SCHEDULE 14A
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
[X] Definitive Proxy Statement Commission Only (as
[ ] Definitive Additional Materials permitted by Rule 14a-6(e)(2))
[ ] Soliciting Material Pursuant
to Rule 14a-11(c) or Rule 14a-12
Endogen, Inc.
------------------------------------------
(Name of Registrant as Specified in Its Charter)
Not Applicable
---------------------------------------------------------
(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:
not applicable
--------------
(2) Aggregate number of securities to which transaction applies:
not applicable
--------------
(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):
not applicable
--------------
(4) Proposed maximum aggregate value of transaction: not applicable
--------------
(5) Total fee paid: not applicable
--------------
[ ] 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: not applicable
--------------
(2) Form, Schedule or Registration Statement No.: not applicable
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(3) Filing Party: not applicable
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(4) Date Filed: not applicable
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<PAGE>
ENDOGEN, INC.
30 COMMERCE WAY
WOBURN, MASSACHUSETTS 01801-1059
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be held on November 5, 1998
-----------------
TO THE STOCKHOLDERS:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Endogen,
Inc., a Massachusetts corporation (the "Corporation"), will be held on Thursday,
November 5, 1998, at 10:00 a.m. at the offices of the Corporation, 6 Gill
Street, Woburn, Massachusetts 01801, for the following purposes:
I. To fix the size of the Board of Directors at six (6).
II. To elect a Board of Directors to serve for the ensuing year and
until their respective successors have been duly elected and qualified.
III. To consider and approve an amendment to the Corporation's 1992
Stock Plan (the "1992 Plan") that increases the number of shares of Common
Stock authorized for issuance under the 1992 Plan from 1,000,000 shares to
1,250,000 shares.
IV. To ratify the selection of the firm of PricewaterhouseCoopers LLP
as auditors for the fiscal year ending May 31, 1999.
V. To transact such other business as may properly come before the
meeting and any adjournments or postponements thereof.
Only stockholders of record at the close of business on September 11, 1998
are entitled to notice of and to vote at the meeting and any adjournment or
postponements thereof.
By Order of the Board of Directors
/s/ Avery W. Catlin
AVERY W. CATLIN
Clerk
Woburn, Massachusetts
September 25, 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 IN
ORDER TO ASSURE REPRESENTATION OF YOUR SHARES.
<PAGE>
ENDOGEN, INC.
30 COMMERCE WAY
WOBURN, MASSACHUSETTS 01801
---------------
PROXY STATEMENT
----------------
September 25, 1998
Proxies in the form enclosed with this proxy statement are solicited by the
Board of Directors of Endogen, Inc., a Massachusetts corporation ("Endogen" or
the "Corporation"), with its principal executive offices at 30 Commerce Way,
Woburn, Massachusetts 01801, for use at the Annual Meeting of Stockholders and
any adjournment thereof (the "Annual Meeting"), to be held on Thursday, November
5, 1998 at 10:00 a.m. at the offices of the Corporation at 6 Gill Street,
Woburn, Massachusetts 01801. It is expected that this proxy statement and the
form of proxy will be mailed to stockholders on or about September 25, 1998.
Only stockholders of record as of September 11, 1998 (the "Record Date")
will be entitled to vote at the Annual Meeting and any adjournments or
postponements thereof. As of September 11, 1998, 3,454,502 shares of Common
Stock, $.01 par value per share (the "Common Stock"), of the Corporation were
issued and outstanding. Each share of Common Stock outstanding as of the Record
Date will be entitled to one vote and stockholders may vote in person or by
proxy. Execution of a proxy will not in any way affect a stockholder's right to
attend the Annual Meeting and vote in person. Any stockholder giving a proxy has
the right to revoke it by written notice to the Clerk of the Corporation at any
time before it is exercised, by executing a proxy with a later date, or by
attending and voting at the Annual Meeting.
The persons named as proxies in the form of proxy are directors and/or
officers of the Corporation. All properly executed proxies returned in time to
be counted at the Annual Meeting will be voted as stated below under "Voting
Procedures." Any stockholder giving a proxy has the right to withhold authority
to vote for any individual nominee to the Board of Directors by writing that
nominee's name in the space provided on the proxy.
In addition to the election of directors, the stockholders will consider
and vote upon (i) a proposal to fix the Board of Directors at six (6), (ii) a
proposal to amend the Corporation's 1992 Stock Plan (the "1992 Plan") to
increase the number of shares of Common Stock authorized for issuance under the
1992 Plan from 1,000,000 to 1,250,000 shares and (iii) a proposal to ratify the
selection of auditors, as further described in this proxy statement. Where a
choice has been specified on the proxy with respect to the foregoing matters,
the shares represented by the proxy will be voted in accordance with the
specifications and will be voted FOR a respective matter if no specification is
indicated.
The Board of Directors of the Corporation knows of no other matters to be
presented at the Annual Meeting. If any other matter should be presented at the
Annual Meeting upon which a vote properly may be taken, shares represented by
all proxies received by the Board of Directors will be voted with respect
thereto in accordance with the judgment of the persons named as proxies in the
form of proxy.
An Annual Report to Stockholders, containing financial statements for the
fiscal year ended May 31, 1998, is being mailed together with this proxy
statement to all stockholders entitled to vote.
1 \ Endogen 1998 Proxy Statement
<PAGE>
PROPOSAL I
FIXING THE SIZE OF THE BOARD OF DIRECTORS
The size of the Board of Directors is currently fixed at seven (7). In
order to avoid a vacancy on the Board of Directors, the Board of Directors
recommends that the Corporation's stockholders at the Annual Meeting fix the
size of the Board of Directors at six (6).
PROPOSAL II
ELECTION OF DIRECTORS
The directors of the Corporation are elected annually and hold office until
the next annual meeting of stockholders and until their successors have been
elected and qualified, or until their earlier resignation or removal. Shares
represented by all proxies received by the Board of Directors and not so marked
as to withhold authority to vote for any individual nominee or for all nominees
will be voted (unless one or more nominees are unable to serve) for the election
of the nominees named below. The Board of Directors knows of no reason why any
such nominee should be unable or unwilling to serve, but if such should be the
case, proxies will be voted for the election of some other person or for fixing
the number of directors at a lesser number.
Nominated for election to the Corporation's Board of Directors are: Owen A.
Dempsey, Charles R. Burke, Ph.D., Wallace G. Dempsey, Irwin J. Gruverman, Hayden
H. Harris and Wolfgang Woloszczuk, Ph.D. Each of the nominees currently serves
as a director of the Corporation. A plurality of the votes cast by the
stockholders present or represented by proxy and entitled to vote at the Annual
Meeting is required for the election of directors. See "Voting Procedures."
The Board of Directors recommends a vote FOR the nominees set forth above.
Board of Directors Meetings and Committees
The Board of Directors met six times and acted by unanimous written consent
two times during the fiscal year ended May 31, 1998. The Board of Directors has
an Audit Committee, of which Irwin Gruverman and Hayden Harris are members. The
Audit Committee oversees the accounting and tax functions of the Corporation,
including matters relating to the appointment and activities of the
Corporation's independent auditors. The Audit Committee met one time during the
fiscal year ended May 31, 1998. The Board of Directors also has a Compensation
Committee, of which Hayden Harris, Charles Burke and Wolfgang Woloszczuk are
members. The Compensation Committee reviews and makes recommendations concerning
executive compensation, and administers the Corporation's 1992 Stock Plan
together with the Board of Directors. The Compensation Committee also
administers the Corporation's 1993 Non-Employee Director Stock Option Plan (the
"Director Plan"). The Compensation Committee met three times and acted by
unanimous written consent once during the fiscal year ended May 31, 1998. The
Board of Directors does not currently have a standing executive or nominating
committee. With the exception of Charles Burke, who did not join the Board of
Directors until June 25, 1998, each of the Corporation's directors attended at
least 75% of the aggregate of the total number of meetings of the Board of
Directors and of all Committees on which he served during the fiscal year ended
May 31, 1998.
2 \ Endogen 1998 Proxy Statement
<PAGE>
Executive Officers
Executive officers of the Corporation are elected annually and hold office
until the first meeting of the Board of Directors after each annual meeting of
stockholders and until their successors are elected and qualified, or until
their earlier resignation or removal.
OCCUPATIONS OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the names of the nominees to be elected at
the Annual Meeting and the executives officers of the Corporation, their ages as
of September 11, 1998, and the positions currently held by each such person with
the Corporation.
<TABLE>
<CAPTION>
Name Age Position
- ---- --- --------
<S> <C> <C>
Owen A. Dempsey 41 Director, President and Chief Executive Officer
Dennis H. Walczewski 50 Vice President of Sales
Avery W. Catlin 50 Vice President, Operations and Finance, Chief
Financial Officer, Clerk and Treasurer
Charles R. Burke, Ph.D. 56 Director
Wallace G. Dempsey 72 Director
Irwin J. Gruverman 65 Director
Hayden H. Harris 56 Chairman of the Board, Director
Wolfgang Woloszczuk, Ph.D. 50 Director
</TABLE>
Owen A. Dempsey has been President, Chief Executive Officer and a director
of the Corporation since February 1986. From February 1987 to December 1996, he
also served as the Corporation's Treasurer. Mr. Dempsey helped to launch Endogen
in 1985. Prior to joining Endogen, Mr. Dempsey held positions at the
International Management Development Institute in Lausanne, Switzerland and at
the IBM Corporation. Mr. Dempsey holds an A.B. from Dartmouth College and an
M.B.A. from Stanford University.
Dennis H. Walczewski has served as Vice President of Sales of the
Corporation since November 1995. From March 1995 until November 1995, Mr.
Walczewski served as Director of Sales at T Cell Diagnostics, Inc., a
manufacturer of diagnostic kits and reagents for the biotechnology industry.
From March 1994 until February 1995, Mr. Walczewski was Vice President of Sales
at Tropix, Inc., a producer of research kits and reagents for the biotechnology
industry. From March 1987 until January 1994, Mr. Walczewski was Area Sales
Manager at Boehringer Mannheim Corporation, a manufacturer of diagnostic kits,
clinical lab equipment and products for the biotechnology industry.
Avery W. Catlin has served as Vice President, Finance, Chief Financial
Officer, Clerk and Treasurer of the Corporation since December 1996. In July
1998, he was promoted to Vice President, Operations and Finance, while retaining
his other duties. From June 1992 to April 1996, Mr. Catlin held various
financial positions at Repligen Corporation, a public biopharmaceutical company,
serving the last two years as Chief Financial Officer. Earlier in his career,
Mr. Catlin held the position of Chief Financial Officer at MediSense, Inc., a
Massachusetts-based medical device company.
Charles R. Burke, Ph.D. has been a director of the Corporation since June
1998. Dr. Burke is currently principal and founder of Monument Partners, Inc.
From January 1994 to December 1997, Dr. Burke was Chief Executive Officer of
Research Biochemicals International, a leading supplier of fine organic
chemicals to the neuroscience research community. From August 1990 to January
1994, Dr. Burke was Vice President, General Manager Clinical Diagnostics at
Gene-Trak Systems, Inc., a developer of amplified DNA probe systems for
infectious testing in clinical diagnostic laboratories. Previously, Dr. Burke
held numerous management and research positions at Molecular Devices
3 \ Endogen 1998 Proxy Statement
<PAGE>
Corporation, Allied Signal, Health and Scientific Products Division, and Abbott
Laboratories, Diagnostics Division.
Wallace G. Dempsey has been a director of the Corporation since February
1986. From 1973 until May 1993, he served as the Secretary and General Attorney
of International Flavors & Fragrances, Inc. From May 1993 until April 1994, Mr.
Dempsey served as a consultant to International Flavors & Fragrances, Inc.
Irwin J. Gruverman has been a director of the Corporation since November
1990. Since 1982, Mr. Gruverman has been Chairman of the Board and Chief
Executive Officer of Microfluidics International and its predecessor,
Biotechnology Development Corp. Since 1990, he has also been a General Partner
of G&G Diagnostics Funds which invests in medical diagnostics companies. Mr.
Gruverman is also a director of Fiberchem International, Inc., InVitro
International and North American Scientific, Inc.
Hayden H. Harris has been a director of the Corporation since March 1993
and Chairman of the Board since November 1995. Since 1977, Mr. Harris has been
President and a director of Enterprise Management, Inc., a venture capital
management and consulting company. From 1990 to present, Mr. Harris has been
Chairman of the Board and Chief Executive Officer of Software Services
Corporation, a provider of contract software services, and since 1995 he has
served as President and a director of EDM, Inc., a venture capital management
company.
Wolfgang Woloszczuk, Ph.D. has been a director of the Corporation since
November 1990. Dr. Woloszczuk has also served as Chief Executive Officer of
Biomedica GmbH since 1992 and of Biocis Handels GmbH since 1994. He has also
served as an executive officer of Bionova Handels GmbH since 1988. Dr.
Woloszczuk was an executive officer of Biozol Diagnostica Vertriebs GmbH from
1989 until May 1996. Since November 1997, Dr. Woloszczuk has been President of
BioNet, Inc., an exporter of biomedical products located in Southbridge,
Massachusetts. In addition, Dr. Woloszczuk has been a Professor of medicinal
chemistry at the University of Vienna since 1989.
Family Relationships
Wallace G. Dempsey is the father of Owen A. Dempsey. There are no other
family relationships among directors or executive officers of Endogen.
MANAGEMENT AND PRINCIPAL STOCKHOLDERS
The following table sets forth as of September 11, 1998 certain
information regarding the ownership of shares of the Corporation's Common Stock
by (i) each person who, to the knowledge of the Corporation, owned beneficially
more than 5% of the shares of Common Stock of the Corporation outstanding at
such date ("Principal Stockholders"), (ii) each director and nominee director of
the Corporation, (iii) each Named Officer (as defined below) of the Corporation,
and (iv) all directors and executive officers as a group.
<TABLE>
<CAPTION>
Amount and Nature of Percent of Common
Name and Address of Beneficial Owner Beneficial Ownership(1) Stock Outstanding(2)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Owen A. Dempsey (3) .......................................... 337,200 9.53%
c/o Endogen, Inc.
30 Commerce Way
Woburn, MA 01801
Wallace G. Dempsey (4) ....................................... 184,000 5.29%
c/o Endogen, Inc.
30 Commerce Way
Woburn, MA 01801
4 \ Endogen 1998 Proxy Statement
<PAGE>
Irwin J. Gruverman (5) ....................................... 119,000 3.43%
G&G Diagnostics Corp.
30 Ossipee Road
Newton, MA 02164
Hayden H. Harris (6) ......................................... 56,500 1.61%
Enterprise Management, Inc.
425 North Main Street
Ann Arbor, MI 48104
Wolfgang Woloszczuk, Ph.D. (7) ............................... 52,000 1.50%
Biomedica GmbH
Divischgasse 4
A-1210 Vienna, Austria
Dennis H. Walczewski (8) ..................................... 20,300 *
c/o Endogen, Inc.
30 Commerce Way
Woburn, MA 01801
Avery W. Catlin (9) .......................................... 19,100 *
c/o Endogen, Inc.
30 Commerce Way
Woburn, MA 01801
Charles R. Burke, Ph.D. (10) ................................. 5,000 *
Monument Partners, Inc.
1410-1 Monument Street
Concord, MA 01742
All executive officers and directors ......................... 793,100 21.56%
as a group (8 persons) (11)
</TABLE>
- --------------------
* Indicates less than 1%
(1) Except as indicated in footnotes to this table, the persons named in this
table have sole voting and investment power with respect to all shares of
Common Stock owned based upon information provided to the Corporation by
the directors, officers and Principal Stockholders.
(2) The number of shares of Common Stock deemed outstanding for this
calculation includes (i) 3,454,502 shares of Common Stock outstanding on
September 11, 1998, and (ii) all Common Stock underlying options which
are currently exercisable or will become exercisable within 60 days of
September 11, 1998 by the person or group in question.
(3) Mr. Owen Dempsey's beneficial ownership includes 82,100 shares issuable
upon the exercise of outstanding stock options exercisable on September
11, 1998 or within 60 days thereafter.
(4) Mr. Wallace Dempsey's beneficial ownership includes 24,000 shares
issuable upon the exercise of outstanding stock options exercisable on
September 11, 1998 or within 60 days thereafter.
(5) Mr. Gruverman's beneficial ownership includes 12,000 shares issuable upon
the exercise of outstanding stock options exercisable on September 11,
1998 or within 60 days thereafter and 95,000 shares of Common Stock held
by G&G Diagnostics Limited Partnership I ("G&G"). Mr. Gruverman is the
sole general partner of G&G and has sole voting and investment power
5 \ Endogen 1998 Proxy Statement
<PAGE>
with respect to such shares of Common Stock. Mr. Gruverman disclaims
beneficial ownership of all shares held by G&G, except with respect to
his pecuniary interest therein, if any.
(6) Mr. Harris's beneficial ownership includes 51,000 shares issuable upon
the exercise of outstanding stock options exercisable on September 11,
1998 or within 60 days thereafter and 2,000 shares held in a trust for
the benefit of his children. Mr. Harris disclaims beneficial ownership of
all of the shares held in a trust for the benefit of his children.
(7) Dr. Woloszczuk's beneficial ownership includes 12,000 shares issuable
upon the exercise of outstanding stock options exercisable on September
11, 1998 or within 60 days thereafter. Excludes 127,000 shares of Common
Stock beneficially owned by Biomedica GmbH ("Biomedica"). Dr. Woloszczuk
is an executive officer and 20% shareholder of Biomedica. Dr. Woloszczuk
disclaims beneficial ownership of all shares held by Biomedica, except
with respect to his pecuniary interest therein.
(8) Mr. Walczewski's beneficial ownership includes 20,100 shares issuable
upon the exercise of outstanding stock options exercisable on September
11, 1998 or within 60 days thereafter and 200 shares held by his son. Mr.
Walczewski disclaims beneficial ownership of all shares held by his son.
(9) Mr. Catlin's beneficial ownership includes 18,100 shares issuable upon
the exercise of outstanding stock options exercisable on September 11,
1998 or within 60 days thereafter.
(10) Dr. Burke's beneficial ownership includes 4,000 shares issuable upon the
exercise of outstanding stock options exercisable on September 11, 1998
or within 60 days thereafter.
(11) Includes 223,300 shares issuable upon the exercise of outstanding stock
options exercisable on September 11, 1998 or within 60 days thereafter.
Excludes shares indicated as being excluded in note 7.
COMPENSATION AND OTHER INFORMATION
CONCERNING DIRECTORS AND OFFICERS
Executive Compensation
The following table summarizes the compensation paid or accrued by the
Corporation for services rendered for its fiscal year ended May 31, 1998 to Owen
A. Dempsey, the Corporation's President and Chief Executive Officer, Dennis H.
Walczewski, the Corporation's Vice President, Sales and Avery W. Catlin, the
Corporation's Vice President, Operations and Finance, Chief Financial Officer,
Treasurer and Clerk (the "Named Officers"). No other executive officer earned a
total salary and bonus exceeding $100,000 during the fiscal year ended May 31,
1998. The Corporation did not grant to the Named Officers any restricted stock
awards or stock appreciation rights ("SARs") and did not make any long-term
incentive plan payouts during the fiscal years ended May 31, 1996, 1997 and
1998.
6 \ Endogen 1998 Proxy Statement
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term Compensation
----------------------------------------
Awards
------- Payouts
Annual Compensation Securities -------
------------------------ Underlying All Other
Name and Principal Position Year Salary ($) Bonus ($) Options (#) Compensation ($)(1)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Owen A. Dempsey 1998 $120,000 $31,067 -- $975
President and Chief 1997 107,692 49,913 200 --
Executive Officer 1996 100,000 34,763 24,000 --
Avery W. Catlin 1998 $124,885 $20,695 12,000 $1,566
Vice President, Operations 1997 71,385 16,819 60,200 --
and Finance, Chief Financial 1996 -- -- -- --
Officer, Treasurer and Clerk (2)
Dennis H. Walczewski 1998 $90,000 $29,825 12,000 $1,344
Vice President of Sales (3) 1997 90,000 47,350 200 --
1996 49,971 25,675 34,000 --
</TABLE>
- ---------------
(1) Corporation contributions to its 401(k) plan.
(2) Mr. Catlin joined the Corporation as Vice President, Finance, Chief
Financial Officer, Treasurer and Clerk in December 1996.
(3) Mr. Walczewski joined the Corporation as Vice President of Sales in
November 1995.
Options
The following table sets forth certain information concerning stock options
granted during the fiscal year ended May 31, 1998 to the Named Officers.
OPTIONS GRANTED IN THE LAST FISCAL YEAR (1)
Individual Grants
<TABLE>
<CAPTION>
% of Total
Number of Options Granted Exercise
Securities Underlying to Employees Price Expiration
Name Options Granted(2) in Fiscal Year(3) ($/Share) Date
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Owen A. Dempsey --
Avery W. Catlin 12,000 12% $4.38 11/6/07
Dennis H. Walczewski 12,000 12% $4.38 11/6/07
</TABLE>
- --------------------
(1) The Corporation did not grant any SAR's during the fiscal year ended May
31, 1998.
(2) Stock options were granted under the 1992 Plan at an exercise price equal
to the fair market value of the Corporation's common stock on the date of
grant. The options have a term of ten years from the date of grant and
become exercisable as to 25% of the shares covered on each of the first
four anniversaries of the date of grant.
7 \ Endogen 1998 Proxy Statement
<PAGE>
(3) Represents all options granted to Mr. Dempsey, Mr. Catlin and Mr.
Walczewski during fiscal year ended May 31, 1998, respectively, as a
percentage of the total options granted to employees during the same
period. A total of 97,000 options were granted to employees in fiscal year
1998.
The following table sets forth certain information concerning stock options
held by the Named Officers on May 31, 1998.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES (1)
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised Options In-the-Money Options
Shares at May 31, 1998 (#) at May 31, 1998 ($) (3)
Acquired on Value --------------------------- --------------------------
Name Exercise (#) Realized ($) (2) Exercisable Unexercisable Exercisable Unexercisable
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Owen A. Dempsey 12,000 $31,680 77,100 17,100 $113,960 $10,060
Avery W. Catlin -- -- 15,100 57,100 900 2,700
Dennis H. Walczewski -- -- 17,100 29,100 300 300
</TABLE>
- ---------------------
(1) The Corporation has never granted any SAR's.
(2) Value is based on the difference between the option exercise price and
$4.00, the fair market value of the Corporation's Common Stock on the date
of exercise, multiplied by the number of shares exercised.
(3) Value is based on the difference between the option exercise price and
$3.94, the fair market value of the Corporation's Common Stock on May 29,
1998, the last trading day for the fiscal year ended May 31, 1998,
multiplied by the number of shares of Common Stock underlying the options.
Compensation of Directors
Each non-employee director of the Corporation is entitled to $500, plus all
reasonable expenses, for each meeting of the Corporation's Board of Directors
and each Committee meeting that he attends. In addition, pursuant to the
Director Plan, each non-employee director is automatically granted, without
further action by the Board, an option to purchase 6,000 shares of the
Corporation's Common Stock upon (a) the date such director is first elected to
the Board and (b) each subsequent anniversary of that director's election to the
Board. The exercise price per share of all options granted under the Director
Plan is equal to 100% of the fair market value of the Corporation's Common Stock
on the date such options are granted. Options granted under the Director Plan
are exercisable as to one-third of the shares subject to such option on the date
of grant and as to an additional one-third of the shares subject to the option
on each successive anniversary of the date of grant, provided that the optionee
has continuously served as a member of the Board of Directors through such date.
Notwithstanding the foregoing, those options which were granted under the
Director Plan on November 12, 1993 were fully vested and exercisable in full on
the date of such grant.
The Chairman of the Corporation's Board of Directors, Hayden Harris, is
entitled to an additional $500 per meeting of the Board of Directors and $1,000
per day for each meeting with the Corporation's President and Chief Executive
Officer that is not a Board or Committee meeting. Moreover, in addition to his
annual option grant under the Director Plan, the Chairman also received an
option to purchase 6,000 shares of the Corporation's Common Stock pursuant to
the 1992 Plan.
8 \ Endogen 1998 Proxy Statement
<PAGE>
These options were granted at an exercise price equal to 100% of the fair market
value of the Corporation's Common Stock as of the date of grant. Provided that
the Chairman continues to serve the Corporation in the capacity of employee,
officer, director or consultant, the options shall vest over a period of one
year from the date of grant, in four equal quarterly installments.
In addition to his annual option grant under the Director Plan, Charles
Burke received an option to purchase 6,000 shares of the Corporation's Common
Stock pursuant to the 1992 Plan. These options were granted at an exercise price
equal to 100% of the fair market value of the Corporation's Common Stock as of
the date of grant. One-third of these options vested on the date of grant and,
provided that Dr. Burke continues to serve the Corporation in the capacity of
employee, officer, director or consultant, the balance of the options shall vest
over a period of two years, in two equal annual installments.
Directors who are employees of the Corporation receive no additional
compensation for serving on the Board of Directors or its Committees.
Executive Employment Agreements
On December 4, 1996, the Corporation entered into an employment agreement
with Avery W. Catlin pursuant to which he joined the Corporation (the "Catlin
Agreement"). Under the terms of the Catlin Agreement, Mr. Catlin is entitled to
receive a minimum salary of $120,000 and a minimum bonus of $34,000 for the
first year of the term and a minimum salary of $130,000 for the second year of
the term. Mr. Catlin's bonus after the first year of the term will be based on
formulas agreed to by the Corporation and Mr. Catlin. Mr. Catlin's salary after
the second year of the term will be determined by the Board of Directors.
Additionally, Mr. Catlin is eligible for participation in an executive incentive
pay plan and in all of the Corporation's welfare, benefit, retirement and
savings plans on the same basis as other employees of the Corporation. Pursuant
to the Catlin Agreement, and subject to the terms of a stock option agreement,
Mr. Catlin received an option to purchase 60,000 shares of Common Stock at $3.88
per share, vesting at 25% per annum for four years. Mr. Catlin's employment by
the Corporation may be terminated, with or without cause, by either party upon
prior written notice. In the event Mr. Catlin is terminated by the Corporation
other than for cause or the death of Mr. Catlin, Mr. Catlin would be entitled to
continue receiving his salary and benefits for a period of six months following
his termination date. In the event Mr. Catlin is terminated by the Corporation
without cause, all of the outstanding options which have been granted to Mr.
Catlin, but which have not vested, shall vest immediately and be exercisable in
full. In the event Mr. Catlin is terminated pursuant to a change in control of
the Corporation, as defined in the Catlin Agreement, Mr. Catlin would be
entitled to receive a cash payment equal to his annual salary on the date of
termination and all of the outstanding options which have been granted to Mr.
Catlin, but which have not yet vested, shall vest immediately and be exercisable
in full. The initial term of the Catlin Agreement is three years and may be
automatically renewed for one year periods.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In 1991, the Corporation entered into a distribution and supply agreement
with Biozol Diagnostica Vertriebs GmbH ("Biozol") under which Biozol exclusively
distributed the Corporation's products to individual country distributors in
certain European countries. Effective September 1, 1996, the agreement was
amended so that the Corporation could distribute its products directly to
certain individual country distributors in Europe. Biozol continues as the
Corporation's exclusive distributor in Germany. Wolfgang Woloszczuk, a director
of the Corporation, was an executive officer of Biozol from 1989 until May 1996,
and is currently an executive officer and 20% shareholder of Biomedica GmbH, a
50% owner of Biozol.
9 \ Endogen 1998 Proxy Statement
<PAGE>
PROPOSAL III
PROPOSAL TO AMEND THE 1992 STOCK PLAN
Amendment to Increase the Number of Authorized Shares Under the 1992 Plan
The 1992 Plan was adopted by the Board of Directors on August 10, 1992 and
was approved by the stockholders on March 1, 1993. The 1992 Plan is an amendment
and restatement of the Corporation's 1989 Stock Plan which was adopted by the
Board of Directors in March 1989 and approved by the stockholders in June 1989.
On August 16, 1993, the Board of Directors amended the 1992 Plan to increase the
number of shares of Common Stock authorized for issuance under the 1992 Plan
from 368,499 to 768,499 shares and such amendment was approved by the
Corporation's stockholders on November 12, 1993. On July 31, 1997 and September
5, 1997, the Board of Directors amended the 1992 Plan to (i) increase the number
of shares of Common Stock authorized for issuance under the 1992 Plan from
768,499 to 1,000,000 shares and (ii) permit grants under the 1992 Plan to comply
with Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code") and such amendments were approved by the Corporation's stockholders on
November 6, 1997. Currently, the number of shares of Common Stock authorized for
issuance under the 1992 Plan is 1,000,000 shares. The Board of Directors has
approved and recommended to the stockholders that they approve an amendment to
increase the number of shares authorized for issuance pursuant to the 1992 Plan
to 1,250,000 shares.
Endogen's management relies on stock options as essential components of the
compensation packages necessary for the Corporation to attract and retain
experienced directors, officers, employees and consultants. The Board of
Directors of the Corporation believes that the proposed increase in the number
of shares authorized for issuance under the 1992 Plan is essential to permit its
Compensation Committee and Endogen's management to continue to provide long
term, equity based incentives to present and future key employees.
As of September 11, 1998, approximately 823,480 shares remained available
for issuance under the 1992 Plan of which approximately 756,450 were already
reserved for outstanding options, such that only approximately 67,030 were
available for new grants of stock options, awards or rights to make direct
purchases. If the increase in the number of shares authorized for issuance under
the 1992 Plan is not approved, the Corporation may be unable to continue to
provide suitable long-term equity based incentives to present and future
employees. If the proposed amendment to the 1992 Plan to increase the number of
shares of Common Stock authorized for issuance thereunder from 1,000,000 to
1,250,000 is not approved by the stockholders, the Corporation will not grant
stock options, awards, or rights to make direct purchases under the 1992 Plan in
excess of that number of shares of Common Stock remaining available under the
existing 1992 Plan. The Corporation has not at the present time determined who
will receive the remaining shares of Common Stock that will be authorized for
issuance under the 1992 Plan if the proposed amendment to the 1992 Plan is
approved.
Description of the 1992 Plan
The purpose of the 1992 Plan is to provide incentives to directors,
officers, employees and consultants of the Corporation by providing the
opportunity to purchase shares of common stock of the Corporation.
Under the 1992 Plan, employees of the Corporation may be awarded incentive
stock options ("ISO" or "ISOs"), as defined in Section 422(b) of the Code, and
directors, officers, employees and consultants of the Corporation may be granted
(i) options which do not qualify as ISOs ("Non-Qualified Option" or
"Non-Qualified Options"), (ii) awards of stock of the Corporation ("Awards") and
(iii) authorizations to make direct purchases of stock of the Corporation
("Purchases"). ISOs, Non-Qualified Options, Awards
10 \ Endogen 1998 Proxy Statement
<PAGE>
and Purchases are sometimes collectively referred to as "Stock Rights" and ISOs
and Non-Qualified Options are sometimes collectively referred to as "Options."
The 1992 Plan is administered by the Compensation Committee (the
"Committee") of the Board of Directors of the Corporation. Subject to the terms
of the 1992 Plan and ratification by the Board of Directors, the Committee has
the authority to determine the persons to whom Stock Rights are granted, the
number of shares covered by each Stock Right, the exercise price per share and
other terms and provisions governing the Stock Rights, including restrictions,
if any, applicable to the shares of Common Stock issuable upon exercise of Stock
Rights. The interpretation and construction by the Committee of any provision of
the 1992 Plan or of any Stock Right granted under the 1992 Plan is final unless
otherwise determined by the Board of Directors.
As of September 11, 1998 approximately 82 persons were eligible to
participate in the 1992 Plan.
The exercise price per share of Non-Qualified Options granted under the
1992 Plan cannot be less than the minimum legal consideration required under
applicable state law. The exercise price per share of ISOs cannot be less than
the fair market value of the Common Stock on the date of grant (or, in the case
of ISO's granted to employees holding more than 10% of the voting stock of the
Corporation, 110% of the fair market value of the Common Stock on the date of
grant).
Payment of the exercise price of an Option granted under the 1992 Plan may
be made by full payment of the exercise price either (i) in United States
dollars in cash or by check, (ii) at the discretion of the Committee, by
tendering Common Stock of the Corporation, (iii) at the discretion of the
Committee, by delivery of the grantee's personal recourse note bearing interest,
(iv) at the discretion of the Committee, through the delivery of an assignment
to the Corporation of a sufficient amount of the proceeds from the sale of the
Common Stock acquired upon exercise of the Stock Right and an authorization to
the broker or selling agent to pay that amount to the Corporation or (v) at the
discretion of the Committee, any combination of the above. The 1992 Plan
contains terms providing for the exercise of Options by or on behalf of former
and deceased employees, respectively, as described below.
Option holders are protected against dilution in the event of a stock
dividend, recapitalization, stock split, merger or similar transaction. The
Board of Directors may from time to time adopt amendments to the 1992 Plan,
certain of which are subject to stockholder approval, and may terminate the 1992
Plan, at any time (although such action shall not affect Options previously
granted). Any shares subject to an Option granted under the 1992 Plan, which for
any reason expire or terminate unexercised may again be available for future
Option grants. Stock Rights may be granted under the 1992 Plan until August 9,
2002. Unless terminated sooner, the 1992 Plan will terminate on August 9, 2002.
Subject to earlier termination, as described below, each Option shall
expire on the date specified by the Committee, as the case may be, but not more
than ten years from its date of grant in the case of ISOs generally and ten
years and one day in the case of Non-Qualified Options. However, in the case of
an ISO granted to an employee owning more than 10% of the voting stock of the
Corporation, its parent and any present or future subsidiaries of the
Corporation, such ISO shall expire five years from the date of grant.
Stock Rights granted under the 1992 Plan are not assignable or transferable
by the grantee except by will or by the laws of descent and distribution.
If an ISO optionee ceases to be employed by the Corporation or any related
corporation other than by reason of death or disability, no further installment
of his or her ISOs will become exercisable, and the ISOs shall terminate after
the passage of 90 days from the date of termination of employment (but not later
than their specified expiration dates), except to the extent that such ISOs
shall have been converted into Non-Qualified Options. If an optionee dies, any
ISO held by the optionee may be exercised, to the extent exercisable on the date
of death, by the optionee's estate, personal representative or beneficiary who
acquires the option by will or the laws of descent and distribution, at any time
within 180 days from the date of the optionee's death (but not later than the
specified expiration date of the ISO). If an ISO optionee ceases to be employed
by the Corporation by reason of his or her permanent and total disability (as
defined in Section 22(e)(3) of the Code), the optionee may exercise any ISO held
by him or her on the
11 \ Endogen 1998 Proxy Statement
<PAGE>
date of termination of employment, to the extent exercisable on that date, at
any time within 180 days from the date of termination of employment (but not
later than the specified expiration date of the ISO).
Non-Qualified Options are subject to the termination and cancellation
provisions as may be determined by the Compensation Committee.
Each Option granted under the 1992 Plan may either be fully exercisable at
the time of grant or may become exercisable in such installments as the
Committee may specify. Each Option may be exercised from time to time, in whole
or in part, up to the total number of shares with respect to which it is then
exercisable. The Committee has the right to accelerate the date of exercise of
any installment of any Option (subject to the $100,000 per year limitation on
the fair market value of stock subject to ISOs granted to any employee which
become exercisable in any calendar year).
The 1992 Plan does not specify amounts to be received or allocated to any
individual, to the executive officers as a group, to non-executive officer
directors as a group or to employees who are not executive officers as a group.
On September 11, 1998, the closing sales price, as reported on the Nasdaq
SmallCap Market, of the Common Stock, the class of stock underlying all Stock
Rights under the 1992 Plan, was $2.56 per share.
Federal Income Tax Considerations of the 1992 Plan
The following general rules are applicable under current federal income tax
law to ISOs granted under the 1992 Plan.
1. In general, no taxable income results to an optionee upon the grant of
an ISO or upon the issuance of shares to him or her upon the exercise of the
ISO, and the Corporation is not allowed a tax deduction upon either grant or
exercise of an ISO.
2. If shares acquired upon exercise of an ISO are not disposed of within
two years following the date the option was granted, or within one year
following the date the shares are issued to an optionee pursuant to the ISO
exercise, the difference between the amount realized on any subsequent
disposition of the shares and the exercise price will generally be treated as
capital gain or loss to such optionee.
3. If shares acquired upon exercise of an ISO are disposed of before the
expiration of one or both of the requisite holding periods (a "Disqualifying
Disposition"), then in most cases the lesser of (i) any excess of the fair
market value of the shares at the time of exercise of the ISO over the exercise
price or (ii) the actual gain on disposition will be treated as compensation to
an optionee and will be taxed as ordinary income in the year of such
disposition.
4. In any year that an optionee makes a Disqualifying Disposition of stock
acquired by exercising an ISO, the Corporation generally will be entitled to a
deduction for federal income tax purposes in an amount equal to the amount of
ordinary income recognizable by the optionee as a result of such Disqualifying
Disposition.
5. Any excess of the amount realized by an optionee as the result of a
Disqualifying Disposition over the sum of (i) the exercise price and (ii) the
amount of ordinary income recognized under the above rules will be treated as
capital gain.
6. Capital gain or loss recognized by an optionee on a disposition of
shares will be a long-term capital gain or loss if the optionee's holding period
for the shares exceeds one year.
7. In general, the amount by which the value of the Common Stock received
upon exercise of an ISO exceeds the exercise price is included in an optionee's
alternative minimum taxable income, which may result in additional tax in the
year of exercise.
The following general rules are applicable under current federal income tax
law to Non-Qualified Options granted under the 1992 Plan:
1. An optionee generally does not realize any taxable income upon the
grant of an option, and the Corporation is not allowed a tax deduction by reason
of such grant.
12 \ Endogen 1998 Proxy Statement
<PAGE>
2. An optionee generally will recognize ordinary income at the time of
exercise of an option in an amount equal to the excess of the fair market value
of the shares on the date of exercise over the exercise price. The Corporation
may be required to withhold tax on this amount.
3. When an optionee sells the shares, he or she generally will recognize
capital gain or loss in an amount equal to the difference between the amount
realized upon the sale of the shares and his or her basis in the stock
(generally, the exercise price plus the amount taxed to the optionee as ordinary
income). If the optionee's holding period for the shares exceeds one year, such
gain or loss will be a long-term capital gain or loss.
4. In any year an optionee exercises an option, the Corporation generally
will be entitled to a federal income tax deduction in an amount equal to the
amount of ordinary income recognized by the optionee as a result of such
exercise.
Under current Federal income tax law, persons receiving Common Stock
pursuant to an Award or Purchase under the 1992 Plan will generally recognize
ordinary income equal to the fair market value of the shares received, reduced
by any purchase price paid. The Corporation generally will be entitled to a
corresponding deduction for federal income tax purposes. When such Common Stock
is sold, the seller generally will recognize capital gain or loss.
Special rules apply if the stock acquired pursuant to the exercise of a
Stock Right is subject to vesting, or is subject to certain restrictions on
resale under Federal securities laws applicable to directors, officers or 10%
stockholders.
Stock Options Granted Under the 1992 Plan Since its Inception
Since its inception, and through September 11, 1998, the following
persons have received stock options pursuant to the 1992 Plan
<TABLE>
<CAPTION>
Name and Principal Position Number of Options (2)
--------------------------- -----------------
<S> <C>
Owen A. Dempsey (1) 136,200
President, Chief Executive Officer
and Director
Avery W. Catlin (1) 92,200
Vice President, Operations and Finance,
Chief Financial Officer, Clerk and Treasurer
Dennis H. Walczewski (1) 60,200
Vice President, Sales
Alan Kotik (1) 70,500
Director, Marketing
Hayden H. Harris 18,000
Chairman of the Board, Director
Charles R. Burke 6,000
Director
Wallace G. Dempsey --
Director
Irwin J. Gruverman --
Director
Wolfgang Woloszczuk --
Director
13 \ Endogen 1998 Proxy Statement
<PAGE>
All Current Executive Officers 288,600
as a Group (3 Persons)
All Current Directors who are not 24,000
Executive Officers as a Group
(5 Persons)
All Employees who are not 888,600
Executive Officers as a Group
</TABLE>
- ----------------------------
(1) Persons who have received five percent or greater of the options granted
under the 1992 Plan.
(2) Such number represents the total number of options granted to the person or
group in question under the 1992 Plan, without taking into account those
options which have been exercised, terminated or expired.
The Board of Directors recommends a vote FOR the approval of the amendment
to the 1992 Plan.
PROPOSAL IV
RATIFICATION OF SELECTION OF AUDITORS
The Board of Directors has selected the firm of PricewaterhouseCoopers LLP,
independent certified public accountants, to serve as auditors for the fiscal
year ending May 31, 1999. PricewaterhouseCoopers LLP has served as the
Corporation's auditors since the fiscal year ended May 31, 1990. It is expected
that a member of the firm will be present at the Annual Meeting with the
opportunity to make a statement if so desired and will be available to respond
to appropriate questions. Stockholder ratification of the Corporation's
independent public accountants is not required under Massachusetts law or under
the Corporation's Restated Articles of Organization or its By-Laws. If the
stockholders do not ratify the selection of PricewaterhouseCoopers LLP as the
Corporation's independent public accountants for the fiscal year ended May 31,
1999, the Corporation's Board of Directors will evaluate what would be in the
best interests of the Corporation and its stockholders and consider whether to
select new independent public accountants for the current fiscal year or whether
to wait until the completion of the audit for the current fiscal year before
changing independent public accountants.
The Board of Directors recommends a vote FOR the ratification of this
selection.
VOTING PROCEDURES
The presence, in person or by proxy, of at least a majority in interest of
the issued and outstanding shares of Common Stock entitled to vote at the Annual
Meeting is necessary to establish a quorum for the transaction of business.
Shares represented by proxies pursuant to which votes have been withheld from
any nominee for director, or which contain one or more abstentions or broker
"non-votes," are counted as present for purposes of determining the presence or
absence of a quorum for the Annual Meeting. A "non-vote" occurs when a broker or
other nominee holding shares for a beneficial owner votes on one proposal, but
does not vote on another proposal because the broker does not have discretionary
voting power and has not received instructions from the beneficial owner.
14 \ Endogen 1998 Proxy Statement
<PAGE>
Proposal II. Directors are elected by a plurality of the votes cast by
stockholders entitled to vote at the Annual Meeting. The six nominees receiving
the highest number of affirmative votes of the shares present, in person or
represented by proxy, and voting on the election of directors at the Annual
Meeting will be elected as directors. Shares represented by all proxies received
by the Board of Directors and not so marked as to withhold authority to vote for
any individual nominee or for all nominees will be voted (unless one or more
nominees are unable to serve) for the election of the nominees. Where the
stockholder properly withheld authority to vote for a particular nominee or
nominees such stockholder's shares will not be counted toward such nominee's
achievement of a plurality.
Other Matters. For all other proposals described in this Proxy Statement
and submitted to stockholders at the Annual Meeting, the affirmative vote of the
majority of shares present, in person or represented by proxy, and voting on
that matter is required for approval. Abstentions and broker "non-votes" are not
considered to have been voted for the particular matter and have the practical
effect of reducing the number of affirmative votes required to achieve a
majority for such matter by reducing the total number of shares from which the
majority is calculated. If any other matter not discussed in this Proxy
Statement should be presented at the Annual Meeting upon which a vote may be
properly taken, shares represented by all proxies received by the Board of
Directors will be voted with respect thereto in accordance with the judgment of
the persons named in the proxies.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Corporation's directors, executive officers and holders of more than 10% of
the Corporation's Common Stock (collectively, "Reporting Persons") to file with
the SEC initial reports of ownership and reports of changes in ownership of
Common Stock of the Corporation. Such persons are required by regulations of the
SEC to furnish the Corporation with copies of all such filings. Based on its
review of the copies of such filings received by it with respect to the fiscal
year ended May 31, 1998 and written representations from certain Reporting
Persons, the Corporation believes that all Reporting Persons complied with the
Section 16(a) filing requirements in the fiscal year ended May 31, 1998 with the
following exception: Mr. Gruverman, a director of the Corporation, had one late
report covering one transaction.
STOCKHOLDER PROPOSALS
Proposals of stockholders intended for inclusion in the Proxy Statement to
be furnished to all stockholders entitled to vote at the 1999 Annual Meeting of
Stockholders of the Corporation pursuant to SEC Rule 14a-8 must be received at
the Corporation's principal executive offices not later than May 28, 1999. The
deadline for providing timely notice to the Corporation of matters that
Stockholders otherwise desire to introduce at the 1999 Annual Meeting of
Stockholders is August 11, 1999. In order to curtail controversy as to the date
on which a proposal was received by the Corporation, it is suggested that
proponents submit their proposals by Certified Mail, Return Receipt Requested.
EXPENSES AND SOLICITATION
The cost of solicitation of proxies will be borne by the Corporation.
Proxies will be solicited principally through the mails. Further solicitation of
proxies from some stockholders may be made by
15 \ Endogen 1998 Proxy Statement
<PAGE>
directors, officers and regular employees of the Corporation personally, by
telephone, telegraph or special letter. No additional compensation, except for
reimbursement of reasonable out-of-pocket expenses will be paid for any such
further solicitation. In addition, the Corporation may request banks, brokers
and other custodians, nominees and fiduciaries to solicit their customers who
have stock of the Corporation registered in the name of a nominee. The
Corporation will reimburse such persons for their reasonable out-of-pocket
costs.
RECENT BY-LAW AMENDMENT
On July 30, 1998, the Board of Directors amended Article VI of the By-laws
to include a new Section 8. Section 8 states that the 1987 Massachusetts Control
Share Acquisition Act, Chapter 110D of the Massachusetts General Laws, as it may
be amended from time to time, shall not apply to the Corporation.
ANNUAL REPORT ON FORM 10-KSB
Copies of the Corporation's Annual Report on Form 10-KSB for the fiscal
year ended May 31, 1998, as filed with the Securities and Exchange Commission,
are available to stockholders without charge upon written request addressed to
Avery W. Catlin, Clerk, Endogen, Inc., 30 Commerce Way, Woburn, Massachusetts
01801-1059.
16 \ Endogen 1998 Proxy Statement
<PAGE>
APPENDIX A
Please date, sign and mail your
proxy card back as soon as possible!
Annual Meeting of Stockholders
ENDOGEN, INC.
November 5, 1998
ENDOGEN, INC.
Annual Meeting of Stockholders to be held on November 5, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, revoking all prior proxies, hereby appoints Owen A. Dempsey and
Avery W. Catlin, and each of them, with full power of substitution, as proxies
to represent and vote all shares of stock of Endogen, Inc. (the "Corporation")
which the undersigned would be entitled to vote if personally present at the
Annual Meeting of Stockholders of the Corporation to be held on November 5,
1998, at 10:00 a.m., at the offices of the Corporation at 6 Gill Street, Woburn,
Massachusetts 01801, and at all adjournments or postponements thereof, upon
matters set forth in the Notice of Annual Meeting of Stockholders and Proxy
Statement dated September 25, 1998, a copy of which has been received by the
undersigned. The proxies are further authorized to vote, in their discretion,
upon such other business as may properly come before the meeting or any
adjournments or postponements thereof. Each of Items 1 through 5 is proposed by
the Corporation.
THIS PROXY, WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED BY THE
UNDERSIGNED STOCKHOLDER(S). IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED
FOR THE ELECTION OF NOMINEES AND FOR THE PROPOSALS IN ITEMS 2, 3 AND 4 AND
AUTHORITY IN ITEM 5 WILL BE DEEMED GRANTED.
SEE REVERSE SIDE
<PAGE>
|X| Please mark your votes as in this example.
1. To elect a Board of Directors, to serve until the next Annual Meeting
of Stockholders and until their respective successors have been duly
elected and qualified, or until their earlier resignation or removal.
<TABLE>
<S> <C> <C>
FOR ALL NOMINEES WITHHOLD AUTHORITY Nominees:
listed at right (except as to vote for all nominees Owen A. Dempsey
marked below): listed at right Wallace G. Dempsey
Irwin J. Gruverman
[ ] [ ] Hayden H. Harris
Wolfgang Woloszczuk
Charles R. Burke
</TABLE>
To withhold authority to vote for any individual nominees, write that nominee's
name in the space provided below:
- -------------------------------------------
2. To fix the size of the Board of Directors at six (6).
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. To approve an amendment to the Corporation's 1992 Stock Plan (the
"1992 Plan") to increase the number of shares of Commons Stock
authorized for issuance under the 1992 Plan from 1,000,000 to
1,250,000 shares.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
4. To ratify the selection of the firm of PricewaterhouseCoopers LLP as
auditors for the fiscal year ending May 31, 1999.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
5. To transact such other business as may properly come before the Annual
Meeting and any adjournment or postponement thereof.
<PAGE>
PLEASE COMPLETE, SIGN, DATE AND RETURN THIS PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE.
I/We will attend the meeting. [ ] YES [ ] NO
- ------------------------------------- Date:
(Signature of Stockholder) --------------------------
- ------------------------------------- Date:
(Signature if held jointly) --------------------------
Note: Please sign this Proxy exactly as your name or names appear on the
books of the Corporation. Joint owners should each sign personally.
Attorney, executor, administrator, trustee or guardian must give full
title as such. If a corporation or partnership, the signature should be
that of an authorized person who should state his or her title.
<PAGE>
APPENDIX B
ENDOGEN, INC.
1992 STOCK PLAN
---------------
(As proposed to be amended)
1. Purpose. This 1992 Stock Plan (the "Plan") is an amendment and
restatement of the 1989 Stock Plan of Endogen, Inc. (the "Company") and is
intended to provide incentives: (a) to the officers and other employees of the
Company, its parent (if any) and any present or future subsidiaries of the
Company (collectively, "Related Corporations") by providing them with
opportunities to purchase stock in the Company pursuant to options granted
hereunder which qualify as "incentive stock options" under Section 422(b) of the
Internal Revenue Code of 1986, as amended (the "Code") ("ISO" or "ISOs"); (b) to
directors, officers, employees and consultants of the Company and Related
Corporations by providing them with opportunities to purchase stock in the
Company pursuant to options granted hereunder which do not qualify as ISOs
("Non-Qualified Option" or "Non-Qualified Options"); (c) to directors, officers,
employees and consultants of the Company and Related Corporations by providing
them with awards of stock in the Company ("Awards"); and (d) to directors,
officers, employees and consultants of the Company and Related Corporations by
providing them with opportunities to make direct purchases of stock in the
Company ("Purchases"). Both ISOs and Non-Qualified Options are referred to
hereafter individually as an "Option" and collectively as "Options". Options,
Awards and authorizations to make Purchases are referred to hereafter
collectively as "Stock Rights". As used herein, the terms "parent" and
"subsidiary" mean "parent corporation" and "subsidiary corporation",
respectively, as those terms are defined in Section 424 of the Code.
2. Administration of the Plan.
--------------------------
A. Board or Committee Administration. The Plan shall be administered by
the Board of Directors of the Company (the "Board") or, subject to
paragraph 2(D) (relating to compliance with Section 162(m) of the Code),
by a committee appointed by the Board (the "Committee"); provided, that,
to the extent required by Rule 16b-3, or any successor provision ("Rule
16b-3"), of the Securities Exchange Act of 1934, with respect to specific
grants of Stock Rights, the Plan shall be administered by a disinterested
administrator or administrators within the meaning of Rule 16b-3.
Hereinafter, all references in this Plan to the "Committee" shall mean the
Board if no Committee has been appointed. Subject to ratification of the
grant or authorization of each Stock Right by the Board (if so required by
applicable state law), and subject to the terms of the Plan, the Committee
shall have the authority to (i) determine the employees of the Company and
Related Corporations (from among the class of employees eligible under
paragraph 3 to receive ISOs) to whom ISOs may be granted, and to determine
(from among the class of individuals and entities eligible under paragraph
3 to receive Non-Qualified Options and Awards and to make Purchases) to
whom Non-Qualified Options, Awards and authorizations to make Purchases
may be granted; (ii) determine the time or times at which Options or
Awards may be granted or
<PAGE>
- 2 -
Purchases made; (iii) determine the option price of shares subject to each
Option, which price shall not be less than the minimum price specified in
paragraph 6, and the purchase price of shares subject to each Purchase;
(iv) determine whether each Option granted shall be an ISO or a
Non-Qualified Option; (v) determine (subject to paragraphs 7 and 9) the
time or times when each Option shall become exercisable and the duration
of the exercise period; (vi) determine whether restrictions such as
repurchase options are to be imposed on shares subject to Options, Awards
and Purchases and the nature of such restrictions, if any, and (vii)
interpret the Plan and prescribe and rescind rules and regulations
relating to it. If the Committee determines to issue a Non-Qualified
Option, it shall take whatever actions it deems necessary, under Section
422 of the Code and the regulations promulgated thereunder, to ensure that
such Option is not treated as an ISO. The interpretation and construction
by the Committee of any provisions of the Plan or of any Stock Right
granted under it shall be final unless otherwise determined by the Board.
The Committee may from time to time adopt such rules and regulations for
carrying out the Plan as it may deem best. No member of the Board or the
Committee shall be liable for any action or determination made in good
faith with respect to the Plan or any Stock Right granted under it.
B. Committee Actions. The Committee may select one of its members as
its chairman, and shall hold meetings at such times and places as it may
determine. Acts by a majority of the Committee, or acts reduced to or
approved in writing by a majority of the members of the Committee (if
consistent with applicable state law), shall be the valid acts of the
Committee. From time to time the Board may increase the size of the
Committee and appoint additional members thereof, remove members (with or
without cause) and appoint new members in substitution therefor, fill
vacancies however caused, or remove all members of the Committee and
thereafter directly administer the Plan.
C. Grant of Stock Rights to Board Members. Stock Rights may be granted
to members of the Board consistent with the provisions of the first
sentence of paragraph 2(A) above, if applicable. All grants of Stock
Rights to members of the Board shall in all other respects be made in
accordance with the provisions of this Plan applicable to other eligible
persons. Members of the Board who are either (i) eligible for Stock Rights
pursuant to the Plan or (ii) have been granted Stock Rights may vote on
any matters affecting the administration of the Plan or the grant of any
Stock Rights pursuant to the Plan, except that no such member shall act
upon the granting to himself of Stock Rights, but any such member may be
counted in determining the existence of a quorum at any meeting of the
Board during which action is taken with respect to the granting to him of
Stock Rights.
D. Performance-Based Compensation. The Board, in its discretion, may
take such action as may be necessary to ensure that Stock Rights granted
under the Plan qualify as "qualified performance-based compensation"
within the meaning of Section 162(m) of the Code and applicable
regulations promulgated thereunder ("Performance-Based Compensation").
Such action may include, in the Board's discretion, some or all of the
following (i) if the Board determines that Stock Rights granted under the
Plan generally shall constitute Performance-Based Compensation, the Plan
shall be administered, to the extent required for such Stock Rights to
constitute Performance-Based Compensation, by a
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Committee consisting solely of two or more "outside directors" (as defined
in applicable regulations promulgated under Section 162(m) of the Code),
(ii) if any Non-Qualified Options with an exercise price less than the
fair market value per share of Common Stock are granted under the Plan and
the Board determines that such Options should constitute Performance-Based
Compensation, such options shall be made exercisable only upon the
attainment of a pre-established, objective performance goal established by
the Committee, and such grant shall be submitted for, and shall be
contingent upon shareholder approval and (iii) Stock Rights granted under
the Plan may be subject to such other terms and conditions as are
necessary for compensation recognized in connection with the exercise or
disposition of such Stock Right or the disposition of Common Stock
acquired pursuant to such Stock Right, to constitute Performance-Based
Compensation.
3. Eligible Employees and Others. ISOs may be granted to any employee
of the Company or any Related Corporation. Those officers and directors of the
Company who are not employees may not be granted ISOs under the Plan.
Non-Qualified Options, Awards and authorizations to make Purchases may be
granted to any employee, officer or director (whether or not also an employee)
or consultant of the Company or any Related Corporation. The Committee may take
into consideration a recipient's individual circumstances in determining whether
to grant an ISO, a Non-Qualified Option, an Award or an authorization to make a
Purchase. Granting of any Stock Right to any individual or entity shall neither
entitle that individual or entity to, nor disqualify him from, participation in
any other grant of Stock Rights.
4. Stock. The stock subject to Options, Awards and Purchases shall be
authorized but unissued shares of Common Stock of the Company, par value $.01
per share (the "Common Stock"), or shares of Common Stock reacquired by the
Company in any manner. The aggregate number of shares which may be issued
pursuant to the Plan is 1,250,000, subject to adjustment as provided in
paragraph 13. Any such shares may be issued pursuant to any type of Stock Rights
granted under the Plan, so long as the number of shares so issued does not
exceed such number, as adjusted. If any Stock Right granted under the Plan shall
expire or terminate for any reason without having been exercised in full or
shall cease for any reason to be exercisable in whole or in part, the
unpurchased shares subject to such Stock Right shall again be available for
grants of Stock Rights under the Plan.
No employee of the Company or any Related Corporation
may be granted Stock Rights to acquire, in the aggregate, more than 200,000
shares of Common Stock under the Plan during any fiscal year of the Company. If
any Stock Right granted under the Plan shall expire or terminate for any reason
without having been exercised in full or shall cease for any reason to be
exercisable in whole or in part or shall be repurchased by the Company, the
shares subject to such Stock Right shall be included in the determination of the
aggregate number of shares of Common Stock deemed to have been granted to such
employee under the Plan.
5. Granting of Stock Rights. Stock Rights may be granted under the Plan
at any time after August 10, 1992 and prior to August 9, 2002. The date of grant
of a Stock Right under the Plan will be the date specified by the Committee at
the time it grants the Stock Right; provided,
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however, that such date shall not be prior to the date on which the Committee
acts to approve the grant. The Committee shall have the right, with the consent
of the optionee, to convert an ISO granted under the Plan to a Non-Qualified
Option pursuant to paragraph 16.
6. Minimum Option Price; ISO Limitations.
--------------------------------------
A. Price for Non-Qualified Options. Subject to paragraph 2(D) (relating
to compliance with Section 162(m) of the Code), the exercise price per
share specified in the agreement relating to each Non-Qualified Option
granted under the Plan shall in no event be less than the minimum legal
consideration required therefor under the laws of the Commonwealth of
Massachusetts or the laws of any jurisdiction in which the Company or its
successors in interest may be organized.
B. Price for ISOs. The exercise price per share specified in the
agreement relating to each ISO granted under the Plan shall not be less
than the fair market value per share of Common Stock on the date of such
grant. In the case of an ISO to be granted to an employee owning stock
possessing more than ten percent (10%) of the total combined voting power
of all classes of stock of the Company or any Related Corporation, the
price per share specified in the agreement relating to such ISO shall not
be less than one hundred ten percent (110%) of the fair market value per
share of Common Stock on the date of grant. For purposes of determining
stock ownership under this paragraph, the rules of Section 424(d) of the
Code shall apply.
C. $100,000 Annual Limitation on ISO Vesting. Each eligible employee
may be granted Options treated as ISOs only to the extent that, in the
aggregate under this Plan and all incentive stock option plans of the
Company and any Related Corporation, ISOs do not become exercisable for
the first time by such employee during any calendar year with respect to
stock having a fair market value (determined at the time the ISOs were
granted) in excess of $100,000. The Company intends to designate any
Options granted in excess of such limitation as Non-Qualified Options.
D. Determination of Fair Market Value. If, at the time an Option is
granted under the Plan, the Company's Common Stock is publicly traded,
"fair market value" shall be determined as of the last business day for
which the prices or quotes discussed in this sentence are available prior
to the date such Option is granted and shall mean (i) the average (on that
date) of the high and low prices of the Common Stock on the principal
national securities exchange on which the Common Stock is traded, if the
Common Stock is then traded on a national securities exchange; or (ii) the
last reported sale price (on that date) of the Common Stock on the Nasdaq
National Market List, if the Common Stock is not then traded on a national
securities exchange; or (iii) the closing bid price (or average of bid
prices) last quoted (on that date) by an established quotation service for
over-the-counter securities, if the Common Stock is not reported on the
Nasdaq National Market List. However, if the Common Stock is not publicly
traded at the time an Option is granted under the Plan, "fair market
value" shall be deemed to be the fair value of the Common Stock as
determined by the Committee after taking into consideration all factors
which it deems
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appropriate, including, without limitation, recent sale and offer prices
of the Common Stock in private transactions negotiated at arm's length.
7. Option Duration. Subject to earlier termination as provided in
paragraphs 9 and 10, each Option shall expire on the date specified by the
Committee, but not more than (i) ten years and one day from the date of grant in
the case of Non-Qualified Options, (ii) ten years from the date of grant in the
case of ISOs generally, and (iii) five years from the date of grant in the case
of ISOs granted to an employee owning stock possessing more than ten percent
(10%) of the total combined voting power of all classes of stock of the Company
or any Related Corporation, as determined under paragraph 6(B). Subject to
earlier termination as provided in paragraphs 9 and 10, the term of each ISO
shall be the term set forth in the original instrument granting such ISO, except
with respect to any part of such ISO that is converted into a Non-Qualified
Option pursuant to paragraph 16.
8. Exercise of Option. Subject to the provisions of paragraphs 9
through 12, each Option granted under the Plan shall be exercisable as follows:
A. Vesting. The Option shall either be fully exercisable on the date
of grant or shall become exercisable thereafter in such installments as
the Committee may specify.
B. Full Vesting of Installments. Once an installment becomes
exercisable it shall remain exercisable until expiration or termination of
the Option, unless otherwise specified by the Committee.
C. Partial Exercise. Each Option or installment may be exercised at
any time or from time to time, in whole or in part, for up to the total
number of shares with respect to which it is then exercisable.
D. Acceleration of Vesting. The Committee shall have the right to
accelerate the date of exercise of any installment of any Option; provided
that the Committee shall not, without the consent of an optionee,
accelerate the exercise date of any installment of any Option granted to
any employee as an ISO (and not previously converted into a Non-Qualified
Option pursuant to paragraph 16) if such acceleration would violate the
annual vesting limitation contained in Section 422(d) of the Code, as
described in paragraph 6(C).
9. Termination of Employment. If an ISO optionee ceases to be employed
by the Company and all Related Corporations other than by reason of death or
disability as defined in paragraph 10, no further installments of his ISOs shall
become exercisable, and his ISOs shall terminate after the passage of ninety
(90) days from the date of termination of his employment, but in no event later
than on their specified expiration dates, except to the extent that such ISOs
(or unexercised installments thereof) have been converted into Non-Qualified
Options pursuant to paragraph 16. For purposes of this paragraph 9 only,
employment shall be considered as continuing uninterrupted during any bona fide
leave of absence (such as those attributable to illness, military obligations or
governmental service) provided that the period of such leave does not exceed 90
days or, if longer, any period during which such optionee's right to
re-employment
<PAGE>
- 6 -
is guaranteed by statute. A bona fide leave of absence with the written approval
of the Committee shall not be considered an interruption of employment under
this paragraph 9, provided that such written approval contractually obligates
the Company or any Related Corporation to continue the employment of the
optionee after the approved period of absence. ISOs granted under the Plan shall
not be affected by any change of employment within or among the Company and
Related Corporations, so long as the optionee continues to be an employee of the
Company or any Related Corporation. Nothing in the Plan shall be deemed to give
any grantee of any Stock Right the right to be retained in employment or other
service by the Company or any Related Corporation for any period of time.
10. Death; Disability.
A. Death. If an ISO optionee ceases to be employed by the Company and
all Related Corporations by reason of his death, any ISO of his may be
exercised, to the extent of the number of shares with respect to which he
could have exercised it on the date of his death, by his estate, personal
representative or beneficiary who has acquired the ISO by will or by the
laws of descent and distribution, at any time prior to the earlier of the
specified expiration date of the ISO or 180 days from the date of the
optionee's death.
B. Disability. If an ISO optionee ceases to be employed by the Company
and all Related Corporations by reason of his disability, he shall have
the right to exercise any ISO held by him on the date of termination of
employment, to the extent of the number of shares with respect to which he
could have exercised it on that date, at any time prior to the earlier of
the specified expiration date of the ISO or 180 days from the date of the
termination of the optionee's employment. For the purposes of the Plan,
the term "disability" shall mean "permanent and total disability" as
defined in Section 22(e)(3) of the Code or successor statute.
11. Assignability. No Stock Right shall be assignable or transferable
by the grantee except by will or by the laws of descent and distribution. During
the lifetime of the grantee each Stock Right shall be exercisable only by him.
12. Terms and Conditions of Options. Options shall be evidenced by
instruments (which need not be identical) in such forms as the Committee may
from time to time approve. Such instruments shall conform to the terms and
conditions set forth in paragraphs 6 through 11 hereof and may contain such
other provisions as the Committee deems advisable which are not inconsistent
with the Plan, including restrictions applicable to shares of Common Stock
issuable upon exercise of Options. In granting any Non-Qualified Option, the
Committee may specify that such Non-Qualified Option shall be subject to the
restrictions set forth herein with respect to ISOs, or to such other termination
and cancellation provisions as the Committee may determine. The Committee may
from time to time confer authority and responsibility on one or more of its own
members and/or one or more officers of the Company to execute and deliver such
instruments. The proper officers of the Company are authorized and directed to
take any and all action necessary or advisable from time to time to carry out
the terms of such instruments.
<PAGE>
- 7 -
13. Adjustments. Upon the occurrence of any of the following events, an
optionee's rights with respect to Options granted to him hereunder shall be
adjusted as hereinafter provided, unless otherwise specifically provided in the
written agreement between the optionee and the Company relating to such Option:
A. Stock Dividends and Stock Splits. If the shares of Common Stock
shall be subdivided or combined into a greater or smaller number of shares
or if the Company shall issue any shares of Common Stock as a stock
dividend on its outstanding Common Stock, the number of shares of Common
Stock deliverable upon the exercise of Options shall be appropriately
increased or decreased proportionately, and appropriate adjustments shall
be made in the purchase price per share to reflect such subdivision,
combination or stock dividend.
B. Consolidations or Mergers. If the Company is to be consolidated with
or acquired by another entity in a merger, sale of all or substantially
all of the Company's assets or otherwise (an "Acquisition"), the Committee
or the board of directors of any entity assuming the obligations of the
Company hereunder (the "Successor Board"), shall, as to outstanding
Options, either (i) make appropriate provision for the continuation of
such Options by substituting on an equitable basis for the shares then
subject to such Options the consideration payable with respect to the
outstanding shares of Common Stock in connection with the Acquisition; or
(ii) upon written notice to the optionees, provide that all Options must
be exercised, to the extent then exercisable, within a specified number of
days of the date of such notice, at the end of which period the Options
shall terminate; or (iii) terminate all Options in exchange for a cash
payment equal to the excess of the fair market value of the shares subject
to such Options (to the extent then exercisable) over the exercise price
thereof.
C. Recapitalization or Reorganization. In the event of a
recapitalization or reorganization of the Company (other than a
transaction described in subparagraph B above) pursuant to which
securities of the Company or of another corporation are issued with
respect to the outstanding shares of Common Stock, an optionee upon
exercising an Option shall be entitled to receive for the purchase price
paid upon such exercise the securities he would have received if he had
exercised his Option prior to such recapitalization or reorganization.
D. Modification of ISOs. Notwithstanding the foregoing, any adjustments
made pursuant to subparagraphs A, B or C with respect to ISOs shall be
made only after the Committee, after consulting with counsel for the
Company, determines whether such adjustments would constitute a
"modification" of such ISOs (as that term is defined in Section 424 of the
Code) or would cause any adverse tax consequences for the holders of such
ISOs. If the Committee determines that such adjustments made with respect
to ISOs would constitute a modification of such ISOs, it may refrain from
making such adjustments.
E. Dissolution or Liquidation. In the event of the proposed dissolution
or liquidation of the Company, each Option will terminate immediately
prior to the consummation of such
<PAGE>
- 8 -
proposed action or at such other time and subject to such other conditions
as shall be determined by the Committee.
F. Issuances of Securities. Except as expressly provided herein, no
issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or
price of shares subject to Options. No adjustments shall be made for
dividends paid in cash or in property other than securities of the
Company.
G. Fractional Shares. No fractional shares shall be issued under the
Plan and the optionee shall receive from the Company cash in lieu of such
fractional shares.
H. Adjustments. Upon the happening of any of the events described in
subparagraphs A, B or C above, the class and aggregate number of shares
set forth in paragraph 4 hereof that are subject to Stock Rights which
previously have been or subsequently may be granted under the Plan shall
also be appropriately adjusted to reflect the events described in such
subparagraphs. The Committee or the Successor Board shall determine the
specific adjustments to be made under this paragraph 13 and, subject to
paragraph 2, its determination shall be conclusive.
If any person or entity owning restricted Common Stock obtained by
exercise of a Stock Right made hereunder receives shares or securities or cash
in connection with a corporate transaction described in subparagraphs A, B or C
above as a result of owning such restricted Common Stock, such shares or
securities or cash shall be subject to all of the conditions and restrictions
applicable to the restricted Common Stock with respect to which such shares or
securities or cash were issued, unless otherwise determined by the Committee or
the Successor Board.
14. Means of Exercising Stock Rights. A Stock Right (or any part or
installment thereof) shall be exercised by giving written notice to the Company
at its principal office address. Such notice shall identify the Stock Right
being exercised and specify the number of shares as to which such Stock Right is
being exercised, accompanied by full payment of the purchase price therefor
either (a) in United States dollars in cash or by check, or (b) at the
discretion of the Committee, through delivery of shares of Common Stock having a
fair market value equal as of the date of the exercise to the cash exercise
price of the Stock Right, (c) at the discretion of the Committee, by delivery of
the grantee's personal recourse note bearing interest payable not less than
annually at no less than 100% of the lowest applicable Federal rate, as defined
in Section 1274(d) of the Code, (d) at the discretion of the Committee and
consistent with applicable law, through the delivery of an assignment to the
Company of a sufficient amount of the proceeds from the sale of the Common Stock
acquired upon exercise of the Stock Right and an authorization to the broker or
selling agent to pay that amount to the Company, which sale shall be at the
participant's direction at the time of exercise, or (e) at the discretion of the
Committee, by any combination of (a), (b), (c) and (d) above. If the Committee
exercises its discretion to permit payment of the exercise price of an ISO by
means of the methods set forth in clauses (b), (c), (d) or (e) of the preceding
sentence, such discretion shall be exercised in writing
<PAGE>
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at the time of the grant of the ISO in question. The holder of a Stock Right
shall not have the rights of a shareholder with respect to the shares covered by
his Stock Right until the date of issuance of a stock certificate to him for
such shares. Except as expressly provided above in paragraph 13 with respect to
changes in capitalization and stock dividends, no adjustment shall be made for
dividends or similar rights for which the record date is before the date such
stock certificate is issued.
15. Term and Amendment of Plan. This Plan was adopted by the Board of
Directors of the Company on August 10, 1992, subject to approval of the Plan by
the stockholders of the Company. The Plan shall expire at the end of the day on
August 9, 2002 (except as to Options outstanding on that date). The Board may
terminate or amend the Plan in any respect at any time, except that, without the
approval of the stockholders obtained within 12 months before or after the Board
adopts a resolution authorizing any of the following actions: (a) the total
number of shares that may be issued under the Plan may not materially be
increased (except by adjustment pursuant to paragraph 13); (b) the benefits
accruing to participants under the Plan may not materially be increased; (c) the
requirements as to eligibility to participate in the Plan may not materially be
modified; (d) the provisions of paragraph 3 regarding eligibility for grants of
ISOs may not be modified; (e) the provisions of paragraph 6(B) regarding the
exercise price at which shares may be offered pursuant to ISOs may not be
modified (except by adjustment pursuant to paragraph 13); and (f) the expiration
date of the Plan may not be extended. Except as otherwise provided in this
paragraph 15, in no event may action of the Board or stockholders alter or
impair the rights of a grantee, without his consent, under any Stock Right
previously granted to him.
16. Conversion of ISOs into Non-Qualified Options; Termination of ISOs.
The Committee, at the written request of any optionee, may in its discretion
take such actions as may be necessary to convert such optionee's ISOs (or any
installments or portions of installments thereof) that have not been exercised
on the date of conversion into Non-Qualified Options at any time prior to the
expiration of such ISOs, regardless of whether the optionee is an employee of
the Company or a Related Corporation at the time of such conversion. Such
actions may include, but shall not be limited to, extending the exercise period
or reducing the exercise price of the appropriate installments of such ISOs. At
the time of such conversion, the Committee (with the consent of the optionee)
may impose such conditions on the exercise of the resulting Non-Qualified
Options as the Committee in its discretion may determine, provided that such
conditions shall not be inconsistent with this Plan. Nothing in the Plan shall
be deemed to give any optionee the right to have such optionee's ISOs converted
into Non-Qualified Options, and no such conversion shall occur until and unless
the Committee takes appropriate action. The Committee, with the consent of the
optionee, may also terminate any portion of any ISO that has not been exercised
at the time of such termination.
17. Application Of Funds. The proceeds received by the Company from the
sale of shares pursuant to Options granted and Purchases authorized under the
Plan shall be used for general corporate purposes.
18. Notice to Company of Disqualifying Disposition. By accepting an ISO
granted under the Plan, each optionee agrees to notify the Company in writing
immediately after he/she
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(or any transferee to whom Section 424(c)(4) of the Code, relating to transfers
to a spouse or former spouse, applies) makes a Disqualifying Disposition, as
described in Sections 421, 422 and 424 of the Code and regulations thereunder,
of any stock acquired under the Plan (or stock or securities received in a
transaction described in Section 424(b) or 424(c)(1)(B) of the Code, relating to
distributions of stock with respect to stock acquired under the Plan and certain
tax-free exchanges of stock acquired under the Plan for other stock or
securities). A Disqualifying Disposition (with certain exceptions) is generally
any disposition within two years of the date the ISO was granted or within one
year of the date the ISO was exercised, whichever period ends later. With
respect to stock or securities held jointly with right of survivorship, a
termination of such joint tenancy may constitute a Disqualifying Disposition.
This paragraph 18 shall be made binding upon the optionee and upon any
transferee of stock or securities described in this paragraph to whom Section
424(c)(4) of the Code applies.
19. Withholding of Additional Income Taxes. Upon the exercise of a
Non-Qualified Option, the grant of an Award, the making of a Purchase of Common
Stock for less than its fair market value, the making of a Disqualifying
Disposition (as defined in paragraph 18), the vesting or transfer of restricted
stock acquired on the exercise of a Stock Right hereunder (or stock or
securities received in a transaction described in Section 424(b) or 424(c)(1)(B)
of the Code), or the making of a distribution or other payment with respect to
such stock or securities, the Company may withhold taxes in respect of amounts
that constitute compensation includible in gross income, whenever the Company
determines that such withholding is required. The Committee in its discretion
may condition (i) the exercise of an Option, (ii) the grant of an Award, (iii)
the making of a Purchase of Common Stock for less than its fair market value, or
(iv) the vesting of restricted Common Stock acquired by exercising a Stock
Right, on the grantee's making satisfactory arrangement for such withholding.
20. Governmental Regulation. The Company's obligation to sell and
deliver shares of the Common Stock under this Plan is subject to the approval of
any governmental authority required in connection with the authorization,
issuance or sale of such shares.
In addition to tax withholding, government regulations may impose
reporting or other obligations on the Company with respect to the Plan. For
example, the Company may be required to send tax information statements to
employees and former employees that exercise ISOs.
21. Compliance with Regulations. It is the Company's intent that the
Plan comply in all respects with Rule 16b-3 and any applicable Securities and
Exchange Commission interpretations thereof. If any provision of this Plan is
deemed not to be in compliance with Rule 16b-3, the provisions shall be null and
void.
22. Governing Law; Construction. The validity and construction of the
Plan and the instruments evidencing Stock Rights shall be governed by the laws
of the Commonwealth of Massachusetts, or the laws of any jurisdiction in which
the Company or its successors in interest may be organized. In construing this
Plan, the singular shall include the plural and the masculine gender shall
include the feminine and neuter, unless the context otherwise requires.
