SCHEDULE 14A INFORMATION
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
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 the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
IXION BIOTECHNOLOGY, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11
(Set forth the amount on which the filing fee is calculated and
state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
IXION
Notice of Annual Meeting and Proxy Statement of Stockholders
June 9, 2000
The annual meeting of stockholders of Ixion Biotechnology, Inc., a Delaware
corporation (the "Company"), will be held at the offices of the Company at 13709
Progress Blvd., Alachua, Florida, on June 9, 2000 at 10:00 a.m., local time to:
1. Elect seven directors for a term of one year;
2. To approve an amendment to our 1994 Stock Option Plan to increase the
number of shares available for the grant of options from 325,000 to 500,000;
3. To ratify the selection of PricewaterhouseCoopers, LLP to audit our
books and records for 2000; and
4. To transact such other business as may properly come before the meeting
or any adjournments or postponements thereof.
The Board of Directors has fixed the close of business on April 13,
2000 as the record date for the determination of stockholders entitled to notice
of, and to vote at, the annual meeting and any adjournments or postponements
thereof.
By Order of the Board of Directors,
Mary Trew
Secretary
Alachua, Florida
April 28, 2000
IMPORTANT
If you do not expect to attend the meeting in person, please complete,
date, and sign the enclosed proxy and return it without delay in the enclosed
envelope, which requires no additional postage if mailed in the United States.
<PAGE>
IXION
IXION BIOTECHNOLOGY, INC.
13709 Progress Blvd., Box 13
Alachua, FL 32615
April 28, 2000
PROXY STATEMENT
For annual meeting of stockholders to be held
on Friday, June 9, 2000
GENERAL
This proxy statement is furnished in connection with the solicitation
of proxies by the Board of Directors of Ixion Biotechnology, Inc. (the "Company"
or "Ixion"), for use at the annual meeting of stockholders on June 9, 2000 at
10:00 a.m. local time, and at any postponements or adjournments thereof. We
expect to distribute this proxy statement and the accompanying proxy card to
stockholders about April 28, 2000.
We will bear the cost of proxy solicitation. In addition to the use of
mails, proxies may be solicited by telephone by our officers, directors, and
regular employees, none of whom will be specially compensated for such services.
Our annual report to stockholders for the fiscal year ended December
31, 1999, including audited financial statements, is included herewith, but does
not constitute a part of this proxy statement.
Holders of our common stock, of record at the close of business on
April 13, 2000, are entitled to vote at the meeting. As of that date, there were
3,068,164 shares of common stock outstanding. Each stockholder entitled to vote
shall have the right to one vote for each share outstanding in such
stockholder's name.
We presently have no other class of stock outstanding and entitled to
be voted at the meeting. The presence in person or by proxy of stockholders
composing a majority of all votes entitled to be cast at the meeting constitutes
a quorum.
Shares cannot be voted at the meeting unless the holder of record is
present in person or by proxy. The enclosed proxy is a means by which a
stockholder may authorize the voting of his or her shares at the meeting. The
shares of common stock represented by each properly executed proxy will be voted
at the meeting in accordance with each stockholder's directions. Stockholders
should specify choices by marking the appropriate boxes on the enclosed proxy;
if no choice has been specified, the shares will be voted as recommended by the
Board of Directors. If any other matters are properly presented at the meeting
for action, the proxy holders will vote the proxies (which confer discretionary
authority to vote on such matters) in accordance with their judgement.
Your execution of the accompanying proxy will not affect your right to
attend the meeting and vote
<PAGE>
in person. Any stockholder giving a proxy has a right to revoke it by giving
written notice of revocation to the Secretary of the Company, or by delivering a
subsequently executed proxy, at any time before the proxy is voted, or by
attending the meeting and voting in person. If you are a stockholder of record
and plan to attend the meeting, please return the proxy card with the "Annual
Meeting" box marked. Admission to the meeting will be on a first-come, first
served basis. Stockholders will be admitted upon verification of ownership at
the door.
Your proxy vote is important. Accordingly, please complete, sign, and
return the accompanying proxy whether or not you plan to attend the meeting.
PROPOSAL 1: ELECTION OF DIRECTORS
Proxies in the accompanying form will be voted at the meeting, unless
authority to do so is withheld, in favor of the election as directors of the
nominees named below.
The stockholders will elect seven directors at the annual meeting for a
term of one year expiring at the 2001 annual meeting of the stockholders, and
until the election and qualification of successors (or until earlier removal or
resignation). In the event one or more of the named nominees is unable to serve,
the persons designated as proxies may cast votes for other persons as substitute
nominees. The Board of Directors has no reason to believe that any of the
nominees named below will be unavailable, or, if elected, will decline to serve.
Directors will be elected by a plurality of the votes cast at the annual
meeting. Withheld votes will not count toward such nominee's achievement of a
plurality.
Certain information is set forth below for each nominee for director.
All of the nominees are presently directors and were previously elected by the
stockholders.
The Board of Directors unanimously recommends a vote FOR each of the
nominees.
Nominees for Director
<TABLE>
<CAPTION>
Year First
Principal Occupations During Past Five Became
Name of Director Age Years and Certain Directorships Director
- ---------------- --- --------------------------------------- --------
<S> <C> <C>
Weaver H. Gaines 56 Mr. Gaines is a co-founder of Ixion and has been our Chairman and 1993
Chief Executive Officer and a Director since April, 1993. He was
also our President from April, 1993 to April, 1994. From April to
November 1992, he was a Senior Advisor on the Washington campaign
staff of Bush/Quayle 92. He is also a director of Unified Financial
Services, Inc., an SEC-reporting company, AquaGene, Inc., and past
Chairman of the Board of BioFlorida, the Florida biotechnology trade
association.
David C. Peck 52 Mr. David Peck is a co-founder of Ixion, a Director since March 1993, 1993
our President since April, 1994, and our Chief Financial Officer
since May, 1995. From October 1995, Mr. Peck has also been Chief
Executive Officer of BACOMPT, a printing company located in Carmel,
Indiana. Mr. Peck is the brother of Dr. Peck, the Company's Chief
Scientist.
David M. Margulies 48 Dr. Margulies became a director and Executive Vice President and 1994
Chief Scientist of CareInsite, Inc. in 1999. Concurrently, he is
Executive Vice President of Medical Manager Corp., CareInsite's
parent, a position he has held since 1997. Both companies are
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publicly held. From May 1996 to January 1997, Dr. Margulies was a
founder and Chairman and CEO of CareAgents, Inc., a developer of
Internet-based clinical commerce applications, which was acquired by
Medical Manager in January 1997. From 1990 to May 1996, Dr.
Margulies was a Director, an Executive Vice President, and Chief
Scientist of Cerner Corporation, a publicly held company that
supplies enterprise-level clinical applications.
Vincent P. Mihalik 49 Mr. Mihalik is presently Senior Vice President and General Manager, 1995
Lab Systems and Molecular Biochemicals, Roche Diagnostics. From
September of 1996 until June 1998, he was Executive Vice President,
Group Personnel, Corange International Holding BV, the parent company
of Boehringer Mannheim Corporation. From 1994 to September of 1996,
he was Senior Vice President Global Marketing, Strategic Planning,
Patient Care, of Boehringer Mannheim Corporation.
Karl-E. Arfors 63 Dr. Arfors has been President of Experimental Medicine, Inc., a 1998
company he founded since 1993. Previous experience includes various
research positions with Pharmacia, AB, of Uppsala, Sweden, president
and co-founder of the La Jolla Institute for Experimental Medicine,
and executive director for biological sciences for the Liposome
Company.
Bengt Agerup 56 Dr. Agerup founded Q-Med AB of Uppsala, Sweden in 1987, and, since 1999
April 1999, has been its Vice President of Research and Development.
From 1995 to 1999, he was the Managing Director of Q-Med.
Previously he held executive and scientific positions with Pharmacia
and Biomatrix.
Thomas P. Stagnaro 56 Mr. Stagnaro has been an independent consultant since 1998. He is 1999
also currently a director of InKine Pharmaceutical Corporation, a
public company and Intellivax International, Inc., a private company,
and a member of the Board of Visitors to the University of Maryland
Biotechnology Institute. From 1996 to 1998 he was President and CEO
and a director of 3-Dimensional Pharmaceuticals, Inc., a public
company. Previously he was a senior executive vice president and
director of Nabi, Inc., a public company.
</TABLE>
Committees of the Board of Directors
The Bylaws provide that the board may designate an executive committee
and other committees, each of which shall consist of one or more directors, and
the board annually elects from its members of an Audit and Benefits Committee
and an Executive Committee.
Audit and Benefits Committee. The members of the Audit and Benefits
Committee are Dr. Margulies, Dr. Arfors, Dr. Agerup, Mr. Stagnaro, and Mr.
Mihalik, Chairman, all non-employee directors. This Committee, which met three
times during 1999, recommends to the board the engagement of independent
auditors, reviews the professional services to be rendered by the independent
auditors, the scope of their audit, their fees, and the results of their
engagement. The independent auditors meet periodically with the Committee and
have unrestricted access to them. The Committee is also responsible for
developing and executing plans for the compensation of the executive officers.
Additionally, the Committee administers the terms and provisions of the 1994
Stock Option Plan (the "Option Plan") and the Board Retainer Plan, including the
determination of the individuals eligible to receive
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awards, the individuals to whom awards should be granted, the nature of the
awards to be granted, and the exercise price, vesting schedule, and term of
options or awards to be granted.
Executive Committee. The members of the Executive Committee are Mr. Gaines
and Mr. Peck. The Executive Committee has all of the powers of the Board
permitted under the Delaware corporation law. There were no meetings of the
Executive Committee during 1999.
Board Meetings and Attendance of Directors
The Board of Directors had four meetings in 1999. All directors
attended more than 75% of the aggregate of (i) the total number of meetings of
the board held while they were members, and (ii) the total number of meetings
held by all committees of the board.
PROPOSAL 2: APPROVAL OF AMENDMENT TO 1994 STOCK OPTION PLAN
In August 1994, the Board of Directors adopted, and the stockholders
subsequently approved, the Ixion 1994 Stock Option Plan (the "Plan"). Under the
Plan, there were 250,000 shares reserved for issuance to employees and
consultants, and 75,000 shares reserved for issuance to directors and members of
the scientific advisory board, for a total of 325,000 shares reserved under the
Plan. In December 1999, the board amended the Plan, subject to shareholder
approval, to increase the number of shares of common stock authorized for
issuance under the Plan from a total of 325,000 shares to a total of 500,000
shares, and to eliminate the separate reservations for employees and
consultants, on the one hand, and directors and members of the scientific
advisory board on the other. The board adopted this amendment in order to ensure
that we can continue to grant options at levels determined to be appropriate by
the board.
At February 28, 2000, a total of 72,000 options had been granted to
directors and members of the scientific advisory board and only 3,000 shares
remained available for future grants to them under the Plan. Options for 109,400
shares have been issued to officers, employees, and consultants. 140,600 shares
remained available for future grants to officers, employees, and consultants.
We are asking stockholders in this Proposal 2 to approve the amendment
to the Plan. The affirmative vote of the holders of a majority of the shares
present in person or represented by proxy and entitled to vote at the meeting
will be required to approve the amendment to the Plan. Abstentions will be
counted toward the tabulation of votes cast on proposals presented to the
stockholders and will have the same effect as negative votes.
The complete text of the Plan, as amended, is set forth in Exhibit A to
this proxy statement. The essential features of the amended Plan are set forth
below and are qualified in their entirety by reference to the full text of the
Plan.
Purpose. The purpose of the Plan is to provide incentive and an
opportunity to participate in our growth, development, and financial success, to
officers, directors, employees, consultants, and members of the scientific
advisory board. All of our employees are eligible for participation.
Stock Subject to the Plan. The Plan reserves a total of 500,000 shares
of common stock for grant of options to directors, members of the scientific
advisory board, employees and consultants.
Types of Awards. The Plan permits the grant of both "incentive stock
options" within the meaning of Section 422 of the Internal Revenue Code (the
"Code") and nonqualified stock options.
Unexercised Options. Any expired, unexercised option may be re-granted.
Administration. The Audit and Benefits Committee (the "Committee)
administers the Plan. The Committee must be composed of at least two outside
directors (if there are two outside directors, otherwise such
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number of outside directors as are available for service) and has complete
discretion to select the eligible individuals who are to receive option grants.
Outside directors who are members of the Committee may not be awarded
discretionary grants, but are awarded options for 2,000 shares upon election to
the Committee and options for 2,500 shares, all exercisable at the then fair
market value, annually thereafter. Other compensation for the members of the
Committee shall be determined by the Board of Directors. The Company pays all
expenses associated with administration of the Plan.
Changes in Company Capitalization. If there is a recapitalization,
reorganization, stock split, combination of shares, or stock dividend, or
similar corporate actions, then the Committee shall make appropriate adjustments
in the shares reserved for unissued options.
Granting of Options. Any officer, director, employee, key consultant, or
member of our Scientific Advisory Board is eligible for the grant of an option.
Incentive Stock Options. Incentive stock options must qualify under
Section 422 of the Internal Revenue Code. The Committee has the absolute
discretion to determine who shall receive options, the number of shares to be
granted, whether the options shall be incentive stock options or nonqualified
stock options, and the other terms and conditions of the options.
Granting of Options to Outside Directors. Each outside director, other
than members of the Committee, shall be granted options for 2,500 shares
annually.
Option Agreements. Each option is evidenced by a written stock option
agreement.
Option Exercise Price. The exercise price of incentive stock options
may not be less than the fair market value of the shares on the date of grant
(or 110% of the fair market value for incentive stock options granted to holders
of 10% or more of our stock or any subsidiary of ours). The price may be paid in
cash, by promissory note, or previously owned shares.
Vesting. Generally, options become exercisable as to 20% of the shares
subject to option after the optionee's first full year of continuous service
with us and as to 1/12 of 20% of the shares at the end of each additional full
month of continuous service thereafter. Options granted to members of the
scientific advisory board generally vest at the rate of 25% at the end of each
three-month period following the grant. Subject to certain exceptions, vested
incentive stock options expire one year after the optionee's death or
disability. Vested nonqualified options expire one year after termination of
employment for any reason including death. Nonvested options expire upon
termination of the relationship with the Company.
Exercise Periods. No option may be exercised until it is vested. No
incentive stock option may be exercised more than ten years after its grant
date, or in the case of nonqualified stock options, ten years and one day after
the date of its grant.
Adjustments in Outstanding Options. If there is a recapitalization,
reorganization, stock split, combination of shares, or stock dividend, or
similar corporate actions, then the Committee shall make appropriate adjustments
in the shares subject to outstanding options.
Change of Control. In the event of a change of control, the Committee
has the discretion to provide that options may not be exercised after a change
of control, that they be immediately exercisable prior to a change of control,
or consent to their being assigned or assumed by any successor entity.
No Right to Continued Employment. The Plan does not restrict the
Company in any way from terminating or discharging any optionee, for any reason,
with or without cause.
Exercise of Options. Generally, only an optionee may exercise an
option. Options may be exercised in
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whole or in part by delivering to the Secretary a notice in writing stating that
the option is exercised, accompanied by cash payment, or, with the consent of
the Committee, shares of the Company or a promissory note.
No Rights as Shareholders. Options are not shareholders, and have no
rights or privileges as shareholders.
Transfer Restrictions. Without approval by the Committee, shares
received by any officer or director upon exercise of a stock option may not be
transferred until at least six months have elapsed from the date the option was
exercised.
Nontransferability. No option is transferable by the optionee other
than by will or the laws of descent and distribution, and each option is
exercisable during the lifetime of the optionee only by the optionee, his or her
guardian, or legal representative.
Termination and Amendment. The Committee may at any time suspend or
terminate the Plan, or make such modifications as it deems advisable, except
that the Plan cannot be changed to increase the cost to the Company. However,
without approval by the shareholders within 12 months, before or after action by
the Committee, the Committee may not increase the number of shares subject to
the Plan, materially modify the eligibility requirements, reduce the minimum
option price requirements or otherwise amend or modify the Plan in a manner
requiring stockholder approval under Rule 16b-3 of the SEC. A termination of the
Plan may not affect the rights of outstanding options.
The Board of Directors recommends a vote FOR Proposal 2.
PROPOSAL 3: DESIGNATION OF AUDITORS
Upon the recommendation of the Audit and Benefits Committee, the Board
of Directors has designated PricewaterhouseCoopers LLP to audit the books and
accounts of the Company for the year ending December 31, 2000, and will offer a
resolution at the annual meeting to ratify the designation. Representatives of
the auditors are not expected to be present at the meeting.
The Board of Directors recommend a vote FOR Proposal 3.
OTHER BUSINESS
The Board of Directors is not aware of any matters not set forth herein
that may come before the meeting. If, however, further business properly comes
before the meeting, the persons named in the proxies will vote the shares
represented thereby in accordance with their judgement.
EXECUTIVE COMPENSATION
Compensation of Directors
Employees and consultants of the Company who are also directors of the
Company receive no additional remuneration for fulfilling their role as
director.
Pursuant to our Board Retainer Plan, non-employee directors receive a
grant of 5,000 shares of common stock upon election to our board, and, during
the duration of the Board Retainer Plan, will receive 1,000 shares annually
thereafter, immediately following the annual meeting at which they are reelected
to the board. They also receive reimbursement of their expenses to attend board
meetings. In July of 1999, Dr. Margulies, Mr. Mihalik, and Dr. Arfors each
received 1,000 shares under the Board Retainer Plan, and Dr. Agerup and Mr.
Stagnaro received 5,000 shares. In addition, non-employee directors are eligible
to receive options under the terms of the 1994 Stock Option Plan as determined
by the Audit and Benefits Committee. Non-employee directors who are members of
the
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Audit and Benefit Committee may not be awarded discretionary option grants,
but will receive a grant of options to purchase 2,000 shares of our common stock
upon appointment to the Committee, and options to purchase an additional 2,500
shares annually thereafter. As described above, options vest over a five-year
period, with an exercise price equal to the fair market value of the Company's
Common Stock on the date of grant. In 1999, Dr. Margulies, Mr. Mihalik, and Dr.
Arfors each received an automatic annual grant under the 1994 Stock Option Plan
of a nonqualified option to purchase 2,500 shares of Common Stock and Dr. Agerup
and Mr. Stagnaro received nonqualified options to purchase 2,000 shares upon
their election to the Audit and Benefits Committee. Dr. Arfors also received
nonqualified options to purchase 2,000 shares in 1999, which should have been
awarded upon his election to the Committee in 1998. All nonqualified options
were awarded at an exercise price of $4.00 per share.
Consulting Agreement with Mr. Stagnaro
Mr. Stagnaro is a consultant to us under a consulting agreement dated
September 21, 1998. Pursuant to this agreement, Mr. Stagnaro is acting as a
non-exclusive finder in connection with our search for strategic partners and
investors and provides certain product development services. We do not pay Mr.
Stagnaro a retainer, but we do reimburse expenses incurred on our behalf and pay
consulting fees in connection with services unrelated to the search for
strategic partners and investors. We paid Mr. Stagnaro $688 in consulting fees
in 1999. In the event of a transaction between us and a party introduced by Mr.
Stagnaro, we will pay compensation of 5% of the first million, 3% of the second
million, and 1% of all amounts over $2 million.
Research Collaboration with Dr. Arfors
Dr. Arfors is a research collaborator with us and from time to time may
be awarded contracts to perform certain research services in connection with our
diabetes research. We do not pay him a retainer. On September 30, 1999, we
received notice that the NIH had awarded us a $200,000 grant to fund diabetes
research pursuant to a grant application listing Dr. Arfors as a subcontractor.
Dr. Arfors's lab will receive $25,000 from the NIH funds over a 23-month period,
of which a total of $15,000 is to defray a portion of Dr. Arfors's salary. No
payments have been made to date under this award.
Summary Compensation Table
The following table summarizes the compensation of those persons who
were, at December 31, 1999, the Company's Chairman and Chief Executive Officer,
its President, and its Senior Vice President and Chief Scientist, for the years
ended December 31, 1997, 1998, and 1999.
Summary Compensation Table
<TABLE>
<CAPTION>
Annual
Long-Term Compensation
Compensation Awards
Restricted
All Stock Securities
Name Year Bonus Other Awards Underlying Options/SARs
Salary
<S> <C> <C> <C> <C> <C> <C>
Weaver H. Gaines .... 1997 $95,000 $0 $0 $0 0
Chairman and CEO 1998 $95,000 $0 $0 $0 19,000
1999 $95,000 $32,775 $0 $0 15,000
David C. Peck (1)...... 1997 $60,000 $0 $0 $0 0
President & CFO 1998 $60,000 $0 $0 $0 12,000
1999 $60,000 $20,700 $0 $0 12,000
Ammon B. Peck (2)...... 1997 $50,000 $0 $0 $0 0
Sr. V.P. & Chief Scientist 1998 $50,000 $0 $0 $0 10,000
1999 $50,000 $17,250 $0 $0 10,000
</TABLE>
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(1) Mr. Peck joined the Company in April 1994. He is paid a consulting fee
rather than a salary.
(2) Dr. Peck began consulting for the Company on June1,1994. He is paid a
consulting fee rather than a salary.
Executive Compensation and Employment Arrangements
In August, 1994, the Board of Directors adopted an annual incentive
compensation plan administered by the Audit and Benefits Committee, pursuant to
which officers, employees, and key consultants may be awarded bonuses based on
our performance. The plan year runs from July 1 to June 30. Awards and
performance goals are set by the Audit and Benefits Committee. For senior vice
president and above, awards could range up to 50% of base salary; vice
presidents, up to 30% of base salary; research director/associate research
director, up to 20% of participant's base salary; and all others, up to 15% of
base salary. For each participant, the award ranges from the maximum award, if
we achieve 100% of our approved goals, to no award, if we achieve less than 70%
of our approved goals. Awards for 1998-1999 were awarded in July of 1999.
Awards, if any, for 1999-2000, will be determined following the annual meeting.
In January, 1994, the Board of Directors adopted a Deferred
Compensation Plan for our officers, key employees, and key consultants,
permitting such persons to defer the receipt of all or a portion of their
compensation. Under the Deferred Compensation Plan, an unfunded deferred
compensation account is established for each participant. Our only obligation is
to make the payments when they become payable if we have sufficient cash to do
so. Any amount credited to accounts is solely for record-keeping, and is not
held in trust or in escrow or in any way vested in the participant. Payments
under the Deferred Compensation Plan are made only upon termination of
employment (which may be by death, disability, retirement, or otherwise) and may
be in a lump sum or as an annuity. In the case of certain senior participants,
if termination is by death or dismissal without cause, at the election of the
participant, the balance in his account may be converted into our common stock
at a price per share not greater than the lowest price per share (adjusted for
stock splits, stock dividends, the issuance of convertible securities, warrants,
or options, or other dilution) at which our shares have been issued (or agreed
to be issued) at any time in the 365 days preceding the date of termination. A
termination is deemed without cause for substantially the same occurrences
described under "Employment Agreements," below. Amounts in the account bear
interest, compounded annually, at a rate established by the Board of Directors
annually, based on the 30-year treasury bond rate in effect on January 1 of any
given year, plus 1%. The rate was 6.29% during 1999. Effective January 1, 2000,
the rate established by the board is 7.477%.
We have entered into written agreements (the "Employment Agreements")
with two of our executive officers, Messrs. Gaines and D. Peck, which currently
provide for annual base compensation of $95,000 and $60,000, respectively. Base
compensation levels are to be reviewed at least annually. Upon a determination
by the board that we have obtained adequate financing, base compensation may be
increased to not less than the average cash base compensation reported by an
appropriate salary survey (as determined by the board) for executive officers at
biotechnology companies of equivalent size and status. The effective date of the
Employment Agreements is August 31, 1994, and the current term of each expires
December 31, 2001. The Employment Agreements are renewable automatically for
one-year terms unless either party gives written notice of termination at least
92 days before the end of the then current term. Annual bonus compensation, if
any, shall be determined by the Board of Directors.
The Employment Agreements provide that either we or the executive has
the right to terminate the agreement at any time upon 60 days' notice. A
termination by Ixion "for cause" or by the executive not for "Good Reason" is
effective without further benefits, upon a finding by the Board of Directors.
Termination without cause (as defined in the Employment Agreements), or
termination by the executive for "Good Reason" (as defined in the Employment
Agreements) requires us to pay severance benefits equal to the aggregate base
salary at the then current rate payable through the end of the then current
term, but not less than two times the executive's base compensation. In
addition, the employee is eligible for annual bonus compensation calculated in
accordance with the Annual Bonus Plan. Finally, all restricted stock is
immediately vested, all outstanding stock options are immediately vested and
accelerated, and the executives have the right to purchase common stock pursuant
to the
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terms of the Deferred Compensation Plan. Termination is deemed without cause or
for "Good Reason" if
o there is a reduction in the executive's annual aggregate
compensation or benefits,
o there is a diminution in the executive's position, powers,
authority, duties, or responsibilities, or
o there is a material breach of the Employment Agreement by Ixion.
The Employment Agreements contain covenants that an executive must
refrain from engaging in any business competitive with us during the period of
his employment and for six months after termination or resignation and must not
use, disclose or make accessible to any third party any of our proprietary
information during the period of his employment, or thereafter. All inventions
relating to biotechnology generally conceived while rendering services us must
be assigned to us.
We have an exclusive consulting agreement expiring on December 31,
2003, with Dr. Ammon B. Peck for consulting services relating to our business
and technology. The fee is $50,000 per year. Dr. Peck is obligated to devote 48
days of service per year to us, including travel time, and has agreed not to
engage in competitive activities with Ixion during the term of the agreement, or
for two years thereafter. Generally, under the terms of Dr. Peck's employment by
the University of Florida, the latter has a right of first refusal to any
intellectual property and must approve waivers by Dr. Peck of the University's
intellectual property rights in any consulting agreement. Dr. Peck has agreed to
assign to us any inventions or intellectual property rights developed by him
while performing services under the consulting agreement in any inventions or
intellectual property rights waived by the University. The consulting agreement
may be canceled by either party on 30 days' written notice. We have a life
insurance policy on the life of Dr. Peck in the amount of $500,000 payable to
us.
Option Tables
The following table sets forth certain information concerning all stock
option grants to our executive officers to date.
Option/SAR Grants in Last Fiscal year
(Individual Grants)
<TABLE>
<CAPTION>
Number of Securities % of Total Options/SARs
Underlying Granted to Employees in Exercise Price
Name Options/SARs Granted Fiscal Year Per Share Expiration Date
----- -------------------- ----------------------- ------------ ---------------
<S> <C> <C> <C> <C>
Weaver H. Gaines 15,000 30% $4.40 June 30, 2008
David C. Peck 12,000 24% $4.40 June 30, 2008
Ammon B. Peck 10,000 20% $4.40 June 30, 2008
</TABLE>
10
<PAGE>
The following table sets forth certain information concerning option
exercises and option holdings under the Stock Option Plan as of December 31,
1999 with respect to each of the Company's executive officers.
Aggregated Options/SAR Exercises in Last Fiscal Year and
Fiscal Year-end Option/SAR Values
<TABLE>
<CAPTION>
Number of Securities Underlying Value of Unexercised In-The-Money
Unexercised Options/SARs at FY-end Options/SARs at FY-end
Name Exercisable/Unexerciseable Exercisable/Unexerciseable(1)
---- ---------------------------------- ---------------------------------
<S> <C> <C> <C>
Weaver H. Gaines 5,705/28,295 $0/$0
David C. Peck 3,603/20,397 $0/$0
Ammon B. Peck 3,003/16,997 $0/$0
</TABLE>
(1) Value is based on the public offering price of our stock. There is no
trading market for our common stock, accordingly no options are "in-the-money."
SECURITY OWNERSHIP OF DIRECTORS AND OFFICERS
The following table sets forth certain information with respect to
beneficial ownership of our common stock as of February 28, 2000, by our
executive officers and by all our directors and officers group. The table
includes, with respect to each shareholder, the exercise of all warrants,
options or conversion of all convertible securities held by such stockholder,
and exercisable within 60 days of February 28, 2000.
<TABLE>
<CAPTION>
Name Number of Shares Percent
- ---- ---------------- -------
<S> <C> <C>
Bengt Agerup.............................................. 3,117,500(1) 54.0%
Ammon B. Peck, Ph.D....................................... 654,326(2) 11.3%
Weaver H. Gaines.......................................... 550,531 (3) 9.5%
David C. Peck............................................. 419,975 (4) 7.3%
David M. Margulies, M.D................................... 24,709 (5) (6)
Vincent P. Mihalik........................................ 18,184 (7) (6)
Karl-E. Arfors, Ph.D...................................... 6,400(8) (6)
Thomas P. Stagnaro........................................ 5,000(9) (6)
All officers and directors
as a group (10 persons) ................................. 4,813,103 83.32%
============ ======
</TABLE>
(1) Dr. Agerup's business address is Q-Med AB, Seminariegatan 21, SE-752 28
Uppsala, Sweden. Includes 412,500 shares and an option to purchase 2,700,000
additional shares held by Q-Med, AB (publ), of which Dr. Agerup is an officer,
director, and controlling shareholder, but excludes 2,000 shares issuable under
options not currently exercisable.
(2) Dr. Peck's business address is 13709 Progress Blvd., Box 13, Alachua,
FL 32615. Includes 4,326 shares issuable upon exercise of currently exercisable
options and 50,000 shares held by Dr. Peck's wife in trust for her brothers as
to which Dr. Peck disclaims beneficial ownership, but excludes 16,674 shares
issuable under options not currently exercisable.
(3) Mr. Gaines's business address is 13709 Progress Blvd., Box 13, Alachua,
FL 32615. Includes 6,319 shares issuable upon exercise of
11
<PAGE>
currently exercisable options, 5,952 shares issuable upon conversion of
unsecured convertible notes held by Mr. Gaines and 40,000 shares held by WABS
Associates, a general partnership composed of Mr. Gaines and his three siblings,
but excludes 27,681 shares issuable under options not currently exercisable. Mr.
Gaines disclaims beneficial ownership of 30,000 of the WABS Associates shares.
(4) Mr. Peck's business address is 13709 Progress Blvd., Box 13, Alachua,
FL 32615. Includes 3,991 shares issuable upon exercise of currently exercisable
options, 12,000 shares issuable upon conversion of unsecured convertible notes
held by members of Mr. Peck's immediate family sharing his household as to which
Mr. Peck disclaims beneficial ownership, but excludes 20,000 shares issuable
under options not currently exercisable.
(5) Dr. Margulies's business address is c/o CareInsite, Inc., One Hampshire
Street, Cambridge, MA 02139. Includes 6,709 shares issuable upon exercise of
currently exercisable options, but excludes 5,791 shares issuable under options
not currently exercisable.
(6) Less than 1.0%.
(7) Mr. Mihalik's business address is c/o Roche Diagnostics Corporation,
9115 Hague Road, Indianapolis, IN 46250. Includes 5,184 shares issuable upon
exercise of currently exercisable options but excludes 5,816 shares issuable
under options not currently exercisable.
(8) Dr. Arfor's business address is c/o Experimental Medicine Inc, 7329 Eads
Avenue, La Jolla, CA 92037. Includes 400 shares issuable upon exercise of
currently exercisable option but excludes 4,100 shares issuable under options
not currently exercisable.
(9) Mr. Stagnaro's business address is 13709 Progress Blvd., Box 13,
Alachua, FL 32615.
Security Ownership of Certain Beneficial Owners
Set forth below is certain information with respect to those persons
who are known to the Company to own beneficially more than five percent of our
common stock as of February 28, 2000.
<TABLE>
<CAPTION>
Name and Address of Beneficial Owners Number of Shares Percent
------------------------------------- ---------------- -------
<S> <C> <C>
Q-Med AB (publ)(1)(6)..................................... 3,117,500 54.0%
Ammon B. Peck, Ph.D.(2)(3(6)............................. 654,3267 11.3%
Weaver H. Gaines (2)(4)(6)................................ 550,531 9.5%
David C. Peck (2) (5)(6).................................. 419,975 7.3%
</TABLE>
(1) Address is Q-Med AB, Seminariegatan 21, SE-752 28 Uppsala, Sweden. Dr.
Agerup is a director and majority shareholder of Q-Med. Q-Med AB is not related
to Q-Med, Inc., a Delaware corporation whose shares are listed on the Nasdaq
small cap market.
(2) Address is 13709 Progress Blvd., Box 13, Alachua, FL 32615.
(3) Includes 50,000 shares held by Dr. Peck's wife in trust for her
brothers as to which Dr. Peck disclaims beneficial ownership and 5,000 shares
issuable upon conversion of unsecured convertible notes held by members of Dr.
Peck's immediate family, as to which Dr. Peck disclaims beneficial ownership.
(4) Includes 5,952 shares issuable upon conversion of unsecured convertible
notes held by Mr. Gaines and 40,000 shares held by WABS Associates, a general
partnership composed of Mr. Gaines and his three siblings. Mr. Gaines disclaims
beneficial ownership of 30,000 of such WABS shares.
(5) Includes 12,000 shares issuable upon conversion of unsecured
convertible notes held by members of Mr.Peck's immediate family as to which Mr.
Peck disclaims beneficial ownership and 1,400 shares held by members of Mr.
Peck's immediate family, as to which Mr. Peck disclaims beneficial ownership.
(6) Includes shares which could be acquired within 60 days of February 28,
through the conversion of unsecured convertible notes or options as follows:
Q-Med AB (2,700,000 shares), Dr. Peck (3,326 shares), Mr. Gaines (6,319 shares),
and Mr. Peck 3,991 shares). Percent is calculated based on actual shares
outstanding plus shares exercisable by officers or directors within 60 days.
Change of Control
Q-Med AB (publ) holds an option to acquire our shares through July 1,
2000. The effect of the option is to permit Q-Med, at any time until June 30,
2000, to purchase however many shares of our common stock as is necessary to
allow them to own 50% of our outstanding shares immediately after the purchase
or 2,700,000 shares, whichever is more. If they elect to exercise the option,
they would have effective control of Ixion immediately following the option
exercise.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTION
The following are transactions since January 1, 1998 between the
Company and any officer, director, director nominee, or the immediate family of
any such persons.
12
<PAGE>
On April 16, 1996, the Chairman and Chief Executive Officer and the
President of the Company each entered into a revolving agreement to extend funds
to the Company in the form of bridge loans. Outstanding loans currently bear
cash interest at the rate 8% (which can be reset annually, at the election of
either party, to the prime rate in effect on January 1 of any given year plus
3%), paid monthly and upon repayment of the principal. $415,000 (not including
accrued interest) in bridge loans to these officers was borrowed and was
outstanding at February 28, 2000. The officers have no commitment to lend
additional funds in the future.
On April 16, 1999, we reached an agreement in principle with Q-Med AB
(publ), a biotechnology company based in Uppsala, Sweden. Bengt Agerup, a
director of Ixion, is a director and majority shareholder of Q-Med. The
agreement in principle was amended on September 7, 1999. Under the amended
agreement, we agreed to the following:
o we issued an option to Q-Med to acquire shares of newly-issued
common stock under the following terms:
o exercise is at the sole discretion of Q-Med;
o the number of shares to be acquired shall be 2,700,000 or a
number of shares such that, following the exercise of the
option, Q-Med shall own at least 50% of our outstanding shares
(on a fully diluted basis);
o Q-Med must purchase all or none of the remaining option shares;
o the option expires not later than July 1, 2000;
o the cash purchase price for the option shares is $2.00/share;
and
o the option price will be paid over a two-year period.
o Q-Med shall purchase 37,500 shares per month (at the $2.00 per
share price) through the expiration of the option or the
agreement. Q-Med will retain these shares without regard to
whether they exercise their option;
o As additional consideration for the option shares, the Company
receives a royalty-free license to Q-Med's non-animal,
stabilized hyaluronic acid technology for use as an
encapsulation material for our transplantable islets;
o If the option is exercised, the redemption of up to $787,000
of our convertible unsecured notes which note holders elect
not to convert in August 2001; and
o The agreement is cancelable by Q-Med on not less than 90 days'
notice.
If Q-Med were to exercise its option for all 2,700,000 shares, it would
own over 50% of the Company.
Q-Med, a growing, profitable Swedish company, develops, manufactures,
and sells natural, specialized medical implants. Q-Med's shares are listed on
the Stockholm stock exchange, and it is not related to or affiliated in any way
with Q-Med, Inc., a Delaware corporation whose shares are listed on the Nasdaq
small cap market. All of Q-Med's products are constructed using a
proprietary form of non-animal, stabilized hyaluronic acid. Hyaluronic acid is a
natural polysaccharide, first isolated in 1934. Its main function in the body is
to lubricate moveable parts like joints and muscles and to transport substances
to and within cells. The majority of Q-Med's revenues are accounted for by
Restylane(R) for the filling out of lips, facial wrinkles, and facial folds.
Through March 31, 2000, we have received $900,000 in payments from
Q-Med, A.B. and issued a total of 450,000 shares of common stock in accordance
with the amended agreement in principle, described above.
It is the Company's policy that any material transactions or loans, and
any forgiveness of loans, between officers, directors, or material shareholders
and the Company must be approved by a majority of the Company's independent
directors, if any, who do not have an interest in the transaction. Furthermore,
all such transactions or loans must be entered into on terms that are no less
favorable to the Company than those that can be obtained from unaffiliated third
parties. The above transactions were entered into in compliance with the
Company's policy.
13
<PAGE>
2001 ANNUAL MEETING OF SHAREHOLDERS
If any stockholder intends to present a proposal for consideration at
the 2001 annual meeting of stockholders, such proposal must be received by the
Company not later than January 3, 2001, for inclusion, pursuant to Rule 14a-8
under the Exchange Act, in the Company's proxy statement for such meeting.
ANNUAL REPORT
The annual report to stockholders of the Company for the year ended
December 31, 1999 has been mailed simultaneously to the stockholders of the
Company. The Company's annual report on Form 10-KSB for the year ended December
31, 1999, as filed with the Securities and Exchange Commission (excluding
exhibits) is included in the Company's annual report to stockholders.
14
<PAGE>
Exhibit A Ixion Biotechnology, Inc.
1994 Stock Option Plan,
as amended December 22, 1999
1. Purpose of Plan. The purpose of the Ixion Biotechnology, Inc. 1994 Stock
Option Plan (the "Plan") is to provide a means by which Ixion Biotechnology,
Inc. (the "Company") may attract and retain directors, executive officers, other
key employees who have been or who will be given responsibility for the
management or administration of the Company's business and the growth of the
Company, Consultants, and Members of the Scientific Advisory Board, by providing
those personnel with an opportunity to participate in the growth, development
and financial success of the Company which their efforts, initiative, and skill
have helped produce.
2. Definitions. Wherever the following capitalized terms are used in the Plan,
they shall have the following respective meaning:
2.1 "Board of Directors" means the Board of Directors of the
Company.
2.2 "Change in Control" shall be deemed to have occurred if:
(a) any "person" (as such term is used in Sections 13(d) and
14(d) of the Exchange Act), other than a trustee or other fiduciary holding
securities under an employee benefit plan of the Company, a corporation owned
directly or indirectly by the stockholders of the Company in substantially the
same proportions as their ownership of the Common Stock, becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing 50% or more of the total
voting power represented by the Company's then outstanding securities which vote
generally in the election of Directors (referred to herein as "Voting
Securities"); or
(b) during any period of two consecutive years, individuals
who at the beginning of such period constitute the Board of Directors and any
new Directors whose election by the Board of Directors or nomination for
election by the Company's stockholders was approved by a vote of at least
two-thirds (2/3) of the Directors then still in office who either were Directors
at the beginning of the period or whose election or nomination for election was
previously so approved, cease for any reason to constitute a majority thereof;
or
(c) the stockholders of the Company approve a merger or
consolidation of the Company with any other entity, other than a merger or
consolidation which would result in the Voting Securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into Voting Securities of surviving
entity) more then 50% of the total voting power represented by the Voting
Securities of the Company or such surviving entity outstanding immediately after
such merger or consolidation; or
(d) the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by the
Company of (in one transaction or a series of transactions) all or substantially
all of the Company's assets.
2.3 "Code" means the Internal Revenue Code of 1986, as amended.
2.4 "Committee" means the Audit and Benefits Committee of the
Company.
2.5 "Common Stock" means the Common Stock of the Company, par
value $0.01 per share.
2.6 "Company" means Ixion Biotechnology, Inc., a Delaware corporation.
In addition, "Company" shall mean any corporation assuming or issuing new
employee stock options in substitution for Incentive Stock Options outstanding
under the Plan, in a transaction to which Section 424(a) of the Code applies.
<PAGE>
2.7 "Consultant" means any person designated a consultant by the Board
of Directors providing services in connection with the Company's business or
research.
2.8 "Director" means a member of the Board of Directors.
2.9 "Disability" or "disabled" means, with respect to an Employee, a
physical or mental condition resulting from any medically determinable physical
or mental impairment that renders such Employee incapable of engaging in any
substantial gainful employment and that can be expected to result in death or
that has lasted or can be expected to last for a continuous period of not less
than six consecutive months.
2.10 "Disinterested Person" means a person who, pursuant to Rule 16b-3
has not been granted stock, stock options, or stock appreciation rights of the
Company, under the Plan or any other plan during the period beginning one year
prior to his appointment to the Committee, and during his period of service on
the Committee (except grants made pursuant to Section 4.3 or 4.4).
2.11 "Employee" means any employee (as defined in accordance with the
regulations and revenue rulings then applicable under Section 3401(c) of the
Code) of the Company, or of its subsidiaries or affiliated entities, or of
members of its Affiliated Group, whether such employee is so employed at the
time this Plan is adopted or becomes so employed subsequent to the adoption of
this Plan.
2.12 "Exchange Act" means the Securities Exchange Action of 1934,
as amended.
2.13 "Fair Market Value" means the per share value of the Common Stock
as of a given date, determined as follows:
(a) If the Common Stock is listed or admitted for trading on
any national securities exchange, the Fair Market Value of the Common Stock is
the closing quotation for such stock on the day preceding such date, or, if
shares were not traded on the day preceding such date, then on the next
preceding trading day during which a sale occurred.
(b) If the Common Stock is not traded on any national
securities exchange, but is quoted on the National Association of Securities
Dealers, Inc. Automated Quotation System (Nasdaq System) or any similar system
of automated dissemination of quotations of prices in common use, the Fair
Market Value of the Common Stock is the last sales price (if the stock is then
listed as a national market issue under the Nasdaq System) or the mean between
the closing representative bid and asked prices (in all other cases) for the
stock on the day preceding such date as reported by Nasdaq System (or such
similar quotation system).
(c) If neither clause (a) nor clause (b) of this Section 2.13
is applicable, the Fair Market Value of the Common Stock is the fair market
value per share as of such valuation date, as determined by the Board of
Directors in good faith and in accordance with uniform principles consistently
applied. Such Fair Market Value shall be determined on a regular basis, not less
than annually.
2.14 "Incentive Stock Option" means an Option which qualifies under
Section 422 of the Code and which is designated as an Incentive Stock Option by
the Committee.
2.15 "Member of the Scientific Advisory Board" means a member of the
Company's Scientific Advisory Board.
2.16 "Nonqualified Option" means an Option which is not an Incentive
Stock Option and which is designated as a Nonqualified Option by the Committee.
2.17 "Officer" means an officer of the Company, as defined in Rule
16a-1(f) under the Exchange Act, as such rule may be amended from time to time.
A-2
<PAGE>
2.18 "Option" means the Incentive Stock Options and Nonqualified Options
granted under this Plan.
2.19 "Optionee" means an Employee or an Outside Director to whom an
Option is granted under this Plan.
2.20 "Outside Director" means a Director who is Independent (if the
Common Stock is listed or admitted for trading on any national securities
exchange, then "Independent" as such term is defined in the applicable rules and
regulations of such exchange, or if the Common Stock is not listed or admitted
for trading on any national securities exchange, then "Independent" as such term
is defined in applicable rules and regulations of the New York Stock Exchange,
Inc.)
2.21 "Participant" means an Optionee who is granted Options pursuant to
Section 4 of the Plan.
2.22 "Plan" means the Ixion Biotechnology, Inc. 1994 Stock Option Plan,
as it may be amended from time to time.
2.23 "Rule 16b-3" means Rule 16b-3 promulgated under the Exchange Act,
as such rule may be amended from time to time.
2.24 "Secretary" means the Secretary of the Company.
2.25 "Securities Act" means the Securities Act of 1933, as amended.
2.26 "Termination of Employment" means:
(a) With respect to any Employee, the time when the
employee-employer relationship between the Optionee and the Company, its
subsidiaries or affiliated entities, is terminated for any reason, with or
without cause. The Committee, in its absolute discretion, shall determine the
effect of all other matters and questions relating to Termination of Employment,
including without limitation, the question of whether a particular leave of
absence constitutes a Termination of Employment; provided, however, that, with
respect to Incentive Stock Options, a leave of absence shall constitute a
Termination of Employment if, and to the extent that, such leave of absence
interrupts employment for the purposes of Section 422(a)(2) of the Code and the
then applicable regulations and revenue rulings under said Section.
Notwithstanding any other provision of this Plan, and subject to any applicable
agreements between the Optionee and the Company, the Company has an absolute and
unrestricted right to terminate the Optionee's employment at any time for any
reason whatsoever, with or without cause.
(b) With respect to any Outside Director, Consultant, or Member
of the Scientific Advisory Board, the time when such person ceases to be a
Director, Consultant, or Member of the Scientific Advisory Board of the Company
for any reason, with or without cause, including without limitation, a
termination by resignation, removal, death, disability, or failure to be
nominated or reelected by the Company's stockholders. Nothing in this Plan or
any Stock Option Agreement hereunder shall confer upon any such person,
Consultant, or Member of the Scientific Advisory Board, any right to continue
his or her association with the Company or shall interfere with or restrict in
any way the rights of the Company and its stockholders, which are hereby
expressly reserved, to remove any such person at any time for any reason
whatsoever, with or without cause.
3. Stock Subject to Plan.
3.1 Stock Subject to Plan. The stock subject to an Option shall be
shares of the Company's Common Stock. The aggregate number of such shares which
may be issued upon exercise of Options granted to Directors, Members of the
Scientific Advisory Board, Employees, and Consultants shall not exceed 500,000.
A-3
<PAGE>
3.2 Types of Awards. Options granted under the Plan may be intended to
qualify for favorable tax treatment as Incentive Stock Options, and as
Nonqualified Options, being those not qualified or intended for such favorable
tax treatment under the Code.
3.3 Unexercised options. If any Option expires or is canceled without
having been fully exercised, additional Options for the number of shares of
Common Stock that would have been issued upon exercise of such Option may be
re-granted under this Plan, subject to limitations of Section 3.1.
3.4 Changes in Company Capitalization. In the event that (i) the
outstanding shares of Common Stock are hereafter changed into or exchanged for a
different number or kind of shares or other securities of the Company, or of
another entity, by reason of reorganization, merger, consolidation,
recapitalization, reclassification, or (ii) the number of shares is increased or
decreased by reason of a stock split, stock dividend, combination of shares or
any other increase or decrease in the number of such shares of Common Stock
effected without receipt of consideration by the Company (provided, however,
that conversion or exchange of any convertible or exchangeable securities of the
Company shall not be deemed to have been "effected without receipt of
consideration"), then the Committee shall make appropriate adjustments in the
number and kind of shares for the purchase of which options may be granted,
including adjustments to the limitations in Section 3.1 on the maximum number
and kind of shares which may be issued on exercise of an Option.
4. Granting of Options.
4.1 Eligibility. Any Officer or other key Employee of the Company and
any Outside Director, Consultant, or Member of the Scientific Advisory Board
shall be eligible to be granted Options. Each Outside Director, including a
member of the Committee, each Member of the Scientific Advisory Board, and each
Consultant shall be eligible to be granted only Nonqualified Options.
4.2 Incentive Stock Options. No Incentive Stock Option shall be granted
unless it qualifies as an "incentive stock option" under Section 422 of the Code
when granted.
4.3 Grants. (a)
(a) The Committee shall from time to time, in its
absolute discretion:
(i) Determine which Employees are key Employees,
taking into account the nature of the services rendered by the particular
Employee, the Employee's potential contribution to the long-term success of the
Company, and such other factors as the Committee deems relevant, and select
from among the key Employees (including those to whom Options have been
previously granted under the Plan, Outside Directors who are not members of the
Committee, Consultants, and Members of the Scientific Advisory Board, such of
them as in its opinion should be granted Options; and
(ii) Determine the number of shares to be
subject to such Options granted to such selected individuals, and
determine whether such Options are to be Incentive Stock Options or
Nonqualified Options; and
(iii) Determine the terms and conditions of such
Options.
(b) Upon the selection of such individual to be granted an
Option, the Committee shall instruct the Secretary to issue such Option and may
impose such conditions on the grant of such Option as it deems appropriate.
Without limiting the generality of the preceding sentence, the Committee may, in
its discretion and on such terms as it deems appropriate, require as a condition
of the grant of an Option to an individual that the individual surrender for
cancellation some or all of the unexercised Options which have been previously
granted to him. An Option, the grant of which is conditioned upon such
surrender, may have an Option price lower (or higher) than the Option price of
the surrendered Option, may cover the same (or a lesser or greater) number of
shares as the surrendered Option, may contain
A-4
<PAGE>
such other terms as the Committee deems appropriate and shall be exercisable in
accordance with its terms, without regard to the number of shares, price, Option
period or any other term or condition of the surrendered Option.
4.4 Granting of Nonqualified Options to Outside Directors.
(a) Each person who is an Outside Director of the Company at
the date of the adoption of this Plan shall be granted Nonqualified Options to
purchase 2,000 shares of Common Stock.
The Committee shall grant to each Outside Director
annually (so long as he or she is an Outside Director on each such anniversary
date) Nonqualified Options to purchase an additional 2,500 shares of Common
Stock.
4.5 Administration of the Plan.
(a) The Plan shall be administered by the Committee. The
Committee shall consist of at least two Outside Directors (if there are such)
selected by the Board of Directors, one of whom, if possible, shall be a
Disinterested Person. Committee members may resign by delivering written notice
to the Secretary. Vacancies on the Committee shall be filled by the Board of
Directors.
(b) Except as otherwise provided in the Plan and except as
otherwise expressly stated to the contrary in the Company's Certificate of
Incorporation, Bylaws, or elsewhere, the Committee shall have the sole
discretionary authority (i) to select the Officers, other key Employees,
Directors, Consultants, or Members of the Scientific Advisory Board who are to
be granted Options under the Plan, (ii) to determine the number of Options to be
granted to any person at any time, (iii) to authorize the granting of Options,
(iv) to impose such conditions and restrictions on Options as it determines
appropriate, (v) to interpret the Plan and the Options, (vi) to prescribe, amend
and rescind rules and regulations relating to the Plan, and (vii) to take any
other actions in connection with the Plan and to make all determinations under
the Plan as it may deem necessary or advisable for the administration of the
Plan. The determinations of the Committee on the matters referred to in this
Section 4 shall be binding and conclusive on all persons.
(c) A majority of the members of the Committee shall
constitute a quorum. All determinations of the Committee shall be made by a
majority of its members. Any decision or determination reduced to writing and
signed by all of the members of the Committee shall be fully effective as if it
had been made by a majority vote at a meeting duly called and held.
(d) The Committee may delegate to one or more persons any of
its powers, other than its power to authorize the granting of Options, or
designate one or more persons to do or perform those matters to be done or
performed by the Committee, including administration of the Plan. Any person or
persons delegated or designated by the Committee shall be subject to the same
obligations and requirements imposed on the Committee and its members under the
Plan.
(e) Members of the Committee shall receive such compensation
for their services as members as may be determined by the Board of Directors.
All expenses and liabilities incurred by members of the Committee in connection
with the administration of the Plan shall be borne by the Company. The Committee
may employ attorneys, consultants, accountants, appraisers, brokers, or other
persons. The Committee, the Company, and its Officers and Directors shall be
entitled to rely upon the advice, opinions, or valuations of any such persons.
All elections taken and all interpretations and determinations made by the
Committee in good faith shall be final and binding upon all Optionees, the
Company, and all other interested persons. No member of the Committee shall be
personally liable for any action, determination or interpretation made in good
faith with respect to the Plan. Members of the Committee and each person or
persons designed or delegated by the Committee shall be entitled to
indemnification by the Company for any action or any failure to act in
connection with services performed by or on behalf of the Committee for the
benefit of the Company to the fullest extent provided or permitted by the
Company's Certificate of Incorporation, Bylaws, any insurance policy or other
agreement intended for the benefit of the Committee, or by any applicable law.
A-5
<PAGE>
5. Terms of Options.
5.1 Option Agreement. Each Option shall be evidenced by a written Stock
Option Agreement, which shall be executed by the Optionee and an authorized
Officer of the Company and which shall contain such terms and conditions as the
Committee shall determine, consistent with the Plan. Stock Option Agreements
evidencing Incentive Stock Options shall contain such terms and conditions as
may be necessary to qualify such Options as "incentive stock options" under
Section 422 of the Code.
5.2 Vesting of Options.
(a) Options granted to Outside Directors in accordance with
Section 4.4 hereof shall vest 20% at the end of the first year of service after
the grant and 1/12 of 20% for each month thereafter. All other Options granted
under the Plan shall vest as determined by the Committee and as set forth in the
respective Stock Option Agreement, whether such vesting is based on the
attainment of performance goals, chronologically, or otherwise.
(b) Options which have been granted but not yet vested under
this Section 5.2 shall be forfeited if the Optionee dies, becomes disabled, or
leaves the employment of the Company, its subsidiary, or affiliated entity for
any or no reason, with or without cause, or otherwise, unless provided to the
contrary in any agreement approved by the Committee between the Optionee and the
Company, its subsidiary, or affiliated entity, which agreement shall govern any
further vesting of Options.
5.3 Option Exercise Price.
(a) The price per share for Options granted pursuant to
Section 4.3 shall be set by the Committee; provided, however, that the price per
share shall be not less than 100% of the Fair Market Value of such shares on the
date such Option is granted; provided, further, that, in the case of an
Incentive Stock Option, the price per share shall not be less than 110% of the
Fair Market Value of such shares on the date such Option is granted in the case
of an individual then owning (within the meaning of Section 424(d) of the Code)
more than 10% of the total combined voting power of all classes of stock of the
Company or any subsidiary of the Company.
(b) The price of shares subject to each Nonqualified Option
granted pursuant to Section 4.4 shall be the Fair Market Value of such shares on
the date such Option is granted.
5.4 Exercise Periods.
(a) No Option may be exercised in whole or in part until it
has vested, except as may be provided in Sections 5.4(c) or 5.6 or as may
otherwise be provided for in a Stock Option Agreement which has been approved by
the Committee.
(b) Subject to the provisions of Sections 5.2, 5.4(c), 5.4(d)
and 5.6, Options shall become exercisable at such times and in such installments
(which may be cumulative) as the Committee shall provide in the terms of each
individual Stock Option Agreement; provided, however, that by resolution adopted
after an Option is granted the Committee may, on such terms and conditions as it
may determine to be appropriate and subject to Sections 5.2, 5.4(c), 5.4(d) and
5.6, accelerate the time at which such Option or any portion thereof may be
exercised, or such rights may be set forth in an agreement between the Optionee
and the Company which has been approved by the Committee.
(c) No portion of an Option which is unexercisable at
Termination of Employment shall thereafter become exercisable; provided,
however, that provision may be made that such Option shall become exercisable in
the event of a Termination of Employment as may be determined by the Committee,
or such rights may be set forth in an agreement between the Optionee and the
Company which has been approved by the Committee.
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(d) To the extent the aggregate Fair Market Value of Common
Stock with respect to which Incentive Stock Options (within the meaning of
Section 422 of the Code, but without regard to Section 422(d) of the Code) are
exercisable for the first time by an Optionee during any calendar year (under
the Plan and all other incentive stock option plans of the Company) exceeds
$100,000, such options shall be treated as Nonqualified Options. The rule set
forth in the preceding sentence shall be applied by taking Options into account
in the order in which they were granted. For purposes of this Section 5.4(d),
the Fair Market Value of Common Stock shall be determined as of the time the
Option with respect to such Common Stock is granted.
(e) No Option may be exercised to any extent by
anyone after the first to occur of the following events:
(i) In the case of an Incentive Stock Option:
(A) the expiration of ten years from the
date the Option was granted;
(B) in the case of an Optionee owning
(within the meaning of Section 424(d) of the Code), on the Date of Grant,
more than 10% of the total combined voting power of all classes of stock of the
Company or any subsidiary of the Company, the expiration of ten years from the
date the Option was granted;
(C) except in the case of any
Optionee who is disabled (within the meaning of Section 22(a)(3) of the
Code), the expiration of three months from the date of the Optionee's
Termination of Employment for any reason other than such Optionee's death
unless the Optionee dies within said three-month period;
(D) in the case of an Optionee who is
disabled (within the meaning of Section 22(a)(3) of the Code), the
expiration of one year from the date of the Optionee's Termination of Employment
for any reason other than such Optionee's death unless the Optionee dies within
said one-year period;
(E) the expiration of one year from the date
of the Optionee's death.
(ii) In the case of a Nonqualified Option:
(A) the expiration of ten years and
one day from the date the Option was granted; or
(B) the expiration of one year
from the date of the Optionee's Termination of Employment (whether by
death or otherwise).
(f) Subject to the provisions of Section 5.4(a), the Committee
shall provide, in terms of each individual stock Option Agreement when such
Option expires and when it becomes unexercisable, and (without limiting the
generality of the foregoing) the Committee may provide in the terms of
individual Stock Option Agreements that said Options expire immediately upon a
Termination of Employment; provided, however, that provision may be made that
such options shall become exercisable in the event of a Termination of
Employment because of the Optionee's retirement, death, disability, or as may
otherwise be determined by the Committee.
5.5 Adjustments in outstanding Options.In the event that the
outstanding shares of Common Stock subject to Options are changed into or
exchanged for a different number or kind of shares of the Company or other
securities of the Company by reason of merger, consolidation, recapitalization,
reclassification, or the number of shares is increased or decreased by reason of
a stock split, stock dividend, combination of shares or any other increase or
decrease in the number of such shares of Common Stock effected without receipt
of consideration by the Company (provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration"), the Committee shall make appropriate
adjustments in the number and kind of shares as to which all outstanding
Options, or portions thereof then unexercised, shall be exercisable, to the end
that after such event the Optionee's proportionate interest shall be maintained
as before the occurrence of such event. Such
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adjustment in an outstanding Option shall be made without change in the total
price applicable to the Option or the unexercised portion of the Option (except
for any change in the price resulting from rounding-off share quantities or
prices) and with any necessary corresponding adjustment in Option price per
share; provided, however, that, in the case of Incentive Stock Options, each
such adjustment shall be made in such manner as not to constitute a
"modification" within the meaning of Section 424(h)(3) of the Code. Any such
adjustment made by the Committee shall be final and conclusive upon all
Optionees, the Company, and all other interested persons.
5.6 Change of Control, Merger, Consolidation, Acquisition, Liquidation
or Dissolution. Notwithstanding the provisions of Section 5.5, in its absolute
discretion, and on such terms and conditions as it deems appropriate, the
Committee may provide by the terms of any Option that such Option cannot be
exercised after a change of control or the merger or consolidation of the
Company with or into another entity, the acquisition by another entity
(excluding any employee benefit plan of the Company or any or other fiduciary
holding securities under an employee benefit plan of the Company) of all or
substantially all of the Company's assets or 51% or more of the Company's then
outstanding voting stock, or the liquidation or dissolution of the Company, and
if the Committee so provides, it may, in its absolute discretion and on such
terms and conditions as it deems appropriate, also provide, either by the terms
of such Option or by a resolution adopted prior to the occurrence of such change
of control, merger, consolidation, acquisition, liquidation or dissolution,
that, for some period of time prior to such event, such Option shall be
exercisable as to all shares covered thereby, notwithstanding anything to the
contrary in Section 5.4(a), Section 5.4(b) and/or any installment provision of
such Option; and if the Committee so provides, it may, in its absolute
discretion and on such terms and conditions as it deems appropriate, also
consent to, cause or otherwise effectuate an assumption, assignment, or other
transfer of the Plan and any outstanding Stock Option Agreements by or to the
successor entity.
5.7 No Right to Continued Employment. Nothing in this Plan or in any
Stock Option Agreement issued hereunder shall confer upon any Optionee any right
to continue in the employ of the Company or its subsidiaries or shall interfere
with or restrict in any way the rights of the Company, and its subsidiaries,
which are hereby expressly reserved, to terminate or discharge any optionee at
any time for any reason whatsoever, with or without cause.
6. Exercise of Options.
--------------------
6.1 Person Eligible to Exercise. During the lifetime of the Optionee,
only such Optionee may exercise an Option (or any portion thereof) granted to
such Optionee. After the death of the Optionee, any exercisable portion of an
Option may, prior to the time when such portion becomes unexercisable under the
Plan or the applicable Stock Option Agreement, be exercised by the personal
representative of such Optionee or by any person empowered to do so under the
deceased Optionee's will or under the then applicable laws of descent and
distribution.
6.2 Partial Exercise. At any time and from time to time prior to the
time when any exercisable Option or exercisable portion thereof becomes
unexercisable under the Plan or the applicable Stock Option Agreement, such
Option or portion thereof may be exercised in whole or in part; provided,
however, that the Company shall not be required to issue fractional shares and
the Committee may, by the terms of the Stock Option Agreement, require any
partial exercise to be with respect to a specified minimum number of shares.
6.3 Manner of Exercise. An exercisable Option, or any exercisable
portion thereof, may be exercised solely by delivery to the Secretary of all of
the following prior to the time when such Option or such portion becomes
unexercisable under the Plan or the applicable Stock Option Agreement:
(a) Notice in writing signed by the Optionee or other person
then entitled to exercise such Option or portion stating that such Option or
portion is exercised, such notice complying with all applicable rules
established by the Committee; and
(b) either:
(i) Full payment (in cash or by check) for the
shares with respect to which such Option or portion is thereby exercised; or
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(ii) With the consent of the Committee, (A)
shares of the Company's Common Stock owned by the Optionee duly endorsed for
transfer to the Company, or (B) subject to the timing requirements of Section
6.4, shares of the Company's Common Stock issuable to the Optionee upon
exercise of the Option, with a Fair Market Value on the date of Option exercise
equal to the aggregate Option price of the shares with respect to which such
Option or portion is thereby exercised; or
(iii) With the consent of the Committee, a full
recourse promissory note bearing interest (at least at such rate as shall then
preclude the imputation of interest under the Code or any successor provision)
and payable upon such terms as may be prescribed by the Committee. The Committee
may also prescribe the form of such note and the security to be given for such
note. No Option may, however, be exercised by delivery of a promissory note or
by a loan from the Company when or where such loan or other extension of credit
is prohibited by law; or
(iv) With the consent of the Committee, any
combination of the consideration provided in the foregoing subsections (i),
(ii) and (iii); and
(c) The payment of the Company (or other employer) of all
amounts which it is required to withhold under federal, state or local law in
connection with the exercise of the Option; with the consent of the Committee,
(i) shares of the Company's Common Stock owned by the Optionee duly endorsed for
transfer, or (ii) subject to the timing requirements of Section 6.4, shares of
the Company's Common Stock issuable to the Optionee upon exercise of the Option,
valued at Fair Market Value as of the date of Option exercise, may be used to
make all or part of such payment; and
(d) Such representations and documents as the Committee, in
its absolute discretion, deems necessary or advisable to effect compliance with
all applicable provisions of the Securities Act and any other federal or state
securities laws or regulations. The Committee may, in its absolute discretion,
also take whatever additional actions it deems appropriate to effect such
compliance including without limitation, placing legends on share certificates
and issuing stop-transfer orders to transfer agents and registrars; and
(e) In the event that the Option or portion thereof shall be
exercised pursuant to Section 6.1 by any person or persons other than the
Optionee, appropriate proof of the right of such person or persons to exercise
the Option or portion thereof.
6.4 Timing Requirements. Shares of the Company's Common Stock issuable
to the Optionee upon exercise of the Option may be used to satisfy the Option
price or the tax withholding consequences of such exercise only (i) during the
period beginning on the third business day following the date of release of the
quarterly or annual summary statement of sales and earnings of the Company and
ending on the twelfth business day following such date, or (ii) pursuant to an
irrevocable written election by the Optionee to use shares of the Company's
Common Stock issuable to the Optionee upon exercise of the Option to pay all or
part of the Option price or the withholding taxes (subject to the approval of
the Committee) made at least six months prior to the payment of such option
price or withholding taxes.
6.5 Conditions to Issuance of Stock Certificates. The shares of Common
Stock issuable and deliverable upon the exercise of an Option, or any portion
thereof, may be either previously authorized but unissued shares or issued
shares which have then been reacquired by the Company. The Company shall not be
required to issue or deliver any certificate or certificates for shares of
Common Stock purchased upon the exercise of any Option or portion thereof prior
to fulfillment of all of the following conditions:
(a) The obtaining of any approval or other clearance from any
state or federal governmental agency which the Committee shall, in its absolute
discretion determine to be necessary or advisable; and
(b) The payment to the Company (or other employer corporation)
of all amounts which it is required to withhold under federal, state or local
law in connection with the exercise of the Option; and
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(c) The lapse of such reasonable period of time following the
exercise of the Option as the Committee may establish from time to time for
reasons of administrative convenience.
6.6 No Rights as Stockholders. The holders of Options shall not be, nor
have any of the rights or privileges of, stockholders of the Company in respect
to any shares purchasable upon the exercise of any part of an Option unless and
until certificates representing such shares have been issued by the Company to
such holders. Except in accordance with Section 3.4 hereof, no adjustment shall
be made for dividends (ordinary or extraordinary, whether cash or other
property) or distributions or other rights for which the record date is prior to
the date on which the exercise price has been received by the Company and shares
have been issued.
6.7 Transfer Restrictions. Unless otherwise approved in writing by the
Committee, no shares of Common Stock acquired upon exercise of any Option by any
Officer or Director may be sold, assigned, pledged, encumbered, or otherwise
transferred until at least six months have elapsed from (but excluding) the date
that such Option was exercised. The Committee, in its absolute discretion, may
impose such other restrictions on the transferability of the shares purchasable
upon the exercise of an Option as it deems appropriate. Any such other
restriction shall be set forth in the respective Stock Option Agreement and may
be referred to on the certificates evidencing such shares. The Committee may
require any Optionee to give the Company prompt notice of any disposition of
shares of stock, acquired by exercise of an Incentive Stock Option, within two
years from the date of granting such Option or one year after the transfer of
such shares to such optionee. The Committee may direct that the certificates
evidencing shares acquired by exercise of an Option refer to such requirement to
give prompt notice of disposition.
7. Additional Provisions.
7.1 Approval of Plan by Stockholders. This Plan will be submitted for
the approval of the Company's stockholders within twelve months before or after
the date of the Board of Director's initial adoption of the Plan. Options may be
granted prior to such stockholder approval; provided, however, that such Options
shall not be exercisable prior to the time when the Plan is approved by the
stockholders; provided, further, that if such approval has not been obtained at
the end of said twelve-month period, all Options previously granted under the
Plan shall thereupon be canceled and become null and void. The Company shall
take such actions with respect to the Plan as may be necessary to satisfy the
requirements of Rule 16b-3(b).
7.2 Nontransferability. No Option or interest or right therein or part
thereof shall be liable for the debts, contracts or engagements of the Optionee
or his successors in interest or shall be subject to disposition by transfer,
alienation, anticipation, pledge, encumbrance, assignment or any other means
whether such disposition be voluntary or involuntary or by operation of law by
judgment, levy, attachment, garnishment or any other legal or equitable
proceedings (including bankruptcy and divorce proceeding), and any attempted
disposition thereof shall be null and void and of no effect; provided, however,
that nothing in this Section 7.2 shall prevent transfers by will or by the
applicable laws of descent and distribution.
7.3 Securities Act. Upon issuance of Common Stock of the Company to the
Participant, or his heirs, the recipient of that stock shall represent that the
shares of stock are taken for investment and not resale and shall make such
other representations as may be necessary to qualify the issuance of the shares
as exempt from the Securities Act and applicable federal and state securities
laws and regulations, or to permit registration of the shares and shall
represent that he or she shall not dispose of those shares in violation of the
Securities Act or of applicable federal and state securities laws and
regulations. The Company reserves the right to place a legend on any stock
certificate issued pursuant to the Plan to assure compliance with this Section
and with the vesting requirements of Section 5.2. No shares of Common Stock of
the Company shall be required to be distributed until the Company shall have
taken such action, if any, as is then required to comply with the provisions of
the Securities Act or any other then applicable federal or state securities law
or regulation.
7.4 Withholding of Tax. The Company shall have the right to deduct from
any payment made under the Plan any federal, state or local income or other
taxes required by law to be withheld with respect to such payment. It shall be a
condition to the obligation of the Company to deliver Common Stock upon exercise
of an Option that the Optionee pay to the Company such amount as may be
requested by the Company for the purpose of satisfying any
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liability for such withholding taxes. Any grant under this Plan may provide by
its terms that the Optionee may elect, in accordance with any applicable
regulations, to pay a portion or all of the amount of such minimum required or
additional permitted withholding taxes in shares of Common Stock, subject to the
timing restrictions set forth in Section 6.4 hereof. The Optionee shall
authorize the Company to withhold, or shall agree to surrender back to the
Company, on or about the date such withholding tax liability is determinable,
shares of Common Stock previously owned by such Optionee or a portion of the
shares that were or otherwise would be distributed to such Optionee pursuant to
such award having a Fair Market Value equal to the amount of such required or
permitted withholding taxes to be paid in shares.
7.5 Termination and Amendment of Plan. The Committee may at any time
suspend or terminate the Plan, or make such modifications of the Plan as it
shall deem advisable, provided that the Plan not be changed to increase the cost
of the Plan to the Company. However, without approval of the Company's
stockholders given within twelve (12) months before or after the action by the
Committee, no action of the Committee may, except as provided in Section 3.4,
increase any limit imposed in Section 3.1 on the maximum number of shares which
may be issued upon exercise of Options, materially modify the eligibility
requirements of Section 4.1, reduce the minimum Option price requirements of
Section 5.3, extend the limit imposed on this Section 7.5 on the period during
which Options may be granted or amend or modify the Plan in a manner requiring
stockholder approval under Rule 16b-3. Notwithstanding anything to the contrary
contained herein, the Committee shall not amend or modify the Plan more than
once every six (6) months or in any other manner inconsistent with the
requirements of Rule 16b-3(c)(2)(ii) except to the extent required by changes in
the Code, the Employee Retirement Income Security Act of 1974, or regulations
and rules issued thereunder. No termination or amendment of the Plan may,
without the consent of a Participant, adversely affect the rights of such
Participant notwithstanding anything to the contrary herein. No Option may be
granted during any period of suspension of the Plan nor after termination of the
Plan, and in no event may any Option be granted under this Plan after the first
to occur of the following events:
(a) The expiration of ten years from the date the
Plan is adopted by the Board of Directors; or
(b) The expiration of ten years from the date the
Plan is approved by the Company's stockholders under Section 7.1.
7.6 Duties of the Company. The Company shall, at all times during the
term of each Option, reserve and keep available for issuance or delivery such
number of shares of Common Stock as will be sufficient to satisfy the
requirements of all Options at the time outstanding, shall pay all original
issue taxes with respect to the issuance or delivery of shares pursuant to the
exercise of such Option and all other fees and expenses necessarily incurred by
the Company in connection therewith.
7.7 Absence of a Committee. Should the Board of Directors fail to
appoint the Committee or should there be no Committee for any other reason, then
the Plan shall be administered by the Board of Directors. All action with
respect to Options granted to any Officer or key Employee who is subject to
Section 16 of the Exchange Act shall be taken by the Board of Directors if each
member is a Disinterested Person, or if the entire Board of Directors is not
comprised of Disinterested Persons, then by not less than two of the Directors
who are Disinterested Persons. In the absence of a Committee, the Board of
Directors (or that portion thereof comprised in accordance with this Section
7.7) shall have all the powers of the Committee as set forth herein in
administration of the Plan.
7.8 Effective Date of Plan. In accordance with Section 7.5 hereof, the
effective date of the Plan will be the date on which it was approved by the
stockholders of the Company. The Plan was adopted by the Board of Directors,
subject to stockholder approval on August 31, 1994.
8. General Provisions.
8.1 No Rights. No Employee shall have any claim or right to be granted
Options under the Plan. Neither the adoption and maintenance of the Plan nor the
granting of Options pursuant to the Plan shall be deemed to constitute a
contract of employment between the Company and any Employee or to be a condition
of the employment of any person. The Plan and any Options granted under the Plan
shall not confer upon any Participant any right with respect
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to continued employment by the Company, nor shall they interfere in any way with
the right of the Company to terminate the employment of any Participant at any
time, and for any reason, with or without cause, it being acknowledged, unless
expressly provided otherwise in writing, that the employment of any Participant
is "at will".
8.2 Costs of Administration. The Company shall pay all costs
and expenses of administering the Plan.
8.3 Controlling Laws. The granting of Options and the issuance of
shares of Common Stock under the Plan shall be subject to all applicable laws,
rules and regulations, and to such approvals by any governmental agencies or
national securities exchanges as may be required. The provisions of this Plan
shall be interpreted so as to comply with the conditions and requirements of the
Securities Act, the Exchange Act, and rules and regulations issued thereunder,
including without limitation Rule 16b-3, unless a contrary interpretation of any
such provisions otherwise required by applicable law. Except to the extent
preempted by Federal law, this Plan and all Stock Option Agreements entered into
pursuant hereto shall be construed and enforced in accordance with, and governed
by, the laws of the State of Delaware, determined without regard to its conflict
of laws rules.
8.4 No Obligation to Exercise. The granting of an Option
shall impose no obligation upon the Optionee to exercise such Option.
8.5 Language. Whenever the context so indicates, the singular or plural
number, and the masculine, feminine or neuter gender shall each be deemed to
include the other.
8.6 No Employment Contract. The Plan is not a contract of employment,
and the terms of employment of any recipient of any award hereunder shall not be
affected in any way by the Plan or related instruments except as specifically
provided therein. The establishment of the Plan shall not be construed as
conferring any legal rights upon any recipient of any award hereunder for a
continuation of employment, nor shall interfere with the right of the Company or
any subsidiary to discharge any recipient of any award hereunder and to treat
him or here without regard to the effect with such treatment might have upon him
or her as the recipient of any award hereunder.
8.7 No Rights as Stockholder. No Optionee of any Option shall have any
rights as a stockholder with respect to any shares subject to his or her Option
prior to the date on which he or she is recorded as the holder of such shares on
the records of the Company. No Optionee of any Option shall have the rights of a
stockholder until he or she has paid in full the Option price.
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PROXY
IXION BIOTECHNOLOGY, INC.
Proxy solicited by the board of directors
for the annual meeting of stockholders
to be held June 9, 2000
The undersigned hereby appoints Weaver H. Gaines or David C. Peck, or
either of them, as attorney and proxy of the undersigned, with full power of
substitution and resubstitution, to vote all of the shares of common stock of
Ixion Biotechnology, Inc. (the "Company") which the undersigned may be entitled
to vote at the annual meeting of stockholders to be held at the offices of the
Company at 13709 Progress Blvd., Box 13, Alachua, FL 32615, commencing at 10:00
a.m., local time, and at any and all postponements and adjournments thereof,
with all powers that the undersigned would possess if personally present, upon
and in respect of the following matters and in accordance with the following
instructions.
Unless a contrary direction is indicated, this proxy will be voted for
all nominees for director listed in Proposal 1, and for proposals 2, and 3, as
more specifically described in the proxy statement. If specific instructions are
indicated, this proxy will be voted in accordance therewith.
You may revoke this proxy at any time prior to the vote at the annual
meeting.
Please complete, date, and sign this proxy and return it in the
accompanying envelope.
The board of directors recommends a vote for the nominees for director
listed on the reverse of this proxy card, and a vote for proposals 2, and 3,
also set forth on the other side of this proxy card.
<PAGE>
Proposal 1. To elect seven directors to hold office until the 2000 annual
meeting of stockholders.
Nominees: Weaver H. Gaines, David C. Peck, David M. Margulies, Vincent P.
Mihalik, Karl-E. Arfors, Bengt Agerup, and Thomas P. Stagnaro
[ ] [ ]
[ ] For all nominees except as noted --------------------------
Proposal 2. To approve an amendment to the Company's 1994 Stock Option Plan, as
amended, to increase the aggregate number of shares subject to the Plan to
500,000 shares.
[ ] [ ] [ ]
Proposal 3. To ratify the designation of PricewaterhouseCoopers LLP to audit the
books and accounts of the Company for the fiscal year ended December 31, 2000.
[ ] [ ] [ ]
Please sign exactly as name Signature-----------------Date -------2000
appears on this proxy.
When signing as attorney, executor,
administrator, trustee or guardian,
please give full title.
If more than one trustee,
all should sign. All joint Signature:---------------Date---------2000
owners must sign.
[ ] MARK HERE FOR CHANGE [ ] MARK HERE IF YOU
OF ADDRESS AND NOTE PLAN TO ATTEND
CHANGE ON OTHER SIDE THE ANNUAL MEETING
