 million shares.
The Company also is currently authorized to issue up to 5 million shares of
preferred stock, par value $0.01 per share ("preferred stock"), of which no
shares are outstanding. Neither the authorized number of shares of preferred
stock nor the relative rights and limitations of the preferred stock and the
common stock would be changed by the Certificate Amendment.
At February 19, 1997, the Company had 22,479,679 shares of common stock
issued and outstanding. In addition, an aggregate of 27,617,435 shares of
common stock are reserved for issuance upon the exercise of the Company's
outstanding warrants and options, and options authorized but unissued under the
Stock Option Plan and the Directors' Plan.
The additional authorized shares of common stock would be available to
meet a variety of possible business needs as they may arise from time to time,
including the issuance of such shares to raise additional capital for the
operations of the Company or in connection with a technology acquisition,
corporate acquisition or strategic alliance. The Company currently has no
plans or proposals concerning any such acquisition or alliance. The shares
also would be available for issuance under the Stock Option Plan and the
Directors' Plan as they are proposed to be amended.
Approval of the Certificate Amendment will permit the Board of Directors
to issue the additional shares of common stock without further stockholder
approval on such terms and at such times as the Board of Directors may
determine, except to the extent that stockholder approval otherwise is required
by law. The issuance of additional shares of common stock will, among other
effects, have a dilutive effect on earnings per share (or an anti-dilutive
effect on loss per share) and on the equity and voting power of the
then-existing holders of common stock. The holders of the common stock do not
have preemptive rights.
Page 7 of 12
<PAGE> 10
The Board of Directors believes that the Certificate Amendment is in the
best interest of the Company and recommends that the stockholders vote FOR the
proposal to approve the Certificate Amendment. The affirmative vote of the
holders of a majority of the outstanding shares of Common Stock is required for
adoption of the Certificate Amendment.
ITEM 3.
APPROVAL OF AMENDMENTS TO ANTEX BIOLOGICS INC.
AMENDED AND RESTATED STOCK OPTION PLAN
In 1995, the Board of Directors adopted and the stockholders approved
the Antex Biologics Inc. Amended and Restated Stock Option Plan (the "Stock
Option Plan"). Under the Stock Option Plan, the Company currently is
authorized to grant stock options with respect to an aggregate of 4,800,000
shares of common stock. An eligible participant may be granted stock options
with respect to a maximum of 3,000,000 shares of common stock in any period of
three consecutive calendar years. As of February 19, 1997, 1,089,989 shares
of common stock remained available for awards under the Stock Option Plan.
The Board of Directors believes that for a development stage company
with only very limited resources, stock options are an important non-cash
element of executive compensation. Stock options also have the advantage of
aligning the financial interests of the Company's executives with those of the
stockholders by tying the return to executives to increases in stockholder
value because the value of the options will increase as the value of the Common
Stock increases.
When the Stock Option Plan was approved by the stockholders, the
4,800,000 shares of Common Stock for which options could be issued represented
approximately 7% of the Company's authorized capital stock. The proposed
Certificate Amendment would increase the authorized number of shares of Common
Stock from 65 million to 95 million, thereby reducing substantially the amount
of Common Stock available to eligible participants under the Stock Option Plan
as a percentage of the total number of authorized shares of capital stock. See
"Item 2 - Amendment of Certificate of Incorporation to Increase Authorized
Shares of Common Stock." The Board of Directors believes that an increase in
the number of shares authorized to be issued under the Stock Option Plan is
required in order to enable the Company to continue to include stock options as
a key element of its employee compensation packages. Accordingly, the
Compensation Committee of the Board of Directors (the "Committee") has
authorized, subject to stockholder approval, (i) an increase to 7,500,000 in
the number of shares available for issuance under the Stock Option Plan,
representing 7.5% of the Company's authorized capital stock if the Certificate
Amendment is approved, and (ii) a corresponding increase from 3,000,000 to
5,000,000 in the number of stock options that may be granted to any participant
during a period of three consecutive calendar years.
All stock options grants under the Stock Option Plan are at the
discretion of the Committee. There currently are no agreements or commitments
on the part of the Committee to issue any stock options in the future.
Accordingly, future awards under the Plan are not determinable.
The Board of Directors believes that these amendments to the Stock
Option Plan are in the best interests of the Company and recommends that the
stockholders vote FOR the proposal to approve the proposed amendments to the
Stock Option Plan.
DESCRIPTION OF STOCK OPTION PLAN
The following is a description of the material terms of the Stock Option
Plan. This description is qualified in its entirety by the specific terms of
the Stock Option Plan.
The Stock Option Plan provides for the grant of stock options to
employees (including officers and directors who are employees), to members of
advisory boards to the Company and to consultants and advisors to the Company.
The options may be either "incentive stock options" within the meaning of
Section 422 of the Code, or non-statutory options. Incentive stock options may
be granted only to salaried employees (including officers
Page 8 of 12
<PAGE> 11
and directors who are employees). Approximately 20 persons currently are
eligible to participate in the Stock Option Plan. As of February 19, 1997, the
market price of the Common Stock was $0.87 per share.
The Stock Option Plan is required to be administered by a committee of
the Board of Directors, and is currently administered by the Committee, each
member of which is a nonemployee director within the meaning of the Exchange
Act. The Committee is responsible for determining the individuals to whom
options will be granted, the time or times at which options will be granted,
the designation of an option as either an incentive stock option or a
non-statutory stock option, the option exercise price, the term of each option,
the date or dates on which each option will be come exercisable and any other
terms of the options, all subject to the provisions of the Stock Option Plan.
The exercise price of an option may not be less than 50%, in the case of
a non-statutory option, and 100%, in the case of an incentive stock option, of
the fair market value of a share of common stock on the date the option is
granted. The term of an option may not exceed ten years. Notwithstanding the
foregoing, in the case of an incentive stock option granted to a person who at
the time of grant owns, directly or by attribution, stock possessing more than
10% of the total combined voting power of all classes of stock of the Company
and its affiliates, the exercise price of an option may not be less than 110%
of the fair market value of a share of common stock on the date of grant and
the term of the option may not exceed five years. During the optionee's
lifetime, an option is exercisable only by the optionee and is not transferable
except by will or by the laws of descent and distribution.
The exercise price of an option may be paid (i) in cash, (ii) if
authorized by the Committee, by delivery of the Company of shares of common
stock owned by the optionee having a fair market value equal to the aggregate
exercise price or (iii) by any other means authorized by the Committee,
including the delivery of a promissory note. If delivery of shares of common
stock in payment of the exercise price is permitted, an optionee could, through
a series of virtually simultaneous exercises and tenders of the shares received
upon exercise, exercise all exercisable options with a minimum initial
commitment of previously-owned shares. If payment of the exercise price is
made through a tender of shares, the Company will receive no cash consideration
for the sale of shares.
Upon the occurrence of a "change in control" of the Company (which is
defined by the Stock Option Plan to include (i) the acquisition by any person
or group of 50% or more of the combined voting power of the Company's
outstanding securities, (ii) certain changes in the composition of the Board of
Directors within a two-year period, (iii) certain mergers or (iv) a liquidation
or sale of all or substantially all of the assets of the Company), all
outstanding options become immediately exercisable in full without regard to
any otherwise applicable vesting restrictions.
The Board of Directors may amend or terminate the Stock Option Plan at
any time; provided that the approval of the stockholders of the Company is
required to the extent necessary (i) to comply with Section 422 of the Code or
any successor provision with respect to incentive stock options or (ii) to
maintain compliance with Rule 16b-3 under the Exchange Act, with respect to
options granted to executive officers and to directors who are employees of the
Company.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
Summarized below are the material federal income tax consequences of the
Stock Option Plan, based on applicable provisions of the federal income tax
laws and regulations as currently in effect.
The grant of an option will have no tax consequences to the optionee or
the Company. In general, upon exercise of a non-statutory option, the optionee
will recognize ordinary income equal to the difference between the option
exercise price and the fair market value of the shares of common stock
purchased on the date of the exercise. Assuming applicable tax withholding
obligations are satisfied, the Company generally will be entitled to a tax
deduction in the same amount as, and at the same time as, the optionee
recognized ordinary income.
Page 9 of 12
<PAGE> 12
Under Section 162(m) of the Code, the Company generally would not be entitled
to a deduction for compensation paid to certain executives in excess of one
million dollars in a taxable year. Compensation earned under the Stock Option
Plan may be exempt from this limitation as "performance-based compensation," if
the per-share exercise price of the option is less than the fair market value
of a share of common stock on the date of grant.
If the shares of common stock purchased pursuant to the exercise of an
incentive stock option are held by the optionee for two years after the grant
of the option and for one year after the exercise of the option, then the
optionee will not recognize income upon the exercise of the option. Instead,
any gain or loss will be recognized only upon the ultimate disposition of the
shares, at which time, assuming the shares constitute capital assets in the
hands of the optionee, the gain or loss will be treated as long-term capital
gain or loss. However, the difference between the option exercise price and
the fair market value of the shares acquired upon exercise of an incentive
stock option will be considered an item of adjustment for purposes of the
alternative minimum tax under the Code. If the optionee does not recognize
income upon the exercise of an incentive stock option, then the Company
correspondingly will not be entitled to a tax deduction.
If the optionee disposes of the shares acquired as the result of the
exercise of an incentive stock option before the expiration of the required
one- and two-year holding periods described above, the optionee generally must
treat as ordinary income in the year of such disposition an amount equal to the
difference between the option exercise price and the lesser of the fair market
value of the shares on the date of exercise or the selling price. Assuming
that the shares constitute capital assets in the optionee's hands, the balance
of any gain or loss on such disposition will be treated as capital gain or loss
(long-term or short-term, depending on whether the shares have been held for
more than one year). If the holding period requirements are not satisfied,
subject to Section 162(m) and certain other limitations, the Company will be
entitled to a tax deduction in the year of disposition equal to the amount of
ordinary income recognized by the optionee.
ITEM 4.
APPROVAL OF AMENDMENTS TO THE ANTEX BIOLOGICS INC.
1992 DIRECTORS' STOCK OPTION PLAN
In 1992, the Board of Directors adopted and the stockholders approved
the Antex Biologics Inc. 1992 Directors' Stock Option Plan (the "Directors'
Plan"). Under the Directors' Plan, as amended to date, the Company is
authorized to grant options with respect to an aggregate of 1,200,000 shares of
common stock to members of the Board of Directors who are not employees of the
Company ("nonemployee directors"). Currently, under the terms of the Directors'
Plan, nonemployee directors automatically receive, upon their initial election
to the Board, a grant of an option to purchase the number of shares of common
stock equal to $20,000 ($10,000 if elected on or after the six-month
anniversary of the most recent annual shareholders meeting) divided by the
greater of the market price of the common stock on the date of grant or $0.50.
At the time of reelection to serve or upon continuing to hold office for the
following year, a director is granted an additional option to purchase the
number of shares of common stock equal to $20,000 divided by the greater of the
market price of the common stock on the date of the grant or $0.50. For
directors who have served for at least three years, this basic annual grant is
supplemented every third year by an additional grant of an option to purchase a
number of shares of common stock equal to 150% of the number of shares covered
by the basic grant. Such options become exercisable in four equal quarterly
installments over a period of one year following the date of grant. All stock
options granted under the Directors' Plan have a five-year term and an exercise
price equal to the fair market value of the common stock on the date of grant.
At December 31, 1996, options to purchase 111,300 shares of common stock were
outstanding under the Directors' Plan. On February 19, 1997, the market price
of the common stock was $0.87 per share.
Page 10 of 12
<PAGE> 13
PROPOSED AMENDMENTS TO THE DIRECTORS' PLAN
As a development stage company, the Company has only very limited
resources. Accordingly, stock options are an important non-cash element of
compensation necessary to attract and retain qualified directors. Because the
value of the options increase as the value of the common stock increases, stock
options also have the advantage of aligning the financial interests of the
Company's directors with those of the stockholders by tying the return to
directors to increases in stockholder value.
The proposed amendment to the Company's Certificate of Incorporation
would increase the authorized number of shares of common stock from 65 million
to 95 million. As a result, the Board of Directors also has authorized,
subject to stockholder approval, a corresponding increase from 1,200,000 to
1,700,000 in the number of shares of common stock available for issuance under
the Directors' Plan. In addition, the Board of Directors has approved, subject
to stockholders approval, an extension of the expiration date of the Directors'
Plan from the date following the day of the Company's annual meeting in 2001 to
the date following the day of the Company's annual meeting in 2002.
The Board of Directors believes that these amendments to the Directors'
Plan are in the best interests of the Company and recommends that the
stockholders vote FOR the proposal to approve the proposed amendments to the
Directors' Plan.
ADDITIONAL TERMS OF THE DIRECTORS' PLAN
The following is a description of other material terms of the Directors'
Plan, which are not proposed to be amended.
During an optionee's lifetime, an option is exercisable only by the
optionee and is not transferable except by will or by the laws of descent and
distribution or a qualified domestic relations order.
The exercise price of an option may be paid (i) in cash, (ii) by
delivery to the Company of shares of common stock owned by the optionee for at
least 12 months and having a fair market value equal to the aggregate exercise
price or (iii) by any combination of such methods of payment.
Upon the occurrence of a "change in control" of the Company (which is
defined by the Directors' Plan to include (i) the acquisition by any person or
group of 50% or more of the combined voting power of the Company's outstanding
securities, (ii) certain changes in the composition of the Board of Directors
within a two-year period, (iii) certain mergers or (iv) a liquidation or sale
of all or substantially all of the assets of the Company), all outstanding
options become immediately exercisable in full without regard to any otherwise
applicable vesting restrictions.
The Board of Directors may amend or terminate the Directors' Plan at any
time, except that the provisions with respect to eligibility, the timing and
amount of option grants and the option exercise price may not be amended more
than once every six months, and provided further that the approval of the
stockholders of the Company is required to the extent necessary to maintain
compliance with Rule 16b-3 under the Exchange Act.
FEDERAL INCOME TAX CONSEQUENCES
The material federal income tax consequences of grants under the
Directors' Plan, based on the current provisions of the Internal Revenue Code
and the regulations thereunder, are as follows.
The grant of a stock option to a nonemployee director will have no
immediate tax consequences to the director or to the Company. In general, upon
the exercise of a stock option, the director will recognize ordinary income
equal to the excess of the fair market value of the acquired shares on the
exercise date over the exercise price, and the Company will, in general, be
entitled to a tax deduction in the same amount.
Page 11 of 12
<PAGE> 14
When a nonemployee director sells shares of common stock acquired upon
the exercise of an option, the director generally will recognize capital gain
or loss equal to the difference between the amount realized on the disposition
of the shares and the director's basis in the shares. In general, the
director's basis in the shares will be equal to the amount of the ordinary
income recognized in connection with the exercise of the shares plus the
exercise price of the shares. Any capital gain or loss realized upon the sale
of the shares will be long-term or short-term, depending on whether the shares
have been held for more than one year from the date as of which the director
recognized ordinary income.
ITEM 5.
RATIFICATION OF APPOINTMENT OF AUDITORS
The firm of Coopers & Lybrand L.L.P., independent certified public
accountants, has audited the books and records of the Company for 1996 and the
Board of Directors desires to continue the services of this firm for the
current fiscal year. Accordingly, the Board recommends that the stockholders
vote FOR the ratification of the appointment by the Board of Directors of the
firm of Coopers & Lybrand L.L.P. to audit the books and accounts of the Company
for the current fiscal year.
A representative of Coopers & Lybrand L.L.P. is expected to be present
at the Annual Meeting to respond to appropriate questions and will be given the
opportunity to make a statement if he desires to do so. If the stockholders do
not ratify the selection of this firm, the Board of Directors will consider the
selection of another firm of independent certified public accountants.
STOCKHOLDER PROPOSALS
Any stockholder proposal intended to be presented at the 1998 Annual
Meeting must be received by the Secretary of the Company on or before November
13, 1997 in order to be considered for inclusion in the Company's proxy
statement and form of proxy for the Annual Meeting. Any such proposal must
also meet the other requirements set forth in the rules of the Securities and
Exchange Commission relating to stockholders' proposals.
By Order of the Board of Directors
GREGORY C. ZAKARIAN
Secretary
March 5, 1997
Page 12 of 12
<PAGE> 15
MICROCARB INC.
AMENDED AND RESTATED STOCK OPTION PLAN
1. Purpose.
The purpose of the MicroCarb Inc. Amended and Restated Stock
Option Plan (the "Plan") is to secure for MicroCarb Inc. (the "Company") and
its shareholders the benefits of providing equity incentives to officers, key
employees, consultants, and members of an advisory board of the Company who are
expected to contribute to the Company's future growth and success. Except
where the context otherwise requires, the term "Company" shall include any
parent and subsidiary of the Company as defined in Section 424(e) and 424(f),
respectively, of the Internal Revenue Code of 1986, as amended or replaced from
time to time (the "Code").
2. Type of Options and Administration.
(a) Types of Options. Options granted pursuant to the
Plan shall be either incentive stock options within the meaning of Section 422
of the Code ("Incentive Stock Options") or options that are not Incentive Stock
Options ("Non-Statutory Options").
(b) Administration. The Plan shall be administered by a
committee of the Board of Directors of the Company (the "Committee") (i) having
at least such number of members as is required to meet the requirements of Rule
16b-3 promulgated under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), or any successor rule or regulation ("Rule 16b-3"), each of
whom is a disinterested person within the meaning of Rule 16b-3 and (ii) to the
extent that it is determined desirable to exempt any compensation resulting
from the exercise of options granted under the Plan from the limitation on
deductions imposed by Section 162(m) of the Internal Revenue Code of 1986, as
amended (the "Code") and the rules and regulations thereunder ("Section
162(m)"), having such composition to exempt such compensation under Section
162(m). Except as set forth below, the Committee may in its sole discretion
grant options to purchase shares of the Company's Common Stock, $0.01 par value
("Common Stock"). The Committee shall have authority, subject to the express
provisions of the Plan, to construe the respective option agreements and the
Plan, to prescribe, amend and rescind rules and regulations relating to the
Plan, to determine the terms and provisions of the respective option
agreements, which need not be identical, and to make any other determination in
the judgment of the Committee necessary or desirable for the administration of
the Plan. The Committee may correct any defect or supply any omission or
reconcile any inconsistency in the Plan or in any option agreement in the
<PAGE> 16
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manner and to the extent it shall deem expedient to carry the Plan into effect.
Notwithstanding the foregoing, except (i) with respect to the application of
the Plan to directors and officers within the meaning of Section 16 of the
Exchange Act ("Insiders") and (ii) to the extent necessary or desirable to
avoid the limitation on deductions imposed by Section 162(m), the Board of
Directors may perform any or all functions of the Committee under the Plan (in
which case each reference herein to the Committee shall be deemed a reference
to the Board of Directors). All actions taken by the Committee or the Board of
Directors in connection with the administration of the Plan shall be final and
conclusive. No member of either the Committee or the Board of Directors shall
be liable for any actions taken or determinations made in good faith.
(c) Applicability of Rule 16b-3. Those provisions of the
Plan which make express reference to Rule 16b-3 shall apply only to Insiders.
3. Eligibility.
(a) General. Options shall be granted only to persons
who are, at the time of grant, (i) salaried employees of the Company (including
officers and directors who are employees), (ii) members of an advisory board of
the Company or (iii) consultants of, or advisors to, the Company; provided,
however, that the persons to whom Incentive Stock Options may be granted shall
be limited to salaried employees (including officers and directors who are
employees) of the Company. Directors who are not salaried employees of the
Company shall not be eligible to receive options. An Incentive Stock Option
may be granted to a person who, at the time such option is granted, owns,
directly or indirectly, stock possessing more than 10% of the total combined
voting power of all classes of stock of the Company, only if the requirements
of paragraph (b) of Section 11 are satisfied. The attribution of stock
ownership provisions of Section 424(d) of the Code, and any successor
provisions thereto, shall be applied in determining the shares of stock owned
by a person for purposes of applying the foregoing percentage limitation.
(b) Limitations on Awards. No person may receive options
to purchase more than 3,000,000 shares of Common Stock (subject to adjustment
as provided in Section 15) in any three calendar years during the term of Plan.
For purposes of the application of this limitation, if an option is cancelled,
the shares of Common Stock subject to the cancelled option shall continue to be
counted against the maximum number of shares for which options may be granted
to the individual. If, after a grant of an option, the option exercise price
is reduced, the transaction shall be treated as a cancellation of the option
and a grant of a new option, and both the shares of Common Stock subject to the
option that is deemed to be cancelled and the shares of Common Stock subject to
the option that is deemed to be granted shall reduce the maximum number of
shares of Common Stock for which options may be granted to the individual.
<PAGE> 17
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4. Stock Subject to Plan.
Subject to adjustment as provided in Section 15 below, the
maximum number of shares of Common Stock of the Company which may be issued and
sold under the Plan is equal to 4,800,000 shares (including shares with respect
to which options were granted under the Plan prior to its amendment and
restatement). Such shares may be authorized and unissued shares or may be
shares that previously were issued and thereafter acquired by the Company. If
an option granted under the Plan (including options that were granted under the
Plan prior to its amendment and restatement) shall expire or terminate for any
reason without having been exercised in full, the unpurchased shares subject to
such option shall be reinstated as shares in respect of which options may be
granted under the Plan. However, if shares issued upon exercise of an option
under the Plan are tendered to, or withheld by, the Company either in payment
of the exercise price of an option granted under the Plan or in satisfaction of
any withholding tax obligation arising under the Plan, such tendered shares
shall not again be available for subsequent option grants under the Plan.
5. Forms of Option Agreements.
As a condition to the grant of an option under the Plan, each
optionee shall execute an option agreement in such form not inconsistent with
the Plan as may be approved by the Committee. Such option agreements may
differ among optionees. Each option agreement shall state whether the options
granted thereby are Incentive Stock Options or Non-Statutory Options.
Appropriate officers of the Company are hereby authorized to execute and
deliver option agreements in the name of the Company as directed from time to
time by the Committee.
6. Purchase Price.
(a) General. The purchase price per share of Common
Stock deliverable upon the exercise of an option shall be determined by the
Committee; provided, however, that (i) in the case of an Incentive Stock
Option, the purchase price per share shall not be less than 100% of the fair
market value of a share at the time of grant of such option, or less than 110%
of such fair market value in the case of such an option granted to a person
described in paragraph (b) of Section 11, and (ii) in the case of a
Non-Statutory Option, the purchase price per share shall not be less than 50%
of the fair market value of a share at the time of grant of such option (except
that in the case of such an option that is intended to be exempt from the
limitation on deductions under Section 162(m), the purchase price per share
shall not be less than 100% of the fair market value of a share on the date of
the grant of such option). In no event may an option be granted if the
purchase price per share is less than the par value of a share. For purposes
of this Plan, the "fair market value" of a share of Common Stock on a certain
<PAGE> 18
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date shall be deemed to be (x) the last sale price on NASDAQ or a national
security exchange on that date if shares are so listed or (y) if shares are not
so listed, the price determined in good faith by the Committee.
(b) Payment of Purchase Price. Options granted under the
Plan may provide for the payment of the purchase price by delivery of cash or a
check to the order of the Company in an amount equal to the purchase price of
the aggregate number of shares being purchased, or, to the extent provided in
the applicable option agreement, (i) by delivery to the Company of shares of
Common Stock already owned by the optionee having a fair market value equal in
amount to the purchase price of the aggregate number of shares being purchased,
or (ii) by any other means (including, without limitation, by delivery of a
promissory note of the optionee payable on such terms as are specified by the
Committee) which the Committee determines are consistent with the purpose of
the Plan and with applicable laws and regulations (including, without
limitation, the provisions of Rule 16b-3, the margin regulations promulgated by
the Board of Governors of the Federal Reserve Board System and Section 162(m),
as applicable) or (iii) by any combination of such methods of payment. The
fair market value of any consideration other than shares of Common Stock that
is permitted to be in payment of the exercise price of an option shall be
determined in such manner as may be prescribed by the Committee.
7. Option Period.
Each option and all rights thereunder shall expire on such
date as the Committee shall determine, but in no event after the expiration of
ten years from the day on which the option is granted (or five years in the
case of Incentive Stock Options granted to persons described in paragraph (b)
of Section 11) and shall be subject to earlier termination as provided in the
Plan or the applicable option agreement.
8. Exercise of Options.
Each option granted under the Plan shall be exercisable either
in full or in installments at such time or times and during such period as
shall be set forth in the agreement evidencing such option, subject to the
provisions of the Plan.
9. Nontransferability of Options.
Except as set forth herein, no option granted under the Plan
shall be assignable or transferable by the person to whom it is granted, either
voluntarily or by operation of law, except by will or the laws of descent and
distribution, and during the life of the optionee, shall be exercisable only by
the optionee; provided, however, that
<PAGE> 19
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Non-Statutory Options may be transferred pursuant to a qualified domestic
relations order (as defined in Section 414(p) of the Code).
10. Effect of Termination of Employment or Other Relationship.
Subject to Section 11(d) in the case of an Incentive Stock
Option, the Committee shall determine the period of time during which an
optionee may exercise an option following (i) the termination of the optionee's
employment or other relationship with the Company or (ii) the death or
disability of the optionee. Such periods shall be set forth in the option
agreement. Whether an authorized leave of absence, or absence in military or
government service, shall constitute termination of employment shall be
determined at the time of such absence in accordance with the provisions of
Section 1.421-7(h) of the Income Tax Regulations (or any successor
regulations).
11. Incentive Stock Options.
Options granted under the Plan which are intended to be
Incentive Stock Options shall be subject to the following additional terms and
conditions.
(a) Express Designation. All Incentive Stock Options
granted under the Plan shall, at the time of the grant, be specifically
designated as such in the option agreement covering such Incentive Stock
Options.
(b) 10% Shareholder. If any employee to whom an
Incentive Stock Option is to be granted under the Plan is, at the time of the
grant of such option, the owner of stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company (after taking into
account the attribution of stock ownership rules of Section 424(d) of the
Code), then the following special provisions shall be applicable to the
Incentive Stock Option granted to such individual:
(i) The purchase price per share of the Common Stock
subject such Incentive Stock Option shall not be less than
110% of the fair market value of one share of Common Stock at
the time of grant; and
(ii) The term of such Incentive Stock Option shall not
exceed five years from the date of grant.
(c) Dollar Limitation. For so long as the Code shall so
provide, options granted to any employee under the Plan (and any other stock
option plans of the Company) which are intended to constitute Incentive Stock
Options shall not constitute Incentive Stock Options to the extent that such
options, in the aggregate, become exercisable for the first time in any one
calendar year for shares of Common Stock with
<PAGE> 20
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an aggregate fair market value (determined as of the respective date or dates
of grant) of more than $100,000. This subsection (c) shall be applied by
taking options into account in the order in which they were granted.
(d) Termination of Employment. Unless the Committee
provides otherwise at the time of grant of an Incentive Stock Option, an
Incentive Stock Option shall remain exercisable after the optionee's
termination of employment according to the following schedule:
(i) Upon termination of the optionee's employment with
the Company for any reason other than death or total or
permanent disability (within the meaning of Section 22(e)(3)
of the Code) ("Disability"), an optionee may exercise an
Incentive Stock Option, to the extent then exercisable, at any
time within the period of three months after the date the
optionee ceases to be an employee of the Company, but not
after such period;
(ii) If the optionee dies while in the employ of the
Company or while the option is exercisable pursuant to
paragraph (i) or (iii), the Incentive Stock Option may be
exercised, to the extent then exercisable, by the person to
whom it is transferred by will or the laws of descent and
distribution at any time within the period of one year after
the date of death, but not after such period; and
(iii) If the optionee's employment with Company terminates
because of Disability, the Incentive Stock Option may be
exercised, to the extent then exercisable, within the period
of one year after the date the optionee ceases to be an
employee of the Company, but not after such period;
Notwithstanding any other provision of this Section 11, in no event may any
Incentive Stock Option be exercised after the expiration date of the option.
If an Incentive Stock Option fails to qualify as an Incentive Stock Option
because of the length of the period between the termination of employment and
the exercise of the option, the exercise of the option shall be treated as the
exercise of a Non-Statutory Option. For all purposes of the Plan and any
option granted hereunder, "employment" shall be defined in accordance with the
provisions of Section 1.421-7(h) of the Income Tax Regulations (or any
successor regulations).
(e) Any optionee who disposes of shares of Common Stock
purchased upon the exercise of an Incentive Stock Option either (i) within two
years after the date on which the option was granted, or (ii) within one year
after the transfer of such shares of Common Stock to the optionee, shall
promptly notify the Company of the date of such disposition and of the amount
realized upon such disposition.
<PAGE> 21
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12. Additional Provisions.
(a) Additional Option Provisions. The Committee may, in
its sole discretion, include additional provisions in any option granted under
the Plan, including without limitation restrictions on transfer, repurchase
rights, commitments to pay cash bonuses, to make, arrange for or guaranty loans
or to transfer other property to optionees upon exercise of options, or such
other provisions as shall be determined by the Committee with the approval of
the Board of Directors; provided that such additional provisions shall not be
inconsistent with any other term or condition of the Plan and such additional
provisions shall not cause an Incentive Stock Option granted under the Plan to
fail to qualify as an Incentive Stock Option within the meaning of Section 422
of the Code or an option granted to an Insider under the Plan to fail to comply
with Rule 16b-3.
(b) Acceleration. The Committee may, in its sole
discretion, (i) accelerate the date or dates on which all or any particular
option or options granted under the Plan may be exercised or (ii) extend the
dates during which all or any particular option or options granted under the
Plan may be exercised; provided, however, that no such acceleration or
extension shall be permitted, without the consent of the optionee, if it would
cause an Incentive Stock Option granted under the Plan to fail to qualify as an
Incentive Stock Option within the meaning of Section 422 of the Code or an
option granted to an Insider under the Plan to fail to comply with Rule 16b-3.
13. General Restrictions.
(a) Investment Representations. The Company may require
any optionee, as a condition of exercising such option, to give written
assurances in substance and form satisfactory to the Company to the effect that
such optionee is acquiring the Common Stock subject to the option for his or
her own account for investment and not with any present intention of selling or
otherwise distributing the same, and to such other effects as the Company deems
necessary or appropriate in order to comply with federal and applicable state
securities laws.
(b) Compliance With Securities Laws. Each option shall
be subject to the requirement that if, at any time, counsel to the Company
shall determine that the listing, registration or qualification of the shares
subject to such option upon any securities exchange or under any state or
federal law, or the consent or approval of any governmental or regulatory body,
or that the disclosure of non-public information or the satisfaction of any
other condition is necessary as a condition of, or in connection with, the
issuance or purchase of shares thereunder, such option may not be exercised, in
whole or in part, unless such listing, registration, qualification, consent or
approval, or satisfaction of such condition shall have been effected or
obtained on conditions acceptable to the Committee. Nothing herein shall be
deemed to require the Company to
<PAGE> 22
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apply for or to obtain such listing, registration or qualification, or to
satisfy such condition. Any such postponement or limitation affecting the
right to exercise an option or the grant or distribution of an option or shares
shall not extend the time within which the option may be granted or exercised
or the shares distributed, unless the Company and the optionee choose to amend
the terms of the option to provide for such an extension; and neither the
Company, nor any of its directors or officers shall have any obligation or
liability to the optionee or to a beneficiary as to any shares to which the
option shall lapse because of such a postponement or limitation.
14. Rights as a Shareholder.
The holder of an option shall have no rights as a shareholder
with respect to any shares covered by the option (including, without
limitation, any rights to receive dividends or non-cash distributions with
respect to such shares) until the date of issue of a stock certificate to him
or her for such shares. No adjustment shall be made for dividends or other
rights for which the record date is prior to the date such stock certificate is
issued.
15. Adjustment Provisions for Recapitalization and Related Transactions.
(a) General. If, through or as a result of any merger,
consolidation, sale of all or substantially all of the assets of the Company,
reorganization, recapitalization, reclassification, stock dividend, stock
split, reverse stock split or other similar distribution with respect to the
outstanding shares of Common Stock or other securities, (i) the outstanding
shares of Common Stock are increased or decreased, or are exchanged for a
different number or kind of shares or other securities of the Company, or (ii)
additional shares or new or different shares or other securities of the Company
or other non-cash assets are distributed with respect to such shares of Common
Stock or other securities, an appropriate and proportionate adjustment may be
made in (w) the maximum number and kind of shares reserved for issuance under
the Plan as provided in Section 4, (x) the number of shares with respect to
which options may be granted to an optionee within any three-year period as
provided in Section 3(b), (y) the number and kind of shares or other securities
subject to then outstanding options under the Plan, and (z) the purchase price
for each share subject to any then outstanding options under the Plan, but
without changing the aggregate purchase price as to which such options remain
exercisable, provided that no adjustment shall be made pursuant to this Section
15, without the consent of the optionee, if such adjustment would cause an
Incentive Stock Option granted under the Plan to fail to qualify as an
Incentive Stock Option within the meaning of Section 422 of the Code or an
option granted to an Insider under the Plan to fail to comply with Rule 16b-3.
<PAGE> 23
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(b) Committee Authority to Make Adjustments. Adjustments
under this Section 15 shall be made by the Committee, whose determination as to
what adjustments, if any, will be made and the extent thereof will be final,
binding and conclusive.
16. Merger, Consolidation, Asset Sale, Liquidation, etc.
(a) General. In the event of a consolidation or merger
or sale of all or substantially all of the assets of the Company in which
outstanding shares of Common Stock are exchanged for securities, cash or other
property of any other corporation or business entity, or in the event of a
liquidation of the Company, the Committee, or the entity performing a similar
function on behalf of any corporation assuming the obligations of the Company,
may, in its sole discretion, take any one or more of the following actions as
to outstanding options: (i) provide that such options shall be assumed, or
equivalent options shall be substituted, by the acquiring or succeeding
corporation (or an affiliate thereof), provided that any such options
substituted for Incentive Stock Options shall meet the requirements of Section
424(a) of the Code, (ii) upon written notice to the optionees, provide that all
unexercised options will terminate immediately prior to the consummation of
such transaction unless exercised by the optionee within a specified number of
days following the date of such notice, (iii) in the event of a merger under
the terms of which holders of the Common Stock will receive upon consummation
thereof a cash payment for each share surrendered in the merger (the "Merger
Price"), make or provide for a cash payment to the optionees equal to the
difference between (A) the Merger Price times the number of shares of Common
Stock subject to such outstanding options (to the extent exercisable at prices
not in excess of the Merger Price) and (B) the aggregate exercise price of all
such outstanding options in exchange for the termination of such options, or
(iv) provide that all or any outstanding options shall become exercisable in
full immediately prior to such event. In any such case, the Committee may, in
its sole discretion, advance the lapse of any waiting or installment periods
and exercise dates.
(b) Substitute Option. The Company may grant options
under the Plan in substitution for options held by employees of another
corporation who become employees of the Company, or a subsidiary of the
Company, as the result of a merger or a consolidation of the employing
corporation with the Company or a subsidiary of the Company, or as a result of
the acquisition by the Company, or one of its subsidiaries, of property or
stock of the employing corporation. Such substitute options shall be granted
on such terms and conditions as the Committee considers appropriate in the
circumstances.
17. Change in Control.
Notwithstanding any other provision of the Plan and except as
otherwise provided in the relevant option or award agreement, in the event of a
"Change in Control
<PAGE> 24
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of the Company" (as defined below), the exercise dates of all options then
outstanding shall be accelerated in full and any restrictions on exercising
outstanding options issued pursuant to the Plan prior to any given date shall
terminate. For purposes of the Plan, a "Change in Control of the Company"
shall occur or be deemed to have occurred only if (i) any "person", as such
term is used in Sections 13(d) and 14(d) of the Exchange Act (other than the
Company, or any trustee or other fiduciary holding securities under an employee
benefit plan of the Company, is or becomes the "beneficial owner" (as defined
in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of
the Company representing 50% or more of the combined voting power of the
Company's then outstanding securities; (ii) during any period of two
consecutive years ending during the term of the Plan (not including any period
prior to the adoption of the Plan), individuals who at the beginning of such
period constitute the Board of Directors of the Company, and any new director
(other than a director designated by a person who has entered into an agreement
with the Company to effect any transaction described in clause (i), (iii) or
(iv) of this Section 17) whose election by the Board of Directors or nomination
for election by the Board of Directors or nomination for election by the
Company's shareholders was approved by a vote of at least a majority of the
directors then still in office who were either directors at the beginning of
the period or whose election or whose nomination for election was previously so
approved (collectively, the "Disinterested Directors"), cease for any reason to
constitute a majority of the Board of Directors; (iii) the shareholders of the
Company approve a merger or consolidation of the Company with any other
corporation, other than (A) a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) more than 50% of the combined
voting power of the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation or (B) a merger or
consolidation effected to implement a recapitalization of the Company (or
similar transaction) in which no "person" (as hereinabove defined) acquires
more than 50% of the combined voting power of the Company's then outstanding
securities; or (iv) the shareholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by the
Company of all or substantially all of the Company's assets which, in either
case, has not previously been approved by a majority of the Disinterested
Directors.
18. No Special Employment Rights.
Nothing contained in the Plan or in any option shall confer
upon any optionee any right with respect to the continuation of his or her
employment by the Company or interfere in any way with the right of the Company
at any time to terminate such employment or to increase or decrease the
compensation of the optionee.
<PAGE> 25
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19. Other Employee Benefits.
Except as to plans which by their terms include such amounts
as compensation, neither the amount of any compensation deemed to be received
by an employee as a result of the exercise of an option nor the sale of shares
received upon such exercise shall constitute compensation with respect to which
any other employee benefits of such employee are determined, including, without
limitation, benefits under any bonus, pension, profit-sharing, life insurance
or salary continuation plan, except as otherwise specifically determined by the
Board of Directors.
20. Fractional Shares.
No fractional shares shall be issued pursuant to the exercise
of any option granted under the Plan. The Board of Directors shall determine
whether cash, other securities, or other property shall be paid or transferred
in lieu of fractional shares, or whether fractional shares or any rights
thereto shall be cancelled, terminated or otherwise eliminated.
21. Amendment or Termination of the Plan.
(a) Except as set forth herein, the Board of Directors
may at any time, and from time to time terminate the Plan or modify or amend
the Plan in any respect, except that if at any time the approval of the
shareholders of the Company is required as to such modification or amendment
under Section 422 of the Code or any successor provision with respect to
Incentive Stock Options or under Rule 16b-3 with respect to options granted to
insiders, the Board of Directors may not effect such modification or amendment
without such approval.
(b) The termination or any modification or amendment of
the Plan shall not, without the consent of an optionee, affect his or her
rights under an option previously granted to him or her. With the consent of
the optionee affected, the Board of Directors may amend outstanding option
agreements in a manner not inconsistent with the Plan. The Board of Directors
shall have the right to amend or modify (i) the terms and provisions of the
Plan and of any outstanding Incentive Stock Options granted under the Plan to
the extent necessary to qualify any or all such options for such favorable
federal income tax treatment (including deferral of taxation upon exercise) as
may be afforded Incentive Stock Options under Section 422 of the Code and (ii)
the terms and provisions of the Plan and of any outstanding option to the
extent necessary to ensure the qualification of the Plan under Rule 16b-3 or
any successor rule.
<PAGE> 26
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22. Withholding.
The Company shall have the right to deduct from payments of
any kind otherwise due to the optionee any federal, state or local taxes of any
kind required by law to be withheld with respect to any shares issued upon
exercise of options under the Plan. Subject to the prior approval of the
Committee, which may be withheld by the Committee in its sole discretion, the
optionee may elect to satisfy such obligations, in whole or in part, (i) by
causing the Company to withhold shares of Common Stock otherwise issuable
pursuant to the exercise of an option or (ii) by delivering to the Company
shares of Common Stock already owned by the optionee. Any shares so delivered
or withheld shall be valued at their fair market value as of the date that the
amount of tax to be withheld is to be determined. In the event that shares of
Common Stock are being delivered to the Company pursuant to this Section 22, an
optionee may satisfy his or her withholding obligation only with shares of
Common Stock which are not subject to any repurchase, forfeiture, unfulfilled
vesting or other similar requirements.
23. Cancellation and New Grant of Options.
The Committee shall have the authority, at any time and from
time to time, with the consent of the affected optionees, (i) to cancel any or
all outstanding options under the Plan and to grant in substitution therefor
new options under the Plan covering the same or different numbers of shares of
Common Stock having an option exercise price per share which may be lower or
higher than the exercise price per share of the cancelled options or (ii) to
amend the terms of any and all outstanding options under the Plan to provide an
option exercise price per share which is higher or lower than the then-current
exercise price per share of such outstanding options.
24. Effective Date and Duration of the Plan.
(a) Effective Date. This amendment and restatement of
the Plan shall become effective when adopted by the Board of Directors, but
Incentive Stock Options and any options granted to Insiders from the additional
shares of Common Stock authorized for delivery by this amended and restated
Plan shall not become exercisable unless and until the amended and restated
Plan shall have been approved by the Company's shareholders in accordance with
the requirements of the Code and Rule 16b-3. If such shareholder approval is
not obtained within twelve months after the date of the Board's adoption of
this amended
<PAGE> 27
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and restated Plan, any such options shall terminate and no other such options
shall be granted. For the purpose of commencing the ten-year period specified
in Section 422(b)(2) of the Code during which Incentive Stock Options may be
granted, this amendment and restatement of the Plan shall constitute the
adoption of a new Plan. Except as provided in this Plan immediately prior to
its amendment and restatement, any option that was outstanding on the date of
the adoption of this amended and restated Plan by the Board of Directors shall
be governed by the terms of this amended and restated Plan.
(b) Termination. Unless sooner terminated in accordance
with Section 16 or Section 21, the Plan shall terminate with respect to
Incentive Stock Options, upon the earlier of (i) the close of business on the
day next preceding the tenth anniversary of the date of the adoption of this
amended and restated Plan by the Board of Directors, or (ii) the date on which
all shares available for issuance under the Plan shall have been issued
pursuant to the exercise or cancellation of options granted under the Plan.
Unless sooner terminated in accordance with Section 16, the Plan shall
terminate with respect to options which are not Incentive Stock Options on the
date specified in (ii) above. If the date of termination is determined under
(i) above, then options outstanding on such date shall continue to have force
and effect in accordance with the provisions of the instruments evidencing such
options.
25. Unfunded Plan
Any liability of the Company to any optionee or beneficiary
with respect to an option shall be based solely upon the contractual
obligations created pursuant to the provisions of the Plan and the option
agreement; no such obligation shall be deemed to be secured by any pledge of,
or encumbrance on, any property of the Company.
26. Governing Law
The Plan shall be governed and its provisions construed,
enforced and administered in accordance with the laws of Maryland, except to
the extent that such laws may be superseded by any federal law.
Adopted by the Board of Directors, as amended, as of April 11,
1995.
<PAGE> 28
AMENDED AND RESTATED
MICROCARB INC.
1992 DIRECTORS' STOCK OPTION PLAN
1. Purpose.
The purpose of this 1992 Directors' Option Plan (the "Plan") of
MicroCarb Inc. (the "Company") is to promote the recruiting and retention of
highly qualified outside Directors and to strengthen the commonality of
interest between directors and shareholders. Except where the context
otherwise requires, the term "Company" shall include all present and future
subsidiaries of the Company as defined in Sections 424(e) and 424(f) of the
Internal Revenue Code of 1986, as amended or replaced from time to time (the
"Code").
2. Administration.
The Plan will be administered by the Board of Directors of the
Company, whose construction and interpretation of the terms and provisions of
the Plan shall be final and conclusive. Grants of stock options under the Plan
and the amount and nature of the awards to be granted shall be automatic and
nondiscretionary in accordance with Section 5. However, all questions of
interpretation of the Plan or of any options issued under it shall be
determined by the Board of Directors and such determination shall be final and
binding upon all persons having an interest in the Plan. No director shall be
liable for any action or determination under the Plan made in good faith.
3. Participation in the Plan.
Directors of the Company who are not employees of the Company shall be
eligible to be granted options under the Plan.
4. Stock Subject to the Plan.
(a) The maximum number of shares which may be issued under the Plan
shall be 1,200,000 shares of the Company's Common Stock, $0.01 par value per
share ("Common Stock"), subject to adjustment as provided in Section 9.
(b) If any outstanding option under the Plan for any reason expires or
is terminated without having been exercised in full, the shares allocable to
the unexercised portion of such option shall again become available for grant
pursuant to the Plan.
(c) All options granted under the Plan shall be nonstatutory options
which are not intended to meet the requirements of Section 422 of the Code.
<PAGE> 29
5. Terms, Conditions and Form of Options.
Each option granted under the Plan shall be evidenced by a written
agreement in such form as the Board of Directors shall from time to time
approve, which agreements shall comply with and be subject to the following
terms and conditions:
(a) Option Grant Dates. Following approval of the Plan by the holders
of a majority of the shares of Common Stock present or represented at a meeting
of the Company's shareholders duly called and held in accordance with the
Company's by-laws and applicable law, options shall be granted automatically to
all eligible directors as follows: (i) each director (an "Original Director")
who is elected to the Board prior to the Company's initial public offering of
shares of its Common Stock (the "Initial Public Offering") and who is eligible
for participation shall be granted an option to purchase 5,000 shares of Common
Stock on the effective date of the Company's Initial Public Offering (the
"Original Options"); (ii) after the date of the Initial Public Offering and
prior to May 21, 1996, the date of the annual stockholders' meeting (the "1996
Annual Meeting"), each Original Director and each person who becomes an
eligible director shall be granted annually an option to purchase 7,500 shares
of Common Stock on the close of business on the date of his or her initial
election to the Board of Directors or at the time of his or her re-election at
the annual stockholders' meeting, or if such director is continuing in his or
her term, at the time of the annual stockholders' meeting, as applicable,
provided he or she is an eligible director on the date of grant; and (iii) on
and after the date of the 1996 Annual Meeting, each director who is eligible to
participate in the Plan shall receive an option to purchase shares of Common
Stock as follows: (A) each eligible director who has served on the Board of
Directors for at least three years as of the date of the 1996 Annual Meeting
shall be granted (I) on the date of the 1996 Annual Meeting, and on the date of
the Annual Meeting every third year thereafter, an option to purchase the
number of shares of Common Stock equal to $20,000 divided by the Fair Market
Value of the Common Stock, and multiplied by a factor of 2.5, and (II) on the
date of each other Annual Meeting after the 1996 Annual Meeting, an option to
purchase the number of shares of Common Stock equal to $20,000 divided by the
Fair Market Value of the Common Stock, and (B) each eligible director who has
served on the Board of Directors for fewer than three years as of the date of
the 1996 Annual Meeting shall be granted (I) on the date of the first Annual
Meeting following the completion of three years of service, and on the date of
the Annual Meeting every third year thereafter, an option to purchase the
number of shares of Common Stock equal to $20,000 divided by the Fair Market
Value of the Common Stock, and multiplied by a factor of 2.5, and (II) on the
date of each other Annual Meeting after the 1996 Annual Meeting, an option to
purchase the number of shares of Common Stock equal to $20,000 divided by the
Fair Market Value of the Common Stock (each option granted pursuant to clause
(ii) or (iii) being referred to as an "Additional Option"). The Fair Market
Value shall be equal to the exercise price of the option calculated in
accordance with paragraph (b), except that in no event shall the Fair Market
Value be less than $0.50 per share.
(b) Option Exercise Price. The option exercise price per share for
each option granted under the Plan shall equal the closing price per share of
the Company's Common Stock on NASDAQ, or the principal exchange on which the
Common Stock is then listed, on the date of
- 2 -
<PAGE> 30
grant, and if no such price is reported on such date, such price as reported on
the nearest preceding date on which such price is reported. If any options are
granted on a date on which the Company's stock is listed on the OTC Bulletin
Board (or similar quotation reporting service), the option exercise price per
share shall be the average closing bid price over the thirty trading days
preceding the date of grant. If any options are granted on a date on which the
Common Stock is not listed on an exchange or NASDAQ, the option exercise price
per share shall be the fair market value of the Common Stock as determined by
the Board of Directors in its sole discretion.
(c) Options Non-Transferable. Each option granted under the Plan by
its terms shall not be transferable by the optionee otherwise than by will or
by the laws of descent and distribution, or pursuant to a qualified domestic
relations order (as defined in Section 414(p) of the Code) and shall be
exercised during the lifetime of the optionee only by such optionee.
(d) Exercise Period. Each Original Option shall become vested and
exercisable upon completion of one year of service, and may be exercised
thereafter from time to time, in whole or in part, prior to the fifth
anniversary of the date of grant. Each Additional Option shall vest quarterly
in four equal installments over a period of one year following the date of
grant and may be exercised at any time and from time to time, in whole or in
part, prior to the fifth anniversary of the date of grant.
(e) Exercise Procedure. Options may be exercised only by written
notice to the Company at its principal office accompanied by payment of the
full consideration for the shares as to which they are exercised.
(f) Payment of Purchase Price. Payment of the exercise price may be
made, at the election of the optionee, (i) by delivery of cash or a check to
the order of the Company in an amount equal to the exercise price, (ii) by
delivery to the Company of shares of Common Stock of the Company already owned
and held by the optionee for at least twelve months and having a fair market
value equal in amount to the exercise price of the options being exercised, or
(iii) by any combination of such methods of payment. The fair market value of
any shares of Common Stock which may be delivered upon exercise of an option
shall be determined by the Company as of the date that such shares are
delivered.
6. Assignments.
The rights and benefits under the Plan may not be assigned except as
provided in Section 5.
7. Time for Granting Options.
No options for shares subject to the Plan shall be granted after the
termination date of the Plan as provided for in Section 14(b).
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<PAGE> 31
8. Limitation of Rights.
(a) No Right to Continue as a Director. Neither the Plan, nor the
granting of an option nor any other action taken pursuant to the Plan, shall
constitute or be evidence of any agreement or understanding, express or
implied, that the Company will retain a director for any period of time.
(b) No Shareholder Rights for Options. An optionee shall have no
rights as a shareholder with respect to the shares covered by his or her option
until the date of the issuance to him or her of a stock certificate therefor,
and no adjustment will be made for dividends or other rights for which the
record date is prior to the date such certificate is issued.
9. Adjustment Provisions.
(a) Recapitalizations. If, through or as a result of any merger,
consolidation, sale of all or substantially all of the assets of the Company,
reorganization, recapitalization, reclassification, stock dividend, stock
split, reverse stock split or other similar transaction, (i) the outstanding
shares of Common Stock are increased or decreased or are exchanged for a
different number or kind of shares or other securities of the Company, or (ii)
additional shares or new or different shares or other securities of the Company
or other non-cash assets are distributed with respect to such shares of Common
Stock or other securities, an appropriate and proportionate adjustment may be
made in (x) the maximum number and kind of shares reserved for issuance under
the Plan, (y) the number and kind of shares or other securities subject to then
outstanding options under the Plan, and (z) the price for each share subject to
any then outstanding options under the Plan, without changing the aggregate
purchase price as to which such options remain exercisable, provided that no
adjustment shall be made pursuant to this Section 9 if such adjustment would
cause the Plan to fail to comply with Rule 16b-3 under the Securities Exchange
Act of 1934 (the "Exchange Act"), or any successor rule ("Rule 16b-3").
(b) Mergers. In the event of a consolidation or merger or sale of all
or substantially all of the assets of the Company in which outstanding shares
of Common Stock are exchanged for securities, cash or other property of any
other corporation or business entity or in the event of a liquidation of the
Company, the Board of Directors of the Company, or the board of directors of
any corporation assuming the obligations of the company, may, in its
discretion, take any one or more of the following actions, as to outstanding
options: (i) provide that such options shall be assumed, or equivalent options
shall be substituted, by the acquiring or succeeding corporation (or an
affiliate thereof), (ii) upon written notice to the optionees, provide that all
unexercised options will terminate immediately prior to the consummation of
such transaction unless exercised by the optionee within a specified period
following the date of such notice; and (iii) in the event of a merger under the
terms of which holders of the Common Stock of the Company will receive upon
consummation thereof a cash payment for each share surrendered in the merger
(the "Merger Price"), make or provide for a cash payment to the optionees equal
to the difference between (A) the Merger Price times the number of shares of
Common Stock subject to such outstanding options (to the extent then
exercisable at prices not in excess of the Merger Price)
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<PAGE> 32
and (B) the aggregate exercise price of all such outstanding options in
exchange for the termination of such options.
10. Change in Control.
Notwithstanding any other provision of the Plan, in the event of a
"Change in Control of the Company" (as defined below), any restrictions on
exercising outstanding options issued pursuant to the Plan prior to any given
date shall terminate. For purposes of the Plan, a "Change in Control of the
Company" shall occur or be deemed to have occurred only if (i) any "person", as
such term is used in Sections 13(d) and 14(d) of the Exchange Act (other than
the Company, any trustee or other fiduciary holding securities under an
employee benefit plan of the Company, or any corporation owned directly or
indirectly by the shareholders of the Company in substantially the same
proportion as their ownership of stock of the Company), is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of the Company representing 50% or more of the
combined voting power of the Company's then outstanding securities; (ii) during
any period of two consecutive years ending during the term of the Plan (not
including any period prior to the adoption of the Plan), individuals who at the
beginning of such period constitute the Board of Directors of the Company, and
any new director (other than a director designated by a person who has entered
into an agreement with the Company to effect any transaction described in
clause (i), (iii) or (iv) of this Section 10) whose election by the Board of
Directors or nomination for election by the Company's shareholders was approved
by a vote of at least twothirds of the directors then still in office who were
either directors at the beginning of the period or whose election or whose
nomination for election was previously so approved (collectively, the
"Disinterested Directors"), cease for any reason to constitute a majority of
the Board of Directors; (iii) the shareholders of the Company approve a merger
or consolidation of the Company with any other corporation, other than (A) a
merger or consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to represent (either
by remaining outstanding or by being converted into voting securities of the
surviving entity) more than 50% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately
after such merger or consolidation or (B) a merger or consolidation effected to
implement a recapitalization of the Company (or similar transaction) in which
no "person" (as hereinabove defined) acquires more than 50% of the combined
voting power of the Company's then outstanding securities; or (iv) the
shareholders of the Company approve a plan of complete liquidation of the
Company or an agreement for the sale or disposition by the Company of all or
substantially all of the Company's assets which, in either case, has not
previously been approved by a majority of the disinterested Directors.
11. Amendment of the Plan.
(a) The provisions of Sections 3, 5(a) and 5(b) of the Plan shall not
be amended more than once every six months, other than to comport with changes
in the Code, the Employee Retirement Income Security Act of 1974, or the rules
thereunder. Subject to the foregoing, the Board of Directors may at any time,
and from time to time, modify or amend the Plan in any
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<PAGE> 33
respect, except that if at any time the approval of the shareholders of the
Company is required as to such modification or amendment under Rule 16b-3, the
Board of Directors may not effect such modification or amendment without such
approval.
(b) The termination or any modification or amendment of the Plan shall
not, without the consent of an optionee, affect his or her rights under an
option previously granted to him or her. With the consent of the optionees
affected, the Board of Directors may amend outstanding option agreements in a
manner not inconsistent with the Plan. The Board of Directors shall have the
right to amend or modify the terms and provisions of the Plan and of any
outstanding option to the extent necessary to ensure the qualification of the
Plan under Rule 16b-3.
12. Withholding.
The Company shall have the right to deduct from payments of any kind
otherwise due to the optionee any federal, state or local taxes of any kind
required by law to be withheld with respect to any shares issued upon exercise
of options under the Plan. Subject to the prior approval of the Company, which
may be withheld by the Company in its sole discretion, the optionee may elect
to satisfy such obligations, in whole or in part, (i) by causing the Company to
withhold shares of Common Stock otherwise issuable pursuant to the exercise of
an option or (ii) by delivering to the Company shares of Common Stock already
owned by the optionee. The shares so delivered or withheld shall have a fair
market value equal to such withholding obligation. The fair market value of
the shares used to satisfy such withholding obligation shall be determined by
the Company as of the date that the amount of tax to be withheld is to be
determined. An optionee who has made an election pursuant to this Section 12
may only satisfy his or her withholding obligation with shares of Common Stock
which are not subject to any repurchase, forfeiture, unfulfilled vesting or
other similar requirements. Notwithstanding the foregoing, no election to use
shares for the payment of withholding taxes shall be effective unless made in
compliance with any applicable requirements of Rule 16b-3.
13. Notice.
Any written notice to the Company required by any of the provisions of
the Plan shall be addressed to the Chief Executive Officer of the Company and
shall become effective when it is received.
14. Effective Date and Duration of the Plan.
(a) Effective Date. The Plan shall become effective when adopted by
the Board of Directors, but no option granted under the Plan shall become
exercisable unless and until the Plan shall have been approved by the Company's
shareholders. If such shareholder approval is not obtained within twelve
months after the date of the Board's adoption of the Plan, all options granted
under the Plan shall terminate and no further options shall be granted under
the Plan. Amendments to the Plan not requiring shareholder approval shall
become effective when adopted by the Board of Directors; amendments requiring
shareholder approval (as provided in section
- 6 -
<PAGE> 34
11(a)) shall become effective when adopted by the Board of Directors, but no
option issued after the date of such amendment shall become exercisable (to the
extent that such amendment to the Plan was required to enable the Company to
grant such option to a particular optionee) unless and until such amendment
shall have been approved by the Company's shareholders. If such shareholder
approval is not obtained within twelve months of the Board's adoption of such
amendment, any options granted on or after the date of such amendment shall
terminate to the extent that such amendment to the Plan was required to enable
the Company to grant such option to a particular optionee. Subject to this
limitation, options may be granted under the Plan at any time after the
effective date and before the date fixed for termination of the Plan.
(b) Termination. Unless earlier terminated pursuant to Section 9, the
Plan shall terminate upon the earlier of (i) the day following the date of the
Company's annual shareholders' meeting in 2001, or (ii) the date on which all
shares available for issuance under the Plan shall have been issued pursuant to
the exercise of options granted under the Plan. If the date of termination is
determined under (i) above, then options outstanding on such date shall
continue to have force and effect in accordance with the provisions of the
instruments evidencing such options.
15. General Restrictions.
(a) Investment Representations. The Company may require any person to
whom an option is granted, as a condition of exercising such option, to give
written assurances in substance and form satisfactory to the Company to the
effect that such person is acquiring the Common Stock subject to the option for
his or her own account for investment and not with any present intention of
selling or otherwise distributing the same, and to such other effects as the
Company deems necessary or appropriate in order to comply with federal and
applicable state securities laws.
(b) Compliance With Securities Laws. Each option shall be subject to
the requirement that if, at any time, counsel to the Company shall determine
that the listing, registration or qualification of the shares subject to such
option upon any securities exchange or under any state or federal law, or the
consent or approval of any governmental or regulatory body, or that the
disclosure of non-public information or the satisfaction of any other condition
is necessary as a condition of, or in connection with, the issuance or purchase
of shares thereunder, such option may not be exercised, in whole or in part,
unless such listing, registration, qualification, consent or approval, or
satisfaction of such condition shall have been effected or obtained on
conditions acceptable to the Board of Directors. Nothing herein shall be
deemed to require the Company to apply for or to obtain such listing,
registration or qualification, or to satisfy such condition.
16. Governing Law.
The Plan and all determinations made and actions taken pursuant hereto
shall be governed by the laws of the State of Maryland.
As amended by the Board of Directors on April 4, 1996
- 7 -
<PAGE> 35
ANTEX BIOLOGICS INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints V. M. Esposito, Gregory C. Zakarian, or
either of them, with full power of substitution, my proxy to attend and vote in
my behalf at the Annual Meeting of Stockholders of Antex Biologics Inc. (the
"Company") to be held on April 18, 1997, and at any adjournment or adjournments
thereof, all shares of Common Stock of the Company held or owned by the
undersigned as directed on the reverse side upon those matters, and in their
discretion, upon such other matters as may come before the meeting.
(TO BE SIGNED ON REVERSE SIDE)
<PAGE> 36
<TABLE>
<S> <C> <C> <C>
X Please mark votes
as in this example
1. Election of Director FOR WITHHELD FOR AGAINST ABSTAIN
Nominee: Donald G. Stark 2. Amendment to Certificate of Incorporation
3. Amendments to Amended and Restated
Stock Option Plan
4. Amendments to 1992 Directors' Stock
Option Plan
5. Ratification of Coopers & Lybrand L.L.P.
as Independent Auditors.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS GIVEN, A
SIGNED PROXY WILL BE VOTED "FOR" PROPOSALS 1 THROUGH 5.
SIGNATURE(S) DATE: , 1997
-------------------------------- ------------------------------------------ -------------------
SIGNATURES IF HELD JOINTLY
</TABLE>
NOTE: PLEASE SIGN EXACTLY AS NAME APPEARS HEREON. JOINT OWNERS SHOULD EACH
SIGN. WHEN SIGNING AS ATTORNEY, EXECUTOR, ADMINISTRATOR, TRUSTEE OR
GUARDIAN, PLEASE GIVE TITLE AS SUCH.
