<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
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)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
- --------------------------------------------------------------------------------
<PAGE> 2
ANTEX BIOLOGICS INC.
300 PROFESSIONAL DRIVE
GAITHERSBURG, MD 20879
---------------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 9, 1998
---------------------------------------------
The Annual Meeting of Stockholders of Antex Biologics Inc. (the "Company")
will be held on Tuesday, June 9, 1998, at 10:00 a.m. at the Courtyard by
Marriott, 805 Russell Avenue, Gaithersburg, Maryland, for the following
purposes:
1. To reelect Charles J. Coulter and V. M. Esposito to the Board of
Directors to serve as Class III directors for three-year terms;
2. To consider and take action on a proposal to approve an amendment
of the Company's Certificate of Incorporation to effect a reverse
stock split of outstanding shares of the Company's common stock;
3. 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, 1998; and
4. 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 April 10, 1998
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
April 13, 1998
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
June 9, 1998
This Proxy Statement is furnished to the stockholders of Antex
Biologics Inc., a Delaware corporation (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 June 9, 1998, 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 April 13, 1998.
Only stockholders of record at the close of business on April 10,
1998, 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 22,480,304 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, two directors 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 proposed reverse stock split. 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 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 directors. In determining whether the reverse stock split 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 for the ratification of the
appointment of auditors for the current fiscal year, which requires 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 enclosed
proxy intend to vote for the nominees for reelection as directors as set forth
below, for the approval of the Certificate Amendment, 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, 1998.
Page 1 of 11
<PAGE> 4
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 1997 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 April 10, 1998
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 OF SHARES
OF COMMON STOCK PERCENTAGE
NAME AND ADDRESS(1) BENEFICIALLY OWNED(2) OF CLASS(2)
---------------- ------------------------ -----------
<S> <C> <C>
SmithKline Beecham Biologicals Manufacturing s.a. 7,732,276(3) 25.84%
Rue de L'Institut 89
B-1330 Rixensart
Belgium
Ruki Renov 2,191,472(4) 8.99%
c/o Kalmen Renov
44 Wall Street
New York, N.Y. 10005
Esther Stahler 2,191,472(4) 8.99%
c/o Alan Stahler
44 Wall Street
New York, N.Y. 10005
V. M. Esposito, Ph.D. 2,443,435(5)(6)(7) 9.94%
Charles J. Coulter 70,309(8) *
Bruce E. Elmblad 52,234(8) *
Donald G. Stark 106,024(9) *
Gregory C. Zakarian 555,834(10) 2.44%
Theresa M. Stevens 80,833(8) *
</TABLE>
Page 2 of 11
<PAGE> 5
<TABLE>
<S> <C> <C>
All directors and executive officers
(7 persons in group) 3,308,669(11) 13.02%
</TABLE>
- ----------
* less than 1%
(1) The address for all of the named individuals is c/o Antex Biologics Inc.,
300 Professional Drive, Gaithersburg, MD 20879, unless otherwise noted.
(2) Pursuant to the rules of the Securities and Exchange Commission, shares of
common stock which an individual or group has a right to acquire within 60
days pursuant to the exercise of options or warrants are deemed to be
outstanding for the purpose of computing the percentage ownership of such
individual or group, but are not deemed to be outstanding for the purpose
of computing the percentage ownership of any other person shown in the
table.
(3) In accordance with an exchange option agreement, includes 3,595,264 shares
issuable upon the exchange of an existing ownership interest in MicroCarb
Human Vaccines Inc. ("MCHV"); and 1,198,421 shares issuable upon the
exercise of a $1.0 million option to increase ownership interest in MCHV
and the subsequent exchange of such additional ownership interest.
Additionally, in accordance with a warrant agreement, includes 2,938,591
shares issuable upon the exercise of warrants.
(4) Consists solely of shares issuable upon the exercise of options and
warrants arising from option granted to private placement agent.
(5) Excludes 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 such
shares will be forfeited on May 11, 1998 (the "Escrow Arrangement").
(6) Includes 2,405,270 shares issuable upon the exercise of options (excluding
20,003 options which will be forfeited on May 11, 1998 in accordance with
the terms of the Escrow Arrangement).
(7) 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.
(8) Consists solely of shares issuable upon the exercise of options.
(9) Includes 70,309 shares issuable upon the exercise of options.
(10) Includes 550,834 shares issuable upon the exercise of options
(excluding 6,666 options which will be forfeited on May 11, 1998 in
accordance with the terms of the Escrow Arrangement).
(11) Excludes 39,083 shares which will be forfeited on May 11, 1998 in
accordance with the terms of the Escrow Arrangement. Includes
3,229,789 shares issuable upon the exercise of options (excluding
26,669 options which will be forfeited on May 11, 1998 in accordance
with the terms of the Escrow Arrangement).
ITEM 1.
ELECTION OF TWO DIRECTORS
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 1995 Annual Meeting, Charles J. Coulter
and V.M. Esposito 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, Donald G. Stark was reelected as a Class II director (term to
expire at the 2000 Annual Meeting). At the 1998 Annual Meeting, the
stockholders will elect two Class III directors, whose terms will extend until
the 2001 Annual Meeting.
The Board of Directors has nominated Charles J. Coulter and V. M.
Esposito for reelection as Class III directors. Shares represented by all
proxies received by the Board of Directors and not so marked as to withhold
authority to vote for either of the nominees will be voted (unless either of
the nominees is unable or unwilling to serve) for the election of the nominees
as Class III directors. The Board of Directors knows of no reason why either
nominee will be unable or unwilling to serve, but if such should be the case,
the persons named in
Page 3 of 11
<PAGE> 6
the proxy will have the authority to vote the proxy for the election of a
replacement nominee selected by the Board of Directors.
NOMINEES, CONTINUING DIRECTORS AND EXECUTIVE OFFICERS
The names of the nominees for election as directors, 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 57, 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 72, 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.
BRUCE E. ELMBLAD, age 69, 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, Inc., two venture capital organizations. Mr. Elmblad is
currently a director of two publicly-held companies, Martek Biosciences
Corporation and PCD, Inc.
DONALD G. STARK, age 71, 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.
LARRY R. ELLINGSWORTH, PH.D., age 47, has served as Vice President,
Research and Development of the Company since December 8, 1997. From October
1996 to November 1997, he was Executive Vice President, Research and Chief
Scientific Officer of Metamorphix, Inc., a privately-held biopharmaceutical
company. Previously, from November 1995 to September 1996, he was Executive
Vice President, Chief Scientific Officer and a director of Cystar, Inc., a
privately-held biopharmaceutical company. From May 1991 to December 1994, he
was Vice President, Operations for Celtrix Pharmaceuticals, Inc., a
publicly-held biopharmaceutical company.
THERESA M. STEVENS, ESQ., age 37, has served as Vice President,
Corporate Development of the Company since September 1996. From January 1995
to September 1996, Ms. Stevens 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 49, 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. Prior to September 1992, Mr. Zakarian spent most of his career in the
field of public accounting.
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.
Page 4 of 11
<PAGE> 7
During 1997, the Board of Directors met six times, the Compensation
Committee met four 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, 1997, 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 1997.
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 $100,000 for the year ended December 31, 1997 (the "named
executive officers").
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long-Term Compensation
------------------------------------
Annual
Compensation Awards Payouts
------------------------------------------------------------------------------------------
Securities All Other
Name and Other Restricted Underlying LTIP Compen-
Principal Annual Stock Options/ Pay- sation
Position Year Salary ($) Bonus ($) Compensat.($) Awards($) SARs(#) outs($) ($)
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
V.M. Esposito, 1997 300,000 50,000 -- -- -- -- 59,738(2)
Ph.D., Chief 1996 257,990 175,000 -- -- 1,000,000 -- 64,023
Executive 1995 230,000 -- -- -- 1,250,000 -- 88,674
Officer(1)
G.C. Zakarian, 1997 141,672 -- -- -- 50,000 -- 29,202(2)
Chief Financial 1996 127,212 30,000 -- -- 125,000 -- 26,739
Officer(1) 1995 118,000 -- -- -- 325,000 -- 34,918
T. M. Stevens, 1997 122,005 -- -- -- 35,000 -- --
Vice President, 1996 30,000 -- -- -- 200,000 -- --
Corporate
Development
</TABLE>
___________
(1) Pursuant to the terms of the Company's private placement, the compensation
of these named executive officers of the Company (except for options,
warrants and similar equity incentives) could not be increased for a period
ending 13 months following the April 1995 termination date of the offering.
(2) Consists of premiums paid by the Company on a split dollar life insurance
policy held by the individual which has been assigned to the Company.
Upon the cancellation of the policy, the Company will receive a cash
payment up to the cumulative amount of the total premiums paid.
Page 5 of 11
<PAGE> 8
The following table sets forth individual grants of stock options to
the named executive officers during the year ended December 31, 1997.
<TABLE>
<CAPTION>
OPTION GRANTS IN 1997
Number of Percent of
Securities Total Options
Underlying Granted Exercise
Options to Employees Price Expiration
Name Granted (#) in Fiscal Year ($/Share) Date
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
G. C. Zakarian 50,000(1) 10.7% $0.69 06/02/07
T. M. Stevens 35,000(1) 7.7% $0.66 09/16/07
</TABLE>
- ------
(1) Options vest ratably on a monthly basis over the 48 months following
date of grant.
The following table sets forth information concerning stock options
exercised during 1997 and the value of unexercised stock options held at
December 31, 1997 by the named executive officers.
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN 1997
AND YEAR-END OPTION VALUES
Number of
Securities Value of
Underlying Unexercised
Unexercised Options In-the-Money
at Year-End (#) Options at Year-End
Shares Acquired on Exercisable (E)/ Exercisable (E)/
Name Exercise (#) Value Realized ($) Unexercisable (U) Unexercisable (U)
---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
V. M. Esposito, Ph.D. 0 -- 2,377,719(E)(1) $821,329(E)
182,292(U) $57,422(U)
G. C. Zakarian 0 -- 551,250(E)(2) $186,199(E)
43,750(U) $8,203(U)
T. M. Stevens 0 -- 64,687(E) $791(E)
170,313(U) $7,865(U)
</TABLE>
__________
(1) Includes options to purchase 20,003 shares that will be forfeited on May
11, 1998 in accordance with the terms of the Escrow Arrangement.
(2) Includes options to purchase 6,666 shares that will be forfeited on May 11,
1998 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. Prior to May 1, 1997, 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 is
also paid an annual retainer of $10,000 as compensation for services.
Page 6 of 11
<PAGE> 9
The 1992 Directors' Stock Option Plan (the "Directors' Plan"), as
amended January 1997, provides for the grant by the Company of options to
purchase up to an aggregate of 1,700,000 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 stockholders 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, 1997, options to purchase 202,352
shares of common stock were outstanding under the Directors' Plan.
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 $325,000 through December 31, 1998, 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 $145,000 through April 30,
1998, 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.
Theresa M. Stevens is employed under an agreement with the Company
which commenced October 1, 1997 and expires on September 30, 2000. Like Dr.
Esposito's agreement, Ms. Stevens' agreement requires her to devote her 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 her during her employment. The
agreement provides for an annual base salary of $128,000 through September 30,
1998, and thereafter is subject to adjustment by the Board, provided that it is
not less than the prior year's base salary. Ms. Stevens also is eligible to
receive bonuses as determined by the Board. The agreement provides for
termination by the Company on six months' prior notice or without notice upon
payment of severance equal to six months' salary and any bonus to which she
would have been entitled. The agreement also provides that if Ms. Stevens is
terminated within one(1) year of a "change in control", related to such change
in control, then she will receive salary and benefits for a period of twelve
months, net of any employment earnings she may receive from other sources
during the twelve-month period.
Page 7 of 11
<PAGE> 10
ITEM 2.
APPROVAL OF AMENDMENT OF CERTIFICATE OF INCORPORATION
TO EFFECT REVERSE STOCK SPLIT OF OUTSTANDING SHARES
OF COMMON STOCK
The Board of Directors is seeking to obtain stockholder authorization
for the Board of Directors of the Company at its discretion to amend the
Certificate of Incorporation of the Company (the "Certificate Amendment") to
effect a reverse split of the Company's common stock (the "Reverse Stock
Split"). If approved by the stockholders, the Board will have the authority
without further stockholder approval to effect the Reverse Stock Split within
the limits discussed below at a ratio (the "Split Factor") to be determined at
a later time. The Board of Directors reserves the right notwithstanding
stockholder approval and without further action or approval by the
stockholders, to decide not to proceed with the Certificate Amendment, if at
any time prior to its effectiveness it determines, in its sole discretion,
that the Certificate Amendment is no longer in the best interests of the
Company and its stockholders. While the exact Split Factor has not yet been
determined by the Board, the stockholders are being asked to approve any
reverse stock split between one-for-four and one-for-ten.
As warranted by business conditions, it is the intent of the Board to
attempt to meet the requirements for listing the Company's common stock on the
Nasdaq Small Cap Market ("Nasdaq") or the American Stock Exchange ("Amex") at
the earliest possible time. Listing on the Nasdaq or the Amex requires that
certain thresholds be met relating to assets, capital, share price and number
of stockholders. The Board of Directors of the Company believes that since all
other conditions are met to list the Company's common stock on these exchanges,
except the share trading price, the Certificate of Incorporation should be
amended to effect a Reverse Stock Split, if it is in the best interest of both
the Company and its stockholders at that time.
EFFECT OF REVERSE STOCK SPLIT
The Company is currently authorized to issue 95,000,000 shares of
common stock, of which 22,480,304 shares were issued and outstanding as of the
Record Date. The Company is further authorized to issue 5,000,000 shares of
Preferred Stock, of which no shares were issued and outstanding as of the
Record Date. If effected, the Reverse Stock Split would reduce the number of
outstanding shares of common stock to approximately 2,248,030 to 5,620,076,
depending on the Split Factor selected by the Board. The proposed Reverse
Stock Split would not affect any stockholder's proportionate equity interest in
the Company or the number of authorized shares. None of the rights currently
accruing to holders of common stock will be affected by the Reverse Stock
Split.
The following table illustrates the principal effects of the Reverse
Stock Split of the Company's common stock (without giving effect to any
adjustments for fractional shares):
<TABLE>
<CAPTION>
======================================================================================================================
Number of Shares as of March 26, 1998
- ----------------------------------------------------------------------------------------------------------------------
Prior to Reverse Stock Split After Reverse Stock Split
---------------------------- ----------------------------
- ----------------------------------------------------------------------------------------------------------------------
1 for 10 1 for 4
-------- -------
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Outstanding
Preferred Stock 0 0
- ----------------------------------------------------------------------------------------------------------------------
Common Stock
Actually outstanding 22,480,304 2,248,030 - 5,620,076
Issuable upon exercise of Options and Warrants 21,939,239 2,193,923 - 5,484,810
Total "as-converted" 44,419,543 4,441,954 - 11,104,886
- ----------------------------------------------------------------------------------------------------------------------
Authorized
Preferred Stock 5,000,000 5,000,000
Common Stock 95,000,000 95,000,000
======================================================================================================================
Stockholders' equity at December 31, 1997 $5,816,540 $5,816,540
Stockholders' equity per share at December 31, 1997 $0.26 $2.59 - $1.03
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
Page 8 of 11
<PAGE> 11
<TABLE>
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------
Net loss for calendar year ended December 31, 1997 $442,676 $442,676
Net loss per share for calendar year ended
December 31, 1997 $0.02 $0.20 - $0.08
======================================================================================================================
</TABLE>
BACKGROUND AND REASONS FOR THE PROPOSAL
In January 1995, the Company received a notice from The Nasdaq Stock
Market that because the Company's net worth was less than $1,000,000 for a
period of three months, The Nasdaq Stock Market was required to delete the
Company's securities from the Small Cap Market of The Nasdaq Stock Market for
failure to meet the minimum net worth requirement for continued listing.
The Company is taking steps which may in the future allow it to comply
with all the listing requirements of the Nasdaq or the Amex. A listing on the
Nasdaq or the Amex would significantly enhance the marketability of the
Company's common stock by broadening the range of investors who may consider
holding the Company's common stock. A significant percentage of individual
investors as well as large institutional investors may currently avoid
investing in the Company's common stock because of institutional policies
relating to lower-priced stocks, and because of the lack of readily available
market price information. The Board of Directors believes that a listing on
the Nasdaq or the Amex may remove such impediments to investor interest and
enhance the Company's ability to obtain additional funding from the public
markets and to use common stock for acquisitions and similar purposes.
Additionally, the policies and practices of many brokerage houses tend
to discourage brokers within those firms from dealing in lower-priced stocks.
Some of such policies and practices pertain to the payment of brokers'
commissions and to time-consuming procedures that make handling of lower-priced
stocks economically unattractive to brokers. The structure of trading
commissions also tends to have an adverse impact upon holders of lower-priced
stock because the brokerage commission payable on its sale generally represents
a higher percentage of the sales price than on higher-priced stock.
In light of these factors, the Board of Directors believes that the
relatively low share price of the common stock, when compared with the market
prices of the common stock of publicly-held companies in the same or comparable
industries, impairs the marketability of the common stock and creates a
negative impression of the Company. The foregoing factors adversely affect not
only the liquidity of the common stock, but also the Company's ability to raise
capital through further sales of equity securities and to use common stock for
acquisitions and similar purposes. The increase in the market price of the
Company's stock as a result of the Reverse Stock Split is expected to enhance
the marketability of the stock to the financial community and the investing
public at large.
The Board is hopeful that the Reverse Stock Split will result in a
trading price for the Company's common stock that meets the requirements of the
Nasdaq or the Amex and that will better suit the preferences of institutional
investors and brokerage firms described above and mitigate the adverse impact
of trading commissions on the potential market for the Company's shares. There
can be no assurance, however, that the increased market price of the common
stock after the Reverse Stock Split will enhance the aggregate value of the
Company's capitalization, will be sustained or will meet the requirements of
the Nasdaq or the Amex.
In order to obtain a listing on the Nasdaq or the Amex, an issuer's
stock must initially trade at a minimum price of $4.00 per share or $3.00 per
share, respectively. As of the close of trading on Thursday, March 26, 1998,
the average of the bid and ask prices for the Company's common stock was $1.016
on the OTC Bulletin Board. The proposed Reverse Stock Split is intended to
raise the trading price of the Company's stock in order to meet the Nasdaq's or
the Amex's minimum trading price requirement.
In the event that the stockholders fail to approve the Reverse Stock
Split, the Company's common stock may not trade at a price above $4.00 or $3.00
per share even though all other criteria required for listing on the Nasdaq or
the Amex, respectively, are met. Since a minimum bid price of $4.00 or $3.00
per share is a
Page 9 of 11
<PAGE> 12
requirement of the Nasdaq or the Amex, respectively, for the inclusion of the
Company's common stock as a Nasdaq or an Amex security, it is unlikely that the
inclusion of the Company's common stock in the Nasdaq or the Amex will occur
if the Reverse Stock Split is not effected. As a result, sales of the
Company's stock would continue to only be reported in the National Daily
Quotation Service published by the National Quotation Bureau, Inc. and certain
electronic quotation services and would not be readily available in newspapers.
To the extent that no sales of the Company's stock occur, no listing would be
published by the National Quotation Bureau, Inc.
The Company is not aware of any current efforts to accumulate common
stock or obtain control of the Company, and the Reverse Stock Split is not
intended to be an anti-takeover device. The Reverse Stock Split is being
proposed with a view toward enhancing marketability of the Company's common
stock by obtaining a common stock price in a range more acceptable to the
investment community.
EXECUTION AND CONSEQUENCES OF REVERSE STOCK SPLIT
Exchange of Stock Certificates
Each stock certificate representing issued and outstanding shares of
common stock prior to the effective date of the Reverse Stock Split will, after
such effective date, represent the appropriate number of shares of common stock
reflecting the Reverse Stock Split. IT WILL NOT BE NECESSARY FOR STOCKHOLDERS
TO EXCHANGE THEIR EXISTING STOCK CERTIFICATES.
Payment for Fractional Shares
No scrip or fractional certificates will be issued in the Reverse
Stock Split. Instead, stockholders who would be entitled to receive fractional
shares because they hold a number of shares not evenly divisible by the Split
Factor will be entitled to receive a cash payment in lieu thereof at a price
equal to the fair market value of the stock as determined by the Board on the
effective date of the Reverse Stock Split. The ownership of a fractional
interest will not give the holder thereof any voting, dividend or other right
except to receive payment therefor as described herein.
Stockholders should be aware that, under the escheat laws of the
various jurisdictions where stockholders reside, where the Company is domiciled
and where funds will be deposited, sums due for fractional interests that are
not timely claimed after the effective date of the Reverse Stock Split may be
required to be paid to the designated agent for each such jurisdiction, unless
correspondence has been received by the Company or its transfer agent, as the
case may be, concerning ownership of such funds within the time permitted in
such jurisdictions. Thereafter, stockholders otherwise entitled to receive
such funds will have to seek to obtain them directly from the state to which
they are paid.
Certain Federal Income Tax Consequences
The following description of federal income tax consequences of the
Reverse Stock Split is based on the Internal Revenue Code, the applicable
Treasury Regulations promulgated thereunder, judicial authority and current
administrative rulings and practices as in effect on the date of this Proxy
Statement. This discussion is for general information only and does not
address all the tax consequences that may be relevant to a particular
stockholder (such as non-resident aliens, broker-dealers or insurance
companies). Furthermore, no foreign, state or local tax consequences are
discussed herein. Accordingly, stockholders are urged to consult their own tax
advisors to determine the specific tax consequences of the Reverse Stock Split
to them.
The exchange of shares of stock for shares of post-split stock will
not result in recognition of gain or loss (except in the case of cash received
for fractional shares as described below). The holding period of the shares of
post-split stock will include the stockholder's holding period for the shares
of stock exchanged therefor. The basis of such shares shall equal the basis of
the stock exchanged, reduced by the tax basis allocable to the receipt
of cash in lieu of fractional shares.
Page 10 of 11
<PAGE> 13
A stockholder who receives cash in lieu of fractional shares will be
treated as if the Company has issued fractional shares to him or her and then
immediately redeemed them for cash. Such stockholder should generally
recognize gain or loss, as the case may be, measured by the difference between
the amount of cash received and the basis of such stockholder's pre-split stock
allocable to such fractional shares, had such fractional shares actually been
issued. Such gain or loss will be capital gain or loss (if such stock was held
as a capital asset), and any such capital gain or loss will generally be
long-term capital gain or loss to the extent such stockholder's holding period
for his or her stock exceeds 12 months.
Vote Required
Approval of the Reverse Stock Split and adoption of the Certificate
Amendment require the affirmative vote of the holders of not less than a
majority of the outstanding shares of the Company's common stock. Abstentions
and broker non-votes will be counted as votes against adoption of the
Certificate Amendment. Any stockholder entitled to vote may vote part of his
or her shares in favor of the proposed Certificate Amendment and refrain from
voting shares against the proposed Amendment. In such a case, the stockholder
must specify the number of shares which he or she is voting affirmatively or
else it will be conclusively presumed that such stockholder intended to vote
all of his or her shares in favor the proposed Certificate Amendment. The
Board of Directors unanimously recommends that stockholders vote "FOR" adoption
of the Proposal.
ITEM 3.
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 1997 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 1999 Annual
Meeting must be received by the Secretary of the Company on or before December
15, 1998 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
April 13, 1998
<PAGE> 14
ANTEX BIOLOGICS INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, revoking all prior proxies, hereby appoints V. M. Esposito
and Gregory C. Zakarian, or either of them, with full power of substitution, as
proxies to represent and vote on my behalf at the Annual Meeting of
Stockholders of Antex Biologics Inc. (the "Company") to be held on June 9,
1998, and at any adjournment or adjournments thereof (the "Meeting"), 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.
Attendance of the undersigned at the Meeting or at any adjournment thereof
will not be deemed to revoke this proxy unless the undersigned shall revoke
this proxy in writing or shall deliver a subsequently dated proxy to the
Secretary of the Company or shall vote in person at the Meeting.
(TO BE SIGNED ON REVERSE SIDE)
<PAGE> 15
<TABLE>
<S> <C>
X Please mark votes
as in this example
1. Election of Directors FOR WITHHOLD FOR AGAINST ABSTAIN
Nominees: Charles J. Coulter
V. M. Esposito 2. Amendment of Certificate
of Incorporation.
3. 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 3.
SIGNATURE(S) DATE: , 1998
---------------------- -------------------------------------------------- -------------------
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.
