<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)(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 10, 1999
------------------------------------------------
The Annual Meeting of Stockholders of Antex Biologics Inc. (the "Company")
will be held on Thursday, June 10, 1999, at 10:00 a.m. at the Courtyard by
Marriott, 805 Russell Avenue, Gaithersburg, Maryland, for the following
purposes:
1. To reelect Robert L. Curry to the Board of Directors to serve as a
Class I director for a three-year term;
2. To consider and take action on a proposal to approve amendments of the
Company's Certificate of Incorporation authorizing the Board of
Directors, in its discretion, to effect a reverse split of outstanding
shares of the Company's Common Stock;
3. To ratify the appointment of PricewaterhouseCoopers LLP as the
independent public accountants to audit the Company's accounts for the
fiscal year ending December 31, 1999; 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 13, 1999 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
/s/ Gregory C. Zakarian
GREGORY C. ZAKARIAN
Secretary
April 30, 1999
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 10, 1999
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 10, 1999, 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 30, 1999.
Only stockholders of record at the close of business on April 13, 1999, 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 25,863,726
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 a majority of the issued and
outstanding shares of Common Stock is required for the approval of the
amendments to the Company's Certificate of Incorporation to allow the Board of
Directors to effect a reverse stock split. The affirmative vote of the holders
of a majority of the issued and outstanding shares of Common Stock present or
represented at the Annual Meeting and entitled to vote 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 director. In determining whether the amendments to the Certificate of
Incorporation have 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, 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, if any, 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 best 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 nominee for reelection as a director as set forth below, for the
approval of the amendments to the Certificate of Incorporation, and for the
ratification of PricewaterhouseCoopers LLP as the independent public accountants
to audit the Company's accounts for the fiscal year ending December 31, 1999.
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 $5,000;
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 1998 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 13, 1999
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.
Rue de L'Institut 89
B-1330 Rixensart
Belgium 7,143,168(3) 21.64%
V. M. Esposito, Ph.D. 2,621,872(4)(5) 9.22%
Charles J. Coulter 112,476(6) *
Robert L. Curry -- --
Donald G. Stark 131,191(6) *
Larry R. Ellingsworth, Ph.D. 118,750(7) *
Theresa M. Stevens 164,583(7) *
Gregory C. Zakarian 593,334(8) 2.24%
All directors and executive officers
(7 persons in group) 3,742,206(9) 12.68%
</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.
Page 2 of 11
<PAGE> 5
(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 or
group shown in the table.
(3) Includes 3,595,264 shares issuable upon the exchange of an existing
ownership interest in MicroCarb Human Vaccines Inc. ("MCHV") in
accordance with an exchange option agreement; and includes 3,547,904
shares issuable upon the exercise of warrants in accordance with a
warrant agreement.
(4) Includes 2,583,707 shares issuable upon the exercise of options.
(5) 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.
(6) Includes 95,476 shares issuable upon the exercise of options.
(7) Consists solely of shares issuable upon the exercise of options.
(8) Includes 588,334 shares issuable upon the exercise of options.
(9) Includes 3,646,326 shares issuable upon the exercise of options.
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 March 25, 1999 Board of Directors meeting, Robert L.
Curry was elected as a Class I director (term to expire at the 1999 Annual
Meeting) to fill a then-existing vacancy. 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, Charles J. Coulter and V. M. Esposito,
Ph.D. were reelected as Class III directors (terms to expire at the 2001 Annual
Meeting). At the 1999 Annual Meeting, the stockholders will elect one Class I
director, whose term will extend until the 2002 Annual Meeting.
The Board of Directors has nominated Robert L. Curry for reelection as a
Class I 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 I 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.
NOMINEES, CONTINUING DIRECTORS AND EXECUTIVE OFFICERS
The names of the nominee for election as a 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 58, 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 73, 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.
Page 3 of 11
<PAGE> 6
ROBERT L. CURRY, age 66, has been a director of the Company since March 25,
1999. Since January 1, 1999, Mr. Curry has been Chairman of MPE Communications,
a division of McCann Ericson Health Care, a division of Inter Public Group
(IPG). From 1981 to December 1998, Mr. Curry was Chairman and CEO of MPE
Communications Inc. a privately-held health care education company. Mr. Curry
also is a Director and the Chief Executive Officer of Curry, Martin, and
Schiavelli, Inc., another division of McCann Ericson Health Care.
DONALD G. STARK, age 72, 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 48, has served as Vice President, Research
and Development of the Company since December 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 38, has served as Vice President, Corporate
Development of the Company since September 1996. From January 1995 to September
1996, Ms. Stevens was employed 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 50, 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 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, Robert L. Curry 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), Robert
L. Curry and Donald G. Stark. The Company does not have a nominating committee.
During 1998, the Board of Directors met eight 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, 1998, 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 1998.
Page 4 of 11
<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 $100,000 for the year ended December 31, 1998 (the "named executive
officers").
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long-Term Compensation
---------------------------------
Annual
Compensation Awards Payouts
-------------------------------------------------------------------------------------------------
Securities All Other
Name and Other Restricted Underlying LTIP Compen-
Principal Annual Stock Options/ Pay- sation
Position Year Salary ($) Bonus ($) Compensat.($) Awards($) SARs(#) outs($) ($)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
V.M. Esposito, 1998 325,000 -- -- -- 500,000 -- 36,858(1)
Ph.D., Chief 1997 300,000 50,000 -- -- -- -- 59,738
Executive 1996 257,990 175,000 -- -- 1,000,000 -- 64,023
Officer
G.C. Zakarian, 1998 148,339 -- -- -- 150,000 -- 13,360(1)
Chief Financial 1997 141,672 -- -- -- 50,000 -- 29,202
Officer 1996 127,212 30,000 -- -- 125,000 -- 26,739
L.R. Ellingsworth, 1998 145,839 -- -- -- 150,000 -- --
Ph.D., Vice 1997 9,388 -- -- -- 250,000 -- --
President,
Research and
Development
T.M. Stevens, 1998 129,254 -- -- -- 150,000 -- --
Vice President, 1997 122,005 -- -- -- 35,000 -- --
Corporate 1996 30,000 -- -- -- 200,000 -- --
Development
</TABLE>
- ----------
(1) Consists of premiums paid by the Company on a split dollar life insurance
policy held by the individual which had been assigned to the Company. In
1999, the Company discontinued paying premiums on the policy and
cancelled the program.
Page 5 of 11
<PAGE> 8
The following table sets forth individual grants of stock options to the
named executive officers during the year ended December 31, 1998.
OPTION GRANTS IN 1998
<TABLE>
<CAPTION>
Number of Percent of
Securities Total Options
Underlying Granted Exercise
Options to Employees Price Expiration
Name Granted (#) in Fiscal Year ($/Share) Date
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
V. M. Esposito, Ph.D. 500,000(1) 36.6% $0.29 10/02/08
L. R. Ellingsworth, Ph.D. 150,000(1) 11.0% $0.29 10/02/08
T. M. Stevens 150,000(1) 11.0% $0.29 10/02/08
G. C. Zakarian 150,000(1) 11.0% $0.29 10/02/08
</TABLE>
- ----------
(1) Options vest ratably on a monthly basis over the 48 months following date
of grant.
The following table sets forth information concerning stock options exercised
during 1998 and the value of unexercised stock options held at December 31, 1998
by the named executive officers.
AGGREGATED OPTION EXERCISES IN 1998
AND YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of
Securities Underlying Value of Unexercised
Shares Unexercised Options In-the-Money Options
Acquired at Year-End (#) at Year-End
on Exercisable (E)/ Exercisable (E)/
Name Exercise (#) Value Realized ($) Unexercisable (U) Unexercisable (U)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
V. M. Esposito, Ph.D. 0 -- 2,473,662(E) $ 1,674(E)
566,346(U) $38,325(U)
L. R. Ellingsworth, Ph.D. 0 -- 68,750(E) $ 500(E)
331,250(U) $11,500(U)
T. M. Stevens 0 -- 129,687(E) $ 500(E)
255,313(U) $11,500(U)
G. C. Zakarian 0 -- 563,334(E) $ 500(E)
175,000(U) $11,500(U)
</TABLE>
- -----
COMPENSATION OF DIRECTORS
Only directors who are not employees of the Company are compensated for their
services as directors. Each nonemployee director is paid an annual retainer of
$10,000 as compensation for services. Additionally, each nonemployee director is
paid $1,000 for each meeting of the Board of Directors which he attends and $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.
Under the 1992 Directors' Stock Option Plan (the "Directors' Plan"), 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
Page 6 of 11
<PAGE> 9
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.
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
$350,000 through December 31, 1999, 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.
Dr. Ellingsworth is employed under an agreement with the Company which
commenced December 1, 1998 and expires on November 30, 2001. Dr. Ellingsworth'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 $155,000 through November 30, 1999, and thereafter is
subject to adjustment by the Board, provided that it is not less than the prior
year's base salary. Dr. Ellingsworth 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 he would have been entitled. The
agreement also provides that if Dr. Ellingsworth is terminated within one(1)
year of a "change in control", related to such change in control, then he will
receive salary and benefits for a period of twelve months, net of any employment
earnings he may receive from other sources during the twelve-month period.
Ms. Stevens is employed under an agreement with the Company which commenced
October 1, 1997 and expires on September 30, 2000. 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
$133,000 through September 30, 1999, 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.
Mr. Zakarian is employed under an agreement with the Company which commenced
May 1, 1998 and expires on April 30, 2001. 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
$150,000 through April 30, 1999, and thereafter is subject to adjustment
Page 7 of 11
<PAGE> 10
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. The agreement also provides that
if Mr. Zakarian is terminated within one(1) year of a "change in control",
related to such change in control, then he will receive salary and benefits for
a period of twelve months, net of any employment earnings he may receive from
other sources during the twelve-month period.
ITEM 2.
APPROVAL OF AMENDMENTS OF CERTIFICATE OF INCORPORATION
TO EFFECT A REVERSE SPLIT OF OUTSTANDING SHARES
OF COMMON STOCK
The Board of Directors is seeking stockholder approval of amendments to the
Company's Certificate of Incorporation to effect, respectively, reverse stock
splits of its Common Stock in integral divisors ranging from 1 for 4 to 1 for
10 (the "Certificate Amendments"). If the Certificate Amendments are approved
by the stockholders, the Board of Directors will have the authority, in its sole
discretion and without further action on the part of the stockholders, to effect
one of the approved reverse stock splits at any time prior to the next Annual
Meeting of stockholders following the 1999 Annual Meeting. When the Board of
Directors effects one of the reverse stock splits, the Certificate Amendments
with respect to each of the other reverse stock splits will be deemed abandon by
the Board of Directors and cannot thereafter be effected. The Board of Directors
also reserves the right, notwithstanding stockholder approval and without
further action or approval by the stockholders, to decide not to proceed with
any of the reverse stock splits if it determines, in its sole discretion, that a
reverse stock split is not in the best interests of the Company and its
stockholders.
The same proposal was approved by the stockholders at the 1998 Annual
Meeting. However, the authorization conferred on the Board of Directors to
effect a reverse stock split will expire as of the 1999 Annual Meeting. This
proposal, in effect, will extend the authorization for an additional year.
EFFECT OF REVERSE STOCK SPLIT
The Company currently is authorized to issue 95,000,000 shares of Common
Stock, of which 25,863,726 shares were issued and outstanding as of the Record
Date. The Company also is authorized to issue 5,000,000 shares of Preferred
Stock, of which no shares were issued and outstanding as of the Record Date.
After each of the reverse stock splits authorized by the Certificate Amendments,
if effected, the number of authorized shares of Common Stock and Preferred Stock
will remain the same, whereas the number of shares of Common Stock outstanding
would be reduced to a number obtained by dividing the number of shares
outstanding immediately prior to the reverse stock split by integral factors
ranging from 4 to 10, depending on the Certificate Amendment that the Board of
Directors elects to implement. Correspondingly, at the effective time of the
reverse stock split, the number of shares of Common Stock owned by each
stockholder will be reduced by the same proportion. Accordingly, except for the
payment of cash in lieu of a fractional share, a reverse stock split will not
affect any stockholder's proportionate equity interest in the Company, nor will
it change any of the rights of a holder of a share of Common Stock.
The following table illustrates the effects of a 1 for 10 and a 1 for 4
reverse stock split (without giving effect to any adjustments for fractional
shares) on the Company's authorized and outstanding shares and on certain per
share data:
Page 8 of 11
<PAGE> 11
<TABLE>
<CAPTION>
=====================================================================================================================
Number of Shares as of April 13, 1999
- ---------------------------------------------------------------------------------------------------------------------
Prior to Reverse Stock Split After Reverse Stock Split
- ---------------------------------------------------------------------------------------------------------------------
1 for 10 - 1 for 4
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Authorized
Preferred Stock 5,000,000 5,000,000
Common Stock 95,000,000 95,000,000
- ---------------------------------------------------------------------------------------------------------------------
Outstanding
Preferred Stock 0 0
- ---------------------------------------------------------------------------------------------------------------------
Common Stock
Outstanding 25,863,726 2,586,372 - 6,465,931
Issuable upon exercise of Options and Warrants 15,006,594 1,500,659 - 3,751,648
Fully diluted 40,870,320 4,087,032 - 10,217,580
- ---------------------------------------------------------------------------------------------------------------------
Stockholders' equity at December 31, 1998 $4,709,167 $4,709,167
Stockholders' equity per share at December 31, 1998 $ 0.18 $1.80 - $0.72
- ---------------------------------------------------------------------------------------------------------------------
Net loss for calendar year ended December 31, 1998 $2,833,687 $2,833,687
Net loss per share for calendar year ended
December 31, 1998 $ 0.12 $1.20 - $0.48
=====================================================================================================================
</TABLE>
BACKGROUND AND REASONS FOR THE PROPOSAL
The Board of Directors believes that the 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. These 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 Board of
Directors believes that the higher market price that should result from a
reverse stock split would enhance the marketability of the stock to the
financial community and the investing public at large.
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.
The Common Stock currently is listed on the OTC Bulletin Board. As of the
close of trading on April 13, 1999, the average of the bid and ask prices for
the Company's common stock was $0.41. It is an objective of the Company to
attempt to qualify the Common Stock for listing either on the American Stock
Exchange ("Amex") or the Nasdaq SmallCap Market, each of which would provide for
greater visibility for the Common Stock and for more comprehensive and timely
dissemination of stock price information. Among the listing requirements is a
minimum stock price of $3.00 for Amex and a minimum bid price of $4.00 for the
Nasdaq SmallCap Market, which the Company would hope to satisfy after giving
effect to a reverse stock split. In addition to a minimum stock price, each of
Amex and the Nasdaq SmallCap Stock Market also have other requirements that must
be satisfied as a condition to listing, including a market value of public float
requirement and a net tangible assets requirement. Accordingly, even if a
reverse stock split were to raise the stock price to a level that would qualify
the stock for listing, there is no assurance that the Company would be eligible
to list the Common Stock on Amex or the Nasdaq SmallCap Market.
The Company is not aware of any current efforts to accumulate Common Stock
or obtain control of the Company, and the Certificate Amendments are not
intended to be an anti-takeover device. The Certificate
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<PAGE> 12
Amendments are being proposed with a view toward enhancing marketability of the
Common Stock by obtaining a Common Stock price in a range more acceptable to the
investment community.
CERTAIN CONSEQUENCES OF REVERSE STOCK SPLIT
Payment for Fractional Shares
No fractional shares of Common Stock will be issued in connection with a
reverse stock split. If, as the result of a reverse stock split, a stockholder
of record would hold a fractional share, the stockholder, in lieu of the
issuance of a fractional share, will be entitled to receive a payment in cash
from the Company in an amount equal to the fraction multiplied by the market
price of the Common Stock at the close of business on the first trading day
immediately following the 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 the cash payment therefor.
Certain Federal Income Tax Consequences
The following description of federal income tax consequences of a 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 addressed. Stockholders are urged
to consult their own tax advisors to determine the specific tax consequences of
a 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 with respect to any cash received
in lieu of a fractional share as described below). The holding period of the
post-split shares will include the stockholder's holding period for the
pre-split shares. The basis of post-split shares will be equal to the basis of
the pre-split shares, reduced by the tax basis allocable to the post-split
fractional share in lieu of which cash is received.
A stockholder who receives cash in lieu of a fractional share will be treated
as if the Company has issued a fractional share to the stockholder and then
immediately redeemed the fractional share 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 shares corresponding to the fractional share, had such fractional
share 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 exceeds 12 months.
VOTE REQUIRED
Approval of the Certificate Amendments requires the affirmative vote of the
holders of a majority of the outstanding shares of the Common Stock. Abstentions
and broker non-votes will be counted as votes against adoption of the
Certificate Amendments. The Board of Directors unanimously recommends that
stockholders vote "FOR" adoption of this Proposal.
ITEM 3.
RATIFICATION OF APPOINTMENT OF AUDITORS
The firm of PricewaterhouseCoopers LLP, independent certified public
accountants, has audited the books and records of the Company for 1998 and the
Board of Directors desires to continue the services of this firm
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<PAGE> 13
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 PricewaterhouseCoopers LLP to audit the books and
accounts of the Company for the current fiscal year.
A representative of PricewaterhouseCoopers LLP 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
Stockholder proposals intended to be presented at the 2000 Annual Meeting
must be received by the Secretary of the Company on or before December 16, 1999
in order to be considered for inclusion in the Company's proxy statement and
form of proxy for the Annual Meeting, and must also meet the other requirements
set forth in the rules of the Securities and Exchange Commission relating to
such stockholder proposals. If the proposal is received by the Company less than
45 days prior to the anniversary of the mailing date of this proxy statement,
the persons named as proxies in the Company's proxy material for the 2000 Annual
Meeting will have the discretionary authority to vote on the matter in
accordance with their best judgment without disclosure in the proxy statement of
such matter or of how the proxy holders intend to exercise their discretionary
voting authority.
By Order of the Board of Directors
/s/ Gregory C. Zakarian
GREGORY C. ZAKARIAN
Secretary
April 30, 1999
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<PAGE> 14
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 June 10, 1999, 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> 15
X PLEASE MARK VOTES
AS IN THIS EXAMPLE
<TABLE>
<S> <C>
1. Election of Director FOR WITHHELD FOR AGAINST ABSTAIN
Nominee: Robert L. Curry
2. Amendments of Certificate of
Incorporation.
3. Ratification of PricewaterhouseCoopers LLP
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:________________, 1999
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.
