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 Rule 14a-11(c) or Rule 14a-12
INNOVIR LABORATORIES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
________________________________________________________________________________
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
|_| Fee paid previously with preliminary materials:
|_| Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement no.:
3) Filing Party:
4) Date Filed:
<PAGE>
INNOVIR LABORATORIES, INC.
510 EAST 73RD STREET
NEW YORK, NEW YORK 10021
212-249-4703
May 20, 1997
Dear Stockholder:
You are cordially invited to attend the Company's Annual Meeting of
Stockholders to be held at 2:00 P.M., New York time, on Tuesday, June 24, 1997,
at The Equitable Building, 50th Floor, Seventh Avenue, New York, New York 10019.
This year you are being asked (i) to elect seven directors of the Company,
(ii) to approve a proposal to amend the Company's certificate of incorporation
to increase the number of authorized shares of Common Stock, (iii) to approve a
proposal to amend the Company's Non-Employee Director Stock Option Plan to
modify the class of persons eligible to receive options thereunder, to increase
the number of shares which may be issued thereunder, to provide for certain
additional grants to the Company's directors and to extend the option period of
options granted thereunder, (iv) to approve a proposal to amend the Company's
1993 Stock Option Plan to increase the number of shares which may be issued
thereunder and (v) to approve a proposal to ratify the Board of Directors'
selection of KPMG Peat Marwick LLP to serve as the Company's independent
accountants. In addition, I will be pleased to report on the affairs of the
Company and a discussion period will be provided for questions and comments of
general interest to stockholders.
We look forward to greeting personally those stockholders who are able to
be present at the meeting; however, whether or not you plan to be with us at the
meeting, it is important that your shares be represented. Accordingly, you are
requested to sign and date the enclosed proxy and mail it in the envelope
provided at your earliest convenience.
Thank you for your cooperation.
Very truly yours,
/s/ ALLAN R. GOLDBERG
Allan R. Goldberg
Chairman of the Board
and Chief Executive Officer
<PAGE>
INNOVIR LABORATORIES, INC.
510 EAST 73RD STREET
NEW YORK, NY 10021
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS - JUNE 24, 1997
TO THE STOCKHOLDERS OF INNOVIR LABORATORIES, INC.:
Notice is hereby given that the Annual Meeting of Stockholders of Innovir
Laboratories, Inc., a Delaware corporation, will be held at 2:00 P.M., New York
time, on Tuesday, June 24, 1997, at The Equitable Building, 50th Floor, 787
Seventh Avenue, New York, New York, for the following purposes:
1. To elect the Board of Directors to serve until the next Annual Meeting
of Stockholders and until their respective successors are duly elected
and qualified;
2. To approve a proposal to amend the Company's certificate of
incorporation to increase the number of authorized shares of Common
Stock, $.013 par value per share, from 35,000,000 shares to 70,000,000
shares;
3. To approve a proposal to amend the Company's Non-Employee Director
Stock Option Plan to modify the class of persons eligible to receive
options thereunder, to increase the number of shares which may be
issued thereunder, to provide for certain additional grants to the
Company's directors and to extend the option period of options granted
thereunder;
4. To approve a proposal to amend the Company's 1993 Stock Option Plan to
increase the number of shares which may be issued thereunder;
5. To ratify the selection by the Board of Directors of KPMG Peat Marwick
LLP to serve as independent accountants for the year ending December
31, 1997; and
6. To transact such other business as may be properly presented for
action at the meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on May 7, 1997 as
the record date for the determination of stockholders entitled to notice of, and
to vote at, this meeting or any adjournment thereof.
Holders of a majority of the outstanding shares must be present in person
or by proxy in order for the meeting to be held. WHETHER OR NOT YOU EXPECT TO
ATTEND THE ANNUAL MEETING, YOUR VOTE IS IMPORTANT. ACCORDINGLY, YOU ARE
REQUESTED TO MARK, SIGN AND DATE THE ENCLOSED PROXY FORM AND RETURN IT IN THE
ACCOMPANYING STAMPED ENVELOPE. The giving of such proxy will not affect your
right to revoke such proxy before it is exercised or to vote in person should
you later decide to attend the meeting.
-1-
<PAGE>
All stockholders are cordially invited to attend the meeting.
Also enclosed is the Company's Annual Report for the fiscal year ended
September 30, 1996, including financial statements.
By Order of the Board of Directors
Merrill M. Kraines
Secretary
Dated: May 20, 1997
IT IS IMPORTANT THAT THE ENCLOSED PROXY FORM
BE COMPLETED AND RETURNED PROMPTLY.
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<PAGE>
INNOVIR LABORATORIES, INC.
510 EAST 73RD STREET
NEW YORK, NY 10021
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD JUNE 24, 1997
SOLICITATION AND REVOCATION OF PROXIES
This proxy statement is furnished in connection with the solicitation by
the Board of Directors of Innovir Laboratories, Inc., a Delaware corporation
(the "Company"), of proxies to be voted at the Annual Meeting of Stockholders of
the Company to be held at 2:00 P.M., New York time, on Tuesday, June 24, 1997,
at The Equitable Building, 50th Floor, 787 Seventh Avenue, New York, New York,
and any adjournment thereof.
A form of proxy is enclosed for use at the meeting. The proxy may be
revoked by a stockholder, at any time before it is voted, by execution of a
proxy bearing a later date or by written notice to the Secretary before the
meeting, and any stockholder present at the meeting may revoke his or her proxy
thereat and vote in person if he or she so desires. When such proxy is properly
executed and returned, the shares it represents will be voted at the meeting in
accordance with any instructions noted thereon. If no direction is indicated,
all shares represented by valid proxies received pursuant to this solicitation
(and not revoked prior to exercise) will be voted (i) FOR the election of the
nominees for directors herein, (ii) FOR the proposal to amend the Company's
certificate of incorporation to increase the number of authorized shares of
Common Stock, $.013 par value per share ("Common Stock"), from 35,000,000 shares
to 70,000,000 shares, (iii) FOR the proposal to amend the Company's Non-
Employee Director Stock Option Plan to modify the class of persons eligible to
receive options thereunder, to increase the number of shares which may be issued
thereunder, to provide for certain additional grants to the Company's directors
and to extend the option period of options granted thereunder, (iv) FOR the
proposal to amend the Company's 1993 Stock Option Plan to increase the number of
shares which may be issued thereunder and (v) FOR the proposal to ratify the
appointment of KPMG Peat Marwick LLP as independent accountants.
The cost of soliciting proxies on behalf of the Board of Directors will be
borne by the Company. In addition to solicitation by mail, proxies may be
solicited by directors, officers or regular employees of the Company (who will
receive no extra compensation for these services) in person or by telephone or
telegraph. The Company will also request brokerage houses, custodians, nominees
and fiduciaries to forward these proxy materials to the beneficial owners of the
Common Stock and will reimburse such holders for their reasonable expenses in
connection therewith. The approximate date of mailing of this Proxy Statement
and accompanying proxy is May 30, 1997.
Only stockholders of record on the close of business on May 7, 1997 will
be entitled to notice of, and to vote at, the Annual Meeting. At the close of
business on such record date, the Company had issued and outstanding 18,050,786
shares of Common Stock. Each share entitles the holder thereof to one vote. The
affirmative vote of a plurality of the shares present in person or represented
by proxy and entitled to vote at the meeting is required for the election of
directors, and a vote of a majority of the shares present, or represented, and
entitled to vote at the meeting is required to approve each other proposal to be
acted upon at the meeting. Abstentions and broker non-votes will be counted for
purposes of determining the presence or absence of a quorum. "Broker non-votes"
are shares held by brokers or nominees which are present in person or
represented by proxy but which are not voted on a particular matter
<PAGE>
because instructions have not been received from the beneficial owner. Under
applicable Delaware law, the effect of broker non-votes on a particular matter
depends on whether the matter is one as to which the broker or nominee has
discretionary voting authority under the applicable rule of the New York Stock
Exchange. The effect of broker non-votes on the specific items to be brought
before the Annual Meeting of Stockholders is discussed under each item. VIMRX
Pharmaceuticals Inc., the holder of greater than a majority of the Company's
outstanding voting securities, has advised the Company that VIMRX
Pharmaceuticals Inc. intends to vote in favor of each of the proposals set forth
herein.
BENEFICIAL OWNERSHIP OF THE COMPANY'S SECURITIES
The following table sets forth certain information concerning stock
ownership of (i) each person known by the Company to own beneficially 5% or more
of the outstanding shares of the Company's Common Stock as of April 1, 1997,
(ii) each director of the Company, (iii) each executive officer of the Company
named in the Summary Compensation Table below and (iv) all executive officers
and directors of the Company as a group.
Number Percentage
Name and Address Owned (1) Of Class
---------------- --------- --------
The Aries Domestic Fund, L.P. (2)........................ 2,500,000 12.5%
c/o Paramount Capital Asset Management, Inc.
787 Seventh Avenue
New York, NY 10019
The Aries Fund, A Cayman Island Trust (3)................ 2,500,000 12.5%
c/o MeesPierson (Cayman) Limited
P.O. Box 2003
British American Centre
Phase 3
Dr. Roy's Drive
George Town, Grand Cayman
VIMRx Pharmaceuticals Inc. (4)........................... 22,666,666 73.8%
2750 Centerville Road, Suite 210
Little Falls II
Wilmington, DE 19808
Richard L. Dunning (5)................................... 500 *
VIMRx Pharmaceuticals Inc.
2751 Centerville Road, Suite 210
Little Falls II
Wilmington, DE 19808
Laurence D. Fink (6)..................................... 0 ---
BlackRock Financial Management, Inc.
345 Park Avenue
New York, NY 10154
Allan R. Goldberg (7).................................... 26,225 *
Innovir Laboratories
510 East 73rd Street
New York, New York 10021
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<PAGE>
David A. Jackson......................................... 0 ---
VIMRx Pharmaceuticals Inc.
2751 Centerville Road, Suite 210
Little Falls, II
Wilmington, DE 19808
Stanley Knowlton (8)..................................... 10,000 *
Knowlton Brothers, Inc.
530 Fifth Avenue
New York, NY 10036
William T. McCaffrey (9)................................. 57,603 *
Innovir Laboratories, Inc.
510 East 73rd Street
New York, New York 10021
Francis M. O'Connell..................................... 0 ---
VIMRx Pharmaceuticals Inc.
2750 Centerville Road, Suite 210
Little Falls II
Wilmington, DE 19808
Shaji T. George (10)..................................... 71,460 *
Innovir Laboratories, Inc.
510 East 73rd Street
New York, New York 10021
All officers and directors as a group (8 persons) (11)... 165,788 *
* Less than 1%.
(1) Unless otherwise indicated below, all shares are owned beneficially and of
record.
(2) Includes warrants to purchase 600,000 shares of Common Stock. Also
includes 350,000 shares of Common Stock and warrants to purchase 1,400,000
shares of Common Stock owned by The Aries Fund, A Cayman Island Trust, an
affiliate of the securityholder ("The Aries Trust" and, together with the
securityholder, "The Aries Funds"). Paramount Capital Asset Management,
Inc. ("Paramount Capital") is the general partner of the securityholder
and the investment manager of The Aries Trust; Lindsay A. Rosenwald, M.D.
is the sole shareholder of Paramount Capital and a member of the Board of
Directors of VIMRx Pharmaceuticals Inc. ("VIMRx"). In December 1996, The
Aries Funds granted to VIMRx an irrevocable three-year proxy to vote their
shares of Common Stock. See "Certain Relationships and Related
Transactions."
(3) Includes warrants to purchase 1,400,000 shares of Common Stock. Also
includes 150,000 shares of Common Stock and warrants to purchase 600,000
shares of Common Stock owned by The Aries Domestic Fund, L.P., an
affiliate of the securityholder ("The Domestic Fund"). Paramount Capital
is the investment manager of the securityholder and the general partner of
The Domestic Fund; Lindsay A. Rosenwald, M.D. is the sole shareholder of
Paramount Capital and a member of the Board of Directors of VIMRx. In
December 1996, The Aries Funds granted to VIMRx an irrevocable three-year
proxy to vote their securities. See "Certain Relationships and Related
Transactions."
(4) Includes (i) shares of Class D Convertible Preferred Stock (which votes
together with the Common Stock) convertible into an aggregate of 8,666,666
shares of Common Stock and (ii) warrants to purchase 2,000,000 shares of
Common Stock. Also includes an aggregate of 500,000 shares of Common Stock
and warrants to purchase an aggregate of 2,000,000 shares of Common Stock
owned by The Aries Funds; in December 1996, The Aries Funds granted to
VIMRx an irrevocable three-year proxy to vote their securities. See
"Certain Relationships and Related Transactions."
(5) Consists of 500 shares of Common Stock which are owned by Mr. Dunning's
wife; Mr. Dunning disclaims beneficial ownership of these shares. Mr.
Dunning is President and Chief Executive Officer of VIMRx.
-3-
<PAGE>
(6) Does not include options to purchase 30,000 shares of Common Stock which
are not exercisable within 60 days of April 1, 1997.
(7) Does not include options to purchase 500,000 shares of Common Stock which
are not exercisable within 60 days of April 1, 1997 or options to purchase
300,000 shares of Common Stock, the vesting of which are subject to
achievement of certain milestones.
(8) Does not include options to purchase 30,000 shares of Common Stock which
are not exercisable within 60 days of April 1, 1997.
(9) Includes Class B Warrants to purchase 16,810 shares of Common Stock and
options to purchase 15,000 shares of Common Stock which are exercisable
within 60 days of April 1, 1997. Does not include options to purchase
25,000 shares of Common Stock which are not exercisable within 60 days of
April 1, 1997.
(10) Includes Class B Warrants to purchase 20,129 shares of Common Stock and
options to purchase 37,500 shares of Common Stock which are exercisable
within 60 days of April 1, 1997. Does not include options to purchase
112,500 shares of Common Stock which are not exercisable within 60 days of
April 1, 1997.
(11) Includes the shares described in footnotes (5) through (10) above.
CHANGE IN CONTROL OF THE COMPANY
On December 23, 1996, VIMRx acquired beneficial ownership of approximately
68% of the issued and outstanding voting securities of the Company, pursuant to
(i) an agreement, dated November 21, 1996, as amended (the "Aries Agreement"),
among VIMRx and The Aries Funds and (ii) an agreement, dated November 21, 1996
(the "VIMRx Agreement" and, together with the Aries Agreement, the
"Agreements"), between the Company and VIMRx. In addition, upon exercise of
certain warrants issued by the Company to VIMRx and as a result of a three-year
irrevocable voting proxy granted to VIMRx by The Aries Funds with respect to the
securities of the Company owned by The Aries Funds, VIMRx may be deemed to have
voting control of up to an aggregate of approximately 74% of the Company's
voting securities.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's executive officers and directors and
persons who beneficially own more than ten percent of the Company's Common Stock
to file initial reports of ownership and reports of changes in ownership with
the Securities and Exchange Commission (the "SEC") and the National Association
of Securities Dealers, Inc. Executive officers, directors and greater than ten
percent beneficial owners are required by SEC regulations to furnish the Company
with copies of all Section 16(a) forms they file.
Based upon on a review of the copies of such forms furnished to the
Company and written representations from the Company's executive officers and
directors, the Company believes that, during fiscal 1996, all reports required
by Section 16(a) of the Exchange Act applicable to the Company's executive
officers, directors and greater than ten percent beneficial owners were filed on
a timely basis.
-4-
<PAGE>
PROPOSAL NO. 1 - ELECTION OF DIRECTORS
Seven directors, all of whom are members of the present Board of
Directors, are nominees for election to hold office until the next meeting of
stockholders and until their respective successors are elected and qualified.
Unless authority to vote for the election of directors shall have been withheld,
it is intended that proxies in the accompanying form will be voted at the
meeting for the election of the seven nominees named below. All nominees have
consented to be named and have indicated their intent to serve if elected. If
any nominee, for any reason presently unknown to the Company, should refuse for
good cause or be unable to serve, the shares represented by proxy will be voted
for such person as may be designated by the Board of Directors to replace any
such nominee. The Board of Directors has no reason to believe that any of the
nominees will be unable to serve or that any vacancy on the Board of Directors
will occur.
The following information is submitted concerning the nominees named for
election as directors based upon information received by the Company from such
persons:
Name Age Office Director Since
- ---- --- ------ --------------
Allan R. Goldberg 55 Chairman of the Board, 1989
Chief Executive Officer
and Director
William T. McCaffrey 60 Director 1994
Richard L. Dunning 51 Director 1996
Laurence D. Fink 44 Director 1996
David A. Jackson 54 Director 1996
Francis M. O'Connell 51 Director 1996
Stanley Knowlton 71 Director 1997
Dr. Goldberg, a co-founder of the Company, has been Chairman of the Board,
Chief Executive Officer and a member of the Science Advisory Board since 1989.
Dr. Goldberg also is an adjunct professor at The Rockefeller University, where
he was a full-time member of their faculty from 1971 to 1989. He has been a
full-time employee of the Company since its inception in 1989. Dr. Goldberg's
areas of expertise include virology, genetics, biochemistry and molecular
biology, and cell biology. He was a postdoctoral fellow of the American Cancer
Society in nucleic acid biochemistry at the Albert Einstein College of Medicine.
Mr. McCaffrey was elected to the Board of Directors in June 1994. Since
July 1987, Mr. McCaffrey has been the Senior Executive Vice President and Chief
Operating Officer of The Equitable Companies Incorporated and its subsidiary,
The Equitable Life Assurance Society of the United States. He began his career
with that company in 1954 and is a director of certain affiliates thereof.
Mr. Dunning was elected to the Board of Directors in December 1996. Since
April 1996, Mr. Dunning has been President, Chief Executive Officer and a
director of VIMRx, a publicly-owned biopharmaceutical company. Prior to joining
VIMRx, Mr. Dunning served as Executive Vice President and Chief Financial
Officer of the DuPont Merck Pharmaceutical Company since 1991.
Mr. Fink was elected to the Board of Directors in December 1996. Since
1988, Mr. Fink has been Chairman and Chief Executive Officer and a director of
BlackRock Financial
-5-
<PAGE>
Management, Inc., an investment adviser ("BlackRock"). Mr. Fink is also a
director of numerous registered investment companies and the closed end funds
for which BlackRock serves as investment adviser. Prior to founding BlackRock,
Mr. Fink was a Managing Director of The First Boston Company.
Dr. Jackson was elected to the Board of Directors in December 1996. Since
September 1996, he has been Executive Vice President and Chief Scientific
Officer of VIMRx. Prior to joining VIMRx, Dr. Jackson was Senior Director,
Cancer, Virology and Molecular Biology Research of DuPont Merck Pharmaceutical
Company since 1991.
Mr. O'Connell was elected to the Board of Directors in December 1996.
Since February 1997, he has been Chief Financial Officer of the Company. Prior
to that, Mr. O'Connell served as Chief Financial Officer of VIMRx since February
1995. In addition, between June 1994 and February 1995, he served as Director of
Litigation Support of J.H. Cohn & Company, and, between March 1992 and June
1994, he served as a Vice President with Hickock Associates Inc. Prior to March
1992, Mr. O'Connell was a partner with KPMG Peat Marwick.
Mr. Knowlton was elected to the Board of Directors in January 1997. Since
June 1989, he has been President of Knowlton Brothers, Inc. In addition, since
May 1992, Mr. Knowlton has been an Associate at Melhado Flynn & Associates, Inc.
VOTE REQUIRED
A plurality of the votes of the shares of Common Stock present or
represented at the 1997 Annual Meeting of Stockholders is required for the
election of directors. Abstentions, broker non-votes and instructions on the
accompanying proxy card to withhold authority to vote for one or more nominees
will result in the respective nominees receiving fewer votes. The number of
votes, however, otherwise received by the nominee will not be reduced by such
action.
THE BOARD OF DIRECTORS DEEMS PROPOSAL NO. 1 TO BE IN THE BEST INTERESTS OF THE
COMPANY AND ITS STOCKHOLDERS AND RECOMMENDS A VOTE "FOR" THE ELECTION OF MESSRS.
GOLDBERG, MCCAFFREY, DUNNING, FINK, JACKSON, O'CONNELL AND KNOWLTON.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Company currently has (i) a Compensation Committee, consisting of
Messrs. McCaffrey and Knowlton, (ii) an Audit Committee, consisting of Messrs.
McCaffrey, Fink and Knowlton, and (iii) an Executive Committee, consisting of
Dr. Goldberg and Messrs. Dunning and Jackson. Of the incumbent directors, only
Dr. Goldberg and Mr. McCaffrey were directors of the Company during the year
ended September 30, 1996. During that year, the Compensation Committee held two
meetings and acted one time by a written consent, and the Audit Committee held
one meeting. The Executive Committee was formed in April 1997. The Company has
no other committees performing similar functions.
The Board of Directors held 13 meetings during the year ended September
30, 1996. During that year, each incumbent director attended at least 75% of the
aggregate of the total number meetings of the Board of Directors (held during
the period for which he was a director) and the total number of meetings of the
committee(s) on which he served (during the periods that he served).
No family relationship exists between any director or executive officer
and any other director or executive officer.
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<PAGE>
COMPENSATION COMMITTEE REPORT TO STOCKHOLDERS
The report of the Compensation Committee shall not be deemed incorporated
by reference by any general statement incorporating by reference this proxy
statement into any filing under the Securities Act of 1933, as amended (the
"Securities Act"), or under the Exchange Act (together, with the Securities Act,
the "Acts"), except to the extent that the Company specifically incorporates
this information by reference, and shall not otherwise be deemed filed under
such Acts.
The Compensation Committee of the Board of Directors was formed in October
1993. During the year ended September 30, 1996, the Compensation Committee
consisted of Mr. McCaffrey and certain other directors who have since resigned
from the Board of Directors. The Compensation Committee currently consists of
Messrs. McCaffrey and Knowlton. The Compensation Committee regularly reviews
and, with any changes it believes appropriate, approves the Company's
compensation program.
COMPENSATION PHILOSOPHY
The Company believes that executive compensation should be closely related
to increased stockholder value. Accordingly, the Company's executive
compensation program is designed to provide competitive compensation, support
the Company's strategic business goals and reflect Company performance.
The compensation programs reflect the following principles:
o Compensation should encourage increased stockholder value.
o Compensation programs should support the short- and long-term
strategic business goals and objectives of the Company.
o Compensation programs should reflect and promote the Company's
values, and reward individuals for outstanding contributions toward
business goals.
o Compensation programs should enable the Company to attract and
retain highly qualified professionals.
PAY MIX AND MEASUREMENT
The Company's executive compensation is comprised of two components, base
salary and incentives, each of which is intended to serve the overall
compensation philosophy.
BASE SALARY
The Company's salary levels are intended to be consistent with competitive
pay practices and level of responsibility, with salary increases reflecting
competitive trends, the overall financial performance and resources of the
Company, general economic conditions as well as a number of factors relating to
the particular individual, including the performance of the individual
executive, and level of experience, ability and knowledge of the job.
INCENTIVES
Stock options are granted from time to time to reward key employees'
contributions. The grant of options is based primarily on a key employee's
potential contribution to the Company's growth and profitability. Options are
granted at the prevailing market value of the Company's Common Stock and will
only have value if the Company's stock price increases. Generally, grants of
options vest over a period of time, and executives must be employed by the
Company for such options to vest.
-7-
<PAGE>
CHIEF EXECUTIVE OFFICER 1996 COMPENSATION
The base salary for Dr. Goldberg, the Company's Chairman of the Board and
Chief Executive Officer, was $200,000 during the Company's fiscal year ended
September 30, 1996, an approximately 6% increase over the previous fiscal year.
In March 1996, Dr. Goldberg's employment agreement was amended to extend its
term to March 31, 1998 and to permit Dr. Goldberg to receive a performance
bonus, at the discretion of the Board of Directors, upon achievement of specific
objectives established by the Board of Directors. (Dr. Goldberg's employment
agreement has been subsequently amended and restated. See "Executive
Compensation - Employment Agreement.")
In November 1995, Dr. Goldberg was awarded Time Accelerated Restricted
Stock Options ("TARSOPs") to purchase 51,429 shares of Common Stock at $3.50 per
share. This grant was made in lieu of the potential annual cash bonus under Dr.
Goldberg's employment agreement, as amended. These TARSOPs become fully
exercisable on November 16, 2000, subject to acceleration based on performance
as decided by the Compensation Committee. This grant was based on the
achievement of objectives deemed by the Compensation Committee to represent
increased stockholder value and strategic business goals. These objectives
included completing a private placement of equity securities and furtherance of
preclinical development. (In December 1996, these and other options were
canceled, and new options were granted. See "1993 Stock Option Plan.") The
aggregate compensation paid to Dr. Goldberg was deemed appropriate by the
Compensation Committee considering the overall performance of the Company and
Dr. Goldberg.
TAX EFFECTS
Changes made in 1993 to the Internal Revenue Code of 1986, as amended (the
"Code"), impose certain limitations on the deductibility of executive
compensation paid by public companies. In general, the Company may not deduct
annual compensation paid to certain executive officers in excess of $1,000,000
except to the extent that such compensation qualifies as "performance-based
compensation." Non-deductibility would result in additional tax cost to the
Company. It is possible that at least some of the cash and equity-based
compensation paid or payable to the Company's executive officers will not
qualify for the "performance-based compensation" exclusion under the deduction
limitation provisions of the Code. Nevertheless, the Committee anticipates that
in making compensation decisions it will give consideration to the net cost to
the Company (including, for this purpose, the potential limitation on
deductibility of executive compensation).
The Compensation Committee believes that linking executive compensation to
corporate performance results in a better alignment of compensation with
corporate business goals and stockholder value. In view of the Company's
performance and achievement of goals and competitive conditions, the
Compensation Committee believes that compensation levels during 1996 adequately
reflect the Company's compensation goals and policies.
Compensation Committee
William T. McCaffrey
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<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth information concerning all cash and
non-cash compensation paid or to be paid by the Company as well as certain other
compensation awarded, earned by and paid, during the fiscal years indicated, to
the Chief Executive Officer and each of the other most highly compensated
executive officers of the Company who earned in excess of $100,000 for such
period in all capacities in which they served.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term Compensation
---------------------------
Annual Compensation Awards
- -----------------------------------------------------------------------------------------------
Other
Annual Restricted
Name and Compen- Stock Options/
Principal Salary Bonus sation Award(s) SARs
Position Year ($) ($) ($) ($) (#)(2)
---------- ---- ----- ----- ----- ----- -------
<S> <C> <C> <C> <C> <C> <C>
Allan R. Goldberg 1996 $200,000 -- -- -- 51,429
Chairman and Chief 1995 188,750 -- -- -- 37,000
Executive Officer 1994 151,055 -- -- -- 61,625
Gary Pokrassa 1996 $139,750 -- -- -- 29,946
Vice President - 1995 132,438 -- -- -- 8,700
Finance(1) 1994 142,139 -- -- -- 67,825
Shaji T. George 1996 $110,000 -- -- -- 23,571
Vice President - 1995 102,500 -- -- -- --
Discovery Research 1994 87,993 -- -- -- 59,250
<FN>
(1) Mr. Pokrassa was paid as a consultant from March 1993 through June 30, 1994. In February
1997, Mr. Pokrassa resigned as Vice President-Finance.
(2) The Company canceled and reissued these and other stock options in December 1996. See "1993
Stock Option Plan."
</FN>
</TABLE>
The Company has no stock appreciation rights plan or long-term incentive
plan.
-9-
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table provides information related to options granted to the
named executive officers during fiscal year ended September 1996.
<TABLE>
<CAPTION>
Potential Realizable Value
At Assumed Annual Rates
of Stock Price Appreciation
Individual Grants For Option Term(1)
----------------------------------------------------------------- ------------------
% of Total
Options
Granted to Exercise
Options Employees in or Base
Granted Fiscal Price Expiration
Name (#)(2) Year ($/share) Date 5% ($) 10% ($)
- ---- ------- ------ --------- ------ ------ -------
<S> <C> <C> <C> <C> <C> <C>
Allan R. Goldberg 51,429(3) 15.5% $3.50 11/16/2000 $49,731 $109,893
Gary Pokrassa 29,946(3) 9.0% $3.50 11/16/2000 $28,957 $63,988
Shaji T. George 23,571(3) 7.1% $3.50 11/16/2000 $22,793 $50,366
<FN>
(1) The potential realizable value portion of the foregoing table illustrates
value that might be received upon exercise of the options immediately
prior to the expiration of their term, assuming the specified compounded
rates of appreciation on the Company's Common Stock over the term of the
options. These numbers do not take into account provisions of certain
options providing for termination of the option following termination of
employment.
(2) Options to acquire shares of Common Stock.
(3) Consists of shares exercisable at $3.50 per share expiring November 16,
2000, none of which was vested at September 30, 1996. Vesting is subject
to acceleration based on performance, otherwise vesting occurs on November
16, 2000. The Company canceled and reissued these and other stock options
in December 1996. See "1993 Stock Option Plan."
</FN>
</TABLE>
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION VALUES
Number of Unexercised Value of Unexercised In-
Options at Fiscal Year the-Money Options at
End (#) Fiscal Year End ($)
-------------------- -------------------
Shares
Acquired Value Unexer- Unexer-
Name on Exercise Realized ($) Exercisable cisable Exercisable cisable
- ---- ----------- ------------ ----------- ------- ----------- -------
<S> <C> <C> <C> <C> <C> <C>
Dr. Allan R. -0- -0- 212,714 285,362 -0- -0-
Goldberg
Gary Pokrassa -0- -0- 44,000 62,471 -0- -0-
Shaji T. George -0- -0- 68,766 64,621 -0- -0-
</TABLE>
DIRECTORS' COMPENSATION
While there is no formal policy pursuant to which the Company's directors
receive fees for their services, from time to time they may receive compensation
in the form of cash or securities, and they are reimbursed for expenses incurred
by them in connection with the Company's business. Non-employee directors each
receive a stipend of $500 per each directors' meeting attended in person and
$250 for each telephonic meeting. See "Non-Employee Director Stock Option Plan."
-10-
<PAGE>
EMPLOYMENT AGREEMENT
The Company and Dr. Goldberg entered into an employment agreement in April
1992 for his services as Chairman of the Board and Chief Science Officer. (In
February 1993, Dr. Goldberg was also named President of the Company, and, in
June 1994, he was named Chief Executive Officer). Pursuant to the agreement,
which was amended effective March 31, 1996, amended and restated in December
1996 and expires November 30, 1999, Dr. Goldberg currently serves as Chairman of
the Board and Chief Executive Officer and receives an annual base salary of
$200,000, adjusted annually as determined by the Board. In addition, pursuant to
the agreement and in connection with the Repricing (as defined below), Dr.
Goldberg received an option to purchase 500,000 shares of Common Stock in
substitution for his existing stock options and received an option to purchase
300,000 shares of Common Stock, the vesting of which is based upon achievement
of specific milestones. Dr. Goldberg is also eligible to receive a performance
bonus, at the discretion of the Board, upon achievement of specific objectives
established by the Board. Dr. Goldberg's agreement contains confidentiality and
non-compete provisions, and an agreement that Dr. Goldberg's inventions,
copyrights and patents become property of the Company. Dr. Goldberg has loaned
the Company some scientific equipment, as listed in his agreement.
COMPENSATION PURSUANT TO PLANS:
1993 Stock Option Plan
In May 1993, the Company adopted its current stock option plan (the "1993
Plan"). Under the 1993 Plan, as amended by the Board in November 1996, subject
to stockholder approval of Proposal No. 4, 3,000,000 shares of Common Stock
(subject to adjustment to cover stock splits, stock dividends, recapitalizations
and other capital adjustments) are reserved for issuance upon exercise of
options granted to officers, employees and directors of and advisers and
consultants to the Company. The 1993 Plan provides that options granted
thereunder will be designated as either incentive stock options or non-incentive
stock options. Options designated as incentive stock options are intended to
qualify as incentive stock options as defined in the Internal Revenue Code of
1986, as amended (the "Code"). The 1993 Plan will terminate in 2003, unless
sooner terminated by the Board of Directors.
Subject to the limitations set forth in the 1993 Plan, the Board of
Directors or a committee of the Board has the authority to select the persons to
whom grants are to be made, to designate the number of shares to be covered by
each option, to determine whether an option is to be an incentive stock option
or a non-incentive stock option, to establish vesting schedules and, subject to
certain restrictions, to specify other terms of the options. The maximum term of
options granted under the 1993 Plan is ten years. Options granted under the 1993
Plan generally are non-transferable and expire three months after the
termination of an optionee's employment or service with the Company. In general,
if an optionee dies, is permanently disabled or retires while employed or
retained by the Company, such person's option may be exercised up to three
months after his or her death, or termination of employment due to disability or
retirement.
The exercise price of options granted under the 1993 Plan is determined by
the Board of Directors (or its committee) at the time of grant. The exercise
price of incentive stock options must equal at least the fair market value of
the Common Stock on the date of grant. The exercise price of incentive stock
options granted to any person who at the time of grant owns stock possessing
more than 10% of the total combined voting power of all classes of stock must be
at least 110% of the fair market value of such stock on the date of grant and
the term of these options cannot exceed five years. The exercise price of
non-incentive stock options may be less than 100% of the fair market value of
the Common Stock on the date of grant. On November 21, 1996, the Board of
Directors authorized the Company to offer to each current employee, director or
consultant holding stock options (the "Old Options") the
-11-
<PAGE>
opportunity to have the Old Options canceled and to grant new options ("New
Options") for an equal number of shares at an exercise price of $1.30 per share
(the "Repricing"); the closing price for the common stock on November 21, 1996
as reported by the Nasdaq SmallCap Market ("Nasdaq") was $.8125. Under the terms
of the Repricing, vesting schedules were reset and no portion of any New Option
may be exercised and sold until November 21, 1997. All New Options are
non-incentive stock options. Under the Repricing, 1,443,925 Old Options were
canceled and 1,473,889 New Options, including 756,471 for officers, were issued.
At April 1, 1997, options for 1,909,789 shares were outstanding under the 1993
Plan at prices ranging from $1.30 to $9.75, including 800,000 options to Dr.
Goldberg and 150,000 options to Dr. George, and, assuming stockholder approval
of Proposal No. 4, 986,572 shares were available for future grant. See "Option
Grants in Last Fiscal Year."
Non-Employee Director Stock Option Plan
During 1994, the Company adopted a Non-Employee Director Stock Option Plan
(the "Director Plan"). Under the Director Plan, as amended by the Board in July
1996 and April 1997, subject to stockholder approval of Proposal No. 3, 270,000
shares of the Company's common stock have been reserved for stock option awards.
Each new non-employee director is automatically granted an option to purchase
30,000 shares of Common Stock, on the date on or after June 1, 1994 on which he
or she is initially appointed or elected as a director. The exercise price is
equal to the fair market value on the date of grant. Such options vest ratably,
at six month intervals, over a three year period. In July 1996, subject to
stockholder approval of Proposal No. 3, the Company's Board of Directors amended
the Director Plan to allow for additional grants of an option to purchase 10,000
shares at each director's second anniversary, and at each anniversary
thereafter, with vesting to be 50% at the eighteenth month following grant, and
100% at the twenty fourth month following grant. In April 1997, subject to
stockholder approval of Proposal No. 3, the Company's Board of Directors amended
the Director Plan to modify the class of persons eligible to receive options
thereunder to exclude employees of affiliates of the Company and to extend the
option period of options granted thereunder from five (5) years to ten (10)
years. During the year ended September 30, 1996, the Company granted options to
purchase an aggregate of 160,000 shares, exercisable at prices ranging from
$0.97 to $3.88. Options to purchase 75,000 shares were terminated during the
year ended September 30, 1996, exercisable at prices ranging from $1.69 to
$7.75. In addition, as approved by the Board of Directors on November 21, 1996,
in connection with the Repricing, 70,000 options, previously granted to two
directors pursuant to the Director Plan, were canceled and reissued under the
1993 Stock Option Plan at an exercise price of $1.30 per share; such options
vest over a three year period. At April 1, 1997, options for 75,000 shares were
outstanding under this plan and, assuming stockholder approval of Proposal No.
3, 195,000 shares were available for future grant. 15,000 options are vested
under this plan at April 1, 1997.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company currently has a Compensation Committee consisting of William
T. McCaffrey and Stanley Knowlton. During the year ended September 30, 1996, the
following directors also served on the Compensation Committee: Charles L.
Dimmler, III served until he resigned as a member of the Board of Directors in
December 1995; Bernard Canavan, M.D. served until he resigned in March 1996;
Susan Clymer served from December 1995 until she resigned in June 1996; and
Maurice Hilleman, Ph.D. served from July 1996 until he resigned in December
1996.
-12-
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On August 30, 1996, the Company completed a private placement whereby The
Aries Funds invested a total of $2,000,000 in exchange for 4,000,000 shares of
newly issued Common Stock and Class C Warrants to purchase an aggregate of
4,000,000 shares of the Common Stock exercisable at $.50 per share. In addition,
the Company issued to The Aries Funds unit purchase options to purchase
2,000,000 shares of Common Stock and Class C Warrants to purchase an aggregate
of 2,000,000 shares of Common Stock, for a total option purchase price of
$1,000,000. Upon consummation of this private placement, The Aries Funds became
the beneficial owner of more than 5% of the Company's voting securities. In
connection with this private placement, The Aries Funds designated two directors
to the Company's Board of Directors, who have subsequently resigned.
On December 23, 1996, the Company completed its acquisition from VIMRx of
all of the issued and outstanding shares of the capital stock of VIMRx Holdings,
Ltd. ("Holdings"). In consideration for the shares of Holdings, the Company
issued to VIMRx shares of Class D Convertible Preferred Stock, convertible into
an aggregate of 8,666,666 shares of Common Stock, and warrants to purchase
2,000,000 shares of Common Stock at exercise prices of $1.00 per share with
respect to 1,000,000 shares and $2.00 per share with respect to 1,000,000
shares. Simultaneously with the Company's acquisition of Holdings, (i) The Aries
Funds exercised for an aggregate purchase price of $3,000,000 Class C Warrants
and unit purchase options to purchase an aggregate of 6,000,000 shares of Common
Stock and Class C Warrants to purchase 2,000,000 shares of Common Stock and (ii)
VIMRx, in exchange for $3,000,000 and 3,000,000 shares of VIMRx's common stock,
acquired from The Aries Funds 9,500,000 shares of Innovir's Common Stock. In
connection with the transaction between VIMRx and The Aries Funds, VIMRx
received from The Aries Funds a three-year proxy granting VIMRx all voting
rights with respect to the 500,000 shares of Common Stock and Class C Warrants
to purchase 2,000,000 shares of Common Stock retained by The Aries Funds, which
proxy does not restrict The Aries Funds from selling such securities; upon such
a sale, the proxy will lapse with respect to any securities so sold. At the end
of the three-year period, the proxy shall lapse, and The Aries Funds shall
retain all voting rights with respect to the Company's securities held by them.
Prior to the consummation of these transactions, each of The Aries Funds' two
designees to the Company's Board of Directors resigned from the Company's Board
of Directors. Prior, and subsequent, to the consummation of these transactions,
The Aries Funds were, and are, beneficial owners of more than 5% of the
Company's voting securities. In connection with these transactions, VIMRx
designated four directors to the Company's Board of Directors: Messrs. Dunning,
Fink, Jackson and O'Connell. Upon consummation of these transactions, VIMRx
became the beneficial owner of a majority interest of the Company's voting
securities. See "Beneficial Ownership of the Company's Securities - Changes in
Control of the Company."
-13-
<PAGE>
STOCK PRICE PERFORMANCE COMPARISON
The Stock Price Performance Graph below shall not be deemed incorporated
by reference by any general statement incorporating by reference this proxy
statement into any filing under the Securities Act or under the Exchange Act,
except to the extent the Company specifically incorporates this information by
reference, and shall not otherwise be deemed filed under such Acts.
The graph below compares cumulative total return of the Company's Common
Stock with the cumulative total return of (i) the Index for the NASDAQ Stock
Market (U.S. Companies) and (ii) an industry peer group index consisting of the
NASDAQ Pharmaceutical Index (the "Nasdaq Pharma Peer Index"). The graph assumes
$100 was invested on the day the Company's Common Stock was first traded on
Nasdaq in each of the Company's Common Stock, the stocks comprising the Index
for the NASDAQ Stock Market (U.S. Companies) and the stocks comprising the
Nasdaq Pharma Peer Index, and the reinvestment of dividends.
[The following table was represented as a line graph in the printed material.]
<TABLE>
<CAPTION>
INVR NASDAQ NASDAQ -------- EQUIVALENT INVESTMENT --------
INDEX PHARMA NASDAQ
INDEX INVR NASDAQ PHARMA
<S> <C> <C> <C> <C> <C> <C>
Aug-93 238.1840 250.1260
09/14/93 $4.13 241.7305 257.5925 100.0000 100.0000 100.0000
Sep-93 $4.50 245.2770 265.0590 109.0909 101.4671 102.8986
Oct-93 $5.38 250.7900 288.4990 130.3030 103.7478 111.9982
Nov-93 $5.88 243.3110 282.1690 142.4242 100.6538 109.5408
Dec-93 $6.25 250.0930 287.2620 151.5152 103.4594 111.5180
Jan-94 $5.88 257.6850 295.9980 142.4242 106.6001 114.9094
Feb-94 $6.50 255.2760 269.3510 157.5758 105.6036 104.5648
Mar-94 $7.00 239.5740 234.2970 169.6970 99.1079 90.9565
Apr-94 $7.38 236.4660 224.8720 178.7879 97.8222 87.2976
May-94 $7.75 237.0430 221.8360 187.8788 98.0609 86.1190
Jun-94 $8.00 228.3750 204.5090 193.9394 94.4750 79.3925
Jul-94 $8.25 233.0580 210.6960 200.0000 96.4123 81.7943
Aug-94 $8.50 247.9160 233.5590 206.0606 102.5588 90.6700
Sep-94 $8.53 247.2830 230.3360 206.8121 102.2970 89.4188
Oct-94 $8.75 252.1420 222.4650 212.1212 104.3071 86.3632
Nov-94 $9.00 243.7790 223.4460 218.1818 100.8474 86.7440
Dec-94 $8.63 244.4640 216.2050 209.0909 101.1308 83.9330
Jan-95 $9.13 245.8340 228.1740 221.2121 101.6976 88.5794
Feb-95 $7.50 258.8350 236.7940 181.8182 107.0759 91.9258
Mar-95 $8.88 266.5040 233.4080 215.1515 110.2484 90.6113
Apr-95 $9.75 274.8940 239.9650 236.3636 113.7192 93.1568
May-95 $11.25 281.9830 242.9900 272.7273 116.6518 94.3312
Jun-95 $11.88 304.8340 271.4600 287.8788 126.1049 105.3835
Jul-95 $11.25 327.2410 294.8320 272.7273 135.3743 114.4567
Aug-95 $7.88 333.8730 329.7030 190.9091 138.1179 127.9940
Sep-95 $8.25 341.5500 339.1900 200.0000 141.2937 131.6770
Oct-95 $2.75 339.5940 326.5100 66.6667 140.4845 126.7545
Nov-95 $4.00 347.5680 342.8930 96.9697 143.7833 133.1145
Dec-95 $4.19 345.7240 395.5490 101.5152 143.0204 153.5561
Jan-96 $2.56 347.4300 429.9080 62.1212 143.7262 166.8946
Feb-96 $4.25 360.6700 421.8050 103.0303 149.2033 163.7489
Mar-96 $4.38 361.8700 411.6170 106.0606 149.6998 159.7939
Apr-96 $4.06 391.8780 432.8840 98.4848 162.1136 168.0499
May-96 $3.75 409.8580 447.5220 90.9091 169.5516 173.7325
Jun-96 $2.00 391.3760 399.9620 48.4848 161.9059 155.2693
Jul-96 $1.38 356.4620 356.4770 33.3333 147.4626 138.3880
Aug-96 $1.22 376.4920 382.2980 29.5455 155.7487 148.4119
Sep-96 $1.44 405.3040 409.0970 34.8485 167.6677 158.8156
</TABLE>
-14-
<PAGE>
PROPOSAL NO. 2 - APPROVAL OF AMENDMENT TO COMPANY'S
CERTIFICATE OF INCORPORATION.
On April 3, 1997, the Board of Directors unanimously adopted, subject to
stockholder approval, an amendment to Article Fourth of the Company's
Certificate of Incorporation, as amended (the "Certificate of Incorporation"),
which would increase the number of shares of Common Stock which the Company is
authorized to issue from 35,000,000 to 70,000,000. The full text of the proposed
amendment to the Certificate of Incorporation is set forth in Exhibit A to this
Proxy Statement, and the following discussion is qualified by reference thereto.
The authorized stock of the Company consists of 35,000,000 shares of
Common Stock and 15,000,000 shares of Preferred Stock. As of April 1, 1997, (x)
18,050,786 shares of Common Stock were issued and outstanding, (y) options to
purchase 75,000 shares were outstanding and 195,000 shares were reserved for
issuance under the Company's Non-Employee Director Stock Option Plan (assuming
Proposal No. 3 is approved), and (z) options to purchase 1,909,789 shares were
outstanding and 986,572 shares were reserved for issuance under the Company's
1993 Stock Option Plan (assuming Proposal No. 4 is approved). In addition, as of
April 1, 1997, the Company reserved an aggregate of 19,627,743 shares of Common
Stock for issuance upon the exercises of various warrants and options and the
conversion of outstanding B Preferred Stock, including: (i) 489,636 shares of
Common Stock for issuance upon exercise of the outstanding warrants issued to
certain consultants and their designees, (ii) a minimum of 60,000 shares of
Common Stock issuable upon the exercise of a warrant held by the New York State
Science and Technology Foundation pursuant to a note, (iii) 10,833 shares and
2,526 shares of Common Stock issuable upon the exercise of warrants issued in
connection with equipment financings, (iv) 567,122 shares of Common Stock for
issuance upon exercise of the Class B Warrants issued in January 1995 resulting
from the Bridge Warrant Exchange offer, (v) 680,608 shares of Common Stock for
issuance upon exercise of the Class B Warrants issued in April and May 1995 as
part of a private placement, (vi) 453,846 shares for issuance upon conversion of
the B Preferred Stock, based on conversion at such date using the minimum price
of $5.00 per share of Common Stock, (vii) 179,975 shares of Common Stock
issuable upon the exercise of certain Units contained in the Unit Purchase
Option issued to A.R. Baron, the underwriter of the Company's initial public
offering, and 359,950 shares of Common Stock issuable upon exercise of the
Underwriter Warrants contained in such Units, (viii) 57,081 shares of Common
Stock issuable upon the exercise of certain Bridge Warrants, (ix) 3,599,500
shares issuable upon the exercise of Class A and Class B Warrants, (x) 500,000
shares issuable upon the exercise of warrants held by Yale University and (xi)
an aggregate of 12,666,666 shares for issuance upon the exercise of D Preferred
Stock and warrants held by VIMRx and Class C Warrants held by The Aries Funds.
As of April 1, 1997, the Company did not have sufficient shares authorized for
issuance upon exercise or conversion of all of the Company's outstanding
securities.
Furthermore, in connection with the transactions consummated in December
1996 involving the Company, VIMRx and The Aries Funds, the Company agreed with
VIMRx to convene a meeting of its stockholders to, inter alia, approve an
amendment to the Company's certificate of incorporation to increase the
authorized number of shares of Common Stock to 70,000,000 shares. VIMRx is the
holder of all of the issued and outstanding D Preferred Stock which is
convertible into an aggregate of 8,666,666 shares of Common Stock. See
"Beneficial Ownership of the Company's Securities - Changes in Control of the
Company" and "Certain Relationships and Related Transactions." To the extent the
Company has sufficient shares of Common Stock authorized, on June 30, 1997, each
outstanding share of D Preferred Stock will be automatically converted into a
share of Common Stock. In the event that, on June 30, 1997, the Company does not
have a sufficient number of shares authorized for issuance upon conversion of
the D Preferred Stock, each share of the D Preferred Stock will be convertible
into one and one-half shares of Common Stock. In order to ensure that the
Company will have
-15-
<PAGE>
a sufficient number of shares authorized, the stockholders of the Company are
being asked to approve an increase in the number of shares of Common Stock
authorized for issuance.
In addition, the proposed increase in the number of shares authorized will
provide the Company with greater flexibility to issue Common Stock for
appropriate corporate purposes. Such additional authorized stock could be issued
in connection with, inter alia, funding of the Company's capital needs and
corporate growth, potential research and development arrangements and other
strategic alliances, potential acquisitions of desirable businesses and stock
split and stock dividends. If Proposal No. 2 is not adopted, the Company's
ability to finance its future capital needs may be severely limited.
Approval of the proposed amendment to the Certificate of Incorporation
will allow the Board of Directors to act promptly to issue additional shares, if
appropriate opportunities should arise, without the delay and expense of calling
a special stockholders' meeting. The Board of Directors will determine whether,
when and on what terms the issuance of shares of Common Stock may be warranted.
The additional shares will be available without further action by the
stockholders unless such action is required by applicable law or by the rules of
Nasdaq or any applicable stock exchange. Except in certain cases such as a stock
dividend, the issuance of additional shares would have the effect of diluting
the voting powers of existing stockholders.
VOTE REQUIRED
The affirmative vote of the holders of a majority of the shares of Common
Stock of the Company present or represented by proxy and entitled to vote at the
Annual Meeting is required for adoption of the proposed amendment to the
Certificate of Incorporation. Abstentions and broker non-votes have the same
legal effect as votes cast against this proposal.
THE BOARD OF DIRECTORS DEEMS PROPOSAL NO. 2 TO BE IN THE BEST INTERESTS OF
THE COMPANY AND ITS STOCKHOLDERS AND RECOMMENDS A VOTE "FOR" APPROVAL THEREOF.
PROPOSAL NO. 3 - APPROVAL OF AMENDMENTS TO COMPANY'S
NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN.
On July 2, 1996 and April 3, 1997, the Board of Directors unanimously
adopted, subject to stockholder approval, amendments to the Director Plan which
would (i) modify the class of persons eligible to receive options thereunder to
exclude employees of affiliates of the Company, (ii) increase the number of
shares which may be issued thereunder from 120,000 shares to 270,000 shares,
(iii) provide for additional grants to each eligible director on the second
anniversary of his or her initial appointment or election to the Board of
Directors of an option to purchase 10,000 shares of Common Stock and on each
anniversary thereafter, such options to become exercisable pursuant to a
specified vesting schedule, and (iv) extend the option period of options granted
thereunder from five (5) years to ten (10) years. As of April 1, 1997, the
number of shares available for future grants under the Director Plan was 195,000
(assuming Proposal No. 3 is approved). The primary features of the Director Plan
are summarized below. The full text of the Director Plan, including the proposed
amendments thereto, is set forth in Exhibit B to this Proxy Statement, and the
following discussion is qualified by reference thereto. See "Executive
Compensation - Compensation Pursuant to Plans: Non-Employee Director Stock
Option Plan."
The Director Plan was adopted by the Board of Directors for the purpose of
enabling the Company to provide stock options to members of the Board of
Directors who are not also employees of the Company ("Non-Employee Directors").
It was intended that the Director Plan
-16-
<PAGE>
constitute a "formula plan" within the meaning and for the purposes of Rule
16b-3 issued by the SEC under Section 16 of the Exchange Act. Currently, the
Director Plan provides for an automatic grant of an option to purchase 30,000
shares of Common Stock to each Non- Employee Director on the date of the
Non-Employee Director's initial appointment or election. As of April 1, 1997,
15,000 shares of Common Stock were vested under the Director Plan. At April 1,
1997, three (3) directors were eligible to participate in the Director Plan.
The Director Plan is administered by the Board of Directors. Subject to
the provisions of the Director Plan and applicable law, the Board of Directors,
acting in its sole and absolute discretion, has full power and authority to
interpret the provisions of the Director Plan and option agreements made under
the Director Plan, to supervise the administration of the Director Plan, and to
take such other action as may be necessary or desirable in order to carry out
the provisions of the Director Plan. The decisions of the Board of Directors as
to any disputed question, including questions of construction, interpretation
and administration, are final and conclusive on all persons.
The Board of Directors may amend or terminate the Director Plan. Except as
otherwise provided in the Director Plan with respect to equity changes, any
amendment which would increase the aggregate number of shares of Common Stock as
to which options may be granted under the Director Plan, materially increase the
benefits under the Director Plan, or modify the class of persons eligible to
receive options under the Director Plan shall be subject to the approval of the
stockholders of the Company. No amendment or termination may adversely affect
any outstanding option without the written consent of the optionee.
Notwithstanding anything to the contrary contained therein or in any option
agreement made thereunder, the provisions of the Director Plan relating to
automatic option grants and the terms and conditions of the options and any
other provision of the Director Plan, or of an option agreement relating to the
timing of option grants, the amount of shares covered thereby and the exercise
price thereunder, may not be amended more than once every six months.
The table below indicates stock options that have been granted during the
fiscal year ended September 30, 1996 under the Director Plan to each
Non-Employee Director:
OPTIONS GRANTED DURING FISCAL 1996 UNDER
THE NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
Exercise Price Number of Shares
Name Per Share Covered by Options Granted
- -------------------------------- -------------- -------------------------
Susan Clymer (1)(2) $3.88 10,000
Michael Ostrach (1)(3) $3.75 10,000
Hugh Robertson (1)(3) $3.38 30,000
Maurice Hilleman (1)(4) $3.00 30,000
Michael Ostrach (1)(3) $1.69 10,000
William McCaffrey $1.69 10,000
Joseph Edelman (1)(4) $0.97 30,000
Michael Weiss (1)(4) $0.97 30,000
(1) Canceled upon resignation as a director of the Board.
(2) Resigned as a director of the Board in June 1996.
(3) Resigned as a director of the Board in September 1996.
(4) Resigned as a director of the Board in December 1996.
-17-
<PAGE>
NEW PLAN BENEFITS
To date, the Company has not granted any options pursuant to the Director
Plan on the basis of the proposed increase in the shares issuable thereunder set
forth in this Proposal No. 3. Upon stockholder approval of this Proposal No. 3,
the following Non-Employee Directors, who currently own options previously
granted pursuant to the Director Plan, will benefit from the amendments
described herein: William T. McCaffrey, Laurence D. Fink and Stanley Knowlton.
In addition, one former director of the Company currently owns options
previously granted pursuant to the Director Plan and will benefit from the
amendments described herein.
FEDERAL INCOME TAX CONSEQUENCES
A Non-Employee Director who receives an option under the Director Plan
will not realize taxable income upon the grant of the option. In general, the
optionee will realize ordinary income when the option is exercised equal to the
excess of the value of the stock over the exercise price (i.e., the option
spread), and the Company receives a corresponding deduction. Upon a later sale
of the stock, an optionee will realize capital gain or loss equal to the
difference between the selling price and the value of the stock at the time the
option was exercised.
THE AMENDMENTS TO THE DIRECTOR PLAN
The Board of Directors believes that approval of the proposed amendments
to the Director Plan will serve the best interests of the Company and its
stockholders with respect to the administration of the Director Plan and the
granting of options thereunder. In addition, the Board of Directors believes
that the ability to grant additional options will help attract, motivate and
retain directors who are in a position to contribute to the successful conduct
of the business and affairs of the Company as well as stimulate in such
individuals an increased desire to render greater service to the Company.
VOTE REQUIRED
The affirmative vote of the holders of a majority of the shares of Common
Stock of the Company present or represented by proxy and entitled to vote at the
Annual Meeting is required for adoption of the proposed amendments to the
Director Plan. Broker non-votes with respect to this matter will be treated as
neither a vote "for" nor a vote "against" the matter, although they will be
counted in determining the number of votes required to attain a majority of the
shares present or represented at the meeting and entitled to vote. Accordingly,
an abstention from voting by a stockholder present in person or by proxy at the
meeting has the same legal effect as a vote "against" the matter because it
represents a share present or represented at the meeting and entitled to vote,
thereby increasing the number of affirmative votes required to approve this
proposal.
THE BOARD OF DIRECTORS DEEMS PROPOSAL NO. 3 TO BE IN THE BEST INTERESTS OF
THE COMPANY AND ITS STOCKHOLDERS AND RECOMMENDS A VOTE "FOR" APPROVAL THEREOF.
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<PAGE>
PROPOSAL NO. 4 - APPROVAL OF AMENDMENT TO COMPANY'S
1993 STOCK OPTION PLAN.
On November 21, 1996, the Board of Directors unanimously adopted, subject
to stockholder approval, an amendment to the 1993 Plan which would increase the
number of shares of Common Stock that may be issued thereunder from 2,000,000
shares to 3,000,000 shares. As of April 1, 1997, the number of shares available
for future grants under the 1993 Plan was 986,572. The primary features of the
1993 Plan are summarized below. The full text of the 1993 Plan, including the
proposed amendments thereto, is set forth in Exhibit C to this Proxy Statement,
and the following discussion is qualified by reference thereto. See "Executive
Compensation - Compensation Pursuant to Plans: 1993 Stock Option Plan."
The 1993 Plan was adopted by the Board of Directors for the purpose of
furthering the growth and development of the Company by encouraging and enabling
employees, including officers, and directors of, and consultants and advisers
to, the Company to obtain a proprietary interest in the Company through the
ownership of stock, thereby providing such persons with an added incentive to
continue in the employ or service of the Company and to stimulate their efforts
in promoting the growth, efficiency and profitability of the Company, and
affording the Company a means of attracting to its service persons of
outstanding quality. As of April 1, 1997, 288,393 shares of Common Stock were
vested under the 1993 Plan. At April 1, 1997, approximately 70 persons were
eligible to participate in the 1993 Plan.
The 1993 Plan is administered by the Compensation Committee. Subject to
the provisions of the 1993 Plan and applicable law, the Board of Directors,
acting in its sole and absolute discretion, has authority to interpret the 1993
Plan, to prescribe, amend and rescind rules and regulations relating to it, to
determine the terms and provisions of the instruments by which options shall be
evidenced, which shall not be inconsistent with the terms of the 1993 Plan, and
to make all other determinations necessary or advisable for the administration
of the 1993 Plan, all of which determinations shall be final, binding and
conclusive.
The Board of Directors may amend or terminate the 1993 Plan. Except as
otherwise provided in the 1993 Plan with respect to equity changes, any
amendment which would materially increase the aggregate number of shares of
Common Stock as to which options may be granted under the 1993 Plan, materially
increase the benefits under the 1993 Plan, or modify the requirements of
eligibility for participation in the 1993 Plan shall be subject to the approval
of the stockholders of the Company. No amendment, modification or termination
may adversely affect any outstanding option.
The table below indicates stock options that have been granted during the
fiscal year ended September 30, 1996 under the 1993 Plan.
OPTIONS GRANTED DURING FISCAL 1996 UNDER
1993 STOCK OPTION PLAN
Number of Shares
Exercise Price Per Covered by Options
Name and Position Share Granted (2)
- ------------------------------ ----------------------- --------------------
Allan R. Goldberg $3.50 51,429
Gary Pokrassa (1) $3.50 29,946
Shaji T. George $3.50 23,571
(1) Resigned as Vice President-Finance of the Company as of February 1997.
(2) The Company canceled and reissued these and other stock options effective
December 1996, See "1993 Stock Option Plan.
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<PAGE>
FEDERAL INCOME TAX CONSEQUENCES
An optionee will not realize taxable income upon the grant of an option.
In general, the holder of an option which does not qualify as an incentive stock
option (within the meaning of Section 422 of the Code, an "ISO") will realize
ordinary income when the option is exercised equal to the excess of the value of
the stock over the exercise price (i.e., the option spread), and the Company
receives a corresponding deduction. (If an option is exercised within six months
after the date of grant and if the optionee is subject to the six month
restrictions on sale of Common Stock under Section 16(b) of the Exchange Act,
the optionee generally will recognize ordinary income on the date the
restrictions lapse, unless an early income recognition election is made.) Upon a
later sale of the stock, an optionee will realize capital gain or loss equal to
the difference between the selling price and the value of the stock at the time
ordinary income is recognized with respect to the exercise of the option.
The holder of an ISO will not realize taxable income upon the exercise of
the option (although the option spread is an item of tax preference income
potentially subject to the alternative minimum tax). If the stock acquired upon
exercise of the ISO is sold or otherwise disposed of within two years from the
option grant date or within one year from the exercise date, then, in general,
gain realized on the sale is treated as ordinary income to the extent of the
option spread at the exercise date, and the Company receives a corresponding
deduction. Any remaining gain is treated as capital gain. If the stock is held
for at least two years from the grant date and one year from the exercise date,
then gain or loss realized upon the sale will be capital gain or loss and the
Company will not be entitled to a deduction. A special basis adjustment applies
to reduce the gain for alternative minimum tax purposes.
THE AMENDMENT TO THE 1993 PLAN
The Board of Directors believes that approval of the amendment to increase
the number of shares which may be issued under the 1993 Plan will serve the best
interests of the Company and its stockholders by permitting the Committee to
exercise needed flexibility in the administration of the 1993 Plan and the
granting of options thereunder. In addition, the Board of Directors believes
that the ability to grant additional options will help attract, motivate and
retain employees who are in a position to contribute to the successful conduct
of the business and affairs of the Company as well as stimulate in such
individuals an increased desire to render greater service to the Company.
VOTE REQUIRED
The affirmative vote of the holders of a majority of the shares of Common
Stock of the Company present or represented by proxy and entitled to vote at the
Annual Meeting is required for adoption of the proposed amendment to the 1993
Plan. Broker non-votes with respect to this matter will be treated as neither a
vote "for" nor a vote "against" the matter, although they will be counted in
determining the number of votes required to attain a majority of the shares
present or represented at the meeting and entitled to vote. Accordingly, an
abstention from voting by a stockholder present in person or by proxy at the
meeting has the same legal effect as a vote "against" the matter because it
represents a share present or represented at the meeting and entitled to vote,
thereby increasing the number of affirmative votes required to approve this
proposal.
THE BOARD OF DIRECTORS DEEMS PROPOSAL NO. 4 TO BE IN THE BEST INTERESTS OF
THE COMPANY AND ITS STOCKHOLDERS AND RECOMMENDS A VOTE "FOR" APPROVAL THEREOF.
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<PAGE>
PROPOSAL NO. 5 - RATIFICATION OF APPOINTMENT OF AUDITORS.
The Board of Directors has selected the accounting firm of KPMG Peat
Marwick LLP to serve as independent accountants of the Company to perform the
annual audit for the year ending December 31, 1997 and proposes the ratification
of such decision. Coopers & Lybrand L.L.P. previously served as the independent
accountants of the Company and performed the annual audit for the fiscal year
most recently completed. Coopers & Lybrand L.L.P. had served as the Company's
independent accountants since the Company's initial public offering in 1993. In
light of recent developments, particularly the Company's transactions with
VIMRx, the Company's majority stockholder, the Board of Directors determined
that it would be most efficient and in the best interests of the Company to have
a single accounting firm serve as principal accountants for both the Company and
VIMRx. The decision to change accountants was not occasioned by any disagreement
or advice given on any matter by Coopers & Lybrand L.L.P. The Company solicited
bids for the audits of its financial statements from four accounting firms,
including Coopers & Lybrand L.L.P. On May 16, 1997, the Company terminated
Coopers & Lybrand L.L.P. as the Company's principal accountants and engaged KPMG
Peat Marwick LLP as its principal accountants. The decision to change
accountants was recommended and approved by the Audit Committee of the Board of
Directors.
During the Company's two most recent fiscal years and the subsequent
interim periods preceding such dismissal, there were no disagreements with
Coopers & Lybrand L.L.P. on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure, which
disagreements, if not resolved to the satisfaction of Coopers & Lybrand L.L.P.,
would have caused it to make reference to the subject matter of the
disagreements in connection with its report.
The audit reports of Coopers & Lybrand L.L.P. on the financial statements
of the Company for either of the past two years did not contain any adverse
opinion or disclaimer of opinion, nor were they qualified or modified as to
uncertainty, audit scope or accounting principles, except that the audit report
of Coopers & Lybrand L.L.P. on the Company's financial statements for the fiscal
year ended September 30, 1995 contained an explanatory paragraph regarding
uncertainty about the Company's ability to continue as a going concern.
During the Company's two most recent fiscal years and the subsequent
interim periods preceding such dismissal, there were no reportable events for
which disclosure is required pursuant to Item 304(a)(1)(v) of Regulation S-K
promulgated under the Exchange Act.
Representatives of KPMG Peat Marwick LLP are expected to be present at the
annual meeting. They will have the opportunity to make a statement if they
desire to do so and will be available to respond to appropriate stockholder
questions. Representatives of Coopers & Lybrand L.L.P. are not expected to be
present at the annual meeting.
VOTE REQUIRED
The affirmative vote of the holders of a majority of the shares of Common
Stock of the Company present or represented at the 1997 Annual Meeting of
Stockholders is required for the ratification of the appointment of KPMG Peat
Marwick LLP as independent accountants of the Company. Abstentions and broker
non-votes have the same legal effect as votes cast against this proposal.
THE BOARD OF DIRECTORS DEEMS PROPOSAL NO. 5 TO BE IN THE BEST INTERESTS OF
THE COMPANY AND ITS STOCKHOLDERS AND RECOMMENDS A VOTE "FOR" APPROVAL THEREOF.
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<PAGE>
STOCKHOLDER PROPOSALS
Stockholders who wish to present proposals for action at the 1998 Annual
Meeting of Stockholders should submit their proposals in writing to the
Secretary of the Company at the address of the Company set forth on the first
page of this Proxy Statement. Proposals must be received by the Secretary no
later than February 1, 1998 for inclusion in next year's proxy materials.
ANNUAL REPORT TO STOCKHOLDERS
The Annual Report to Stockholders of the Company for the year ended
September 30, 1996, including audited financial statements, has been mailed to
the stockholders concurrently herewith, but such report is not incorporated in
this Proxy Statement and is not deemed to be a part of the proxy solicitation
material. Copies of the Company's Annual Report on Form 10-K for the year ended
September 30, 1996 and the Company's Transition Report on Form 10-Q including
the three-month period ended December 31, 1996 will be sent without charge to
any stockholder requesting it in writing from Innovir Laboratories, Inc., 510
East 73rd Street, New York, New York 10021, Attn: Secretary.
OTHER MATTERS
The Board of Directors of the Company does not know of any other matters
that are to be presented for action at the Annual Meeting of Stockholders. If
any other matters are properly brought before the meeting or any adjournment
thereof, the persons named in the enclosed proxy will have the discretionary
authority to vote all proxies received with respect to such matters in
accordance with their best judgment.
The prompt return of your proxy will be appreciated and helpful in
obtaining the necessary vote. Therefore, whether or not you expect to attend the
Annual Meeting, please sign the proxy and return it in the enclosed envelope.
By Order of the Board of Directors
Merrill M. Kraines
Secretary
New York, New York
May 20, 1997
STOCKHOLDERS ARE URGED TO SPECIFY THEIR CHOICES, DATE, SIGN AND RETURN THE
ENCLOSED PROXY IN THE ENCLOSED ENVELOPE. PROMPT RESPONSE IS HELPFUL AND YOUR
COOPERATION WILL BE APPRECIATED.
<PAGE>
EXHIBIT A
INNOVIR LABORATORIES, INC.
AMENDMENT TO CERTIFICATE OF INCORPORATION
The Certificate of Incorporation, as amended, of the Company is to be
further amended by changing the Article thereof numbered 4(A) so that, as
amended, the first paragraph of said Article 4(A) shall be and read as set forth
below. The proposed amended language is set forth in bold and italics, and the
language to be deleted is set forth in brackets.
4. (A) Number of Shares. The aggregate number of shares of all classes of
capital stock which the Corporation has the authority to issue is
EIGHTY-FIVE MILLION (85,000,000) [fifty million (50,000,000)] shares,
consisting of (i) SEVENTY MILLION (70,000,000) [thirty-five million
(35,000,000)] shares of Common Stock of the par value of $.013 per share
and (ii) fifteen million (15,000,000) shares of preferred stock of the par
value of $.06 per share, of which two million (2,000,000) shares of Series
A Convertible Preferred Stock, $.06 par value, are hereby authorized and
designated.
<PAGE>
EXHIBIT B
Below is the text of the Company's Non-Employee Director Stock Option Plan
as proposed to be amended in Sections 1, 2, 4 and 5 pursuant to Proposal No. 3.
The proposed amended language to the Non-Employee Director Stock Option Plan is
set forth in bold and italics, and the language to be deleted is set forth in
brackets.
INNOVIR LABORATORIES, INC.
NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
1. PURPOSE. The purpose of this Non-Employee Director Stock Option Plan (the
"Plan") is to enable Innovir Laboratories, Inc. (the "Company") to provide
compensatory stock options to members of its Board of Directors (the "Board")
who are not also employees of the Company OR ANY OF ITS AFFILIATES
("Non-Employee Directors"). It is intended that the Plan will constitute a
"formula plan" within the meaning and for the purposes of Rule 16b-3 issued by
the Securities and Exchange Commission under Section 16 of the Securities
Exchange Act of 1934. The provisions of the Plan and of any option agreement
made pursuant to the Plan will be interpreted and applied accordingly.
2. STOCK SUBJECT TO THE PLAN. The Company may issue and sell a total of 270,000
[120,000] shares (subject to equitable adjustment for stock dividends and
certain capital changes) of its common stock, $.013 par value (the "Common
Stock"), pursuant to the Plan. Such shares may be either authorized and unissued
or held by the Company in its treasury. New options may be granted under the
Plan with respect to shares of Common Stock which are covered by the unexercised
portion of an option which has terminated or expired.
3. ADMINISTRATION. The Plan shall be administered by the Board. Subject to the
provisions of the Plan and applicable law, the Board, acting in its sole and
absolute discretion, shall have full power and authority to interpret the
provisions of the Plan and option agreements made under the Plan, to supervise
the administration of the Plan, and to take such other action as may be
necessary or desirable in order to carry out the provisions of the Plan. The
decisions of the Board as to any disputed question, including questions of
construction, interpretation and administration, shall be final and conclusive
on all persons.
4. AUTOMATIC OPTION GRANTS. Subject to stockholder approval of this Plan, an
option to purchase 30,000 shares of Common Stock will automatically be granted
to each Non-
<PAGE>
Employee Director on the date on which he or she is initially appointed or
elected as a director (by the Board or the stockholders, as the case may be)
AND, FOR AS LONG AS EACH NON-EMPLOYEE DIRECTOR CONTINUES TO SERVE ON THE BOARD,
AN OPTION TO PURCHASE 10,000 SHARES WILL AUTOMATICALLY BE GRANTED TO EACH
NON-EMPLOYEE DIRECTOR ON THE SECOND ANNIVERSARY DATE OF SUCH PERSON'S INITIAL
APPOINTMENT OR ELECTION AS A DIRECTOR AND ON EACH ANNIVERSARY DATE THEREAFTER.
5. TERMS AND CONDITIONS OF OPTIONS. Each option granted under the Plan shall be
evidenced by a written agreement containing the following terms and conditions:
A. OPTION PRICE. The purchase price per share shall be equal to the fair
market value of a share of Common Stock on the date the option is granted which,
for so long as the Company's Common Stock is listed on the NASDAQ Small-Cap
Issues, shall be the last price per share as listed thereon. In the event the
Common Stock is listed on the NASDAQ National Market System, the fair market
value shall be the last closing price per share thereon.
B. OPTION PERIOD. Subject to the provisions hereof, the period during
which an option may be exercised shall be 10 [5] years from the date the option
is granted.
C. EXERCISE OF OPTIONS. An initial grant of options to purchase 30,000
shares of Common Stock will become exercisable at the rate of 16.67% (5,000
shares) for each six months of the optionee's continuous service as a director
from the date the option is granted. EACH GRANT OF 10,000 SHARES WILL BECOME
EXERCISABLE AT THE RATE OF 50% (5,000 SHARES) ON THE DATE EIGHTEEN MONTHS
FOLLOWING THE DATE OF GRANT AND 50% (5,000 SHARES) ON THE DATE TWENTY-FOUR
MONTHS FOLLOWING THE DATE OF GRANT. No option shall be exercisable unless the
Non-Employee Director to whom the option was granted remains in the continuous
service as a director of the Company for at least six months from the date the
option is granted. All or part of the exercisable portion of an option may be
exercised at any time during the option period, except that, without the consent
of the Board, no partial exercise of an option shall be made for less than 100
shares. An option may be exercised by transmitting to the Company (1) a written
notice specifying the number of shares to be purchased, and (2) payment in full
of the purchase price, together with the amount, if any, deemed necessary to
enable the Company to satisfy its income tax withholding obligations with
respect to such exercise (unless other arrangements
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<PAGE>
acceptable to the Board are made with respect to the satisfaction of such
withholding obligations).
D. PAYMENT OF OPTION PRICE. The purchase price of shares of Common Stock
acquired pursuant to the exercise of an option granted under the Plan shall be
payable in cash or check and/or previously-owned shares of Common Stock. If the
shares of Common Stock are tendered as payment of the option exercise price, the
value of such shares shall be the fair market value as of the date of exercise.
If such tender would result in the issuance of fractional shares of Common
Stock, the Company shall instead return the difference in cash or by check to
the optionee.
E. RIGHTS AS A SHAREHOLDER. No shares of Common Stock shall be issued in
respect of the exercise of an option granted under the Plan until full payment
therefor has been made. The holder of an option shall have no rights as a
shareholder with respect to any shares covered by an option until the date a
stock certificate for such shares is issued to him or her. Except as otherwise
provided herein, no adjustments shall be made for dividends or distributions of
other rights for which the record date is prior to the date such stock
certificate is issued.
F. NONTRANSFERABILITY OF OPTIONS. No option shall be assignable or
transferrable except upon the optionee's death to a beneficiary designated by
the optionee in accordance with procedures established by the Board or, if no
designated beneficiary shall survive the optionee, pursuant to the optionee's
will or by the laws of descent and distribution. During an optionee's lifetime,
options may be exercised only by the optionee or the optionee's guardian or
legal representative.
G. TERMINATION OF SERVICE. Subject to the provisions hereof, if an
optionee ceases to perform services as a director of the Company for any reason,
then the outstanding option granted to him or her under the Plan, to the extent
then exercisable, will remain exercisable for the balance of the option period.
H. OTHER PROVISIONS. The Board may impose such other conditions with
respect to the exercise of options, including, without limitation, any
conditions relating to the application of federal or state securities laws, as
it may deem necessary or advisable.
-3-
<PAGE>
6. CHANGE IN CONTROL; CAPITAL CHANGES.
A. CHANGE IN CONTROL. If any event constituting a "Change in Control of
the Company" shall occur, all options granted under the Plan which are
outstanding at the time a Change of Control of the Company occurs shall
immediately become exercisable. A "Change in Control of the Company" shall be
deemed to occur if (1) there shall be consummated (a) any consolidation or
merger of the Company in which the Company is not the continuing or surviving
corporation or pursuant to which shares of the Company's Common Stock would be
converted into cash, securities or other property, other than a merger of the
Company in which the holders of the Company's Common Stock immediately prior to
the merger have the same proportionate ownership of common stock of the
surviving corporation immediately after the merger, or (b) any sale, lease,
exchange or other transfer (in one transaction or a series of related
transactions) of all, or substantially all, of the assets of the Company, or (2)
the stockholders of the Company shall approve any plan or proposal for
liquidation or dissolution of the Company, or (3) any person (as such term is
used in Section 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")), shall become the beneficial owner (within the
meaning of Rule 13d-3 under the Exchange Act) of 40% or more of the Company's
outstanding Common Stock other than pursuant to a plan or arrangement entered
into by such person and the Company, or (4) during any period of two consecutive
years, individuals who at the beginning of such period constitute the entire
Board of Directors shall cease for any reason to constitute a majority thereof
unless the election, or the nomination for election by the Company's
shareholders, of each new director was approved by a vote of at least a majority
of the directors then still in office who were directors at the beginning of the
period.
B. CAPITAL CHANGES. In the event of any stock split, stock dividend or
similar transaction which increases or decreases the number of outstanding
shares of Common Stock, appropriate adjustment shall be made by the Board to the
number of shares which may be issued under the Plan, as well as to the number of
shares which may be issued to any Non-Employee Director pursuant to Section 4
hereof, and to the number and option exercise price per share of Common Stock
which may be purchased under any outstanding options. In the case of a merger,
consolidation or similar transaction which results in a replacement of the
-4-
<PAGE>
Company's Common Stock with stock of another corporation but does not constitute
Change in Control of the Company, the Company will make a reasonable effort, but
shall not be required, to replace any outstanding options granted under the Plan
with comparable options to purchase the stock of such other corporation, or will
provide for immediate maturity of all outstanding options, with all options not
being exercised within the time period specified by the Board being terminated.
C. FRACTIONAL SHARES. In the event of any adjustment in the number of
shares covered by any option pursuant to the provisions hereof, any fractional
shares resulting from such adjustment will be disregarded, and each such option
will cover only the number of full shares resulting from the adjustment.
D. DETERMINATION OF BOARD TO BE FINAL. All adjustments under this
paragraph 6 shall be made by the Board, and its determination as to what
adjustments shall be made, and the extent thereof, shall be final, binding and
conclusive.
7. AMENDMENT AND TERMINATION OF THE PLAN. The Board may amend or terminate the
Plan. Except as otherwise provided in the Plan with respect to equity changes,
any amendment which would increase the aggregate number of shares of Common
Stock as to which options may be granted under the Plan, materially increase the
benefits under the Plan, or modify the class of persons eligible to receive
options under the Plan shall be subject to the approval of the shareholders of
the Company. No amendment or termination may adversely affect any outstanding
option without the written consent of the optionee. Notwithstanding anything to
the contrary contained herein or in any option agreement made hereunder, the
provisions of paragraphs 4 and 5(a) of the Plan and any other provision of the
Plan or of an option agreement relating to the timing of option grants, the
amount of shares covered thereby and the exercise price thereunder may not be
amended more than once every six months, and no amendment may be made to the
Plan or an option agreement if, as a result of such amendment, the Plan would no
longer qualify as a "formula plan" under Rule 16b-3 issued by the Securities and
Exchange Commission under Section 16 of the Securities Exchange Act of 1934
-5-
<PAGE>
8. NO RIGHTS CONFERRED. Nothing contained herein will be deemed to give any
individual any right to be retained or elected or re-elected as a member of the
Board.
A. GOVERNING LAW. The Plan and each option agreement shall be governed in
all respects by the laws of the State of Delaware without giving effect to the
provisions relating to conflicts of law.
B. TERM OF THE PLAN. The Plan shall be effective upon its adoption by the
Board of Directors, subject to the date on which stockholder approval of the
Plan is obtained. The Plan will terminate on the date ten years after the date
on which it is adopted by the Board, unless sooner terminated by the Board. The
rights of optionees under options outstanding at the time of the termination of
the Plan shall not be affected solely by reason of the termination and shall
continue in accordance with the terms of the option.
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<PAGE>
EXHIBIT C
Below is the text of the Company's 1993 Stock Option Plan as proposed to be
amended in Section 2 pursuant to Proposal No. 4. The proposed amended language
to the 1993 Stock Option Plan is set forth in bold and italics, and the language
to be deleted is set forth in brackets.
INNOVIR LABORATORIES, INC.
1993 STOCK OPTION PLAN
1. PURPOSE OF PLAN
The purpose of this 1993 Stock Option Plan (the "Plan") is to further the
growth and development of Innovir Laboratories, Inc. (the "Company") by
encouraging and enabling employees, including officers, and directors of, and
consultants and advisors to, the Company to obtain a proprietary interest in the
Company through the ownership of stock, thereby providing such persons with an
added incentive to continue in the employ or service of the Company and to
stimulate their efforts in promoting the growth, efficiency and profitability of
the Company, and affording the Company a means of attracting to its service
persons of outstanding quality.
2. SHARES OF STOCK SUBJECT TO THE PLAN
Subject to adjustment as provided in Section 12 hereof, an aggregate of
3,000,000 [2,000,000] shares of common stock, par value $.013 per share, of the
Company ("Common Stock") shall be reserved for issuance upon the exercise of
options which may be granted from time to time in accordance with the Plan. Such
shares may be, in whole or in part, as the Board of Directors of the Company
(the "Board of Directors") shall from time to time determine, authorized but
unissued shares or issued shares which have been reacquired by the Company. If,
for any reason, an option shall lapse, expire or terminate without having been
exercised in full, these options shall (unless the Plan shall have been
terminated) again be available for the purpose of the Plan.
3. ADMINISTRATION
(1) The Board of Directors shall administer the Plan and subject to the
express provisions of the Plan, shall have authority in its discretion to
determine and designate from time to time, those persons eligible for a grant of
options under the Plan, those persons to
<PAGE>
whom options are to be granted, the purchase price of the shares covered by each
option, the time or times at which options shall be granted, and the manner in
which said options are exercisable. In making such determination, the Board of
Directors may take into account the nature of the services rendered by the
respective persons, their present and potential contributions to the Company's
success and such other factors as the Board of Directors in its sole discretion
shall deem relevant. Subject to the express provisions of the Plan, the Board of
Directors shall also have authority to interpret the Plan, to prescribe, amend
and rescind rules and regulations relating to it, to determine the terms and
provisions of the instruments by which options shall be evidenced, which shall
not be inconsistent with the terms of the Plan, and to make all other
determinations necessary or advisable for the administration of the Plan, all of
which determinations shall be final, binding and conclusive.
(2) The Board of Directors may, at its discretion, in accordance with the
provisions of the Company's By-Laws, by resolution adopted by the affirmative
vote of a majority of the entire Board of Directors, appoint from among its
members a Stock Option Plan Committee (the "Committee"). Such Committee shall be
composed of two or more directors and shall have and may exercise any and all of
the powers relating to the administration of the Plan and the grant of options
hereunder as are set forth above in Section 3(i), as the Board of Directors
shall confer and delegate. The Board of Directors shall have the power at any
time to fill vacancies in, to change the membership of, or to discharge, such
Committee. The Committee shall select one of its members as its Chairman and
shall hold its meetings at such time and at such places as it shall deem
advisable. A majority of such Committee shall constitute a quorum and such
majority shall determine its action. The Committee shall keep minutes of its
proceedings and shall report the same to the Board of Directors at the Board
meeting next succeeding.
4. PERSONS TO WHOM SHARES MAY BE GRANTED
Options may be granted to persons who are, at the time of the grant,
employees, including officers, or directors of, or consultants or advisors to,
the Company or any subsidiary corporation (as defined in Section 425 of the
Internal Revenue Code of 1986, as amended (the "Code"), and herein referred to
as "Subsidiary"), including part-time employees, as the Board
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of Directors (or Committee) shall select from time to time from among those
nominated by the Board of Directors (or Committee). In addition, for purposes of
this Plan, options may only be granted to those consultants and advisors who
shall render bona fide services to the Company and such services must not be in
connection with the offer or sale of securities in a capital-raising
transaction. Subject to the provisions hereinafter set forth, options granted
under the Plan shall be designated either (i) "Incentive Stock Options" (which
term, as used herein, shall mean options intended to be "incentive stock
options" within the meaning of Section 422 of the Code) or (ii) "Non-Incentive
Stock Options" (which term, as used herein, shall mean options not intended to
be "incentive stock options" within the meaning of Section 422 of the Code).
Each option granted to a person who is not an "employee" (within the meaning of
Section 422 of the Code) of the Company or a Subsidiary on the date of the grant
shall be designated a Non-Incentive Stock Option.
The Board of Directors (or Committee) may grant, at any time, new options
to a person who has previously received options whether such prior options are
still outstanding, have previously been exercised in whole or in part, have
expired, or are canceled in connection with the issuance of new options. The
purchase price of the new options may be established by the Board of Directors
(or Committee) without regard to the existing option price.
5. OPTION PRICE
(1) The purchase price of the Common Stock underlying each option shall be
determined by the Board of Directors (or Committee), which determination shall
be final, binding and conclusive; provided, however, that in no event shall the
purchase price for Incentive Stock Options be less than 100% (110% in the case
of optionees who own more than 10% of the voting power of all classes of stock
of the Company) of the fair market value of the Common Stock on the date the
option is granted. The purchase price for Non-Incentive Stock Options may be
less than 100% of the fair market value of the Common Stock on the date the
option is granted. In determining such fair market value, the Board of Directors
(or Committee) shall consider (i) the average between the highest and lowest
selling prices of the Common Stock on the date on which the option is granted
(if such Common Stock is listed on a national securities exchange); (ii) the
closing bid prices as quoted by the National Quotation
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Bureau or a recognized dealer in the Common Stock on the date of grant (if such
Common Stock is not listed on such an exchange); and (iii) such other factors as
the Board of Directors (or Committee) shall deem appropriate or which may be
relevant under applicable federal tax laws and Internal Revenue rules and
regulations. For purposes of the Plan, the date of grant of an option shall be
the date on which the Board of Directors (or Committee) shall by resolution duly
authorize such option.
(2) Notwithstanding any other provisions herein contained, the aggregate
fair market value (as defined above), determined at the time the Incentive Stock
Options are granted, of the Common Stock with respect to which such Incentive
Stock Options are exercisable for the first time by an employee during any
calendar year shall not exceed $100,000. Non-Incentive Stock Options shall not
be subject to the limitations of this paragraph 5(2).
6. EXERCISE OF OPTIONS
(1) Subject to the provisions set forth in Sections 9, 10, and 11 hereof,
no option shall be exercisable unless the holder thereof shall have been an
employee, including officer, or director of the Company and/or a Subsidiary from
the date of the granting of the option until the date of exercise. Unless
otherwise provided in their stock option agreement, this provision shall not be
applicable to Non-Incentive Stock Options granted to consultants or advisors of
the Company.
(2) The number of shares which are issued pursuant to the exercise of an
option shall be charged against the maximum limitations on shares set forth in
Section 2 hereof.
(3) The exercise of an option shall be made contingent upon receipt by the
Company from the holder thereof of (i) a written representation and
acknowledgement that at the time of such exercise it is his then present
intention to acquire the option shares for investment and not with a view to
distribution or resale thereof, that he knows that the Company is not obligated
to register the shares and that the shares may have to be held indefinitely
unless an exemption from the registration requirements of the Securities Act of
1933, as amended (the "Act"), is available or the Company has registered the
shares underlying the options, that the Company may place a legend on the
certificate(s) evidencing the shares
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reflecting the fact that they were acquired for investment and cannot be sold or
transferred unless registered under the Act, or unless counsel for the Company
is satisfied that the circumstances of the proposed transfer do not require such
registration and (ii) cash, or a check to its order, for the purchase price of
such shares.
(4) The holder of an option shall have none of the rights of a stockholder
with respect to shares subject to the option until a certificate for such shares
has been issued to him upon the due exercise of the option.
(5) Neither the Plan, nor the granting of an option, nor any other action
taken pursuant to the Plan shall constitute or be evidence of any agreement or
understanding, express or implied, that an employee, officer, director,
consultant or advisor, as the case may be, has a right to continue in such
position for any period of time or at any particular rate of compensation.
7. TERM OF OPTIONS
The period during which each option granted hereunder shall be exercisable
shall be determined by the Board of Directors (or Committee); provided, however,
that no option shall be exercisable for a period exceeding ten (10) years (five
(5) years in the case of optionees who own more than 10% of the voting power of
all classes of the stock of the Company) from the date the options are granted.
8. NON-TRANSFERABILITY OF OPTIONS
No option granted pursuant to this Plan shall be subject to anticipation,
sale, assignment, pledge, encumbrance, or charge or otherwise transferable
except by will or the laws of descent and distribution, or pursuant to a
qualified domestic relations order as defined by the Code ("QDRO"), or Title I
of the Employee Retirement Income Security Act, or the rules thereunder
("ERISA"), and an option shall be exercisable during the lifetime of the holder
thereof only by such holder or pursuant to a QDRO or ERISA.
9. TERMINATION OF SERVICES
In the event that a person to whom an option has been granted under the
Plan shall cease to be an employee, officer or director of the Company or a
Subsidiary, by reason of a termination of such relationship for cause, the
option granted to such person shall
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automatically terminate, lapse and expire. In the event that a person to whom an
option has been granted under the Plan shall cease to be an employee, officer,
or director of the Company or a Subsidiary by reason of a termination of such
relationship for a reason other than for cause, death, disability or retirement
at age 65, then such holder may exercise such option at any time prior to the
expiration date of the option, or within three months after termination,
whichever is earlier. So long as the holder of an option shall continue to be in
the employ, or continue to be a director of the Company or one or more of its
Subsidiaries, such holder's option shall not be affected by any change of duties
or position. Absence on leave approved by the employing corporation shall not be
considered an interruption of employment for any purpose under the Plan. The
granting of an option in any year shall not give the holder of the option any
rights to similar grants in future years or any right to be retained in the
employ or service of the Company or any of its Subsidiaries or interfere in any
way with the right of the Company or any such Subsidiary to terminate such
holder's employment or services at any time.
10. RETIREMENT OR DISABILITY OF HOLDER OF OPTION
If any person to whom an option has been granted under the Plan shall
cease to be an employee, officer or director of the Company or a Subsidiary, by
reason of disability or retirement at age 65, such holder may exercise such
option at any time prior to the expiration date of the option or within three
months (one year in the case of termination by reason of disability) after the
date of termination for such cause, whichever is earlier, but only to the extent
the holder had the right to exercise such option on the date of termination.
11. DEATH OF HOLDER OF OPTION
If any employee, officer or director to whom an option has been granted
under the Plan shall cease to be an employee, officer or director of, or
consultant or advisor to, the Company or a Subsidiary, by reason of death, or
such holder of an option shall die within three months after termination by
reason of retirement at age 65, the option may be exercised by the person or
persons to whom the optionee's rights under the option are transferred by will
or by the laws of descent and distribution at any time prior to the expiration
date of the option or within three months from the date of death, whichever is
earlier, but only to the extent the
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holder of the option had the right to exercise such option on the date of such
termination. Notwithstanding the foregoing, no option may be exercised after ten
years from the date of its grant.
12. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION
If the shares of Common Stock outstanding are changed in number, kind or
class by reason of a stock split, combination, merger, consolidation,
reorganization, reclassification, exchange or any capital adjustment, including
a stock dividend, or if any distribution is made to shareholders other than a
cash dividend, then
(a) the aggregate number and class of shares that may be issued or
transferred pursuant to Section 2,
(b) the number and class and shares which are issuable under outstanding
options, and
(c) the purchase price to be paid per share under outstanding options,
shall be adjusted as hereinafter provided.
In the event of a liquidation of the Company, or a merger, reorganization,
or consolidation of the Company with any other corporation in which the Company
is not the surviving corporation or the Company becomes a wholly owned
subsidiary of another corporation, any unexercised options theretofore granted
under the Plan shall be deemed canceled unless the surviving corporation in any
such merger, reorganization or consolidation elected to assume the options under
the Plan or to issue substitute options in place thereof; provided, however,
that, notwithstanding the foregoing, if such options would otherwise be canceled
in accordance with the foregoing, the optionee shall have the right, exercisable
during a ten-day period ending on the fifth day prior to such liquidation,
merger or consolidation, to exercise the option in whole or in part. Adjustments
under this Section 12 shall be made in a proportionate and equitable manner by
the Board of Directors (or Committee), whose determination as to what
adjustments shall be made, and the extent thereof, shall be final, binding and
conclusive. In the event that a fraction of a share results from the foregoing
adjustment, said fraction shall be eliminated and the price per share of the
remaining shares subject to the option adjusted accordingly. The granting of an
option pursuant to this Plan shall not affect in any way the right or power of
the Company to make adjustments,
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reorganizations, reclassifications, or changes of its capital or business
structure or to merge, consolidate, dissolve, liquidate, or sell or transfer all
or any part of its business or assets.
13. VESTING OF RIGHTS UNDER OPTIONS
Nothing contained in this Plan or in any resolution adopted or to be
adopted by the Board of Directors (or Committee) or the stockholders of the
Company shall constitute the vesting of any rights under any option. The vesting
of such rights shall take place only when a written agreement shall be duly
executed and delivered by and on behalf of the Company to the person to whom the
option shall be granted.
14. RIGHTS AS A STOCKHOLDER
A holder of an option shall have no rights of a stockholder with respect
to any shares covered by his option until the date of issuance of a stock
certificate to him for such shares.
15. TERMINATION AND AMENDMENT
The Board of Directors may, at any time, terminate or suspend this Plan or
make such modifications or amendments thereto as it shall deem advisable;
provided, however, that no termination, modification or amendment shall
adversely affect the rights of a holder of an option previously granted under
the Plan; and, provided further, however, that, if required to qualify the Plan
under Rule 16b-3 promulgated under Section 16 of the Securities Exchange Act of
1934, as amended, no amendment that would (a) materially increase the number of
shares that may be issued under the Plan, (b) materially modify the requirements
of eligibility for participation in the Plan, or (c) otherwise materially
increase the benefits necessary to participants under the Plan, shall be made
without the approval of the stockholders of the Company.
16. MODIFICATION, EXTENSION AND RENEWAL OF OPTIONS
Subject to the terms and conditions and within the limitations of the
Plan, the Board of Directors may modify, extend or renew outstanding options
granted under the Plan, or accept the surrender of outstanding options (to the
extent not theretofore exercised) and authorize the granting of new options in
substitution therefor. Notwithstanding the foregoing,
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<PAGE>
no modification of an option shall, without the consent of the holder thereof,
alter or impair any rights or obligations under any option theretofore granted
under the Plan.
17. INDEMNIFICATION
In addition to such other rights of indemnification as they may have as
members of the Board of Directors (or Committee), the members of the Board of
Directors (or Committee) administering the Plan shall be indemnified by the
Company against reasonable expenses, including attorneys' fees, actually and
necessarily incurred in connection with the defense of any action, suit, or
proceeding, or in connection with any appeal therein, to which they or any of
them may be a party by reason of any action taken or failure to act under or in
connection with the Plan or any Option granted thereof (provided such settlement
is approved by independent legal counsel selected by the Company) or paid by
them in satisfaction of a judgment in any action, suit or proceeding, except in
relation to matters as to which it shall be adjudged in such action, suit or
proceeding that such member is liable for negligence or misconduct in the
performance of his duties, provided that within 60 days after institution of any
such action, suit, or proceeding, the member shall in writing offer the Company
the opportunity, at its own expense, to handle and defend the same.
18. EFFECTIVE DATE
The Plan shall become effective on March 24, 1993, upon its approval by
the holders of a majority of shares of Common Stock of the Company entitled to
vote thereon and shall terminate no later than ten years from the date of
effectiveness, and no option may be granted under the Plan thereafter, but such
termination shall not effect any option theretofore granted.
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<PAGE>
INNOVIR LABORATORIES, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 24, 1997
Dr. Allan Goldberg and Mr. Frank O'Connell, and each of them, as the
true and lawful attorneys, agents and proxies of the undersigned, with full
power of substitution, are hereby authorized to represent and to vote all shares
of Common Stock of Innovir Laboratories, Inc. held of record by the undersigned
on May 7, 1997, at the Annual Meeting of Stockholders to be held at 2:00 P.M.,
New York time, on Tuesday, June 24, 1997, at The Equitable Building, 50th Floor,
787 Seventh Avenue, New York, New York 10019. Any and all proxies heretofore
given are hereby revoked.
WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED AS
DESIGNATED BY THE UNDERSIGNED. IF NO CHOICE IS SPECIFIED, THE PROXY
WILL BE VOTED FOR PROPOSAL NOS. 1, 2, 3, 4 AND 5.
1. Proposal No. 1 - Election of Directors - Nominees are: Allan R. Goldberg,
William T. McCaffrey, Richard L. Dunning, Laurence D. Fink, David A.
Jackson, Francis M. O'Connell and Stanley Knowlton.
|_| FOR all listed nominees
|_| FOR, except vote withheld from the following nominee(s):
______________________________
|_| WITHHOLD AUTHORITY to vote for the listed nominees
2. Proposal No. 2 - Approval of Amendment to Company's Certificate of
Incorporation to increase the number of authorized shares of Common Stock,
$.013 par value per share, from 35,000,000 shares to 70,000,000 shares.
|_| FOR |_| AGAINST |_| ABSTAIN
3. Proposal No. 3 - Approval of Amendment to Company's Non-Employee Director
Stock Option Plan to modify the class of persons eligible to receive
options thereunder, to increase the number of shares which may be issued
thereunder, to provide for certain additional grants to the Company's
directors and to extend the option period of options granted thereunder.
|_| FOR |_| AGAINST |_| ABSTAIN
4. Proposal No. 4 - Approval of Amendment to Company's 1993 Stock Option Plan
to increase the number of shares which may be issued thereunder.
|_| FOR |_| AGAINST |_| ABSTAIN
<PAGE>
5. Proposal No. 5 - Ratification of the selection of KPMG Peat Marwick LLP to
serve as the Company's Independent Accountants for the fiscal year ending
December 31, 1997.
|_| FOR |_| AGAINST |_| ABSTAIN
- --------------------------------------------------------------------------------
Discretionary authority is hereby granted with respect to such other
matters as may properly come before the meeting.
IMPORTANT: PLEASE SIGN EXACTLY AS NAME APPEARS BELOW. EACH JOINT OWNER SHALL
SIGN. EXECUTORS, ADMINISTRATORS, TRUSTEES, ETC. SHOULD GIVE FULL TITLE AS SUCH.
IF STOCKHOLDER IS A CORPORATION, PLEASE GIVE FULL CORPORATE NAME BY DULY
AUTHORIZED OFFICER. IF A PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY
AUTHORIZED PERSON.
DATED ____________________, 1997
--------------------------------
SIGNATURE
--------------------------------
SIGNATURE IF HELD JOINTLY
The above-signed acknowledges receipt of the Notice of Annual Meeting of
Stockholders and the Proxy Statement furnished therewith.
PLEASE SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
