<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
- --------------------------------------------------------------------------------
I. SCHEDULE 14A INFORMATION
II. Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
Entremed, Inc.
--------------------------------------------------
(Name of Registrant as Specified in Its Charter)
--------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule O-11
(Set forth the amount on which the filing fee is calculated and state how it
was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
--------------------------------------------------------
<PAGE> 2
ENTREMED, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 25, 1998
To the Stockholders:
Notice is hereby given that the Annual Meeting of the Stockholders of
EntreMed, Inc. (the "Company") will be held on June 25, 1998 at 10:00 a.m.
local time at the Gaithersburg Hilton, 620 Perry Parkway, Gaithersburg,
Maryland 20877. The Annual Meeting is called for the following purposes:
1. To elect to the board three directors;
2. To approve an amendment to the Amended and Restated
Certificate of Incorporation of the Company to increase the number of shares of
the Company's Common Stock, par value $.01 per share, authorized for issuance
by the Company from 20 million to 35 million;
3. To approve and ratify an amendment to the Company's Amended
and Restated 1996 Stock Option Plan, increasing from 1,266,667 to 1,750,000 the
number of shares of Common Stock reserved for issuance;
4. To approve and ratify the appointment of Ernst & Young LLP as
the independent auditors of the Company; and
5. To consider and take action upon such other matters as may
properly come before the meeting or any adjournment thereof.
The close of business on May 20, 1998 has been fixed as the record
date for the determination of stockholders entitled to notice of, and to vote
at, the Annual Meeting.
All stockholders are cordially invited to attend the Annual Meeting.
Whether or not you expect to attend, you are respectfully requested by the
Board of Directors to sign, date and return the enclosed proxy promptly.
Stockholders who execute proxies retain the right to revoke them at any time
prior to the voting thereof. A return envelope which requires no postage if
mailed in the United States is enclosed for your convenience.
By Order of the Board of Directors,
John W. Holaday, Ph.D.
Chairman, President and Chief Executive Officer
Dated: May 22, 1998
<PAGE> 3
ENTREMED, INC.
9610 MEDICAL CENTER DRIVE, SUITE 200
ROCKVILLE, MARYLAND 20850
(301) 217-9858
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 25, 1998
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of EntreMed, Inc., a Delaware corporation
(the "Company"), for the Annual Meeting of Stockholders to be held at the
Gaithersburg Hilton, 620 Perry Parkway, Gaithersburg, Maryland 20877 on June
25, 1997, at 10:00 a.m. and for any adjournment or adjournments thereof, for
the purposes set forth in the accompanying Notice of Annual Meeting of
Stockholders. Any stockholder giving such a proxy has the power to revoke it
at any time before it is voted. Written notice of such revocation should be
forwarded directly to the Secretary of the Company at the above stated address.
Attendance at the Annual Meeting will not have the effect of revoking the proxy
unless such written notice is given or the stockholder votes by ballot at the
Annual Meeting.
If the enclosed proxy is properly executed and returned, the shares
represented thereby will be voted in accordance with the directions thereon and
otherwise in accordance with the judgement of the persons designated as
proxies. Any proxy on which no direction is specified will be voted in favor
of the actions described in this Proxy Statement, including the election of the
director nominees set forth under the caption "Election of Directors", the
approval of an amendment to the Company's Amended and Restated Certificate of
Incorporation, the approval and ratification of an amendment to the Amended and
Restated 1996 Stock Option Plan (the "1996 Plan") and the approval and
ratification of the appointment of Ernst & Young LLP as the independent
auditors of the Company.
The approximate date on which this Proxy Statement and the
accompanying form of proxy will first be mailed or given to the Company's
stockholders is May 22, 1998.
Your vote is important. Accordingly, you are urged to sign and return
the accompanying proxy card whether or not you plan to attend the Annual
Meeting. If you do attend, you may vote by ballot at the Annual Meeting,
thereby canceling any proxy previously given.
2
<PAGE> 4
VOTING SECURITIES
Holders of record of shares of Common Stock, par value $.01 per share
(the "Shares"), as of the close of business on May 20, 1998, are entitled to
notice of and to vote at the Annual Meeting on all matters. On the record date
there were issued and outstanding __________ Shares. Each outstanding Share is
entitled to one vote upon all matters to be acted upon at the Annual Meeting.
A majority of the outstanding Shares entitled to vote on any matter and
represented at the Annual Meeting in person or by proxy shall constitute a
quorum.
Abstentions and broker non-votes are counted for purposes of
determining the presence or absence of a quorum for the transaction of
business. If a stockholder, present in person or by proxy, abstains on any
matter, the stockholder's Shares will not be voted on such matter. Thus, an
abstention from voting on any matter has the same legal effect as a vote
"against" the matter, even thought the stockholder may interpret such action
differently. Except for determining the presence or absence of a quorum and
whether the proposed amendment to the Company's Amended and Restated
Certificate of Incorporation has been approved, broker non-votes are not
counted for any purpose in determining whether a matter has been approved.
With respect to the proposed amendment to the Company's Amended and Restated
Certificate of Incorporation, however, broker non-votes will have the effect of
a vote "against" the proposal.
Assuming a quorum is present, (i) the affirmative vote of a plurality
of the Shares so represented and entitled to vote is required to elect the
director nominees, (ii) the affirmative vote of a majority of the outstanding
Shares is required to approve the amendment to the Company's Amended and
Restated Certificate of Incorporation, and (iii) the affirmative vote of a
majority of the Shares so represented and entitled to vote, excluding broker
non-votes, is necessary to ratify the amendment to the Company's Amended and
Restated 1996 Stock Option Plan and to approve and ratify the appointment of
Ernst & Young LLP as the independent auditors of the Company.
3
<PAGE> 5
PRINCIPAL STOCKHOLDERS
The following table sets forth, as of May 7, 1998 (except as otherwise
footnoted below), certain information concerning stock ownership of all persons
known by the Company to own beneficially more than 5% of the Shares, each
director or director nominee, each executive officer named under "Executive
Compensation and Other Matters" and all directors and executive officers of the
Company as a group.
<TABLE>
<CAPTION>
AMONG AND NATURE OF BENEFICIAL PERCENTAGE OF
NAME OF STOCKHOLDER (1) OWNERSHIP (1) OUTSTANDING CLASS
<S> <C> <C>
John W. Holaday, Ph.D. 1,144,734 (2) 9.02 %
Carl R. Alving, M. D. 635,235 (3) 5.13 %
Donald S. Brooks 51,001 (4) *
R. Nelson Campbell 50,000 (5) *
Samuel R. Dunlap, Jr. 410,236 (6) 3.30 %
Jerry Finkelstein 76,500 (7) *
Edward R. Gubish, Ph. D. 150,166 (8) 1.20 %
Lee F. Meier 50,334 (9) *
Mark C. M. Randall 56,667 (10) *
Wendell M. Starke 292,336 (11) 2.36 %
John C. Thomas, Jr. 151,667 (12) 1.22 %
Bristol-Myers Squibb Company 874,999 7.06 %
P. O. Box 4000
Princeton, New Jersey 08543
D. H. Blair Investment Banking Corp. 1,000,000 (13) 8.07 %
44 Wall Street
New York, New York 10005
All executive officers and directors of the 2,433,641 (14) 18.68 %
Company as a group (10 persons)
</TABLE>
- ------------------
*Less than 1%
(footnotes on following page)
4
<PAGE> 6
(1) Beneficial ownership is defined in accordance with the rules of the
Securities and Exchange Commission ("SEC") and generally means the
power to vote and/or to dispose of the securities regardless of any
economic interest therein.
(2) Includes 437,502 shares issuable upon exercise of options and warrants
which are exercisable within 60 days and 126,666 shares held by a
limited partnership of which Dr. Holaday is the general partner. Does
not include 304,167 shares issuable upon exercise of options not
exercisable within 60 days.
(3) Includes 15,002 shares issuable upon exercise of options which are
exercisable within 60 days.
(4) Includes 51,001 shares issuable upon exercise of options which are
exercisable within 60 days.
(5) Consists of 50,000 shares issuable upon exercise of options which are
exercisable within 60 days. Does not include 75,000 shares issuable
upon exercise of options not exercisable within 60 days.
(6) Includes 409,334 shares issuable upon exercise of options and warrants
which are exercisable within 60 days. Does not include 33,334 shares
issuable upon exercise of options not exercisable within 60 days.
(7) Includes 40,000 shares issuable upon exercise of options which are
exercisable within 60 days. Does not include 5,000 shares owned by
various family members of Mr. Finkelstein, as to which Mr. Finkelstein
disclaims beneficial ownership.
(8) Includes 149,166 shares issuable upon exercise of options which are
exercisable within 60 days. Does not include 135,834 shares issuable
upon exercise of options not exercisable within 60 days.
(9) Includes 17,000 shares issuable upon exercise of options which are
exercisable within 60 days and 33,334 shares issuable upon exercise of
warrants which are exercisable within 60 days held by an entity the
general partner of which is an entity in which Mr. Meier serves as
Managing Director.
(10) Includes 56,667 shares issuable upon exercise of options which are
exercisable within 60 days. Does not include 13,334 shares issuable
upon exercise of options not exercisable within 60 days.
(11) Includes 102,551 shares issuable upon exercise of options and warrants
which are exercisable within 60 days. Does not include 40,761 shares
owned by various family members of Mr. Starke, as to which Mr. Starke
disclaims beneficial ownership.
5
<PAGE> 7
(12) Includes 149,835 shares issuable upon exercise of options and warrants
which are exercisable within 60 days. Does not include 56,500 shares
issuable upon exercise of options not exercisable within 60 days.
(13) Based on a Form 13-G filed by Mr. J. Morton Davis and D. H. Blair
Investment Banking Corp. ("Blair") filed on February 3, 1998.
Excludes 21,600 shares held by Mrs. Rosalind Davidowitz, Mr. Davis'
wife, which Mr. Davis disclaims beneficial ownership. Mr. Davis is
deemed to beneficially own the 1,000,000 shares held by D. H. Blair
Investment Banking Corporation.
(14) Includes 1,492,824 shares issuable upon exercise of options and
warrants which are exercisable within 60 days. Does not include
643,169 shares issuable upon exercise of options not exercisable
within 60 days.
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PROPOSAL 1
ELECTION OF DIRECTORS
The Company's Board of Directors is divided into three classes, as
nearly equal in number as reasonably possible, with terms currently expiring at
the Annual Meeting, the annual meeting of stockholders to be held in 1999 and
the annual meeting of stockholders to be held in 2000. At the Annual Meeting,
two directors will be elected by the stockholders to serve a three-year term
and one director will be elected by the stockholders to serve a one year term
to fill the vacancy of Dr. Bart Chernow, whose term was to expire in 1999.
Management recommends that the persons named below be elected as directors of
the Company and it is intended that the accompanying proxy will be voted for
the election as directors of the four persons named below, unless the proxy
contains contrary instructions. The Company has no reason to believe that any
of the nominees will not be a candidate or will be unable to serve. However,
in the event that any of the nominees should become unable or unwilling to
serve as a director, the persons named in the proxy have advised that they will
vote for the election of such person or persons as shall be designated by
management.
The following sets forth the names and ages as of May 20, 1998 of the
three nominees for election to the Board of Directors as well as the Directors
whose terms will continue, their respective principal occupations or employment
during the past five years and the period during which each has served as a
director of the Company.
<TABLE>
<CAPTION>
DIRECTOR PRINCIPAL OCCUPATION AND BUSINESS EXPERIENCE
NOMINEE AGE SINCE DURING THE PAST FIVE YEARS
- ------- --- ----- --------------------------
<S> <C> <C>
NOMINEES FOR TERMS EXPIRING IN 2001
Donald S. Brooks 62 1996 Mr. Brooks has been a director of the Company since April 1996. Since July 1993,
Mr. Brooks has been a practicing attorney with the law firm Carella Byrne Bain
Gilfillan Cecchi Stewart & Olstein, Roseland, New Jersey, which represents the
Company on certain matters. Prior thereto, Mr. Brooks was employed by Merck &
Co., Inc. for 27 years, most recently, from 1986 to 1993, as Senior Counsel. From
1980 to 1985, Mr. Brooks served as a U.S. employer delegate to the Chemical
Industries Committee, International Labor Organization in Geneva, Switzerland
</TABLE>
7
<PAGE> 9
<TABLE>
<S> <C> <C> <C>
Lee F. Meier 50 1997 Mr. Meier has been a director of the Company since July 1997. Mr. Meier has over
twenty years of experience in the equipment financing industry. He has been
affiliated with US Leasing Corporation, The Chemical Bank of New York and Steiner
Financial Corporation, a privately held, tax motivated lessor. Since 1984 Mr.
Meier has served as founder and managing director of Meier Mitchell & Company, an
investment banking firm specializing in providing debt and lease financing
products. Meier Mitchell & Company targets clients in the biotechnology and
electronics industries and has arranged or provided well over $1 billion in
financing to both private and public companies in these sectors.
</TABLE>
NOMINEE AND CONTINUING DIRECTORS FOR TERM EXPIRING 1999
NOMINEE
<TABLE>
<S> <C> <C> <C>
Jerry Finkelstein 82 1998 Mr. Finkelstein has been a director of the Company since April 1998. Mr.
Finkelstein has been a senior advisor to Apollo Advisors, L. P., a fund manager,
since March 1994 and the Chairman of the Board of News Communications, Inc., a
consortium of 23 publications, since August 1993 as well as Chairman of The Hill
Newspaper, a weekly newspaper, since September 1994. Mr. Finkelstein has been
the former publisher of the New York Law Journal, a daily newspaper. He has been
a member of the Boards of Rockefeller Center, Chicago Milwaukee Corporation,
Chicago Milwaukee Railroad Corporation, Bank of North America, Struthers Wells
Corporation, and PATH Railroad. Mr. Finkelstein has also held the following
positions: member of Task Force Committee on the sale of the World Trade Center;
Chairman of the New York City Planning Commission, and Commissioner of the Port
Authority of New York and New Jersey, as well as numerous civic, social and
political appointments.
</TABLE>
8
<PAGE> 10
CONTINUING DIRECTORS
<TABLE>
<S> <C> <C> <C>
Samuel R. Dunlap, Jr. 48 1992 Mr. Dunlap has been a director of the Company since August 1992 and has served as
an Executive Advisor to the Company since August 1992. Mr. Dunlap also has (i)
served as Chairman of Dunlap & Partners, Ltd., a financial consulting firm in
Atlanta, Georgia, since October 1988, (ii) served as a director of Credit Depot
Corporation, of which he was a founder, from December 1986 until 1997, (iii)
served as Vice President of MEDigital, Inc. since August 1996, (iv) from 1992
through 1996 served as a director to First Pacific Networks, Inc., a
publicly-held telecommunications company, (v) served as a director and a
consultant of Golf Training Systems, Inc., a public company, from August 1994
until December 1995 and (vi) served as a director from July 1991 until February
1994 and an Executive Advisor from July 1991 until November 1994 of Tapistron
International, Inc. From April 1986 until December 1988, Mr. Dunlap served as
Executive Vice President and director of CytRx Corporation, a publicly-held
pharmaceutical company of which he was a founder. Mr. Dunlap also served as
Executive Vice President of Elan Pharmaceutical Research Corp., a publicly-held
company, from August 1982 to December 1983 and President and a director of such
entity from January 1984 to January 1985.
Mark C.M. Randall 35 1996 Mr. Randall has been a director of the Company since April 1996. Since 1985, Mr.
Randall has been associated with Sarasin International Securities Limited,
London, England, a wholly-owned subsidiary of Bank Sarasin & Cie, a private bank
based in Switzerland, where he has been Director since 1994.
</TABLE>
CONTINUING DIRECTORS FOR TERM EXPIRING 2000
<TABLE>
<S> <C> <C> <C>
John W. Holaday, Ph.D. 52 1992 Dr. Holaday is a co-founder of the Company and has served as its President and
Chief Executive Officer and a director since August 1992 and its Chairman of the
Board since November 1995. Prior thereto, from May 1989 to August 1992, he was a
</TABLE>
9
<PAGE> 11
<TABLE>
<S> <C> <C> <C>
co-founder of Medicis Pharmaceutical Corp. where he served as Scientific
Director, Senior Vice President for Research and Development and director. Dr.
Holaday also serves as a director for CytImmune Sciences, Inc., a privately held
research diagnostics company. From 1968 to 1989, he served at the Walter Reed
Army Institute of Research, where he founded the Neuropharmacology Branch in
1980. He serves as an officer and fellow in several biomedical societies and has
authored and edited numerous scientific articles in journals and books. His
current academic positions include Associate Professor of Anesthesiology and
Critical Care Medicine and Senior Lecturer in Medicine at The Johns Hopkins
University of Medicine, Baltimore, Maryland; Adjunct Professor of Pharmacology
and Psychiatry at the Uniformed Services University School of Medicine, Bethesda,
Maryland; and Clinical Assistant Professor of Surgery at the University of
Connecticut Health Center, Farmington, Connecticut.
Wendell M. Starke 56 1994 Mr. Starke has been a director of the Company since April 1994. Mr. Starke is a
Chartered Financial Analyst and a Chartered Investment Counselor. Mr. Starke was
President of INVESCO Capital Management, Inc. from 1979 to 1991. In 1992, he
became Chairman of INVESCO, Inc., the parent company of INVESCO Capital
Management and other INVESCO money management subsidiaries in the United States.
Mr. Starke also serves as a member of the Board and as Global Chief Investment
Officer of AMVESCAP, PLC. the London-based parent company of the worldwide
INVESCO organization.
</TABLE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE
NOMINATED DIRECTORS, AND SIGNED PROXIES WHICH ARE RETURNED WILL BE SO VOTED
UNLESS OTHERWISE INSTRUCTED ON THE PROXY CARD.
10
<PAGE> 12
BOARD AND COMMITTEE MEETINGS
The Board of Directors of the Company held three meetings during the
fiscal year ended December 31, 1997 ("fiscal 1997"). Each of the directors
attended at least 75% of the meetings of the Board of Directors and the
committees thereof on which such director served that were held during fiscal
1997.
The Board of Directors has had three standing committees. These are
the Executive Committee, the Audit Committee and the Compensation Committee.
The Executive Committee acts as a liaison between management and the
Board of Directors and is responsible for all matters that arise between
regular meetings of the Board of Directors, to the extent permitted by Delaware
law. The Executive Committee which currently consists of three directors,
Messrs. Holaday, Dunlap and Starke, held six meetings during fiscal 1997 and
took action by unanimous written consent on one occasion.
The Audit Committee reviews, with the Company's independent auditors,
the scope and timing of their audit services and any other services they are
asked to perform, their report on the Company's financial statements following
completion of their audit and the Company's policies and procedures with
respect to internal accounting and financial controls. In addition, the Audit
Committee makes annual recommendations to the Board of Directors for the
appointment of independent public accountants for the ensuing year. The Audit
Committee, which currently consists of two directors, Messrs. Meier and
Randall, held one meeting during fiscal 1997.
The Compensation Committee reviews and recommends to the Board of
Directors the compensation and benefits of all officers of the Company, reviews
general policy matters relating to compensation and benefits of employees of
the Company and administers the Company's stock option plans. The Compensation
Committee, which currently consists of three directors, Messrs. Brooks, Dunlap
and Meier, held one meeting during fiscal 1997 and took action by unanimous
written consent on one occasion.
COMPENSATION OF DIRECTORS
Directors of the Company receive a fee of $2,000 per in-person meeting
attended and are reimbursed for expenses actually incurred in connection with
attending such meetings. Directors are also awarded initial grants of
non-qualified stock options to purchase 15,000 shares of Common Stock upon
joining the Board of Directors and annual grants of non-qualified stock options
to purchase 5,000 shares of Common Stock. In addition, each member of the
Audit Committee and the Compensation Committee will receive annual grants of
non-qualified stock options to purchase 1,000 shares of Common Stock and each
member of the Executive Committee will receive annual grants of non-qualified
stock options to purchase 5,000 shares of Common Stock. All such automatic
grants will be awarded on July 1, 1998.
The Company entered into a three year consulting agreement with Samuel
R. Dunlap, Jr. commencing January 1, 1996 that provides for annual payments of
$90,000. See "Certain Transactions".
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<PAGE> 13
EXECUTIVE COMPENSATION AND OTHER MATTERS
The following summary compensation table sets forth the aggregate
compensation paid or accrued by the Company to the Chief Executive Officer and
to executive officers whose annual compensation exceeded $100,000 for fiscal
1997 (collectively, the "named executive officers") for services during the
fiscal years ended December 31, 1997, 1996 and 1995.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
AWARDS
SECURITIES
ANNUAL UNDERLYING ALL OTHER
SALARY BONUS OPTIONS/SARS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) (NO.) ($)
<S> <C> <C> <C> <C> <C>
John W. Holaday, Ph.D. 1997 275,000 - 260,000 18,883(1)
Chairman, President and Chief 1996 250,000 80,000 105,000 18,221
Executive Officer 1995 200,000 100,000 270,001 18,369
Edward R. Gubish, Ph.D. 1997 165,000 50,000 100,000 6,332(2)
Vice President, Regulatory 1996 140,000 42,000 75,000 5,670
and Clinical Development 1995 126,600 10,750 70,000 5,818
R. Nelson Campbell 1997 133,718 25,000 50,000 1,301(2)
Chief Financial Officer 1996 - - - -
1995 - - - -
Leo Einck, Ph.D. 1997 105,105 - - 6,332(2)
Vice President, 1996 100,100 21,500 20,000 5,670
Extramural Programs 1995 91,000 10,750 10,000 5,818
John C. Thomas, Jr. 1997 120,000 25,000 50,000 -
Secretary/Treasurer 1996 96,880 21,500 38,000 -
1995 48,220 3,170 6,667 5,818
</TABLE>
(1) $12,551 of such amount represents the premiums paid by the Company
with respect to a split-dollar life insurance policy on the life of
Dr. Holaday. Premiums paid by the Company on such policy are treated
as non-interest bearing advances to the insured for the policy. The
initial proceeds of any death benefit are required to be used to repay
the indebtedness, and the balance of the insurance proceeds are
payable as designated by the insured. See "Employment Contracts and
Termination of Employment and Change-in-Control Arrangements". The
remaining amount represents group health insurance premiums paid on
behalf of such officer.
(2) Includes group health insurance premiums paid on behalf of such
officer.
12
<PAGE> 14
The following table sets forth certain information with respect to
individual grants of stock options and warrants made during the fiscal year
ended December 31, 1997 to each of the named executive officers.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
NUMBER OF VALUE AT ASSUMED ANNUAL
SECURITIES % OF TOTAL RATES OF STOCK PRICE
UNDERLYING OPTIONS/SARS APPRECIATION FOR OPTION
OPTIONS/ GRANTED TO EXERCISE OR TERM(1)
SARS EMPLOYEES IN BASE PRICE EXPIRATION
NAME GRANTED FISCAL YEAR ($/SH) DATE 5% ($) 10% ($)
<S> <C> <C> <C> <C> <C> <C>
John W. Holaday, Ph.D. 10,000 1.16% 12.00 07/01/07 195,467 311,249
250,000 29.02% 10.00 11/20/07 4,072,238 6,484,355
Edward R. Gubish, Ph.D. 100,000 11.61% 10.00 11/20/07 1,628,895 2,593,742
R. Nelson Campbell 50,000 5.80% 10.00 11/20/07 814,448 1,296,871
Leo Einck, Ph.D. - - - - - -
John C. Thomas, Jr. 50,000 5.80% 10.00 11/20/07 814,448 1,296,871
</TABLE>
(1) Calculated by multiplying the exercise price by the annual
appreciation rate shown (as prescribed by S.E.C. rules and compounded
for the term of the options), subtracting the exercise price per share
and multiplying the gain per share by the number of shares covered by
the options. These amounts are not intended to forecast possible
future appreciation, if any, of the price of the Company's Shares.
The actual value realized upon exercise of the options to purchase
Company Shares will depend on the fair market value of the Company's
Shares on the date of exercise.
13
<PAGE> 15
The following table sets forth information concerning all option
holdings for the fiscal year ended December 31, 1997 for each of the named
executive officers. None of the named executive officers exercised options
during 1997.
AGGREGATED OPTION AND WARRANT/EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/VALUE
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYINGUNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS
FY-END AT FY-END ($)
NAME EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
<S> <C> <C>
John W. Holaday, Ph.D. 437,502/116,667 2,200,320/350,002
Edward R. Gubish, Ph.D. 149,166/135,834 510,622/244,379
R. Nelson Campbell 50,000/75,000 20,313/60,938
Leo Einck, Ph.D. 70,000/33,334 320,000/122,504
John C. Thomas, Jr. 149,835/56,500 1,031,576/60,938
</TABLE>
(1) Calculated by multiplying the number of unexercised options
outstanding at December 31, 1997 by the difference between the fair
market value of the Company's Shares at December 31, 1997 ($11.625)
and the option exercise price.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND
CHANGE-IN-CONTROL ARRANGEMENTS
In April 1996, effective as of January 1, 1996, the Company entered
into a three-year employment agreement with John W. Holaday, Ph. D., Chairman
and Chief Executive Officer of the Company. The agreement provides for an
annual base salary of $250,000 per year. The Company may terminate the
agreement without cause and, upon such termination, Dr. Holaday will be
entitled to receive his base salary through the end of the initial term of the
agreement (subject to an offset for salary received from subsequent
employment). The agreement contains confidentiality and non-competition
provisions.
The Company maintains a $2,000,000 split-dollar life insurance policy
on the life of Dr. Holaday at an annual cost of approximately $12,551.
Premiums paid by the Company on such policy are treated as non-interest bearing
advances to the insured for the policy. The initial proceeds of any death
benefit are required to be used to repay the indebtedness, and the balance of
the insurance proceeds are payable as designated by the insured.
Each of the Company's employees has entered into a Proprietary
Information and Invention Assignment Agreement providing, among other things,
that such employee will not disclose any confidential information or trade
secrets in any unauthorized manner and that all inventions of such officer
relating to the Company's current or anticipated business during the term of
employment become the Company's property.
In the event of certain transactions, including those which may result
a change in control, as defined under the Company's 1996 Plan, unvested
installments of options to purchase Shares of the Company may become
immediately exercisable.
14
<PAGE> 16
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the 1934 Act requires the Company's executive
officers, directors and persons who beneficially own more than 10% of a
registered class of the Company's equity securities to file with the S.E.C.
initial reports of ownership and reports of changes in ownership of common
stock and other equity securities of the Company. Such executive officers,
directors, and greater than 10% beneficial owners are required by S.E.C.
regulation to furnish the Company with copies of all Section 16(a) forms filed
by such reporting persons.
Based solely on the Company's review of such forms furnished to the
Company and written representation from certain reporting persons, the Company
believes that all filing requirements applicable to the Company's executive
officers, directors and greater than 10% beneficial owners were complied with.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During fiscal 1997, the members of the Compensation Committee were:
Donald S. Brooks, Samuel R. Dunlap, Jr., and Wendell M. Starke.
The Company has in the past maintained a consulting arrangement with
Mr. Dunlap and in January 1996 entered into a new three year consulting
agreement with Mr. Dunlap that provides for annual payments of $90,000.
Donald S. Brooks is of counsel to the law firm Carella Byrne Bain
Gilfillan Cecchi Stewart & Olstein, which provides certain legal services to
the Company.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The goal of the Company's executive compensation policy is to ensure
that an appropriate relationship exists between executive compensation and the
creation of stockholder value, while at the same time attracting, motivating
and retaining senior management. The Compensation Committee's informal
executive compensation philosophy (which applies generally to all Company
management, including the President and Chief Executive Officer, John W.
Holaday, Ph.D.) considers a number of factors, which may include:
- - Providing levels of compensation competitive with companies at a comparable
stage of development and in the Company's geographic are;
- - Integrating management's compensation with the achievement of performance
goals;
- - Rewarding above average corporate performance; and
- - Recognizing and providing incentive for individual initiative and
achievement.
The compensation structure of the Company's executive officers, including
its President and Chief Executive Officer, is based on competitive,
market-based pay practices, performance
15
<PAGE> 17
evaluations and generally includes a combination of base salary, discretionary
bonuses and stock options. In setting compensation levels, the Compensation
Committee considers data regarding compensation practices from a group of
approximately 10 biotechnology and pharmaceutical companies that are believed
to be generally comparable to the Company. The companies comprising this group
are not necessarily included within the peer group index reflected in the
performance graph on page 17.
Base salary is not targeted at any particular level within the group
of companies considered. Instead, base salary is determined based on a
subjective assessment of the executive's performance and the Company's needs.
Cash bonuses are within the discretion of the Compensation Committee
and are based, in part, on achieving certain business and financial objectives
and the Compensation Committee's subjective assessment of individual
performance during the year.
Consistent with its belief that equity ownership by senior management
is beneficial in aligning the interests of senior management with those of the
stockholders', the Company provides potentially significant long-term incentive
opportunities to its senior management through discretionary grants of stock
options, thereby emphasizing the potential creation of long-term stockholder
value. The Compensation Committee considers stock options effective long-term
incentives because an executive can profit only if the value of the Common
Stock increases. In making these grants, the Compensation Committee considers
its subjective assessment of the Company's past financial performance and
future prospects, an executive officer's current level of ownership of the
Common Stock, the period during which an executive officer has been in a key
position with the Company, individual performance and competitive practices
within the comparative group of companies. Dr. Holaday's option grants are
determined based on the same criteria as those applicable to other executive
officers.
Section 162(m) of the Internal Revenue Code generally denies a
deduction to any publicly held corporation for compensation paid to its chief
executive officer and its four other highest-paid executive officers to the
extent that any such individual's compensation exceeds $1 million, subject to
certain exceptions, including one for "performance-based compensation". The
Compensation Committee believes that none of the Company's executive officers
received compensation in 1997, which was nondeductible under Section 162(m) of
the Internal Revenue Code.
16
<PAGE> 18
STOCK PRICE PERFORMANCE PRESENTATION
The following chart compares the cumulative total stockholder return
on the Company's Shares with the cumulative total stockholder return of the
NASDAQ Market - U. S. Index, NASDAQ Pharmaceuticals Index and the Hambrecht &
Quist Biotechnology Index.
In future proxy statements, the Company intends to replace the
Hambrecht & Quist Biotechnology Index with the NASDAQ Pharmaceuticals Index
because the Company believes that the NASDAQ index more accurately reflects the
Company's peer group and is readily accessible by the Company's stockholders.
[CHART]
<TABLE>
<CAPTION>
6/12/96 6/96 9/96 12/96 3/97 6/97 9/97 12/97
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ENTREMED, INC. 100.00 100.00 108.33 108.33 85.00 80.00 66.25 77.50
NASDAQ STOCK MARKET - US 100.00 96.01 99.43 104.32 98.71 116.80 136.56 128.07
NASDAQ PHARMACEUTICALS 100.00 91.00 93.06 90.10 85.71 92.53 103.80 93.27
HAMBRECHT & QUIST BIOTECHNOLOGY 100.00 92.19 98.44 95.81 95.00 97.34 103.65 95.15
</TABLE>
(1) Assumes $100 invested on June 12, 1996 and assumes dividends reinvested.
Measurement points begin with the date of the Company's initial public
offering ("IPO") and include the last day of each quarter beginning with
the month in which the IPO occurred, through and including December 31,
1997. The material in this chart is not soliciting material, is not deemed
filed with the S.E.C. and is not incorporated by reference in any filing of
the Company under the Securities Act of 1993, as amended, (the "1993 Act")
or the 1934 Act, whether made before or after the date of this proxy
statement and irrespective of any general incorporation language in such
filing.
17
<PAGE> 19
CERTAIN TRANSACTIONS
The Company entered into a three year consulting agreement with Samuel
R. Dunlap, Jr. commencing January 1, 1996 that provides for annual payments of
$90,000. In May 1996 effective August 1995, the Company entered into a
termination agreement with Steve Gorlin, a co-founder and former director of
the Company, superceding a previous consulting agreement with Mr. Gorlin, that
provides for annual payments of $90,000 per year for a three year period.
Leon E. Rosenberg, M.D., a director of the Company until March 3,
1998, was the Senior Vice President, Scientific Affairs of Bristol-Myers Squibb
Company. In December 1995, the Company and Bristol-Myers Squibb entered into a
collaboration to develop and commercialize certain antiangiogenesis
therapeutics. Pursuant to this collaboration, Bristol-Myers Squibb paid to the
Company during fiscal 1997 an aggregate of approximately $3,670,000 in research
funding and reimbursements for certain clinical trials and certain research and
development and know-how.
Donald S. Brooks, a director of the Company, is of counsel to the law
firm Carella, Byrne, Bain, Gilfillan, Cecchi, Stewart & Olstein, which
provides certain legal services to the Company.
Wendell M. Starke, a director of the Company, is the Chairman of
INVESCO, Inc. and serves as a member of the Board and Global Chief Investment
Officer of AMVESCAP, the London-based parent company of the worldwide INVESCO
organization
In April 1995, the Company entered into a sale/leaseback transaction
with respect to certain of its equipment with MMC/GATX Partnership No. 1
("MMC/GATX"). The general partner of MMC/GATX is Meier Mitchell & Company, an
entity in which Lee F. Meier, a director nominee, is the founder and Managing
Director. During fiscal 1997, the Company paid lease payments to MMC/GATX in
the amount of approximately $148,000 and in 1997 purchased the leased equipment
for a total of $263,000.
18
<PAGE> 20
PROPOSAL 2
APPROVAL OF AMENDMENT TO INCREASE NUMBER O SHARES OF
COMMON STOCK AUTHORIZED FOR ISSUANCE UNDER THE COMPANY'S
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
The Company's Amended and Restated Certificate of Incorporation (the
"Certificate of Incorporation") currently provides for the authority of the
Company to issue up to 20 million Shares. As of May 20, 1998, the Company had
____________ Shares issued and outstanding and had reserved 2,233,333 Shares
for possible future issuance in connection with the Company's 1992 Stock Option
Plan and the Amended and Restated 1996 Stock Option Plan.
The Board of Directors believes that an increase in the authorized but
unissued Shares is in the best interests of the Company and, therefore, has
adopted a proposed amendment to the Certificate of Incorporation increasing the
number of authorized Shares from 20 million to 35 million. The proposed
amendment would amend the first paragraph and paragraph (A) of the Certificate
of Incorporation to read as follows:
"IV.
The total number of shares of capital stock which the Company
is authorized to issue is Forty Million (40,000,000) divided into two
classes as follows:
(A) Common Stock. Thirty-Five Million (35,000,000)
shares of common stock, $.01 par value per share
("Common Stock"), the holder of which shall be
entitled to ine vote for each share on all
matters required or permitted to be voted on by
stockholders of the Company, and"
The proposed amendment would not affect the terms of the 5,000,000
shares of authorized Preferred Stock.
The additional Shares for which authorization is being sought will
have the same terms and rights as the Shares now authorized. No preemptive
rights would be attached to these Shares. If the proposed amendment is
approved, the additional authorized Shares will be available for issuance for
capital formation, share splits or dividends, franchise expansion, and other
corporate purposes at the discretion of the Board of Directors. Except as may
be required by applicable law or regulation at the time of issuance, the shares
may be issued without further action by the shareholders. The Board of
Directors believes that the proposed increase in the number of authorized
Shares will provide the Company with the flexibility it will need in conducting
its business and in meeting future contingencies.
19
<PAGE> 21
Currently there are no commitments to issue any of the additional
Shares to be authorized by the proposed amendment. Issuance of such Shares or
other authorized but unissued Shares, under certain circumstances, could
discourage or make more difficult an attempt to gain control of the Company.
The Board of Directors presently has no intention of issuing authorized but
unissued Shares for that purpose and knows of no ongoing attempt to gain
control of the Company.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSED AMENDMENT TO
THE CERTIFICATE OF INCORPORATION INCREASING THE NUMBER OF AUTHORIZED SHARES OF
COMMON STOCK.
PROPOSAL 3
APPROVAL AND RATIFICATION OF THE
AMENDMENT TO THE AMENDED AND RESTATED 1996 STOCK OPTION PLAN
In April 1998, the Board of Directors of the Company adopted an
amendment to the Company's Amended and Restated 1996 Stock Option Plan (the
"1996 Plan"), which increases the authorized number of Shares available for
option grants pursuant to the 1996 Plan from 1,266,667 to 1,750,000 (the "1996
Plan Amendment"). The Board of Directors is requesting and recommends to the
stockholders ratification and approval of the 1996 Plan Amendment to ensure
that an adequate supply of authorized unissued Shares is reserved for issuance
of option grants to attract and retain executive personnel, key employees,
directors, consultants and advisors and to provide additional incentive by
permitting certain individuals to participate in the ownership of the Company.
The 1996 Plan, as amended, provides for the grant by the Company of
options to purchase up to an aggregate of 1,750,000 shares of the Company's
authorized but unissued Common Stock (in each case subject to adjustment in
certain cases including stock splits, recapitalizations and reorganizations) to
officers, directors, employees, consultants and independent contractors of the
Company. The purposes of the 1996 Plan are to ensure the retention of
existing executive personnel, key employees, directors and consultants and to
provide additional incentive to all such persons by permitting them to
participate in the ownership of the Company. The 1996 Plan terminates in April
2006.
The 1996 Plan is administered by the Board of Directors or a committee
of the Board of Directors. Options granted under the 1996 Plan may be either
incentive options or non-qualified options. Incentive options granted under
the 1996 Plan are exercisable for a period of up to 10 years from the date of
grant at an exercise price which is not less than the fair market value of the
Common Stock on the date of the grant, exept that the term of an incentive
option granted under the 1996 Plan to a stockholder owning more than 10% of the
outstanding voting power may not exceed five years and its exercise price may
not be less than 110% of the fair market value of the Common Stock on the date
of the grant. To the extent that the aggregate fair market value, as of the
date of grant, of the shares for which incentive options become exercisable for
the first time by an optionee during the calendar year exceeds $100,000, the
portion of such option which is in
20
<PAGE> 22
excess of the $100,000 limitation will be treated as a non-qualified option.
Additionally, the aggregate number of shares of Common Stock that may be
subject to options granted to any person in a calendar year shall not exceed
25% of the maximum number of shares of Common Stock which may be issued from
time to time under the 1996 Plan. Options granted under the 1996 Plan to
officers, directors or employees of the Company generally may be exercised only
while the optionee is employed or retained by the Company or within 90 days of
the date of termination of the employment relationship or directorship.
However, options which are exercisable at the time of termination by reason of
death or permanent disability of the optionee may be exercised within 12 months
of the date of termination of the employment relationship or directorship.
Upon the exercise of an option, payment may be made by cash or by any other
means that the Board of Directors or the committee determines.
Options may be granted only to such employees, officers and directors
of, and consultants and advisors to, the Company or any subsidiary of the
Company as the Board of Directors or the committee shall select from time to
time in its sole discretion, provided that only employees of the Company or a
subsidiary of the Company shall be eligible to receive incentive options. As
of April 30, 1998, the number of employees, officers and directors of the
Company eligible to receive grants under the 1996 Plan was approximately 51
persons. The number of consultants and advisors to the Company eligible to
receive grants under the 1996 Plan is not determinable. An optionee may be
granted more than one option under the 1996 Plan. The Board of Directors or
the committee will, in its discretion, determine (subject to the terms of the
1996 Plan) who will be granted options, the time or times at which options
shall be granted, the number of shares subject to each option and whether the
options are incentive options or non-qualified options. In making such
determination, consideration may be given to the value of the services rendered
by the respective individuals, their present and potential contributions to the
success of the Company and its subsidiaries and such other factors deemed
relevant in accomplishing the purposes of the 1996 Plan.
An optionee will not recognize income on the grant or exercise of an
incentive option. However, the difference between the exercise price and the
fair market value of the stock on the date of exercise is an adjustment item
for purposes of the alternative minimum tax. If an optionee does not exercise
an incentive stock option within certain specified periods after termination of
employment, the option will recognize ordinary income on the exercise of an
incentive stock option in the same manner as on the exercise of a nonstatutory
stock option, as described below.
The general rule is that gain or loss from the sale or exchange of
shares acquired on the exercise of an incentive option will be treated as
capital gain or loss. If certain holding period requirements are not
satisfied, however, the optionee generally will recognize ordinary income at
the time of disposition. Gain recognized on the disposition in excess of the
ordinary income resulting therefrom will be capital gain, and any loss
recognized will be capital loss. If an optionee recognizes ordinary income on
exercise of an incentive option or as a result of a disposition of the shares
acquired on exercise, the Company will be entitled to a deduction in the same
amount.
21
<PAGE> 23
An optionee will not recognize income at the time of grant of a
non-qualified option. At the time of a non-qualified option, an optionee will
recognize ordinary income equal to the excess of the fair market value of the
shares at the time of exercise over the aggregate exercise price paid for the
shares, regardless of whether the exercise price is paid in cash, in stock, or
in part with a note. The Company will be entitled to a deduction in the amount
of ordinary income so recognized.
The rules governing the tax treatment of options and the receipt of
shares in connection with such grants are quite technical, so that the above
description of tax consequences is necessarily genteral in nature and does not
purport to be complete. Moreover, statutory provisions are subject to change,
as are their interpretations, and their application may vary in individual
circumstances. Finally, the tax consequences under applicable state law may
not be the same as under the federal income tax laws.
In October 1995, the Financial Accounting Standards Board (FASB)
issued FASB Statement No. 123 "Accounting for Stock-Based Compensation" ("FAS
No. 123"). This statement defines a fair value based method of measuring and
recording compensation cost associated with employee stock compensation plans.
Under the fair value based method, compensation cost is measured at the grant
date based on the value of the award and is recognized in income over the
service periods. FAS No. 123 encourages adoption of this method of accounting;
however, it also allows an entity to continue to measure compensation cost
using the method of accounting prescribed by APB Opinion No. 25, "Accounting
for Stock Issued to Employees" ("APB No. 25"). Entities electing to continue
using the accounting method in APB No. 25, as the Company has elected, must
make pro forma disclosures of net income and earnings per share as if the fair
value based method prescribed under FAS No. 123 had been applied.
Under APB No. 25, as applied by the Company, neither the grant nor the
exercise of an incentive stock option or a nonstatutory stock option under the
1997 Plan with an exercise price not less than the fair market value of Common
Stock at the date of grant requires a charge against earnings.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE AMENDMENT
TO THE 1996 PLAN, AND SIGNED PROXIES WHICH ARE RETURNED WILL BE SO VOTED UNLESS
OTHERWISE INSTRUCTED ON THE PROXY CARD.
22
<PAGE> 24
PROPOSAL 4
APPROVAL AND RATIFICATION OF THE
APPOINTMENT OF INDEPENDENT AUDITORS
The Management of the Company recommends a vote for the approval and
ratification of the appointment of Ernst & Young LLP, Certified Public
Accountants, as the Company's independent auditors for the fiscal year ending
December 31, 1998. Ernst & Young LLP have been the Company's auditors for the
past fiscal year and has no direct or indirect financial interest in the
Company. A representative of Ernst & Young LLP is expected to be present at
the Annual Meeting of Stockholders with the opportunity to make a statement if
he or she desires to do so, and shall be available to respond to appropriate
questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF THE
APPOINTMENT OF ERNST & YOUNG LLP AND FOR THE ADOPTION OF PROPOSAL 4.
GENERAL
The Management of the Company does not know of any matters other than
those stated in this Proxy Statement which are to be presented for action at
the meeting. If any other matters should properly come before the meeting, it
is intended that proxies in the accompanying form will be voted on any such
other matters in accordance with the judgment of the persons voting such
proxies. Discretionary authority to vote on such matters is conferred by such
proxies upon the persons voting them.
The Company will bear the cost of preparing, printing assembling, and
mailing the proxy, Proxy Statement and other material which may be sent to
stockholders in connection with this solicitation. It is contemplated that
brokerage houses will forward the proxy materials to beneficial owners at the
request of the Company. In addition to the solicitation of proxies by use of
the mails, officers and regular employees of the Company may solicit by
telephone proxies without additional compensation. The Company does not expect
to pay any compensation for the solicitation of proxies.
The Company will provide without charge to each person being solicited
by the Proxy Statement, on the written request of any such person, a copy of
the Annual Report of the company on Form 10-K for the fiscal year ended
December 31, 1997 (as filed with the S.E.C.) including the financial statements
thereto. All such requests should be directed to the Secretary of the Company,
John C. Thomas, Jr., EntreMed, Inc., 9610 Medical Center Drive, Suite 200,
Rockville, Maryland 20850.
23
<PAGE> 25
STOCKHOLDER PROPOSALS
The Annual Meeting of Stockholders for the fiscal year ending December
31, 1998 is expected to be held in June 1999. All proposals intended to be
presented at the Company's next Annual Meeting of Stockholders must be received
at the Company's executive office not later than January 31, 1999, for
inclusion in the Proxy Statement and form of proxy related to that meeting.
By Order of the Board of Directors,
John W. Holaday, Ph. D.
Chairman, President and Chief Executive Officer
Dated: May 22, 1998
24
<PAGE> 26
PRELIMINARY PROXY
ENTREMED, INC.
ANNUAL MEETING OF STOCKHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints John W. Holaday, Ph.D. and ______ , and
each of them, as proxy (each of whom shall have full power of substitution) to
represent the undersigned at the Annual Meeting of Stockholders to be held at
the Gaithersburg Hilton, 620 Perry Parkway, Gaithersburg, Maryland 20877 on
June 25, 1998 at 10:00 a.m. and at any adjournment thereof, and to vote the
shares of common stock the undersigned would be entitled to vote if personally
present, as indicated below.
1. Election of Directors.
FOR all nominees listed below [ ] WITHHOLD AUTHORITY [ ]
(except as marked to the contrary below) to vote for all nominees
listed below
Donald S. Brooks, Lee F. Meier, and Jerry Finkelstein
(INSTRUCTION: To withhold authority to vote for any individual nominee, print
that nominee's name on the line provided below.)
- --------------------------------------------------------------------------------
2. Approval of an amendment to Article IV of the Amended and Restated
Certificate of Incorporation of the Company to increase the number of shares
of the Company's common stock, par value $.01 per share, authorized for
issuance by the Company from 20 million to 35 million.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. Approval of an amendment to the Company's Amended and Restated 1996 Stock
Option Plan to increase the number of shares of Common Stock reserved for
issuance thereunder from 1,266,667 to 1,750,000.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
4. Approval and ratification of the appointment of Ernst & Young L.L.P. as
independent auditors for the Company.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
5. In their discretion upon such other business as may properly come before the
meeting.
<PAGE> 27
THE SHARES OF COMMON STOCK REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED.
IF NO CONTRARY INSTRUCTION IS GIVEN, THE SHARES OF COMMON STOCK WILL BE VOTED
FOR THE ELECTION OF THE DIRECTOR NOMINEES, FOR THE AMENDMENT TO THE AMENDED AND
RESTATED CERTIFICATE OF INCORPORATION, FOR THE AMENDMENT TO THE 1996 STOCK
OPTION PLAN AND FOR THE APPROVAL AND RATIFICATION OF THE APPOINTMENT OF ERNST &
YOUNG LLP AS THE INDEPENDENT AUDITORS OF THE COMPANY.
DATED:____________________________, 1998
----------------------------------
Signature
----------------------------------
Signature if held jointly.
(Please date, sign as name appears at the left, and return
promptly. If the Shares are registered in the names of two
or more persons, each should sign. When signing as
Corporate Officer, Partner, Executor, Administrator,
Trustee or Guardian, please give full title. Please note
any changes in your address alongside the address as it
appears in the proxy.)
