<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
<TABLE>
<S> <C>
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 Section240.14a-11(c) or
Section240.14a-12
ENERGY BIOSYSTEMS CORPORATION
-----------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
-----------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
</TABLE>
Payment of Filing Fee (Check the appropriate box):
<TABLE>
<S> <C> <C>
/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:
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(2) Aggregate number of securities to which transaction
applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(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:
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</TABLE>
<PAGE>
ENERGY BIOSYSTEMS CORPORATION
4200 RESEARCH FOREST DRIVE
THE WOODLANDS, TEXAS 77381
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 8, 2000
------------------------
The Annual Meeting of the Stockholders of Energy BioSystems Corporation, a
Delaware corporation (the "Company"), will be held at the Company's offices,
4200 Research Forest Drive, The Woodlands, Texas, on June 8, 2000 at
10:00 a.m., local time, for the following purposes:
1. To elect nine directors to serve until the annual stockholders'
meeting in 2001 or until their successors have been elected and qualified;
2. To act upon a proposal to amend the corporation's Amended and
Restated Certificate of Incorporation to change the name of the corporation
from Energy BioSystems Corporation to Enchira Biotechnology Corporation.
3. To ratify and approve the appointment of Arthur Andersen LLP as the
Company's independent public accountants for the 2000 fiscal year; and
4. To act upon such other business as may properly come before the
meeting or any adjournments thereof.
Only stockholders of record at the close of business on April 21, 2000 are
entitled to receive notice of, and to vote at, the meeting.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE ANNUAL MEETING OF
STOCKHOLDERS REGARDLESS OF THE SIZE OF YOUR HOLDINGS OR WHETHER YOU PLAN TO
ATTEND THE MEETING. THEREFORE, PLEASE MARK, SIGN, DATE, AND RETURN THE ENCLOSED
PROXY CARD PROMPTLY. IF YOU ARE PRESENT AT THE MEETING, AND WISH TO DO SO, YOU
MAY REVOKE THE PROXY AND VOTE IN PERSON.
By Order of the Board of Directors
Paul G. Brown, III
SECRETARY
May 1, 2000
The Woodlands, Texas
<PAGE>
ENERGY BIOSYSTEMS CORPORATION
4200 RESEARCH FOREST DRIVE
THE WOODLANDS, TEXAS 77381
------------------------
PROXY STATEMENT
---------------------
SOLICITATION AND REVOCABILITY OF PROXIES
The accompanying proxy is solicited by the Board of Directors of Energy
BioSystems Corporation (the "Company") for use at the 2000 Annual Meeting of
Stockholders to be held on June 8, 2000 and at any adjournments thereof (the
"Annual Meeting"). The Annual Meeting will be held at 10:00 a.m., local time, at
the Company's principal executive offices, 4200 Research Forest Drive, The
Woodlands, Texas. If the accompanying proxy is properly executed and returned,
the shares it represents will be voted at the Annual Meeting in accordance with
the directions noted thereon or, if no direction is indicated, it will be voted
in favor of the proposals described in this Proxy Statement. In addition, the
proxy confers discretionary authority to the persons named in the proxy
authorizing those persons to vote, in their discretion, on any other matters
properly presented at the Annual Meeting. The Board of Directors is not
currently aware of any such other matters.
Each stockholder of the Company has the unconditional right to revoke his
proxy at any time prior to its exercise, either in person at the Annual Meeting
or by written notice to the Company addressed to Secretary, Energy BioSystems
Corporation, 4200 Research Forest Drive, The Woodlands, Texas 77381. No
revocation by written notice will be effective unless such notice has been
received by the Secretary of the Company prior to the day of the Annual Meeting
or by the inspector of election at the Annual Meeting.
The principal executive offices of the Company are located at 4200 Research
Forest Drive, The Woodlands, Texas 77381. This Proxy Statement and the
accompanying Notice of Annual Meeting of Stockholders and proxy are being mailed
to the Company's stockholders on or about May 1, 2000.
<PAGE>
QUORUM AND VOTING
The number of voting securities of the Company outstanding on April 21,
2000, the record date for the determination of stockholders of the Company
entitled to receive notice of, and to vote at, the Annual Meeting was
(i) shares of common stock, par value $0.01 per share (the "Common
Stock"), each share being entitled to one vote, and (ii) shares of
Series B Convertible Preferred Stock, par value $0.01 per share (the "Preferred
Stock"). Shares of Preferred Stock have voting rights on all matters subject to
a vote of the holders of Common Stock on an as-converted basis. As of the record
date, the shares of Preferred Stock are entitled to an aggregate of votes
upon each of the matters to be voted on at the Annual Meeting. The total number
of votes that may be cast at the Annual Meeting is .
The presence, either in person or by proxy, of holders of a majority of the
outstanding shares of Common Stock is necessary to constitute a quorum at the
Annual Meeting. Abstentions and broker non-votes which are properly executed and
received by the Company prior to or at the Annual Meeting are counted for
purposes of determining whether a quorum is present. A plurality vote is
required for the election of directors. Accordingly, if a quorum is present at
the Annual Meeting, the nine persons receiving the greatest number of votes will
be elected to serve as directors. Withholding authority to vote for a director
nominee and broker non-votes in the election of directors will not affect the
outcome of the election of directors. All other matters to be voted on will be
decided by the vote of the holders of a majority of the shares present or
represented at the Annual Meeting and entitled to vote on such matter. On any
such matter, an abstention will have the same effect as a negative vote but,
because shares held by brokers will not be considered entitled to vote on
matters as to which the brokers withhold authority, a broker non-vote will have
no effect on such vote.
All proxies that are properly completed, signed and returned prior to the
Annual Meeting will be voted. Any proxy given by a stockholder may be revoked at
any time before it is exercised if the stockholder either (i) files with the
Secretary of the Company an instrument revoking it, (ii) executes and returns a
proxy bearing a later date or (iii) attends the Annual Meeting and expresses a
desire to vote his shares of Common Stock in person. Votes will be counted by
Harris Trust & Savings Bank, the Company's transfer agent and registrar.
2
<PAGE>
PROPOSAL NUMBER 1:
ELECTION OF DIRECTORS
The Board of Directors has nominated and urges you to vote for the election
of the nine nominees identified below who have been nominated to serve as
directors until the next annual meeting of stockholders or until their
successors are duly elected and qualified. Each of the nominees listed below is
a member of the Company's present Board of Directors. Proxies solicited hereby
will be voted for all nine nominees unless stockholders specify otherwise in
their proxies.
If, at the time of or prior to the Annual Meeting, any of the nominees
should be unable or decline to serve, the discretionary authority provided in
the proxy may be used to vote for a substitute or substitutes designated by the
Board of Directors. The Board of Directors has no reason to believe that any
substitute nominee or nominees will be required.
NOMINEES FOR DIRECTOR
The nine nominees for election as directors and certain additional
information with respect to each of them, are as follows:
<TABLE>
<CAPTION>
YEAR FIRST
NAME AGE POSITION WITH THE COMPANY BECAME A DIRECTOR
- ---- -------- ----------------------------------- -----------------
<S> <C> <C> <C>
William E. Nasser......................... 60 Chairman of the Board 1992
R. James Comeaux.......................... 62 Director 1997
Ramon Lopez............................... 66 Director 1994
Edward B. Lurier.......................... 69 Director 1991
Thomas E. Messmore, CFA................... 54 Director 1992
Daniel J. Monticello, Ph.D................ 44 Director and Vice President, 1994
Research and Development
John S. Patton............................ 65 Director 1997
Peter P. Policastro, Ph.D................. 46 Director, Chief Executive Officer 1999
and President
William D. Young.......................... 55 Director 1994
</TABLE>
WILLIAM E. NASSER. Mr. Nasser has served as Chairman of the Board since
April 1998 and has been a Director since January 1992. Mr. Nasser served as
President and Chief Executive Officer from April 1998 to June 1999. Mr. Nasser
formerly served as Chairman of the Board, President and Chief Executive Officer
of Petrolite Corporation from 1992 to 1995 and as President of Petrolite from
1988 to 1992. He retired in November 1995 after over 30 years of service.
Mr. Nasser currently is a director of Laclede Gas Company. He holds a B.S.
degree in Chemical Engineering from the University of Notre Dame and an M.S.
degree from the University of Oklahoma.
R. JAMES COMEAUX. Mr. Comeaux has been a Director since April 1997.
Mr. Comeaux has been President of Petrochemical Management Incorporated since
1993. From 1989 to 1993, Mr. Comeaux served as President and Chief Executive
Officer of Arcadian Corporation. He served as Senior Vice President of
Fina, Inc. from 1984 to 1989. Prior to joining Fina, Mr. Comeaux spent 17 years
at Gulf Oil Corporation. Mr. Comeaux is a director of Ivex Packaging
Corporation. Mr. Comeaux received a B.S. degree in Chemical Engineering from
Lamar University.
RAMON LOPEZ. Mr. Lopez has been a Director since 1994 and served as
Chairman of the Board of Directors from April 1997 until April 1998. Mr. Lopez
served as Vice President--Safety, Environment and Technology of Shell Oil
Company from October 1992 until his retirement in October 1993. He started his
career with Shell in 1955 and held senior responsibilities in all areas of
petroleum refining and marketing, including positions as Vice President of
Manufacturing and Technical and General Manager of the
3
<PAGE>
Western and Eastern Regions for Refining and Marketing. Mr. Lopez holds a B.S.
degree in Chemical Engineering from the University of Florida.
EDWARD B. LURIER. Mr. Lurier has been a Director since 1991. Since 1984,
Mr. Lurier has been a general partner of Gryphon Management Company, Inc. and
general partner of Gryphon Financial Partners II, a venture capital firm which
he co-founded. Gryphon Financial Partners II is the general partner of Gryphon
Ventures II, Limited Partnership, a limited partnership of which Ethyl
Corporation is the sole limited partner. Mr. Lurier is a director of IGEN
International Inc.
THOMAS E. MESSMORE, CFA. Mr. Messmore has been a Director since 1992.
Mr. Messmore has been Managing Director of Zurich Centre Resources, Ltd., a
subsidiary of Zurich Insurance Group, since 1997 and currently serves as a
member of the Executive Staff with their parent company Zurich Insurance in
Zurich, Switzerland. Previously, Mr. Messmore served as President and Chief
Executive Officer of UBS Asset Management (New York), Inc. from 1995 until
October 1996. Mr. Messmore served as Senior Vice President of The Travelers
Insurance Company from 1984 until his resignation in January 1994. Prior
thereto, he served as Senior Vice President and Chief Financial Officer of the
Keystone Massachusetts Group, an affiliate of The Travelers Insurance Company.
Mr. Messmore received a B.S. degree in Engineering from West Virginia University
and an M.B.A. from Harvard Business School.
DANIEL J. MONTICELLO, PH.D. Dr. Monticello was the Company's first
employee. He joined the Company in July 1990 as Vice President, Research and
Development and became a Director in 1994. From 1983 to 1990, Dr. Monticello was
employed by Miles Laboratories where he served in various capacities in the
Biotechnology Products Division, including Manager of Biochemistry Research.
Dr. Monticello earned his B.S. degree from the University of Michigan and his
M.S. and Ph.D. in Microbiology from Michigan State University. His post-doctoral
research at the University of Georgia from 1982 to 1984 concerned the microbial
desulfurization of fossil fuels.
JOHN S. PATTON. Mr. Patton has been a Director since January 1997. Since
1997, he has been the Director of Strategic Planning for Ethyl Corporation. He
served as the Director of Investor Relations for Ethyl Corporation from 1989
through 1997. Mr. Patton also serves as chairman of Ethyl Ventures, Inc., a
wholly-owned subsidiary of Ethyl Corporation which invests in early-stage
development companies. Mr. Patton has served in various positions at Ethyl
Corporation since 1974. Mr. Patton joined Sterling Seal Co. in 1957, where he
served in various positions until Sterling Seal was acquired by VCA Corporation
in 1972 and Ethyl Corporation in 1974. Mr. Patton currently is a regional
director of Mellon Bank Corporation. He received a B.A. degree in Economics from
Denison University and an M.B.A. from the University of Richmond.
PETER P. POLICASTRO, PH.D. Mr. Policastro joined the Company in
January 1999 as Executive Vice President and Chief Operating Officer, and was
elected Chief Executive Officer, President and a director in July 1999. Prior to
joining the Company, Mr. Policastro was Senior Vice President Research and
Development in the Melamine Resins and Derivatives Unit, a division of Borden
Chemical, Inc. From 1995 to 1998, Mr. Policastro was Senior Vice President of
Plastics Manufacturing Company, a division of Sun Coast Industries, Inc. From
1992 to 1995, Mr. Policastro was Chief Executive Officer and Founder of
Med-Genesis, Inc., a biomedical company engaged in the development, manufacture,
marketing and sales of surgical products. From 1989 to 1992, Mr. Policastro was
President of OctaNova Laboratories corporation. Mr. Policastro received his A.B.
degree in Chemistry from Duke University in 1976 and his Ph.D. in Organic
Chemistry from the Massachusetts Institute of Technology in 1983.
WILLIAM D. YOUNG. Mr. Young has been a Director since 1994. Mr. Young has
been Chief Executive Officer and Chairman of ViroLogic, Inc. since
October 1999. Mr. Young was Chief Operating Officer of Genentech, Inc. from
March 1997 to October 1999, with responsibility for overseeing
Genentech, Inc.'s operations, business development and sales and marketing.
Prior to joining Genentech, Inc. in 1980, Mr. Young spent 14 years with Eli
Lilly and Company. He received his B.S. degree in Chemical
4
<PAGE>
Engineering from Purdue University and an M.B.A. from Indiana University.
Mr. Young is also a Director of IDEC Pharmaceuticals, Inc. and is a member of
the National Academy of Engineering.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE ELECTION
OF EACH OF THE ABOVE-NAMED NOMINEES.
All directors hold office until the next annual meeting of the stockholders
of the Company or until their successors have been duly elected and qualified.
The Company's officers are elected annually by, and serve at the pleasure of,
the Board of Directors, subject to the terms of any employment agreements.
The Company's Certificate of Incorporation and Bylaws provide that the
number of directors on the Board shall be fixed from time to time by the Board
of Directors but shall not be less than three nor more than fifteen persons. The
Board in its discretion and in accordance with such authority has currently
fixed its size at nine members. No proxy will be voted for a greater number of
persons than the number of nominees named herein.
DIRECTORS' MEETINGS AND COMPENSATION
During 1999, the Board of Directors met eight times and took certain
additional actions by unanimous written consent in lieu of meetings. During
1999, no director of the Company attended fewer than 75 percent of the meetings
of the Board of Directors.
Members of the Board of Directors are reimbursed for out-of-pocket expenses
incurred in attending meetings of the Board of Directors and its committees.
During 1999, each of Messrs. Comeaux, Lopez, Nasser (except while he was
President and Chief Executive Officer) and Young received $1,000 for each board
meeting attended and Messrs. Comeaux, Lopez and Nasser (except while he was
President and Chief Executive Officer) received $500 for each committee meeting
attended. Directors who are employees of the Company do not receive any
additional compensation for their services as a director.
Under the Company's Non-Employee Director Option Plan, each nonemployee
director receives annually on July 1 an automatic annual grant of non-qualified
options to purchase 4,000 shares of Common Stock at an exercise price per share
equal to the fair market value per share of Common Stock on the date the option
is granted.
BOARD COMMITTEES
The Company's Board of Directors has an Executive Committee, an Audit
Committee and a Compensation Committee. The Board of Directors does not have a
Nominating Committee. The Executive Committee exercises all the powers of the
Board in the management of the business and affairs of the Company, except as
limited by Delaware law, when the Board is not in session. The current members
of the Executive Committee are Messrs. Comeaux, Lopez, Lurier and Nasser. The
Audit Committee's functions include making recommendations concerning the
engagement of independent public accountants, reviewing with the independent
public accountants the plan and results of the auditing engagement, approving
professional services provided by the independent public accountants, and
reviewing the adequacy of the Company's internal accounting controls. The
current members of the Audit Committee are Messrs. Lopez, Lurier and Messmore.
The Compensation Committee makes recommendations concerning compensation,
including incentive arrangements, for the Company's officers. The Compensation
Committee also administers the Company's Stock Compensation Plan. The current
members of the Compensation Committee are Messrs. Comeaux, Lopez, Lurier and
Messmore.
During 1999, the Executive Committee met four times, the Audit Committee did
not meet and the Compensation Committee met one time and took certain additional
actions by unanimous written consent in lieu of meetings. During 1999, no
director of the Company attended fewer than 75 percent of the number of meetings
of committees on which he served.
5
<PAGE>
EXECUTIVE COMPENSATION
EXECUTIVE OFFICERS
Set forth below is certain information concerning the executive officers of
the Company, including the business experience of each during the past five
years.
<TABLE>
<CAPTION>
NAME AGE POSITION WITH THE COMPANY
- ---- -------- ------------------------------------------------
<S> <C> <C>
William E. Nasser............................ 60 Chairman of the Board
Peter P. Policastro, Ph.D.................... 46 President and Chief Executive Officer
Daniel J. Monticello, Ph.D................... 44 Vice President, Research and Development
Paul G. Brown, III........................... 39 Vice President, Finance and Administration and
Chief Financial Officer
</TABLE>
Information regarding the business experience of Mr. Nasser, Dr. Policastro
and Dr. Monticello is set forth above under the heading "Proposal Number 1:
Election of Directors--Nominees for Director."
PAUL G. BROWN, III. Mr. Brown has served as Vice President, Finance and
Administration of the Company since September 1993 and Chief Financial Officer
since September 1997. From February 1992 to September 1993, he served as
Corporate Controller of the Company. Mr. Brown spent 10 years with Arthur
Andersen & Co. from 1982 to 1992, serving most recently as a Tax Manager.
Mr. Brown earned his B.S. degree in Accounting from the University of New
Orleans.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
The Compensation Committee (the "Committee") of the Board of Directors of
the Company currently consists of R. James Comeaux, Ramon Lopez, Edward B.
Lurier and Thomas E. Messmore, none of whom are officers or employees of the
Company. The Committee is responsible for evaluating the performance of
management, determining the compensation for certain executive officers of the
Company and administering the Company's stock plans under which grants of stock
options and restricted stock may be made to employees of the Company. The
Committee has furnished the following report on executive compensation for 1999:
Under the supervision of the Committee, the Company has developed a
compensation policy which is designed to attract and retain key executives
responsible for the success of the Company and motivate management to enhance
long-term stockholder value. The annual compensation package for executive
officers primarily consists of (i) a cash salary which reflects the
responsibilities relating to the position and individual performance,
(ii) variable performance awards payable in cash or stock and tied to the
achievement of certain personal or corporate goals or milestones and
(iii) long-term stock based incentive awards which strengthen the mutuality of
interests between the executive officers and the Company's stockholders.
In determining the level and composition of compensation of each of the
Company's executive officers, the Committee takes into account various
qualitative and quantitative indicators of corporate and individual performance.
Although no specific target has been established, the Committee generally seeks
to set salaries at the median to high end of the range in comparison with peer
group companies. In setting such salaries, the Committee considers its peer
group to be certain companies in the biotechnology industry with market
capitalizations under one billion dollars. Such competitive group does not
necessarily include the companies comprising the Peer Group Index reflected in
the performance graph in this Proxy Statement. Because the Company is still in
the development stage, the use of certain traditional performance standards
(E.G., profitability and return on equity) is not currently appropriate in
evaluating the performance of the Company's executive officers. Consequently, in
evaluating the performance of management the Committee takes into consideration
such factors as the Company's achieving specified milestones
6
<PAGE>
or goals under various research or development programs. In addition, the
Committee recognizes performance and achievements that are more difficult to
quantify, such as the successful supervision of major corporate projects,
demonstrated leadership ability, and contributions to the industry and community
development.
Base compensation is established through negotiation between the Company and
the executive officer at the time the executive is hired, and then subsequently
adjusted when such officer's base compensation is subject to review or
reconsideration. While the Company has entered into employment agreements with
certain of its executive officers, such agreements provide that base salaries
after the initial year will be determined by the Committee after review. When
establishing or reviewing base compensation levels for each executive officer,
the Committee, in accordance with its general compensation policy, considers
numerous factors, including the responsibilities relating to the position, the
qualifications of the executive and the relevant experience the individual
brings to the Company, strategic goals for which the executive has
responsibility, and compensation levels of companies at a comparable stage of
development who compete with the Company for business, scientific, and executive
talents. As stated above, such comparable companies are generally those with
market capitalizations under one billion dollars and are not necessarily among
the companies comprising the Peer Group Index reflected in the performance graph
in this Proxy Statement. No predetermined weights are given to any one of such
factors. The base salaries for the executive officers for fiscal 1999 were at
the median level in comparison to the Company's peer group companies.
In addition to each executive officer's base compensation, the Committee may
award cash bonuses and/or grant awards under the Company's stock compensation
plans to chosen executive officers depending on the extent to which certain
defined personal and corporate performance goals are achieved. Such corporate
performance goals are the same as discussed above. Because the Company's
technology is still in the early stages of development, the Company has granted
minimal bonuses to its executive officers.
All employees of the Company, including its executive officers, are eligible
to receive long-term stock-based incentive awards under the Company's stock
compensation plans as a means of providing such individuals with a continuing
proprietary interest in the Company. Such grants further the mutuality of
interest between the Company's employees and its stockholders by providing
significant incentives for such employees to achieve and maintain high levels of
performance. The Company's stock compensation plans enhance the Company's
ability to attract and retain the services of qualified individuals. Factors
considered in determining whether such awards are granted to an executive
officer of the Company include the executive's position in the Company, his or
her performance and responsibilities, the amount of stock options and restricted
stock, if any, currently held by the officer, the vesting schedules of any such
options or restricted stock and the executive officer's other compensation.
While the Committee does not adhere to any firmly established formulas or
schedules for the issuance of awards such as options or restricted stock, the
Committee will generally tailor the terms of any such grant to achieve its goal
as a long-term incentive award by providing for a vesting schedule encompassing
several years or tying the vesting dates to particular corporate or personal
milestones. On August 12, 1999, Mr. Brown and Dr. Monticello were granted
options to acquire an aggregate of 148,000 shares of Common Stock at $2.06 per
share in recognition of their continuing contributions to the Company, with
vesting over four years. See "Executive Compensation--Option Grants in Last
Fiscal Year" and "--Compensation of Chief Executive Officer" for discussion of
Dr. Policastro's grant.
COMPENSATION OF CHIEF EXECUTIVE OFFICER
As of July 1, 1999, Peter Policastro was elected as the Company's President
and Chief Executive Officer. Dr. Policastro's employment agreement with the
Company specifies an initial base annual salary of $200,000. In setting this
initial base salary for Dr. Policastro, the Committee evaluated the compensation
package for chief executive officers of peer group companies with similar market
capitalizations. The Committee expects that when it reevaluates
Dr. Policastro's base salary level in the future, it will consider a
7
<PAGE>
variety of factors, including Dr. Policastro's responsibilities, his general
background and qualifications, his achievement of various corporate and personal
milestones set by the Committee from time to time, and compensation levels for
executives in Dr. Policastro's position and with his background at peer group
companies. The Committee has not attached any particular relative weighting to
the foregoing factors (or any other factors which the Committee may also
consider in reaching compensation decisions for the Company's executive
officers).
Dr. Policastro will be eligible to receive such bonuses as may be determined
by the Committee. The Committee will retain discretion to determine the amount
of any incentive bonus awards to be paid to Dr. Policastro, and the Committee
expects that it will evaluate a number of factors in reaching this decision,
including the Company's strategic goals for which Dr. Policastro has
responsibility, his other responsibilities, his initiatives and contributions to
the Company's achievement of various corporate and strategic goals, and his own
achievement of certain personal milestones as determined by the Committee from
time to time.
On August 12, 1999, Dr. Policastro was granted a stock option to purchase
90,800 shares of Common Stock at an exercise price of $2.06 per share, with
vesting over four years. On January 1, 1999, when Dr. Policastro was first hired
by the Company as Executive Vice President and Chief Operating Officer, he was
granted an option to purchase 50,000 shares at an exercise price of $2.06 per
share. The Committee expects that Dr. Policastro will continue to participate in
the Company's stock compensation plans on the same general terms as other
participants in such plans with respect to future stock option grants that he
may be granted from time to time, although the amount of shares underlying
option grants to Dr. Policastro will be potentially larger than for other
employees as a result of his position.
In 1999, the Company reimbursed Dr. Policastro for commuting, temporary
living expenses, meals and other travel related expenses in the amount of
$73,624.
William E. Nasser, currently serving as the Company's Chairman of the Board
of Directors, served as the Company's President and Chief Executive Officer from
April 1998 until Dr. Policastro was elected to such position in June 1999.
Mr. Nasser was paid $200,000 in base salary in 1999 for serving in such
position, and granted options to purchase 43,600 shares of common stock at an
exercise price of $2.06 per share.
Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"), added by the Revenue Reconciliation Act of 1993, places a $1 million
cap per executive on the deductible compensation that can be paid to certain
executives of publicly-traded corporations. Amounts that qualify as "performance
based" compensation under Section 162(m)(4)(c) of the Code are exempt from the
cap and do not count toward the $1 million limit. Generally, stock options will
qualify as performance based compensation. The Committee has discussed and
considered and will continue to evaluate the potential impact of Section 162(m)
on the Company in making compensation determinations, but has not established a
set policy with respect to future compensation determinations.
The foregoing report is given by the following members of the Compensation
Committee:
R. James Comeaux
Ramon Lopez
Edward B. Lurier
Thomas E. Messmore
The report of the Compensation Committee shall not be deemed incorporated by
reference by any general statement incorporating by reference this Proxy
Statement into any filing under the Securities Act of 1933, as amended, or under
the Securities Exchange Act of 1934, as amended, except to the extent that the
Company specifically incorporates this information by reference, and shall not
otherwise be deemed filed under such acts.
8
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table summarizes certain information regarding aggregate cash
compensation, stock option and restricted stock awards and other compensation
earned by the Company's President and Chief Executive Officer and each of the
Company's other executive officers as of December 31, 1999 who earned in excess
of $100,000 during 1999.
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
------------------------
ANNUAL COMPENSATION RESTRICTED SECURITIES
------------------- STOCK UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS AWARDS OPTIONS (#) COMPENSATION(1)
- --------------------------- -------- -------- -------- ---------- ----------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Peter Policastro, Ph.D. ...... 1999 $192,500 -- -- 140,800 $81,624(3)
President and Chief
Executive Officer(2)
William E. Nasser ............ 1999 $100,000 -- -- 43,600 $ 9,500(5)
Chairman of the Board, 1998 $146,282 -- -- 22,321 $53,378(6)
President and Chief
Executive Officer(4)
Daniel J. Monticello, 1999 $171,113 -- -- 86,700 $12,800
Ph.D. ...................... 1998 $169,000 $ 155 -- 1,714 $12,800
Vice President, Research 1997 $161,000 $ 1,442 -- 1,428 $12,800
and Development
Paul G. Brown, III ........... 1999 $135,169 $25,000 -- 61,300 $10,814
Vice President, Finance 1998 $131,313 -- -- 3,142 $10,005
and Administration 1997 $126,600 -- -- 2,857 $10,080
</TABLE>
- ------------------------
(1) During each of the three years ended December 31, 1999, perquisites for each
individual named in the Summary Compensation Table aggregated less than 10%
of the total annual salary and bonus reported for such individuals in the
Summary Compensation Table. Accordingly, no such amounts are included in the
Summary Compensation Table. All amounts listed below represent Company
contributions to the Company's Simplified Employee Pension Plan ("SEP")
unless otherwise indicated.
(2) Dr. Policastro was elected as the Company's President and Chief Executive
Officer effective July 1, 1999.
(3) Includes $73,624 for relocation expenses.
(4) Mr. Nasser served as President and Chief Executive Officer from April 1998
until July 1999 and continues to serve as the Chairman of the Board.
(5) Includes $1,500 for meal allowance.
(6) Represents (i) $49,378 in reimbursement of expenses incurred for temporary
housing and other travel-related expenses while Mr. Nasser commuted to the
Company's offices, and (ii) $4,000 in Company contributions to the SEP.
9
<PAGE>
STOCK OPTIONS
The following table sets forth information concerning the grant of stock
options under the Company's 1997 Stock Option Plan during 1999 to the executive
officers named in the Summary Compensation Table.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
NUMBER OF PERCENTAGE OF STOCK PRICE
SECURITIES TOTAL OPTIONS APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OPTION TERM(2)
OPTIONS EMPLOYEES IN PRICE PER EXPIRATION ---------------------
NAME GRANTED(1) FISCAL 1999 SHARE DATE 5% 10%
- ---- ---------- ------------- --------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
William E. Nasser.............. 43,600 9.6% $ 2.06 8/12/09 $146,496 $232,824
Peter P. Policastro, Ph.D. .... 50,000 31.1% $ 2.06 1/01/09 168,000 267,000
90,800 $ 2.06 8/12/09 305,088 484,872
Daniel J. Monticello, Ph.D..... 86,700 19.1% $ 2.06 8/12/09 291,312 462,978
Paul G. Brown, III............. 61,300 13.5% $ 2.06 8/12/09 205,968 327,342
</TABLE>
- ------------------------
(1) No stock appreciation rights ("SARs") or other instruments were granted in
tandem with the options reflected in this table.
(2) The Securities and Exchange Commission requires disclosure of the potential
realizable value or present value of each grant. The disclosure assumes the
options will be held for the full ten-year term prior to exercise. Such
options may be exercised prior to the end of such ten-year term. The actual
value, if any, an executive officer may realize will depend upon the excess
of the stock price over the exercise price on the date the option is
exercised. There is no assurance that the stock price will appreciate at the
rates shown in the table. If the assumed annual rate of stock price
appreciation of 5% or 10% per year should occur, the market value per share
of Common Stock at the end of the ten-year option term would be $3.36 and
$5.34, respectively, for the options granted at $2.06 to Messrs. Brown and
Nasser and Drs. Policastro and Monticello.
OPTION EXERCISES AND HOLDINGS
The following table sets forth information concerning option exercises and
the value of unexercised options held by the executive officers of the Company
named in the Summary Compensation Table.
AGGREGATED OPTION EXERCISES IN 1999
AND OPTION VALUES AT DECEMBER 31, 1999
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS HELD AT OPTIONS HELD AT
SHARES DECEMBER 31, 1999 (#) DECEMBER 31, 1999(1) ($)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ------------ ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
William E. Nasser........... -- -- 81,842 -- $47,600 $ --
Peter P. Policastro,
Ph.D...................... -- -- 35,715 105,085 35,715 105,085
Daniel J. Monticello,
Ph.D...................... -- -- 34,381 90,024 -- 86,700
Paul G. Brown, III.......... -- -- 10,335 67,393 -- 61,300
</TABLE>
- ------------------------
(1) Computed based on the difference between aggregate fair market value and
aggregate exercise price. The fair market value of the Company's Common
Stock on December 31, 1999, was $4.44, the average of the high and low
prices on the Nasdaq National Market on December 31, 1999.
10
<PAGE>
SIMPLIFIED EMPLOYEE PENSION PLAN
In April 1992, the Company adopted the SEP for all employees. Under the
terms of the SEP, employees are eligible to participate after completion of six
months of service. The Company has the discretion to determine how much, if
anything, it will contribute to the employee's accounts in the SEP each year.
Currently, the Company contributes an amount equal to eight percent of the
employees' monthly compensation to the SEP. Employees are vested immediately and
there is at present no employee contribution. Total expense under the SEP was
approximately $194,500 for the year ended December 31, 1999.
PERFORMANCE GRAPH
The following performance graph compares the performance of the Company's
Common Stock to the Nasdaq Combined Composite Index and the Nasdaq Biotechnology
Index for the period beginning December 31, 1994 and ending December 31, 1999.
This Peer Group has been changed from the peer group used in prior performance
graphs to more accurately reflect the industry in which the Group currently
operates. The prior peer group was the Nasdaq Pharmaceutical Index. The graph
assumes that the value of the investment in the Company's Common Stock and each
index was $100 at December 31, 1994, and that all dividends were reinvested.
EDGAR PRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
COMPARISON OF CUMULATIVE RETURN
AMONG ENERGY BIOSYSTEMS CORPORATION,
NASDAQ COMBINED COMPOSITE INDEX AND
NASDAQ BIOTECHNOLOGY INDEX AND
NASDAQ PHARMACEUTICAL INDEX (PRIOR PEER GROUP)
<TABLE>
<CAPTION>
12/31/94 12/30/95 12/29/96 12/31/97 12/31/98 12/31/99
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Energy BioSystems Corporation.............. 100 112 96 52 5 10
Nasdaq Combined Composite Index............ 100 140 172 209 292 537
Nasdaq Biotechnology Index................. 100 163 176 198 226 479
Nasdaq Pharmaceutical Index (Prior Peer
Group)................................... 100 155 188 279 408 370
</TABLE>
The foregoing stock price performance comparisons shall not be deemed
incorporated by reference by any general statement incorporated by reference
from this Proxy Statement into any filing under the Securities Act of 1933, as
incorporates such comparisons by reference, and shall not otherwise be deemed
filed under such acts.
EMPLOYMENT AGREEMENTS
In January 1996, the Company entered into an employment agreement with
Dr. Daniel J. Monticello providing for an initial annual salary of $161,000,
which is to be reviewed no less than annually by the Board of Directors. The
agreement was extended in 1999 and expires in April 2002. If Dr. Monticello is
terminated without cause, as that term is defined in the agreement, the Company
is obligated to pay Dr. Monticello an amount not greater than one year of his
salary at the time of termination. Dr. Monticello's current annual salary of
$174,070.
In December 1998, Dr. Peter P. Policastro entered into a three-year
employment agreement with the Company as Executive Vice President and Chief
Operating Officer (amended to President and Chief Executive Officer effective
July 1, 1999), providing for a current annual salary of $200,000. Salary is to
be
11
<PAGE>
reviewed no less than annually by the Board of Directors. If he is terminated
without cause, as that term is defined in the agreement, the Company is
obligated to pay him an amount not greater than one year of his salary at the
time of termination.
In July 1995, Mr. Brown entered into a five-year employment agreement with
the Company providing for an initial annual salary of $119,840, which is to be
reviewed no less than annually by the Board of Directors. If he is terminated
without cause, as that term is defined in the agreement, the Company is
obligated to pay him an amount not greater than six months of his salary at the
time of termination. Mr. Brown's current annual salary is $137,505.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Board of Directors of the Company
currently consists of Messrs. Comeaux, Lopez, Lurier and Messmore. No member of
the Compensation Committee of the Board of Directors of the Company was, during
1999, an officer or employee of the Company, or was formerly an officer of the
Company or had any relationships requiring disclosure by the Company under Item
404 of Regulation S-K.
During fiscal 1999, no executive officer of the Company served as (i) a
member of the compensation committee (or other board committee performing
equivalent functions) of another entity, one of whose executive officers served
on the Compensation Committee of the Board of Directors, (ii) a director of
another entity, one of whose executive officers served on the Compensation
Committee of the Board of Directors of the Company or (iii) a member of the
compensation committee (or other board committee performing equivalent
functions) of another entity, one of whose executive officers served as a
director of the Company.
12
<PAGE>
PROPOSAL NUMBER 2:
APPROVAL OF AMENDMENT TO
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
The Board of Directors unanimously proposes that the stockholders approve an
amendment to the First Article of the Amended and Restated Certificate of
Incorporation (the "Charter") of the Company to change the Company's name from
Energy BioSystems Corporation to Enchira Biotechnology Corporation. The text of
the First Article of the Charter as proposed to be amended is as follows:
"FIRST: The name of the Corporation is Enchira Biotechnology Corporation."
REASONS FOR THE PROPOSED AMENDMENT
The Company was formed in 1990 to pursue the development and
commercialization of its biodesulfurization process ("BDS"), a process targeted
at the oil and gas industry as a method of reducing the sulfur content of
certain petroleum products. The Company named itself Energy BioSystems
Corporation to reflect such focus on the energy industry.
Through its research and development efforts in developing the BDS process,
the Company achieved expertise in certain gene-shuffling technologies and
obtained a proprietary interest in a certain specific method of gene-shuffling
known as RACHITT-TM-. Last year, the Company developed a new high-throughput
screening ("HTS") technology to complement its RACHITT-TM- technology.
While the Company continues to develop and commercialize its BDS technology
and will continue to market BDS to the energy industry, the Company made the
decision in 1999 to structure its financial and human resources to further
develop and commercialize its RACHITT-TM- and HTS technologies for other
applications besides energy desulfurization such as agriculture, chemicals,
animal and human uses. The Company believes that there are considerable
opportunities in the biotechnology industry.
As a result, the Company believes that its current name, Energy BioSystems
Corporation, no longer reflects its commitment to the development of its
gene-shuffling technology and its new focus on the biotechnology industry.
Enchira Biotechnology Corporation, the Company's choice for its new name,
reflects this new technology and focus.
EFFECTIVENESS OF THE PROPOSED AMENDMENT
If approved by the holders of the Company's capital stock eligible to vote,
the amendment to the First Article of the Charter will become effective upon
filing a Certificate of Amendment to the Charter with the Secretary of State of
the State of Delaware, which is expected to occur shortly after the Annual
Meeting. Upon effectiveness of the proposed amendment to the Charter, the
Company's stockholders will not be required to exchange outstanding stock
certificates for new certificates. If the proposed amendment to the Charter is
not approved by the holders of the Company's capital stock eligible to vote, the
Certificate of Amendment to the Charter will not be filed.
VOTE REQUIRED FOR APPROVAL OF THE PROPOSED AMENDMENT
Approval of the proposed amendment to the First Article of the Charter
requires the affirmative vote of a majority of the issued and outstanding shares
of Common Stock and Series B Preferred Stock (on an as-converted basis) eligible
to vote at the Annual Meeting, voting together as a single class.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" APPROVAL OF
THE PROPOSED AMENDMENT TO THE FIRST ARTICLE OF THE CHARTER, AND PROXIES EXECUTED
AND RETURNED WILL BE SO VOTED UNLESS CONTRARY INSTRUCTIONS ARE INDICATED
THEREON.
13
<PAGE>
PROPOSAL NUMBER 3:
APPROVAL OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has appointed the firm of Arthur Andersen LLP as the
Company's independent public accountants to make an examination of the accounts
of the Company for the fiscal year ending December 31, 2000, subject to
ratification by the Company's stockholders. Representatives of Arthur Andersen
LLP will be present at the Annual Meeting and will have an opportunity to make a
statement, if they desire to do so. They will also be available to respond to
appropriate questions from stockholders attending the Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" RATIFICATION
OF THE APPOINTMENT OF ARTHUR ANDERSEN LLP AS THE COMPANY'S INDEPENDENT PUBLIC
ACCOUNTANTS FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000, AND PROXIES EXECUTED
AND RETURNED WILL BE SO VOTED UNLESS CONTRARY INSTRUCTIONS ARE INDICATED
THEREON.
14
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of March 31, 2000, certain information
with respect to the shares of Common Stock and Series B Preferred Stock
beneficially owned by (i) each person known by the Company to be the beneficial
owner of more than five percent of the Common Stock or the Series B Preferred
Stock, (ii) each director of the Company, (iii) each of the executive officers
of the Company named in "Executive Compensation" and (iv) all directors and
executive officers of the Company as a group.
<TABLE>
<CAPTION>
AMOUNT AND NATURE AMOUNT AND NATURE
OF BENEFICIAL OF BENEFICIAL
OWNERSHIP OF PERCENT OF OWNERSHIP OF SERIES B PERCENT
NAME OF BENEFICIAL OWNER COMMON STOCK(1) CLASS PREFERRED STOCK(1) OF CLASS
- ------------------------ ----------------- ---------- --------------------- --------
<S> <C> <C> <C> <C>
Zesiger Capital Group LLC............... 1,683,059(2) 24.0% 62,400 15.8%
320 Park Avenue, 30th Floor
New York, New York 10022
Kingdon Capital Management, LLC......... 1,200,000(3) 17.1% -- --
152 West 57th Street
New York, New York 10019
Gryphon Ventures II, Limited
Partnership............................. 305,154(4) 4.3% -- --
222 Berkeley Street, Suite 1600
Boston, Massachusetts 02116
Ethyl Corporation....................... 581,064(5) 8.3% 160,000 40.4%
300 South Fourth Street
Richmond, Virginia 23217
State of Wisconsin Investment Board..... 590,199(6) 8.4%
P.O. Box 7842
Madison, Wisconsin 53707
Farmers Insurance Group of Companies.... 82,723(7) 1.2% 80,000 20.2%
4680 Wilshire Boulevard
Los Angeles, California 90010
Keystone, Inc........................... 65,286(8) * 40,000 10.1%
c/o Alex.Brown & Sons Incorporated
200 Crescent Court, Suite 500
Dallas, Texas 75201
William E. Nasser....................... 113,905(9) 1.6% -- --
R. James Comeaux........................ 11,313(10) * -- --
Ramon Lopez............................. 10,569(11) * -- --
Edward B. Lurier........................ 316,580(12) 4.5% -- --
Thomas E. Messmore...................... 39,997(13) * -- --
Daniel J. Monticello, Ph.D.............. 35,459(14) * -- --
John S. Patton.......................... 586,206(15) 8.3% -- --
Peter Policastro........................ 35,715(16) *
William D. Young........................ 94,069(17) 1.3% -- --
Paul G. Brown, III...................... 11,567(18) * -- --
All directors and executive officers
as a group (11 persons)............... 663,792(19) 9.2% -- --
</TABLE>
- ------------------------
* Represents less than 1% of the class.
(1) Unless otherwise indicated, each of the stockholders designated above has
sole voting and investment power with respect to the securities shown to be
owned by such stockholder.
15
<PAGE>
(2) Based upon information provided in a Schedule 13G/A filed on January 28,
2000. Includes 157,731 shares issuable upon conversion of Series B
Preferred Stock.
(3) Based upon information provided in a Schedule 13G filed on February 23,
2000. Includes a warrant to purchase 200,000 shares of Common Stock.
(4) Based upon information provided in a Schedule 13G/A filed on February 1,
2000.
(5) Based upon information provided in a Form 5 filed on February 11, 2000 by
Ethyl Corporation ("Ethyl") with the Securities and Exchange Commission on
February 1, 2000, as amended. Includes 398,804 shares issuable upon
conversion of Series B Preferred Stock owned by Ethyl. Excludes 305,154
shares of Common Stock beneficially owned by Gryphon Ventures II, Limited
Partnership ("Gryphon"), a limited partnership of which a wholly-owned
subsidiary of Ethyl is the sole limited partner, and as to which Ethyl has
no voting or dispositive power.
(6) Based upon information provided in a Schedule 13G/A filed on February 9,
2000.
(7) Includes 78,817 shares of Common Stock issuable upon conversion of
Series B Preferred Stock.
(8) Includes 39,408 shares of Common Stock issuable upon conversion of
Series B Preferred Stock.
(9) Includes 81,842 shares of Common Stock subject to stock options that are
exercisable within 60 days of March 31, 2000.
(10) Includes 5,142 shares of Common Stock subject to stock options that are
exercisable within 60 days of March 31, 2000.
(11) Includes 10,569 shares of Common Stock subject to stock options that are
exercisable within 60 days of March 31, 2000.
(12) Includes 305,154 shares of Common Stock held by Gryphon, which Mr. Lurier
may be deemed to beneficially own due to his status as an affiliate of the
general partner of Gryphon, but as to which he disclaims beneficial
ownership. Includes 5,713 to stock options exercisable within 60 days of
March 31, 2000.
(13) Includes 6,855 shares of Common Stock subject to stock options exercisable
within 60 days of March 31, 2000.
(14) Includes 34,381 shares of Common Stock subject to stock options that are
exercisable within 60 days of March 31, 2000.
(15) Includes 581,064 shares of Common Stock held by Ethyl, which Mr. Patton
may be deemed to beneficially own due to his status as an affiliate of
Ethyl, but as to which he disclaims beneficial ownership. Includes 5,142
shares of Common Stock subject to stock options that are exercisable
within 60 days of March 31, 2000.
(16) Includes 35,715 shares of Common Stock subject to stock options that are
exercisable within 60 days of March 31, 2000.
(17) Includes 10,569 shares of Common Stock subject to stock options that are
exercisable within 60 days of March 31, 2000.
(18) Includes 10,335 shares of Common Stock subject to stock options that are
exercisable within 60 days of March 31, 2000.
(19) Includes an aggregate of 206,263 shares of Common Stock subject to stock
options that are exercisable within 60 days of March 31, 2000. Includes
305,154 shares of Common Stock held by Gryphon which Mr. Lurier may be
deemed to beneficially own due to his status as an affiliate of the
general partner of Gryphon.
16
<PAGE>
COMPLIANCE WITH SECTION 16(a)
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors and officers, and persons who own more than ten percent
of the Common Stock, to file initial reports of ownership and reports of changes
in ownership (Forms 3, 4, and 5) of Common Stock with the Securities and
Exchange Commission (the "SEC") and The Nasdaq Stock Market. Officers, directors
and greater than ten percent stockholders are required by SEC regulation to
furnish to Company with copies of all such forms that they file.
To the Company's knowledge, based solely on the Company's review of the
copies of such reports received by the Company and on written representations by
certain reporting persons that no reports on Form 5 were required, the Company
believes that during the fiscal year ended December 31, 1999, all Section 16(a)
filing requirements applicable to its officers, directors and ten percent
stockholders were complied with.
17
<PAGE>
PROPOSALS OF STOCKHOLDERS
Any proposal of a stockholder intended to be presented at the next annual
meeting must be received at the Company's principal executive offices no later
than December 26, 2000, if the proposal is to be considered for inclusion in the
Company's Proxy Statement relating to such meeting.
FINANCIAL INFORMATION
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K, INCLUDING ANY FINANCIAL
STATEMENTS AND SCHEDULES AND EXHIBITS THERETO, MAY BE OBTAINED WITHOUT CHARGE BY
WRITTEN REQUEST TO PAUL G. BROWN, III, CHIEF FINANCIAL OFFICER, ENERGY
BIOSYSTEMS CORPORATION, 4200 RESEARCH FOREST DRIVE, THE WOODLANDS, TEXAS 77381.
OTHER MATTERS
The Company will bear the cost of preparing and mailing proxy materials as
well as the cost of solicitation of proxies. The Company will reimburse banks,
brokerage firms, custodians, nominees, and fiduciaries for their expenses in
sending proxy materials to the beneficial owners of Common Stock and Preferred
Stock. The Company has retained Corporate Communications Center, Inc.
("Corporate Communications") to assist in the solicitation of proxies and will
pay approximately $1,000 for certain brokerage searches and proxy solicitations
performed by Corporate Communications. In addition to solicitation by mail,
certain directors, officers and regular employees of the Company and Corporate
Communications may solicit proxies by fax, telex, telephone and personal
interview.
By Order of the Board of Directors
Paul G. Brown, III
CHIEF FINANCIAL OFFICER AND SECRETARY
May 1, 2000
The Woodlands, Texas
18
<PAGE>
<TABLE>
<CAPTION>
Every properly signed proxy will be voted in accordance with specifications made on the reverse side of this card. If not
otherwise specified, this proxy will be voted for proposals 1 through 3.
All prior proxies are hereby revoked.
<S> <C>
Dated:____________________________________________________________
__________________________________________________________________
Signature(s)
__________________________________________________________________
Signature(s)
NOTE: Please sign exactly as name appears hereon. Joint owners
signing as attorney, executor, administrator, trustee or guardian,
please give full title as such.
Change of address:
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
ENERGY BIOSYSTEMS CORPORATION
Proxy Solicited on Behalf of the Board of Directors of
the Company for the Annual Meeting of Stockholders June 8, 2000
The undersigned hereby constitutes and appoints William E. Nasser, Peter P. Policastro, Ph.D. and Paul G. Brown, III, and
each or any of them, his true and lawful attorneys and proxies with full power of substitution, for and in the name, place and
stead of the undersigned, to attend the Annual Meeting of Stockholders of Energy BioSystems Corporation to be held at the
Company's offices, 4200 Research Forest Drive, The Woodlands, Texas on Thursday, June 8, 2000, at 10:00 a.m., central daylight
time, and any adjournment(s) thereof, with all powers the undersigned would possess if personally present and to vote there at,
as provided on the reverse side of this card, the number of shares the undersigned would be entitled to vote if personally
present. In accordance with their discretion, said attorneys and proxies are authorized to vote upon such other business as may
properly come before the meeting or any adjournment thereof.
Election of Directors, Nominees: William E. Nasser, R. James Comeaux, Ramon Lopez, Edward B. Lurier, Thomas E. Messmore,
Daniel J. Monticello Ph.D., John S. Patton, Peter P. Policastro, Ph.D. and William D. Young.
1. ELECTION OF DIRECTORS / / FOR, except vote withheld from the following nominees(s):
--------------------------------------------------------------------------------------------
2. Approval of amendment to the Company's Amended and Restated Certificate of Incorporation to change the name of the Company to
Enchira Biotechnology Corporation.
/ / FOR / / AGAINST / / ABSTAIN
3. Ratification of the appointment of Arthur Andersen LLP as the Company's independent public accountants for the fiscal year
ending December 31, 2000.
/ / FOR / / AGAINST / / ABSTAIN
</TABLE>
