1
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to SectionPROXY STATEMENT PURSUANT TO SECTION 14(a) of the Securities Exchange Act ofOF THE SECURITIES
EXCHANGE ACT OF 1934 Filed by the Registrant(AMENDMENT NO. )
FILED BY THE REGISTRANT [X] Filed by a party other than the RegistrantFILED BY A PARTY OTHER THAN THE REGISTRANT [ ]
- --------------------------------------------------------------------------------
Check the appropriate box:
[X][ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
AMERICAN BIOGENETIC SCIENCES, INC.American Biogenetic Sciences, Inc.
(Name of Registrant as Specified inIn Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box)Statement)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
[X] No fee requiredrequired.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1)(4) and 0-110-11.
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:
- --------------------------------------------------------------------------------
2
AMERICAN BIOGENETIC SCIENCES, INC.
1375 AKRON STREET
COPIAGUE, NEW YORK 11726
--------------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
--------------------
June------------------------
JUNE 13, 2000
--------------------
NOTICE IS HEREBY GIVEN that the 2000 Annual Meeting of Stockholders of
American Biogenetic Sciences, Inc., a Delaware corporation (the "Company"), will
be held at The Huntington Hilton, 598 Broadhollow Road, Melville, New York, on
Tuesday, June 13, 2000 at 3:00 p.m., Eastern Daylight Savings Time. The
following matters are to be presented for consideration at the meeting:
1. The election of seven directors to serve until the next annual meeting
of stockholders and until their respective successors are elected and
qualified;
2. A proposal to approve the Company's 2000 Stock Option Plan;
3. A proposal to approve amendments to the Company's 1993 Non-Employee
Director Stock Option Plan;
4. A proposal to ratify the selection of Arthur Andersen LLP as the
Company's independent auditors for the year ending December 31, 2000;
and
5. The transaction of such other business as may properly come before the
meeting or any adjournments or postponements thereof.
The close of business on April 20, 2000 has been fixed as the record date
for the determination of stockholders entitled to notice of, and to vote at, the
meeting and any adjournments or postponements thereof. A list of such
stockholders will be open for examination by any stockholder for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten days prior to the meeting at the offices of the Company located at 1375
Akron Street, Copiague, New York.
By Order of the Board of Directors,
TimothyTIMOTHY J. RoachROACH
Secretary
Copiague, New York
May 1, 2000
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE AND SIGN
THE ENCLOSED PROXY AND MAIL IT PROMPTLY IN THE ENCLOSED ENVELOPE IN ORDER TO
ASSURE REPRESENTATION OF YOUR SHARES. NO POSTAGE IS NEEDED IF MAILED IN THE
UNITED STATES.
3
AMERICAN BIOGENETIC SCIENCES, INC.
1375 AKRON STREET
COPIAGUE, NEW YORK 11726
--------------------------------------------
PROXY STATEMENT
--------------------------------------------
This Proxy Statement is furnished to the holders of Class A Common Stock
("Class A Common Stock") and to the sole holder of Class B Common Stock ("Class
B Common Stock") of American Biogenetic Sciences, Inc. (the "Company") in
connection with the solicitation by the Board of Directors of the Company of
proxies in the accompanying form ("Proxy" or "Proxies") to be used at the 2000
Annual Meeting of Stockholders of the Company (the "Meeting") to be held on
Tuesday, June 13, 2000, at 3:00 p.m., Eastern Daylight Savings Time, at The
Huntington Hilton, 598 Broadhollow Road, Melville, New York, and at any
adjournments and postponements thereof, for the purposes set forth in the
accompanying Notice of Annual Meeting. It is anticipated that this Proxy
Statement and the Proxies will be mailed to stockholders on or about May 1,
2000.
The cost of preparing, assembling and mailing the Notice of Annual Meeting,
this Proxy Statement and Proxies will be borne by the Company. The Company will
also reimburse brokers who are holders of record of Class A Common Stock for
their expenses in forwarding Proxies and Proxy soliciting materials to the
beneficial owners of such shares. In addition to the use of the mails, Proxies
may be solicited without extra compensation by directors, officers and employees
of the Company by telephone, telecopy, telegraph or personal interview. The
Company has retained W.F. Doring & Co., Inc., 150 Bay Street, Jersey City, New
Jersey 07302 to aid in the solicitation of Proxies. For its services, W.F.
Doring & Co., Inc. will receive a fee of $2,500 plus reimbursement for certain
out-of-pocket expenses. Proxies properly executed and received in time for the
Meeting will be voted. A stockholder who signs and returns a Proxy has the power
to revoke it at any time before it is exercised by giving written notice of
revocation to the Company, 1375 Akron Street, Copiague, New York 11726,
Attention: Secretary, by a duly executed proxy of later date, or by voting in
person at the Meeting.
VOTING SECURITIES
The close of business on April 20, 2000 has been fixed as the record date
for the determination of stockholders entitled to notice of, and to vote at, the
Meeting (the "Record Date"). There were outstanding, as of the close of business
on that date, [40,506,612]40,507,028 shares of Class A Common Stock and 3,000,000 shares of
Class B Common Stock, and 7,000 shares of Series A Preferred Stock. A majority
of the total of such outstanding shares of Class A Common Stock and Class B
Common Stock, represented in person or by Proxy at the Meeting, is required to
constitute a quorum for the transaction of business at the Meeting. Holders of
Class A Common Stock have one vote for each share thereof held of record and the
holder of Class B Common Stock has ten votes for each share thereof held of
record. The Class A Common Stock and Class B Common Stock will vote as one class
on all matters proposed herein to be submitted to stockholders at the Meeting.
(Holders of Series A Preferred Stock have no right to vote except on certain
matters affecting the Series A Preferred Stock). Proxies submitted which contain
abstentions or broker nonvotes will be deemed present at the Meeting in
determining the presence of a quorum. Abstentions and broker nonvotes will have
no effect on the outcome of the election of directors. Abstentions will, in
effect, be deemed negative votes on each proposal, but broker nonvotes will not
affect the results of any of the matters proposed herein to be submitted to
stockholders at the Meeting.
Unless otherwise specified, all Proxies received will be voted for the
election of all nominees named herein to serve as directors, in favor of
approval of the Company's 2000 Stock Option Plan and the proposed amendments to
the Company's 1993 Non-Employee Director Stock Option Plan, and to ratify the
selection of Arthur Andersen LLP as the Company's independent auditors. The
Board of Directors does not intend to bring before the Meeting any matter other
than those specifically described above and knows of no matters other than the
foregoing to come before the Meeting. If any other matters or motions come
before the
4
Meeting, it is 4 the intention of the persons named in the accompanying Proxy to
vote such Proxy in accordance with their judgment on such matters or motions,
including any matters dealing with the conduct of the Meeting.
SECURITY HOLDINGS OF CERTAIN
STOCKHOLDERS, MANAGEMENT AND NOMINEES
The following table sets forth information as at the Record Date with
respect to the beneficial ownership of the Company's Class A Common Stock and
Class B Common Stock by (i) each person known by the Company to beneficially own
more than 5% of the outstanding shares of Class A Common Stock or Class B Common
Stock, (ii) each director of the Company, (iii) each executive officer named in
the Summary Compensation Table under the caption "Executive Compensation" and
(iv) all executive officers and directors of the Company as a group. The
information is based upon information provided by the person or upon Schedule
13D or Schedule 13G filings which they have made with the Securities and
Exchange Commission. Each share of Class A Common Stock is entitled to one vote
per share while each share of Class B Common Stock is entitled to ten votes per
share. The Company understands that, except as noted below, each beneficial
owner has sole voting and investment power with respect to all shares
attributable to such owner.
ClassCLASS A Common Stock (1) ClassCOMMON
STOCK(1) CLASS B Common Stock
------------------------ --------------------
No. Percent No. Percent
Beneficial Owner of Shares of Class of Shares of ClassCOMMON STOCK
---------------------- ---------------------
NO. PERCENT NO. PERCENT
BENEFICIAL OWNER OF SHARES OF CLASS OF SHARES OF CLASS
- ---------------- ---------- -------- --------- --------
Directors and Officers
Alfred J. Roach(2) 11,007,250 (2)............................... 11,007,250(2) 23.4% 3,000,000 100%
John S. North 309,000 (3)North.................................... 309,000(3) * -- --
Timothy J. Roach 830,000 (3)Roach................................. 830,000(3) 2.0% --
--
Ellena Byrne 197,500 (3)Byrne..................................... 197,500(3)(4) * --
--
Joseph C. Hogan 45,000 (3)Hogan.................................. 45,000(3) * -- --
Gustav V. R. Born 52,500 (3)Born................................ 52,500(3) * -- --
Glenna M. Crooks 15,000 (3)Crooks................................. 15,000(3) * -- --
Josef C. Schoell 306,500 (3)Schoell................................. 306,500(3)(5) * -- --
All executive officers and directors as a group
(10 persons, including the foregoing) 13,055,250 (6).......... 13,055,250(6) 26.7% 3,000,000 100%
5% Owners
BVF Partners, L.P.(7)............................ 12,000,000 22.9% --
Abbott Laboratories (8).......................... 2,782,931 6.9% --
- -------------------------------------
(1) Asterisk indicates less than one percent. Shares of Class A Common Stock
subject to issuance upon conversion of Class B Common Stock or Series A
Preferred Stock into Class A Common Stock and upon exercise of options and
warrants that were exercisable on, or become exercisable within 60 days
after, the Record Date are considered owned by the holder thereof and
outstanding for purposes of computing the percentage of outstanding Class A
Common Stock that would be owned by such person, but (except for the
computation of beneficial ownership by all executive officers and directors
as a group) are not considered outstanding for purposes of computing the
percentage of outstanding Class A Commons Stock owned by any other person.
(2) The address of Mr. Roach is Route 2 --- Kennedy Avenue, Guaynabo, Puerto Rico
00657. Beneficial ownership of Class A Common Stock includes 3,000,000
shares of Class A Common Stock issuable upon conversion of the
-2-
5 same number
of shares of Class B Common Stock on a share for share basis, 1,000,000
shares of Class A Common Stock issuable upon conversion of 1,000 shares of
Series A Preferred Stock, and 1,000,000 shares of Class A Common Stock subject
to outstanding warrants and 1,535,000 shares of Class A Common Stock subject
to outstanding options.
2
5
(3) Includes shares of Class A Common Stock subject to options as follows: for
Timothy J. Roach, 820,000; for John S. North, 175,000; for Ellena Byrne,
170,000; for Joseph C. Hogan, 25,000; for Gustav V.R. Born, 50,000; for
Glenna M. Crooks, 15,000; and for Josef C. Schoell, 277,500.
(4) Includes 7,500 shares owned, and 20,000 shares subject to options held, by
her husband. The inclusion of these amounts should not be construed as an
admission that Ms. Byrne is the beneficial owner of these shares.
(5) Includes 200 shares owned by his wife. The inclusion of these amounts should
not be construed as an admission that Mr. Schoell is the beneficial owner of
these shares.
(6) Includes 3,000,000 shares of Class A Common Stock issuable upon conversion
of the same number of shares of Class B Common Stock, 1,000,000 shares of
Class A Common Stock issuable upon conversion of 1,000 shares of Series A
Preferred Stock, 1,000,000 shares of Class A Common Stock subject to
outstanding warrants and 3,328,500 shares of Class A Common Stock subject to
outstanding options.
(7) Beneficial ownership of Class A Common Stock consists of 6,000,000 shares
issuable upon conversion of 6,000 shares of Series A Preferred Stock and
6,000,000 shares of Class A Common Stock subject to outstanding warrants.
These securities are held by certain investment partnerships for which BVF
Partners, L.P. serves as the general partner and BVF, Inc. (of which Mark
Lampert is sole owner) acts as investment adviser, sharing the power to vote
and dispose the shares with such investment partnerships. The address of BVF
Partners is 227 West Monroe Street, Suite 4800, Chicago, IL 60606.
(8) The address of Abbott Laboratories is 100 Abbott Park Road, Abbott Park, IL
60064.
3
6
PROPOSAL 1.
ELECTION OF DIRECTORS
The Company's By-Laws provide that the number of members of the Board of
Directors shall be not less than three or more than nine, the exact number to be
fixed by resolution of the Board of Directors. The Board of Directors presently
consists of seven members. Each of the nominees, other than John S. North and
Glenna M. Crooks. Ph.D. (who were elected as directors by the Board in November
1998 and March 1999, respectively), has been previously elected by stockholders
of the Company.
Unless authority to do so is withheld, Proxies will be voted at the Meeting
for the election of each of the nominees named below to serve as directors of
the Company until the next annual meeting of stockholders and until their
respective successors are elected and qualified. In the event that any of the
nominees should become unavailable or unable to serve for any reason, the
holders of Proxies have discretionary authority to vote for one or more
alternate nominees designated by the Board of Directors. The Company believes
that all of the nominees are available to serve as directors.
BACKGROUND OF NOMINEES
ALFREDAlfred J. ROACH,Roach, 84, has been Chairman of the Board of Directors of the
Company since its organization in September 1983 and, from September 1983 until
November 1998, also served as the Company's Chief Executive Officer. Mr. Roach
has served as Chairman of the Board and/or President of TII Industries, Inc.
("TII"), a corporation engaged in manufacturing and marketing telecommunications
products, and its predecessor since its founding in 1964. Mr. Roach devotes a
majority of his time to the business of the Company.
JOHNJohn S. NORTH,North, 55, has been President, Chief Executive Officer and member
of the Board of Directors of the Company since joining the Company in November
1998. From April 1969 until he joined the Company, Mr. North was employed by Eli
Lilly and Company ("Lilly"), which develops, manufactures and sells
pharmaceutical products, in a number of management positions, including Director
of Marketing for Lilly's Dista Products Division in the United Kingdom (from
March 1982 until January 1984), Director of New Product Planning for Europe and
the Nordic Area (from January 1984 until October 1986), in which geographic
areas he was responsible for the launch of Lilly's antidepressant Prozac,
Manager of International Relations (from October 1986 until April 1993) and
Director of International Public and Government Affairs for Lilly's
pharmaceutical division (from April 1993 until joining ABS).
-3-
6
ELLENAEllena M. BYRNE,Byrne, 49, has been Executive Vice President and a director of
the Company since March 1995. From January 1986 until December 1991, Ms. Byrne
served as Vice President-Administration of the Company and, from December 1991
until March 1995, Ms. Byrne served in various capacities with the Company,
including Director of Operations for Europe and Asia.
TIMOTHYTimothy J. ROACH,Roach, 53, has been Treasurer, Secretary and a director of the
Company since September 1983. He has also been affiliated with TII since 1974,
serving as its President since July 1980, Chief Operating Officer since May
1987, Vice Chairman of the Board since October 1993, Chief Executive Officer
since January 1995 and a director since January 1978. Mr. Roach devotes such
time as is necessary to the business of the Company to discharge his duties as
Treasurer, Secretary and a director. Timothy J. Roach is the son of Alfred J.
Roach.
GUSTAV VICTOR RUDOLF BORN,Gustav Victor Rudolf Born, M.D., D.Phil., F.R.S., 78, has been a director
of the Company since January 1997. Since 1988, Dr. Born has been Research
Director of The William Harvey Research Institute at St. Bartholomew's Hospital
Medical College, London, England and Emeritus Professor of Pharmacology in the
University of London. Among Dr. Born's distinctions, appointments and activities
are: Fellowship and Royal Medal of the Royal Society; and Foundation President
of the British Society for Thrombosis and Haemostasis.
GLENNAGlenna M. CROOKS,Crooks, Ph.D., 50, has been a director of the Company since March
1999. Dr. Crooks has been President of Strategic Health Policy International,
Inc., a health care consulting and planning firm that
4
7
advises governments, businesses and industry trade associations in the U.S. and
overseas on the development and application of business strategy, a company she
formed in October 1994. From January 1991 until September 1994, Dr. Crooks
served as Vice President-WorldwidePresident -- Worldwide Sales and Operations for the Vaccines
Division of Merck & Co., Inc., a pharmaceutical company that develops,
manufactures and markets human and animal health products.
JOSEPHJoseph C. HOGAN,Hogan, Ph.D., 77, has been a director of the Company since
December 1983. Dr. Hogan served as Dean of the College of Engineering of the
University of Notre Dame from 1967 until 1981, following which he performed
various services for the University of Notre Dame until 1985, where he remains
Dean Emeritus. From 1985 until his retirement in 1987, Dr. Hogan was Director of
Engineering Research and Resource Development at Georgia Institute of Technology
("Georgia Tech"). Dr. Hogan is a director of TII.
-4-
7
MEETINGS OF THE BOARD OF DIRECTORS
During the year ended December 31, 1999, the Board of Directors held six
meetings and acted by unanimous written consent on twenty-one occasions
following informal discussions. Each director was present for at allleast 75% of
the meetings of the Board of Directors and committees of the Board on which such
director served that were held during the 1999 fiscal year, except that Dr. Born
was not present at two Dr.Sharwell was not present at one and Dr. Crooks was not
present at one of the six Board meetings held during 1999.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors has an Audit and Compensation Committee, but does
not have a nominating committee.
The Audit Committee, which presently consists of Mr. Hogan and Ms. Crooks,
is authorized to examine and consider matters related to the audit of the
Company's accounts, the financial affairs and accounts of the Company, the scope
of the independent auditors' engagement and their compensation, the effect on
the Company's financial statements of any proposed changes in generally accepted
accounting principles, disagreements, if any, between the Company's independent
auditors and management, and matters of concern to the independent auditors
resulting from the audit, including the results of the independent auditors'
review of internal accounting controls. This committee is also authorized to
nominate independent auditors, subject to approval by the Board of Directors.
The Audit Committee held one meeting during 1999.
The Compensation Committee is authorized to consider and recommend to the
Board of Directors the salaries, bonuses and other compensation arrangements
with respect to the executive officers of the Company. This Committee is also
empowered to grant all options under, and administer, the Company's stock option
plans. The Compensation Committee is further empowered to examine, administer
and make recommendations to the full Board with respect to other employee
benefit plans and arrangements of the Company. The Compensation Committee
presently consists of Mr. Hogan and Ms. Crooks. The Compensation Committee acted
by unanimous written consent on twelve occasions during 1999 following informal
discussions.
REMUNERATION OF DIRECTORS
Each non-employee director receives a fee of $1,000 for each meeting of the
Board of Directors attended by that director in person and not telephonically.
Each director serving on the Audit Committee receives a fee of $600 for each
meeting of the committee attended by that director in person and not
telephonically. All directors are reimbursed for travel expenses incurred in
attending Board and committee meetings. Dr. Born serves as a consultant to the
Company for which he receives compensation at the rate of $12,000 per annum.
The Company's 1993 Non-Employee Director Stock Option Plan, approved by
stockholders at the Company's 1993 Annual Meeting of Stockholders, provides for
the automatic grant of an option to purchase 10,000 shares of the Company's
Class A Common Stock to each non-employee director holding office immediately
after each annual meeting of stockholders. The exercise price for each option is
equal to the fair market value of the Company's Class A Common Stock on the date
of grant. All options have a term of five years and are exercisable, on a
cumulative basis, at the rate of one quarter of the number of shares subject to
5
8
the option in each year commencing one year after the date of the grant. The
amendments to the Company's 1993 Non-Employee Director Stock Option Plan to be
voted on at the 2000 Annual Meeting of Stockholders would increase the term of
these options to ten years and would make these options immediately exercisable.
REQUIRED VOTE
-5-
8
A plurality of the votes cast at the Meeting by the holders of Class A
Common Stock and Class B Common Stock voting together as one class, with Class A
Common Stock having one vote per share and Class B Common Stock having ten votes
per share, will be required for the election of directors. The Board of
Directors recommends that stockholders vote FOR each of Alfred J. Roach, John S.
North, Ellena M. Byrne, Timothy J. Roach, Gustav V.R. Born, Glenna M. Crooks and
Joseph C. Hogan to serve as directors of the Company.
EXECUTIVE OFFICERS
The executive officers of the Company, in addition to Alfred J. Roach, John
S. North, Timothy J. Roach and Ellena M. Byrne (whose backgrounds are described
under the caption "Election of Directors --- Background of Nominees" above), are:
GEORGE CHRISTOFFERSEN,George Christoffersen, Ph.D., 64, joined the Company in November 1997 as
its Director of Research and Development and was elected Vice President-Research
and Development in June 1998. From June 1997 until November 1997, Dr.
Christoffersen served as a biotechnology consultant. From September 1991 to May
1997, Dr. Christoffersen was employed by Genzyme Corporation, a biotechnology
company, as Senior Director --- Scientific Affairs, where he was responsible for
the identification, evaluation and licensing of new technologies, as well as
managing offsite research projects and establishing university networks.
JAMESJames H. MCLINDEN,McLinden, Ph.D., 49, has been Vice President --- Molecular Biology
of the Company since November 1991. Prior thereto (and since joining the Company
in January 1987), Dr. McLinden served as Director of Molecular Biology of the
Company.
JOSEFJosef C. SCHOELL,Schoell, 50, joined the Company in July 1992 as its Controller and
was elected Vice President-Finance and Chief Financial Officer of the Company in
July 1995. Mr. Schoell is a Certified Public Accountant in the State of New
York.
-6-6
9
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth information concerning the annual and
long-term compensation for services in all capacities to the Company during
1997,1999, 1998 and 19991997 of each person who served as the Company's chief executive
officer during 1999 and each other person who served as an executive officer of
the Company during 1999 and whose annual compensation for 1999 exceeded
$100,000:
ANNUAL COMPENSATION
----------------------------------------
OTHER LONG-TERM
ANNUAL COMPENSATION
OTHER
NAME AND ANNUALCOMPEN- ------------ ALL OTHER
PRINCIPAL POSITION YEAR SALARY ($SALARY($) BONUS ($BONUS($) COMPENSATIONSATION OPTIONS COMPENSATION
- ------------------ ---- ---------- --------- -------- -------- ------------ ------- ------------
Alfred J. Roach,Roach....................... 1999 $250,000 (3)$250,000(3) -- -- 300,000 --
Chairman of the Board (1)Board(1) 1998 $250,000 -- -- 100,000 --
1997 $250,000 -- -- -- --
John S. North,North......................... 1999 $260,000(4) 25,000(2) -- 250,000 $100,000(2)
President and 1999 $260,000 (4) 25,000 (2) -- 250,000 $100,000 (2)
Chief Executive
Officer (2)Officer(2) 1998 $ 25,000 300,000
Josef C. Schoell, ViceSchoell...................... 1999 $120,000 (5)$120,000(5) -- -- 200,000 --
Vice President Finance and 1998 $120,000 -- -- -- --
Chief Financial Officer 1997 $103,000 -- -- 25,000 --
- -----------------------------------
(1) Mr. Roach served as the Company's Chief Executive Officer until November 16,
1998.
(2) Mr. North joined the Company as President and Chief Executive Officer on
November 16, 1998. Under the terms of his employment agreement, he received
a one-time $25,000 bonus in January 1999 and a $100,000 interest free loan
during 1999. Loans under this arrangement are to be forgiven as to 25% every
six months provided Mr. North is still an employee of the Company. During
1999, $50,000 of the $100,000 loan amount was forgiven.
(3) Includes $115,000 which was deferred during 1999 at the election of Mr.
Roach.
(4) Includes $110,000 which was deferred during 1999 at the election of Mr.
North.
(5) Includes $10,000 which was deferred during 1999 at the election of Mr.
Schoell
.
-7-Schoell.
7
10
OPTION GRANTS IN LAST FISCAL YEAR
The following table contains information concerning options to purchase
shares of the Company's capital stock granted by the Company during the year
ended December 31, 1999 to the executive officers named in the Summary
Compensation Table. No stock appreciation rights have been granted by the
Company.
INDIVIDUAL OPTIONS
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF STOCK
PRICE APPRECIATION FOR
INDIVIDUAL OPTIONS OPTION TERM (2)TERM(2)
--------------------------------------------------- ----------------------
PERCENT OF
NUMBER OF PERCENT OFTOTAL
SHARES TOTAL OPTIONS
UNDERLYING GRANTED TO EXERCISE
OPTIONS EMPLOYEES IN PRICE PER EXPIRATION
NAME GRANTED FISCAL YEAR SHARE (1)SHARE(1) DATE 5% 10%
- ---- ---------- ------------------------- --------- ---------- -- ------------ ----------
Alfred J. Roach 200,000 (3)Roach................ 200,000(3) 11.0% $ 1.10 5/25/2004 $65,782 $134,312
100,000 (4)100,000(4) 5.5% $ 0.3080.31 10/20/2004 $ 8,509 $ 18,804
John S. North 150,000 (3)North.................. 150,000(3) 8.2% $ 1.00 5/25/2009 $94,334 $239,061
100,000 (4)100,000(4) 5.5% $ 0.28 10/20/2009 $17,609 $ 44,625
Josef C. Schoell 100,000 (3)Schoell............... 100,000(3) 5.5% $ 1.00 5/25/2009 $62,889 $159,374
100,000 (4)100,000(4) 5.5% $ 0.28 10/20/2009 $17,609 $ 44,625
- ----------------------------
(1) The exercise price of the options granted to Messrs. Roach, North and
Schoell was 110%, 100% and 100%, respectively, of the market value of the
Class A Common Stock on the date of grant.
(2) These are hypothetical values using assumed compound growth rates prescribed
by the Securities and Exchange Commission and are not intended to forecast
possible future appreciation, if any, in the market price of the Company's
Class A Common Stock.
(3) Exercisable as to 50% of the number of shares of Class A Common Stock
underlying the option during each six months commencing six months after the
date of grant, on a cumulative basis.
(4) 100% exercisable.
-8-
11
OPTION EXERCISES IN LAST FISCAL YEAR AND YEAR-END VALUES
No options to purchase shares of the Company's capital stock were exercised
during 1999 by the executive officers named in the Summary Compensation Table.
The following table contains information concerning the number of shares of
Class A Common Stock underlying unexercised options held at December 31, 1999 by
the executive officers named in the Summary Compensation Table.
NUMBER OF SHARES
UNDERLYING UNEXERCISED OPTIONS HELD AT VALUE OF UNEXERCISED IN-THE-MONEY
YEAR-END (EXERCISABLE/ FISCALIN-THE-
OPTIONS MONEY OPTIONS
HELD AT FISCAL YEAR-END HELD AT FISCAL YEAR-END
NAME (EXERCISABLE/UNEXERCISABLE) (EXERCISABLE/UNEXERCISABLE)(1)
---- --------------------------- --------------------------------------------------------------------
Alfred J. Roach 1,560,000 / Roach............................... 1,560,000/1,310,000 $11,250 / $30,450$11,250/$30,450
John S. North 550,000 / North................................. 550,000/150,000 $18,750 / $78,250$18,750/$78,250
Josef C. Schoell 330,000 / Schoell.............................. 330,000/177,500 $ -0-/ $22,000$22,000
- ---------------
(1) Represents the closing price of the Company's Class A Common Stock on The
Nasdaq SmallCap Market on December 31, 1999 ($0.50) less the exercise price
of each option.
EMPLOYMENT AGREEMENTS
The Company is a party to an employment agreement with John S. North, dated
as of November 2, 1998, under which Mr. North is serving as President and Chief
Executive Officer of the Company. The agreement provides for a term expiring
November 15, 2001. The Company has the right to terminate the agreement without
cause on thirty days' notice. In the event of termination of the agreement by
the Company without
8
11
cause, Mr. North is to remain as a consultant to the Company at his then
existing compensation for a period of one year, provided that the consulting and
compensation arrangement is to terminate if Mr. North enters into full-time
employment with a third party. Under the agreement, Mr. North's current annual
salary is $260,000 per annum, he received a one-time $25,000 bonus in January
1999 and a $100,000 interest free loan during 1999. Loans under this arrangement
are to be forgiven as to 25% every six months provided Mr. North is still an
employee of the Company. During 1999, $50,000 of the $100,000 loan amount was
forgiven. Mr. North was also granted stock options to purchase an aggregate of
300,000 shares of Class A Common Stock exercisable at $.25 per share, the market
value of the Company's Class A Common Stock on the date of grant. The options
vest as to 25% of the number of shares subject to the options annually, on a
cumulative basis, commencing one year after the date of grant. The options are
for a term of ten years, subject to earlier termination in certain events.
As part of his employment agreement, Mr. North has agreed not to disclose
confidential information about the Company during or after employment and not to
compete with the Company during their term of employment and, in certain
instances, following employment.
REPORT OF COMPENSATION COMMITTEE CONCERNING EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors, consisting of.of Joseph
C. Hogan and Glenna M. Crooks, "non-employee"two non-employee directors, within the
meaning of Rule 16b-3 promulgated by the Securities and Exchange Commission
under the Securities Exchange Act of 1934, and "outside directors", within the
meaning of Section 162(m) of the Internal Revenue Code of 1986, as amended
("Section 162(m)"), is authorized to
consider and recommend to the Board of Directors salaries, bonuses and other
compensation arrangements for executive officers and to grant all options under,
and administer, the Company's employee stock option plans.
-9-
12
The Compensation Committee believes that the Company, as a development
stage company, should create compensation packages to attract and retain
executives who can bring the experience and skills to the Company necessary for
the development of the Company and development and marketing of its products. To
date, this has been accomplished by utilizing salary as the base compensation
and stock options to promote long-term incentives and conserve the Company's
available cash and, in certain cases, a bonus as an inducement to an executive
to join the Company. As the Company grows, other forms of annual and long-term
compensation arrangements may be developed to provide appropriate incentives and
to reward specific accomplishments.
In determining base salaries, the Compensation Committee examines, among
other factors, the executive's performance, degree of responsibility and
experience, as well as general employment conditions, competition and economic
factors. No specific weights are assigned to any of the factors employed by the
Compensation Committee. In 1999, the salaries of certain executive officers were
increased, using subjective standards, to recognize their performance.
The Compensation Committee also makes use of stock options to provide
long-term incentive compensation to many of the Company's employees, including
executive officers, enabling them to benefit, along with all stockholders, if
the market price for Class A Common Stock rises. The Compensation Committee
believes that the use of stock options ties employee interests to those of the
Company's stockholders through stock ownership and potential stock ownership,
while also providing the Company with a means of compensating employees using a
method which enables the Company to conserve its available cash for operations,
including research and development and product development. To assure the
long-term nature of the incentive, options granted have generally not become
exercisable during the first six months to one year after grant and thereafter
have become exercisable over a period of two to four years. Decisions of the
Compensation Committee as to option grants are based, in large measure, upon a
review of such factors as the executive's level of responsibility, other
compensation, accomplishments and goals, and when the last option was granted to
such executive, as well as recommendations and evaluations of the executive's
performance and prospective contributions by the Company's Chairman of the Board
and Chief Executive Officer. Determinations have been made subjectively without
giving weight to specific factors.
Chief Executive Officer Compensation. Mr. John S. North joined the Company
as President and Chief Executive Officer in November 1998. His base salary of
$260,000, bonus, stock option grant and other benefits (see " --"-- Employment
Agreements," above) were negotiated in connection with Mr. North's agreement to
9
12
join the Company. Prior thereto, Alfred J. Roach, the Company's Chairman of the
Board of Directors, served as the Company's Chief Executive Officer. The salary
of Mr. Roach has remained unchanged for the past seven years. In lieu of any
additional cash compensation, the Compensation Committee determined to grant Mr.
Roach options to purchase 300,000 shares of the Company's Class A Common Stock
under the Company's 1996 Stock Option Plan.
-10-
13
Certain Tax Legislation. Section 162(m) precludes a public company from
taking a federal income tax deduction for annual compensation in excess of
$1,000,000 paid to its chief executive officer or any of its four other most
highly compensated executive officers. Certain "performance based compensation"
is excluded from the deduction limitation. Any compensation resulting from the
exercise of stock options granted by the Company should be eligible for
exclusion since all options were either granted prior to the adoption of Section
162(m) or under a plan approved by the Company's stockholders which was designed
to conform to regulations for determining whether options are deemed
"performance based compensation." The Committee believes that the limitations on
compensation deductibility under Section 162(m) will have no effect on the
Company in the foreseeable future, and intends to take such action as may be
necessary, including obtaining stockholder approval where required, in order for
compensation not to be subject to the limitation on deductibility imposed by
Section 162(m) of the Code.
Respectfully submitted,
JosephJOSEPH C. Hogan
GlennaHOGAN
GLENNA M. Crooks
-11-CROOKS
10
1413
PERFORMANCE GRAPH
The following graph compares the cumulative return to stockholders of Class
A Common Stock from December 31, 1994 (the first point shown in the following
graph) through December 31, 1999 with the Nasdaq Market Index and the Dow Jones
Industry Group BTC --- Biotechnology Index for the same period. The comparison
assumes $100 was invested on December 31, 1994 in Class A Common Stock and in
each of the comparison groups, and assumes reinvestment of dividends (the
Company paid no dividends during the periods):
[GRAPH OMITTED]
- ---------------------------------------------------------------------------------------------------------------------
At December 31, 1994 1995 1996 1997 1998 1999
- ---------------------------------------------------------------------------------------------------------------------AMERICAN BIOGENETIC
SCIENCES, INC. PEER GROUP INDEX NASDAQ MARKET INDEX
------------------- ---------------- -------------------
American Biogenetic Sciences, Inc. 1001994 100.00 100.00 100.00
1995 183.33 185.57 129.71
1996 270.83 213.24 161.18
1997 127.09 226.48 197.16
1998 50.00 297.90 276.08
1999 33.33 Peer Group Index 100 185.57 213.24 226.48 297.90 502.56 NASDAQ Market Index 100 129.71 161.18 197.16 276.08 490.46
- ---------------------------------------------------------------------------------------------------------------------
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act requires the Company's
executive officers and directors, and persons who beneficially own more than 10%
of the Company's Class A Common Stock, to file initial reports of ownership, and
reports of changes of ownership, of the Company's equity securities with the
Securities and Exchange Commission and furnish copies of those reports to the
Company. Based solely on a review of copies of the reports furnished to the
Company, or written representation that no reports were required, the Company
believes that all reports required to be filed by such persons with respect to
the Company's year ended December 31, 1999 were timely filed.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Between September 3, 1999 and January 19, 2000, Mr. Roach loaned the
Company an aggregate of $776,000 at an interest rate of 6% per annum. On March
3, 2000, $500,000 of the principal amount of the Company's indebtedness to Mr.
Roach was exchanged for 1,000 shares of the Company's Series A Preferred Stock
which are convertible into 1,000,000 shares of the Class A Common Stock and
1,000,000 warrants to purchase the Class A Common Stock at a price of $1.00 per
share. The Company made principal payments on -12-
15
Mr. Roach's loans in February and
March 2000 and repaid the remaining principal amount of and accrued interest on
these loans in April 2000.
11
14
On March 8, 1999, Mr. Roach purchased directly from the Company 440,000
shares of the Company's Class A Common Stock for $495,000 ($1.1250 per share).
PROPOSAL NO. 2
APPROVAL OF THE COMPANY'S 2000 STOCK OPTION PLAN
On April 4, 2000, the Board of Directors adopted, subject to stockholder
approval at the Meeting, the Company's 2000 Stock Option Plan (the "2000 Plan").
The Plan is intended to replace the Company's 1996 Stock Option Plan (the "1996
Plan"), the Company's only other plan that permits the grant of options to
employees or consultants. The 2000 Plan, like the 1996 Plan, is designed to
provide an incentive to employees of, and consultants to, the Company and its
present and future subsidiaries and to offer an additional inducement in
obtaining the services of such persons.
The following summary of certain material features of the 2000 Plan does
not purport to be complete and is qualified in its entirety by reference to the
text of the 2000 Plan, a copy of which is set forth as Exhibit A to this Proxy
Statement.
SHARES SUBJECT TO THE OPTION PLAN AND ELIGIBILITY
The 2000 Plan authorizes the grant of options to purchase a maximum of
300,0003,000,000 shares of the Company's Class A Common Stock (subject to adjustment as
described below) to employees (including officers and directors who are
employees) of, and to consultants to, the Company or any of its subsidiaries.
Upon expiration, cancellation or termination of unexercised options, the shares
of the Company's Class A Common Stock subject to such options will again be
available for the grant of options under the 2000 Plan. No options have been
granted to date under the 2000 Plan.
TYPE OF OPTIONS
Options granted under the 2000 Plan may either be incentive stock options
("ISOs"), within the meaning of Section 422 of the Internal Revenue Code of
1986, as amended (the "Code") the Code, or nonqualified stock options which do
not qualify as ISOs ("NQSOs"). ISOs, however, may only be granted to employees.
ADMINISTRATION
The 2000 Plan will be administered by a committee of the Company's Board of
Directors (the "Committee") consisting of at least two members of the Board,
each of whom is a "disinterested person" within the meaning of Rule 16b-3
promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). It is also intended that each member of the Committee will be an "outside
director", within the meaning of Section 162(m) of the Code. The 2000 Plan will
initially be administered by the Compensation Committee of the Board.
Among other things, the Committee is empowered to determine, within any
express limits contained in the 2000 Plan, the employees and consultants to be
granted options, whether an option granted to an employee is to be an ISO or an
NQSO, the number of shares of Class A Common Stock to be subject to each option,
the exercise price of each option, the term of each option, the date each option
shall become exercisable as well as any terms, conditions or installments
relating to the exercisability of each option, whether to accelerate the date of
exercise of any option or installment and the form of payment of the exercise
price, to construe each stock option contract ("Contract") between the Company
and an optionee and, with the consent of the optionee, to cancel or modify an
option. The Committee is also authorized to prescribe, amend and -13-
16
rescind rules
and regulations relating to the 2000 Plan and make all other determinations
necessary or advisable for administering the 2000 Plan.
12
15
TERMS AND CONDITIONS OF OPTIONS
Options granted under the 2000 Plan will be subject to, among other things,
the following terms and conditions:
(a) The exercise price of each option will be determined by the Committee;
provided, however, that the exercise price of an ISO may not be less
than the fair market value of the Company's Class A Common Stock on
the date of grant (110% of such fair market value if the optionee owns
(or is deemed to own) more than 10% of the voting power of the
Company).
(b) Options may be granted for terms determined by the Committee;
provided, however, that the term of an ISO may not exceed ten years
(five years if the optionee owns (or is deemed to own) more than 10%
of the voting power of the Company).
(c) The maximum number of shares of the Company's Common Stock for which
options may be granted to an employee in any.any calendar year is 500,000.
In addition, the aggregate fair market value of shares with respect to
which ISOs may be granted to an employee which are exercisable for the
first time during any calendar year may not exceed $100,000.
(d) The exercise price of each option is payable in full upon exercise or,
if the applicable Contract permits, in installments. Payment of the
exercise price of an option may be made in cash, or, if the applicable
Contract permits, in shares of the Company's Class A Common Stock or
any combination thereof.
(e) Options may not be transferred other than by will or by the laws of
descent and distribution, and may be exercised during the optionee's
lifetime only by the optionee.
(f) Except as may otherwise be provided in the applicable Contract, if the
optionee's relationship with the Company as an employee or consultant
is terminated for any reason other than death or disability, the
option may be exercised, to the extent exercisable at the time of
termination of such relationship, within three months thereafter, but
in no event after the expiration of the term of the option; provided,
however, that if the relationship is terminated either for cause or
without the consent of the Company, the option will terminate
immediately. Options are not affected by a change in the status of an
optionee so long as the optionee continues to be an employee of, or a
consultant to, the Company. In the case of the death of an optionee
while an employee or consultant (or, generally, within three months
after termination of such relationship, or within one year after
termination of employment by reason of disability), except as
otherwise provided in the Contract, the optionee's legal
representative or beneficiary may exercise the option, to the extent
exercisable on the date of death, within one year after such date, but
in no event after the expiration of the term of the option. An
optionee whose relationship with the Company is terminated by reason
of disability may exercise the option, to the extent exercisable at
the time of such termination, within one year thereafter, but not
after the expiration of the term of the option.
(g) The Company may withhold cash and/or shares of the Company's Class A
Common Stock having an aggregate value equal to the amount which the
Company determines is necessary to meet its obligations to withhold
any federal, state and/or local taxes or other amounts incurred by
reasons of the grant or exercise of an option or the disposition of
shares acquired upon the exercise of the option. Alternatively, the
Company may require the optionee to pay the Company such amount, in
cash, promptly upon demand.
-14-
17
ADJUSTMENT IN EVENT OF CAPITAL CHANGES
Appropriate adjustments will be made in the number and kind of shares
available under the 2000 Plan, in the number and kind of shares subject to each
outstanding option and the exercise prices of such options, as well as the
limitation on the number of shares that may be granted to any employee in any
calendar year, in the event of any change in the Company's Class A Common Stock
by reason of any stock dividend, split-up, combination, reclassification,
recapitalization, merger in which the Company is not the surviving corporation,
13
16
exchange of shares or the like. In the event of (a) the liquidation or
dissolution of the Company, or (b) a merger in which the Company is not the
surviving corporation or a consolidation, any outstanding options shall
terminate upon the earliest of any such event, unless other provision is made
therefor in the transaction.
DURATION AND AMENDMENT OF THE 2000 PLAN
No option may be granted under the 2000 Plan after March 30, 2010. The
Board of Directors may at any time terminate or amend the 2000 Plan; provided,
however, that, without the approval of the Company's stockholders, no amendment
may be made which would (a) except as a result of the anti-dilution adjustments
described above, increase the maximum number of shares available for the grant
of options or increase the maximum number of shares covered by options that may
be granted to an employee in any calendar year, (b) materially increase the
benefits accruing to participants, or (c) change the eligibility requirements
for persons who may receive options. No termination or amendment may adversely
affect the rights of an optionee with respect to an outstanding option without
the optionee's consent.
FEDERAL INCOME TAX TREATMENT
The following is a general summary of the federal income tax consequences
under current tax law of NQSOs and ISOs. It does not purport to cover all of the
special rules, including special rules relating to optionees subject to Section
16(b) of the Exchange Act and the exercise of an option with previously-acquired
shares, or the state or local income or other tax consequences inherent in the
ownership and exercise of stock options and the ownership and disposition of the
underlying shares.
An optionee will not recognize taxable income for federal income tax
purposes upon the grant of a NQSO or an ISO.
Upon the exercise of a NQSO, the optionee will recognize ordinary income in
an amount equal to the excess, if any, of the fair market value of the shares
acquired on the date of exercise over the exercise price thereof, and the
Company will generally be entitled to a deduction for such amount at that time.
If the optionee later sells shares acquired pursuant to the exercise of a NQSO,
he or she will recognize long-term or short-term capital gain or loss, depending
on the period for which the shares were held. Long-term capital gain is
generally subject to more favorable tax treatment than ordinary income or
short-term capital gain.
Upon the exercise of an ISO, the optionee will not recognize taxable
income. If the optionee disposes of the shares acquired pursuant to the exercise
of an ISO more than two years after the date of grant and more than one year
after the transfer of the shares to him or her, the optionee will recognize
long-term capital gain or loss and the Company will not be entitled to a
deduction. However, if the optionee disposes of such shares withinprior to expiration
of the required holding period, all or a portion of the gain will be treated as
ordinary income and the Company will generally be entitled to deduct such
amount.
In addition to the federal income tax consequences described above, an
optionee may be subject to the alternative minimum tax, which is payable to the
extent it exceeds the optionee's regular tax. For this purpose, upon the
exercise of an ISO, the excess of the fair market value of the shares over the
exercise price therefor is an adjustment which increases alternative minimum
taxable income. In addition, the optionee's basis in such shares is increased by
such excess for purposes of computing the gain or loss on the disposition of the
shares for alternative minimum tax purposes. If an optionee is required to pay
an alternative minimum tax, the amount of such tax which is attributable to
deferral preferences (including the ISO adjustment) is allowed as a credit
-15-
18
against the optionee's regular tax liability in subsequent years. To the extent
the credit is not used, it is carried forward.
OPTIONS GRANTED DURING LAST FISCAL YEAR TO EMPLOYEES AND CONSULTANTS
The grant of options is within the discretion of the Committee.
Accordingly, the Company is unable to determine future options, if any, that may
be granted to the persons or groups to which the following table pertains. Set
forth under the caption "Executive Compensation --- Option Grants in Last Fiscal
Year", above, is information.,information concerning options granted during the Company's
fiscal year ended December 31, 1999 to the
14
17
persons named in the Summary Compensation Table, each of which options was
granted under the 1996 Plan. The following table sets forth the number of shares
underlying options that were granted under the 1996 Plan (in the case of options
granted to non-executive officer directors, under the Company's 1993
Non-Employee Director Stock Option Plan) during the Company's fiscal year ended
December 31, 1999 to (i) all current executive officers as a group, and (ii) all
other employees, including current officers who are not executive Officers
(non-employee directors of the Company are not entitled to participate in the
2000 Plan):
NUMBER OF SHARES
CATEGORY OF OPTIONEE UNDERLYING OPTIONS GRANTED
- -------------------- --------------------------
Executive officers as a group (7 persons, including the
persons 1,260,000
named in the Summary Compensation Table).......... 1,260,000
Other employees as a group (25 persons)..................... 545,000
The exercise price of all options granted was at least 100% of the market
value of the underlying shares on the date of grant. The foregoing table does
not include any dollar value that may arise from a future increase in the market
value of the Company's Class A Common Stock. On April 20, 2000, the closing
price of the Company's Class A Common Stock on OTC Bulletin Board was $____$1.85 per
share.
REQUIRED VOTE
Approval of the 2000 Plan requires the affirmative vote of both (a) a
majority of the shares ofvotes entitled to be cast by outstanding shares of Class A
Common Stock and Class B Common Stock, voting together as one class, with Class
A Common Stock having one vote per share and Class B Common Stock having ten
votes per share and (b) a majority of outstanding shares of Class A Common Stock
voting as a separate class, with each share of Class A Common Stock having one
vote per share. If the 2000 Plan is not approved by stockholders, the 2000 Plan
will terminate. The Board of Directors recommends a Vote FOR approval of this
proposal.
PROPOSAL 3.
PROPOSAL TO APPROVE AMENDMENTS
TO THE COMPANY'S 1993 NON-EMPLOYEE
DIRECTOR STOCK OPTION PLAN
At the Company's 1993 annual meeting, stockholders approved the Company's
1993 Stock Option Plan (as amended, the "Non-Employee Director Plan") for the
purpose of granting options, within the limits and subject to the terms and
conditions of the plan, to directors who are not employees of the Company
("Outside Directors"). The Board of Directors believes that the Non-Employee
Director Plan has been instrumental in attracting and retaining Outside
Directors and that this objective will be furthered by amending the Non-EmployeeNon-
Employee Director Plan in the manner described below.
On April 4, 2000, the Board unanimously adopted and recommended to
stockholders for approval amendments to the Non-Employee Director Plan (the
"Proposed Amendments") which provide: (i) all previously granted options will
become fully vested and all options granted in the future under the Non-EmployeeNon-
Employee Director Plan vest in full immediately following their grant in lieu of
annual vesting at the rate of 25% per annum on the first four
-16-
19 anniversaries of
the date of grant; (ii) the term of all previously granted options and all
options granted in the future under the Non-Employee Director Plan be for a term
of ten years in lieu of five years; and (iii) the period following termination
of service during which an Outside Director may exercise an option previously
granted or granted in the future shall be twelve months in lieu of three months
except that an option shall automatically terminate upon
cessation of service as an Outside Director for cause (such twelve month period being the same period following an Outside Director's
death or disability during which an option may be exercised)., except that an
option shall automatically terminate upon cessation of service as an Outside
Director for cause.
15
18
DESCRIPTION OF THE NON-EMPLOYEE DIRECTOR PLAN
The Non-Employee Director Plan authorizes the grant of options to purchase
a maximum of 500,000 shares of Class A Common stockStock (subject to potential
adjustment in the event of stock dividends, splits, combinations and
recapitalizations and certain other events) to directors who are not employees
of the Company. No options may be granted under the Non-Employee Director Plan
after April 5, 2003. Upon the expiration, cancellation or termination of
unexercised options, the shares subject thereto will again be available for
grant under the Non-Employee Director Plan. The Non-Employee Director Plan is
administered by the Board of Directors subject to the provisions of the
Non-Employee Director Plan. Participation in the Non-Employee Director Plan is
limited to Outside Directors.
As presently constituted, the Non-Employee Director Plan provides for the
granting immediately following each annual meeting of stockholders, commencing
with the MeetingCompany's 1993 annual meeting of stockholders, of an option to purchase
10,000 shares of Class A Common Stock to each Outside Director who is an Outside
Director immediately following each annual meeting of stockholders, commencing
with the Company's 1993 annual meeting of stockholders and the granting
of an option to purchase 10,000 shares of Common Stock to each person who
thereafter becomes an Outside Director on the date such person becomes an
Outside Director.
The option exercise price of each option under the Non-Employee Director
Plan is 100% of the fair market value of the Class A Common Stock on the date of
grant. Upon exercise of the option, the exercise price is to be paid in full in
cash.
OPTIONS RECENTLY GRANTED UNDER THE NON-EMPLOYEE DIRECTOR PLAN
Immediately following the 1999 Annual Meeting of Stockholders on June 15,
1999, options to purchase 10,000 shares were granted to each of Mr. Born, Ms.
Crooks, Mr. Hogan and Mr. Sharwell, the Company's then non-employee directors,
at an exercise price of $1.09 per share, the fair market value of the Company's
Class A Common Stock on the Nasdaq National Market on that date.
REQUIRED VOTE
Approval of the amendments to the Non-Employee Director Plan requires the
affirmative vote of both (a) a majority of the shares ofvotes entitled to be cast by the
outstanding shares of Class A Common Stock and Class B Common Stock, voting
together as one class, with Class A Common Stock having one vote per share and
Class B Common Stock having ten votes per share and (b) a majority of
outstanding shares of Class A Common Stock voting as a separate class, with each
share of Class A Common Stock having one vote per share. If the proposed
amendments are not approved by stockholders, the Non-Employee Director Plan will
continue in its present form. The Board of Directors unanimously recommends that
stockholders vote FOR this proposal.
PROPOSAL 4.
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has selected the firm of Arthur Andersen LLP as the
independent auditors of the Company for the year ending December 31, 2000.
Arthur Andersen LLP has acted for the Company in such capacity since 1989. The
Board proposes that the stockholders ratify such selection at the Meeting.
-17-
20
Representatives of Arthur Andersen LLP are expected to be present at the
Meeting and will be afforded an opportunity to make a statement if they so
desire and to respond to appropriate questions.
REQUIRED VOTE
The affirmative vote of a majority of the votes entitled to be cast by the
outstanding shares of Class A Common Stock and Class B Common Stock present, in
person or by proxy, at the Meeting and entitled to vote on this proposal, voting
together as one class, with Class A Common Stock having one vote per share and
Class B Common Stock having ten votes per share, will be required to adopt this
proposal. The Board of Directors recommends that stockholders vote FOR approval
of this proposal.
16
19
MISCELLANEOUS
STOCKHOLDER PROPOSALS
From time to time stockholders may present proposals which may be proper
subjects for inclusion in the proxy statement and form of proxy relating to that
meeting. In order to be considered, such proposals must be submitted in writing
on a timely basis. Stockholder proposals intended to be included in the Board of
Directors' proxy statement and form of proxy relating to the Company's next
Annual Meeting of Stockholders must be received by December 31, 2000. As to any
proposals intended to be presented by a stockholder without inclusion in the
Board of Directors' proxy statement and form of proxy for the Company's next
Annual Meeting of Stockholders, the proxies named in the Board of Directors'
form of proxy for that meeting will be entitled to exercise discretionary
authority on that proposal unless the Company receives notice of the matter on
or before April 2, 2001. However, even if such notice is timely received, such
proxies nevertheless may be entitled to exercise discretionary authority on that
matter to the extent permitted by Securities and Exchange Commission
regulations. Any such proposals, as well as any questions relating thereto,
should be directed to the Secretary of the Company at 1375 Akron Street,
Copiague, New York 11726.
ANNUAL REPORT ON FORM 10-K
A copy of the Company's Annual Report on Form 10-K for the year ended
December 31, 1999, which has been filed with the Securities and Exchange
Commission, is also available, without charge, to stockholders who are
interested in more detailed information about the Company. Requests for a copy
of that report should be addressed to Josef C. Schoell, Vice President-Finance,
at 1375 Akron Street, Copiague, New York 11726.
By Order of the Board of Directors,
TimothyTIMOTHY J. RoachROACH
Secretary
May 1, 2000
-18-17
21
Exhibit20
EXHIBIT A
2000 STOCK OPTION PLAN
OF
AMERICAN BIOGENETIC SCIENCES, INC.
1. PURPOSES OF THE PLAN. This stock option plan (the "Plan") is designed
to provide an incentive to employees (including directors and officers who are
employees) and to consultants who are not employees of American Biogenetic
Sciences, Inc., a Delaware corporation (the "Company"), and its present and
future subsidiary corporations, as defined in Paragraph 19 ("Subsidiaries"), and
to offer an additional inducement in obtaining the services of such employees
and consultants. The Plan provides for the grant of "incentive stock options"
("ISOs") within the meaning of Section 422 of the Internal Revenue Code of 1986,
as amended (the "Code"), and nonqualified stock options which do not qualify as
ISOs ("NQSOs"), but the Company makes no representation or warranty, express or
implied, as to the qualification of any option as an "incentive stock option"
under the Code.
2. STOCK SUBJECT TO THE PLAN. Subject to the provisions of Paragraph 12,
the aggregate number of shares of Class A Common Stock, $.001 par value per
share, of the Company ("Common Stock") for which options may be granted under
the Plan shall not exceed 3,000,000. Such shares of Common Stock may, in the
discretion of the Board of Directors of the Company (the "Board of Directors"),
consist either in whole or in part of authorized but unissued shares of Common
Stock or shares of Common Stock held in the treasury of the Company. Subject to
the provisions of Paragraph 13, any shares of Common Stock subject to an option
which for any reason expires, is canceled or is terminated unexercised or which
ceases for any reason to be exercisable shall again become available for the
granting of options under the Plan. The Company shall at all times during the
term of the Plan reserve and keep available such number of shares of Common
Stock as will be sufficient to satisfy the requirements of the Plan.
3. ADMINISTRATION OF THE PLAN. The Plan shall be administered by the
Board of Directors or, to the extent the Board of Directors may determine, a
committee of the Board of Directors (the "Committee") consisting of not less
than two directors, each of whom shall be a "non-employee director" within the
meaning of Rule 16b-3 (or any successor rule or regulation) promulgated under
the Securities Exchange Act of 1934, as amended (as the same may be in effect
and interpreted from time to time, "Rule 16b-3"). A majority of the members of
the Committee shall constitute a quorum, and the acts of a majority of the
members present at any meeting at which a quorum is present, and any acts
approved in writing by all members without a meeting, shall be the acts of the
Committee. All references in the Plan to determinations or actions of the
Committee shall be deemed to include determinations and actions by the Committee
or the Board of Directors.
Subject to the express provisions of the Plan, the Committee shall have the
authority, in its sole discretion, to determine the employees and the
consultants who shall be granted options; the times when options shall be
granted; whether an option granted to an employee shall be an ISO or a NQSO; the
number of shares of Common Stock to be subject to each option; the term of each
option; the date each option shall become exercisable; whether an option shall
be exercisable in whole, in part or in installments and, if in installments, the
number of shares of Common Stock to be subject to each installment, whether the
installments shall be cumulative, the date each installment shall become
exercisable and the term of each installment; whether to accelerate the date of
exercise of any option or installment; whether shares of Common Stock may be
issued upon the exercise of an option as partly paid and, if so, the dates when
future installments of the exercise price shall become due and the amounts of
such installments; the exercise price of each option; the form of payment of the
exercise price; the fair market value of a share of Common Stock; whether to
restrict the sale or other disposition of the shares of Common Stock acquired
upon the exercise of an option and, if so, whether to waive any such
restriction; whether to subject the exercise of all or any portion of an option
to the fulfillment of contingencies as specified in the contract referred to in
Paragraph 11 (the "Contract"), including without limitation, contingencies
relating to entering into a covenant not to compete -19-
22
with the Company, any of its
Subsidiaries or a Parent (as defined in Paragraph 19), to financial objectives
for
18
21
the Company, any of its Subsidiaries or a Parent, a division of any of the
foregoing, a product line or other category, and/or the period of continued
employment of the optionee with the Company, any of its Subsidiaries or a
Parent, and to determine whether such contingencies have been met; the amount,
if any, necessary to satisfy the Company's obligation to withhold taxes or other
amounts; whether an optionee is Disabled (as defined in Paragraph 19); to
construe the respective Contracts and the Plan; with the consent of the
optionee, to cancel or modify an option, PROVIDEDprovided such modified provision would
be permitted to be included in an option on the date of modification, and
FURTHER, PROVIDED,further, provided, that, in the case of a modification (within the meaning of
Section 424(h) of the Code) of an ISO, such option as modified would be
permitted to be granted on the date of such modification under the terms of the
Plan; to prescribe, amend and rescind rules and regulations relating to the
Plan; and to make all other determinations necessary or advisable for
administering the Plan. Any controversy or claim arising out of or relating to
the Plan, any option granted under the Plan or any Contract shall be determined
unilaterally by the Committee in its sole discretion. The determinations of the
Committee on the matters referred to in this Paragraph 3 shall be conclusive and
binding on the parties. No member or former member of the Committee shall be
liable for any action, failure to act or determination made in good faith with
respect to the Plan or any option hereunder.
4. ELIGIBILITY. The Committee may from time to time, in its sole
discretion, consistent with the purposes of the Plan, grant options to employees
(including officers and directors who are employees) of, and to consultants to,
the Company or any of its Subsidiaries. Such options granted shall cover such
number of shares of Common Stock as the Committee may determine in its sole
discretion; PROVIDED, HOWEVER,provided, however, that the maximum number of shares subject to
options that may be granted to any employee during any calendar year under the
Plan (the "162(m) Maximum") shall not exceed 500,000 shares; and FURTHER,
PROVIDED,further,
provided, that the aggregate market value (determined at the time the option is
granted in accordance with Paragraph 5) of the shares of Common Stock for which
any eligible employee may be granted ISOs under the Plan or any other plan of
the Company, or of a Parent or a Subsidiary of the Company, which are
exercisable for the first time by such optionee during any calendar year shall
not exceed $100,000. Such limitation shall be applied by taking ISOs into
account in the order in which they were granted. Any option (or the portion
thereof) granted in excess of such amount shall be treated as an NQSO.
5. EXERCISE PRICE. The exercise price of the shares of Common Stock under
each option shall be determined by the Committee in its sole discretion;
PROVIDED, HOWEVER,provided, however, the exercise price of an ISO shall not be less than the fair
market value of the Common Stock subject to such option on the date of grant;
and FURTHER, PROVIDED,further, provided, that if, at the time an ISO is granted, the optionee owns
(or is deemed to own under Section 424(d) of the Code) stock possessing more
than 10% of the total combined voting power of all classes of stock of the
Company, of any of its Subsidiaries or of a Parent, the exercise price of such
ISO shall not be less than 110% of the fair market value of the Common Stock
subject to such ISO on the date of grant.
The fair market value of a share of Common Stock on any day shall be (a) if
the principal market for the Common Stock is a national securities exchange, the
average of the highest and lowest sales prices per share of Common Stock on such
day as reported by such exchange or on a composite tape reflecting transactions
on such exchange, (b) if the principal market for the Common Stock is not a
national securities exchange and the Common Stock is quoted on The Nasdaq Stock
Market ("Nasdaq"), (i) if closing bid and asked price information is available
with respect to the Common Stock, the average of the closing bid and asked
prices per share of Common Stock on such day on Nasdaq, or (ii) if such
information is not available, the average of the highest bid and lowest asked
prices per share of Common Stock on such day on Nasdaq, or (c) if the principal
market for the Common Stock is not a national securities exchange and the Common
Stock is not quoted on Nasdaq, the average of the highest bid and lowest asked
prices per share of Common Stock on such day as reported on the OTC Bulletin
Board Service or by National Quotation Bureau, Incorporated or a comparable
service; PROVIDED, HOWEVER,provided, however, that if clauses (a), (b) and (c) of this Paragraph
are all inapplicable, or if no trades have been made or no quotes are available
for such day, the fair market value of the Common Stock shall be determined by
the Board by any method consistent with applicable regulations adopted by the
Treasury Department relating to stock options.
-20-
23
6. TERM. The term of each option granted pursuant to the Plan shall be
such term as is established by the Committee, in its sole discretion; PROVIDED,
HOWEVER,provided,
however, that the term of each ISO granted pursuant to the
19
22
Plan shall be for a period not exceeding 10 years from the date of grant
thereof; and FURTHER,
PROVIDED,further, provided, that if, at the time an ISO is granted, the
optionee owns (or is deemed to own under Section 424(d) of the Code) stock
possessing more than 10% of the total combined voting power of all classes of
stock of the Company, of any of its Subsidiaries or of a Parent, the term of the
ISO shall be for a period not exceeding five years from the date of grant.
Options shall be subject to earlier termination as hereinafter provided.
7. EXERCISE. An option (or any part or installment thereof), to the
extent then exercisable, shall be exercised by giving written notice to the
Company at its principal office stating which option is being exercised,
specifying the number of shares of Common Stock as to which such option is being
exercised and accompanied by payment in full of the aggregate exercise price
therefor (or the amount due on exercise if the Contract permits installment
payments) (a) in cash or by certified check or (b) if the applicable Contract
permits, with previously acquired shares of Common Stock having an aggregate
fair market value on the date of exercise (determined in accordance with
Paragraph 5) equal to the aggregate exercise price of all options being
exercised, or with any combination of cash, certified check or shares of Common
Stock
The Committee may, in its sole discretion, permit payment of the exercise
price of an option by delivery by the optionee of a properly executed notice,
together with a copy of the optionee's irrevocable instructions to a broker
acceptable to the Committee to deliver promptly to the Company the amount of
sale or loan proceeds sufficient to pay such exercise price. In connection
therewith, the Company may enter into agreements for coordinated procedures with
one or more brokerage firms.
A person entitled to receive Common Stock upon the exercise of an option
shall not have the rights of a stockholder with respect to such shares of Common
Stock until the date of issuance of a stock certificate to him for such shares;
PROVIDED, HOWEVER,provided, however, that until such stock certificate is issued, any optionee
using previously acquired shares of Common Stock in payment of an option
exercise price shall continue to have the rights of a stockholder with respect
to such previously acquired shares.
In no case may a fraction of a share of Common Stock be purchased or issued
under the Plan.
8. TERMINATION OF RELATIONSHIP. Except as may otherwise be expressly
provided in the applicable Contract, any optionee whose relationship with the
Company, its Subsidiaries and Parent as an employee or consultant has terminated
for any reason (other than his death or Disability) may exercise such option, to
the extent exercisable on the date of such termination, at any time within three
months after the date of termination, but not thereafter and in no event after
the date the option would otherwise have expired; PROVIDED, HOWEVER,provided, however, that if
such relationship is terminated either (a) for cause, or (b) without the consent
of the Company, such option shall terminate immediately.
For the purposes of the Plan, an employment relationship shall be deemed to
exist between an individual and a corporation if, at the time of the
determination, the individual was an employee of such corporation for purposes
of Section 422(a) of the Code. As a result, an individual on military, sick
leave or other bona fide leave of absence shall continue to be considered an
employee for purposes of the Plan during such leave if the period of the leave
does not exceed 90 days, or, if longer, so long as the individual's right to
reemployment with the Company (or a related corporation) is guaranteed either by
statute or by contract. If the period of leave exceeds 90 days and the
individual's right to reemployment is not guaranteed by statute or by contract,
the employment relationship shall be deemed to have terminated on the 31st day
of such leave.
Notwithstanding the foregoing, except as may otherwise be expressly
provided in the applicable Contract, options granted under the Plan shall not be
affected by any change in the status of the optionee so long as the optionee
continues to be an employee of, or a consultant to, the Company, any of its
Subsidiaries or a Parent (regardless of having changed from one to the other or
having been transferred from one corporation to another).
-21-
24
Nothing in the Plan or in any option granted under the Plan shall confer on
any optionee any right to continue in the employ of, or as a consultant to, the
Company, its Parent or any of its Subsidiaries, or interfere in any way with any
right of the Company, its Parent or any of its Subsidiaries to terminate the
optionee's relationship at any time for any reason whatsoever without liability
to the Company, its Parent or any of its Subsidiaries.
20
23
9. DEATH OR DISABILITY OF AN OPTIONEE. Except as may otherwise be
expressly provided in the applicable Contract, if an individual optionee dies
(a) while he is an employee of, or a consultant to, the Company, any of its
Subsidiaries or a Parent, (b) within three months after the termination of such
relationship (unless such termination was for cause or without the consent of
the Company) or (c) within one year following the termination of such
relationship by reason of Disability, his option may be exercised, to the extent
exercisable on the date of his death, by his Legal Representative (as defined in
Paragraph 19) at any time within one year after death, but not thereafter and in
no event after the date the option would otherwise have expired.
Except as may otherwise be expressly provided in the applicable Contract,
any optionee whose relationship as an employee of, or a consultant to, the
Company, its Parent or any Subsidiary has terminated by reason of Disability may
exercise his option, to the extent exercisable upon the effective date of such
termination, at any time within one year after such date, but not thereafter and
in no event after the date the option would otherwise have expired.
10. COMPLIANCE WITH SECURITIES LAWS. It is a condition to the exercise of
any option that either (a) a Registration Statement under the Securities Act of
1933, as amended (the "Securities Act"), with respect to the shares of Common
Stock to be issued upon such exercise shall be effective and current at the time
of exercise, or (b) there be an exemption from registration under the Securities
Act for the issuance of the shares of Common Stock upon such exercise. Nothing
herein shall be construed as requiring the Company to register shares subject to
any option under the Securities Act or to keep any Registration Statement
effective or current.
The Committee may require, in its sole discretion, as a condition to the
exercise of any option that the optionee execute and deliver to the Company his
representations and warranties, in form, substance and scope satisfactory to the
Committee, which the Committee determines are necessary or convenient to
facilitate the perfection of an exemption from the registration requirements of
the Securities Act or other legal requirement, including without limitation that
(a) the shares of Common Stock to be issued upon the exercise of the option are
being acquired by the optionee for his own account, for investment only and not
with a view to the resale or distribution thereof, and (b) any subsequent resale
or distribution of shares of Common Stock by such optionee will be made only
pursuant to (i) a Registration Statement under the Securities Act which is
effective and current with respect to the shares of Common Stock being sold, or
(ii) a specific exemption from the registration requirements of the Securities
Act, but in claiming such exemption, the optionee shall prior to any offer of
sale or sale of such shares of Common Stock provide the Company with a favorable
written opinion of counsel satisfactory to the Company, in form, substance and
scope satisfactory to the Company, as to the applicability of such exemption to
the proposed sale or distribution.
In addition, if at any time the Committee shall determine, in its sole
discretion, that the listing or qualification of the shares of Common Stock
subject to such option on any securities exchange, Nasdaq or under any
applicable law, or the consent or approval of any governmental regulatory body,
is necessary or desirable as a condition to, or in connection with, the granting
of an option or the issue of shares of Common Stock thereunder, such option may
not be exercised in whole or in part unless such listing, qualification, consent
or approval shall have been effected or obtained free of any conditions not
acceptable to the Committee.
11. STOCK OPTION CONTRACTS. Each option shall be evidenced by an
appropriate Contract which shall be duly executed by the Company and the
optionee, and shall contain such terms, provisions and conditions not
inconsistent herewith as may be determined by the Committee.
-22-
25
12. ADJUSTMENTS UPON CHANGES IN COMMON STOCK. Notwithstanding any other
provision of the Plan, in the event of a stock dividend, split-up, combination,
reclassification, recapitalization, spin-off, merger in which the Company is the
surviving corporation, or exchange of shares or the like which results in a
change in the number or kind of those shares of Common Stock which are
outstanding immediately prior to such event, the aggregate number and kind of
shares subject to the Plan, the aggregate number and kind of shares subject to
each outstanding option and the exercise price thereof, and the 162(m) Maximum
shall be appropriately adjusted by the Board of Directors, whose determination
shall be conclusive and binding on all
21
24
parties. Such adjustment may provide for the elimination of fractional shares
which might otherwise be subject to options without payment thereto.
In the event of (a) the liquidation or dissolution of the Company, or (b) a
merger in which the Company is not the surviving corporation or a consolidation,
any outstanding options shall terminate upon the earliest of any such event,
unless other provision is made therefor in the transaction.
13. AMENDMENTS AND TERMINATION OF THE PLAN. The Plan was adopted by the
Board of Directors as of March 31, 2000. No option may be granted under the Plan
after March 30, 2010. The Board of Directors, without further approval of the
Company's stockholders, may at any time suspend or terminate the Plan, in whole
or in part, or amend it from time to time in such respects as it may deem
advisable, including, without limitation, in order that ISOs granted hereunder
meet the requirements for "incentive stock options" under the Code, or to comply
with, conform to or adopt the provisions of Rule 16b-3, Section 162(m) of the Code or
Section 16(b) of the Securities Exchange Act of 1934 or any change in applicable
law, regulations, rulings or interpretations of administrative agencies;
PROVIDED, HOWEVER,provided, however, that no amendment shall be effective without the requisite
prior or subsequent stockholder approval which would (a)
except as contemplated in Paragraph 12, increaseto the maximum number of shares of
Common Stock for which options may be granted underextent required by the PlanCode or
the 162(m)
Maximum, (b) materially increase the benefits accruing to participants under the
Plan or (c) change the eligibility requirements to receive options hereunder.Section 16(b). No termination, suspension or amendment of the Plan shall,
without the consent of the holder of an existing and outstanding option affected
thereby, adversely affect his rights under such option. The power of the
Committee to construe and administer any options granted under the Plan prior to
the termination or suspension of the Plan nevertheless shall continue after such
termination or during such suspension.
14. NON-TRANSFERABILITY OF OPTIONS. No option granted under the Plan
shall be transferable otherwise than by will or the laws of descent and
distribution, and options may be exercised, during the lifetime of the optionee,
only by the optionee or his Legal Representatives. Except to the extent provided
above, options may not be assigned, transferred, pledged, hypothecated or
disposed of in any way (whether by operation of law or otherwise) and shall not
be subject to execution, attachment or similar process, and any such attempted
assignment, transfer, pledge, hypothecation or disposition shall be null and
void AB INITIOab initio and of no force or effect.
15. WITHHOLDING TAXES. The Company shall withhold cash in an amount equal
to the amount determined necessary to satisfy the Company's obligation to
withhold Federal, state and local income taxes or other amounts incurred by
reason of the grant or exercise of an option or the disposition of the
underlying shares of Common Stock except to the extent that, with the specific
authorization of the Committee, in the Contract or otherwise, the optionee is
permitted to pay such amounts by (a) the delivery or withholding of shares of
Common Stock having an aggregate fair market value on the exercise date
(determined in accordance with Paragraph 5) or (b) any combination of cash and
such shares. Alternatively, the Company may require the holder to pay to the
Company such amount, in cash, promptly upon demand. The Company shall not be
required to issue any shares of Common Stock pursuant to any such option until
all required payments have been made.
16. LEGENDS; PAYMENT OF EXPENSES. The Company may endorse such legend or
legends upon the certificates for shares of Common Stock issued upon exercise of
an option under the Plan and may issue such "stop transfer" instructions to its
transfer agent in respect of such shares as it determines, in its discretion, to
be necessary or appropriate to (a) prevent a violation of, or to perfect an
exemption from, the registration requirements of the Securities Act and any
applicable state securities laws, (b) implement the -23-
26
provisions of the Plan or
any agreement between the Company and the optionee with respect to such shares
of Common Stock, or (c) permit the Company to determine the occurrence of a
"disqualifying disposition," as described in Section 421(b) of the Code, of the
shares of Common Stock issued or transferred upon the exercise of an ISO granted
under the Plan.
The Company shall pay all issuance taxes with respect to the issuance of
shares of Common Stock upon the exercise of an option granted under the Plan, as
well as all fees and expenses incurred by the Company in connection with such
issuance.
22
25
17. USE OF PROCEEDS. The cash proceeds from the sale of shares of Common
Stock pursuant to the exercise of options under the Plan shall be added to the
general funds of the Company and used for such corporate purposes as the Board
of Directors may determine.
18. SUBSTITUTIONS AND ASSUMPTIONS OF OPTIONS OF CERTAIN CONSTITUENT
CORPORATIONS. Anything in this Plan to the contrary notwithstanding, the Board
of Directors may, without further approval by the stockholders, substitute new
options for prior options of a Constituent Corporation (as defined in Paragraph
19) or assume the prior options of such Constituent Corporation.
19. DEFINITIONS. For purposes of the Plan, the following terms shall be
defined as set forth below:
(a) Constituent Corporation. The term "Constituent Corporation" shall
mean any corporation which engages with the Company, any of its
Subsidiaries or a Parent in a transaction to which Section 424(a) of the
Code applies (or would apply if the option assumed or substituted were an
ISO), or any Parent or any Subsidiary of such corporation.
(b) Disability. The term "Disability" shall mean a permanent and total
disability within the meaning of Section 22(e)(3) of the Code.
(c) Legal Representative. The term "Legal Representative" shall mean
the executor, administrator or other person who at the time is entitled by
law to exercise the rights of a deceased or incapacitated optionee with
respect to an option granted under the Plan.
(d) Parent. The term "Parent" shall have the same definition as
"parent corporation" in Section 424(e) of the Code.
(e) Subsidiary. The term "Subsidiary" shall have the same definition
as "subsidiary corporation" in Section 424(f) of the Code.
20. GOVERNING LAW; CONSTRUCTION. The Plan, such options as may be granted
hereunder and all related matters shall be governed by, and construed in
accordance with, the laws of the State of Delaware, without regard to conflict
of law provisions.
Neither the Plan nor any Contract shall be construed or interpreted with
any presumption against the Company by reason of the Company causing the Plan or
Contract to be drafted. Whenever from the context it appears appropriate, any
term stated in either the singular or plural shall include the singular and
plural, and any term stated in the masculine, feminine or neuter gender shall
include the masculine, feminine and neuter.
21. PARTIAL INVALIDITY. The invalidity, illegality or unenforceability of
any provision in the Plan or any Contract shall not affect the validity,
legality or enforceability of any other provision, all of which shall be valid,
legal and enforceable to the fullest extent permitted by applicable law.
22. STOCKHOLDER APPROVAL. The Plan shall be subject to approval by a
majority of the votes present in person or by proxy at the next duly held
meeting of the Company's stockholders at which a quorum is present. No options
granted hereunder may be exercised prior to such approval; PROVIDED, HOWEVER,
provided,
however,that the
-24-
27 date of grant of any option shall be determined as if the Plan
had not been subject to such approval. Notwithstanding the foregoing, if the
Plan is not approved by a vote of the stockholders of the Company on or before
March 30, 2001, the Plan and any options granted hereunder shall terminate.
-25-23
2826
AMERICAN BIOGENETIC SCIENCES, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS --- JUNE 13, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints, as proxies for the undersigned, AIDA
PADILLA, TIMOTHY J. ROACH and LEONARD W. SUROFF, or any one or more of them,
with full power of substitution, to vote all shares of the capital stock of
American Biogenetic Sciences, Inc. (the "Company") which the undersigned is
entitled to vote at the Annual Meeting of Stockholders of the Company to be held
on Tuesday, June 13, 2000, at 3:00 p.m., Eastern Daylight Savings Time, at The
Huntington Hilton, 598 Broadhollow Road, Melville, New York, and at any
adjournments or postponements thereof, receipt of Notice of which meeting and
the Proxy Statement accompanying the same being hereby acknowledged by the
undersigned, upon the matters described in the Notice of Meeting and Proxy
Statement and upon such other business as may properly come before the meeting
and any adjournments or postponements thereof, hereby revoking any proxies
heretofore given.
Each properly executed proxy will be voted in accordance with the
specifications made below and on the reverse side hereof. If no specifications
are made, the proxies will be voted FOR each listed nominee to serve as a
director and FOR Proposals 2, 3, 4 and 5.4.
A vote FOR each nominee and FOR Proposals 2, , 3, 4 and 54 is recommended by the
Board of Directors.
1. Election of Directors (check one box only)
[ ]
[ ] FOR EACH NOMINEE LISTED BELOW [ ] WITHHOLD AUTHORITY
(except as marked to the contrary below) to vote for all nominees listed below
ALFRED J. ROACH, JOHN S. NORTH, ELLENA M. BYRNE, TIMOTHY J. ROACH,
GUSTAV V.R.V. R. BORN, GLENNA M. CROOKS and JOSEPH C. HOGAN
(Instruction: To withhold authority to vote for any nominee, circle that
nominee's name in the above list)
(continued and to be signed on reverse side)
2927
2. To approve the Company's 2000 Stock Option Plan.
FOR AGAINST ABSTAIN
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. To approve an amendments to the Company's 1993 Non-Employee Director Stock
Option Plan.
FOR AGAINST ABSTAIN
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. To ratify the selection of Arthur Andersen LLP as independent auditors for
the Company.
FOR AGAINST ABSTAIN
[ ] FOR [ ] AGAINST [ ] ABSTAIN
Dated: ,_____________________, 2000
------------------------------
------------------------------------------__________________________________
(SIGNATURE OF STOCKHOLDER)
------------------------------------------__________________________________
(SIGNATURE OF STOCKHOLDER)
NOTE: PLEASE SIGN YOUR NAME OR
NAMES EXACTLY AS SET FORTH HEREON.
FOR JOINTLY OWNED SHARES, EACH
OWNER SHOULD SIGN. IF SIGNING AS
ATTORNEY, EXECUTOR, ADMINISTRATOR,
TRUSTEE OR GUARDIAN, PLEASE
INDICATE THE CAPACITY IN WHICH YOU
ARE ACTING. PROXIES EXECUTED BY
CORPORATIONS SHOULD BE SIGNED BY A
DULY AUTHORIZED OFFICER AND SHOULD
BEAR THE CORPORATE SEAL.
PLEASE DATE AND SIGN THIS PROXY AND MAIL IT PROMPTLY
IN THE ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.