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] No filing fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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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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[LOGO]
March 19, 1997
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 30,
1997, 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 seven directors and approve and
adopt a proposed Directors' 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 30, 1997
The Annual Meeting of Stockholders of Ribi ImmunoChem Research, Inc., will
be held on Wednesday, April 30, 1997, 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 seven 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 Directors' 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 3,
1997, 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 19, 1997
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 30, 1997, 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 19, 1997.
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 3, 1997, will
be entitled to vote at the meeting. As of that date, there were 20,001,291
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 Directors' 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 seven 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.
1
Certain information concerning each nominee is set forth below:
Director
Since Age
-------- ---
John L. Cantrell, Ph.D. . . . . . . . . . . . . . . . . . . . 1981 58
Executive Vice President of the Company since 1981.
Philipp Gerhardt, Ph.D. . . . . . . . . . . . . . . . . . . . 1985 75
Professor (Emeritus since 1992), Department of Microbiology
and Public Health, Michigan State University, since 1965;
Adjunct Senior Scientist, Michigan Biotechnology Institute,
since 1985.
Paul Goddard, Ph.D. . . . . . . . . . . . . . . . . . . . . . 1996 47
Chief Executive Officer and Chairman of the Board
of Directors of Neurex Corporation and member of the Board of
Directors of Molecular Devices Corp. and ONYX
Pharmaceuticals, Inc.; all are biotechnology companies which
do not compete with the Company.
Mark I. Greene, M.D., Ph.D., FRCP. . . . . . . . . . . . . . . 1995 48
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 63
President and Chief Executive Officer of the Company since
1987; Chairman of the Board of Directors of the Company
since 1989; member of the Board of Directors and Chairman of
the Finance Committee of St. Patrick Hospital, Missoula,
Montana, since 1991; member of the Board of Directors
of The International Heart Institute of Montana Foundation
since 1995.
Thomas N. McGowen, Jr., J.D. . . . . . . . . . . . . . . . . . 1984 71
Currently retired; director of various public and private
companies for more than the past five years; currently a
member of the Board of Directors of Federal Signal
Corporation and Energy West Corporation.
Frederick B. Tossberg, M.B.A. . . . . . . . . . . . . . . . . 1986 66
Currently retired; formerly involved in finance
and investments in industry and state government; director of
various private entities for more than the past five years;
currently Vice Chairman, Marcus Daly Memorial Hospital
Corporation, Hamilton, Montana.
2
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 1996, all filing
requirements applicable to its officers, directors and greater than 10%
beneficial owners, if any, were complied with.
COMMITTEES AND MEETINGS
The standing committees of the Board of Directors include an Audit
Committee and a Committee of Outside Directors. During 1996, the Board of
Directors held seven meetings. Each incumbent director serving during 1996
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 twice in 1996, 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 and 1996 Stock Option Plans (as amended and restated) as adopted by the
stockholders and to consider and make recommendations to the Board of Directors
regarding compensation of executive officers, as well as to matters in which
directors who are also Company employees may have a conflict of interest or be
otherwise involved personally. Members of the Committee of Outside Directors
are Messrs. Gerhardt, Goddard, Greene, McGowen and Tossberg. The Committee of
Outside Directors held one meeting during 1996.
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 3, 1997, 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 are
also the nominees for election as directors, (iii) the chief executive officer
of the Company, (iv) the four most highly
3
compensated executive officers, other than the chief executive officer, whose
total annual salary and bonus exceeded $100,000 in 1996, and (v) all directors
and executive officers of the Company as a group.
Amount Percent
Beneficially of
Name or Group Owned (1) Class
------------- ------------ -------
SmithKline Beecham plc. . . . . . . . . . . . . 2,754,056(2) 13.2%
Amerindo Investment Advisors, Inc . . . . . . . 1,925,000(3) 9.6%
Weiss, Peck & Greer . . . . . . . . . . . . . . 1,654,151(4) 8.3%
Delphi Asset Management . . . . . . . . . . . . 1,004,000(5) 5.0%
Robert E. Ivy . . . . . . . . . . . . . . . . . 272,000(6) 1.3%
Ronald H. Kullick, R.Ph., J.D. . . . . . . . . 71,000(7) *
Frederick B. Tossberg, M.B.A. . . . . . . . . . 61,287(8) *
John L. Cantrell, Ph.D. . . . . . . . . . . . . 55,000(9) *
Thomas N. McGowen, Jr., J.D. . . . . . . . . . 50,610(10) *
Lonnie L. Bookbinder, Ph.D., M.B.A. . . . . . . 47,000(9) *
Charles E. Richardson, Ph.D. . . . . . . . . . 45,600(9) *
Paul Goddard, Ph.D. . . . . . . . . . . . . . . 17,000(11) *
Mark I. Greene, M.D., Ph.D., FRCP . . . . . . . 17,000(11) *
Philipp Gerhardt, Ph.D. . . . . . . . . . . . . 15,000(12) *
All directors and executive officers as a group
(13 persons). . . . . . . . . . . . . . . . . . 778,119(13) 3.8%
- ------------
*Less than 1% of the outstanding shares of the Company.
<FN>
(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 3, 1997, 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) SmithKline Beecham Biologicals ("SBB"), Rue de l'Institut 89 B-1330,
Rixensart, Belgium, owns 1,103,448 shares and has warrants, which were
exercisable on March 3, 1997, to purchase 500,000 additional shares.
SBB also has the option to purchase additional shares of the Company's
common stock for up to $2,000,000 at market price. Based on the
stock's market price on March 3, 1997, SBB could purchase up to
400,000 additional shares, which are included in the total above.
S.R. One, Limited, Bay Colony Executive Park, 565 E. Swedesford Road,
Suite 315, Wayne, Pennsylvania 19087, owns 750,608 shares. Both
companies are subsidiaries of SmithKline Beecham plc.
(3) 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. 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
4
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.
(4) Based on a Schedule 13G dated January 31, 1997, Weiss, Peck & Greer,
L.L.C. ("WPG"), 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 1,654,151 shares as of December 31,
1996. The shares are held for the discretionary accounts of certain
clients. WPG disclaims beneficial ownership of all such shares.
(5) Based on a Schedule 13G dated February 13, 1997, 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
865,000 shares and sole dispositive power with respect to 1,004,000
shares as of December 31, 1996.
(6) Represents 272,000 shares for which options were exercisable on March
3, 1997, 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.
(7) Represents 71,000 shares for which options were exercisable on March
3, 1997, or within 60 days thereafter.
(8) Includes 49,919 shares for which options were exercisable on March 3,
1997, or within 60 days thereafter.
(9) Includes 45,000 shares for which options were exercisable on March 3,
1997, or within 60 days thereafter.
(10) Includes 40,351 shares for which options were exercisable on March 3,
1997, or within 60 days thereafter.
(11) Includes 15,000 shares for which options were exercisable on March
3, 1997, or within 60 days thereafter.
(12) Represents 15,000 shares for which options were exercisable on March
3, 1997, or within 60 days thereafter. Does not include 27,682 shares
owned by Dr. Gerhardt's wife. Dr. Gerhardt disclaims beneficial
ownership of such shares.
(13) Includes 738,370 shares for which options were exercisable on March 3,
1997, or within 60 days thereafter.
</FN>
5
EXECUTIVE COMPENSATION
The following tables set forth information regarding executive compensation
for the Company's Chief Executive Officer, President and Chairman and its four
most highly compensated executive officers who earned more than $100,000 in
salary and bonus in 1996 for services performed in all capacities for the
Company ("the Named Executive Officers").
Summary Compensation Table
Years Ended December 31, 1996, 1995 and 1994
Long-term
Compensation-
Awards
Annual -------------
Compensation Securities
Name and ------------------ Underlying All Other
Principal Position Year Salary Bonus Options (#) Compensation
- ------------------ ---- ------ ----- ------------- ------------
Robert E. Ivy(1) 1996 $251,500 $25,000 65,000 $9,424(2)
Chief Executive 1995 237,500 25,000 65,000 9,034
Officer, 1994 222,500 9,078
President and
Chairman
Lonnie L. Bookbinder 1996 140,269 2,525(3)
Ph.D., M.B.A. 1995 136,788 25,000 1,247
Vice President-
Director of Corporate
Development
Ronald H. Kullick 1996 111,626 15,000 1,674(3)
R.Ph., J.D. 1995 107,055 1,606
Vice President-Legal 1994 99,311 15,000 1,488
Counsel and Secretary
Charles E. Richardson 1996 111,049 1,999(3)
Ph.D., Vice President- 1995 105,404 1,897
Pharmaceutical
Discovery
John L. Cantrell, Ph.D. 1996 105,156 25,000 1,893(3)
Executive Vice President
- -----------
<FN>
(1) The Company has an employment contract with Mr. Ivy which currently
provides for an annual salary of $258,000 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 1996 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 $1,542.
The Company also contributed $2,850 for Mr. Ivy's account in a 401(k)
savings plan.
(3) During 1996 the Company contributed $2,525, $1,674, $1,999 and $1,893
for the account of Messrs. Bookbinder, Kullick, Richardson and
Cantrell, respectively, in a 401(k) savings plan.
</FN>
6
Stock Option Grants
Year Ended December 31, 1996
Individual Grants(1)
-----------------------------------------
% of Potential
Total Realizable Value at
Number of Stock Assumed Annual
Securities Options Rates of Stock Price
Under- Granted to Appreciation for
lying Employees Exercise Expira- 10 Year Option Term(2)
Options in Fiscal Price Per tion -----------------------
Name Granted Year Share Date 5% 10%
---- --------- --------- --------- ------- -------- --------
Robert E. Ivy 65,000 23.0 $4.75 4-24-06 $194,171 $492,068
Ronald H. Kullick 15,000 5.3 4.00 7-24-06 37,734 95,625
John L. Cantrell 25,000 8.8 4.00 7-24-06 62,889 159,374
- ----------
<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, 1996
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 Exercisable cisable Exercisable cisable
- ---- --------------- -------- ----------- ------- ----------- -------
Robert E. Ivy - - 226,600 110,400 $ 45,375 $ 2,437
Lonnie L. Bookbinder - - 40,000 35,000 - -
Ronald H. Kullick - - 63,000 20,000 4,500 -
Charles E. Richardson - - 38,800 6,200 1,875 -
John L. Cantrell - - 40,000 25,000 - -
- --------------
<FN>
(1) Value is based on the closing price of the Company's stock on December
31, 1996, which was $3.88, less the option exercise price.
(2) The values presented do not include income tax consequences.
</FN>
7
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. 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, 1996, Mr. Ivy's annual base salary was increased from
$245,000 to $258,000. Effective April 24, 1996, 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 was done in recognition of his substantial achievements
made in the previous year. Special achievements were noted in achieving
research and drug development goals such as enabling the preparation for filing
in 1997 applications to market MELACINE melanoma theraccine in North America and
Europe, as well as signing additional product license and supply agreements, all
of which are moving the Company toward the goal of achieving profitability. 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 $1,542 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
8
officers for fiscal 1997 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 1996
Frederick B. Tossberg, Chairman and Secretary
Philipp Gerhardt
Mark I. Greene
Thomas N. McGowen, Jr.
9
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, 1991, and all dividends, if any, were reinvested.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
COMPARISON OF FIVE-YEAR TOTAL RETURN
Five Years Ended December 31, 1996
--------------------------------------------
1991 1992 1993 1994 1995 1996
---- ---- ---- ---- ---- ----
Ribi ImmunoChem
Research, Inc. 100 112 112 51 72 46
Nasdaq Stock Market -
Total Return (U.S.
Companies) 100 116 134 131 185 227
Nasdaq Stock Market -
Pharmaceutical Stocks 100 83 74 56 102 102
DIRECTORS' COMPENSATION
In 1996 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. None of the directors were paid for extraordinary services in 1996.
The Company's 1996 Stock Option Plan provides for the issuance of
discounted stock options to certain directors. This plan 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
10
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 1996 in lieu of cash compensation, Mr. Tossberg
was granted options to purchase 9,568 shares at an average price of $3.34 per
share.
Additionally, in 1996 the directors adopted, subject to stockholder
approval, the 1996 Directors' Stock Option Plan (the "Plan") for directors who
are not employees of the Company. The Plan provides for the grant of
nonqualified options to purchase a maximum of 210,000 shares of common stock.
Each director who is not an employee was granted options to purchase 30,000
shares on the later of the date the Plan was adopted or on the date they first
became a director. In addition, immediately following each annual meeting of
the Company's stockholders, each director who is not an employee who continues
as an outside director after the meeting will be granted options to purchase 500
common shares. The exercise price of the options is the market price on the
date of grant. The options vest and can be exercised at the rate of 50% on the
date of grant and 25% on each anniversary of the grant date. The options expire
if not exercised within ten years of the grant date. During 1996, options to
purchase 150,000 shares were granted under the Plan with an exercise price of
$4.00 per share. Adoption of the Plan and the right to exercise options granted
under the Plan is contingent upon stockholder approval; thus, none of the
options have been exercised.
Item No. 2
APPROVAL OF THE RIBI IMMUNOCHEM RESEARCH, INC.
1996 DIRECTORS' STOCK OPTION PLAN
The Board of Directors ("Board") has proposed and is unanimously
recommending approval of the adoption of a new stock option plan known as the
"Ribi ImmunoChem Research, Inc. 1996 Directors' Stock Option Plan" (the "Plan").
The Plan was adopted by the Board on July 24, 1996, subject to approval by the
stockholders. The Plan provides for the grant of options to purchase common
stock to directors who are not employees of the Company. The Plan was adopted
to enable the Company to attract the best available individuals to serve as
members of the Board of Directors and to encourage their continued service on
the Board. Additionally, the Board believes that it is important to establish
ownership in the Company as is accomplished with employees, including directors
who are employees, who are granted stock options under an employee stock option
plan. The Board believes that the Plan will constitute an important
incentive to directors of the Company.
The Plan provides for the grant of stock options which are not intended to
qualify as incentive stock options under Section 422 of the Internal Revenue
Code of 1986, as amended. Such nonqualified stock options are herein referred
to as "Options."
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 210,000 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
11
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. If stock which was acquired upon exercise of an Option is subsequently
repurchased by the Company, such stock will not be available for future grant
under the Plan.
The fair market value of the Company's common stock on March 3, 1997, as
determined by the closing price reported by The Nasdaq Stock Market, was $5.00
per share. The maximum number of shares which may be offered upon exercise of
Options under the Plan constitutes approximately 1% of the common stock
outstanding on the record date.
Options under the Plan will be granted only to directors who are not
employees ("Outside Directors"). At March 3, 1997, there were five Outside
Directors. All grants are automatic and nondiscretionary and will be made
strictly in accordance with the provisions of the Plan. Under the Plan, an
Option to purchase 30,000 shares of stock was granted to each Outside Director,
subject to stockholder approval, on the date the Plan was approved by the Board
and to other Outside Directors when they first became or become an Outside
Director. In addition, immediately following each annual meeting of the
Company's stockholders, each Outside Director who continues as an Outside
Director following the meeting will be granted an Option to purchase 500 shares
of common stock. These subsequent grants will be made as of the date of the
annual stockholders' meeting. In the event that a sufficient number of shares
of stock is not available under the Plan, the remaining shares will be prorated
based upon the number of shares each Outside Director was entitled to receive
under the Plan. Any further grants of Options will be deferred until such time
as additional shares become available for grant under the Plan. The Board will
have the authority at any time to make additional shares available for grant
under the Plan, subject to obtaining stockholder approval. Any grant of an
Option made before the Company has obtained stockholder approval of the Plan and
any grant of an Option made after amendment of the Plan, which requires
stockholder approval, will be conditioned upon obtaining such approval.
The Company cannot now determine the number of Options which will be
granted in the future under the Plan. However, in 1996, subject to stockholder
approval, Options were granted to Outside Directors as shown in the following
table. In the event that stockholder approval is not obtained, all Options
previously granted will terminate.
Weighted Average
Options % of Total Exercise Price
Identity of Group Granted Options Granted Per Share
- ------------------------------ ------- --------------- ----------------
Non-executive officer directors
as a group 150,000 100 $4.00
Administration of the Plan
The Plan is intended to be self-executing pursuant to the terms set out in
the Plan. However, any questions concerning the interpretation or execution of
the Plan will be decided by the Board. The Board will have the authority to
authorize any person to execute on behalf of the Company any agreements or other
documents in connection with grants of Options under the Plan and to make all
other determinations deemed necessary.
Terms and Conditions
Each Option granted pursuant to the Plan will be evidenced by a written
stock option agreement which will contain the terms and conditions of the
Option. The exercise price per share will be 100% of the fair market value of
the stock on the date of grant. Fifty percent (50%) of each Option granted will
vest and become exercisable on the date of grant and the balance will vest and
become exercisable at the rate of 25% of the total
12
on each anniversary of the grant date, such that the Option will be fully vested
and exercisable two years after its date of grant. However, no portion of the
Option will vest on an anniversary of the grant date if the Outside Director
does not continue as an Outside Director immediately following such anniversary.
Each Option will expire in 10 years if not exercised. Options may be granted
under the Plan at any time on or before the tenth anniversary of the date of
adoption of the Plan by the Board.
An Outside Director can exercise Options by giving the Secretary of the
Company written notice of exercise, specifying the number of shares to be
acquired upon exercise. The notice will be accompanied by an amount equal to
the exercise price of the shares in: (1) cash or check, (2) a form prescribed by
the Board of an irrevocable direction to a securities broker approved by the
Board to sell shares of stock and deliver all or a portion of the proceeds to
the Company in payment for the stock, or (3) shares of stock owned by the
Optionee. The Company may require the Optionee, under certain conditions, to
provide written assurance that the shares are being purchased for investment and
not with a view to distribution. Upon delivery of the notice and appropriate
payment, the Company will authorize the transfer agent of the Company to issue a
stock certificate to the Optionee for the number of shares of stock acquired.
No stock will be sold under the Plan until the Optionee has made arrangements
acceptable to the Board for the satisfaction of applicable federal, state and
local income and employment tax withholding obligations. Until the shares are
issued, the Optionee has no right to vote or to receive dividends or to exercise
any other rights as a stockholder. In the event of a change in control of the
Company, all outstanding Options will become immediately vested and exercisable.
To the extent required by Rule 16b-3 of the Securities Exchange Act of
1934, as amended,("Exchange Act") no Option may be sold, pledged, assigned,
hypothecated, transferred, or disposed of in any manner other than by will or by
the laws of descent or distribution. If Rule 16b-3 is amended after the date of
the Board's adoption of the Plan to permit broader transferability of Options,
the Options will be transferable to the fullest extent permitted by the Rule.
The terms and conditions of Options granted to persons subject to Section
16 of the Exchange Act will comply with applicable provisions of Rule 16b-3.
The Plan and Options granted under the Plan will be deemed to contain additional
conditions and restrictions as may be required for the Plan to qualify as a
"formula plan" under Rule 16b-3, as it applies to the Company, and to qualify
for the maximum exemptions from Section 16 of the Exchange Act with respect to
transactions pursuant to the Plan.
During the term of the Plan, the Company will reserve and keep available
the number of shares of stock as will be sufficient to satisfy the requirements
of the Plan.
Amendments and Termination
The Board may amend the Plan from time to time in such respects as the
Board deems advisable. However, the Company will obtain approval by the
Company's stockholders to amend the Plan to the extent and in the manner
required by Rule 16b-3 or any other applicable law or regulation.
Notwithstanding the foregoing, the provisions governing the grant and terms of
the Options will not be amended more than once every six months, other than to
comport with changes in the Code, the Employee Retirement Income Security Act of
1974, as amended, or any applicable rules and regulations thereunder. The
Board, without further approval of the stockholders, may at any time terminate
or suspend the Plan. Generally, any such termination or suspension of the Plan
will not affect Options already granted under the Plan and such Options will
remain in full force and effect as if the Plan had not been terminated or
suspended.
13
Federal Income Tax Consequences
The following is a general discussion of the federal tax treatment for
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 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.
Since all Optionees will be Outside Directors of the Company, the
following additional rules apply to Optionees who are (i) subject to the insider
trading rules of Section 16(b) of the Exchange 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, as defined in Section 422 of the Code, 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.
14
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 1997, 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, 1996.
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 1998
annual meeting must be received by the Company on or before November 19, 1997,
in order for such proposals to be included in the proxy statement and form of
proxy of the Company for the 1998 annual meeting.
OTHER MATTERS
The Company's annual report for the fiscal year ended December 31, 1996, 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 19, 1997
15
Appendix A
Ribi ImmunoChem Research, Inc.
1996 Directors' Stock Option Plan
1. Establishment and Purpose.
-------------------------
(a) There is hereby adopted by the Company, the Ribi ImmunoChem Research,
Inc. 1996 Directors' Stock Option Plan. The Plan is intended to provide a means
whereby eligible members of the Board may be given an opportunity to purchase
shares of Stock pursuant to options which are not intended to qualify as
incentive stock options under Section 422 of the Code.
(b) The purpose of the Plan is to enable the Company to attract the best
available individuals to serve as members of the Board, to provide additional
performance incentives to such individuals while serving as directors, and to
encourage their continued service on the Board.
2. Definitions.
-----------
As used herein, the following definitions shall apply:
(a) "Affiliate" shall mean any parent or subsidiary corporations of the
Company, as defined in Sections 424(e) and (f) of the Code (but substituting
"the Company" for "employer corporation"), including parents or subsidiaries of
the Company that become such after adoption of the Plan.
(b) "Board" shall mean the Board of Directors of the Company.
(c) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(d) "Company" shall mean Ribi ImmunoChem Research, Inc., a Delaware
corporation.
(e) "Director" shall mean a member of the Board.
(f) "Employee" shall mean any person, including officers and Directors,
who is an employee of the Company, or any Affiliate of the Company, for purposes
of tax withholding under the Code. The payment of a director's fee by the
Company shall not be sufficient to constitute "employment" by the Company.
(g) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(h) "Fair Market Value" means, as of any date, the value of the Stock
determined as follows:
(i) Where there exists a public market for the Stock, the Fair Market
Value shall be the closing sales price for a share of Stock for the trading day
on which the options are granted ("Grant Date") (or, if no sales were reported
on that date, on the last trading date on which sales were reported) on the
NASDAQ National Market or the principal securities exchange on which the Stock
is listed for trading, whichever is applicable, as reported in The Wall Street
Journal or such other source as the Board deems reliable; or
(ii) In the absence of an established market of the type described in
(i), above, for the Stock, the Fair Market Value thereof shall be determined in
good faith by the Board, and such determination shall be conclusive and binding
on all persons.
(i) "Option" shall mean an option to purchase shares of Stock granted
pursuant to the Plan.
(j) "Optionee" shall mean an Outside Director who receives an Option.
A-1
(k) "Outside Director" shall mean a Director who is not an Employee.
(l) "Plan" shall mean the Ribi ImmunoChem Research, Inc. 1996 Directors'
Stock Option Plan.
(m) "Rule 16b-3" shall mean Rule 16b-3 promulgated under the Exchange Act
or any successor thereto.
(n) "Securities Act" shall mean the Securities Act of 1933, as amended.
(o) "Stock" shall mean the Common Stock, par value $.001 per share, of the
Company.
3. Stock Subject to the Plan.
-------------------------
Subject to the provisions of Section 13 of the Plan, the maximum number of
shares of Stock which may be made subject to Options and sold under the Plan is
two hundred ten thousand (210,000) shares of Stock. If an Option expires or
becomes unexercisable for any reason and has not been exercised in full, the
Stock subject to such Option shall be available for future grant under the Plan.
If Stock which was acquired upon exercise of an Option is subsequently
repurchased by the Company, such Stock shall not be available for future grant
under the Plan.
4. Administration of the Plan.
--------------------------
(a) The Plan is intended to be self-executing pursuant to the terms
hereof, however, any questions concerning the interpretation or execution of the
Plan or grants hereunder shall be decided by the Board. All decisions,
determinations and interpretations of the Board shall be final and binding on
all holders of any Options granted under the Plan.
(b) Subject to the provisions and restrictions of the Plan, the Board
shall have the authority to authorize any person to execute on behalf of the
Company any agreements or other documents in connection with grants of Options
under the Plan and to make all other determinations deemed necessary or
advisable for the implementation of the Plan.
5. Option Grants.
-------------
(a) All grants of Options hereunder shall be automatic and
nondiscretionary and shall be made strictly in accordance with the provisions of
this Section 5. No person shall have any discretion to select which Outside
Directors shall be granted Options or to determine the number of shares of Stock
to be covered by Options granted to Outside Directors, the timing of such Option
grants or the exercise price thereof.
(b) An Option to purchase thirty thousand (30,000) shares of Stock shall
be granted ("Initial Grant") to each Outside Director, such Initial Grant to be
made (i) to the then-existing Outside Directors upon approval of the Plan by the
Board ("Approval Date") and (ii) to other Outside Directors elected or appointed
to the Board after the Approval Date upon the date each such Outside Director
first becomes an Outside Director following the Approval Date. In addition,
immediately following each annual meeting of the Company's stockholders, each
Outside Director who continues as an Outside Director following such annual
meeting shall be granted an Option to purchase five hundred (500) shares of
Stock ("Subsequent Grant"). Each such Subsequent Grant shall be made as of the
date of the annual stockholders' meeting in question.
(c) Limitations.
-----------
(i) Notwithstanding the provisions of Section 5(b), above, in the
event that a sufficient number of shares of Stock is not available under the
Plan, the remaining shares shall be prorated based upon the
A-2
number of shares each Outside Director was entitled to receive under the Plan.
Any further grants of Options shall then be deferred until such time that
additional shares become available for grant under the Plan. The Board shall
have the authority at any time to make additional shares available for grant
under the Plan, subject to obtaining stockholder approval of such increase to
the extent required under Section 14(a), below.
(ii) Notwithstanding the provisions of Sections 5(b), above, any grant
of an Option made before the Company has obtained stockholder approval of the
Plan and any grant of an Option made after amendment of the Plan where such
amendment of the Plan requires stockholder approval under Section 14(a), below,
shall be conditioned upon obtaining such stockholder approval.
6. Terms and Conditions of Options.
-------------------------------
(a) Each Option granted pursuant to the Plan shall be evidenced by a
written stock option agreement in the form attached hereto as Exhibit A
("Directors' NonQualified Stock Option Agreement") executed by the Company and
the Outside Director.
(b) The exercise price per share shall be 100% of the Fair Market Value
per share of Stock on the date of grant of the Option, subject to adjustment to
the extent provided in Section 13, below.
(c) Each Initial Grant and Subsequent Grant shall be vested and
exercisable as to fifty percent (50%) of the total number of the shares of Stock
covered by the Option on the date of grant and the balance shall vest and become
exercisable at the rate of twenty-five percent (25%) of the total number of
shares of Stock covered by the Option on each anniversary of the date of grant,
beginning on the first anniversary of the date of grant such that the Option
will be fully vested and exercisable two (2) years after its date of grant;
provided, however, that no portion of the Option shall vest on an anniversary of
the date of grant if the Outside Director does not continue as an Outside
Director immediately following such anniversary.
(d) The term of each Option shall be ten (10) years from the date of
grant, unless a shorter period is required to comply with any applicable law, in
which case such shorter period shall apply.
7. Eligibility.
-----------
Options may be granted only to Outside Directors. The Plan shall not
confer upon any Outside Director any right with respect to continuation of
service as a Director or nomination to serve as a Director, nor shall it
interfere in any way with any rights that the Director or the Company may have
to terminate his or her directorship at any time.
8. Term of Plan; Effective Date.
----------------------------
The Plan shall become effective upon its adoption by the Board. Options
may be granted under the Plan at any time on or before the tenth anniversary of
the date of adoption of the Plan.
9. Payment Upon Exercise.
---------------------
Payment of the exercise price upon exercise of any Option shall be made
(i) by cash or check; (ii) by delivery on a form prescribed by the Board of an
irrevocable direction to a securities broker approved by the Board to sell
shares and deliver all or a portion of the proceeds to the Company in payment
for the Stock; (iii) with shares of Stock owned by the Optionee; or (iv) any
combination of the foregoing.
A-3
10. Withholding Taxes.
-----------------
No Stock shall be sold under the Plan to any individual until the
individual has made arrangements acceptable to the Board for the satisfaction of
applicable federal, state, and local income and employment tax withholding
obligations.
11. Exercise of Option.
------------------
(a) An Option shall be deemed to be exercised when notice of such exercise
has been given to the Company in accordance with the terms of the Directors'
Nonqualified Stock Option Agreement by the person entitled to exercise the
Option and full payment for the Stock has been received by the Company. An
Option may not be exercised for a fraction of a share of Stock.
(b) Notwithstanding the exercise of the Option, until the issuance (as
evidenced by the appropriate entry on the books of a duly authorized transfer
agent of the Company) of the certificate evidencing such Stock, no right to vote
or to receive dividends or to exercise any other rights as a stockholder shall
exist with respect to the Stock. A stock certificate for the number of shares
of Stock so acquired shall be issued to the Optionee as soon as practicable
after exercise of the Option. No adjustment will be made for a dividend or
other right if the record date is prior to the date the stock certificate is
issued.
(c) In event of a Change in Control of the Company, all outstanding
Options shall become immediately vested and exercisable. For purposes of this
subsection, a Change in Control shall be deemed to occur upon:
(i) the first purchase of Stock pursuant to a tender offer or
exchange offer (other than an offer made by the Company) for all or part of the
Stock;
(ii) a third person, including a "group" as defined in Section
13(d)(3) of the Exchange Act, 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;
(iii) on any date on which the persons who were the Directors of
the Company ninety (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;
(iv) approval by the Company's stockholders of a merger or
consolidation in which the Company will not survive as an independent publicly
owned corporation; or
(v) approval by the Company's stockholders of the sale or disposition
of all or substantially all of the assets of the Company.
12. Nontransferability of Options.
-----------------------------
To the extent required by Rule 16b-3, no Option may be sold, pledged,
assigned, hypothecated, transferred, or disposed of in any manner other than by
will or by the laws of descent or 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 Rule 16b-3, the Options granted hereunder shall
be transferable to the fullest extent permitted by Rule 16b-3 as so amended. 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
persons 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.
A-4
13. Adjustment Upon Changes in Capitalization.
-----------------------------------------
In the event that the number of outstanding shares of Stock of the Company
is changed by a merger, consolidation, reorganization, recapitalization,
reincorporation, stock dividend (in excess of two percent (2%)), stock split, or
similar change in the capital structure of the Company without consideration,
the number of shares of Stock available under the Plan, the number of shares of
Stock deliverable in connection with any Option and the exercise price per share
of such Options shall be proportionately adjusted, subject to any required
action by the Board or stockholders of the Company and compliance with
applicable securities laws; provided, however, that fractional shares shall be
rounded to the nearest whole share.
14. Amendment and Termination of the Plan.
-------------------------------------
(a) The Board may amend the Plan from time to time in such respects as the
Board may deem advisable; provided, however, that to the extent necessary to
comply with Rule 16b-3 under the Exchange Act (or any other applicable law or
regulation), the Company shall obtain approval by the Company's stockholders to
amend the Plan to the extent and in the manner required by such law or
regulation. Notwithstanding the foregoing, the provisions set forth in
sections 5 and 6 of the Plan (and any other sections of the Plan that affect the
formula award terms required to be specified in the Plan by Rule 16b-3) shall
not be amended more than once every six (6) months, other than to comport with
changes in the Code, the Employee Retirement Income Security Act of 1974, as
amended, or any applicable rules and regulations thereunder.
(b) The Board, without further approval of the stockholders, may at any
time terminate or suspend the Plan. Except as otherwise provided herein, any
such termination or suspension of the Plan shall not affect Options already
granted hereunder and such Options shall remain in full force and effect as if
the Plan had not been terminated or suspended.
15. Conditions Upon Issuance of Stock.
---------------------------------
(a) Stock shall not be issued pursuant to the exercise of an Option unless
the exercise of such Option and the issuance and delivery of such Stock pursuant
thereto shall comply with all relevant provisions of law, including, without
limitation, the Securities Act, the Exchange Act, the rules and regulations
promulgated thereunder, state securities laws, and the requirements of any stock
exchange upon which the Stock may then be listed, and shall be further subject
to the approval of counsel for the Company with respect to such compliance.
(b) As a condition to the exercise of an Option, the Company may require
the person exercising such Option to represent and warrant at the time of any
such exercise that the Stock is being purchased only for investment and without
any present intention to sell or distribute such Stock, if, in the opinion of
counsel for the Company, such a representation is required by any provisions of
applicable law.
(c) Inability of the Company to obtain authority from any regulatory body
having jurisdictional authority deemed by the Company's counsel to be necessary
for the lawful issuance and sale of any Stock hereunder shall relieve the
Company of any liability for failure to issue or sell such Stock.
16. Reservation of Stock.
--------------------
The Company, during the term of the Plan, will at all times reserve and
keep available such number of shares of Stock as shall be sufficient to satisfy
the requirements of the Plan.
A-5
17. Stockholder Approval.
--------------------
Continuance of the Plan shall be subject to approval by the stockholders at
the next annual stockholder's meeting that occurs after the date the Plan is
adopted by the Board. Such shareholder approval shall be obtained in the degree
and manner required under applicable state and federal law and the rules of any
stock exchange upon which the Stock is listed. In the event that such
stockholder approval is not obtained, all Options previously granted hereunder
shall terminate.
18. Additional Restrictions of Rule 16b-3.
-------------------------------------
The terms and conditions of Options granted hereunder to persons subject to
Section 16 of the Exchange Act shall comply with the applicable provisions of
Rule 16b-3. The Plan and the Options granted hereunder shall be deemed to
contain such additional conditions and restrictions as may be required for the
Plan to qualify as a "formula plan" under Rule 16b-3, as then applicable to the
Company, and to qualify for the maximum exemptions from Section 16 of the
Exchange Act with respect to transactions pursuant to the Plan.
A-6
Exhibit A
RIBI IMMUNOCHEM RESEARCH, INC.
DIRECTORS' NONQUALIFIED STOCK OPTION AGREEMENT
This agreement (the "Agreement") is made as of __________, 199__ (the
"Grant Date") between Ribi ImmunoChem Research, Inc. (the "Company") and
___________________________("Optionee").
WITNESSETH:
WHEREAS, the Company has adopted the Ribi ImmunoChem Research, Inc. 1996
Directors' 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 Outside 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 _______________ (_________) shares of
the Common Stock of the Company (the "Stock"). The exercise price of the Stock
subject to this option shall be $_________ per share, which price is the per
share Fair Market Value as of the Grant Date. This grant is an Initial Grant
under the Plan.
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 (10)
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 for any reason other than
disability (within the meaning of subparagraph (c), below) or death during the
Option Period, the Option Period shall terminate three (3) 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 or within three (3)
months of the date the Optionee ceases to be a Director, the Option Period shall
end one (1) 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 (1) 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 disabled if he
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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 twelve (12) months. An individual shall not be
considered to be disabled unless he furnishes proof of the existence thereof in
such form and manner, and at such time, as the Board may require.
4. VESTING OF RIGHT TO EXERCISE OPTIONS. This option will be vested and
exercisable as to fifty percent (50%) of the total number of shares of Stock
covered by the option on the Grant Date and the balance shall vest and become
exercisable at the rate of twenty-five percent (25%) of the total number of
shares of Stock covered by the option on each anniversary of the Grant Date,
beginning on the first anniversary of the Grant Date such that the option will
be fully vested and exercisable two (2) years after the Grant Date; provided,
however, that no portion of the option shall vest on an anniversary of the Grant
Date if the Optionee does not continue as a Director immediately following such
anniversary. 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 11(c) of the
Plan (relating to the acceleration of vesting upon the occurrence of a Change in
Control).
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 Secretary of the Company 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 or check; (2) by delivery on a form prescribed by the Board of an
irrevocable direction to a securities broker approved by the Board to sell
shares of Stock and deliver all or a portion of the proceeds to the Company in
payment for the Stock; or (3) with shares of Stock owned by Optionee.
(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 of 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 securities exchange upon which the Stock may then be listed,
and requirements under any other law or regulation applicable to the issuance or
transfer of such shares.
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6. CHANGES IN CAPITALIZATION. If there should be any change in a class
of Stock subject to this option, through merger, consolidation, reorganization,
recapitalization, reincorporation, stock split, stock dividend (in excess of two
percent [2%]) or other change in the capital structure of the Company without
consideration, 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; provided, however, that fractional shares shall be rounded to the
nearest whole share.
7. LIMITATIONS ON TRANSFER. To the extent required by Rule 16b-3 of the
Securities Exchange Act of 1934, this option shall not be transferable by
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 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 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 Secretary 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 insure to the
benefit of any successor or successors of the Company. Where the context
permits, "Optionee" as used in this Agreement shall include any transferee,
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.
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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 __________________________
Its Chief Executive Officer,
President & Chairman
______________________________
Optionee
Address:
______________________________
______________________________
______________________________
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Appendix B
PROXY
RIBI IMMUNOCHEM RESEARCH, INC.
Annual Meeting of Stockholders to be held on April 30, 1997
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 3, 1997, at the Annual Meeting of Stockholders to be held
on April 30, 1997, 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, P. Goddard, 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 Directors' 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)
================================================================================
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 _________________________________, 1997
_____________________________________________
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 30, 1997)
Omitted Material Description
1. Stockholder Return Performance Graph Described in table format on
page 10 of the Proxy Statement
under "Stockholder Return
Performance Presentation."