DRAFT OF 4/10/97
SCHEDULE 14A
(RULE 14A-101)
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for use of
[x] Definitive Proxy Statement the Commission only
[ ] Definitive Additional Materials (as permitted by Rule 14a-6(e)(2))
[ ] Soliciting Material Pursuant to Rule 14a-ll(c) or Rule 14a-12
ENAMELON, INC.
(Name of Registrant as Specified In Its Charter)
ENAMELON, INC.
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction
applies:___________________________
(2) Aggregate number of securities to which transaction
applies:__________________________
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule
0-11:________________________
(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-ll(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>
ENAMELON, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
to be held on May 20, 1997
To the Shareholders of Enamelon, Inc.:
Notice is hereby given that the Annual Meeting of Stockholders of
Enamelon, Inc., a Delaware corporation, will be held on May 20, 1997, at The
Hyatt Regency, 2 Albany Street, New Brunswick, New Jersey 08901, at 9:00 a.m.,
for the following purposes:
1. To elect five Directors of the Company to serve until the next
Annual Meeting and until their successors are duly elected and
qualified.
2. To approve the adoption of the Company's 1997 Incentive Stock
Option Plan.
3. To ratify the appointment of BDO Seidman, LLP, as the
Company's independent public accountants for the year ending
December 31, 1997.
4. To transact such other business as may properly come before
the Annual Meeting or any adjournment or adjournments thereof.
Only Shareholders of record at the close of business on April 15, 1997, are
entitled to notice of and to vote at the Annual Meeting or any adjournments
thereof.
By Order of the Board of Directors,
Norman Usen, Secretary
Yonkers, New York
April 16, 1997
IMPORTANT
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE PROMPTLY
COMPLETE, SIGN AND DATE THE ENCLOSED PROXY, WHICH IS SOLICITED BY THE BOARD OF
DIRECTORS OF THE COMPANY, AND RETURN IT TO THE COMPANY. THE PROXY MAY BE REVOKED
AT ANY TIME BEFORE IT IS VOTED, AND SHAREHOLDERS EXECUTING PROXIES MAY ATTEND
THE MEETING AND VOTE IN PERSON SHOULD THEY SO DESIRE.
<PAGE>
ENAMELON, INC.
15 KIMBALL AVENUE
YONKERS, NEW YORK 10704
914-237-1308
PROXY STATEMENT
The Board of Directors of Enamelon, Inc. (the "Company") presents this
Proxy Statement to all Stockholders and solicits their proxies for the Annual
Meeting of Stockholders to be held on May 20, 1997. All proxies duly executed
and received will be voted on all matters presented at the Annual Meeting in
accordance with the instructions given by such proxies. In the absence of
specific instructions, proxies so received will be voted for the named nominees
for election to the Company's Board of Directors, for the 1997 Incentive Stock
Option Plan and for the ratification of BDO Seidman, LLP, as the Company's
independent public accountants. The Board of Directors anticipates that all of
the nominees will be available for election and does not know of any other
matter that may be brought before the Annual Meeting. In the event that any
other matter should come before the Annual Meeting or that any nominee is not
available for election, the persons named in the enclosed proxy will have
discretionary authority to vote all proxies not marked to the contrary with
respect to such matter in accordance with their best judgment. The proxy may be
revoked at any time before being voted. The Company will pay the entire expense
of soliciting these proxies, which solicitation will be by use of the mails.
This Proxy Statement is being mailed on or about April 16, 1997.
A total of 6,900,378 shares of Common Stock of the Company were
outstanding as of April 1, 1997. The Common Stock is the only outstanding class
of securities of the Company entitled to vote. Each share of Common Stock has
one vote. Only Stockholders of record as of the close of business on April 15,
1997 will be entitled to vote at the Annual Meeting or any adjournment or
adjournments thereof.
The affirmative vote by holders of a plurality of the shares of Common
Stock represented at the Annual Meeting is required for the election of
Directors and a majority of the shares present at the Annual Meeting and
entitled to vote is required for the approval of the Company's 1997 Incentive
Stock Option Plan and for the ratification of BDO Seidman, LLP, as the Company's
independent public accountants. Shares represented by proxies that are marked
"abstain" with respect to the ratification of the independent public accountants
and approval of the 1997 Stock Option Plan and proxies that are marked to deny
discretionary authority on all other matters will only be counted for the
purpose of determining the presence of a quorum. Votes withheld in connection
with the election of one or more nominees for Director will not be counted as
votes cast for such individuals. In addition, where brokers are prohibited from
exercising discretionary authority for beneficial owners who have not provided
voting instructions (commonly referred to as "broker non-votes"), those shares
will not be included in the vote totals.
A list of Stockholders entitled to vote at the Annual Meeting will be
available at the Company's office, 15 Kimball Avenue, Yonkers, New York, during
business hours, for a period of ten (10) days prior to the Annual Meeting for
examination by any Stockholder. Such list will also be available at the Annual
Meeting.
<PAGE>
ACTIONS TO BE TAKEN AT THE ANNUAL MEETING
PROPOSAL 1. ELECTION OF DIRECTORS
The Directors to be elected at the Annual Meeting will serve until the
next Annual Meeting and until their successors are duly elected and qualified.
Proxies not marked to the contrary will be voted "FOR" the election of the
following five persons, all of whom are incumbent Directors. The following table
sets forth information concerning the nominees:
<TABLE>
<CAPTION>
Name Age Position
<S> <C> <C>
Dr. Steven R. Fox 43 Chairman of the Board and Chief Executive
Officer
Dr. S.N. Bhaskar 74 Director
Dr. Bert D. Gaster 69 Director
Richard A. Gotterer 33 Director
Eric D. Horodas 43 Director
</TABLE>
BIOGRAPHICAL INFORMATION ABOUT NOMINEES
STEVEN R. FOX, D.D.S., F.I.C.D., F.A.C.D., is the founder of the
Company, and has been the Chairman of the Board of Directors and Chief Executive
Officer of the Company since June 1992. From June 1992 through December 1995 and
from June 1992 through August 1996, respectively, Dr. Fox was also the Company's
President and Treasurer. Dr. Fox is a member of the faculty of the Harvard
School of Dental Medicine. Since July 1978, Dr. Fox has been a practicing
dentist and currently practices dentistry on a part-time basis. Dr. Fox was an
Assistant Clinical Professor at New York University's College of Dentistry from
1979 to 1987. Dr. Fox has been active in various professional organizations,
including the International Dental Research Society, the American Dental
Association and the Ethics Committee of the Ninth District Dental Society. See
"Management - Employment and Consulting Agreements."
S.N. BHASKAR, D.D.S., M.S., PH.D., MAJOR GENERAL U.S. ARMY (RET.), has
been a director of the Company since August 1994 and the Chairman of the
Scientific Advisory Board since August 1992. Since 1981, Dr. Bhaskar has been in
a private dental practice in Monterey and Salinas, California. From January 1955
to December 1980, Dr. Bhaskar was Major General, Dental Corps in the United
States Army, Dental Corps. He is an Honorary Fellow of the Academy of General
Dentistry, a Diplomat to the American Board of Oral Medicine and the American
Board of Oral Pathology, and a member of the Dental Research Advisory Committee
to the United States Army. Dr. Bhaskar is a former Vice Chairman of Atrix
Laboratories, Inc. and a consultant to the Board of Directors at Vipont, Inc., a
publicly-traded company engaged in the development and marketing of oral care
products.
BERT D. GASTER, D.D.S., M.S.D., has been a director of the Company
since November 1992 and has been a tenured Associate Professor at New York
University's College of Dentistry since 1970. Dr. Gaster has held various
faculty positions with New York University's College of Dentistry since 1972,
including that of Clinic (Module) Director for 16 years. Dr. Gaster is a past
president of the American College of Prosthodontics, New York section, has
served on the Budget Policy Development Committee and currently is President of
the New York University Dental Alumni Association. Dr. Gaster is currently an
attending Prosthodontist with four hospitals in the New York metropolitan area.
2
<PAGE>
RICHARD A. GOTTERER has been a director of the Company since November
1992 and has been a portfolio manager of fixed income securities at Schroder
Capital Management Inc., an investment banking firm, since September 1993. Mr.
Gotterer was a private investor from June 1990 through August 1993. Mr. Gotterer
was the Vice President of Finance and Chief Financial Officer of Channel
American LPTV Holdings, Inc., an entertainment company, from February 1988 to
May 1990. He was a financial analyst with Oppenheimer & Co., Inc., an investment
banking firm, from October 1985 to October 1987.
ERIC D. HORODAS, ESQ., has been a director of the Company since
November 1992. Mr. Horodas has been President of Markev Realty Corporation and
Vice President and Secretary of Baco Realty Corporation since June 1995, both of
which are actively engaged in originating, managing and servicing commercial
real estate and mortgage investments. He has formerly acted as a consultant to
various insurance regulators and insurance industry members in connection with
the restructuring and rehabilitation of financially troubled insurance companies
from November 1993 through May 1995. Mr. Horodas was a founding partner and
member of the Management Committee of the law firm of Rubinstein & Perry from
February 1988 until October 1993.
INFORMATION ABOUT THE BOARD OF DIRECTORS, COMMITTEES OF
THE BOARD, AND EXECUTIVE OFFICERS
MEETINGS OF THE BOARD OF DIRECTORS AND INFORMATION REGARDING COMMITTEES
The Board of Directors has two standing committees, an Audit Committee,
and a Compensation Committee. The Board of Directors does not have a Nominating
Committee.
The Audit Committee is composed of Mr. Gotterer (Chairman) and Dr.
Bhaskar. The duties of the Audit Committee include recommending the engagement
of independent auditors, reviewing and considering actions of management in
matters relating to audit functions, reviewing with independent auditors the
scope and results of its audit engagement, reviewing reports from various
regulatory authorities, reviewing the system of internal controls and procedures
of the Company, and reviewing the effectiveness of procedures intended to
prevent violations of law and regulation. The Audit Committee held one meeting
in 1996.
The Compensation Committee is composed of Mr. Horodas (Chairman)and Dr.
Gaster. Among the duties of this Committee are to recommend to the Board
remuneration for officers of the Company, to determine the number and issuance
of options pursuant to the Company's Stock Option Plans and to recommend the
establishment of and to monitor a compensation and programs for all executives
of the Company. The Compensation Committee held one meeting in 1996.
The Board of Directors held three meetings in 1996. All Directors
attended at least 75% of the total number of Board meetings and of the meetings
of Committees on which each Director served.
EXECUTIVE OFFICERS
In addition to Dr. Steven R. Fox, the Company's Chairman and Chief
Executive Officer, the following individuals serve as executive officers of the
Company:
D. BROOKS COLE has been the President and Chief Operating Officer of
the Company since January 1996. Commencing in September 1993 and continuing
through December 1995, Mr. Cole was retained by the Company as a consultant. Mr.
Cole was an independent consultant on projects and assignments relating to
consumer and packaged goods marketing from 1992 to December 1995. Mr. Cole has
over thirty-five years of experience in the marketing of over-the counter drugs,
oral care products and cosmetics. Mr. Cole was employed by the Mentholatum
Company, Inc., an over-the-counter drug company, in various positions from 1980
to 1993, most recently as President of the United States Division, and a member
of the Executive Committee and the Board of Directors from 1983 to 1993. Mr.
Cole was a Vice President of the Non Prescription Drug Manufactures Association
and served on its Board of Directors and Executive Committee from 1990 to 1993.
3
<PAGE>
NORMAN USEN had been the Vice President-Research and Development and
Product Development of the Company since July 1993. In May 1995, Mr. Usen became
the Company's Vice President-Product Development, Vice President-Operations and
Secretary. Mr. Usen specializes in consumer product development and has over
thirty years experience. From 1992 to April 1995, Mr. Usen, as President and
sole stockholder of Nu-Products, Inc. ("NP"), was an independent consultant.
From August 1993 through April 1995, NP was retained by the Company as
consultant on a part-time basis to coordinate product development.
ANTHONY E. WINSTON has been the Vice President-Technology and Clinical
Research since January 1995. Mr. Winston has over 25 years of technology
development and clinical research experience most recently as Technical Director
for Church & Dwight Co., Inc., a consumer products manufacturer, where he was
responsible for technology development, clinical research, ADA and FDA
interface, claim substantiation and patent protection for Arm & Hammer's baking
soda toothpastes, including their latest introduction: Peroxy Care(R). Mr.
Winston was employed at Church & Dwight Co., from 1970 to 1995. Mr. Winston is
the holder or co-holder of more than 60 United States patents, of which 16 are
for toothpaste products, with several additional oral care patents pending.
EDWIN DIAZ has been the Chief Financial Officer, Vice President-Finance
and Treasurer of the Company since August 1996. Prior to joining the Company,
Mr. Diaz was the Corporate Controller of NYCOR, Inc., a manufacturer of devices
used in heating and cooling systems, from September 1994 to August 1996. He was
the Controller of Lancer Industries, Inc., a company specializing in the
acquisition of distressed and under-performing companies, from 1990 until August
1994. Mr. Diaz was employed by the Alfieri Organization, a real estate
development company, as Assistant Controller from 1988 until 1990 and by the
accounting firm of Arthur Young & Company from 1986 until 1988. Mr. Diaz is a
certified public accountant.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Pursuant to Section 16 of the Securities Exchange Act of 1934, the
Company's Directors and executive officers and beneficial owners of more than
10% of the Company's Common Stock are required to file certain reports, within
specified time periods, indicating their holdings of and transactions in the
Common Stock and derivative securities. Based solely on a review of such reports
provided to the Company and written representations from such persons regarding
the necessity to file such reports, the Company is not aware of any failures to
file reports or report transactions in a timely manner during the Company's
fiscal year ended December 31, 1996, except that Dr. Fox, Mr. Cole, Dr. Bhaskar,
Dr. Gaster, Mr. Gotterer and Mr. Horodas each filed one late report concerning
one transaction.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION
The table below summarizes the compensation received by the Company's
Chief Executive Officer and each other executive officer who received a salary
and bonus in excess of $100,000 ("named executive officers") for services
rendered during the fiscal year ended December 31, 1996. No other executive
officer of the Company received compensation in excess of $100,000 during such
year.
4
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation
Securities
Name and Underlying
Principal Position (1) Year Salary Bonus($) Options(#)
---------------------- ---- ------ -------- ----------
<S> <C> <C> <C> <C>
Steven R. Fox....................................1996 $175,000 $75,000 50,000
Chairman of the Board,
and Chief Executive Officer (2)(3)
D. Brooks Cole...................................1966 $150,000 $22,500 50,000
President and Chief Operating
Officer (3)
Anthony E. Winston...............................1966 $135,000 $20,250 -
Vice President -
Technology and Clinical Research
Norman Usen......................................1966 $115,000 $17,000 -
Vice President -
Product Development
</TABLE>
(1) See "Management-Employment and Consulting Agreements" for a description
of Dr. Fox's employment agreement with the Company as Chairman of the
Board and Chief Executive Officer which commenced on January 1, 1994;
Anthony E. Winston's employment agreement with the Company as the
Company's Vice President-Technology and Clinical Research which
commenced on January 1, 1995; D. Brooks Cole's employment agreement
with the Company whereby Mr. Cole became the Company's President and
Chief Operating Officer as of January 1, 1996; and Norman Usen's
employment agreement with the Company as the Company's Vice
President-Research and Development Vice President-Operations.
(2) Dr. Fox resigned as the Company's President effective in January 1996,
and as Treasurer effective August 1996.
(3) Options granted on December 11, 1996 issued at $6.875 for Dr. Fox and
$6.25 for Mr. Cole vest 25% as of December 11, 1997 and an additional
25% on December 11 in each successive year.
The following table sets forth the individual grants of stock options
made during the fiscal year ended December 31, 1996 to each of the named
executive officers.
5
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
(INDIVIDUAL GRANTS)
<TABLE>
<CAPTION>
Number of Percent of
Securities Total Options
Underlying Granted to
Options Employees in Exercise or Base Expiration
Name Granted (#) Fiscal Year Price ($/Sh)(1) Date
<S> <C> <C> <C> <C> <C>
Steven R. Fox 50,000(1) 31.3% $6.875 12/10/01
D. Brooks Cole 50,000(1) 31.3% $6.25 12/10/06
Anthony E. Winston -- -- -- --
Norman Usen -- -- -- --
</TABLE>
(1) Options granted on December 11, 1996 vest 25% as of December 11, 1997
and an additional 25% each successive year.
The following table sets forth the number of exercisable or vested and
unexercisable or unvested options during the fiscal year ended December 31, 1996
held by each of the named executive officers and the year-end value of such
options.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Value of Unexercised In-
NAME Number of Unexercised Options at The-Money Options at
Fiscal Year-End (#) Exercisable/ Fiscal Year-End
Unexercisable ($)Exercisable/
Unexercisable (1)(2)
<S> <C> <C>
Steven R. Fox 450,000/50,000 $ 1,462,500/0
D. Brook Cole 135,000/50,000 $ 498,870/0
Anthony E. Winston 160,000/0 $ 360,000/0
Norman Usen 168,762/30,000 $ 830,309/147,600
</TABLE>
(1) At December 31, 1996, the market price of the Company's Common Stock
was $6.25 per share.
(2) At March 19, 1997, the market price of the Company's common stock was
$19.50 per share. On such date the value of Dr. Fox's exercisable
options was $7,425,000 and the value of Dr. Fox's unexercisable options
was $631,250. On such date the value of Mr. Cole's exercisable options
was $2,287,620 and the value of Mr. Cole's unexercisable options was
$662,500. On such date the value of Mr. Winston's exercisable options
was $2,880,500. All of Mr. Winston's options were exercisable. On such
date the value of Mr. Usen's exercisable options was $3,066,406 and the
value of Mr. Usen's unexercisable options was $545,100.
6
<PAGE>
COMPENSATION OF DIRECTORS
Each non-employee member of the Board of Directors presently receives
$500 plus reimbursement of expenses for each board meeting attended. See
"Employee Benefits Plans" and " Employment and Consulting Agreements" below
for a description of options granted to members of the Board of Directors.
Each member of the Audit Committee and the Compensation Committee receives
$250 for each committee meeting attended together with reimbursement of
expenses.
EMPLOYMENT AND CONSULTING AGREEMENTS
The Company has entered into an employment agreement with Dr. Steven R.
Fox, pursuant to which Dr. Fox is employed as Chairman of the Board of
Directors and Chief Executive Officer for a term of five years commencing on
January 1, 1994. The agreement, as amended, provides that Dr. Fox shall devote
such time to the Company as necessary to perform his responsibilities
thereunder, but no less then forty hours per week, in consideration of an
annual salary which was increased by the Board to $175,000 in 1996 and
$250,000 per year in January 1997 subject to adjustment. The employment
agreement acknowledges that Dr. Fox shall be entitled to maintain his dental
practice and see patients on a basis that does not interfere with the
performance of his duties thereunder. Dr. Fox continues to practice dentistry
on a part-time basis. Pursuant to the agreement, if Dr. Fox opposes a change
of control of the Company, as defined in the agreement, and thereafter elects
to terminate his employment with the Company, he is entitled to a one time
payment of either (i) two and nine-tenths (2.9) times the sum of Dr. Fox's
current base annual salary plus any amounts due to him under the Company's
Incentive Compensation Plan if a majority of the Company's Board of Directors
opposed the change of control or (ii) two and one-half (2.5) times the sum of
Dr. Fox's current base annual salary plus any amounts due to him under the
Company's Incentive Compensation Plan if a majority of the Company's Board of
Directors voted in favor of the change of control. However, such payment shall
not exceed the maximum payment permitted by Section 280G of the Internal
Revenue Code of 1986, as amended. Pursuant to the Company's Incentive
Compensation Plan, Dr. Fox shall be entitled to 50% of all amounts allocated
to such plan. See "Employee Benefit Plans" below.
The Company has entered into an employment agreement with D. Brooks
Cole, pursuant to which Mr. Cole is employed as President and Chief Operating
Officer. The agreement, as amended, provides that Mr. Cole is required to
devote all of his business time to the Company in consideration of an annual
salary of $150,000 in 1996 and $175,000 in 1997, subject to adjustment. In
addition, Mr. Cole will be entitled to 15% of all amounts allocated to the
Company's Incentive Compensation Plan. Mr. Cole serves at the pleasure of the
Board of Directors; however, if the Company elects to terminate the agreement,
Mr. Cole is entitled to six months' severance pay including all salary and
benefits. Pursuant to the employment agreement, Mr. Cole was granted a
seven-year option to purchase 99,000 shares of Common Stock at an exercise
price equal to $3.00 per share, immediately exercisable from the date of the
grant, and expiring seven years thereafter. See "Employee Benefit Plans"
below.
The Company entered into an employment agreement with Norman Usen,
pursuant to which Mr. Usen is employed full-time as Vice President-Product
Development and Vice President-Operations for a term of three years commencing
on May 1, 1995. The consulting agreement between the Company and NP, a company
controlled by Mr. Usen, terminated upon the commencement of Mr. Usen's
employment agreement. Pursuant to the employment agreement, Mr. Usen will
devote full time to the Company in consideration of an annual salary of
$105,000 in the first year of the term, $115,000 in the second year of the
term and $125,000 in the third year of the term. If Mr. Usen is terminated
from the Company without cause, as defined in the agreement, then he will be
entitled to continue to receive his salary and benefits until the end of the
term of the agreement. As additional compensation, Mr. Usen will be entitled
to 12.5% of all amounts allocated to the Company's Incentive Compensation
Plan. Pursuant to the employment agreement, Mr. Usen was granted seven-year
options to purchase an aggregate 90,000 shares of Common Stock at an exercise
price equal to $1.33 per share. The options previously granted to NP were
terminated and reissued to Mr. Usen. See "Certain Transactions."
7
<PAGE>
The Company has entered into an employment agreement with Anthony E.
Winston, as amended, pursuant to which Mr. Winston is employed full-time as
Vice President-Technology and Clinical Research for a term of three years
expiring in January 2000. Pursuant to the employment agreement, Mr. Winston
will devote his full time to the Company in consideration of an annual salary
of $143,000 in 1997, $151,000 in 1998 and $160,000 in 1999. If Mr. Winston is
terminated from the Company without cause, as defined in the agreement, then
he shall be entitled to continue to receive his salary and benefits until the
end of the term of the agreement. As additional compensation, Mr. Winston
shall be entitled to 10% of all amounts allocated to the Company's Incentive
Compensation Plan. Pursuant to the employment agreement, Mr. Winston was
granted ten-year options to purchase an aggregate 150,000 shares of Common
Stock at an exercise price equal to $1.33 per share.
The Company has entered into an employment agreement with Edwin Diaz
pursuant to which Mr. Diaz is employed full-time as Vice President-Finance and
Chief Financial Officer at the discretion of the Company's Board of Directors.
Pursuant to the employment agreement, Mr. Diaz will devote his full time to
the Company in consideration of an annual salary of $89,000, subject to
adjustment. In addition, Mr. Diaz will be entitled to not less than 5% of all
amounts allocated to the Company's Incentive Compensation Plan. If the Company
terminates Mr. Diaz's employment without cause, as defined in the agreement,
he will be entitled to six months severance pay, including all salary and
benefits. If, after a change of control of the Company, Mr. Diaz's employment
is terminated without cause or he terminates his employment, he will be
entitled to receive one year's compensation, including salary and benefits. In
connection with his employment, Mr. Diaz was granted options to purchase
25,000 shares of the Company's Common Stock at an exercise price of $7.00 per
share, half of which vest on the first anniversary of his employment and the
balance of which vest on the second anniversary of his employment.
EMPLOYEE BENEFITS PLANS
1993 STOCK OPTION PLAN
In July 1993, the Board of Directors adopted the Enamelon, Inc. 1993
Stock Option Plan (the "Plan"), which was approved by the Company's
stockholders in September 1993. The Plan provides for the grant to qualified
employees (including officers and directors) of the Company of options to
purchase shares of Common Stock. A total of 1,500,000 shares of Common Stock
have been reserved for issuance upon exercise of stock options granted under
the Plan. The Plan is administered by the Board of Directors or a committee of
the Board of Directors (the "Committee") whose members are not entitled to
receive options under the Plan (excluding options granted exclusively for
directors, fees). The Committee has complete discretion to select the optionee
and to establish the terms and conditions of each option, subject to the
provisions of the Plan. Options granted under the Plan may or may not be
"incentive stock options" as defined in Section 422 of the Internal Revenue
Code ("Incentive Options") depending upon the terms established by the
Committee at the time of grant, but the exercise price of options granted may
not be less than 100% of the fair market value of the Common Stock as of the
date of grant (110% of the fair market value if the grant is an Incentive
Option granted to an employee who owns more than 10% of the outstanding Common
Stock). Options may not be exercised more than 10 years after the grant (five
years if the grant is an Incentive Option to any employee who owns more than
10% of the outstanding Common Stock). Options granted under the Plan are not
transferable and may be exercised only by the respective grantees during their
lifetimes or by their heirs, executors or administrators in the event of
death. Under the Plan, shares that are the subject of canceled or terminated
options are reserved for subsequently granted options. The number of options
outstanding and the exercise price thereof are subject to adjustment in the
case of certain transactions such as mergers, recapitalizations, stock splits
or stock dividends.
As of March 31, 1997, the Company had granted options exercisable for
periods of three to ten years to purchase an aggregate of 1,376,306 shares of
Common Stock, at exercise prices ranging from $1.33 to $8.00 per share
(subject to adjustment), to certain employees, officers and directors of the
Company, including options to purchase an aggregate of 450,000 shares at $3.00
per share, and 50,000 shares at $6.875 granted to the Company's Chairman of
the Board, options to purchase an aggregate of 144,515 shares granted to other
members of the Company's Board
8
<PAGE>
of Directors at prices ranging from $3.06 to $6.25 per share, and options to
purchase an aggregate of 47,079 shares granted to members of the Company's
Scientific Advisory Board other than members of the Company's Board of
Directors at prices ranging from $2.00 to $4.40 per share. See "Employment and
Consulting Agreements" above for a description of options granted to an
affiliate of an officer of the Company.
INCENTIVE COMPENSATION PLAN
The Company has established a five-year incentive compensation program
to award officers and key employees for their efforts on behalf of the Company
as measured by yearly increases in the net income (before income taxes and
extraordinary items) generated by the Company. The program provides for
incentive compensation utilizing an objective formula based upon guidelines in
accordance with the Company's goals. The Company will establish a yearly bonus
pool for 1997 equal to five percent of its net income before income taxes,
including the amount provided for by the incentive compensation plan and
extraordinary items ("ICP Income"), to be distributed to officers and key
employees. For the subsequent four fiscal years, such bonus pool shall only be
established in the event the Company's ICP Income equals or exceeds by at
least 5% the Company's ICP Income for the prior fiscal year. Amounts remaining
in the yearly bonus pool that are not distributed do not carry over into the
subsequent year's pool. The maximum amount an executive or key employee may
receive from the bonus pool is limited to two times such person's salary.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of March 19, 1997, certain
information, with respect to the beneficial ownership of shares of Common
Stock by (i) each person known by the Company to be the owner or more than 5%
of the outstanding shares of Common Stock, (ii) each director, (iii) each
named executive officer and (iv) all directors and executive officers as a
group:
<TABLE>
<CAPTION>
Amount and
Nature of Percentage of
Name and Address Beneficial Outstanding Shares
of Beneficial Owners Ownership (1) Owned (2)
-------------------- ------------- ---------
<S> <C>
Dr. Steven R. Fox (3)(4)......................... 3,543,240 48.2%
Dr. Bert Gaster (3)(5)........................... 25,253 *
Mr. Richard Gotterer (3)(5)...................... 90,512 1.3%
Mr. Eric Horodas (3)(5) (6)..................... 109,262 1.6%
Dr. S.N. Bhaskar (3)(7)......................... 68,756 1.0%
Mr. Anthony E. Winston (3)(8)................... 160,000 2.3%
Mr. D. Brooks Cole (3)(9)....................... 135,000 1.9%
Mr. Norman Usen (3)(10)......................... 198,762 2.8%
All directors and executive officers as a group
(8 persons) (11)............................. 4,330,785 54.1%
</TABLE>
* Represents less than 1%.
(1) Unless otherwise indicated, the Company believes that all persons named
in the table have sole voting and investment power with respect to all
shares of Common Stock beneficially owned by them. A person is deemed
to be the beneficial owner of securities that can be acquired by such
person within 60 days from the date hereof upon the exercise of
warrants or options. Each beneficial owner's
9
<PAGE>
percentage ownership is determined by assuming that options or warrants
that are held by such person (but not those held by any other person)
and which are exercisable within 60 days from the date hereof have been
exercised.
(2) Based on 6,900,378 shares issued and outstanding on March 19, 1997.
(3) The address of this person is c/o Enamelon, Inc., 15 Kimball Avenue,
Yonkers, NY 10704.
(4) Includes 36,348 shares held in trust for the benefit of Dr. Fox's minor
children. Also includes 450,000 shares issuable upon exercise of
currently exercisable stock options.
(5) Includes 25,253 shares issuable upon exercise of currently exercisable
stock options.
(6) Includes 9,375 shares issuable upon exercise of warrants.
(7) Includes 68,756 shares issuable upon exercise of stock options
(8) Includes 160,000 shares issuable upon exercise of stock options.
(9) Includes 135,000 shares issuable upon exercise of stock options.
(10) Includes 198,762 shares issuable upon exercise of stock options.
(11) Includes 1,088,277 shares issuable upon exercise of currently
exercisable stock options and 9,375 shares issuable upon exercise of
currently exercisable warrants.
By virtue of his ownership of shares of Common Stock and position with
the Company, Steven R. Fox may be deemed a "parent" and a "founder" of the
Company as such terms are defined under the federal securities laws.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company has subleased its office facilities without a written
agreement, since December 1, 1992, from Dr. Steven R. Fox, the Chairman of the
Board, at a rent of $600 per month. Commencing January 1, 1996 for a period of
one year, the Company entered into a lease with a relative of Dr. Fox for
additional office facilities at a rent of $2,500 per month.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS
VOTE "FOR" THE NOMINEES LISTED IN PROPOSAL 1.
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<PAGE>
PROPOSAL 2. APPROVAL BY STOCKHOLDERS OF THE COMPANY'S 1997
INCENTIVE STOCK OPTION PLAN
The Board of Directors of the Company has adopted, subject to the
approval of Stockholders, the Company's 1997 Incentive Stock Option Plan (the
"Plan"), which authorizes the grant of options to purchase an aggregate of
750,000 shares of Common Stock.
Management recommends voting "FOR" approval of the Company's 1997
Incentive Stock Option Plan. The affirmative vote of a majority of the shares
present at the Annual Meeting and entitled to vote is necessary for such
approval.
GENERAL
The Board of Directors has deemed it in the best interest of the
Company to establish the Plan so as to provide employees and other persons
involved in the continuing development and success of the Company and its
subsidiaries an opportunity to acquire a proprietary interest in the Company
by means of grants of options to purchase Common Stock. The Plan supplements
the Company's 1993 Stock Option Plan (the "Existing Plan"), which presently
has 123,694 shares of the 1,500,000 shares authorized thereunder available for
issuance. The Existing Plan was previously approved by the Company's
Stockholders. It is the opinion of the Board of Directors that by rewarding
the Company's employees and other individuals contributing to the Company and
its subsidiaries with the opportunity to acquire an equity investment in the
Company, the Plan will maintain and strengthen their desire to remain with the
Company, stimulate their efforts on the Company's behalf, and also attract
other qualified personnel to provide services on behalf of the Company.
The following description summarizes certain provisions of the Plan.
All statements are qualified in their entirety by reference to the text of the
Plan, copies of which are available for examination at the Securities and
Exchange Commission and at the principal office of the Company, 15 Kimball
Avenue, Yonkers, New York 10704.
The Plan allows the Company to grant incentive stock options ("ISOs"),
as defined in Section 422(b) of the Internal Revenue Code of 1986, as amended
(the "Code"), Non-Qualified Stock Options ("NQSOs") not intended to qualify
under Section 422(b) of the Code, and Stock Appreciation Rights ("SARs").
ISOs, NQSOs, and SARs are collectively referred to below as "Options". The
Plan is intended to provide the employees, directors, independent contractors
and consultants of the Company with an added incentive to continue their
services to the Company and to induce them to exert their maximum efforts
toward the Company's success. The Board has deemed it in the best interest of
the Company to establish the Plan so as to provide employees and the other
persons listed above the opportunity to acquire a proprietary interest in the
Company by means of grants of options to purchase Common Stock. The Plan is
not subject to ERISA.
ELIGIBILITY FOR PARTICIPATION
Under the Plan, ISOs or ISOs in tandem with SARs, subject to the
requirements set forth in Temp. Reg. Section 14a.422A-1, A-39 (a)-(e), may be
granted, from time to time, to employees of the Company, including officers,
but excluding directors who are not otherwise employees of the Company. NQSOs
and NQSOs in tandem with SARs may be granted from time to time under the Plan
to employees of the Company, officers, directors, independent contractors,
consultants and other individuals who are not employees of, but
11
<PAGE>
are involved in the continuing development and success of, the Company
(persons entitled to receive Options are referred to herein as
"Participants"). ISOs and ISOs in tandem with SARs may not be granted under
the Plan to any person for whom shares first become exercisable under the Plan
or any other stock option plan of the Company in any calendar year having an
aggregate fair market value (measured at the respective time of grant of such
Options) in excess of $100,000. Any grant in excess of such amount will be
deemed a grant of an NQSO. Furthermore, not more than 150,000 Options may be
granted to a Participant in any calendar year. The Company presently has 15
employees (including one director-employee), and four outside directors who
are eligible for grants of one or more types of Options under the Plan. The
Company cannot presently determine the number of non-employees who may be
entitled to NQSO's under the Plan.
ADMINISTRATION
The Plan is to be administered by the Board of Directors, by the
Compensation Committee of the Board of Directors of the Company or another
Committee of the Board of Directors of the Company composed solely of at least
two "outside directors" (as defined under Section 162(m) of the Code). The
administrator of the Plan, whether the Board of Directors itself, the
Compensation Committee and/or any other committee of the board of Directors is
referred to below as the "Committee," unless the context otherwise requires.
The Committee has the authority, in its discretion, to determine the persons
to whom Options will be granted, the character of such Options, the manner of
exercising and making payment for shares of Common Stock and the number of
shares of Common Stock to be subject to each Option. A committee of the Board
of Directors composed solely of at least two outside directors, to the extent
the Company has two outside directors, will be required to administer the Plan
with respect to employees included within the term "covered employee" under
Section 162(m) of the Code (generally, executive officers of the Company).
TERMS OF OPTIONS
The terms of options granted under the Plan will be determined by the
Committee. Each Option is to be evidenced by a stock option agreement between
the Company and the employee to whom such Option is granted, and is subject to
the following additional terms and conditions:
(a) Exercise of the Option: The Committee will determine the time
periods during which Options granted under the Plan may be exercised. An
Option must be granted within ten (10) years from the date the Plan was
adopted by the Board and may not have an expiration date later than ten (10)
years from the date of grant. Unless otherwise provided in any option
agreement issued under the Plan, any Option granted under the Plan may be
exercisable in whole or in part at any time during the exercise period and,
other than with respect to performance-based options, must become fully
exercisable within five years from the date of its grant and vest at a rate of
not less than 20% of the Option in the aggregate in each of the first five
years of the Option. The Committee may, in its sole discretion, accelerate any
such vesting period after the grant thereof. The vesting of one or more
Options granted under the Plan may also be based on the attainment of
specified performance goals of the Participant or the performance of the
Company, one or more subsidiaries, parent and/or division of one or more of
the above. Notwithstanding the above, ISOs or SARs granted in tandem with
ISOs, granted to a participant owning directly or through attribution more
than 10% of the Company's Common Stock are subject to the additional
restriction that the expiration date of the Option may not be later than five
(5) years from the date of grant. An Option is exercised by giving written
notice of exercise to the Company specifying the number of full shares of
Common Stock to be purchased and tendering payment of the purchase price to
the Company in cash or certified check. At the discretion of the Committee,
the exercise price may also be paid by delivery of shares of Common Stock
having a fair market value equal
12
<PAGE>
to the option price, an interest-bearing promissory note in the principal
amount of the exercise price and bearing interest at a rate not less than the
imputed interest rate under the Code, or a combination of a cash payment
and/or delivery or shares and/or an interest-bearing promissory note.
Furthermore, in the case of an NQSO, at the discretion of the Committee, the
Participant may have the Company withhold from the Common Stock to be issued
upon exercise of the Option that number of shares having a fair market value
equal to the exercise price and/or the withholding amount due.
(b) Option Price: The option price of an NQSO or an SAR or in tandem
with an NQSO granted pursuant to the Plan will be determined by the Committee
in its sole discretion, but in no event may such price be less than 85% of the
fair market value of the Company's Common Stock on the date of grant. In no
event may the option price of an ISO be less than the fair market value of the
Company's Common Stock on the date of grant. Such fair market value of an ISO
will be determined by the Committee and, if the shares of Common Stock are
listed on a national securities exchange or traded on the over-the-counter
market, the fair market value will be the closing price on such exchange, or
the mean of the reported bid and asked prices of the Common Stock on the
over-the-counter market as reported by NASDAQ, the NASD OTC Bulletin Board or
the National Quotation Bureau, Inc., as the case may be, on such date. ISOs or
SARs granted in tandem with ISOs granted to holders of more than 10% of the
Company's Common Stock are subject to the additional restriction that the
option price must be at least 110% of the fair market value of the Company's
Common Stock on the date of grant.
(c) Termination of Employment or Consulting Agreement; Death: Except
as provided in the Plan, or otherwise determined by the Committee in its sole
discretion, upon voluntary termination of employment with the Company or
termination of a consultant's consulting agreement prior to expiration of its
term, a Participant may exercise his Option, to the extent such Option would
otherwise be exercisable as of the date of termination or at any time within
three (3) months after the date of such termination. However, unless otherwise
determined by the Committee in its sole discretion, any Options granted under
the Plan will immediately terminate if the Participant's employment is
terminated as a result of his not having adequately performed the services for
which he was hired.
Unless extended by the Committee, if a Participant dies (i) while
employed by the Company or a subsidiary or parent corporation or (ii) within
three (3) months after the termination of his employment, his Options may be
exercised by a legatee or legatees of such Options under such individual's
last will or by such individual's estate, to the extent such Option was
exercisable as of the date of death or date of termination of employment,
whichever date is earlier, but in no event later than six (6) months after the
date of death.
If a Participant becomes disabled within the definition of section
22(e)(3) of the Code while employed by the Company or a subsidiary or parent
corporation, his Options may be exercised at any time within six months after
the termination of his employment due to the disability.
An Option may not be exercised except to the extent that the
Participant was entitled to exercise the Option at the time of termination of
employment or death, unless otherwise extended by the Committee in its sole
discretion, and in any event it may not be exercised after the original
expiration date of the Option.
(d) Nontransferability of Options; No Liens: ISOs and SARs granted in
tandem with ISOs are not transferable or assignable, except by will or the
laws of intestacy, and any ISO or SAR granted in tandem with an ISO is
exercisable during the lifetime of the Participant only by the Participant, or
in the event of his or her death, by a person who acquires the right to
exercise the Option by bequest or inheritance or by reason
13
<PAGE>
of the death of the Participant. The Committee has the right to grant options
other than ISO's or SAR's in tandem with ISO's which may or may not be
transferable or assignable.
The option agreement may contain such other terms, provisions and
conditions not inconsistent with the Plan as may be determined by the Board of
Directors or the Compensation Committee.
TERMINATION, MODIFICATION AND AMENDMENT OF THE PLAN
The Plan (but not Options previously granted under the Plan) will
terminate ten years from the date of its adoption by the Board of Directors.
No Option will be granted after termination of the Plan.
The Board of Directors of the Company may terminate the Plan at any
time prior to its expiration date, or from time to time make such
modifications or amendments of the Plan as it deems advisable. However, the
Board may not, without the approval of a majority of the then outstanding
shares of the Company entitled to vote thereon, except under conditions
described under "Adjustments Upon Changes in Capitalization," increase the
maximum number of shares as to which Options may be granted under the Plan,
materially change the standards of eligibility under the Plan, or adopt a new
plan.
No termination, modification or amendment of the Plan may adversely
affect the terms of any outstanding options without the consent of the holders
of such Options.
ADJUSTMENTS UPON CHANGES IN CAPITALIZATION
In the event that the number of outstanding shares of Common Stock of
the Company is changed by reason of recapitalization, reclassification, stock
split, stock dividend, combination, exchange of shares, or the like, the Board
of Directors of the Company will make an appropriate adjustment in the
aggregate number of shares of Common Stock available under the Plan, in the
number of shares of Common Stock reserved for issuance upon the exercise of
then outstanding Options and in the exercise prices of such Options. Any
adjustment in the number of shares will apply proportionately only to the
unexercised portion of Options granted under the Plan. Fractions of shares
resulting from any such adjustment shall be revised to the next higher whole
number of shares.
In the event of the proposed dissolution or liquidation of
substantially all of the assets of the Company, all outstanding Options will
automatically terminate, unless otherwise provided by the Board.
FEDERAL INCOME TAX CONSEQUENCES
The following discussion is only a summary of the principal Federal
income tax consequences of the Options granted under the Plan and is based on
existing federal law, which is subject to change, in some cases retroactively.
This discussion is also qualified by the particular circumstances of
individual Participants, which may substantially alter or modify the Federal
income tax consequences herein discussed.
Generally, under present law, when an option qualifies as an ISO under
Section 422 of the Code, (i) an employee will not realize taxable income
either upon the grant or the exercise of the option, (ii) the amount by which
the fair market value of the shares acquired by the exercise of the option at
the time of exercise exceeds the option price is included in alternative
minimum taxable income for purposes of determining the employee's alternative
minimum tax, (iii) any gain or loss (the difference between the net proceeds
received
14
<PAGE>
upon the disposition of the shares and the option price paid therefor), upon a
qualifying disposition of the shares acquired by the exercise of the option
will be treated as capital gain or loss if the stock qualifies as a capital
asset in the hands of the employee, and (iv) no deduction will be allowed to
the Company for federal income tax purposes in connection with the grant or
exercise of an incentive stock option or a qualifying disposition of the
shares. A disposition by an employee of shares acquired upon exercise of an
ISO will constitute a qualifying disposition if it occurs more than two years
after the grant of the option and one year after the issuance of the shares to
the employee. If such shares are disposed of by the employee before the
expiration of those time limits, the transfer would be a "disqualifying
disposition" and the employee, in general, will recognize ordinary income (and
the Company will, subject to the limitations under Section 162(m) of the Code
discussed below, receive an equivalent deduction) equal to the aggregate fair
market value of the shares as of the date of exercise less the option price.
Ordinary income from a disqualifying disposition will constitute compensation
for which withholding may be required under federal and state law. In
addition, a holder of Options granted after August 10, 1993 may be entitled to
exclude up to 50% of the gain on any such sale occurring more than five years
after the date of exercise. The availability of such exclusion is dependent
upon, among other things, the Company not having in excess of $50 million of
aggregate gross assets at any time before the exercise of such Option.
Currently under the Code, the maximum rate of tax on ordinary income is
greater than the rate of tax on long-term capital gains. Many proposals have
been made to reduce the marginal rate of tax on capital gains. However, to
date, no such proposals have been enacted into law. Furthermore, in the
future, the rate of tax on such gains may be increased. No assurance can be
given of when, if ever, new tax legislation will be enacted into law, and the
effective date of any such legislation.
In the case of an NQSO granted under the Plan, no income generally is
recognized by the Participant at the time of the grant of the Option assuming
such NQSO does not have a readily ascertainable fair market value. The
Participant generally will recognize ordinary income when the NQSO is
exercised equal to the aggregate fair market value of the shares acquired less
the option price. Ordinary income from NQSOs will constitute compensation for
which withholding may be required under federal and state law, and the Company
will receive an equivalent deduction, subject to the limitations of Section
162(m) of the Code, which limits the amount a publicly held corporation may
deduct with respect to remuneration generally paid to an executive officer of
the Corporation to $1,000,000. Income recognized by such executive officer on
the exercise of an NQSO or SAR would be deemed remuneration. However, there
are certain requirements which, if met, will allow income from the exercise of
an NQSO or NQSO in tandem with an SAR to be excluded from remuneration for
such purposes. One of the requirements is that the Plan set forth the maximum
number of Options to which a Participant may be entitled. Even though the
Company believes that it and the Plan satisfy such requirements, no assurance
can be given that they will be met in the future.
Shares acquired upon exercise of NQSOs will have a tax basis equal to
their fair market value on the exercise date or other relevant date on which
ordinary income is recognized and the holding period for the shares generally
will begin on the date of the exercise or such other relevant date. Upon
subsequent disposition of the shares, the Participant will recognize capital
gain or loss if the stock is a capital asset in his hands. Provided the shares
are held by the Participant for more than one year prior to disposition, such
gain or loss will be long-term capital gain or loss. As set forth above, the
maximum rate of tax on ordinary income is currently greater than the rate of
tax on long-term capital gains. To the extent an Participant recognizes a
capital loss, such loss may currently generally offset capital gains and
$3,000 of ordinary income. Any excess capital loss is carried forward
indefinitely.
The grant of an SAR is generally not a taxable event for the
Participant. Upon the exercise of an
15
<PAGE>
SAR, the Participant will recognize ordinary income in an amount equal to the
amount of cash and the fair market value of any Common Stock received upon
such exercise, and the Company will be entitled to a deduction equal to the
same amount. However, if the sale of any shares received would be subject to
Section 16(b) of the Securities Exchange Act of 1934, ordinary income
attributable to such shares received will be recognized on the date such sale
would not give rise to a Section 16(b) action, valued at the fair market value
at such later time, unless the Participant has made an election under Section
83(b) of the Code within 30 days after the date of exercise to recognize
ordinary income as of the date of exercise based on the fair market value at
the date of exercise.
The foregoing discussion is only a brief summary of the applicable
federal income tax laws as in effect on this date and should not be relied
upon as being a complete statement. The federal tax laws are complex, and they
are subject to legislative changes and new or revised judicial or
administrative interpretations at any time. In addition to the federal income
tax consequences described herein, a Participant may also be subject to state
and/or local income tax consequences in the jurisdiction in which the
Participant works and/or resides.
NEW PLAN BENEFITS.
No options to purchase shares of Common Stock have been granted or
allocated under the Plan.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE
STOCKHOLDERS VOTE "FOR" THE APPROVAL OF THE
COMPANY'S 1997 INCENTIVE STOCK OPTION PLAN.
PROPOSAL 3. RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS
BDO Seidman, LLP has been the independent public accountants of the
Company since 1995. They have no financial interest, either direct or
indirect, in the Company. Selection of independent public accountants has been
recommended by the Audit Committee of the Company's Board of Directors and has
been approved by the entire Board of Directors, subject to stockholder
ratification. A representative of BDO Seidman, LLP is expected to attend the
Annual Meeting and to have an opportunity to make a statement or respond to
appropriate questions from Stockholders.
MANAGEMENT RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THE
RATIFICATION OF THE APPOINTMENT OF BDO SEIDMAN, LLP AS THE COMPANY'S
INDEPENDENT PUBLIC ACCOUNTANTS.
OTHER MATTERS
The Board of Directors is not aware of any business to be presented at
the Annual Meeting except the matters set forth in the Notice and described in
this Proxy Statement. Unless otherwise directed, all shares represented by
Board of Directors' Proxies will be voted in favor of the proposals of the
Board of Directors described in this Proxy Statement. If any other matters
come before the Annual Meeting, the persons named in the accompanying Proxy
will vote on those matters according to their best judgment.
16
<PAGE>
EXPENSES
The entire cost of preparing, assembling, printing and mailing this
Proxy Statement, the enclosed Proxy and other materials, and the cost of
soliciting Proxies with respect to the Annual Meeting, will be borne by the
Company. The Company will request banks and brokers to solicit their customers
who beneficially own shares listed of record in names of nominees, and will
reimburse those banks and brokers for the reasonable out-of-pocket expenses of
such solicitations. The original solicitation of Proxies by mail may be
supplemented by telephone and telegram by officers and other regular employees
of the Company, but no additional compensation will be paid to such
individuals.
STOCKHOLDER PROPOSALS
No person who intends to present a proposal for action at a
forthcoming stockholders' meeting of the Company may seek to have the proposal
included in the proxy statement or form of proxy for such meeting unless that
person (a) is a record beneficial owner of at least 1% or $1,000 in market
value of shares of Common Stock, has held such shares for at least one year at
the time the proposal is submitted, and such person shall continue to own such
shares through the date on which the meeting is held, (b) provides the Company
in writing with his name, address, the number of shares held by him and the
dates upon which he acquired such shares with documentary support for a claim
of beneficial ownership, (c) notifies the Company of his intention to appear
personally at the meeting or by a qualified representative under Nevada law to
present his proposal for action, and (d) submits his proposal timely. A
proposal to be included in the proxy statement or proxy for the Company's next
annual meeting of stockholders, will be submitted timely only if the proposal
has been received at the Company's principal executive office no later than
December 15, 1997. If the date of such meeting is changed by more than 30
calendar days from the date such meeting is scheduled to be held under the
Company's By-Laws, or if the proposal is to be presented at any meeting other
than the next annual meeting of stockholders, the proposal must be received at
the Company's principal executive office at a reasonable time before the
solicitation of proxies for such meeting is made.
Even if the foregoing requirements are satisfied, a person may submit
only one proposal with a supporting statement of not more than 500 words, if
the latter is requested by the proponent for inclusion in the proxy materials,
and under certain circumstances enumerated in the Securities and Exchange
Commission's rules relating to the solicitation of proxies, the Company may be
entitled to omit the proposal and any statement in support thereof from its
proxy statement and form of proxy.
AVAILABLE INFORMATION
Copies of the Company's Annual Report on Form 10-KSB for the fiscal
year ended December 31, 1996 as filed with the Securities and Exchange
Commission, including the financial statements, can be obtained without charge
by stockholders (including beneficial owners of the Company's Common Stock)
upon written request to Norman Usen, the Company's Secretary, Enamelon, Inc.
15 Kimball Avenue, Yonkers, New York 10704, or on the Commission's web site at
http://www.sec.gov.
By Order of the Board of Directors
Norman Usen, Secretary
Yonkers, New York
April 16, 1997
17
<PAGE>
APPENDIX
--------
ENAMELON, INC.
1997 INCENTIVE STOCK OPTION PLAN
1. Purposes.
The ENAMELON, INC. 1997 INCENTIVE STOCK OPTION PLAN (the "Plan") is
intended to provide the employees, directors, independent contractors and
consultants of Enamelon Corporation (the "Company") and/or any subsidiary or
parent thereof with an added incentive to commence and/or continue their
services to the Company and to induce them to exert their maximum efforts toward
the Company's success. By thus encouraging employees, directors, independent
contractors and consultants and promoting their continued association with the
Company, the Plan may be expected to benefit the Company and its stockholders.
The Plan allows the Company to grant Incentive Stock Options ("ISOs") (as
defined in Section 422(b) of the Internal Revenue Code of 1986, as amended (the
"Code"), Non-Qualified Stock Options ("NQSOs") not intended to qualify under
Section 422(b) of the Code and Stock Appreciation Rights ("SARs") (collectively
the "Options"). The vesting of one or more Options granted hereunder may be
based on the attainment of specified performance goals of the participant or the
performance of the Company, one or more subsidiaries, parent and/or division of
one or more of the above.
2. Shares Subject to the Plan.
The total number of shares of Common Stock of the Company, $.001 par
value per share, that may be subject to Options granted under the Plan shall be
seven hundred fifty thousand (750,000) in the aggregate, subject to adjustment
as provided in Paragraph 8 of the Plan; however, the grant of an ISO to an
employee together with a tandem SAR or any NQSO to an employee together with a
tandem SAR shall only require one share of Common Stock available subject to the
Plan to satisfy such joint Option. The Company shall at all times while the Plan
is in force reserve such number of shares of Common Stock as will be sufficient
to satisfy the requirement of outstanding Options granted under the Plan. In the
event any Option granted under the Plan shall expire or terminate for any reason
without having been exercised in full or shall cease for any reason to be
exercisable in whole or in part, the unpurchased shares subject thereto shall
again be available for granting of Options under the Plan.
3. Eligibility.
All employees of the Company or of a "subsidiary" or "parent" of the
Company, as the quoted terms are defined within Section 424 of the Code are
eligible to receive ISO's or ISO's in tandem with SAR's (provided the SAR meets
the requirements set forth in Temp. Reg. Section 14a.422A-1, A-39 (a) through
(e) inclusive). ISO's or ISO's in tandem with SAR's (provided the SAR meets the
requirements set forth in Temp. Reg. Section 14a.422A-1, A-39 (a) through (e)
inclusive) may be granted from time to time under the Plan to one or more
employees of the Company or of a "subsidiary" or "parent" of the Company, as the
quoted terms are defined within Section 424 of the Code. An Officer is an
employee for the above purposes. However, a director of the Company who
<PAGE>
is not otherwise an employee is not deemed an employee for such purposes. NQSOs
and NQSO's in tandem with SARs may be granted from time to time under the Plan
to one or more employees of the Company, Officers, members of the Board of
Directors, independent contractors, consultants and other individuals who are
not employees of, but are involved in the continuing development and success of
the Company and/or of a subsidiary of the Company, including persons who have
previously been granted Options under the Plan.
4. Administration of the Plan.
(a) The Plan shall be administered by the Board of Directors of the
Company as such Board of Directors may be composed from time to time and/or by a
Stock Option Committee or Compensation Committee (the "Committee") which shall
be comprised of solely of at least two Outside Directors (as such term is
defined in regulations promulgated from time to time with respect to Section
162(m)(4)(C)(i) of the Code) appointed by such Board of Directors of the
Company. As and to the extent authorized by the Board of Directors of the
Company, the Committee may exercise the power and authority vested in the Board
of Directors under the Plan. Within the limits of the express provisions of the
Plan, the Board of Directors or Committee shall have the authority, in its
discretion, to determine the individuals to whom, and the time or times at
which, Options shall be granted, the character of such Options (whether ISOs,
NQSOs, and/or SARs in tandem with NQSOs, and/or SARs in tandem with ISOs) and
the number of shares of Common Stock to be subject to each Option, the manner
and form in which the optionee can tender payment upon the exercise of his
Option, and to interpret the Plan, to prescribe, amend and rescind rules and
regulations relating to the Plan, to determine the terms and provisions of
Option agreements that may be entered into in connection with Options (which
need not be identical), subject to the limitation that agreements granting ISOs
must be consistent with the requirements for the ISOs being qualified as
"incentive stock options" as provided in Section 422 of the Code, and to make
all other determinations and take all other actions necessary or advisable for
the administration of the Plan. In making such determinations, the Board of
Directors and/or the Committee may take into account the nature of the services
rendered by such individuals, their present and potential contributions to the
Company's success, and such other factors as the Board of Directors and/or the
Committee, in its discretion, shall deem relevant. The Board of Directors'
and/or the Committee's determinations on the matters referred to in this
Paragraph shall be conclusive.
(b) Notwithstanding anything contained herein to the contrary, at
anytime during the period the Company's Common Stock is registered pursuant to
Section 12(g) of the Securities Exchange Act of 1934 (the "1934 Act), the
Committee, if one has been appointed to administer all or part of the Plan,
shall have the exclusive right to grant Options to Covered Employees as defined
under Section 162(m)(3) of the Code (generally executive officers subject to
Section 16 of the 1934 Act) and set forth the terms and conditions thereof. With
respect to persons subject to Section 16 of the 1934 Act, transactions under the
Plan are intended, to the extent possible, comply with all applicable conditions
of Rule 16b-3, as amended from time to time, (and its successor provisions, if
any) under the 1934 Act and Section 162(m)(4)(C) of the Code of 1986, as
amended. To the extent any provision of the Plan or action by the Board of
Directors or Committee fails to so comply,
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it shall be deemed null and void, to the extent permitted by law and deemed
advisable by the Board of Directors and/or such Committee.
5. Terms of Options.
Within the limits of the express provisions of the Plan, the Board of
Directors or the Committee may grant either ISOs or NQSOs or SARs in tandem with
NQSOs or SARs in tandem with ISOs. An ISO or an NQSO enables the optionee to
purchase from the Company, at any time during a specified exercise period, a
specified number of shares of Common Stock at a specified price (the "Option
Price"). The optionee, if granted a SAR in tandem with a NQSO or ISO, may
receive from the Company, in lieu of exercising his option to purchase shares
pursuant to his NQSO or ISO, at one of the certain specified times during the
exercise period of the NQSO or ISO as set by the Board of Directors or the
Committee, the excess of the fair market value upon such exercise (as determined
in accordance with subparagraph (b) of this Paragraph 5) of one share of Common
Stock over the Option Price per share specified upon grant of the NQSO or
ISO/SAR multiplied by the number of shares of Common Stock covered by the SAR so
exercised. The character and terms of each Option granted under the Plan shall
be determined by the Board of Directors and/or the Committee consistent with the
provisions of the Plan, including the following:
(a) An Option granted under the Plan must be granted within 10 years
from the date the Plan is adopted, or the date the Plan is approved by the
stockholders of the Company, whichever is earlier.
(b) The Option Price of the shares of Common Stock subject to each ISO
and each SAR issued in tandem with an ISO shall not be less than the fair market
value of such shares of Common Stock at the time such ISO is granted. Such fair
market value shall be determined by the Board of Directors and, if the shares of
Common Stock are listed on a national securities exchange or traded on the
over-the-counter market, the fair market value shall be the closing price on
such exchange, or the mean of the closing bid and asked prices of the shares of
Common Stock on the over-the-counter market, as reported by the Nasdaq Stock
Market, the National Association of Securities Dealers OTC Bulletin Board or the
National Quotation Bureau, Inc., as the case may be, on the day on which the
Option is granted or, if there is no closing price or bid or asked price on that
day, the closing price or mean of the closing bid and asked prices on the most
recent day preceding the day on which the Option is granted for which such
prices are available. If an ISO or SAR in tandem with an ISO is granted to any
individual who, immediately before the ISO is to be granted, owns (directly or
through attribution) more than 10% of the total combined voting power of all
classes of capital stock of the Company or a subsidiary or parent of the
Company, the Option Price of the shares of Common Stock subject to such ISO
shall not be less than 110% of the fair market value per share of the shares of
Common Stock at the time such ISO is granted.
(c) The Option Price of the shares of Common Stock subject to an NQSO
or an SAR in tandem with a NQSO granted pursuant to the Plan shall be determined
by the Board of Directors or the Committee, in its sole discretion, but in no
event less than 85% of the fair market value per share of the shares of Common
Stock at the time of grant.
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(d) In no event shall any Option granted under the Plan have an
expiration date later than 10 years from the date of its grant, and all Options
granted under the Plan shall be subject to earlier termination as expressly
provided in Paragraph 6 hereof. If an ISO or an SAR in tandem with an ISO is
granted to any individual who, immediately before the ISO is granted, owns
(directly or through attribution) more that 10% of the total combined voting
power of all classes of capital stock of the Company or of a subsidiary or
parent of the Company, such ISO shall by its terms expire and shall not be
exercisable after the expiration of five (5) years from the date of its grant.
(e) An SAR may be exercised at any time during the exercise period of
the ISO or NQSO with which it is granted in tandem and prior to the exercise of
such ISO or NQSO. Notwithstanding the foregoing, the Board of Directors and/or
the Committee shall in their discretion determine from time to time the terms
and conditions of SAR's to be granted, which terms may vary from the
afore-described conditions, and which terms shall be set forth in a written
stock option agreement evidencing the SAR granted in tandem with the ISO or
NQSO. The exercise of an SAR granted in tandem with an ISO or NQSO shall be
deemed to cancel such number of shares subject to the unexercised Option as were
subject to the exercised SAR. The Board of Directors or the Committee has the
discretion to alter the terms of the SARS if necessary to comply with Federal or
state securities law. Amounts to be paid by the Company in connection with an
SAR may, in the Board of Director's or the Committee's discretion, be made in
cash, Common Stock or a combination thereof.
(f) An Option granted under the Plan shall become exercisable,
in whole at any time or in part from time to time, but in no event may an Option
(i) be exercised as to less than one hundred (100) shares of Common Stock at any
one time, or the remaining shares of Common Stock covered by the Option if less
than one hundred (100), and (ii) except with respect to performance based
Options, become fully exercisable more than five years from the date of its
grant nor shall less than 20% of the Option become exercisable in any of the
first five years of the Option, if not terminated as provided in Section 6
hereof. The Board of Directors or the Committee, if applicable, shall, in the
event it so elects in its sole discretion, set one or more performance standards
with respect to one or more Options upon which vesting is conditioned (which
performance standards may vary among the Options).
(g) An Option granted under the Plan shall be exercised by the
delivery by the holder thereof to the Company at its principal office (to the
attention of the Secretary) of written notice of the number of full shares of
Common Stock with respect to which the Option is being exercised, accompanied by
payment in full, which payment at the option of the optionee shall be in the
form of (i) cash or certified or bank check payable to the order of the Company,
of the Option Price of such shares of Common Stock, or, (ii) if permitted by the
Committee or the Board of Directors, as determined by the Committee or the Board
of Directors in its sole discretion at the time of the grant of the Option with
respect to an ISO and at or prior to the time of exercise with respect to a
NQSO, by the delivery of shares of Common Stock having a fair market value equal
to the Option Price or the delivery of an interest-bearing promissory note
having an original principal balance equal to the Option Price and an interest
rate not below the rate which would result in imputed interest under the
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Code (provided, in order to qualify as an ISO, more than one year shall have
passed since the date of grant and one year from the date of exercise), or (iii)
at the option of the Committee or the Board of Directors, determined by the
Committee or the Board of Directors in its sole discretion at the time of the
grant of the Option with respect to an ISO and at or prior to the time of
exercise with respect to a NQSO, by a combination of cash, promissory note
and/or such shares of Common Stock (subject to the restriction above) held by
the employee that have a fair market value together with such cash and principal
amount of any promissory note that shall equal the Option Price, and, in the
case of a NQSO, at the discretion of the Committee or Board of Directors by
having the Company withhold from the shares of Common Stock to be issued upon
exercise of the Option that number of shares having a fair market value equal
to the exercise price and/or the tax withholding amount due, or otherwise
provide for withholding as set forth in Paragraph 9(c) hereof, or in the event
an employee is granted an ISO or NQSO in tandem with an SAR and desires to
exercise such SAR, such written notice shall so state such intention. To the
extent allowed by applicable Federal and state securities laws, the Option
Price may also be paid in full by a broker-dealer to whom the optionee has
submitted an exercise notice consisting of a fully endorsed Option, or through
any other medium of payment as the Board of Directors and/or the Committee, in
its discretion, shall authorize.
(h) The holder of an Option shall have none of the rights of a
stockholder with respect to the shares of Common Stock covered by such holder's
Option until such shares of Common Stock shall be issued to such holder upon the
exercise of the Option.
(i) All ISOs or SARs in tandem with ISOs granted under the Plan
shall not be transferable otherwise than by will or the laws of descent and
distribution and may be exercised during the lifetime of the holder thereof only
by the holder. The Board or the Committee, in its sole discretion, shall
determine whether an Option other than an ISO or SAR in tandem with an ISO shall
be transferable. No Option granted under the Plan shall be subject to execution,
attachment or other process.
(j) The aggregate fair market value, determined as of the time
any ISO or SAR in tandem with an ISO is granted and in the manner provided for
by Subparagraph (b) of this Paragraph 5, of the shares of Common Stock with
respect to which ISOs granted under the Plan are exercisable for the first time
during any calendar year and under incentive stock options qualifying as such in
accordance with Section 422 of the Code granted under any other incentive stock
option plan maintained by the Company or its parent or subsidiary corporations,
shall not exceed $100,000. Any grant of Options in excess of such amount shall
be deemed a grant of a NQSO.
(k) Notwithstanding anything contained herein to the contrary,
an SAR which was granted in tandem with an ISO shall (i) expire no later than
the expiration of the underlying ISO; (ii) be for no more than 100% of the
spread at the time the SAR is exercised; (iii) shall only be transferable when
the underlying ISO is transferable; (iv) only be exercised when the underlying
ISO is eligible to be exercised; and (v) only be exercisable when there is a
positive spread.
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<PAGE>
(l) In no event shall an employee be granted Options for more
than 150,000 shares of Common Stock during any calendar year period; provided,
however, that the limitation set forth in this Section 5(l) shall be subject to
adjustment as provided in Section 8 herein.
6. Death or Termination of Employment/Consulting Relationship.
(a) Except as provided herein, or otherwise determined by the
Board of Directors or the Committee in its sole discretion, upon termination of
employment with the Company voluntarily by the employee or termination of a
consulting relationship with the Company prior to the termination of the term
thereof, a holder of an Option under the Plan may exercise such Options to the
extent such Options were exercisable as of the date of termination at any time
within thirty (30) days after termination, subject to the provisions of
Subparagraph (d) of this Paragraph 6. Except as provided herein, or otherwise
determined by the Board of Directors or the Committee in its sole discretion, if
such employment or consulting relationship shall terminate for any reason other
than death, voluntary termination by the employee or for cause, then such
Options may be exercised at anytime within three (3) months after such
termination. Notwithstanding anything contained herein to the contrary, unless
otherwise determined by the Board of Directors or the Committee in its sole
discretion, any options granted hereunder to an Optionee and then outstanding
shall immediately terminate in the event the Optionee is terminated for cause,
and the other provisions of this Section 6 shall not be applicable thereto. For
purposes of this Section 6, termination for cause shall be deemed the decision
of the Company, in its sole discretion, that Optionee has not adequately
performed the services for which he/she/it was hired.
(b) If the holder of an Option granted under the Plan dies (i)
while employed by the Company or a subsidiary or parent corporation or while
providing consulting services to the Company or a subsidiary or parent
corporation or (ii) within three (3) months after the termination of such
holder's employment/consulting, such Options may, subject to the provisions of
subparagraph (d) of this Paragraph 6, be exercised by a legatee or legatees of
such Option under such individual's last will or by such individual's personal
representatives or distributees at any time within such time as determined by
the Board of Directors or the Committee in its sole discretion, but in no event
less than six months after the individual's death, to the extent such Options
were exercisable as of the date of death or date of termination of employment,
whichever date is earlier.
(c) If the holder of an Option under the Plan becomes disabled
within the definition of section 22(e)(3) of the Code while employed by the
Company or a subsidiary or parent corporation, such Option may, subject to the
provisions of subparagraph (d) of this Paragraph 6, be exercised at any time
within six months less one day after such holder's termination of employment due
to the disability.
(d) Except as otherwise determined by the Board of Directors or
the Committee in its sole discretion, an Option may not be exercised pursuant to
this Paragraph 6 except to the
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extent that the holder was entitled to exercise
the Option at the time of termination of employment, consulting relationship or
death, and in any event may not be exercised after the original expiration date
of the Option. Notwithstanding anything contained herein which may be to the
contrary, such termination or death prior to vesting shall, unless otherwise
determined by the Board of Directors or Committee, in its sole discretion, be
deemed to occur at a time the holder was not entitled to exercise the Option.
(e) The Board of Directors or the Committee, in its sole
discretion, may at such time or times as it deems appropriate, if ever,
accelerate all or part of the vesting provisions with respect to one or more
outstanding options. The acceleration of one Option shall not infer that any
Option is or to be accelerated.
7. Leave of Absence.
For the purposes of the Plan, an individual who is on military
or sick leave or other bona fide leave of absence (such as temporary employment
by the Government) shall be considered as remaining in the employ of the Company
or of a subsidiary or parent corporation for ninety (90) days or such longer
period as such individual's right to reemployment is guaranteed either by
statute or by contract.
8. Adjustment Upon Changes in Capitalization.
(a) In the event that the outstanding shares of Common Stock are
hereafter changed by reason of recapitalization, reclassification, stock
split-up, combination or exchange of shares of Common Stock or the like, or by
the issuance of dividends payable in shares of Common Stock, an appropriate
adjustment shall be made by the Board of Directors, as determined by the Board
of Directors and/or the Committee, in the aggregate number of shares of Common
Stock available under the Plan, in the number of shares of Common Stock issuable
upon exercise of outstanding Options, and the Option Price per share. In the
event of any consolidation or merger of the Company with or into another
company, where the Company is not the surviving entity, or the conveyance of all
or substantially all of the assets of the Company to another company for solely
stock and/or securities, each then outstanding Option shall upon exercise
thereafter entitle the holder thereof to such number of shares of Common Stock
or other securities or property to which a holder of shares of Common Stock of
the Company would have been entitled to upon such consolidation, merger or
conveyance; and in any such case appropriate adjustment, as determined by the
Board of Directors of the Company (or successor entity) shall be made as set
forth above with respect to any future changes in the capitalization of the
Company or its successor entity. In the event of the proposed dissolution or
liquidation of the Company, or, except as provided in (b) below, the sale of
substantially all the assets of the Company for other than stock and/or
securities, all outstanding Options under the Plan will automatically terminate,
unless otherwise provided by the Board of Directors of the Company or any
authorized committee thereof.
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(b) Any Option granted under the Plan, may, at the discretion of
the Board of Directors of the Company and said other corporation, be exchanged
for options to purchase shares of capital stock of another corporation which the
Company, and/or a subsidiary thereof is merged into, consolidated with, or all
or a substantial portion of the property or stock of which is acquired by said
other corporation or separated or reorganized into. The terms, provisions and
benefits to the optionee of such substitute option(s) shall in all respects be
identical to the terms, provisions and benefits of optionee under his Option(s)
prior to said substitution. To the extent the above may be inconsistent with
Sections 424(a)(1) and (2) of the Code, the above shall be deemed interpreted
so as to comply therewith.
(c) Any adjustment in the number of shares of Common Stock shall
apply proportionately to only the unexercised portion of the Options granted
hereunder. If fractions of shares of Common Stock would result from any such
adjustment, the adjustment shall be revised to the next higher whole number of
shares of Common Stock.
9. Further Conditions of Exercise.
(a) Unless the shares of Common Stock issuable upon the exercise
of an Option have been registered with the Securities and Exchange Commission
pursuant to the Securities Act of 1933, as amended, prior to the exercise of the
Option, an optionee must represent in writing to the Company that such shares of
Common Stock are being acquired for investment purposes only and not with a view
towards the further resale or distribution thereof, and must supply to the
Company such other documentation as may be required by the Company, unless in
the opinion of counsel to the Company such representation, agreement or
documentation is not necessary to comply with said Act.
(b) The Company shall not be obligated to deliver any shares of
Common Stock until they have been listed on each securities exchange on which
the shares of Common Stock may then be listed or until there has been
qualification under or compliance with such state or federal laws, rules or
regulations as the Company may deem applicable.
(c) The Board of Directors or Committee may make such provisions
and take such steps as it may deem necessary or appropriate for the withholding
of any taxes that the Company is required by any law or regulation of any
governmental authority, whether federal, state or local, domestic or foreign, to
withhold in connection with the exercise of any Option, including, but not
limited to, (i) the withholding of payment of all or any portion of such Option
and/or SAR until the holder reimburses the Company for the amount the Company is
required to withhold with respect to such taxes, or (ii) the cancelling of any
number of shares of Common Stock issuable upon exercise of such Option and/or
SAR in an amount sufficient to reimburse the Company for the amount it is
required to so withhold, (iii) the selling of any property contingently credited
by the Company for the purpose of exercising such Option, in order to withhold
or reimburse the Company for the amount it is required to so withhold, or (iv)
withholding the amount due from such employee's wages if the employee is
employed by the Company or any subsidiary thereof.
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10. Termination, Modification and Amendment.
(a) The Plan (but not Options previously granted under the Plan)
shall terminate ten (10) years from the earliest of the date of its adoption by
the Board of Directors, or the date the Plan is approved by the stockholders of
the Company, or such date of termination, as hereinafter provided, and no
Option shall be granted after termination of the Plan.
(b) The Plan may from time to time be terminated, modified or
amended by the affirmative vote of the holders of a majority of the outstanding
shares of capital stock of the Company entitled to vote thereon.
(c) The Board of Directors of the Company may at any time, prior
to ten (10) years from the earlier of the date of the adoption of the Plan by
such Board of Directors or the date the Plan is approved by the stockholders,
terminate the Plan or from time to time make such modifications or amendments of
the Plan as it may deem advisable; provided, however, that the Board of
Directors shall not, without approval by the affirmative vote of the holders of
a majority of the outstanding shares of capital stock of the Company entitled to
vote thereon, increase (except as provided by Paragraph 8) the maximum number of
shares of Common Stock as to which Options or shares may be granted under the
Plan, or materially change the standards of eligibility under the Plan. Any
amendment to the Plan which, in the opinion of counsel to the Company, will be
deemed to result in the adoption of a new Plan, will not be effective until
approved by the affirmative vote of the holders of a majority of the outstanding
shares of capital stock of the Company entitled to vote thereon.
(d) No termination, modification or amendment of the Plan may
adversely affect the rights under any outstanding Option without the consent of
the individual to whom such Option shall have been previously granted.
11. Effective Date of the Plan.
The Plan shall become effective upon adoption by the Board of
Directors of the Company. The Plan shall be subject to approval by the
affirmative vote of the holders of a majority of the outstanding shares of
capital stock of the Company entitled to vote thereon within one year before or
after adoption of the Plan by the Board of Directors.
12. Not a Contract of Employment.
Nothing contained in the Plan or in any option agreement
executed pursuant hereto shall be deemed to confer upon any individual to whom
an Option is or may be granted hereunder any right to remain in the employ of
the Company or of a subsidiary or parent of the Company or in any way limit the
right of the Company, or of any parent or subsidiary thereof, to terminate the
employment of any employee.
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13. Other Compensation Plans.
The adoption of the Plan shall not affect any other stock option
plan, incentive plan or any other compensation plan in effect for the Company,
nor shall the Plan preclude the Company from establishing any other form of
stock option plan, incentive plan or any other compensation plan.
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APPENDIX
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
ENAMELON, INC.
ANNUAL MEETING OF STOCKHOLDERS
The undersigned stockholder of ENAMELON, INC., a Delaware
corporation, hereby acknowledges receipt of the Notice of Annual Meeting of
Stockholders and Proxy Statement, each dated April 16, 1997, and the Annual
Report to Stockholders for the year ended December 31, 1996, and hereby
appoints Dr. Steven R. Fox and Norman Usen, and each of them, on behalf and in
the name of the undersigned to represent the undersigned at the Annual Meeting
of Stockholders of ENAMELON, INC., to be held on May 20, 1997 at 9:00 a.m., at
the Hyatt Regency, 2 Albany Street, New Brunswick, New Jersey 08901, and any
adjournment or adjournments thereof, and to vote all shares of Common Stock
that the undersigned would be entitled to vote if then and there personally
present, on the matters set forth below.
1. ELECTION OF DIRECTORS, as provided in the Company's
Proxy Statement:
[ ] FOR all nominees listed below [ ] WITHHOLD
AUTHORITY to vote for all nominees listed below.
(Instructions: TO WITHHOLD AUTHORITY TO VOTE FOR ANY
INDIVIDUAL NOMINEE, STRIKE A LINE THROUGH OR OTHERWISE
STRIKE OUT HIS NAME BELOW)
Steven R. Fox, S. N. Bhaskar, Bert D. Gaster, Richard
A. Gotterer and Eric D. Horodas
2. To approve the Company's 1997 Incentive Stock Option
Plan
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. To ratify the appointment of BDO Seidman, LLP, as the
Company's independent auditors for the year ending
December 31, 1997.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. Upon such other matters as may properly come before the
meeting or any adjournments thereof.
The undersigned hereby revokes any other proxy to vote at such
Annual Meeting, and hereby ratifies and confirms all that said attorneys and
proxies, and each of them, may lawfully do by virtue hereof. With respect to
matters not known at the time of the solicitations hereof, said proxies are
authorized to vote in accordance with their best judgment.
(To be Signed on Reverse Side)
<PAGE>
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED,
OR, IF NO CONTRARY DIRECTION IS INDICATED, WILL BE VOTED FOR THE ELECTION OF
DIRECTORS, FOR THE ADOPTION OF PROPOSALS 2 AND 3, AND AS SAID PROXIES SHALL
DEEM ADVISABLE ON SUCH OTHER BUSINESS AS MAY COME BEFORE THE MEETING.
Please mark, sign, date and return the Proxy Card promptly using
the enclosed envelope.
Date:____________________,1997 ______________________________________
Signature(s) of Stockholder(s)
NOTE: (This proxy should be marked, dated and signed by the
stockholder(s) exactly as his name appears hereon, and returned
promptly in the enclosed envelope. Persons signing in a
fiduciary should so indicate. If shares are held by joint
tenants or as community property, both must sign.)
