<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to (s)240.14a-11(c) or (s)240.14a-12
Myriad Genetics, Inc.
_______________________________________________________________________
(Name of Registrant as Specified In Its Charter)
_______________________________________________________________________
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ] 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 0-11 (set forth the amount on
which the filing fee is calculated and state now it was
determined):
_______________________________________________
4) Proposed maximum aggregate value of transaction:
_______________________________________________
5) Total fee paid:
_______________________________________________
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing:
1) Amount previously paid:
_____________________________
2) Form, Schedule or Registration Statement No:
_____________________________
3) Filing party:
_____________________________
4) Date Filed:
_____________________________
<PAGE>
MYRIAD GENETICS, INC.
October 15, 1996
Dear Stockholder,
You are cordially invited to attend the 1996 Annual Meeting of Stockholders
of Myriad Genetics, Inc. (the "Company") to be held at 9:00 a.m. on Friday,
November 15, 1996 at the Salt Lake City Marriott Hotel, 75 S. West Temple,
Salt Lake City, Utah.
At the Annual Meeting, eight persons will be elected to the Board of
Directors. The Company will also seek Stockholder approval of amendments to
the Company's 1992 Employee, Director and Consultant Stock Option Plan to
increase the aggregate number of shares authorized for issuance thereunder and
to limit the number of shares of Common Stock that may be granted pursuant to
stock options to any employee in any one year period. In addition, the Company
will ask the stockholders to ratify the selection of KPMG Peat Marwick LLP as
the Company's independent public accountants. The Board of Directors
recommends the approval of each of these proposals. Such other business will
be transacted as may properly come before the Annual Meeting.
We hope you will be able to attend the Annual Meeting. Whether you plan to
attend the Annual Meeting or not, it is important that your shares are
represented. Therefore, you are urged promptly to complete, sign, date and
return the enclosed proxy card in accordance with the instructions set forth
on the card. This will ensure your proper representation at the Annual
Meeting.
Sincerely,
/s/ Peter D. Meldrum
Peter D. Meldrum
President and Chief Executive
Officer
YOUR VOTE IS IMPORTANT.
PLEASE RETURN YOUR PROXY PROMPTLY.
<PAGE>
MYRIAD GENETICS, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD NOVEMBER 15, 1996
To the Stockholders of Myriad Genetics, Inc.
NOTICE IS HEREBY GIVEN that the Annual Meeting of Myriad Genetics, Inc., a
Delaware corporation (the "Company"), will be held on Friday, November 15,
1996 at the Salt Lake City Marriott Hotel, 75 S. West Temple, Salt Lake City,
Utah, at 9:00 a.m. for the following purposes:
1.To elect eight members to the Board of Directors.
2. To consider and act upon a proposal to amend the Company's 1992
Employee, Director and Consultant Stock Option Plan to increase the
aggregate number of shares of Common Stock authorized for issuance
thereunder and to limit the number of shares of Common Stock that may be
granted pursuant to stock options to any employee in any one year
period.
3. To consider and act upon a proposal to ratify the appointment of KPMG
Peat Marwick LLP as the Company's independent public accountants for the
fiscal year ending June 30, 1997.
4. To transact such other business as may be properly brought before the
Annual Meeting and any adjournments thereof.
The Board of Directors has fixed the close of business on October 1, 1996 as
the record date for the determination of Stockholders entitled to notice of
and to vote at the Annual Meeting and at any adjournments thereof.
All Stockholders are cordially invited to attend the Annual Meeting. Whether
you plan to attend the Annual Meeting or not, you are requested to complete,
sign, date and return the enclosed proxy card as soon as possible in
accordance with the instructions on the proxy card. A pre-addressed, postage
prepaid return envelope is enclosed for your convenience.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Jay M. Moyes
Jay M. Moyes
Assistant Secretary
October 15, 1996
<PAGE>
MYRIAD GENETICS, INC.
320 WAKARA WAY
SALT LAKE CITY, UTAH 84108
(801) 584-3600
----------------
PROXY STATEMENT
----------------
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of Myriad Genetics, Inc. (the "Company"), a Delaware
corporation, of proxies, in the accompanying form, to be used at the Annual
Meeting of Stockholders to be held at the Salt Lake City Marriott Hotel, 75 S.
West Temple, Salt Lake City, Utah, on Friday, November 15, 1996 at 9:00 a.m.,
and any adjournments thereof (the "Meeting").
Where the Stockholder specifies a choice on the proxy as to how his or her
shares are to be voted on a particular matter, the shares will be voted
accordingly. If no choice is specified, the shares will be voted FOR the
election of the eight nominees for director named herein, FOR the proposal to
amend the Company's 1992 Employee, Director and Consultant Stock Option Plan,
and FOR the ratification of the appointment of KPMG Peat Marwick LLP as the
Company's independent public accountants for the fiscal year ending June 30,
1997. Any proxy given pursuant to this solicitation may be revoked by the
person giving it at any time before its use by delivering to the Company a
written notice of revocation or a duly executed proxy bearing a later date.
Any Stockholder who has executed a proxy but is present at the Meeting, and
who wishes to vote in person, may do so by revoking his or her proxy as
described in the preceding sentence. Shares represented by valid proxies in
the form enclosed, received in time for use at the Meeting and not revoked at
or prior to the Meeting, will be voted at the Meeting. The presence, in person
or by proxy, of the holders of a majority of the outstanding shares of the
Company's common stock, par value $.01 per share ("Common Stock"), is
necessary to constitute a quorum at the Meeting.
The affirmative vote of a majority of the shares voted affirmatively or
negatively at the Meeting is required to approve each proposal, other than the
election of directors which requires a plurality of the shares voted
affirmatively or negatively at the Meeting. With respect to the tabulation of
votes on any matter, abstentions are treated as votes against a proposal,
while broker non-votes have no effect on the vote.
The close of business on October 1, 1996 has been fixed as the record date
for determining the Stockholders entitled to notice of and to vote at the
Meeting. As of the close of business on October 1, 1996, the Company had
8,725,907 shares of Common Stock outstanding and entitled to vote. Holders of
Common Stock are entitled to one vote per share on all matters to be voted on
by Stockholders.
The cost of soliciting proxies, including expenses in connection with
preparing and mailing this Proxy Statement, will be borne by the Company. In
addition, the Company will reimburse brokerage firms and other persons
representing beneficial owners of Common Stock of the Company for their
expenses in forwarding proxy material to such beneficial owners. Solicitation
of proxies by mail may be supplemented by telephone, telegram, telex and
personal solicitation by the directors, officers or employees of the Company.
No additional compensation will be paid for such solicitation.
This Proxy Statement and the accompanying proxy are being mailed on or about
October 15, 1996 to all Stockholders entitled to notice of and to vote at the
Meeting.
The Annual Report to Stockholders for the fiscal year ended June 30, 1996 is
being mailed to the Stockholders with this Proxy Statement, but does not
constitute a part hereof.
<PAGE>
SHARE OWNERSHIP
The following table sets forth certain information as of August 23, 1996
concerning the ownership of Common Stock by each Stockholder known by the
Company to be the beneficial owner of more than 5% of its outstanding shares
of Common Stock, each current member of the Board of Directors, each executive
officer named in the Summary Compensation Table on p. 6 hereof, and all
current directors and executive officers as a group.
<TABLE>
<CAPTION>
SHARES
BENEFICIALLY
OWNED(1)
---------------
NAME AND ADDRESS** NUMBER PERCENT
------------------ ------- -------
<S> <C> <C>
Bayer Corporation.............................................. 588,235 6.7%
400 Morgan Lane
West Haven, CT 06516
Peter D. Meldrum(2)............................................ 352,471 4.0%
Mark H. Skolnick(3)............................................ 645,740 7.3%
Jay M. Moyes(4)................................................ 8,700 *
Janet H. Haskell(5)............................................ 38,000 *
Walter Gilbert, Ph.D.(6)....................................... 309,454 3.5%
John J. Horan(7)............................................... 52,214 *
Arthur H. Hayes, M.D.(8)....................................... 26,000 *
Dale A. Stringfellow, Ph.D.(9)................................. 16,371 *
Alan J. Main, Ph.D. ........................................... 0 *
Wolfgang Hartwig, Ph.D. ....................................... 0 *
All executive officers and directors as a group (10 persons)... 979,537 15.8%
</TABLE>
- - --------
* Represents beneficial ownership of less than 1% of the Company's
outstanding shares of Common Stock.
** Addresses are given for beneficial owners of more than 5% of the
outstanding Common Stock only.
(1) The number of shares of Common Stock issued and outstanding on August 23,
1996 was 8,719,149 shares. The calculation of percentage ownership for
each listed beneficial owner is based upon the number of shares of Common
Stock issued and outstanding at August 23, 1996, plus shares of Common
Stock subject to options held by such person at August 23, 1996 and
exercisable within 60 days thereafter. The persons and entities named in
the table have sole voting and investment power with respect to all
shares shown as beneficially owned by them, except as noted below.
(2) Includes 7,143 shares of Common Stock subject to currently exercisable
options held by Mr. Meldrum, and 152,229 shares of Common Stock subject
to currently exercisable options held by Founder's Fund, Inc. Mr.
Meldrum, President, Chief Executive Officer and a Director of the
Company, is a director of Founder's Fund, Inc. and may be deemed to share
voting and investment power with respect to options owned by Founder's
Fund, Inc., and may be deemed to be the beneficial owner of such shares.
(3) Includes shares held directly by Dr. Skolnick and his wife, shares held
by a family limited partnership of which Dr. Skolnick is a general
partner, as well as shares held by certain family members. Also includes
165,085 shares of Common Stock subject to currently exercisable options.
(4) Includes 7,371 shares of Common Stock subject to currently exercisable
options.
(5) Consists of 38,000 shares of Common Stock subject to currently
exercisable options.
(6) Includes 202,969 shares of Common Stock owned by Dr. Gilbert's wife and
children, as to which Dr. Gilbert disclaims beneficial ownership. Also
includes 5,000 shares of Common Stock subject to currently exercisable
options.
(7) Consists of 52,214 shares of Common Stock subject to currently
exercisable options.
(8) Consists of 26,000 shares of Common Stock subject to currently
exercisable options.
(9) Consists of 16,371 shares of Common Stock subject to currently
exercisable options.
(10) Includes 469,413 shares of Common Stock subject to currently exercisable
options.
2
<PAGE>
MANAGEMENT
DIRECTORS
The Company's Restated Certificate of Incorporation and Restated By-Laws
provide for the Company's business to be managed by or under the direction of
the Board of Directors. Under the Company's Restated Certificate of
Incorporation and Restated By-Laws, the number of directors is fixed from time
to time by the Board of Directors. The Board of Directors currently is fixed
at eight directorships and is divided into three classes. The Board of
Directors has nominated all of the current directors for re-election at the
Meeting. The Class I Directors with an initial term ending in 1997 are Alan J.
Main, Ph.D., Wolfgang Hartwig, Ph.D., and Dale A. Stringfellow, Ph.D.; the
Class II Directors with an initial term ending in 1998 are Peter D. Meldrum
and Mark H. Skolnick, Ph.D.; and the Class III Directors with an initial term
ending in 1999 are John J. Horan, Arthur H. Hayes, Jr., M.D., and Walter
Gilbert, Ph.D. At each annual meeting of Stockholders following the 1996
Meeting and upon expiration of the initial terms, directors will be elected
for three year terms.
Ciba-Geigy Corporation ("Ciba") and Bayer Corporation ("Bayer") each have
Board representation rights which were granted in connection with their
strategic collaborations with the Company. Under the collaboration agreements,
the Company must nominate one representative of each of Ciba and Bayer for
election to the Board of Directors. Further, certain Company stockholders--
Mark H. Skolnick, Ph.D., Angela A. Skolnick, Walter Gilbert, Ph.D. and Celia
Gilbert (and, in the case of Bayer, the Skolnick Family Limited Partnership)--
have agreed to vote in favor of such nominees for election to the Board. Dr.
Main, a Director of the Company since April 1995, is Ciba's current
representative on the Board. Dr. Hartwig is Bayer's current representative and
has served as a Director of the Company since March 1996.
The names of the Company's current directors and certain information about
them are set forth below:
<TABLE>
<CAPTION>
NAME AGE POSITION WITH THE COMPANY
---- --- -------------------------
<C> <C> <S>
John J. Horan................ 76 Chairman of the Board of Directors
Walter Gilbert, Ph.D......... 64 Vice Chairman of the Board of Directors
President, Chief Executive Officer,
Peter D. Meldrum............. 49 Director
Mark H. Skolnick, Ph.D....... 50 Executive Vice President of Research and
Development, Director
Arthur H. Hayes, Jr., M.D.... 63 Director
Dale A. Stringfellow, Ph.D... 51 Director
Alan J. Main, Ph.D........... 42 Director
Wolfgang Hartwig, Ph.D....... 45 Director
</TABLE>
John J. Horan, Chairman of the Board of Directors of the Company since
joining the Board in November 1992, served as the Chairman of the Board and
Chief Executive Officer of Merck & Co., Inc. from 1975 through 1985. Mr. Horan
held a variety of positions with Merck from 1952 until his retirement from the
Merck Board in 1993. He has also served on the Board of Directors of General
Motors Corporation, J.P. Morgan, Inc., Morgan Guaranty Bank, NCR Corporation,
Burlington Mills, Celgene Corporation, PathoGenesis Corporation, and as
Chairman of Atrix Laboratories, Inc. Mr. Horan is a Director of the Robert
Wood Johnson Foundation and a past Chairman of the Pharmaceutical
Manufacturers Association.
Walter Gilbert, Ph.D., Vice Chairman of the Board of Directors, joined the
Company as a founding scientist in March 1992. Dr. Gilbert won the Nobel Prize
in Chemistry in 1980 for his contributions to the development of DNA
sequencing technology. He was a founder of Biogen, Inc. and its Chairman of
the Board and Chief Executive Officer from 1981 to 1985. He has held
professorships at Harvard University in the Departments of Physics,
Biophysics, Biology, Biochemistry and Molecular Biology, and Molecular and
Cellular Biology. He presently holds the Carl M. Loeb University Professorship
at Harvard University.
Peter D. Meldrum has been a Director of the Company since its inception in
May 1991 and has been President and Chief Executive Officer of the Company
since November 1991. Prior to joining the Company he
3
<PAGE>
was President and Chief Executive Officer of Founders Fund, Inc., a venture
capital group specializing in the biotechnology industry. He served as
President and/or Chief Executive Officer of AgriDyne Technologies Inc., an
agricultural biotechnology company, for 13 years. He received an M.B.A. degree
from the University of Utah in 1974 and a B.S. degree in Chemical Engineering
from the University of Utah in 1970.
Mark H. Skolnick, Ph.D., Executive Vice President of Research and
Development and a Director of the Company since May 1991, is a scientific
founder of the Company. Dr. Skolnick and several colleagues were the first to
conceive of using restriction fragment length polymorphism technology as
genetic markers, a breakthrough that underpins the Human Genome Project. He
received his Ph.D. in Genetics from Stanford University in 1975, and a B.A.
degree in Economics from the University of California at Berkeley in 1968.
Arthur H. Hayes, Jr., M.D., a Director of the Company since November 1992,
served as Commissioner of the U.S. Food and Drug Administration from 1981 to
1983. Since 1991 he has served as the President and CEO of Mediscience
Associates, Inc. From 1986 to 1991, Dr. Hayes served as the President and CEO
of EM Pharmaceuticals, Inc., the United States affiliate of E. Merck of
Darmstadt, Germany. He also served as Provost and Dean of New York Medical
College from 1983 to 1986. Dr. Hayes currently serves as the Vice Chairman and
Medical Director of Nelson Communications, Inc. Dr. Hayes serves on the board
of the following publicly traded companies: Napro Biotherapeutics, Inc. and
Celgene Corporation. He also serves on the Board of Directors of the Macy
Foundation and the Food and Drug Law Institute.
Dale A. Stringfellow, Ph.D., a Director of the Company since December 1991,
has been President of Berlex BioSciences, a wholly owned subsidiary of
Schering AG, since June 1995. Prior to that he was President, CEO and a
Director of Celtrix Pharmaceuticals from July 1990 until April 1995. In
addition, Dr. Stringfellow has held other positions, including Vice President
and Senior Director of Preclinical Cancer Research at Bristol-Myers Squibb
Co.; Research Head, Cancer Virology and Cellular Biology Research at Upjohn
Company; and Vice President, Research and Development at Collagen Corporation.
Alan J. Main, Ph.D., a Director of the Company since April 1995, has been
Senior Vice President of Research at Ciba-Geigy Corporation Pharmaceuticals
Division, located in Summit, New Jersey, since October 1992. In this capacity,
he is responsible for all drug discovery and preclinical development
activities in the areas of arthritis and cardiovascular disease. In addition,
he is a member of the Ciba-Geigy Corporation Pharmaceuticals Division
Management Committee and a member of the Global Research and Development Board
responsible for overseeing Ciba-Geigy Limited's worldwide pharmaceutical
research and development effort. Prior to this position, Dr. Main held several
positions in the Ciba group of companies, both in Basel, Switzerland and
Summit, New Jersey. He received a B.Sc. with honors in Chemistry from the
University of Aberdeen, Scotland in 1975, a Ph.D. in Organic Chemistry from
the University of Liverpool, England in 1978. He is a Fellow of the Royal
Chemical Society and is Vice President of the Inflammation Research
Association.
Wolfgang Hartwig, Ph.D., a Director of the Company since March 1996, has
been Senior Vice President of Research for Bayer Corporation, Pharmaceutical
Division since 1994. His last appointment was head of Chemistry in the pharma
research center in Wuppertal. Dr. Hartwig's responsibilities include the Bayer
Research Center in West Haven, Connecticut, a large facility housing five
scientific institutes and employing 300 researchers and support staff. He is
also a lecturer at the University of Munster, Pharmaceutical chemistry
faculty. Dr. Hartwig received his Ph.D. from the University of Gottingen and
was postdoctoral fellow at the Institute de Chimie des Substances Naturalles,
CNRS, Paris. Dr. Hartwig serves on the board of Onyx Pharmaceuticals, Inc., a
publicly traded company.
COMMITTEES OF THE BOARD OF DIRECTORS AND MEETINGS
Meeting Attendance. During the fiscal year ended June 30, 1996 there were
eight meetings of the Board of Directors, and the various committees of the
Board of Directors met a total of ten times. No director attended fewer than
75% of the total number of meetings of the Board and of committees of the
Board on which he served during fiscal 1996.
4
<PAGE>
Audit Committee. The Audit Committee, which met one time in fiscal 1996, has
three members, Dale A. Stringfellow, Ph.D. (Chairman), Walter Gilbert, Ph.D.
and Arthur H. Hayes, Jr., M.D. The Audit Committee reviews the engagement of
the Company's independent accountants, reviews annual financial statements,
considers matters relating to accounting policy and internal controls and
reviews the scope of annual audits.
Compensation Committee. The Compensation Committee, which met one time
during fiscal 1996, has three members, Walter Gilbert, Ph.D. (Chairman), John
J. Horan and Dale A. Stringfellow, Ph.D., who are all non-employee directors.
The Compensation Committee reviews, approves and makes recommendations on the
Company's compensation policies, practices and procedures to ensure that legal
and fiduciary responsibilities of the Board of Directors are carried out and
that such policies, practices and procedures contribute to the success of the
Company.
Nominating Committee. The Company does not have a standing Nominating
Committee.
Compensation Committee Interlocks and Insider Participation. The
Compensation Committee has three members, Walter Gilbert, Ph.D. (Chairman),
John J. Horan and Dale A. Stringfellow. No executive officer of the Company is
a member of the Compensation Committee. No executive officer of the Company
serves as a member of the board of directors or compensation committee of any
entity that has one or more executive officers serving as a member of the
Company's Board of Directors or Compensation Committee.
COMPENSATION OF DIRECTORS
The Company pays its non-employee directors $2,000 for each meeting of the
Board of Directors that he attends. Non-employee directors nominated pursuant
to a contractual agreement are not entitled to such fee. All directors are
reimbursed for their out-of pocket expenses incurred in attending meetings.
Non-employee directors, other than those nominated pursuant to a contractual
agreement, are awarded formula options under the Plan. See "Amendments to the
Company's 1992 Employee, Director, and Consultant Stock Option Plan--Material
Features of the Plan."
EXECUTIVE OFFICERS
The names of, and certain information regarding, executive officers of the
Company who are not also directors, are set forth below. Except for executive
officers who have employment agreements with the Company, the executive
officers serve at the pleasure of the Board of Directors.
<TABLE>
<CAPTION>
NAME AGE POSITION WITH THE COMPANY
---- --- -------------------------
<S> <C> <C>
Jay M. Moyes............ 42 Vice President of Finance
Janet H. Haskell........ 40 President, Myriad Genetic Laboratories, Inc.
</TABLE>
Jay M. Moyes, Vice President of Finance since July 1993, served as Vice
President of Finance and Chief Financial Officer of Genmark, Inc. from 1991
through July 1993. Mr. Moyes held various positions with the accounting firm
of KPMG Peat Marwick LLP from 1979 through 1991, most recently as a Senior
Manager. He holds an M.B.A. degree from the University of Utah, a B.A. degree
in economics from Weber State University, and is a Certified Public
Accountant.
Janet E. Haskell, President of Myriad Genetic Laboratories, Inc., a wholly-
owned subsidiary, joined the Company in September 1995. Ms. Haskell has 17
years of health care experience with SmithKline Beecham Corporation, most
recently serving as Vice President and General Manager in the Clinical
Laboratories Division of SmithKline. Ms. Haskell is a member of the Advisor
Committee of the National Center for Genome Resources and serves on various
committees of the Biotechnology Industry Organization. Ms. Haskell received a
M.S. in International Management at the American Graduate School of
International Management in 1978.
5
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following Summary Compensation Table sets forth summary information as
to compensation received by the Company's Chief Executive Officer and each of
the three other most highly compensated persons who were serving as executive
officers of the Company as of June 30, 1996 (collectively, the "named
executive officers") for services rendered to the Company in all capacities
during the two fiscal years ended June 30, 1996.
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
--------------------------------- ------------
OTHER SECURITIES
NAME AND PRINCIPAL FISCAL ANNUAL UNDERLYING ALL OTHER
POSITION YEAR SALARY BONUS COMPENSATION(1) OPTIONS(#) COMPENSATION(2)
------------------ ------ -------- -------- --------------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Peter D. Meldrum........ 1996 $205,324 $ 85,000 $ -- 40,000 $5,651
President and Chief 1995 $175,355 $ 90,000 -- 50,000 $5,701
Executive Officer
Mark H. Skolnick, 1996 $176,151 $ 72,000 $ -- 40,000 $6,714
Ph.D................... 1995 $ 90,182 $100,000 -- 57,143 $3,679
Executive Vice
President of Research
and Development
Jay M. Moyes............ 1996 $105,284 $ 40,000 $ -- 20,000 $4,303
Vice President of 1995 $ 92,186 $ 20,000 -- 21,286 $3,759
Finance
Janet E. Haskell........ 1996 $112,743 $ 47,000 $53,817 140,000 $3,811
President, Myriad 1995 $ -- $ -- -- -- $ --
Genetic Laboratories,
Inc.
</TABLE>
- - --------
(1) Other Annual Compensation for Ms. Haskell during fiscal 1996 consisted of
relocation expenses.
(2) All Other Compensation includes (i) the dollar value of premiums paid by
the Company with respect to term life insurance for the benefit of each
named executive officer and (ii) the Company's matching contributions made
under its 401(k) plan on behalf of each named executive officer.
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth information regarding each stock option
granted during the fiscal 1996 year to each of the named executive officers.
The potential realizable values that would exist for the respective options
are based on assumed rates of annual compound stock price appreciation of 0%,
5% and 10% from the date of grant over the full term of the option. Actual
gains, if any, on stock options, exercises and Common Stock holdings are
dependent on the future performance of the Common Stock.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
----------------------------------------------
POTENTIAL REALIZABLE
NUMBER OF % OF TOTAL VALUE AT ASSUMED ANNUAL RATES
SECURITIES OPTIONS OF STOCK PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE FOR OPTION TERM
OPTIONS EMPLOYEES IN PRICE PER EXPIRATION ------------------------------
NAME GRANTED (#) FISCAL YEAR SHARE DATE 0% 5% 10%
---- ----------- ------------ --------- ---------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Peter D. Meldrum........ 40,000(1) 6% $24.75 6/13/2006 -- $ 622,606 $1,577,805
Mark H. Skolnick........ 40,000(1) 6% $24.75 6/13/2006 -- $ 622,606 $1,577,805
Jay M. Moyes............ 20,000(1) 4% $24.75 6/13/2006 -- $ 311,303 $ 788,903
Janet H. Haskell........ 120,000(2) 24% $ 7.00 9/30/2005 $990,000 $2,096,855 $3,794,987
20,000(1) 4% $24.75 6/13/2006 -- $ 311,303 $ 788,903
</TABLE>
- - --------
(1) Options were granted pursuant to the Plan. Options granted vest 20% upon
each anniversary date of the date of grant. Options terminate ten years
after the grant date, subject to earlier termination in accordance with
the Plan and the applicable option agreement. Vesting of options will
accelerate upon a change in control of the Company in accordance with the
applicable option agreement. Options were granted at an
6
<PAGE>
exercise price equal to the fair market value of the Company's Common
Stock, as determined by the closing price of The Nasdaq Stock Market on the
trading day immediately preceding the grant date.
(2) Options were granted pursuant to the Plan. Options granted vest 20% upon
the date of grant, and 20% upon each anniversary date of the date of
grant. Options terminate ten years after the grant date, subject to
earlier termination in accordance with the Plan and the applicable option
agreement. Vesting of options will accelerate upon a change in control of
the Company in accordance with the applicable option agreement. Options
were granted at an exercise price determined by the Board of Directors,
$7.00 per share, that was estimated to be less than the fair market value
of the Company's Common Stock on the grant date, $16.00 per share. The
estimate of the fair market value was based on the price received by the
Company in recent arms length sales of its capital stock to third parties,
discounted for the restrictions on the transfer of the options.
OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END VALUES
The following table provides information regarding the exercises of options
by each of the named executive officers during the 1996 fiscal year. In
addition, this table includes the number of shares covered by both exercisable
and unexercisable stock options as of June 30, 1995 and the values of "in-the-
money" options, which values represent the positive spread between the
exercise price of any such option and the fiscal year-end value of the
Company's Common Stock.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF THE UNEXERCISED
SHARES OPTIONS AT FISCAL YEAR- IN-THE-MONEY OPTIONS
ACQUIRED END AT FISCAL YEAR-END(1)
ON VALUE ------------------------- -------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- -------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Peter D. Meldrum........ 0 $ 0 10,000 80,000 $ 180,000 $ 720,000
Mark H. Skolnick........ 0 $ 0 163,656 85,715 $4,012,140 $ 842,873
Jay M. Moyes............ 1,600 $ 44,075 5,513 39,888 $ 105,132 $ 373,990
Janet H. Haskell........ 10,000 $290,000 14,000 116,000 $ 252,000 $1,728,000
</TABLE>
- - --------
(1) The value of unexercised in-the-money options at fiscal year end assumes a
fair market value for the Company's Common Stock of $25.00, the closing
sale price per share of the Company's Common Stock as reported by The
Nasdaq Stock Market on June 30, 1996.
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE OF CONTROL
ARRANGEMENTS
The Company entered into employment agreements with no defined term with
Peter D. Meldrum, Mark H. Skolnick, Ph.D., and Jay M. Moyes in May 1993,
January 1994, and July 1993, respectively. Pursuant to these agreements,
Messrs. Meldrum, Skolnick and Moyes receive annual base salaries of $100,000,
$65,000, and $80,000, respectively, which base salaries have been increased by
the Board of Directors and may be changed from time to time. Either party may
terminate employment without cause at any time upon 15 days written notice to
the other party or immediately with cause upon written notice to the other
party. Each employment agreement also provides that the employee will not
disclose confidential information of the Company during and after employment
and will not compete with the Company during the term of employment with the
Company.
The Company entered into an employment agreement with no defined term with
Janet H. Haskell in August 1996. Pursuant to the agreement, Ms. Haskell
receives an annual base salary of $150,000, which base salary has been
increased by the Board of Directors and may be changed from time to time at
the discretion of the Board. In addition to the Company's standard benefit
package, the Company provides Ms. Haskell with $1,000,000 life insurance
coverage. Either party may terminate Ms. Haskell's employment with or without
cause, provided that Ms. Haskell must provide the Company with 60 days' prior
written notice. If (i) the Company terminates Ms. Haskell without cause, or
(ii) Ms. Haskell terminates her employment as a result of an uncured reduction
of her responsibilites after a change of control of the Company, then the
Company must pay Ms. Haskell's salary for up to 12 months following
termination. The employment agreement also provides that the employee will not
disclose confidential information of the Company during and after employment
and will not compete with the Company during the term of employment with the
Company.
7
<PAGE>
In the event of a change in control of the Company (as defined in the Plan),
all outstanding unvested options, including options held by Messrs. Meldrum,
Skolnick, and Moyes and Ms. Haskell, will become immediately vested, unless
provision is made for the continuation of such options pursuant to the
applicable provisions of the Plan.
REPORT OF COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION
Overview
The Compensation Committee of the Board of Directors (the "Compensation
Committee") is composed entirely of outside directors. The Compensation
Committee, which consists of Dr. Gilbert, Mr. Horan and Dr. Stringfellow, is
responsible for establishing and administering the Company's executive
compensation policies. This report addresses the compensation policies for
fiscal year 1996 as they affected Mr. Meldrum, in his capacity as President
and Chief Executive Officer of the Company, and the other executive officers
of the Company.
General Compensation Policy
The objectives of the Company's executive compensation program are to:
--Provide a competitive compensation package that will attract and retain
superior talent and reward performance.
--Support the achievement of desired Company performance.
--Align the interests of executives with the long-term interests of
stockholders through award opportunities that can result in ownership of
Common Stock, thereby encouraging the achievement of superior results over
an extended period.
Executive Officer Compensation Program
The Company's executive officer compensation program is comprised of: (i)
base salary, which is set on an annual basis; (ii) annual incentive bonuses,
which are based on the achievement of predetermined objectives; and (iii)
long-term incentive compensation in the form of periodic stock option grants,
with the objective of aligning the executive officers' long-term interests
with those of the stockholders and encouraging the achievement of superior
results over an extended period.
The Compensation Committee performs annual reviews of executive compensation
to confirm the competitiveness of the overall executive compensation packages
as compared with companies who compete with the Company for prospective
employees.
In considering compensation of the Company's executives, one of the factors
the Compensation Committee takes into account is the anticipated tax treatment
to the Company of various components of compensation. The Company does not
believe Section 162(m) of the Internal Revenue Code of 1986, as amended, which
generally disallows a tax deduction for certain compensation in excess of $1
million to any of the executive officers appearing in the Summary Compensation
Table above, will have an effect on the Company. The Compensation Committee
has considered the requirements of Section 162(m) of the Code and its related
regulations. It is the Compensation Committee's present policy to take
reasonable measures to preserve the full deductibility of substantially all
executive compensation, to the extent consistent with its other compensation
objectives.
Base Salary
The Compensation Committee reviews base salary levels for the Company's
executive officers on an annual basis. Base salaries are set competitively
relative to companies in the biotechnology industry and other
8
<PAGE>
comparable companies. In determining salaries the Compensation Committee also
takes into consideration individual experience and performance. The
Compensation Committee seeks to compare the salaries paid by companies similar
in size and stage of development to the Company. Within this comparison group,
the Company seeks to make comparisons to executives at a comparable level of
experience, who have a comparable level of responsibility and expected level
of contribution to the company's performance. In setting base salaries, the
Compensation Committee also takes into account the intense level of
competition among biotechnology companies to attract talented personnel.
Annual Incentive Bonuses
The Company, along with each executive officer, establishes goals related
specifically to that officer's areas of responsibility. The Compensation
Committee determines the amount of each executive's bonus based on a
subjective assessment by the Compensation Committee of the officer's progress
toward completing the established goals. Bonuses are awarded on an annual
basis.
Long-term Incentive Compensation
Long-term incentive compensation, in the form of stock options, allows the
executive officers to share in any appreciation in the value of the Company's
Common Stock. The Compensation Committee believes that stock option
participation aligns executive officer's interests with those of the
stockholders. The amounts of the awards are designed to reward past
performance and create incentives to meet long-term objectives. Awards are
made at a level calculated to be competitive within the biotechnology industry
as well as a broader group of companies of comparable size and complexity. In
determining the amount of each grant, the Compensation Committee takes into
account the number of shares held by the executive prior to the grant.
Chief Executive Officer Compensation
Mr. Meldrum was appointed to the position of President and Chief Executive
Officer in November 1991. In May 1993, Mr. Meldrum entered into the Company's
standard Employment Agreement as required of all Company employees. Under this
agreement, Mr. Meldrum receives an annual base salary of $100,000, which
salary has been increased by the Board of Directors periodically. This is
consistent with the range of salary levels received by his counterparts in
companies in the biotechnology industry and other comparable companies. The
Compensation Committee believes Mr. Meldrum has managed the Company well in a
challenging business climate and has continued to move the Company towards its
long-term objectives.
The Company granted stock options to Mr. Meldrum to purchase 50,000 shares
of Common Stock at an exercise price of $7.00, in fiscal 1995, and 40,000
shares at an exercise price of $24.75, in fiscal 1996. This option package is
designed to align the interests of Mr. Meldrum with those of the Company's
stockholders with respect to short-term operating results and long term
increases in the price of the Company's stock. The grant of these options is
consistent with the goals of the Company's stock option program as a whole.
THE COMPENSATION COMMITTEE:
Walter Gilbert, Ph.D., Chairman
John J. Horan
Dale A. Stringfellow, Ph.D.
9
<PAGE>
PERFORMANCE GRAPH
The following graph compares the quarterly percentage change in the Company's
cumulative total stockholder return on its Common Stock during a period
commencing on October 6, 1995 (the date of the Company's initial public
offering) and ending on June 28, 1996 (as measured by dividing the difference
between the Company's share price at the end and the beginning of the
measurement period; by the share price at the beginning of the measurement
period) with the cumulative total return of The Nasdaq Stock Market and the
Nasdaq Health Services Stock Index during such period. It should be noted that
the Company has not paid any dividends on the Common Stock, and no dividends
are included in the representation of the Company's performance. The stock
price performance on the graph below is not necessarily indicative of future
price performance.
<TABLE>
<CAPTION>
10/6/95 12/29/95 3/29/96 6/28/96
------- -------- ------- -------
<S> <C> <C> <C> <C>
Myriad Genetics Inc. $100 $181.25 $148.61 $138.89
Nasdaq Stock Market (U.S.) $100 $104.40 $109.26 $118.19
Nasdaq Health Services Stocks $100 $119.15 $124.20 $134.94
</TABLE>
SECTION 16(A) REPORTING DELINQUENCIES
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and officers, and persons who own more than 10% of the Company's
Common Stock, to file with the Securities and Exchange Commission (the "SEC")
initial reports of beneficial ownership and reports of changes in beneficial
ownership of the Common Stock and other equity securities of the Company.
Officers, directors and greater than 10% beneficial owners are required by SEC
regulation to furnish the Company with copies of all Section 16(a) forms they
file.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended June 30,
10
<PAGE>
1996 all Section 16(a) filing requirements applicable to its officers,
directors and greater than 10% beneficial owners were complied with, except
that (i) Mr. Meldrum inadvertently under reported the number of shares
beneficially indirectly owned in his timely filed Form 3, (ii) Dr.
Stringfellow inadvertently did not report 2,184 shares that he beneficially
indirectly owned in his timely filed Form 3 and filed one late report
describing a change in the nature of his beneficial ownership of such shares,
and (iii) Mr. Dennis Farrar, a former director and officer of the Company,
inadvertently over reported the number of shares he beneficially owned in his
timely filed Form 3 and underreported the number of shares he indirectly
beneficially acquired in two transactions reported in two timely filed Form
4's. All of these reports were corrected by amended reports or by filing
Form 5 reports.
CERTAIN TRANSACTIONS
In September 1995, Bayer purchased 588,235 shares of the Company's Series D
Convertible Preferred Stock for a purchase price of $17.00 per share (for an
aggregate purchase price of approximately $10,000,000). Bayer also entered
into a Collaborative Research and License Agreement related to the discovery
and commercialization of certain genes that may cause obesity, osteoporosis,
and asthma. Upon consummation of the Company's initial public offering, the
Series D Convertible Preferred Stock received by Bayer was automatically
converted into 588,235 shares of Common Stock.
ELECTION OF DIRECTORS
(NOTICE ITEM 1)
Under the Company's Restated Certificate of Incorporation and Restated By-
Laws, the number of directors is fixed from time to time by the Board of
Directors. The Board of Directors has fixed the size of the Board at eight (8)
directorships.
The Board of Directors currently consists of the following eight members:
Walter Gilbert, Ph.D., Wolfgang Hartwig, Ph.D., Arthur H. Hayes, Jr., M.D.,
John J. Horan, Alan J. Main, Ph.D., Peter D. Meldrum, Mark H. Skolnick, Ph.D.,
and Dale A. Stringfellow, Ph.D.
Pursuant to the Company's Restated Certificate of Incorporation and Restated
By-Laws, the Board of Directors on September 17, 1996 unanimously adopted a
resolution to classify the Board of Directors into three classes and voted to
nominate and recommend to the Stockholders the election of Dr. Main, Dr.
Hartwig, and Dr. Stringfellow (the "Class I Directors"); Mr. Meldrum and Dr.
Skolnick ("Class II Directors"); and Mr. Horan, Dr. Hayes, and Dr. Gilbert
("Class III Directors") for the following initial terms: Class I Directors
with a term ending in 1997, Class II Directors with a term ending in 1998, and
Class III Directors with a term ending in 1999. At each annual meeting of
Stockholders following the 1996 Meeting and upon the expiration of the initial
terms, directors will be elected for three year terms.
Unless authority to vote for any of the nominees named above is withheld,
the shares represented by the enclosed proxy will be voted FOR the election as
directors of such nominees. In the event that any nominee shall become unable
or unwilling to serve, the shares represented by the enclosed proxy will be
voted for the election of such other person as the Board of Directors may
recommend in his place. The Board has no reason to believe that any nominee
will be unable or unwilling to serve.
A plurality of the shares voted affirmatively or negatively at the Meeting
is required to elect each nominee as a director.
THE BOARD OF DIRECTORS RECOMMENDS THE ELECTION OF DR. GILBERT, DR. HARTWIG,
DR. HAYES, MR. HORAN, DR. MAIN, MR. MELDRUM, DR. SKOLNICK, AND DR.
STRINGFELLOW AS DIRECTORS, AND PROXIES SOLICITED BY THE BOARD WILL BE VOTED IN
FAVOR THEREOF UNLESS A STOCKHOLDER HAS INDICATED OTHERWISE ON THE PROXY.
11
<PAGE>
AMENDMENTS TO THE COMPANY'S
1992 EMPLOYEE, DIRECTOR AND CONSULTANT STOCK OPTION PLAN
(NOTICE ITEM 2)
GENERAL
The Company's Board of Directors and the Stockholders approved the 1992
Employee, Director and Consultant Stock Option Plan (the "Plan") in 1992, and
subsequently amended and/or restated the Plan, most recently in September
1996. A total of 1,000,000 shares of Common Stock were initially reserved for
issuance under the Plan. By the terms of the Plan, the Plan may be amended by
the Board of Directors provided that any amendment approved by the Board of
Directors which is of a scope that requires Stockholder approval in order to
ensure favorable federal income tax treatment for any incentive stock options
under the Internal Revenue Code of 1986 (the "Code") Section 422 is subject to
obtaining such Stockholder approval. On September 17, 1996, the Board of
Directors voted to approve an amendment to the Plan to increase by 500,000
shares the aggregate number of shares of Common Stock for which stock options
may be granted under the Plan. The Board believes that the increase in the
number of shares reserved for issuance under the Plan is advisable to give the
Company the flexibility needed to attract, retain and motivate employees,
directors and consultants. This amendment is being submitted for Stockholder
approval to ensure continued favorable federal income tax treatment under
Section 422 of the Code and to comply with the requirements of The Nasdaq
Stock Market.
On September 17, 1996, the Board of Directors also voted to approve an
amendment to the Plan to limit the number of shares with respect to which
options may be granted to any employee in any calendar year. The limit in the
proposed amendment is 1,000,000 shares per employee per year. If approved, the
amendment would be made by adding the following as the penultimate sentence of
Paragraph 5 of the Plan:
"In no event shall any employee be granted in any calendar
year Options to purchase more than 1,000,000 shares of the
Company's Common Stock pursuant to this Plan."
The Plan did not previously impose a limit on the number of shares for which
stock options may be granted to any employee. This amendment has been approved
by the Board, and is being submitted for Stockholder approval (i) to preserve
the deductibility of compensation expense with respect to stock options
granted or awarded pursuant to the Plan under Section 162(m) of the Code,
which was added to the Code by the Omnibus Budget Reconciliation Act of 1993,
and the regulations thereunder, (ii) to comply with Section 422 of the Code,
and (iii) to comply with the requirements of The Nasdaq Stock Market.
MATERIAL FEATURES OF THE PLAN
The purpose of the Plan is to attract, retain and motivate employees,
directors and consultants through the issuance of stock options and to
encourage ownership of shares of Common Stock by employees, directors and
consultants of the Company. The Plan is administered by the Board of
Directors. Subject to the provisions of the Plan, the Board of Directors
determines the persons to whom options will be granted, the number of shares
to be covered by each option and the terms and conditions upon which an option
may be granted, and has the authority to administer the provisions of the
Plan. All employees, directors and consultants of the Company and its
affiliates are eligible to participate in the Plan. The Company currently has
170 full time equivalent employees.
Options granted under the Plan may be either (i) options intended to qualify
as "incentive stock options" under Section 422 of the Code, or (ii) non-
qualified stock options. Incentive stock options may be granted under the Plan
to employees of the Company and its affiliates. Non-qualified stock options
may be granted to consultants, directors and employees of the Company and its
affiliates. The Plan also provides for the automatic grant of non-qualified
options to non-employee directors of the Company. Non-employee directors
nominated pursuant to a contractual obligation are not entitled to such
automatic grants. Each new non-employee director who is elected or appointed
to the Board after October 12, 1996, the date on which the Company's initial
public offering was consummated, upon joining the Board, is granted a ten-year
option for 5,000 shares of Common
12
<PAGE>
Stock ("the Initial Grant") at the then current fair market value of the
Common Stock. Thereafter, on the anniversary of the Initial Grant, the non-
employee director will receive an additional ten-year option for 7,500 shares
with an exercise price equal to the then fair market value of the Common
Stock. Options granted to non-employee directors vest thirty-three and 33/100
percent (33.33%) per year, assuming continued membership on the Board. The
amount of each option grant subsequent to the Initial Grant will be adjusted
on a pro rata basis to reflect increases in the issued and outstanding shares
of Common Stock, subject to limitations for de minimis changes. No options
were granted under this formula during fiscal 1996.
The aggregate fair market value (determined at the time of grant) of shares
issuable pursuant to incentive stock options which become exercisable in any
calendar year under any incentive stock option plan of the Company may not
exceed $100,000. Incentive stock options granted under the Plan may not be
granted at a price less than the fair market value of the Common Stock on the
date of grant, or 110% of fair market value in the case of employees holding
10% or more of the voting stock of the Company. Non-qualified stock options
granted under the Plan may not be granted at an exercise price less than the
par value per share of the Common Stock. Incentive stock options granted under
the Plan expire not more than ten years from the date of grant, or not more
than five years from the date of grant in the case of incentive stock options
granted to an employee holding 10% or more of the voting stock of the Company.
An option granted under the Plan is exercisable, during the optionholder's
lifetime, only by the optionholder and is not transferable by him or her
except by will or by the laws of descent and distribution or pursuant to a
Qualified Domestic Relations Order.
An incentive stock option granted under the Plan may, at the Board of
Director's discretion, be exercised after the termination of the
optionholder's employment with the Company (other than by reason of death,
disability or termination for cause as defined in the Plan) to the extent
exercisable on the date of such termination, at any time prior to the earlier
of the option's specified expiration date or 90 days after such termination.
In granting any non-qualified stock option, the Board of Directors may specify
that such non-qualified stock option shall be subject to such termination or
cancellation provisions as the Board of Directors shall determine. In the
event of the optionholder's death or disability, both incentive stock options
and non-qualified stock options may be exercised, to the extent exercisable on
the date of death or disability (plus a pro rata portion of the option if the
option vests periodically), by the optionholder or the optionholder's
survivors at any time prior to the earlier of the option's specified
expiration date or one year from the date of the optionholder's death or
disability. In the event of the optionholder's termination for cause, all
outstanding and unexercised options are forfeited.
If the shares of Common Stock shall be subdivided or combined into a greater
or smaller number of shares or if the Company shall issue any shares of Common
Stock as a stock dividend on its outstanding Common Stock, the number of
shares of Common Stock deliverable upon the exercise of an option granted
under the Plan shall be appropriately increased or decreased proportionately,
and appropriate adjustments shall be made in the purchase price per share to
reflect such subdivision, combination or stock dividend. If the Company is to
be consolidated with or acquired by another entity in a merger, sale of all or
substantially all of the Company's assets or otherwise (an "Acquisition"), the
Board of Directors or the Board of Directors of any entity assuming the
obligations of the Company under the Plan (the "Successor Board"), shall, as
to outstanding options under the Plan either (i) make appropriate provision
for the continuation of such options by substituting on an equitable basis for
the shares then subject to such options the consideration payable with respect
to the outstanding shares of Common Stock in connection with the Acquisition
or securities of the successor or acquiring entity; or (ii) upon written
notice to the participants, provide that all options must be exercised (either
to the extent then exercisable or, at the discretion of the Board of
Directors, all options being made fully exercisable for purposes of such
transaction) within a specified number of days of the date of such notice, at
the end of which period the options shall terminate; or (iii) terminate all
options in exchange for a cash payment equal to the excess of the fair market
value of the shares subject to each such option (either to the extent then
exercisable or, at the discretion of the Board of Directors, all options being
made fully exercisable for purposes of such transaction) over the exercise
price thereof. In the event of a recapitalization or reorganization of the
Company (other than an Acquisition) pursuant to which securities of the
Company or of another corporation are issued with respect to the outstanding
shares of Common Stock, an optionholder upon exercising an option under the
Plan, shall be
13
<PAGE>
entitled to receive for the purchase price paid upon such exercise the
securities he or she would have received if he or she had exercised such
option prior to such recapitalization or reorganization.
The Plan may be amended by the Stockholders of the Company. The Plan may
also be amended by the Board of Directors, provided that any amendment
approved by the Board of Directors which is of a scope that requires
Stockholder approval in order to ensure favorable federal income tax treatment
for any incentive stock options under Code Section 422, is subject to
obtaining such Stockholder approval.
OPTION INFORMATION
The following table sets forth as of August 23, 1996, all options granted
pursuant to the Plan to (i) the named executive officers, (ii) all current
executive officers of the Company as a group, (iii) all current directors of
the Company who are not executive officers as a group, and (iv) all employees,
including all current officers who are not executive officers, as a group.
<TABLE>
<CAPTION>
NO. OF OPTIONS
NAME TITLE GRANTED (#)(1)
---- ----- --------------
<S> <C> <C>
Peter D. Meldrum........ President and Chief Executive Officer 87,143
Mark H. Skolnick........ Executive Vice President of Research and Development 97,143
Jay M. Moyes............ Vice President of Finance 45,401
Janet H. Haskell........ President, Myriad Genetic Laboratories, Inc. 130,000
All current executive officers as a group (4 persons)........................ 359,687
All current directors who are not executive officers (6 persons)............. 60,000
All employees who are not executive officers as a group(2)................... 276,680
</TABLE>
- - --------
(1) Does not include options to purchase 2,857, 1,600 and 10,000 shares of
Common Stock which have been previously exercised by Mr. Meldrum, Mr.
Moyes and Ms. Haskell, respectively.
(2) Net of all canceled options. Does not include options to purchase 39,064
shares of Common Stock that have been exercised by all such employees.
On August 23, 1996, the market value of the Company's Common Stock was
$21.25 per share, based on the closing price of such Common Stock as quoted on
the Nasdaq Stock Market.
FEDERAL INCOME TAX CONSIDERATIONS
The following is a description of certain United States federal income tax
consequences of the issuance and exercise of options under the Plan:
Incentive Stock Options. An incentive stock option does not result in
taxable income to the optionee or deduction to the Company at the time it is
granted or exercised, provided that no disposition is made by the optionee of
the shares acquired pursuant to the option within two years after the date of
grant of the option nor within one year after the date of issuance of shares
to him (the "ISO holding period"). However, the difference between the fair
market value of the shares on the date of exercise and the option price will
be an item of tax preference includible in "alternative minimum taxable
income." Upon disposition of the shares after the expiration of the ISO
holding period, the optionee will generally recognize long term capital gain
or loss based on the difference between the disposition proceeds and the
option price paid for the shares. If the shares are disposed of prior to the
expiration of the ISO holding period, the optionee generally will recognize
taxable compensation, and the Company will have a corresponding deduction, in
the year of the disposition, equal to the excess of the fair market value of
the shares on the date of exercise of the option over the option price. Any
additional gain realized on the disposition will normally constitute capital
gain. If the amount realized upon such a disqualifying disposition is less
than fair market value of the shares on the date of exercise, the amount of
compensation income will be limited to the excess of the amount realized over
the optionee's adjusted basis in the shares.
14
<PAGE>
Non-Qualified Stock Options. The grant of a non-qualified option will not
result in taxable income to the optionee or deduction to the Company at the
time of grant. The optionee will recognize taxable compensation, and the
Company will have a corresponding deduction, at the time of exercise in the
amount of the excess of the then fair market value of the shares acquired over
the option price. Upon disposition of the shares, the optionee will generally
realize capital gain or loss, and his basis for determining gain or loss will
be the sum of the option price paid for the shares plus the amount of
compensation income recognized on exercise of the option.
The affirmative vote of a majority of the shares voted affirmatively or
negatively at the Meeting is required to approve the amendments to the Plan.
THE BOARD OF DIRECTORS RECOMMENDS APPROVAL OF THE ADOPTION OF THE AMENDMENTS
TO THE PLAN TO INCREASE BY 500,000 SHARES THE AGGREGATE NUMBER OF SHARES FOR
WHICH STOCK OPTIONS MAY BE GRANTED UNDER THE PLAN AND TO LIMIT THE NUMBER OF
SHARES OF COMMON STOCK THAT MAY BE GRANTED PURSUANT TO STOCK OPTIONS TO ANY
EMPLOYEE IN ANY ONE YEAR PERIOD TO A NUMBER NOT TO EXCEED 1,000,000 SHARES,
AND PROXIES SOLICITED BY THE BOARD WILL BE VOTED IN FAVOR OF SUCH AMENDMENTS
UNLESS A STOCKHOLDER HAS INDICATED OTHERWISE ON THE PROXY.
INDEPENDENT PUBLIC ACCOUNTANTS
(NOTICE ITEM 3)
The Board of Directors has appointed KPMG Peat Marwick LLP, independent
public accountants, to audit the financial statements of the Company for the
fiscal year ending June 30, 1997. The Board proposes that the Stockholders
ratify this appointment, although such ratification is not required under
Delaware law or the Company's Restated Certificate of Incorporation or
Restated By-Laws. KPMG Peat Marwick LLP audited the Company's financial
statements for the fiscal year ended June 30, 1996. The Company expects that
representatives of KPMG Peat Marwick LLP will be present at the Meeting, with
the opportunity to make a statement if they so desire, and will be available
to respond to appropriate questions.
The affirmative vote of a majority of the shares voted affirmatively or
negatively at the Meeting is required to ratify the appointment of the
independent public accountants.
In the event that ratification of the appointment of KPMG Peat Marwick LLP
as the independent public accountants for the Company is not obtained at the
Meeting, the Board of Directors will reconsider its appointment.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE TO APPROVE THE RATIFICATION OF THE
APPOINTMENT OF KPMG PEAT MARWICK LLP AS INDEPENDENT PUBLIC ACCOUNTANTS, AND
PROXIES SOLICITED BY THE BOARD WILL BE VOTED IN FAVOR THEREOF UNLESS A
STOCKHOLDER HAS INDICATED OTHERWISE ON THE PROXY.
OTHER MATTERS
The Board of Directors knows of no other business which will be presented to
the Meeting. If any other business is properly brought before the Meeting, it
is intended that proxies in the enclosed form will be voted in respect thereof
in accordance with the judgment of the persons voting the proxies.
STOCKHOLDER PROPOSALS
To be considered for presentation at the Annual Meeting of Stockholders to
be held in 1997, Stockholder proposals must be received, marked for the
attention of: Secretary, Myriad Genetics, Inc., 320 Wakara Way, Salt
15
<PAGE>
Lake City, Utah 84108, not later than June 17, 1997. In addition, the
Company's Restated By-Laws require that notice of Stockholder proposals and
nominations for director for the 1997 Annual Meeting be delivered to the
Secretary of the Company not less than sixty (60) days nor more than ninety
(90) days prior to November 15, 1997, unless the date of the 1997 Annual
Meeting is more than thirty (30) days before or more than sixty (60) days
after November 15, 1997, in which event Stockholders may deliver such notice
not earlier than the ninetieth (90th) day prior to the 1997 Annual Meeting and
not later than the close of business on the later of the sixtieth (60th) day
prior to the 1997 Annual Meeting or the close of business on the tenth (10th)
day following the day on which public disclosure of the date of the meeting
was made. Nothing in this paragraph shall be deemed to require the Company to
include in its proxy statement and proxy relating to the 1997 Annual Meeting
any stockholder proposal that does not meet all of the requirements for
inclusion established by the Securities and Exchange Commission in effect at
the time such proposal is received.
WHETHER OR NOT YOU INTEND TO BE PRESENT AT THE MEETING, YOU ARE URGED TO
FILL OUT, SIGN, DATE AND RETURN THE ENCLOSED PROXY AT YOUR EARLIEST
CONVENIENCE.
By order of the Board of Directors:
/s/ Jay M. Moyes
Jay M. Moyes
Assistant Secretary
October 15, 1996
THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED JUNE 30,
1996 (OTHER THAN EXHIBITS THERETO) FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION, WHICH PROVIDES ADDITIONAL INFORMATION ABOUT THE COMPANY, IS
AVAILABLE TO BENEFICIAL OWNERS OF THE COMPANY'S COMMON STOCK WITHOUT CHARGE
UPON WRITTEN REQUEST TO SECRETARY, MYRIAD GENETICS, INC., 320 WAKARA WAY, SALT
LAKE CITY, UTAH 84108 (801-584-3600).
16
<PAGE>
APPENDIX A
MYRIAD GENETICS, INC.
1992 EMPLOYEE, DIRECTOR AND CONSULTANT STOCK OPTION PLAN
(AS AMENDED AND RESTATED AUGUST 14, 1995)
1. DEFINITIONS.
-----------
Unless otherwise specified or unless the context otherwise
requires, the following terms, as used in this Myriad Genetics, Inc.
1992 Employee, Director and Consultant Stock Option Plan, have the
following meanings:
Administrator means the Board of Directors, unless it has
-------------
delegated power to act on its behalf to a committee. (See
Paragraph 4)
Affiliate means a corporation which, for purposes of Section 424
---------
of the Code, is a parent or subsidiary of the Company, direct or
indirect.
Board of Directors means the Board of Directors of the Company.
------------------
Code means the United States Internal Revenue Code of 1986, as
----
amended.
Committee means the Committee to which the Board of Directors
---------
has delegated power to act under or pursuant to the provisions
of the Plan.
Common Stock means shares of the Company's common stock, $.01
------------
par value.
Company means Myriad Genetics, Inc., a Delaware
-------
corporation.
Disability or Disabled means permanent and total disability as
---------- --------
defined in Section 22(e)(3) of the Code.
Fair Market Value of a Share of Common Stock means:
-----------------
(1) If the Common Stock is listed on a national securities
exchange or traded in the over-the-counter market and sales
prices are regularly reported for the Common Stock, either (a)
the average of the closing or
<PAGE>
last prices of the Common Stock on the Composite Tape or other
comparable reporting system for the ten (10) consecutive trading
days immediately preceding the applicable date or (b) the
closing or last price of the Common Stock on the Composite Tape
or other comparable reporting system for the trading day
immediately preceding the applicable date, as the Administrator
shall determine;
(2) If the Common Stock is not traded on a national securities
exchange but is traded on the over-the-counter market, if sales
prices are not regularly reported for the Common Stock for the
trading days or day referred to in clause (1), and if bid and
asked prices for the Common Stock are regularly reported, either
(a) the average of the mean between the bid and the asked price
for the Common Stock at the close of trading in the over-the-
counter market for the ten (10) days on which Common Stock was
traded immediately preceding the applicable date or (b) the mean
between the bid and the asked price for the Common Stock at the
close of trading in the over-the-counter market for the trading
day on which Common Stock was traded immediately preceding the
applicable date, as the Administrator shall determine; and
(3) If the Common Stock is neither listed on a national
securities exchange nor traded in the over-the-counter market,
such value as the Administrator, in good faith, shall determine.
ISO means an option meant to qualify as an incentive stock
---
option under Code Section 422.
Key Employee means an employee of the Company or of an Affiliate
------------
(including, without limitation, an employee who is also serving
as an officer or director of the Company or of an Affiliate),
designated by the Administrator to be eligible to be granted one
or more Options under the Plan.
Non-Qualified Option means an option which is not intended to
-------------
qualify as an ISO.
Option means an ISO or Non-Qualified Option granted under the
------
Plan.
Option Agreement means an agreement between the Company and a
----------------
Participant delivered pursuant to the Plan.
Participant means a Key Employee, director or consultant to whom
-----------
one or more Options are granted under the Plan. As used herein,
"Participant" shall include "Participant's Survivors" where the
context requires.
<PAGE>
Participant's Survivors means a deceased Participant's legal
-----------------------
representatives and/or any person or persons who acquired the
Participant's rights to an Option by will or by the laws of
descent and distribution.
Plan means this Myriad Genetics, Inc. 1992 Employee,
----
Director and Consultant Stock Option Plan.
Shares means shares of the Common Stock as to which Options have
------
been or may be granted under the Plan or any shares of capital
stock into which the Shares are changed or for which they are
exchanged within the provisions of Paragraph 3 of the Plan. The
Shares issued upon exercise of Options granted under the Plan
may be authorized and unissued shares or shares held by the
Company in its treasury, or both.
2. PURPOSES OF THE PLAN.
--------------------
The Plan is intended to encourage ownership of Shares by Key Employees,
directors and certain consultants to the Company in order to attract such
people, to induce them to work for the benefit of the Company or of an
Affiliate and to provide additional incentive for them to promote the success
of the Company or of an Affiliate. The Plan provides for the granting of ISOs
and Non-Qualified Options.
3. SHARES SUBJECT TO THE PLAN.
--------------------------
The number of Shares subject to this Plan as to which Options may be
granted from time to time shall be 1,500,000 or the equivalent of such number
of Shares after the Administrator, in its sole discretion, has interpreted the
effect of any stock split, stock dividend, combination, recapitalization or
similar transaction in accordance with Paragraph 16 of the Plan.
If an Option ceases to be "outstanding", in whole or in part, the Shares
which were subject to such Option shall be available for the granting of other
Options under the Plan. Any Option shall be treated as "outstanding" until
such Option is exercised in full, or terminates or expires under the provisions
of the Plan, or by agreement of the parties to the pertinent Option Agreement.
<PAGE>
4. ADMINISTRATION OF THE PLAN.
--------------------------
The Administrator of the Plan will be the Board of Directors, except to the
extent the Board of Directors delegates its authority to a Committee of the
Board of Directors. Following the date on which the Common Stock is registered
under the Securities and Exchange Act of 1934, as amended (the "1934 Act"), the
Plan is intended to comply in all respects with Rule 16b-3 or its successors,
promulgated pursuant to Section 16 of the 1934 Act with respect to Participants
who are subject to Section 16 of the 1934 Act, and any provision in this Plan
with respect to such persons contrary to Rule 16b-3 shall be deemed null and
void to the extent permissible by law and deemed appropriate by the
Administrator. Subject to the provisions of the Plan, the Administrator is
authorized to:
a. Interpret the provisions of the Plan or of any Option or Option
Agreement and to make all rules and determinations which it deems
necessary or advisable for the administration of the Plan;
b. Determine which employees of the Company or of an Affiliate
shall be designated as Key Employees and which of the Key Employees,
directors and consultants shall be granted Options;
c. Determine the number of Shares for which an Option or Options
shall be granted; and
d. Specify the terms and conditions upon which an Option or Options
may be granted;
provided, however, that all such interpretations, rules, determinations,
terms and conditions shall be made and prescribed in the context of preserving
the tax status under Code Section 422 of those Options which are designated as
ISOs. Subject to the foregoing, the interpretation and construction by the
Administrator of any provisions of the Plan or of any Option granted under it
shall be final, unless otherwise determined by the Board of Directors, if the
Administrator is other than the Board of Directors.
5. ELIGIBILITY FOR PARTICIPATION.
-----------------------------
The Administrator will, in its sole discretion, name the Participants in
the Plan, provided, however, that each Participant must be a Key Employee,
director or consultant of the Company or of an Affiliate at the time an Option
is granted. Members of the Company's Board of Directors, who are not (i)
employees of the Company or of an Affiliate or (ii) nominated or elected
pursuant to or in satisfaction of a contractual
<PAGE>
obligation of the Company, may receive options pursuant to Paragraph 6,
Subparagraph A(e), but only pursuant thereto. Notwithstanding any of the
foregoing provisions, the Administrator may authorize the grant of an Option to
a person not then an employee, director or consultant of the Company or of an
Affiliate. The actual grant of such Option, however, shall be conditioned upon
such person becoming eligible to become a Participant at or prior to the time of
the execution of the Option Agreement evidencing such Option. ISOs may be
granted only to Key Employees. Non-Qualified Options may be granted to any Key
Employee, director or consultant of the Company or an Affiliate. In no event
shall any employee be granted in any calendar year Options to purchase more than
1,000,000 shares of the Company's Common Stock pursuant to this Plan. The
granting of any Option to any individual shall neither entitle that individual
to, nor disqualify him or her from, participation in any other grant of Options.
6. TERMS AND CONDITIONS OF OPTIONS.
-------------------------------
Each Option shall be set forth in writing in an Option Agreement, duly
executed by the Company and, to the extent required by law or requested by the
Company, by the Participant. The Administrator may provide that Options be,
granted subject to such conditions as the Administrator may deem appropriate
including, without limitation, subsequent approval by the stockholders of the
Company of this Plan or any amendments thereto. The Option Agreements shall be
subject to at least the following terms and conditions:
A. Non-Qualified Options: Each Option intended to be a Non-
---------------------
Qualified Option shall be subject to the terms and conditions
which the Administrator determines to be appropriate and in the
best interest of the Company, subject to the following minimum
standards for any such Non-Qualified Option:
a. Option Price: The option price (per share) of
the Shares covered by each Option shall be determined by
the Administrator but shall not be less than the par value
per share of Common Stock.
b. Each Option Agreement shall state the number of
Shares to which it pertains;
c. Each Option Agreement shall state the date or
dates on which it first is exercisable and the date after
which it may no longer be exercised, and may provide that
the Option rights accrue or become exercisable in
installments over a period of months or years, or upon the
occurrence of certain conditions
<PAGE>
or the attainment of stated goals or events; and
d. Exercise of any Option may be conditioned upon
the Participant's execution of a Share purchase agreement
in form satisfactory to the Administrator providing for
certain protections for the Company and its other
shareholders including requirements that:
i. The Participant's or the
Participant's Survivors' right to sell the Shares may
be restricted; and
ii. The Participant or the
Participant's Survivors may be required to execute
letters of investment intent and must also acknowledge
that the Shares will bear legends noting any
applicable restrictions.
e. Each director of the Company who is not (i) an
employee of the Company or any Affiliate, or (ii) nominated
or elected pursuant to or in satisfaction of a contractual
obligation of the Company, who is elected or appointed to
the Board of Directors after the date on which the initial
underwritten public offering of the Company's Common Stock
is consummated, upon such election or appointment shall be
granted a Non-Qualified Option to purchase 5,000 Shares
(the "Initial Grant") and upon every anniversary thereof,
provided that on such dates such director has been in the
continued and uninterrupted service of the Company as a
director since his or her election or appointment and
remains a director of the Company who is not (i) an
employee of the Company or (ii) nominated or elected
pursuant to or in satisfaction of a contractual obligation
of the Company, each such Director shall be granted an
additional Non-Qualified Option to purchase 7,500 Shares.
Each such Option shall (i) have an exercise price equal to
the Fair Market Value (per share) of the Shares on the date
of grant of the Option, (ii) have a term of ten (10) years,
and (iii) shall become cumulatively exercisable in three
(3) equal annual installments of thirty-three
<PAGE>
and 33/100 percent (33.33%) each, upon completion of one
full year of service on the Board of directors after the
date of grant, and continuing on each of the next two (2)
full years of service thereafter. Additionally, each grant
of an Option subsequent to the Initial Grant shall be
subject to adjustment such that the number of Shares
subject to such Option, shall be increased on a
proportional basis to reflect any increase in the issued
and outstanding shares of capital stock of the Company in
the year of the subject grant over the number of such
shares issued and outstanding at the time of the Initial
Grant, provided, that no such adjustment shall be required
until such adjustment results in an increase in the grant
equal to at least 100 Shares. Any director entitled to
receive an Option grant under this subparagraph may elect
to decline the Option. Notwithstanding the provisions of
Paragraph 23 concerning amendment of the Plan, the
provisions of this subparagraph shall not be amended more
than once every six months, other than to comport with
changes in the Code, the Employee Retirement Income
Security Act, or the rules thereunder. The provisions of
Paragraphs 10, 11, 12 and 13 below shall not apply to
Options granted pursuant to this subparagraph.
Except as otherwise provided in the pertinent Option Agreement,
if a director who receives Options pursuant to this subparagraph:
i. ceases to be a member of the Board
of Directors of the Company for any reason other than
death or disability, any then unexercised Options granted
to such director may be exercised by the director within
a period of ninety (90) days after the date the director
ceases to be a member of the Board of Directors, but only
to the extent of the number of Shares with respect to
which the Options are exercisable on the date the
director ceases to be a member of the Board of Directors,
and in no event later than the expiration date of the
Option; or,
<PAGE>
ii. ceases to be a member of the Board
of Directors of the Company by reason of his or her death
or Disability, any then unexercised Options granted to
such Director may be exercised by the Participant (or by
the Participant's personal representative, or the
Participant's Survivors) within a period of one hundred
eighty (180) days after the date the director ceases to
be a member of the Board of Directors, but only to the
extent of the number of Shares with respect to which the
Options are exercisable on the date the director ceases
to be a member of the Board of Directors, and in no event
later than the expiration date of the Option.
B. ISOs: Each Option intended to be an ISO shall be issued only to a Key
----
Employee and be subject to at least the following terms and conditions,
with such additional restrictions or changes as the Administrator
determines are appropriate but not in conflict with Code Section 422 and
relevant regulations and rulings of the Internal Revenue Service:
a. Minimum standards: The ISO shall meet the minimum
standards required of Non-Qualified Options, as described above,
except clause (a) thereunder.
b. Option Price: Immediately before the Option is
granted, if the Participant owns, directly or by reason of the applicable
attribution rules in Code Section 424(d):
i. Ten percent (10%) or less of the
total combined voting power of all classes of
share capital of the Company or an Affiliate, the
Option price per share of the Shares covered by
each Option shall not be less than one hundred
percent (100%) of the Fair Market Value per share
of the Shares on the date of the grant of the
Option.
ii. More than ten percent (10%) of the
total combined voting power of all classes of share
capital of the
<PAGE>
Company or an Affiliate, the Option price per share of
the Shares covered by each Option shall not be less than
one hundred ten percent (110%) of the said Fair Market
Value on the date of grant.
c. Term of Option: For Participants who own
i. Ten percent (10%) or less of the total
-------
combined voting power of all classes of share capital of
the Company or an Affiliate, each Option shall terminate
not more than ten (10) years from the date of the grant
or at such earlier time as the Option Agreement may
provide;
ii. More than ten percent (10%) of the
total combined voting power of all classes of share
capital of the Company or an Affiliate, each Option shall
terminate not more than five (5) years from the date of
the grant or at such earlier time as the Option Agreement
may provide.
d. Limitation on Yearly Exercise: The Option
Agreements shall restrict the amount of Options which may be
exercisable in any calendar year (under this or any other ISO
plan of the Company or an Affiliate) so that the aggregate Fair
Market Value (determined at the time each ISO is granted) of
the stock with respect to which ISOs are exercisable for the
first time by the Participant in any calendar year does not
exceed one hundred thousand dollars ($100,000), provided that
this subparagraph (e) shall have no force or effect if its
inclusion in the Plan is not necessary for Options issued as
ISOs to qualify as ISOs pursuant to Section 422(d) of the Code.
e. Limitation on Grant of ISOs: No ISOs shall be
granted after the date which is the earlier of ten (10) years
-------
from the date of the adoption of the Plan by the Company and
the date of the approval of the Plan by the shareholders of the
Company.
<PAGE>
7. EXERCISE OF OPTION AND ISSUE OF SHARES.
--------------------------------------
An Option (or any part or installment thereof) shall be exercised by
giving written notice to the Company at its principal office address, together
with provision for payment of the full purchase price in accordance with this
paragraph for the Shares as to which such Option is being exercised, and upon
compliance with any other condition(s) set forth in the Option Agreement. Such
written notice shall be signed by the person exercising the Option, shall state
the number of Shares with respect to which the Option is being exercised and
shall contain any representation required by the Plan or the Option Agreement.
Payment of the purchase price for the Shares as to which such Option is being
exercised shall be made (a) in United States dollars in cash or by check, or (b)
at the discretion of the Administrator, through delivery of shares of Common
Stock having a fair market value equal as of the date of the exercise to the
cash exercise price of the Option, determined in good faith by the
Administrator, or (c) at the discretion of the Administrator, by delivery of the
grantee's personal recourse note bearing interest payable not less than annually
at no less than 100% of the applicable Federal rate, as defined in Section
1274(d) of the Code, or (d) at the discretion of the Administrator, in
accordance with a cashless exercise program established with a securities
brokerage firm, and approved by the Administrator, (e) at the discretion of the
Administrator, by any combination of (a), (b), (c) and (d) above.
Notwithstanding the foregoing, the Administrator shall accept only such payment
on exercise of an ISO as is permitted by Section 422 of the Code.
The Company shall then reasonably promptly deliver the Shares as to
which such Option was exercised to the Participant (or to the Participant's
Survivors, as the case may be). In determining what constitutes "reasonably
promptly," it is expressly delayed by the Company in order to comply with any
law or regulation which requires the Company to take any action with respect to
the Shares prior to their issuance. The Shares shall, upon delivery, be
evidenced by an appropriate certificate or certificates for fully paid, non-
assessable Shares.
The Administrator shall have the right to accelerate the date of
exercise of any installment of any Option; provided that the Administrator shall
not accelerate the exercise date of any installment of any Option granted to any
Key Employee as an ISO (and not previously converted into a Non-Qualified Option
pursuant to paragraph 19) if such acceleration would
<PAGE>
violate the annual vesting limitation contained in Section 422(d) of the Code,
as described in paragraph 6(e).
The Administrator may, in its discretion, amend any term or condition of
an outstanding Option provided (i) such term or condition as amended is
permitted by the Plan, (ii) any such amendment shall be made only with the
consent of the Participant to whom the Option was granted, or in the event of
the death of the Participant, the Participant's Survivors, if the amendment is
adverse to the Participant, (iii) any such amendment of any ISO shall be made
only after the Administrator, after consulting the counsel for the Company,
determines whether such amendment would constitute a "modification" of any
Option which is an ISO (as that term is defined in Section 424(h) of the Code)
or would cause any adverse tax consequences for the holders of such ISO, and
(iv) with respect to any Option held by any Participant who is subject to the
provisions of Section 16(a) of the 1934 Act, any such amendment shall be made
only after the Administrator, after consulting with counsel for the Company,
determines whether such amendment would constitute the grant of a new Option.
8. RIGHTS AS A SHAREHOLDER.
-----------------------
No Participant to whom an Option has been granted shall have rights as a
shareholder with respect to any Shares covered by such Option, except after due
exercise of the Option and tender of the full purchase price for the Shares
being purchased pursuant to such exercise and registration of the Shares in the
Company's share register in the name of the Participant.
9. ASSIGNABILITY AND TRANSFERABILITY OF OPTIONS.
--------------------------------------------
By its terms, an Option granted to a Participant shall not be
transferable by the Participant other than by will or by the laws of descent and
distribution or pursuant to a qualified domestic relations order as defined by
the Code or Title I of the Employee Retirement Income Security Act or the rules
thereunder, provided, however, that the designation of a beneficiary of an
-------- -------
Option by a Participant shall not be deemed a transfer prohibited by this
Paragraph. Except as provided in the preceding sentence, an Option shall be
exercisable, during the Participant's lifetime, only by such Participant (or by
his or her legal representative). Such Option shall not be assigned, pledged or
hypothecated in any way (whether by operation of law or otherwise) and shall not
be subject to execution, attachment or similar process. Any
<PAGE>
attempted transfer, assignment, pledge, hypothecation or other disposition of
any Option or of any rights granted thereunder contrary to the provisions of
this Plan, or the levy of any attachment or similar process upon an Option,
shall be null and void.
10. EFFECT OF TERMINATION OF SERVICE OTHER THAN "FOR CAUSE".
------------------------------------------------------
Except as otherwise provided in the pertinent Option Agreement, in the
event of a termination of service (whether as an employee, director or
consultant) with the Company or an Affiliate before the Participant has
exercised all Options, the following rules apply:
a. A Participant who ceases to be an employee, director or
consultant of the Company or of an Affiliate (for any reason other than
termination "for cause", Disability, or death for which events there are
special rules in Paragraphs 11, 12, and 13, respectively), may exercise
any Option granted to him or her to the extent that the right to
purchase Shares has accrued on the date of such termination of service,
but only within such term as the Administrator has designated in the
pertinent Option Agreement.
b. In no event may an Option Agreement provide, if the Option is
intended to be an ISO, that the time for exercise be later than three
(3) months after the Participant's termination of employment.
c. The provisions of this paragraph, and not the provisions of
Paragraph 12 or 13, shall apply to a Participant who subsequently
becomes disabled or dies after the termination of employment, director
status or consultancy, provided, however, in the case of a Participant's
death within three (3) months after the termination of employment,
director status or consulting, the Participant's Survivors may exercise
the Option within one (1) year after the date of the Participant's
death, but in no event after the date of expiration of the term of the
Option.
d. Notwithstanding anything herein to the contrary, if subsequent
to a Participant's termination of employment, termination of director
status or termination of consultancy, but prior to
<PAGE>
the exercise of an Option, the Board of Directors determines that,
either prior or subsequent to the Participant's termination, the
Participant engaged in conduct which would constitute "cause", then such
Participant shall forthwith cease to have any right to exercise any
Option.
e. A Participant to whom an Option has been granted under the Plan
who is absent from work with the Company or with an Affiliate because of
temporary disability (any disability other than a permanent and total
Disability as defined in Paragraph 1 hereof), or who is on leave of
absence for any purpose, shall not, during the period of any such
absence, be deemed, by virtue of such absence alone, to have terminated
such Participant's employment, director status or consultancy with the
Company or with an Affiliate, except as the Administrator may otherwise
expressly provide.
f. Options granted under the Plan shall not be affected by any
change of employment or other service within or among the Company and
any Affiliates, so long as the Participant continues to be an employee,
director or consultant of the Company or any Affiliate, provided,
however, if a Participant's employment by either the Company or an
Affiliate should cease (other than to become an employee of an Affiliate
or the Company), such termination shall affect the Participant's rights
under any Option granted to such Participant in accordance with the
terms of the Plan and the pertinent Option Agreement.
11. EFFECT OF TERMINATION OF SERVICE "FOR CAUSE".
--------------------------------------------
Except as otherwise provided in the pertinent Option Agreement, the
following rules apply if the Participant's service (whether as an employee,
director or consultant) with the Company or an Affiliate is terminated "for
cause" prior to the time that all of his or her outstanding Options have been
exercised:
a. All outstanding and unexercised Options as of the date the
Participant is notified his or her service is terminated "for cause"
will immediately be forfeited, unless the Option Agreement provides
otherwise.
b. For purposes of this Article, "cause" shall include (and is not
limited to) dishonesty with respect to the employer, insubordination,
substantial malfeasance or non-feasance of duty, unauthorized disclosure
<PAGE>
of confidential information, and conduct substantially prejudicial to
the business of the Company or any Affiliate. The determination of the
Administrator as to the existence of cause will be conclusive on the
Participant and the Company.
c. "Cause" is not limited to events which have occurred prior to a
Participant's termination of service, nor is it necessary that the
Administrator's finding of "cause" occur prior to termination. If the
Administrator determines, subsequent to a Participant's termination of
service but prior to the exercise of an Option, that either prior or
subsequent to the Participant's termination the Participant engaged in
conduct which would constitute "cause", then the right to exercise any
Option is forfeited.
d. Any definition in an agreement between the Participant and the
Company or an Affiliate, which contains a conflicting definition of
"cause" for termination and which is in effect at the time of such
termination, shall supersede the definition in this Plan with respect to
such Participant.
12. EFFECT OF TERMINATION OF SERVICE FOR DISABILITY.
-----------------------------------------------
Except as otherwise provided in the pertinent Option Agreement, a
Participant who ceases to be an employee, director or consultant of the Company
or of an Affiliate by reason of Disability may exercise any Option granted to
such Participant:
a. To the extent exercisable but not exercised on the date of
Disability; and
b. In the event rights to exercise the Option accrue periodically, to
the extent of a pro rata portion of any additional rights as would have
accrued had the Participant not become Disabled prior to the end of the
accrual period which next ends following the date of Disability. The
proration shall be based upon the number of days of such accrual period
prior to the date of Disability.
A Disabled Participant may exercise such rights only within a period of
not more than one (1) year after the date that the Participant became Disabled,
notwithstanding that the Participant might have been able to exercise the Option
as to some or all of the Shares on a later date if he or she had not become
disabled and had continued to be an employee,
<PAGE>
director or consultant or, if earlier, within the originally prescribed term of
the Option.
The Administrator shall make the determination both of whether
Disability has occurred and the date of its occurrence (unless a procedure for
such determination is set forth in another agreement between the Company and
such Participant, in which case such procedure shall be used for such
determination). If requested, the Participant shall be examined by a physician
selected or approved by the Administrator, the cost of which examination shall
be paid for by the Company.
13. EFFECT OF DEATH WHILE AN EMPLOYEE, DIRECTOR OR CONSULTANT.
---------------------------------------------------------
Except as otherwise provided in the pertinent Option Agreement, in the
event of the death of a Participant to whom an Option has been granted while
the Participant is an employee, director or consultant of the Company or of an
Affiliate, such Option may be exercised by the Participant's Survivors:
a. To the extent exercisable but not exercised on the date of
death; and
b. In the event rights to exercise the Option accrue periodically,
to the extent of a pro rata portion of any additional rights which would
have accrued had the Participant not died prior to the end of the
accrual period which next ends following the date of death. The
proration shall be based upon the number of days of such accrual period
prior to the Participant's death.
If the Participant's Survivors wish to exercise the Option, they must
take all necessary steps to exercise the Option within one (1) year after the
date of death of such Participant, notwithstanding that the decedent might have
been able to exercise the Option as to some or all of the Shares on a later date
if he or she had not died and had continued to be an employee, director or
consultant or, if earlier, within the originally prescribed term of the Option.
14. PURCHASE FOR INVESTMENT.
-----------------------
Unless the offering and sale of the Shares to be issued upon the
particular exercise of an Option shall have been effectively registered under
the Securities Act of 1933, as
<PAGE>
now in force or hereafter amended (the "1933 Act"), the Company shall be under
no obligation to issue the Shares covered by such exercise unless and until the
following conditions have been fulfilled:
a. The person(s) who exercise such Option shall warrant to the
Company, prior to the receipt of such Shares, that such person(s) are
acquiring such Shares for their own respective accounts, for investment,
and not with a view to, or for sale in connection with, the distribution
of any such Shares, in which event the person(s) acquiring such Shares
shall be bound by the provisions of the following legend which shall be
endorsed upon the certificate(s) evidencing their Shares issued pursuant
to such exercise or such grant:
"The shares represented by this certificate have been
taken for investment and they may not be sold or otherwise
transferred by any person, including a pledgee, unless (1)
either (a) a Registration Statement with respect to such shares
shall be effective under the Securities Act of 1933, as amended,
or (b) the Company shall have received an opinion of counsel
satisfactory to it that an exemption from registration under
such Act is then available, and (2) there shall have been
compliance with all applicable state securities laws.
b. The Company shall have received an opinion of its counsel that
the Shares may be issued upon such particular exercise in compliance
with the 1933 Act without registration thereunder.
The Company may delay issuance of the Shares until completion of any
action or obtaining of any consent which the Company deems necessary under any
applicable law (including, without limitation, state securities or "blue sky"
laws).
15. DISSOLUTION OR LIQUIDATION OF THE COMPANY.
-----------------------------------------
Upon the dissolution or liquidation of the Company, all Options granted
under this Plan which as of such date shall not have been exercised will
terminate and become null and void; provided, however, that if the rights of a
Participant or a Participant's Survivors have not otherwise terminated and
expired, the Participant or the Participant's Survivors
<PAGE>
will have the right immediately prior to such dissolution or liquidation to
exercise any Option to the extent that the Option is exercisable as of the date
immediately prior to such dissolution or liquidation.
16. ADJUSTMENTS.
-----------
Upon the occurrence of any of the following events, a Participant's
rights with respect to any Option granted to him or her hereunder which have not
previously been exercised in full shall be adjusted as hereinafter provided,
unless otherwise specifically provided in the written agreement between the
Participant and the Company relating to such Option:
A. Stock Dividends and Stock Splits. If the shares of Common Stock
--------------------------------
shall be subdivided or combined into a greater or smaller number of shares or if
the Company shall issue any shares of Common Stock as a stock dividend on its
outstanding Common Stock, the number of shares of Common Stock deliverable upon
the exercise of such Option shall be appropriately increased or decreased
proportionately, and appropriate adjustments shall be made in the purchase price
per share to reflect such subdivision, combination or stock dividend. The number
of Shares subject to options to be granted to directors pursuant to Subparagraph
e of Paragraph 6 shall also be proportionately adjusted upon the occurrence of
such events.
B. Consolidations or Mergers. If the Company is to be consolidated
-------------------------
with or acquired by another entity in a merger, sale of all or substantially all
of the Company's assets or otherwise (an "Acquisition"), the Administrator or
the board of directors of any entity assuming the obligations of the Company
hereunder (the "Successor Board"), shall, as to outstanding Options, either (i)
make appropriate provision for the continuation of such Options by substituting
on an equitable basis for the Shares then subject to such Options either the
consideration payable with respect to the outstanding shares of Common Stock in
connection with the Acquisition or securities of any successor or acquiring
entity; or (ii) upon written notice to the Participants, provide that all
Options must be exercised (either, to the extent then exercisable or, at the
discretion of the Administrator, all Options being made fully exercisable for
purposes of this subsection), within a specified number of days of the date of
such notice, at the end of which period the Options shall terminate; or (iii)
terminate all Options in exchange for a cash payment equal to the excess of the
Fair Market Value of the shares subject to such Options
<PAGE>
(either to the extent then exercisable or, at the discretion of the
Administrator, all Options being made fully exercisable for purposes of this
subsection) over the exercise price thereof.
C. Recapitalization or Reorganization. In the event of a
----------------------------------
recapitalization or reorganization of the Company (other than a transaction
described in subparagraph B above) pursuant to which securities of the Company
or of another corporation are issued with respect to the outstanding shares of
Common Stock, a Participant upon exercising an Option shall be entitled to
receive for the purchase price paid upon such exercise the securities he or she
would have received if he or she had exercised such Option prior to such
recapitalization or reorganization.
D. Modification of ISOs. Notwithstanding the foregoing, any
--------------------
adjustments made pursuant to subparagraph A, B or C with respect to ISOs shall
be made only after the Administrator, after consulting with counsel for the
Company, determines whether such adjustments would constitute a "modification"
of such ISOs (as that term is defined in Section 424(h) of the Code) or would
cause any adverse tax consequences for the holders of such ISOs. If the
Administrator determines that such adjustments made with respect to ISOs would
constitute a modification of such ISOs, it may refrain from making such
adjustments, unless the holder of an ISO specifically requests in writing that
such adjustment be made and such writing indicates that the holder has full
knowledge of the consequences of such "modification" on his or her income tax
treatment with respect to the ISO.
17. ISSUANCES OF SECURITIES.
-----------------------
Except as expressly provided herein, no issuance by the Company of
shares of stock of any class, or securities convertible into shares of stock of
any class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of shares subject to Options. Except as
expressly provided herein, no adjustments shall be made for dividends paid in
cash or in property (including without limitation, securities) of the Company.
18. FRACTIONAL SHARES.
-----------------
No fractional share shall be issued under the Plan and the person
exercising such right shall receive from the Company cash in lieu of such
fractional share equal to the Fair Market Value thereof.
<PAGE>
19. CONVERSION OF ISOs INTO NON-QUALIFIED OPTIONS:
---------------------------------------------
TERMINATION OF ISOs.
-------------------
The Administrator, at the written request of any Participant, may in its
discretion take such actions as may be necessary to convert such Participant's
ISOs (or any portions thereof) that have not been exercised on the date of
conversion into Non-Qualified Options at any time prior to the expiration of
such ISOs, regardless of whether the Participant is an employee of the Company
or an Affiliate at the time of such conversion. Such actions may include, but
not be limited to, extending the exercise period or reducing the exercise price
of the appropriate installments of such Options. At the time of such
conversion, the Administrator (with the consent of the Participant) may impose
such conditions on the exercise of the resulting Non-Qualified Options as the
Administrator in its discretion may determine, provided that such conditions
shall not be inconsistent with this Plan. Nothing in the Plan shall be deemed
to give any Participant the right to have such Participant's ISO's converted
into Non-Qualified Options, and no such conversion shall occur until and unless
the Administrator takes appropriate action. The Administrator, with the
consent of the Participant, may also terminate any portion of any ISO that has
not been exercised at the time of such termination.
20. WITHHOLDING.
-----------
In the event that any federal, state, or local income taxes, employment
taxes, Federal Insurance Contributions Act ("F.I.C.A.") withholdings or other
amounts are required by applicable law or governmental regulation to be
withheld from the Optionholder's salary, wages or other remuneration in
connection with the exercise of an Option or a Disqualifying Disposition (as
defined in Paragraph 21), the Optionholder shall advance in cash to the
Company, or to any Affiliate of the Company which employs or employed the
Optionholder, the amount of such withholdings unless a different withholding
arrangement, including the use of shares of the Company's Common Stock, is
authorized by the Administrator (and permitted by law); provided, however, that
with respect to persons subject to Section 16 of the 1934 Act, any such
withholding arrangement shall be in compliance with any applicable provisions
of Rule 16b-3 promulgated under Section 16 of the 1934 Act. For purposes
hereof, the fair market value of the shares withheld for purposes of payroll
withholding shall be determined in the manner provided in Paragraph 1 above, as
of the most recent practicable date prior to the date of exercise. If the fair
market value of
<PAGE>
the shares withheld is less than the amount of payroll withholdings required,
the Optionholder may be required to advance the difference in cash to the
Company or the Affiliate employer. The Administrator in its discretion may
condition the exercise of an Option for less than the then Fair Market Value on
the Participant's payment of such additional withholding.
21. NOTICE TO COMPANY OF DISQUALIFYING DISPOSITION.
----------------------------------------------
Each Key Employee who receives an ISO must agree to notify the Company
in writing immediately after the Key Employee makes a Disqualifying Disposition
of any shares acquired pursuant to the exercise of an ISO. A Disqualifying
Disposition is later of (a) two years after the date the Key Employee was
granted the ISO, or (b) one year after the date the Key Employee acquired shares
by exercising the ISO. If the Key Employee has died before such stock is sold,
these holding period requirements do not apply and no Disqualifying Disposition
can occur thereafter.
22. TERMINATION OF THE PLAN.
-----------------------
The Plan will terminate on November 9, 2002, the date which is ten (10)
years from the earlier of the date of its adoption and the date of its approval
-------
by the shareholders of the Company. The Plan may be terminated at an earlier
date by vote of the shareholders of the Company; provided, however, that any
such earlier termination will not affect any Options granted or Option
Agreements executed prior to the effective date of such termination.
23. AMENDMENT OF THE PLAN AND AGREEMENTS.
------------------------------------
The Plan may be amended by the shareholders of the Company. The Plan may
also be amended by the Administrator, including, without limitation, to the
extent necessary to qualify any or all outstanding Options granted under the
Plan or Options to be granted under the Plan for favorable federal income tax
treatment (including deferral of taxation upon exercise) as may be afforded
incentive stock options under Section 422 of the Code, to the extent necessary
to ensure the qualification of the Plan under Rule 16b-3, at such time, if any,
as the Company has a class of stock registered pursuant to Section 12 of the
1934 Act, and to the extent necessary to qualify the shares issuable upon
exercise of any outstanding Options granted, or Options to be granted, under
<PAGE>
the Plan for listing on any national securities exchange or quotation in any
national automated quotation system of securities dealers. Any amendment
approved by the Administrator which is of a scope that requires shareholder
approval in order to ensure favorable federal income tax treatment for any
incentive stock options or requires shareholder approval in order to ensure the
compliance of the Plan with Rule 16b-3 at such time, if any, as the Company has
a class of stock registered pursuant to Section 12 of the 1934 Act, shall be
subject to obtaining such shareholder approval. Any modification or amendment of
the Plan shall not, without the consent of a Participant, affect his or her
rights under an Option previously granted to him or her. With the consent of the
Participant affected, the Administrator may amend outstanding Option Agreements
in a manner which may be adverse to the Participant but which is not
inconsistent with the Plan. In the discretion of the Administrator, outstanding
Option Agreements may be amended by the Administrator in a manner which is not
adverse to the Participant.
24. EMPLOYMENT OR OTHER RELATIONSHIP.
--------------------------------
Nothing in this Plan or any Option Agreement shall be deemed to prevent
the Company or an Affiliate from terminating the employment, consultancy or
director status of a his or her own employment, consultancy or director status
or to give any Participant a right to be retained in employment or other service
by the Company or any Affiliate for any period of time.
25. GOVERNING LAW.
-------------
This Plan shall be construed and enforced in accordance with the law of
the State of Delaware.
<PAGE>
APPENDIX B
MYRIAD GENETICS, INC.
THIS PROXY IS BEING SOLICITED BY MYRIAD GENETICS, INC.'S
BOARD OF DIRECTORS
The undersigned, revoking any previous proxies relating to these shares,
hereby acknowledges receipt of the Notice and Proxy Statement dated October 15,
1996 in connection with the Annual Meeting to be held at 9:00 a.m. on Friday,
November 15, 1996 at the Salt Lake City Marriott Hotel, 75 S. West Temple, Salt
Lake City, Utah and hereby appoints Peter D. Meldrum and John J. Horan, and
each of them (with full power to act alone), the attorneys and proxies of the
undersigned, with power of substitution to each, to vote all shares of the
Common Stock of MYRIAD GENETICS, INC. registered in the name provided herein
which the undersigned is entitled to vote at the 1996 Annual Meeting of
Stockholders, and at any adjournments thereof, with all the powers the
undersigned would have if personally present. Without limiting the general
authorization hereby given, said proxies are, and each of them is, instructed
to vote or act as follows on the proposals set forth in said Proxy.
THIS PROXY WHEN EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN. IF NO
DIRECTION IS MADE THIS PROXY WILL BE VOTED FOR THE ELECTION OF DIRECTORS AND
FOR PROPOSALS 2 AND 3.
IN THEIR DISCRETION THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
MATTERS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENTS THEREOF.
ELECTION OF DIRECTORS (or if any nominee is not available for election, such
substitute as the Board of Directors may designate)
NOMINEES: Walter Gilbert, Ph.D., Wolfgang Hartwig, Ph.D., Arthur H. Hayes, Jr.,
M.D., John J. Horan, Alan J. Main, Ph.D., Peter D. Meldrum, Mark H.
Skolnick, Ph.D., and Dale A. Stringfellow, Ph.D.
SEE REVERSE SIDE FOR ALL THREE PROPOSALS. If you wish to vote in accordance
with the Board of Directors' recommendations, just sign on the reverse side.
You need not mark any boxes.
(SEE REVERSE SIDE)
------------------
[X] PLEASE MARK VOTES AS IN THIS EXAMPLE.
The Board of Directors recommends a vote FOR Proposals 1, 2 and 3.
1. Election of Directors (See reverse). FOR [ ] WITHHELD [ ]
______________________________
[ ] For all nominees except as noted above.
2. Proposal to amend the Myriad Genetics, Inc. 1992 Employee, Director and
Consultant Stock Option Plan to increase by 500,000 the aggregate number of
shares of Common Stock authorized for issuance thereunder and to limit the
number of shares of Common Stock that may be granted pursuant to stock options
to any employee in any one year period to a number not to exceed 1,000,000
shares.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
<PAGE>
3. Proposal to ratify the appointment of KPMG Peat Marwick LLP as the
Company's independent public accountants for the fiscal year ending June 30,
1997.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
Please sign exactly as name(s) appears hereon. Joint
owners should each sign. When signing as attorney,
executor, administrator, trustee or guardian, please give
full title as such.
Signature: Date
------------------ ---------------
Signature: Date
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