SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-
6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
RIBI IMMUNOCHEM RESEARCH, INC.
(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3)
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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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):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] 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 offset 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:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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March 18, 1996
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
Ribi ImmunoChem Research, Inc., which will be held at 2:00 P.M. on April 24,
1996, at Hamilton City Hall/Community Center, 223 S. 2nd St., Hamilton, Montana.
Your Board of Directors looks forward to greeting personally those stockholders
able to attend.
At the meeting, you will be asked to elect six directors and approve and
adopt a proposed 1996 Stock Option Plan. Whether or not you plan to attend, it
is important that your shares are represented at the meeting. Accordingly, you
are requested to promptly sign, date and mail the enclosed proxy in the envelope
provided.
Thank you for your consideration and continued support.
Sincerely,
/s/ Robert E. Ivy
Robert E. Ivy
Chief Executive Officer,
President and Chairman
[LOGO] 553 Old Corvallis Road
Hamilton, Montana 59840
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 24, 1996
The Annual Meeting of Stockholders of Ribi ImmunoChem Research, Inc., will
be held on Wednesday, April 24, 1996, at 2:00 P.M., Mountain Daylight Time, at
Hamilton City Hall/Community Center, 223 S. 2nd St., Hamilton, Montana, for the
following purposes:
1. To elect a board of six directors to serve until the next Annual
Meeting of Stockholders or until their successors are duly elected and
qualified;
2. To approve and adopt a 1996 Stock Option Plan;
3. To transact such other business as may properly come before the meeting
or any adjournment thereof.
Holders of common stock of record at the close of business on March 4,
1996, will be entitled to notice of, and to vote at, the annual meeting or any
adjournment thereof.
All stockholders are invited to attend the annual meeting in person. Those
who do not expect to attend the annual meeting are urged to sign and date the
enclosed proxy and return it promptly in the enclosed stamped envelope. Your
proxy will not be used if you subsequently decide to attend the annual meeting
and to vote your shares in person.
BY ORDER OF THE BOARD OF DIRECTORS
Ronald H. Kullick
Secretary
March 18, 1996
RIBI IMMUNOCHEM RESEARCH, INC.
553 Old Corvallis Road
Hamilton, Montana 59840
PROXY STATEMENT
This proxy statement is furnished in connection with the solicitation by
the Board of Directors of Ribi ImmunoChem Research, Inc. (the "Company"), of
proxies in the accompanying form to be voted at the Annual Meeting of
Stockholders to be held in Hamilton, Montana, on April 24, 1996, or any
adjournment thereof, for the purposes set forth in the preceding notice. This
proxy statement and the enclosed proxy are being mailed to stockholders on or
about March 18, 1996.
Proxies will be voted in accordance with the directions specified thereon
and otherwise in accordance with the judgment of the persons designated as
proxies. Any proxy returned on which no direction is specified will be voted
FOR all items. A stockholder may revoke his or her proxy at any time prior to
the voting thereof by filing with the Secretary of the Company a later proxy or
written notice of revocation, or by attending the meeting and voting in person.
VOTING RIGHTS
Stockholders of record as of the close of business on March 4, 1996, will
be entitled to vote at the meeting. As of that date, there were 18,888,543
shares of common stock outstanding and entitled to vote. Each share of common
stock entitles the holder to one vote on all matters presented at the meeting. A
majority of the shares entitled to vote, present in person or represented by
proxy, shall constitute a quorum. Abstentions and broker non-votes will be
treated as present at the meeting for purposes of determining a quorum.
However, broker non-votes are not counted for purposes of determining the number
of votes cast with respect to a particular proposal. In determining whether a
proposal has been approved, abstentions are counted as votes against the
proposal and broker non-votes are not counted as votes for or against the
proposal. If a quorum is present, the proposed 1996 Stock Option Plan requires
the affirmative vote of a majority of shares present in person or represented by
proxy at the meeting and entitled to vote to become effective. Directors shall
be elected by a plurality of the votes of the shares present in person or
represented by proxy at the meeting and entitled to vote thereon.
Item No.1
ELECTION OF DIRECTORS
A board of six directors will be elected at the meeting, each director to
hold office until the next Annual Meeting of Stockholders or until his successor
is elected and qualified. Unless authority to vote is withheld, shares
represented by proxies will be voted in favor of the election as directors the
nominees named below (or, in the event, which is not anticipated, that any such
nominees should become unavailable, a substitute nominee). The nominees are all
present members of the Board of Directors.
Certain information concerning each nominee is set forth below:
Director
Since Age
-------- ---
John L. Cantrell, Ph.D. . . . . . . . . . . . . . . . . . . . . 1981 57
Executive Vice President of the Company since 1981.
Philipp Gerhardt, Ph.D. . . . . . . . . . . . . . . . . . . . . 1985 74
Professor (Emeritus since 1992), Department of Microbiology
and Public Health, Michigan State University, since 1965;
Adjunct Senior Scientist, Michigan Biotechnology Institute,
since 1985; member of the Committee on Biotechnology of the
National Research Council from 1988 to 1991.
Mark I. Greene, M.D., Ph.D., FRCP. . . . . . . . . . . . . . . 1995 47
Director of the Division of Immunology, Department of
Pathology, and Professor of Pathology, University of
Pennsylvania School of Medicine, since 1986; Associate
Director of the Division for Fundamental Research,
University of Pennsylvania Cancer Center, since 1987;
appointed the John Eckman Professor of Medical Science,
University of Pennsylvania, in 1989.
Robert E. Ivy . . . . . . . . . . . . . . . . . . . . . . . . . 1987 62
President and Chief Executive Officer of the Company since
1987; Chairman of the Board of Directors of the Company
since 1989; director and Chairman of the Finance Committee
of St. Patrick Hospital, Missoula, Montana, since 1991;
director of The International Heart Institute of Montana
since 1995; member of the Advisory Council to the President,
Montana State University ("MSU"), since 1993; member of the
Advisory Board for the Center for Economic Renewal and
Technology Transfer, MSU, since 1994.
Thomas N. McGowen, Jr., J.D. . . . . . . . . . . . . . . . . . 1984 70
Currently retired; director of various public and private
companies for more than the past five years; currently a
director of Federal Signal Corporation and Energy West
Corporation.
Frederick B. Tossberg, M.B.A. . . . . . . . . . . . . . . . . . 1986 65
Currently retired; formerly involved in finance and
investments in industry and state government; currently
director of various private entities.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and any persons who own more than 10% of a
registered class of the Company's equity securities to file with the Securities
and Exchange Commission and The Nasdaq Stock Market reports of ownership and
changes in ownership of common stock of the Company. Officers, directors and
greater than 10% stockholders are required to furnish the Company with copies of
all Section 16(a) forms they file. Based solely on review of the copies of such
reports furnished to the Company or written representations that no other
reports were required, the Company believes that during 1995, all filing
requirements applicable to its officers, directors and greater than 10%
beneficial owners, if any, were complied with, except that a report on Form 3
was inadvertently filed late for Mark I. Greene after he was appointed a
director of the Company.
COMMITTEES AND MEETINGS
The standing committees of the Board of Directors include an Audit
Committee and a Committee of Outside Directors. During 1995, the Board of
Directors held five meetings. Each incumbent director serving during 1995
attended more than 75% of all such meetings of the board and all meetings of
committees of which he was a member. The Board of Directors does not have a
nominating committee or any committee performing similar functions.
The Audit Committee, which met once in 1995, is comprised of Messrs.
McGowen and Tossberg, neither of whom is an employee of the Company. The
principal functions of the Audit Committee are to review the scope of the audit
conducted by the Company's independent auditors; to review recommendations
contained in any management letters from the Company's independent auditors and
the methods by which such recommendations are to be implemented; to review the
Company's internal accounting controls; to review any related-party transactions
on an ongoing basis to determine potential conflict-of-interest situations; and
to recommend to the Board of Directors the appointment of the Company's
independent auditors.
The Committee of Outside Directors was established to act upon all matters
concerning stock options for directors and officers pursuant to the Company's
1986 Stock Option Plan (as amended and restated) as adopted by the stockholders
and to consider and make recommendations to the Board of Directors on matters in
which directors who are also Company employees may have a conflict of interest
or be otherwise involved personally, such as salary adjustments, employment
agreements, etc. Members of the Committee of Outside Directors are Messrs.
Chappell, Gerhardt, Greene, McGowen and Tossberg. The Committee of Outside
Directors held one meeting during 1995.
PRINCIPAL STOCKHOLDERS AND MANAGEMENT'S STOCKHOLDINGS
The following table sets forth the number of shares of the Company's
outstanding common stock which were owned beneficially, as of March 4, 1996, by
(i) each person known by the Company to own more than 5% of the Company's
outstanding common stock, (ii) each director of the Company, all of whom, except
for John F. Chappell, are also the nominees for election as directors, (iii)
each of the most highly compensated executive officers whose total annual salary
and bonus exceeded $100,000 in 1995, and (iv) all directors and executive
officers of the Company as a group.
Amount Percent
Beneficially of
Owned (1) Class
------------ -------
Name or Group
-------------
Amerindo Investment Advisors Inc. . . . . . . . . . 1,925,000(2) 10.2%
Weiss, Peck & Greer . . . . . . . . . . . . . . . . 1,527,751(3) 8.1%
Delphi Asset Management . . . . . . . . . . . . . . 955,500(4) 5.1%
Robert E. Ivy . . . . . . . . . . . . . . . . . . . 213,600(5) 1.1%
John F. Chappell . . . . . . . . . . . . . . . . . 178,360(6) *
Ronald H. Kullick, R.Ph., J.D. . . . . . . . . . . 61,000(7) *
John L. Cantrell, Ph.D. . . . . . . . . . . . . . . 50,000(8) *
Charles E. Richardson, Ph.D. . . . . . . . . . . . 38,900(9) *
Frederick B. Tossberg, M.B.A. . . . . . . . . . . . 36,719(10) *
Thomas N. McGowen, Jr., J.D. . . . . . . . . . . . 35,610(10) *
Lonnie L. Bookbinder . . . . . . . . . . . . . . . 32,000(11) *
Philipp Gerhardt, Ph.D. . . . . . . . . . . . . . . 24,282(12) *
Mark I. Greene, M.D., Ph.D., FRCP . . . . . . . . . 2,000 *
All directors and executive officers as a group
(13 persons). . . . . . . . . . . . . . . . . . . . 777,593(13) 4.0%
<FN>
- -------------
*Less than 1% of the outstanding shares of the Company.
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission. In computing the number of shares
beneficially owned by a person and the percentage ownership of that
person, shares of Common Stock subject to warrants or options held by
that person that are currently exercisable or exercisable within 60
days of March 4, 1996, are deemed outstanding. Such shares, however,
are not deemed outstanding for purposes of computing the percentage
ownership of each other person. To the Company's knowledge, except as
set forth in the footnotes to this table and subject to applicable
community property laws, each person named in the table has sole
voting and investment power with respect to the shares set forth
opposite such person's name.
(2) Based on a Schedule 13G dated January 11, 1996, Amerindo Investment
Advisors Inc., a California corporation, whose principal executive
offices are located at One Embarcadero Center, Suite 2300, San
Francisco, CA 94111, ("Amerindo") and Amerindo Investment Advisors,
Inc., a Panama corporation, whose principal executive offices are
located at Edificio Sucre, Calle 48 Este, Bella Vista, Apartado 6277,
Panama 5, Panama, ("Amerindo - Panama") have shared voting and
dispositive power with respect to 1,925,000 shares as of December 31,
1995. Amerindo is registered as an investment adviser under Section
203 of the Investment Advisers Act of 1940, as amended. Messrs.
Alberto W. Vilar and Gary A. Tanaka are sole stockholders and
directors of each of the entities. Each person expressly disaffirms
membership in any group under Rule 13d-5 under the Securities Exchange
Act of 1934, as amended, or otherwise. The shares are held for the
discretionary accounts of certain clients. Amerindo, Amerindo -
Panama and Messrs. Vilar and Tanaka disclaim beneficial ownership of
all such shares.
(3) Based on a Schedule 13G dated February 9, 1996, Weiss, Peck & Greer
("the Partnership") a broker or dealer registered under Section 15 of
the Securities Exchange Act of 1934 and an investment adviser
registered under Section 203 of the Investment Advisers Act of 1940,
as amended, One New York Plaza, New York, NY 10004, has shared voting
and dispositive power with respect to 1,527,751 shares as of December
31, 1995. The shares are held for the discretionary accounts of
certain clients. The Partnership disclaims beneficial ownership of
all such shares.
(4) Based on a Schedule 13G dated February 12, 1996, Delphi Asset
Management ("Delphi"), an investment adviser registered under section
203 of the Investment Advisers Act of 1940, as amended, 485 Madison
Avenue, New York, NY 10022, has sole voting power with respect to
850,000 shares and sole dispositive power with respect to 955,500
shares as of December 31, 1995. Delphi holds 105,500 shares for the
discretionary accounts of clients, and therefore, disclaims beneficial
ownership of such 105,500 shares.
(5) Represents 213,600 shares for which options were exercisable on March
4, 1996, or within 60 days thereafter. Does not include 2,185 shares
owned of record and beneficially by Mr. Ivy's wife. Mr. Ivy disclaims
beneficial ownership of such 2,185 shares.
(6) Includes 91,027 shares for which warrants and options were exercisable
on March 4, 1996, or within 60 days thereafter.
(7) Includes 60,000 shares for which options were exercisable on March 4,
1996, or within 60 days thereafter.
(8) Includes 35,000 shares for which options were exercisable on March 4,
1996, or within 60 days thereafter.
(9) Includes 38,800 shares for which options were exercisable on March 4,
1996, or within 60 days thereafter.
(10) Includes 25,351 shares for which options were exercisable on March 4,
1996, or within 60 days thereafter.
(11) Includes 30,000 shares for which options were exercisable on March 4,
1996, or within 60 days thereafter.
(12) Does not include 3,400 shares owned of record and beneficially by Dr.
Gerhardt's wife. Dr. Gerhardt disclaims beneficial ownership of such
3,400 shares.
(13) Includes 622,729 shares for which options were exercisable on March 4,
1996, or within 60 days thereafter.
</FN>
EXECUTIVE COMPENSATION
The following tables set forth information regarding executive compensation
for the Company's Chief Executive Officer, President and Chairman and its most
highly compensated executive officers who earned more than $100,000 in salary
and bonus in 1995 for services performed in all capacities for the Company ("the
Named Executive Officers").
Summary Compensation Table
Years Ended December 31, 1995, 1994 and 1993
Long-term
Compensation-
Awards
-------------
Annual Securities
Name and Compensation Underlying All Other
Principal Position Year Salary Bonus Options (#) Compensation
- ------------------ ---- ------ ----- ------------- ------------
Robert E. Ivy(1) 1995 $237,500 $25,000 65,000 $9,034(3)
Chief Executive 1994 222,500 9,078
Officer, 1993 209,154 97,000(2) 8,892
President and
Chairman
Lonnie L. Bookbinder 1995 136,788 25,000 1,247(4)
Vice President-
Director of Corporate
Development
Ronald H. Kullick 1995 107,055 1,606(4)
R.Ph., J.D. 1994 99,311 15,000 1,488
Vice President-Legal
Counsel and Secretary
Charles E. Richardson 1995 105,404 1,897(4)
Ph.D., Vice President-
Pharmaceutical
Discovery
<FN>
- -------------
(1) The Company has an employment contract with Mr. Ivy which currently provides for an annual salary of $245,000 with
associated executive benefits. The agreement may be terminated by the Company by giving notice one year prior to the
expiration of the contract, which otherwise automatically extends for one-year periods. If the agreement is terminated by
the Company other than for cause, or by Mr. Ivy following his failure to be elected as a director of the Company or his
removal as Chief Executive Officer, President and Chairman, Mr. Ivy will continue to receive his salary until the
expiration of the agreement. The Board of Directors reviews Mr. Ivy's salary annually and may adjust it.
(2) During 1995 options to purchase 15,000 shares, which were granted in 1993 and which were contingent on Mr. Ivy completing
certain performance goals, were canceled after the Company determined that the goals were no longer appropriate. The
number of options granted in 1993 have been reduced to reflect the number of canceled options.
(3) During 1995 the Company provided supplemental long-term disability insurance for Mr. Ivy at a cost of $5,032 and a term
life insurance policy on which the Company is not a beneficiary at a cost of $1,302. The Company also contributed $2,700
for Mr. Ivy's account in a 401(k) savings plan.
(4) During 1995 the Company contributed $1,247, $1,606 and $1,897 for the account of Messrs. Bookbinder, Kullick and
Richardson, respectively, in a 401(k) savings plan.
</FN>
Stock Option Grants
Year Ended December 31, 1995
Individual Grants(1)
-----------------------------------------
% of
Total Potential
Number of Stock Realizable Value at
Securities Options Assumed Annual
Under- Granted to Rates of Stock Price
lying Employees Exercise Expira- Appreciation for
Options in Fiscal Price Per ation 10 Year Option Term(2)
Name Granted Year Share Date 5% 10%
---- ---------- --------- --------- -------- -------- --------
Robert E. Ivy 65,000 67.7 $3.81 4-26-05 $155,848 $394,949
Lonnie L. Bookbinder 25,000 26.0 4.25 1-25-05 66,820 169,335
<FN>
- ---------------
(1) Of the stock options reported above, 20% are exercisable on the grant date and an additional 20% are exercisable on each
anniversary of the grant date such that 100% are exercisable four years from the grant date. The exercise price is equal to
the market value of the stock on the grant date.
(2) The potential realizable value is calculated based on the term of the option at its time of grant (ten years). It is
calculated by assuming that the stock price on the date of grant appreciates at the indicated annual rate, compounded annually
for the entire term of the option, and that the option is exercised and sold on the last day of its term for the appreciated
stock price. Such values do not include consideration of income tax consequences.
</FN>
Aggregated Stock Option Exercises
and Year End Stock Option Values
Year Ended December 31, 1995
Number of Securities Value of
Underlying Unexercised In-the-
Unexercised Options Money Options(1)(2)
------------------- --------------------
Number of
Shares Acquired Value Unexer- Unexer-
Name on Exercise Realized(2) Exercisable cisable Exercisable cisable
- ---- --------------- -------- ----------- ------- ----------- -------
Robert E. Ivy 169,200 102,800 $200,563 $129,125
Lonnie L. Bookbinder 25,000 50,000 9,063 36,250
Ronald H. Kullick 2,000 $9,000 50,000 18,000 51,375 5,000
Charles E. Richardson 30,800 14,200 17,500 3,125
<FN>
- -----------------
(1) Value is based on the closing price of the Company's stock on December 31, 1995, which was $6.06, less the option exercise
price.
(2) The values presented do not include income tax consequences.
</FN>
Report by the Committee of Outside Directors
on Executive Compensation
The philosophy of the Company with respect to executive compensation is to
offer competitive compensation opportunities which are based upon an
individual's performance and contribution toward the attainment of Company and
personal goals.
At the present time, the Company's executive officers receive compensation
in the form of base salary and long-term incentive compensation through the
grant of stock options. Occasionally, they may receive cash
bonuses for unusual or extraordinary accomplishments. They are also eligible to
participate in an employee savings plan under Section 401(k) of the Internal
Revenue Code. This plan covers substantially all full-time employees. The
Company matches 30% of employee contributions up to 6% of compensation. In
addition, the Company provides health, term life and disability insurance for
employees who are actively employed.
The Committee of Outside Directors (the "Committee") of the Board of
Directors is responsible for administering executive officer compensation. The
Committee is comprised of non-employee directors who are not eligible to
participate in any of the compensation plans it administers. The Committee
reviews compensation annually, usually during the first quarter of the fiscal
year for executives other than the Chief Executive Officer, and based upon its
review makes specific compensation recommendations to the Board of Directors for
ratification.
With respect to compensation for executive officers other than the Chief
Executive Officer, the Committee reviews with the Chief Executive Officer a
compensation proposal prepared by the Chief Executive Officer with the
assistance of the Company's Human Resources staff. The compensation proposal is
based upon an objective performance evaluation measuring past performance as
well as defined expected future contributions. Other factors taken into account
include compensation information of peer group companies, national surveys and
the financial condition of the Company. The proposal is then submitted to the
full Board of Directors for ratification. Stock option grants, if any, are
administered solely by the Committee.
The Committee also assesses the performance of the Chief Executive Officer,
usually in the second quarter of the fiscal year, against previously set goals
and objectives and reviews with the Chief Executive Officer future goals and
objectives. Based upon this evaluation, and further considering peer group and
national survey compensation data, as well as the financial status of the
Company, the Committee determines what it believes to be appropriate
compensation and submits its proposal for ratification by the Board of
Directors. Stock option grants, if any, are administered solely by the
Committee.
Effective July 1, 1995, Mr. Ivy's annual base salary was increased from
$230,000 to $245,000. Effective April 26, 1995, Mr. Ivy was awarded a cash
bonus of $25,000 and options to purchase 65,000 shares of common stock of the
Company under the Company's stock option program. The increase in salary, bonus
and stock option award were done in recognition of his substantial achievements
made in the previous year. Special achievements were noted in strengthening
internal operations such as manufacturing, research and drug development, as
well as considerable progress in negotiations for additional product license and
supply agreements. In 1993 Mr. Ivy had been granted options which were
contingent upon his achieving certain performance goals. At the end of 1994
options for 15,000 shares remained contingent upon completing the goals. The
Committee determined in 1995 that the goals related to the options for the
15,000 shares were not reasonably achievable and accordingly, the options were
canceled. In addition, pursuant to the Company's employment agreement with Mr.
Ivy, he received an automobile allowance of $5,400, a term life insurance policy
at a cost of $1,302 and a supplemental long-term disability insurance policy at
a cost of $5,032. The Company is not a beneficiary on either insurance policy.
The Company is required to disclose its policy regarding qualifying
executive compensation for deductibility under Section 162(m) of the Internal
Revenue Code of 1986, as amended, which provides that, for purposes of the
regular income tax and the alternative minimum tax, the otherwise allowable
deduction for compensation paid or accrued with respect to a covered employee of
a publicly owned corporation is limited to no more than $1 million per year. It
is not expected that the compensation to be paid to the Company's executive
officers for fiscal 1996 will exceed the $1 million limit per officer. The
Company's 1996 Stock Option Plan (the "Plan")
is structured so that any compensation deemed paid to an executive officer when
he exercises an outstanding option under the Plan, with an exercise price equal
to the fair market value of the option shares on the grant date, will qualify as
performance-based compensation which will not be subject to the $1 million
limitation.
The Committee of Outside Directors
April 1995
John F. Chappell, Chairman and Secretary
Philipp Gerhardt
Mark I. Greene
Thomas N. McGowen, Jr.
Frederick B. Tossberg
Stockholder Return Performance Presentation
Set forth below is a five-year line graph comparing the yearly percentage
change in the cumulative total stockholder return on the Company's common stock
with the cumulative total return for The Nasdaq Stock Market (U.S. Companies)
and the Nasdaq Pharmaceutical Stocks. The graph assumes that the value of the
investment in the Company's common stock and each index was $100 on December 31,
1990 and all dividends, if any, were reinvested.
COMPARISON OF FIVE-YEAR TOTAL RETURN
Years Ended December 31,
--------------------------------------------
1990 1991 1992 1993 1994 1995
---- ---- ---- ---- ---- ----
Ribi ImmunoChem
Research, Inc. 100 335 375 375 170 243
Nasdaq Stock Market -
Total Return (U.S.
Companies) 100 161 187 215 210 296
Nasdaq Stock Market -
Pharmaceutical Stocks 100 266 221 197 148 271
DIRECTORS' COMPENSATION
In 1995 each director who is not an employee of the Company was paid $6,000
per year plus $500 for each day on which the director attended meetings and was
reimbursed for travel expenses. Additionally, directors who perform
extraordinary services are entitled to compensation at the rate of $125 per
hour. Messrs. McGowen and Tossberg each received $200 in 1995 for extraordinary
services performed.
The Company's stock option plan provides for the issuance of discounted
stock options to certain directors. The plan, as amended, allows for the
issuance of nonqualified stock options with an exercise price which is 20% below
the market price of the Company's common stock on the grant date. The
discounted stock options may be awarded to directors who are not employees of
the Company who elect to receive the discounted stock options rather than cash
for all or a portion of their director fees. The directors are required to make
the voluntary election at least six months prior to the beginning of each
calendar year. The number of options to be granted is determined by dividing
the amount of the foregone cash compensation by the amount of the per share
price discount on the grant date. Such options are granted at the end of each
calendar quarter and are fully vested on
the grant date. The options, which expire if not exercised within ten years
from the grant date, are exercisable after a six month period following the
grant date. For the year 1995 in lieu of cash compensation, Messrs. McGowen and
Tossberg were each granted options to purchase 9,860 shares at exercise prices
ranging from $3.10 to $4.85 per share.
Item No. 2
APPROVAL OF THE RIBI IMMUNOCHEM RESEARCH, INC.
1996 STOCK OPTION PLAN
The Board of Directors ("Board") has proposed and is unanimously
recommending approval of the adoption of a new stock option plan (the "Plan").
The Plan was adopted by the Board on January 31, 1996, subject to approval by
the stockholders.
The Company has had a stock option plan called the Ribi ImmunoChem
Research, Inc. 1986 Stock Option Plan. Under terms approved by stockholders in
1986, the 1986 Stock Option Plan expired on February 10, 1996. All options
available under this plan have been awarded. The Board of Directors believes
that the Company's long-term progress is dependent upon the quality and
continuity of management and key employees. The purpose of the new Plan is to
continue to aid the Company in attracting and retaining qualified and competent
employees, directors and consultants. Additionally, the Board believes that
awarding stock options to employees and directors tends to more closely align
their interests with those of stockholders. The Board believes that the Plan
will continue to constitute an important incentive to employees, directors and
consultants of the Company.
The Plan provides for the grant of incentive awards in the form of
Incentive Stock Options (as defined in Section 422 of the Internal Revenue Code
of 1986, as amended, {"Code"}), Nonqualified Stock Options (hereinafter
collectively referred to as "Options") and Stock Appreciation Rights ("SARs"),
an arrangement which the Board believes may afford flexibility to the Company.
The full text of the Plan as adopted by the Board appears as Appendix A
included in this Proxy Statement. The essential features of the Plan are
summarized below, but such summary is qualified in its entirety by the full text
of the Plan.
A total of 900,000 shares of the Company's common stock, whether authorized
but unissued shares or treasury shares, will be available for issuance upon the
exercise of Options granted under the Plan. The total number of shares
available under the Plan, the number of shares subject to outstanding Options
and the exercise price per share of Options will be subject to adjustment upon
the occurrence of stock dividends (in excess of 2 percent), re-incorporation,
reorganization, recapitalization, merger, consolidation, stock split,
combination or exchange of stock, or other similar change in the capital
structure of the Company in order to preserve but not increase the benefits to
an optionee. If any Option under the Plan terminates or expires, the shares
allocable to the unexercised portion of the Option will again be available for
purposes of the Plan.
The fair market value of the Company's common stock on March 4, 1996, as
determined by the closing price reported by The Nasdaq Stock Market, was $5.63
per share. The maximum number of shares which may be offered upon exercise of
options under the Plan constitutes approximately 4.8% of the common stock
outstanding on the record date.
The Company cannot now determine the number of Options to be granted in the
future under the Plan to all current executive officers as a group or all
employees (excluding current executive officers) as a group. The table under
the caption "Stock Option Grants Year Ended December 31, 1995" provides
information with respect to
the grant of options under the Company's 1986 Stock Option Plan (the "1986
Plan") to the Named Executive Officers of the Company during 1995 and the
discussion under "Directors Compensation" provides information with respect to
the grant of options under the 1986 Plan to directors of the Company during
1995. The following table sets forth additional information with respect to
options granted under the 1986 Plan during 1995:
Weighted Average
Options % of Total Exercise Price
Identity of Group Granted Options Granted Per Share
- ----------------------------- ------- --------------- ---------------
Executive officers as a group 90,000 78 $ 3.93
Non-executive officer employees
as a group 6,000 5 3.73
Non-executive officer directors
as a group 19,720 17 3.65
------- ---
115,720 100 3.88
======= ===
Administration of the Plan
The Plan will be administered by the Board. The Board may delegate the
responsibility for administering the Plan to a committee ("Committee"), under
the terms and conditions set forth by the Board. The Committee will consist of
two or more members of the Board or such lesser number of members of the Board
as permitted by Rule 16b-3 of the Securities Exchange Act of 1934 ("Rule 16b-
3"). Except as permitted by Rule 16b-3, none of the members of the Committee
will receive, while serving on the Committee, or during the one-year period
preceding appointment to the Committee, a grant or award of equity securities
under (a) the Plan or (b) any other plan of the Company or its affiliates under
which the participants are entitled to acquire common stock, options, related
rights or stock appreciation rights of the Company or any of its subsidiaries,
other than below-market, nonqualified stock options issued to non-employee
directors in lieu of part or all of his or her director fees ("Below-Market
Options").
Subject to the terms of the Plan and with exception of Below-Market
Options, the Committee may determine which directors, employees or consultants
will receive Options, determine the terms and conditions of all Options granted
under the Plan and prescribe, amend, rescind and interpret rules and regulations
for administering the Plan. In granting Options, the Committee will take into
consideration the contribution the optionee has made or may make to the success
of the Company and such other factors as the Committee determines. Except for
Below-Market Options, the Committee may amend the terms of any outstanding
Option granted under this Plan, but any amendment which would adversely affect
the optionee's rights under an outstanding Option will not be made without the
optionee's written consent. The Committee may, with the optionee's written
consent, cancel any outstanding Option or accept any outstanding Option in
exchange for a new Option.
Grant and Exercise of Incentive Stock Options, Nonqualified Stock Options and
SARs
All full- or part-time salaried employees of the Company who are
responsible for the conduct and management of its business or who are involved
in endeavors significant to its success will be eligible to receive both
incentive stock options and nonqualified stock options under the Plan.
Consultants who are neither full- nor part-time salaried employees of the
Company but who are involved in endeavors significant to its success will be
eligible to receive nonqualified stock options, but not incentive stock options.
Other than Below-Market Options granted to non-employee directors in lieu of
part or all of his or her director fees, non-employee directors will not be
eligible to receive grants under the Plan.
Except for Below-Market Options, the Committee may from time to time in its
discretion determine which of the eligible employees of the Company should
receive Options, the type of Options to be granted (whether incentive stock
options or nonqualified stock options), the number of shares subject to such
Options, and the dates on which such Options are to be granted. In the case of
incentive stock options, the aggregate fair market value of the common stock
with respect to which incentive stock options are exercisable for the first time
by an eligible employee in any calendar year will not exceed $100,000. If the
aggregate fair market value of stock with respect to which incentive stock
options are exercisable by an optionee for the first time during any calendar
year exceeds $100,000, such Options will be treated as nonqualified stock
options to the extent required by Section 422 of the Code. This rule will be
applied by taking Options into account in the order in which they were granted.
Options will be granted in the form of an option agreement which will
contain such terms, provisions and conditions as may be determined by the
Committee not inconsistent with the Plan. Except for Below-Market Options, the
option price for Options granted under the Plan will not be less than 100% of
the fair market value of the shares subject to the Option. Because the
Company's common stock is traded on the national over-the-counter market, fair
market value will be deemed to be the closing price of the stock on the day of
the grant, or if there were no trades on that day, on the next preceding day on
which there was trading. Each Option will be of a duration as specified in the
option agreement; provided, however, that the term of each Option will be no
more than ten years from the date on which the Option is granted. No incentive
stock option will be granted to an employee who, at the time the incentive stock
option is granted, owns stock representing more than 10% of the total combined
voting power of all classes of stock of the Company, unless the option price of
the incentive stock option is at least 110% of the fair market value of the
stock subject to the incentive stock option and the incentive stock option by
its terms is not exercisable more than five years from the date it is granted.
Each non-employee director may elect to receive Below-Market Options to
purchase common stock of the Company in lieu of part or all of his or her
director fees. Such election must be made by June 30 of each year prior to the
year services are provided. Such Options will have an exercise price of 80% of
the fair market value of the common stock on the grant date. The number of
Options to be granted will be determined by dividing the amount of the
director's fees by the fair market value of a share of common stock on the date
of the grant after subtracting the Option exercise price from the fair market
value. These Options will be granted at the end of each calendar quarter and
will be fully vested as of the date of grant; provided, however, said Options
may not be exercised prior to six months after the date of grant. The term of
these Options will be for ten years, and they will not be transferable otherwise
than by will or the laws of descent and distribution.
Subject to the limitations and conditions of the Plan and the option
agreement, an Option will be exercisable, in whole or in part, by giving written
notice of exercise to the President of the Company or the President's designee,
which will specify the number of shares of common stock to be purchased and will
be accompanied by payment in full to the Company of the purchase price of the
shares to be purchased. The Committee, in its sole discretion, may permit an
optionee to pay the option price in whole or in part (a) with cash (check or
money order); (b) with shares of common stock owned by the optionee; (c) by
delivery on a form prescribed by the Committee of an irrevocable direction to a
securities broker approved by the Committee to sell shares of common stock and
deliver all or a portion of the proceeds to the Company in payment for the
common stock; or (d) in any combination of the foregoing. Any common stock used
to exercise Options will be valued at its fair market value on the date of the
exercise of the Option. Upon exercise of an Option, the Company may withhold
from the optionee amounts required sufficient to satisfy federal, state and
local income and social security tax withholding obligations.
Notwithstanding any vesting requirements contained in any option agreement,
all outstanding Options will become immediately exercisable (a) following the
first purchase of common stock pursuant to a tender offer or
exchange offer (other than an offer made by the Company) for all or part of the
common stock, (b) at such time as a third person, including a "group" as defined
in Section 13(d)(3) of the Securities Exchange Act of 1934, becomes the
beneficial owner of shares of the Company having 25% or more of the total number
of votes that may be cast for the election of directors of the Company, (c) on
the date on which the stockholders of the Company approve (i) any agreement for
a merger or consolidation in which the Company will not survive as an
independent, publicly owned corporation or (ii) any sale, exchange or other
disposition of all or substantially all of the Company's assets, or (d) on any
date on which the persons who were the directors of the Company 90 days prior to
such date no longer constitute a majority of the Board.
Upon termination of an optionee's employment with the Company upon
retirement at or after age 65 or under circumstances for which the Committee has
given approval, other than upon death or disability, an optionee may exercise
the Option or SAR at any time within three months after the date of termination
but not later than the date of expiration of the Option or SAR. If an optionee
dies while in the employ of the Company or within a period of three months after
termination upon retirement, the personal representatives of the optionee's
estate or the person or persons who have acquired the Option from the optionee
by bequest or inheritance may exercise the Option or SAR at any time within the
year after the date of death but not later than the expiration date of the
Option or SAR, to the extent the optionee was entitled to do so on the date of
death. Upon termination of an optionee's employment with the Company by reason
of the optionee's disability, the optionee may exercise the Option or SAR at any
time within one year after the date of termination but not later than the
expiration date of the Option or SAR, to the extent the optionee was entitled to
do so on the date of termination. Any Options or SARs not exercisable as of the
date of termination as described above under circumstances for which the
Committee has given approval, death or disability, and any Options not exercised
as provided, will terminate. Upon termination of an optionee's employment with
the Company under any other circumstances, Options granted to the optionee will
terminate immediately. Termination of employment will be deemed to include the
termination of a director's service as a member of the Board and the termination
of a consulting arrangement in the case of consultants. The effect of the
termination of a non-employee director's service as a member of the Board on the
exercisability of Below-Market Options will be determined in accordance with the
terms of the option agreement evidencing such Options.
To the extent required by Rule 16b-3, Options are not transferable except
by operation of law or by will or the laws of descent and distribution. If Rule
16b-3 is amended after the date of the Board's adoption of the Plan to permit
broader transferability of Options, (a) Below-Market Options will be
transferable to the fullest extent permitted by Rule 16b-3 as so amended, and
(b) any other Option will be transferable to the extent provided in the option
agreement covering the Option, and the Committee will have discretion to amend
any outstanding Option to provide for broader transferability of the Option
within the limits of Rule 16b-3.
An optionee will have no rights as a stockholder of the Company with
respect to any shares of common stock covered by an Option until the date of
issuance of the stock certificate for such shares.
Stock Appreciation Rights
Except for Below-Market Options, any Option under the Plan may include a
Stock Appreciation Right to surrender to the Company all or a portion of the
Option, to the extent the Option is then exercisable, and to receive in exchange
a payment equal to the excess of the fair market value on the date preceding the
date of surrender of the shares covered by the Option over the aggregate option
price of such shares. Such payment will be made by the Company in shares of
common stock, in cash or in a combination of the two, as the Committee in its
sole discretion determines. An SAR may be granted by the Committee concurrently
with the grant of the Option or thereafter by amendment to the Option. An SAR
may contain such terms and conditions, which will
not be inconsistent with the Plan, as the Committee deems appropriate,
including, without limitation, a provision that limits the amount which may be
paid in satisfaction of an SAR to some multiple of the Option exercise price of
the underlying Option or a provision which limits the times at which an SAR may
be exercised. Shares surrendered upon exercise of an SAR will not thereafter be
available for Option grants under the Plan.
Amendments and Termination
The Board may at any time and from time to time alter, amend, suspend or
terminate the Plan or any part thereof as it may deem proper, except that no
such action will diminish or impair the rights under an Option previously
granted. Unless the stockholders of the Company have given their approval, the
total number of shares for which Options may be issued under the Plan will not
be increased except as otherwise provided in the Plan, and no amendment will be
made which reduces the price at which the common stock may be offered under the
Plan below the minimum required elsewhere in the Plan, or which materially
modifies the requirements as to eligibility for participation in the Plan. The
provisions for Below-Market Options will not be amended periodically and in no
event more than once every six months, other than to comport with changes to the
Code, the Employee Retirement Income Security Act of 1974, as amended, or any
applicable rules and regulations thereunder.
The Plan will terminate on February 11, 2006; provided, however, that the
Board may at any time prior thereto suspend or terminate the Plan.
Federal Income Tax Consequences
The following is a general discussion of the federal tax treatment for
incentive stock options and nonqualified stock options.
Incentive Stock Options - Payment of Exercise Price in Cash
-----------------------------------------------------------
An employee will in most cases realize no taxable income and the Company
will not be entitled to a compensation deduction at either the date of the grant
or exercise of an incentive stock option. The excess of the stock's fair market
value on the exercise date less the exercise price, however, constitutes tax
preference income to the employee and may be taxed under the alternative minimum
tax provisions of the Code.
If the employee sells or otherwise disposes of the stock following
expiration of the "statutory holding period," he or she will realize the
difference between the disposition proceeds and the stock's exercise price as
long-term capital gain or loss in the year of disposition. The statutory
holding period is the later of (i) one year after the stock was transferred to
the employee upon exercise; or (ii) two years after the date of grant.
If the employee sells or otherwise disposes of his or her stock acquired
upon exercise of an incentive stock option prior to meeting the statutory
holding period requirements, all or a portion of any gain will be treated as
ordinary income to the employee and the Company will be entitled to deduct an
equal amount as compensation expense. The amount of ordinary income realized
upon sale (other than to certain related parties or a "wash" sale) is the lesser
of (i) the stock's fair market value on the exercise date less the stock's
exercise price; or (ii) the gain on the sale (the amount realized less the
exercise price). If the disposition is not a sale, or if it is a sale to
certain related parties or a "wash" sale, the amount of ordinary income realized
will be the difference between the stock's fair market value on the exercise
date and the exercise price.
An employee may also realize additional gain if the sale price exceeds the
fair market value on the exercise date. The difference between the fair market
value on the sale date and the fair market value on the exercise date will be
treated as long-term capital gain if the stock was held for more than one year;
otherwise it will be short-term capital gain.
If the employee realizes an amount upon a subsequent sale of his or her
option shares that is less than the exercise price or other tax basis of the
shares, the resulting loss will be a short- or long-term capital loss depending
upon the capital asset holding periods stated above.
Where cash or stock (or a combination of both) is received by such an
optionee with respect to the exercise of an SAR, ordinary income is recognized
at the time of exercise in an amount equal to the cash or the value of the stock
(or the sum of both) received.
Incentive Stock Options - Payment of Exercise Price with Stock
--------------------------------------------------------------
The exercise of an incentive stock option by payment in shares of common
stock previously owned by the employee will generally have the same tax
consequences as described above (i.e., no tax upon the exercise).
However, under the "pyramiding" rules, gain will be realized upon the
exercise of an incentive stock option if the payment shares were acquired
pursuant to an earlier exercise of an incentive stock option and those shares
have not been held for the statutory holding period. The amount of ordinary
income will be equal to the lesser of (i) the payment stock's fair market value
on the exercise date less its option price; or (ii) the payment stock's fair
market value on the transfer date less its option price.
A taxable pyramiding will not occur if the payment stock was acquired
pursuant to the exercise of a nonqualified option or if the statutory holding
period has expired for payment stock acquired upon a prior exercise of an
incentive stock option.
Employees should also be aware of the following tax items even if the
payment stock has been held for the statutory holding period:
(1) If the stock acquired upon exercise of an incentive stock option is
sold prior to expiration of the statutory holding period, the capital
gain or loss holding period for this stock is considered to have
commenced on the date an equal number of payment shares were acquired.
(2) The tax basis of the payment stock becomes the tax basis for an equal
number of incentive stock option shares for purposes of determining
capital gain or loss on disposition of the new stock. The tax basis
of any additional stock acquired upon exercise will be zero. If the
statutory holding period is not met, the payment stock's basis will be
increased to the fair market value on the date the option was
exercised or such other amount as is taxable to the employee as
ordinary income.
(3) If basis is allocated between payment stock and additional stock,
proposed regulations under Section 422 provide that a disqualifying
disposition of stock transferred pursuant to the exercise will be a
disqualifying disposition of stock with the lowest basis.
Nonqualified Stock Options
--------------------------
There will be no federal income tax consequences to the optionee or the
Company when a nonqualified option is granted, provided the option does not have
a readily ascertainable fair market value. The Company believes that the
options granted under the present Plan will not have such a value at the date of
grant.
Upon the exercise of a nonqualified option, the optionee will realize
ordinary income equal to the fair market value of the stock on the date of
exercise less the exercise price. The Company will be entitled to a deduction
equal to the optionee's ordinary income and is required to withhold taxes on
this amount.
An optionee will realize capital gain or loss upon any subsequent sale or
disposition of stock equal to the amount received less the fair market value of
the stock on the date the option is exercised. The capital gain or loss will be
long-term if the stock has been held for more than one year, otherwise, it will
be a short-term gain or loss.
Where cash or stock (or a combination of both) is received by such an
optionee with respect to the exercise of an SAR, ordinary income is recognized
at the time of exercise in an amount equal to the cash or the value of the stock
(or the sum of both) received.
The following additional rules apply to optionees who (i) are officers,
directors or 10% stockholders subject to the insider trading rules of Section
16(b) of the 1934 Act; and (ii) who exercise the option less than six months
after the date on which the option is granted:
(1) Such an optionee will not realize ordinary income until six months
after the date the option is granted, unless an election under Section
83(b) of the Code is made. If this election is not made, the amount
of ordinary income will be the excess of the stock's fair market value
at the later date less the exercise price.
(2) If such an optionee makes a Section 83(b) election, ordinary income is
calculated as if the insider trading rules did not apply. The Section
83(b) election must be made within 30 days after the option is
exercised.
(3) The holding period for determining the amount of capital gain or loss
realized upon sale of the stock will not begin to run until six months
after the date the option is granted, unless the Section 83(b)
election is made.
Generally no gain or loss will be realized on previously acquired stock
used in payment upon exercise of a nonqualified option. The acquisition date of
the payment stock is substituted as the capital gain holding period commencement
date for an equal number of new shares. Any additional stock acquired upon
exercise will use the exercise date as the capital gain holding period
commencement date.
The tax basis of the payment stock will be substituted as the tax basis of
an equal number of shares acquired upon exercise of the option. The tax basis
of additional shares acquired upon exercise will be equal to the total taxable
income realized by the employee or director plus any cash paid.
If the payment shares were acquired through the exercise of incentive stock
options and the stock has not been held for the statutory holding period, no
gain or loss is realized on the payment shares. Instead, an equal number of new
shares acquired upon exercise of the option assumes the payment shares' tax
characteristics. If the new shares are held for the balance of the payment
stock's statutory holding period, any gain or disposition (sale proceeds less
the payment share's original exercise price) will be long-term capital gain.
The Board of Directors recommends a vote "FOR" Item 2.
------------------------------------------------------
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
KPMG Peat Marwick LLP, the Company's independent auditors since October
1981, have not yet been selected by the Board of Directors to serve in that
capacity in 1996, pending recommendation from the Company's Audit Committee. No
change is anticipated in the Company's independent auditors. The report of
KPMG Peat Marwick LLP with respect to the Company's financial statements appears
in the Company's annual report for the year ended December 31, 1995.
Representatives of KPMG Peat Marwick LLP will be present at the annual meeting
and will have the opportunity to make a statement if they so desire. They will
also be available to respond to appropriate questions.
STOCKHOLDER PROPOSALS
Appropriate proposals by stockholders intended to be presented at the 1997
annual meeting must be received by the Company on or before November 18, 1996,
in order for such proposals to be included in the proxy statement and form of
proxy of the Company for the 1997 annual meeting.
OTHER MATTERS
The Company's annual report for the fiscal year ended December 31, 1995, is
enclosed with this proxy statement.
The Company knows of no other business which will come before the annual
meeting. If any other business is properly presented to the annual meeting, the
persons named in the proxy will vote thereon in accordance with their best
judgment.
COST OF PROXY SOLICITATION
The cost of solicitation of the enclosed proxy will be borne by the
Company. In addition to solicitation by mail, solicitations may be made by
directors, officers, employees and consultants of the Company personally or by
telephone or other means of communication. The Company will reimburse brokers,
custodians, nominees and fiduciaries for their reasonable out-of-pocket expenses
in sending proxy material to beneficial owners.
BY ORDER OF THE BOARD OF DIRECTORS
Ronald H. Kullick
Secretary
March 18, 1996
Appendix A
RIBI IMMUNOCHEM RESEARCH, INC.
1996 STOCK OPTION PLAN
SECTION 1: PURPOSE
The purpose of the Ribi ImmunoChem Research, Inc. 1996 Stock Option
Plan (the "Plan") is to further the growth and development of Ribi ImmunoChem
Research, Inc. (the "Company") by affording an opportunity for stock ownership
to selected employees, Directors and consultants of the Company and its
Subsidiaries who are responsible for the conduct and management of its business
or who are involved in endeavors significant to its success.
SECTION 2: DEFINITIONS
Unless otherwise indicated, the following words when used herein shall
have the following meanings:
(a) "Board of Directors" shall mean the Board of Directors of the
Company.
(b) "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time.
(c) "Common Stock" shall mean the Company's common stock (par value
$.001 per share) and any share or shares of the Company's stock
hereafter issued or issuable in substitution for such shares.
(d) "Disability" shall mean a person's inability to engage in any
substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected
to result in death or which has lasted or can be expected to last
for a continuous period of not less than 12 months.
(e) "Director" shall mean a member of the Board of Directors.
(f) "Incentive Stock Option" shall mean any option granted to an
eligible employee under the Plan, which the Company intends at
the time the option is granted to be an Incentive Stock Option
within the meaning of Section 422 of the Code.
(g) "Nonqualified Stock Option" shall mean any option granted to an
eligible employee, Non-Employee Director or consultant under the
Plan which is not an Incentive Stock Option.
(h) "Non-Employee Director" shall mean any Director who is not an
employee of the Company.
(i) "Option" shall mean and refer collectively to Incentive Stock
Options and Nonqualified Stock Options.
(j) "Optionee" shall mean any employee, Non-Employee Director or
consultant who is granted an option under the Plan. "Optionee"
shall also mean the personal representative of an Optionee and
any other person who acquires the right to exercise an Option by
bequest or inheritance.
(k) "Stock Appreciation Right" shall mean a right to surrender to the
Company all or a portion of an Option, to the extent the Option
is then exercisable, and to receive in exchange a payment as
provided in Section 11.
(l) "Subsidiary" shall mean a subsidiary corporation of the Company
as defined in Section 424(f) of the Code.
SECTION 3: EFFECTIVE DATE
The effective date of the Plan is February 11, 1996; provided,
however, that such adoption is subject to approval and ratification by the
stockholders of the Company within 12 months of the effective date. No Options
may be granted under the Plan prior to approval of the Plan by the stockholders
of the Company.
SECTION 4: ADMINISTRATION
4.1 ADMINISTRATIVE COMMITTEE. The Plan shall be administered by the
Board of Directors of the Company (the "Board"). Subject to Subsection 4.3
below, the Board may delegate the responsibility for administering the Plan to a
committee, under such terms and conditions as the Board shall determine (the
"Committee"). The Committee shall consist of two or more members of the Board or
such lesser number of members of the Board as permitted by Rule 16b-3
promulgated under the Securities Exchange Act of 1934, as amended ("Rule 16b-
3"). Except as permitted by Rule 16b-3, none of the members of the Committee
shall receive, while serving on the Committee, or during the one-year period
preceding appointment to the Committee, a grant or award of equity securities
under (a) the Plan or (b) any other plan of the Company or its affiliates under
which the participants are entitled to acquire Common Stock, Options, related
rights or Stock Appreciation Rights of the Company or any of its Subsidiaries,
other than pursuant to the grant of Options provided in Subsection 7.8 below,
and pursuant to transactions in any such other plan which do not disqualify a
Director from being a disinterested person under Rule 16b-3. The limitations set
forth in this Subsection 4.1 shall automatically incorporate any additional
requirements that may in the future be necessary for the Plan to comply with
Rule 16b-3. Members of the Committee shall serve at the pleasure of the Board.
If the Board does not delegate administration of the Plan to the Committee, then
each reference in this Plan to "the Committee" shall be construed to refer to
the Board.
4.2 COMMITTEE MEETINGS AND ACTIONS. The Committee shall hold meetings
at such times and places as it may determine and shall select one of its members
as chairman. A majority of the members of the Committee shall constitute a
quorum, and the acts of the majority of the members present at a meeting or a
consent in writing signed by all members of the Committee shall be the acts of
the Committee and shall be final, binding and conclusive upon all persons,
including the Company, its Subsidiaries, its stockholders, and all persons
having any interest in Options which may be or have been granted pursuant to the
Plan.
4.3 POWERS OF COMMITTEE. Except for Options granted to Non-Employee
Directors pursuant to Subsection 7.8, the Committee shall have the full and
exclusive right to grant and determine terms and conditions of all Options
granted under the Plan and to prescribe, amend and rescind rules and regulations
for administration of the Plan. In granting Options, the Committee shall take
into consideration the contribution the Optionee has made or may make to the
success of the Company or its Subsidiaries and such other factors as the
Committee shall determine. Except for Options granted to Non-Employee Directors
pursuant to Subsection 7.8, the Committee may amend the terms of any outstanding
Option granted under this Plan, but any amendment which would adversely affect
the Optionee's rights under an outstanding Option shall not be made without the
Optionee's written consent. The Committee may, with the Optionee's written
consent, cancel any outstanding Option or accept any outstanding Option in
exchange for a new Option.
4.4 INTERPRETATION OF PLAN. The determination of the Committee as to
any disputed question arising under the Plan, including questions of
construction and interpretation, shall be final, binding and conclusive upon all
persons, including the Company, its Subsidiaries, its stockholders and all
persons having any interest in Options which may be or have been granted
pursuant to the Plan.
SECTION 5: STOCK SUBJECT TO THE PLAN
5.1 NUMBER. The aggregate number of shares of Common Stock which may
be issued under Options granted pursuant to the Plan shall not exceed 900,000
shares. Such shares may consist, in whole or in part, of authorized but unissued
stock or treasury stock of the Company not reserved for any other purpose.
5.2 UNUSED STOCK. If any outstanding Option under the Plan expires or
for any other reason ceases to be exercisable, in whole or in part, other than
upon exercise of the Option or a related Stock Appreciation Right, the shares
which were subject to such Option and as to which the Option had not been
exercised shall continue to be available under the Plan.
5.3 ADJUSTMENT FOR CHANGE IN OUTSTANDING SHARES. If there is any
change, increase or decrease, in the outstanding shares of Common Stock which is
effected without receipt of additional consideration by the Company, by reason
of a stock dividend (in excess of 2 percent), re-incorporation, reorganization,
recapitalization, merger, consolidation, stock split, combination or exchange of
stock, or other similar change in the capital structure of the Company, then in
each such event, the Committee shall make an appropriate adjustment in the
aggregate number of shares of stock available under the Plan, the number of
shares of stock subject to each outstanding Option and the option prices in
order to preserve but not to increase the benefits to an Optionee; provided,
however, that fractional shares shall be rounded to the nearest whole share. The
Committee's determinations in making adjustments shall be final and conclusive.
SECTION 6: ELIGIBILITY
All full- or part-time salaried employees of the Company and its
Subsidiaries who are responsible for the conduct and management of its business
or who are involved in endeavors significant to its success shall be eligible to
receive both Incentive Stock Options and Nonqualified Stock Options under the
Plan. Consultants who are neither full- nor part-time salaried employees of the
Company or its Subsidiaries but who are involved in endeavors significant to its
success shall be eligible to receive Nonqualified Stock Options, but not
Incentive Stock Options, under the Plan. Other than below-market Options granted
to Non-Employee Directors in lieu of part or all of his or her Director fees in
accordance with Subsection 7.8, Non-Employee Directors shall not be eligible to
receive grants under the Plan.
SECTION 7: GRANT OF OPTIONS
7.1 GRANT OF OPTIONS. Except for Options granted pursuant to
Subsection 7.8, the Committee may from time to time in its discretion determine
which of the eligible employees of the Company or its Subsidiaries should
receive Options, the type of Options to be granted (whether Incentive Stock
Options or Nonqualified Stock Options), the number of shares subject to such
Options, and the dates on which such Options are to be granted. In the case of
Incentive Stock Options, the aggregate fair market value (determined as of the
time such option is granted) of the Common Stock with respect to which Incentive
Stock Options are exercisable for the first time by an eligible employee in any
calendar year (under this Plan and any other plans of the Company or its
Affiliates) shall not exceed $100,000. If the aggregate fair market value of
stock with respect to which Incentive Stock Options are exercisable by an
Optionee for the first time during any calendar year exceeds $100,000, such
Options shall be treated as Nonqualified Stock Options to the extent required by
Section 422 of the Code. The rule set forth in the preceding sentence shall be
applied by taking Options into account in the order in which they were granted.
7.2 OPTION AGREEMENT. Except for grants to Non-Employee Directors
pursuant to Subsection 7.8, which shall be granted on the form of Option
Agreement attached hereto as Exhibit A, the Option Agreement may contain such
other terms, provisions and conditions as may be determined by the Committee not
inconsistent with this Plan. If an Option, or any part thereof is intended to
qualify as an Incentive Stock Option, the Option Agreement shall contain those
terms and conditions which are necessary to so qualify it.
7.3 OPTION PRICE. Except as provided for in Subsection 7.8 below, the
option price per share of Common Stock under each Option shall be determined by
the Committee and stated in the Option Agreement. Except as provided for in
Subsection 7.8 below, the option price for Options granted under the Plan shall
not be less than 100% of the fair market value (determined as of the day the
Option is granted) of the shares subject to the Option.
7.4 DETERMINATION OF FAIR MARKET VALUE. If the Common Stock is listed
upon an established stock exchange or exchanges, then the fair market value per
share shall be deemed to be the mean between the highest and lowest quoted
selling prices of the Common Stock on such stock exchange or exchanges on the
day for which the determination is made, or if no sale of the Common Stock shall
have been made on any stock exchange on that day, on the next preceding day on
which there was such a sale. If the Common Stock is not listed upon an
established stock exchange but is traded in the national over-the-counter
market, the fair market value per share shall be deemed to be the closing price
of the Common Stock in the national over-the-counter market on the day for which
the determination is made, or if there shall have been no trading of the Common
Stock on that day, on the next preceding day on which there was such trading. If
the Common Stock is not listed upon an established stock exchange and is not
traded in the national over-the-counter market, the fair market value per share
shall be deemed to be an amount as determined by the Committee by applying any
reasonable valuation method.
7.5 DURATION OF OPTIONS. Each Option shall be of a duration as
specified in the Option Agreement; provided, however, that the term of each
Option shall be no more than ten years from the date on which the Option is
granted and shall be subject to early termination as provided herein.
7.6 ADDITIONAL LIMITATIONS ON GRANT. No Incentive Stock Option shall
be granted to an employee who, at the time the Incentive Stock Option is
granted, owns stock (as determined in accordance with Section 424(d) of the
Code) representing more than 10% of the total combined voting power of all
classes of stock of the Company, unless the option price of such Incentive Stock
Option is at least 110% of the fair market value (determined as of the day the
Incentive Stock Option is granted) of the stock subject to the Incentive Stock
Option and the Incentive Stock Option by its terms is not exercisable more than
five years from the date it is granted.
7.7 OTHER TERMS AND CONDITIONS. Except for Options granted pursuant
to Subsection 7.8, Options may contain such other provisions, which shall not be
inconsistent with the Plan, as the Committee shall deem appropriate, including,
without limitation, provisions that relate the Optionee's ability to exercise an
Option to the passage of time or the achievement of specific goals established
by the Committee.
7.8 NON-EMPLOYEE DIRECTOR OPTIONS. Each Non-Employee Director may
elect to receive below-market, Nonqualified Stock Options to purchase Common
Stock of the Company in lieu of part or all of his or her Director fees. Such
election must be made by June 30 of each year prior to the year services are
provided. Such Options shall have an exercise price of eighty percent (80%) of
the fair market value of the Common Stock on the grant date. The number of
Options to be granted shall be determined by dividing the amount of the
Director's fees (that the Director irrevocably elected to take in the form of
below-market Options instead of cash) by the fair market value of a share of
Common Stock on the date of the grant after subtracting the discounted option
exercise price from such fair market value. These Options shall be granted at
the end of each calendar quarter and shall be fully vested as of the date of
grant; provided, however, said Options may not be exercised prior to six (6)
months after the date of grant. The term of these Options shall be for ten
years, and they shall not be transferable otherwise than by will or the laws of
descent and distribution and may only be exercised by the Director, his or her
guardian or legal representative during the exercise period as defined elsewhere
herein, except as provided in the Option Agreement attached hereto as Exhibit A.
SECTION 8: EXERCISE OF OPTIONS
8.1 MANNER OF EXERCISE. Subject to the limitations and conditions of
the Plan or the Option Agreement, an Option shall be exercisable, in whole or in
part, from time to time, by giving written notice of exercise to the President
of the Company or the President's designee, which notice shall specify the
number of shares of Common Stock to be purchased and shall be accompanied by
payment in full to the Company of the purchase price of the shares to be
purchased. Payment of the purchase price upon exercise of any Option granted
under this Plan shall be made in cash, by Optionee's personal check, a certified
check, bank draft, or postal or express money order payable to the order of the
Company in lawful money of the United States (collectively, "Cash
Consideration'); provided, however, that, except for Options granted under
Subsection 7.8, the Committee, in its sole discretion, may permit an Optionee to
pay the option price in whole or in part (a) with shares of Common Stock owned
by the Optionee; (b) by delivery on a form prescribed by the Committee of an
irrevocable direction to a securities broker approved by the Committee to sell
shares of Common Stock and deliver all or a portion of the proceeds to the
Company in payment for the Common Stock; or (c) in any combination of the
foregoing. The exercise price of any Options granted under Subsection 7.8 shall
be paid in Cash Consideration, the consideration specified in clauses (a) or (b)
of the preceding sentence, or in any combination thereof. Any Common Stock used
to exercise Options shall be valued at its fair market value on the date of the
exercise of the Option.
8.2 WITHHOLDING TAXES. No Common Stock shall be delivered under the
Plan to any participant until the participant has made arrangements acceptable
to the Committee for the satisfaction of federal, state, and local income and
social security tax withholding obligations, including, without limitation,
obligations incident to the receipt of Common Stock under the Plan or to the
failure to satisfy the conditions for treatment as Incentive Stock Options under
applicable tax law. Upon exercise of an Option, the Company may withhold from
the Optionee an amount sufficient to satisfy federal, state and local income and
social security tax withholding obligations.
8.3 ACCELERATION OF EXERCISE PERIOD. Notwithstanding any vesting
requirements contained in any Option Agreement, all outstanding Options shall
become immediately exercisable (a) following the first purchase of Common Stock
pursuant to a tender offer or exchange offer (other than an offer made by the
Company) for all or part of the Common Stock, (b) at such time as a third
person, including a "group" as defined in Section 13(d)(3) of the Securities
Exchange Act of 1934, becomes the beneficial owner of shares of the Company
having 25% or more of the total number of votes that may be cast for the
election of Directors of the Company, (c) on the date on which the stockholders
of the Company approve (i) any agreement for a merger or consolidation in which
the Company will not survive as an independent, publicly owned corporation or
(ii) any sale, exchange or other disposition of all or substantially all of the
Company's assets, or (d) on any date on which the persons who were the Directors
of the Company 90 days prior to such date no longer constitute a majority of the
Board of Directors of the Company or any successor to the Company. The
Committee's reasonable determination as to whether such an event has occurred
shall be final and conclusive.
SECTION 9: TERMINATION OF EMPLOYMENT
9.1 TERMINATION UPON RETIREMENT OR WITH COMMITTEE APPROVAL. Upon
termination of an Optionee's employment with the Company or a Subsidiary upon
retirement at or after age 65 or under circumstances for which the Committee,
either before or after the termination, has given its approval, and other than
upon death or Disability, an Optionee may, at any time within three months after
the date of termination but not later than the date of expiration of the Option,
exercise the Option or Stock Appreciation Right to the extent the Optionee was
entitled to do so on the date of termination. Any Options not exercisable as of
the date of termination and any Options or portions of Options of terminated
employees not exercised as provided herein shall terminate.
9.2 TERMINATION BY DEATH OF OPTIONEE. If an Optionee dies while in
the employ of the Company or a Subsidiary or within a period of three months
after the termination upon retirement pursuant to Subsection 9.1 above of his
employment with the Company or a Subsidiary, the personal representatives of the
Optionee's estate or the person or persons who shall have acquired the Option
from the Optionee by bequest or inheritance may exercise the Option or Stock
Appreciation Right at any time within the year after the date of death but not
later than the expiration date of the Option, to the extent the Optionee was
entitled to do so on the date of death. Any Options not exercisable as of the
date of death and any Options or portions of Options of deceased employees not
exercised as provided herein shall terminate.
9.3 TERMINATION BY DISABILITY OF OPTIONEE. Upon termination of an
Optionee's employment with the Company or a Subsidiary by reason of the
Optionee's Disability, the Optionee may exercise the Option or Stock
Appreciation Right at any time within one year after the date of termination but
not later than the expiration date of the Option, to the extent the Optionee was
entitled to do so on the date of termination. Any Options not exercisable as of
the date of termination under this Subsection 9.3 and any Options or portions of
Options of disabled employees not exercised as provided herein shall terminate.
9.4 OTHER TERMINATIONS. Upon termination of an Optionee's employment
with the Company or a Subsidiary under circumstances other than those set forth
in Subsections 9.1 through 9.3, Options granted to the Optionee shall terminate
immediately.
9.5 TERMINATION OF DIRECTORS AND CONSULTANTS. For purposes of this
Section 9, a termination of employment shall be deemed to include the
termination of a Director's service as a member of the Board of Directors and
the termination of a consulting arrangement in the case of consultants. The
effect of the termination of a Non-Employee Director's service as a member of
the Board of Directors on the exercisability of Options granted pursuant to
Subsection 7.8 shall be determined in accordance with the terms of the Option
Agreement evidencing such Options, attached hereto as Exhibit A.
SECTION 10: NON-TRANSFERABILITY OF OPTION
To the extent required by Rule 16b-3, no Option granted pursuant to
this Plan shall be transferable by the holder except by operation of law or by
will or the laws of descent and distribution; provided, that, if Rule 16b-3 is
amended after the date of the Board's adoption of the Plan to permit broader
transferability of Options under that Rule, (a) Options granted under
Subsection 7.8 to Non-Employee Directors shall be transferable to the fullest
extent permitted by Rule 16b-3 as so amended, (b) any other Option shall be
transferable to the extent provided in the Option Agreement covering the Option,
and the Committee shall have discretion to amend any such outstanding Option to
provide for broader transferability of the Option as the Committee may authorize
within the limitations of Rule 16b-3. Notwithstanding the foregoing, if required
by the Code, each Incentive Stock Option under the Plan shall be transferable by
the Optionee only by will or the laws of descent and distribution, and, during
the Optionee's lifetime, shall be exercisable only by the Optionee. In the event
of any Rule 16b-3 permitted transfer of an Option hereunder, the transferee
shall be entitled to exercise the Option in the same manner and only to the same
extent as the Optionee (or his personal representative or the person who would
have acquired the right to exercise the Option by bequest or intestate
succession) would have been entitled to exercise the Option had the Option not
been transferred.
SECTION 11: STOCK APPRECIATION RIGHTS
Except for Options granted pursuant to Subsection 7.8, any Option
under the Plan may include a right (the "Stock Appreciation Right") to surrender
to the Company all or a portion of the Option, to the extent the Option is then
exercisable, and to receive in exchange a payment equal to the excess of the
fair market value on the date preceding the date of surrender of the shares
covered by the Option (or the portion that is surrendered) over the aggregate
option price of such shares. Such payment shall be made by the Company in shares
of Common Stock, in cash or partly in Common Stock and partly in cash, as the
Committee in its sole discretion shall determine, whether before or after
exercise of the Stock Appreciation Right. A Stock Appreciation Right may be
granted by the Committee concurrently with the grant of the Option or thereafter
by amendment to the Option. A Stock Appreciation Right may contain such terms
and conditions, which shall not be inconsistent with the Plan, as the Committee
shall deem appropriate, including, without limitation, a provision that limits
the amount which may be paid in satisfaction of a Stock Appreciation Right to
some multiple of the option exercise price of the underlying Option or a
provision which limits the times at which a Stock Appreciation Right may be
exercised. Shares subject to Options (or such portion of an Option that has been
surrendered upon exercise of a Stock Appreciation Right) shall not thereafter be
available for Option grants under the Plan.
SECTION 12: ISSUANCE OF SHARES
12.1 TRANSFER OF SHARES TO OPTIONEE. As soon as practicable after the
Optionee has given the Company written notice of exercise of an Option or Stock
Appreciation Right and, upon exercise of an Option, has otherwise met the
requirements of Subsections 8.1 and 8.2, the Company shall issue or transfer to
the Optionee the number of shares of Common Stock as to which the Option has
been exercised or with respect to which the Stock Appreciation Right will be
paid and shall deliver to the Optionee a certificate or certificates therefor,
registered in Optionee's name. In no event shall the Company be required to
transfer fractional shares to the Optionee, and in lieu thereof, the Company may
pay an amount in cash equal to the fair market value of such fractional shares
on the date of exercise. If the issuance or transfer of shares by the Company
would for any reason, in the opinion of counsel for the Company, violate any
applicable federal or state laws or regulations, the Company may delay issuance
or transfer of such shares to the Optionee until compliance with such laws can
reasonably be obtained.
12.2 INVESTMENT REPRESENTATION. Upon demand by the Company, the
Optionee shall deliver to the Company a representation in writing that the
purchase of all shares with respect to which notice of exercise of the Option or
Stock Appreciation Right has been given by Optionee is being made for investment
only and not for resale or with a view to distribution, and containing such
other representations and provisions with respect thereto as the Company may
require. Upon such demand, delivery of such representation promptly and prior to
the transfer or delivery of any such shares and prior to the expiration of the
Option period shall be a condition precedent to the right to purchase such
shares.
SECTION 13: AMENDMENTS
The Board of Directors may at any time and from time to time alter,
amend, suspend or terminate the Plan or any part thereof as it may deem proper,
except that no such action shall diminish or impair the rights under an Option
previously granted; provided, however, that unless the stockholders of the
Company shall have given their approval, the total number of shares for which
Options may be issued under the Plan shall not be increased, except as
provided in Subsection 5.3, and no amendment shall be made which reduces the
price at which the Common Stock may be offered under the Plan below the minimum
required by Subsection 7.3, except as provided in Subsection 5.3, or which
materially modifies the requirements as to eligibility for participation in the
Plan. Notwithstanding the foregoing provisions of this Section 13, the
provisions set forth in Subsection 7.8 of the Plan (and any other sections of
the Plan that affect the terms of Options granted to Non-Employee Directors
required to be specified in the Plan by Rule 16b-3) shall not be amended
periodically and in no event more than once every six months, other than to
comport with changes to the Code, the Employee Retirement Income Security Act of
1974, as amended, or any applicable rules and regulations thereunder.
SECTION 14: TERM OF PLAN
This Plan shall terminate at midnight on February 11, 2006; provided,
however, that the Board of Directors may at any time prior thereto suspend or
terminate the Plan.
SECTION 15: RIGHTS AS STOCKHOLDER
An Optionee shall have no rights as a stockholder of the Company with
respect
to any shares of Common Stock covered by an Option until the date of the
issuance of the stock certificate for such shares.
SECTION 16: RULE 16B-3 COMPLIANCE
Transactions under the Plan are intended to comply with all applicable
conditions of Rule 16b-3 or its successors under the Exchange Act. To the extent
any provision of the Plan or action by the Board or the Committee fails to so
comply, it shall be deemed null and void, to the extent permitted by law and
deemed advisable by the Board or the Committee. Moreover, in the event the Plan
does not include a provision required by Rule 16b-3 to be stated therein in
order to qualify the grants under Subsection 7.8 hereof as grants under a non-
discretionary formula under Rule 16b-3 such provision (other than one relating
to eligibility requirements, or the price and amount of awards) shall be deemed
automatically to be incorporated by reference into the Plan with respect to
grants of Options to Non-Employee Directors.
SECTION 17: GOVERNING LAW
Options granted under this Plan shall be construed and shall take
effect in accordance with the law of the State of Montana, except to the extent
it is superseded by the laws of the United States.
EXHIBIT A (of Appendix A)
RIBI IMMUNOCHEM RESEARCH, INC.
DIRECTORS' NON-QUALIFIED STOCK OPTION AGREEMENT
This agreement (the "Agreement") is made as of _____________, 199__
(the "Grant Date") between Ribi ImmunoChem Research, Inc. (the "Company") and
_________________ ("Optionee").
WITNE SSETH:
WHEREAS, the Company has adopted the Ribi ImmunoChem Research, Inc.
1996 Stock Option Plan (the "Plan"), which Plan is incorporated in this
Agreement by reference and made a part of it (capitalized terms shall have the
meaning ascribed to them in the Plan);
WHEREAS, the Plan provides for option grants to Non-Employee Directors
of the Company;
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
set forth, the parties to this Agreement hereby agree as follows:
1. OPTION GRANT. The Company hereby grants to Optionee the right and
option to purchase from the Company on the terms and conditions hereinafter set
forth, all or any part of an aggregate of _________ Thousand (___________)
shares of the Common Stock, $.001 par value, of the Company (the "Stock"). The
exercise price of the Stock subject to this option shall be $_______ per share,
which price is 80% of the per share fair market value as of the Grant Date.
2. OPTION PERIOD. This option shall be exercisable only during the
Option Period, and during such Option Period, the exercisability of the option
shall be subject to the limitations of paragraph 3 and the vesting provisions of
paragraph 4. The Option Period shall commence on the Grant Date and, except as
provided in paragraph 3, shall end on the Terminal Date which shall be ten years
from the Grant Date.
3. LIMITS ON OPTION PERIOD. The Option Period may end before the
Terminal Date, as follows:
(a) If Optionee ceases to be a Director on the Company's Board
of Directors (the "Board") for any reason other than cause, disability (within
the meaning of subparagraph (c) below) or death during the Option Period, the
Option Period shall terminate three months after the date Optionee ceases to be
a Director or on the Terminal Date, whichever shall first occur, and the option
shall be exercisable only to the extent exercisable under paragraph 4 on the
date Optionee ceases to be a Director.
(b) If Optionee dies while serving on the Board, the Option
Period shall end one year after the date of death or on the Terminal Date,
whichever shall first occur, and Optionee's executor or administrator or the
person or persons to whom Optionee's rights under this option shall pass by will
or by the applicable laws of descent and distribution may exercise this option
only to the extent exercisable under paragraph 4 on the date of Optionee's
death.
(c) If Optionee ceases to be a Director by reason of disability,
as defined below, the Option Period shall end one year after the date Optionee
ceases to be a Director or on the Terminal Date, whichever shall first occur,
and this option shall be exercisable only to the extent exercisable under
paragraph 4 on the date Optionee ceases to be a Director. For purposes of this
subparagraph (c), an individual is permanently and totally disabled if he is
unable to engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result in
death or which has lasted or can be expected to last for a continuous period of
not less than 12 months. An individual shall not be considered to be permanently
and totally disabled unless he or she furnishes proof of the existence thereof
in such form and manner, and at such times, as the Board may require.
(d) If Optionee is removed from the Board for cause during the
Option Period, the Option Period shall terminate on the date of such Optionee's
removal as a Director and shall not thereafter be exercisable to any extent.
4. VESTING OF RIGHT TO EXERCISE OPTIONS. This option is fully
vested; provided, however, said option may not be exercised prior to six (6)
months following the Grant Date. No partial exercise of this option may be for
less than five percent (5%) of the total number of shares then available under
this option to purchase shares of Stock. In no event shall the Company be
required to issue fractional shares. Notwithstanding the foregoing, all options
granted under this Agreement shall be subject to the provisions of
Subsection 8.3 of the Plan (relating to the acceleration of vesting upon the
occurrence of certain events).
5. METHOD OF EXERCISE. Optionee may exercise the option with respect
to all or any part of the shares of Stock then subject to such exercise as
follows:
(a) By giving the President of the Company or the President's
designee written notice of such exercise, specifying the number of such shares
as to which this option is exercised. Such notice shall be accompanied by an
amount equal to the exercise price of such shares, in the form of any one or
combination of the following: (1) Cash Consideration; or (2) by delivery on a
form prescribed by the Committee of an irrevocable direction to a securities
broker approved by the Committee to sell shares of Stock and deliver all or a
portion of the proceeds to the Company in payment for the Stock.
(b) If required by the Company, Optionee shall give the Company
satisfactory assurance in writing, signed by Optionee or Optionee's legal
representative, as the case may be, that such shares are being purchased for
investment and not with a view to the distribution thereof, provided that such
assurance shall be deemed inapplicable to (1) any sale of such shares by such
Optionee made in accordance with the terms of a registration statement covering
such sale, which has heretofore been (or may hereafter be) filed and become
effective under the Securities Act of 1933, as amended, and with respect to
which no stop order suspending the effectiveness thereof has been issued, and
(2) any other sale of such shares with respect to which, in the opinion of
counsel for the Company, such assurance is not required to be given in order to
comply with the provisions of the Securities Act of 1933, as amended.
(c) As soon as practicable after receipt of the notice required
in paragraph 5(a) and satisfaction of the conditions set forth in
paragraph 5(b), the Company shall, without transfer or issue tax and without
other incidental expense to Optionee, deliver to Optionee at the office of the
Company, at 553 Old Corvallis Road, Hamilton, Montana 59840, attention of the
Corporate Secretary, or such other place as may be mutually acceptable to the
Company and Optionee, a certificate or certificates of such shares of Stock;
provided, however, that the time of such delivery may be postponed by the
Company for such period as may be required for it with reasonable diligence to
comply with applicable registration requirements under the Securities Act of
1933, as amended, the Securities Exchange Act of 1934, as amended, any
applicable listing requirements of any national securities exchange, and
requirements under any other law or regulation applicable to the issuance or
transfer of such shares. If Optionee fails to accept delivery of and pay for all
or any part of the number of shares specified in such notice upon tender or
delivery thereof, Optionee's right to purchase such shares may be terminated by
the Company at its election.
6. CHANGES IN CAPITALIZATION. If there should be any change in a
class of Stock subject to this option, through merger, consolidation,
reorganization, recapitalization, re-incorporation, stock split, stock dividend
(in excess of 2 percent) or other change in the capital structure of the
Company, the Company shall make appropriate adjustments in order to preserve,
but not to increase, the benefits to Optionee, including adjustments of the
number and kind of shares of such Stock subject to this option and of the price
per share. Any adjustment made
pursuant to this paragraph 6 as a consequence of a change in the capital
structure of the Company shall not entitle Optionee to acquire a number of
shares of such Stock of the Company or shares of stock of any successor company
greater than the number of shares Optionee would receive if, prior to such
change, Optionee had actually held a number of shares of such Stock equal to the
number of shares subject to this option.
7. LIMITATIONS ON TRANSFER. To the extent required by Rule 16b-3 of
the Exchange Act, no Option shall be transferable by an Optionee other than by
operation of law or by will or by the laws of descent or distribution; provided
that, if Rule 16b-3 is amended after the Board's adoption of the Plan to permit
greater transferability of an Option, the Option hereunder shall be transferable
to the fullest extent provided by Rule 16b-3 as so amended. In the event of any
Rule 16b-3 permitted transfer of the Option, the transferee shall be entitled to
exercise the Option in the same manner and only to the same extent as the
Optionee (or his personal representative or the person who would have acquired
the right to exercise the Option by bequest or intestate succession) would have
been entitled to exercise the Option had the Option not been transferred.
8. NO STOCKHOLDER RIGHTS. Neither Optionee nor any person entitled
to exercise Optionee's rights in the event of Optionee's death shall have any of
the rights of a stockholder with respect to the shares of Stock subject to this
option except to the extent the certificates for such shares shall have been
issued upon the exercise of this option.
9. NOTICE. Any notice required to be given under the terms of this
Agreement shall be addressed to the Company in care of its President at the
office of the Company at 553 Old Corvallis Road, Hamilton, Montana 59840, and
any notice to be given to Optionee shall be addressed to Optionee at the address
given by Optionee beneath Optionee's signature to this Agreement, or such other
address as either party to this Agreement may hereafter designate in writing to
the other. Any such notice shall be deemed to have been duly given when enclosed
in a properly sealed envelope addressed as aforesaid, registered or certified
and deposited (postage and registration or certification fee prepaid) in a post
office or branch post office regularly maintained by the United States.
10. SUCCESSORS. This Agreement shall be binding upon and inure to the
benefit of any successor or successors of the Company. Where the context
permits, "Optionee" as used in this Agreement shall include Optionee's executor,
administrator or other legal representative or the person or persons to whom
Optionee's rights pass by will or the applicable laws of descent and
distribution.
11. WITHHOLDING. Optionee agrees to make appropriate arrangements
with the Company for satisfaction of any applicable federal, state or local
income tax withholding requirements or social security requirements.
12. APPLICABLE LAW. The interpretation, performance, and enforcement
of this Agreement shall be governed by the laws of the State of Montana.
IN WITNESS WHEREOF, this Agreement has been executed as of the day and
year first written above.
Ribi ImmunoChem Research, Inc.,
a Delaware corporation
By_________________________________
___________________________________
__________________________,Optionee
Address:
Appendix B
PROXY
RIBI IMMUNOCHEM RESEARCH, INC.
Annual Meeting of Stockholders to be held on April 24, 1996
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned hereby appoints Robert E. Ivy and Ronald H. Kullick as
Proxies, each with the power to appoint his substitute, and hereby authorizes
them to represent and to vote, as designated on the reverse side, all the shares
of common stock of Ribi ImmunoChem Research, Inc., held of record by the
undersigned on March 4, 1996, at the Annual Meeting of Stockholders to be held
on April 24, 1996, or any adjournment thereof.
This proxy, when properly executed, will be voted in the manner directed
herein by the undersigned stockholder. If no direction is made, this proxy will
be voted FOR Proposals 1 and 2.
1. ELECTION OF DIRECTORS
[ ] FOR all nominees listed below
(except as marked to the contrary)
[ ] WITHHOLD AUTHORITY
to vote for all nominees listed
Nominees: J. Cantrell, P. Gerhardt, M. Greene, R. Ivy, T. McGowen, F. Tossberg
(INSTRUCTIONS: To withhold authority to vote for any individual nominee,
write that nominee's name in the space provided below.)
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2. PROPOSAL TO ADOPT THE 1996 STOCK OPTION PLAN
[ ] FOR
[ ] AGAINST
[ ] ABSTAIN
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
(Continued and to be SIGNED on the other side)
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Please sign exactly as name appears on this proxy. When shares are held by
joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such.
Dated _________________________________, 1996
_____________________________________________
Signature
______________________________________________
Signature if held jointly
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
Appendix C
Ribi ImmunoChem Research, Inc.
List of Graphic Material Omitted
From Proxy Statement
(Annual Meeting on April 24, 1996)
Omitted Material Description
1. Stockholder Return Performance Graph Described in table format on
page 11 of the Proxy Statement
under "Stockholder Return
Performance Presentation."